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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM 10-K
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Annual Report Pursuant to Section 13 or 15(d)
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of the Securities Exchange Act of 1934
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FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996 Commission File No. O-13965
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GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 04-3051642
(State of Incorporation) (I.R.S. Employer Identification No.)
320 Needham Street, Newton Upper Falls, Massachusetts 02164
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 969-0700
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
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Common stock, par value $.01
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes No X
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Number of Shares of Common Stock
outstanding at May 15, 1996 3,929,486
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The aggregate market value of voting stock of the registrant held by
non-affiliates of the registrant (i.e., stockholders who are not directors,
officers or employees of the registrant and are not otherwise persons who
control or are controlled by or under common control with the registrant) was
$8,213,870, as of May 15, 1996.
Documents Incorporated by Reference
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Portions of the Annual Report to Stockholders of the registrant for fiscal year
1996 are incorporated by reference in Part II. Portions of the definitive proxy
statement for the Annual Meeting of Stockholders of the registrant to be held on
July 9, 1996 are incorporated by reference in Part III.
The Index to Exhibits is located at Page 15.
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PART I
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ITEM 1. BUSINESS
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GENERAL
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GZA GeoEnvironmental Technologies, Inc. ("GZA" or the "Company") provides
geotechnical engineering, environmental consulting and remediation services to
industrial, commercial, financial, public service and government clients.
Environmental services range from the initial assessment and evaluation of
contaminated sites to the design, construction and operation of remediation
systems to treat, control or remove contamination. GZA also helps clients to
plan, coordinate and implement effective environmental and occupational health
and safety management programs. Geotechnical services involve the evaluation of
soil, rock and groundwater conditions for the design and construction of
buildings, highways, tunnels, dams, piers and other structures. GZA also
provides drilling, laboratory and instrumentation services in support of its
environmental and geotechnical activities.
GZA's strategy is to provide vertically integrated services that range from the
identification of a potential problem through the design and implementation of a
solution, although the Company often enters into contracts requiring only one of
its services. Management believes that the Company's ability to combine
environmental and geotechnical capabilities differentiates GZA from many of its
competitors. Environmental problems frequently involve soil and groundwater
contamination. Often, geotechnical expertise is essential in developing the best
remedial solutions, which may involve excavation and removal of contaminated
soil and groundwater, containment by subsurface and surface hydraulic barriers,
and management of groundwater flow through soil and rock. In such situations,
GZA's geotechnical and environmental personnel work together to evaluate and
develop engineered solutions to environmental problems. Management believes that
these complementary skills enable GZA to offer a broad technical approach and
efficient solutions to clients' problems.
The Company provides services to clients through its subsidiaries and
affiliates. Environmental consulting and geotechnical services are performed
primarily by GZA GeoEnvironmental, Inc. (GZA GeoEnvironmental), environmental
remediation services by GZA Remediation, Inc. (GZA Remediation), and drilling
operations by GZA Drilling, Inc. (GZA Drilling), all wholly-owned subsidiaries.
Certain services in New York are provided by the Company's affiliate
Goldberg-Zoino Associates of New York, P.C. (GZANY), doing business as GZA
GeoEnvironmental of New York, a professional corporation owned by officers,
directors and stockholders of the Company. Aquaterra Environmental Consultants
Limited, the Company's 50%-owned joint venture in the United Kingdom, provides
environmental services in Europe.
SERVICES
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The Company's services can be divided into three broad categories: environmental
consulting, environmental restoration and geotechnical engineering. Any given
project may involve activities in more than one of these categories.
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ENVIRONMENTAL CONSULTING SERVICES
The Company provides a wide variety of services which deal with environmental
issues, seeking solutions that address regulatory requirements that are
acceptable to clients in terms of both cost and risk.
ENVIRONMENTAL MANAGEMENT AND REGULATORY COMPLIANCE SERVICES. GZA's integrated
services help clients to plan, coordinate and implement effective strategies to
comply with current environmental and occupational health and safety
regulations. Services include:
* Compliance Audits
* Regulatory Training
* Occupational Health & Safety
* Wastewater Management
* Pollution Prevention
* Strategic Planning
* ISO 14000 Services
* Permitting Assistance
* Air Quality Engineering
* Community Relations
PROPERTY TRANSFER STUDIES/ENVIRONMENTAL SITE ASSESSMENTS. GZA helps clients
assess the risks associated with the purchase and/or management of real estate
and businesses. Services include:
* Phase I and Phase II Environmental Site Assessments
* Regulatory Compliance Audits of Operating Facilities
ENVIRONMENTAL INVESTIGATIONS OF CONTAMINATED SITES AND FACILITIES. GZA performs
all aspects of environmental investigation for projects ranging from individual
leaking underground storage tanks to Superfund sites. Services include:
* Hydrogeologic and Remedial Investigations
* Facility Investigation and Voluntary Corrective Actions
* Feasibility Studies and Remedial Design
RISK ASSESSMENT. GZA helps clients evaluate environmental data and quantify the
level of risk of various activities to human or ecological receptors. Services
include:
* Human Health and Ecological Risk Assessment
* Development of Risk-Based Cleanup Levels
NATURAL RESOURCE EVALUATION AND PERMITTING. GZA identifies potential risks posed
to natural resources and develops solutions that are economically viable and
environmentally acceptable. Environmental, geotechnical and civil engineering
services include:
* Water Resource Evaluation and Aquifer Protection
* Erosion Control and Stormwater Management
* Wildlife and Aquatic Habitat Evaluation
* Wetland Impact Assessment and Mitigation Design
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SOLID WASTE MANAGEMENT SERVICES. GZA assists the owners and operators of
landfills in the siting, design, construction, operation, maintenance,
remediation, and closure of solid waste landfills. Services include:
* Feasibility Studies
* Environmental Impact Studies
* Geologic and Hydrogeologic Investigations
* Permitting
* Facility Design
* Facility Operation
* Closure/Post Closure
* Environmental Remediation
ENVIRONMENTAL RESTORATION SERVICES
GZA provides engineering and construction services to help clients locate,
identify and remediate environmental contamination. GZA can either design and
implement its own restoration plan or can construct and operate cleanup systems
designed by others.
DESIGN AND CONSTRUCTION OF ENVIRONMENTAL TREATMENT SYSTEMS. GZA performs some or
all aspects of design, construction, installation, and start-up of remedial
treatment systems. These systems utilize remediation techniques such as: soil
stabilization/fixation, soil vapor extraction, counter-current aeration, carbon
absorption, thermal desorption and bioremediation.
OPERATION AND MAINTENANCE SERVICES. GZA provides operation and maintenance
services for treatment systems as well as performance evaluations, including
periodic sampling and analyses of contaminants to monitor cleanup progress.
DESIGN AND CONSTRUCTION OF CONTAINMENT SYSTEMS. GZA designs and constructs
containment systems, using a variety of techniques to physically isolate
contaminants from the surrounding environment.
HAZARDOUS MATERIALS MANAGEMENT. GZA acts as a general contractor on assignments
where the chosen remedial alternative is removal and off-site disposal of
hazardous or contaminated material. GZA oversees excavation, performs testing
and waste characterization, evaluates and monitors transportation and disposal
vendors, and assists with administration and regulatory compliance.
REMOVAL AND/OR REPLACEMENT OF TANKS AND PIPING SYSTEMS. GZA provides underground
storage tank testing and assessment; regulatory compliance audit and planning
services; and management of tank or piping upgrade, removal and installation.
ASBESTOS AND LEAD MANAGEMENT AND ABATEMENT. GZA provides a variety of services
including asbestos surveys, and lead risk assessments, management of the
abatement process, air quality monitoring and development and periodic review
of asbestos management programs.
FACILITY CLOSURE AND RESTORATION. GZA provides integrated remediation services
to clients who are closing facilities and/or restoring contaminated sites for
redevelopment. Multi-phase services include environmental assessments,
cost-benefit analysis, and remedial design and construction management.
Applications include facility/equipment decontamination and decommissioning as
well as lagoon and landfill closures.
GEOTECHNICAL ENGINEERING SERVICES
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The Company's geotechnical engineers analyze the properties of soil and rock to
develop recommendations and specifications for the design and construction of
structures and civil works projects. Clients include engineers and architects,
construction firms, public agencies, real estate developers and property owners.
SOIL AND ROCK ENGINEERING. GZA provides engineering services for analysis,
design and construction monitoring of geotechnical construction challenges such
as earthwork, braced excavations, dewatering, slope stability, geosynthetics
and ground improvement.
FOUNDATION ENGINEERING. GZA makes recommendations to other design professionals
concerning foundation design and construction. To formulate its recommendations,
the Company performs geological studies, subsurface exploration and laboratory
testing and analysis to determine the engineering properties of subsurface
materials and to identify related engineering and construction issues.
DAMS. GZA provides consulting, design and inspection services in connection with
new construction and the rehabilitation of concrete and embankment dams, dikes
and levees.
MARINE FACILITIES. GZA provides specialized geotechnical engineering and
structural design for the construction of new marine facilities, both marginal
and off-shore, and the rehabilitation and remediation of existing facilities.
TUNNELS. GZA provides geotechnical engineering for the design and construction
of shafts, tunnels and underground chambers in soil and rock for mass transit
programs, utilities, water supply systems, highways and other uses. Services
range from geological investigations and mapping to recommendations for
structural design and construction to installation and monitoring of
instrumentation.
TRENCHLESS CONSTRUCTION. GZA helps owners, engineers and contractors make
decisions regarding the use of trenchless construction for utility development
and other projects. Services include equipment applicability evaluations,
subsidence evaluations and groundwater control, and involve use of pipe
jacking, microtunneling and directional drilling.
SERVICES TO CONTRACTORS. GZA assists construction companies with specialized
technical services that deal with design, safety, environmental and quality
control issues. Examples of these services include:
* Pile Driving Studies/Testing
* Earthwork Control
* Cofferdam/Underpinning Design
* Dewatering System Design
* Vibration/Noise Monitoring
* Health and Safety Plans
* Environmental Monitoring and Reporting
SUPPORT SERVICES
To support its services to clients, GZA maintains a geotechnical instrumentation
group, an environmental laboratory, a geotechnical laboratory and a drilling
operation. Management believes that internal availability of these support
services enables the Company to control quality and to provide faster results
than could generally be obtained from independent commercial providers of such
services.
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GEOTECHNICAL INSTRUMENTATION. GZA's Soil and Rock Instrumentation Division
("SRI") supports the Company's geotechnical and environmental projects, and also
provides specialty geotechnical instrumentation and engineering services to the
heavy construction industry and other clients. SRI maintains an instrumentation
laboratory and a fabrication shop. On geotechnical projects, SRI designs,
installs and monitors instruments to observe excavation support systems,
tunnels, and deep foundations during construction. On environmental projects,
SRI performs automated pump tests to determine the characteristics of aquifers.
SRI also develops custom software to be used in automatic data acquisition
systems for dams and construction projects where rapid collection and analysis
of data are required.
LABORATORIES. GZA's Environmental Chemistry Laboratory analyzes soil, water, air
and waste samples in connection with GZA's environmental investigations. GZA's
Mobile Laboratory and Vibratory Drill Rig provide field sampling and small
diameter well installation as well as on-site, real time chemical analysis.
GZA's Geotechnical Laboratory performs analyses to determine the permeability,
strength, compressibility and other engineering properties of rock cores and
soil samples. The Geotechnical Laboratory also has the equipment necessary to
determine geomembrane seam strength as well as frictional components between
geomembranes and soils or other geosynthetics.
DRILLING. GZA performs drilling, sampling and installation of monitoring and
recovery wells primarily for clients who have engaged GZA to provide other
services as well. Drilling to obtain samples usually forms part of the
subsurface investigation phase of both environmental and geotechnical projects.
The drilling operation also provides dewatering and pump testing support
services.
JOINT VENTURES
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AQUATERRA (U.K.)
In 1991 the Company entered into a joint venture with Carl Bro Group (U.K.)
Limited to form Aquaterra Environmental Consultants Limited, a limited liability
company whose stock is owned equally by the Company and Carl Bro. Located in
Leeds, Great Britain, Aquaterra provides services related to contaminated land
and groundwater and to environmental concerns of operating facilities.
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GEOAMBIENTE (MEXICO)
In July 1994, the Company and Grupo Sacmag, S de RL de CV (Sacmag), one of the
five largest engineering firms in Mexico, established a new Mexican company
called GeoAmbiente, SA de CV to perform environmental consulting, engineering
and construction services for public and private sector clients throughout
Mexico. Geoambiente's stock is owned 50 percent by the Company and 50 percent by
Sacmag and its affiliates. In August 1995, the shareholders of GeoAmbiente
agreed to suspend operations as of October 1, 1995, and that GeoAmbiente would
be inactive until at least September 30, 1996. The company still exists as an
entity but there is no current plan for future reactivation.
CUSTOMERS
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The Company's client base includes industrial companies, owners and operators of
solid waste landfills, real estate developers, architects and engineers,
construction firms, parties to property transfers and financings (lenders, law
firms, corporations and developers) and public agencies. The Company derives
most of its revenues from the private sector, which accounted for approximately
82% of net revenues during the past year.
In fiscal 1996, the Company was actively engaged in approximately 4,000
assignments for approximately 1,800 clients. These assignments ranged from brief
projects (of one month or less) such as environmental site assessments and
geotechnical foundation evaluations to long-term projects such as multi-year
hazardous waste cleanups and geotechnical infrastructure projects. Most
assignments of the Company were short-term (less than six months in duration),
and management estimates that 42% of net revenues in fiscal 1996 were derived
from projects for which net revenues were $50,000 or less. In fiscal year 1996,
no one customer accounted for more than 10% of the Company's net revenues.
BACKLOG
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As of April 30, 1996, the Company had a backlog of orders it believed to be firm
of approximately $41 million. This amount includes estimated amounts under
orders on a time and materials, unit price or other basis without a fixed price,
and represents gross revenues, including cost of services and materials
subcontracted to third parties. Management anticipates that approximately $34
million of the total backlog will be completed in the current fiscal year. As of
April 30, 1995, the Company had a backlog of orders it believed to be firm of
approximately $48 million. The $7 million difference in backlog from April 1995
to April 1996 is attributable principally to a reduction in third party
subcontracting services required to complete Company projects. Because work
under the Company's orders generally can be terminated by the client at any
time, there is no assurance that all amounts included in backlog will
ultimately be realized, even if covered by written contracts.
COMPETITION
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The markets for environmental and geotechnical services have become increasingly
competitive. At each district office and for each service offered, the Company
competes with many different firms, ranging from small local firms to large
regional and national firms having substantially greater financial and marketing
resources than the Company. Competition in both the environmental and
geotechnical services markets is based primarily on quality, diversity of
services, geographic location, price and reputation. In some geographic
markets, GZA provides environmental engineering and consulting, geotechnical
engineering design and contractor support services. Some state and local
statutes and regulations may inhibit the Company's ability to compete for
construction work in areas at or near sites where the Company has formerly
provided engineering or design services. Management believes the Company is one
of the few firms based in the New England region that offer a combination of
environmental consulting, remediation services, and geotechnical engineering.
Management believes that its ability to provide this range of services enhances
the Company's competitive position in the New England market.
IMPACT OF ENVIRONMENTAL REGULATION
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The business of the Company and its clients is subject to a wide range of
overlapping federal, state and local laws and regulations concerned with
protection of the environment. These laws and regulations have helped to create
a demand for many of the services offered by the Company. Changes in
environmental laws and regulations, in the regulatory climate generally, and in
the resources available to and priorities of the federal, state and local
agencies responsible for enforcement of environmental laws and regulations could
materially affect demand for the Company's services.
Recent federal actions significantly reducing the budget of the U.S.
Environmental Protection Agency (EPA) and ongoing legislative proposals to
narrow the scope of the federal Superfund and Clean Water Acts and delays in EPA
rule making could result in reduced demand for the Company's services.
Conversely, regulatory reform initiatives designed to shift responsibility for
environmental compliance and enforcement from government agencies to private
parties could create new opportunities for the Company. Such privatization
initiatives have been taken in Massachusetts and Connecticut where, under a
state analogue to the federal Superfund Act, supervision of the clean-up of
contaminated sites has for the most part been delegated by state regulatory
officials to "Licensed Site Professionals" or "Licensed Environmental
Professionals" employed by private entities. The Company employs a number of
individuals qualified and licensed in these and other states in which the
Company provides services. Regulatory reform initiatives may also reduce the
cost of environmental cleanups and therefore activate private remediation
projects that have been pending. Whether such initiatives will lead to increased
need for the Company's services is not yet known, and there can be no assurance
that changes in the regulatory climate and in environmental statutes and
regulations will not result in reduced demand for such services.
The principal statutes affecting the Company's business and the markets it
serves include the following:
RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 ("RCRA"). RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984, establishes a comprehensive
regulatory scheme for the handling, transportation, treatment, storage and
disposal of hazardous waste. Although "cradle-to-grave" responsibility for
hazardous wastes rests with generators of the material, every facility that
treats, stores or disposes of specified minimum amounts of hazardous waste must
comply with specific operating, design, financial responsibility and closure
requirements. These requirements have contributed to demand for the Company's
consulting services, permitting assistance, remedial design and implementation
and waste management services.
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980
("CERCLA" OR "SUPERFUND"). CERCLA, as amended by the Superfund Amendments and
Re-authorization Act of 1986 ("SARA"), addresses problems created by past
handling and disposal of hazardous substances. It requires the EPA to identify
contaminated sites and to compel a wide array of "responsible parties" to pay
for necessary cleanup activities. CERCLA also authorizes multiple damages and
penalties for non-compliance with EPA orders and provides funds (hence the name
"Superfund") for the EPA to perform cleanup activities in appropriate
circumstances. The Company's related services include site investigations,
feasibility studies, development and implementation of alternative remediation
plans, oversight of contractors and support and expert testimony for related
litigation.
FEDERAL WATER POLLUTION CONTROL ACT OF 1972 (THE "CLEAN WATER ACT"). The Clean
Water Act establishes a system of standards, permits and enforcement procedures
for the discharge to water of pollutants from industrial and municipal sources.
The law sets treatment standards for industries and wastewater treatment plants.
The law also regulates and requires permits for development and construction
activities involving wetlands and navigable waters. The Company provides a range
of services in connection with this regulatory scheme, including regulatory
permitting assessments, conceptual design planning, assistance with
environmental impact studies, reports and applications for environmental
permits and construction services.
CLEAN AIR ACT AMENDMENTS OF 1990 (THE "CLEAN AIR ACT"). The Clean Air Act
consists of major initiatives to attain and maintain National Ambient Air
Quality Standards, to ensure that all new sources of potential atmospheric
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emissions are equipped with appropriate pollution control technology and to
ensure that emissions of hazardous air pollutants are controlled to the maximum
extent possible. The law established a comprehensive new operating permit
program known as the Title V program. The Company provides a range of air
quality services including emission inventories and preparation of permit
applications.
OTHER REGULATIONS. In addition to federal environmental regulations, many states
and local authorities have enacted laws regulating activities affecting the
environment, some of which impose differing, and sometimes stricter, standards
than their federal counterparts.
POTENTIAL LIABILITY, RISK MANAGEMENT AND INSURANCE
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The Company's professional environmental consulting, remediation design and
geotechnical engineering services, as well as its remedial construction,
drilling and test boring operations, involve risks of significant liability for
environmental and property damage, personal injury, economic loss, and costs,
fines and penalties assessed by regulatory agencies. Liability for environmental
contamination and for the provision of environmental services is a rapidly
developing area of the law, and it is difficult to assess accurately the areas
and magnitude of potential risks to the Company.
Some statutes and judicial decisions impose strict liability on a party who
causes or contributes to the release of contaminants into the environment, even
if the party acted without negligence or fault. Under certain circumstances, a
government or private party might allege that the Company's own analytical,
consulting or remedial activities subject the Company to liability under various
statutes or regulations. Services by the Company's environmental consultants as
Licensed Site and Licensed Environmental Professionals may expose the Company to
additional liability. In addition to its potential liability under statutes and
common law, the Company sometimes agrees to indemnify clients for losses and
expenses they may incur as a result of the Company's services, some of which may
not be covered by the Company's insurance.
The Company maintains comprehensive programs for risk management, health and
safety training and medical monitoring of its field employees, quality assurance
and quality control and loss prevention. The Company seeks to include in its
contracts with clients provisions that limit GZA's liability to the client and
that require the client to indemnify GZA for costs and liabilities not caused by
the Company's negligence or misconduct. However, not all contracts include these
provisions and there is no assurance that such provisions can be enforced or
that the client will have adequate financial resources to stand behind its
indemnity.
The Company has a broad-range insurance program with large commercial insurers
designed to limit exposure arising out of its activities. It maintains
comprehensive general, automobile and excess liability coverage with aggregate
limits of $10 million written on an occurrence basis. It also maintains an
environmental professional liability policy which covers professional
liability, contractor's environmental liability and completed operations, with
an aggregate limit of $3 million in excess of a self-insured retention of
$500,000, written on a claims-made basis for occurrences since 1986. The law
concerning the extent of coverage available under the Company's liability
insurance policies in the context of environmental claims is unsettled and is
likely to remain so in the foreseeable future. All of the Company's policies
permit termination by the insurer without cause. There is no assurance that the
Company will be able to maintain or replace its insurance policies, that
premiums will remain at levels which economically permit the maintenance of such
coverage, that all claims that may be asserted against the Company will be
covered by insurance or that such claims will not exceed the coverage limits.
EMPLOYEES
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On April 30, 1996 the Company had 467 employees, including 384 technical
personnel. The Company's technical staff consists of civil and environmental
engineers, geologists, drillers and a number of specialists in such fields as
hydrology, chemistry, toxicology, biology and industrial hygiene. Management
believes that the future success of the Company depends in large part on its
ability to continue to attract and retain qualified professional staff. The
market for such professionals is competitive.
ITEM 2. PROPERTIES
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The Company's corporate and administrative headquarters, and one of its district
offices, are located in Newton Upper Falls, Massachusetts, where the Company
occupies two buildings. One of the buildings is approximately 42,000 square feet
and has a lease which extends through February 2001. During fiscal 1996, the
Company paid approximately $714,000 in base rent for this facility. The other
location in Newton Upper Falls was for 14,000 square feet. In fiscal 1996, the
Company paid approximately $195,000 in base rent for this facility.
The Company leases 22 other principal facilities located in Phoenix, Arizona;
Vernon, Connecticut; Gainesville, Florida; Duluth, Georgia; Portland, Maine;
Brockton, Massachusetts; Needham, Massachusetts; Springfield, Massachusetts;
Worcester, Massachusetts; Livonia, Michigan; Grand Rapids, Michigan; Manchester,
New Hampshire; Lyndhurst, New Jersey; Buffalo, New York; Rochester, New York;
Charlotte, North Carolina; Providence, Rhode Island; Dallas, Texas; Rutland,
Vermont; South Burlington, Vermont; and Pewaukee, Wisconsin. These other
facilities have a combined square footage of approximately 112,000 square feet.
Aggregate base rent for all facilities leased by the Company (other than its
facilities in Newton Upper Falls) during fiscal 1996 totalled approximately
$1,223,000. The lease terms expire at various times through December 1999.
The Company believes that its existing facilities are adequate to meet current
requirements and that suitable additional or substitute space will be available
on reasonable terms as needed to accommodate any expansion of operations and for
additional offices as required.
In addition to its leasehold interests in real property, the Company also owns
computer equipment, vehicles, drilling rigs, laboratory equipment and
instrumentation, remediation treatment equipment and other machinery, equipment
and furniture.
ITEM 3. LEGAL PROCEEDINGS
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The Company is party to several legal proceedings arising in the normal course
of business. Management believes that the outcome of these actions will not,
individually or in the aggregate, have a material adverse effect on the results
of operations or financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not Applicable
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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The information appearing under the caption "Supplemental Information" of the
Annual Report to Stockholders of the Company for the fiscal year ended February
29, 1996 (the "1996 Annual Report") Exhibit 13.1 of Form 10-K is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
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The information appearing under the Caption "Summary Financial Information" of
the 1996 Annual Report Exhibit 13.1 of Form 10-K is incorporated herein by
reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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The information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the 1996 Annual
Report Exhibit 13.1 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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The information appearing under the captions "Consolidated Balance Sheets,"
"Consolidated Statements of Operations," "Consolidated Statements of
Stockholders' Equity," "Consolidated Statements of Cash Flows," and "Notes to
Consolidated Financial Statements" Exhibit 13.1 is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
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FINANCIAL DISCLOSURE
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None.
PART III
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ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
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EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
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MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The information called for by Items 10, 11, 12 and 13 is incorporated by
reference to the definitive proxy statement relating to the Annual Meeting of
Stockholders of the Company to be held on July 9, 1996 (the "1996 Proxy
Statement"), as filed or to be filed with the Commission no later than 120 days
after the end of the fiscal year covered by this report.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1)
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AND (2)
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The following consolidated financial statements of GZA GeoEnvironmental
Technologies, Inc. and its Subsidiaries and Affiliate included in the 1996
Annual Report are incorporated by reference in Item 8:
Report of Independent Accountants
Consolidated Balance Sheets at February 29, 1996 and February 28, 1995
Consolidated Statements of Operations for the fiscal years ended February
29, 1996 and February 28, 1995 and 1994
Consolidated Statements of Changes in Stockholders' Equity for the fiscal
years ended February 29, 1996 and February 28, 1995 and 1994
Consolidated Statements of Cash Flows for the fiscal years ended February
29, 1996 and February 28, 1995 and 1994
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Notes to Consolidated Financial Statements for the fiscal years ended
February 29, 1996 and February 28, 1995 and 1994
The following consolidated financial statement schedules of GZA GeoEnvironmental
Technologies, Inc. and its Subsidiaries and Affiliate are included as exhibits
to this report:
Schedule II Valuation and Qualifying Accounts
(a) (3) Exhibit List. The documents listed below are filed as exhibits with this
report or are incorporated by reference to documents previously filed with the
Commission as exhibits. The Company's file number under the Act is 0-13965.
3.1 Restated Certificate of Incorporation of the Company (1)
3.3 Amended and Restated By-Laws of the Company (2)
4 Specimen certificate for the Common Stock of the Company (1)
10.2 Indenture of Lease dated September 5, 1984 and effective as of
December 1, 1981, and First Amendment to Indenture of Lease,
between GZA and Donald T. Goldberg and William S. Zoino, for the
GEO Building, Newton Upper Falls, Massachusetts (1)
10.6 1989 Incentive Stock Option Plan of the Company (1)
10.7 1989 Non-Qualified Stock Option Plan of the Company (1)
10.21 Support Services Agreement among the Company, Goldberg-Zoino
Associates of New York, P.C. ("GZANY") and GZA, dated July 26,
1989 (1)
10.22 Stockholders' Agreement among GZANY, Richard M. Simon and Joseph
D. Guertin, Jr. dated May 1, 1996, together with related Powers
of Attorney
10.23 Voting Trust Agreement among the Company, GZANY, Messrs. Simon
and Guertin, and Richard M. Simon, as Trustee, dated May 1, 1996
10.24 Indemnification Agreement among the Company, GZA
GeoEnvironmental, Inc. and Messrs. Simon and Guertin dated May 1,
1996
10.25 Security Agreement between GZANY and the Company dated July 26,
1989 (1)
10.26 Credit Agreement among the Company, GZANY and GZA dated July 26,
1989 (1)
10.30 Revolving Credit and Term Loan Agreement among Fleet Bank
and the Company and its subsidiaries and affiliate dated
February 28, 1994 (2)
10.34 Amendment No. 1 to 1989 Incentive Stock Option Plan of the
Company (2)
10.35 GZA 1995 Stock Incentive Plan (2)
13
<PAGE> 14
10.36 Lease Agreement dated January 1, 1992 between GZNH Associates
and GZA GeoEnvironmental, Inc. for the Manchester, New Hampshire
district office (2)
10.37 Lease Agreement dated January 1, 1992 between GZRI Associates
and GZA GeoEnvironmental, Inc. for the Providence, Rhode Island
district office (2)
10.38 Lease Agreement dated March 1, 1992 between GZAIAT Associates
and GZA Drilling, Inc. for the Brockton, Massachusetts facilities
of GZA Drilling, Inc., and memorandum of agreement dated December
29, 1994 among GZA Drilling, Inc., John E. Ayres, Donald T.
Goldberg, Joseph D. Guertin and Steven J. Trettel (2)
10.39 Second Amendment dated December 11, 1991 to Indenture of Lease
listed as Exhibit 10.2 hereto (2)
10.40 Form of Confidentiality, Non-Disclosure and Restrictive Covenant
Agreement between the Company and, respectively, Donald T.
Goldberg, Leonard M. Seale, M. Joseph Celi, Richard M. Simon,
John E. Ayres, Michael A. Powers, Lawrence Feldman, Joseph P.
Hehir, Joseph D. Guertin, Jr., and certain other employees (2)
10.41 Non-Competition and Non-Disclosure Agreement between the Company
and Irvine G. Reinig II, and amendment thereto (2)
10.42 Form of Group Life Insurance Plan for key employees, and letter
describing coverage levels (2)
10.43 Form of Indemnity Agreement between the Company and its
respective directors (2)
10.49 Form of Purchase and Sale Agreement between GZA
GeoEnvironmental, Inc. and, respectively, John E. Ayres, Joseph
D. Guertin, Jr., and Steven J. Trettel, dated February 1996, to
buy and receive each sellers' one-sixth (1/6) interest as a
beneficiary of GZA Investment Associates Trust
10.50 Summary of memorandum dated September 12, 1995 outlining
Donald T. Goldberg's arrangement with the Company following
his retirement as CEO and as a full-time employee
13.1 Annual Report to Stockholders of the Company for the fiscal year
ended February 29, 1996
22.1 Subsidiaries of the Registrant
23.2 Consent of Independent Accountants
(1) Incorporated by reference to the similarly numbered exhibits
included in the Company's Form S-1 Registration Statement, File
No. 33-29369, filed with the Commission on June 16, 1989.
(2) Incorporated by reference to the similarly numbered exhibits
included in the Company's Annual Report on Form 10-K, for the
fiscal year ended February 28, 1995, filed with the Commission on
June 12, 1995.
(b) Reports on Form 8-K
-------------------
None.
14
<PAGE> 15
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------ -----------
10.22 Stockholder's Agreement among GZANY, Richard M. Simon
and Joseph D. Guertin, Jr. dated May 1, 1996, together with
related Powers of Attorney
10.23 Voting Trust Agreement among the Company, GZANY,
Messrs. Simon and Guertin, and Richard M. Simon, as Trustee,
dated May 1, 1996
10.24 Indemnification Agreement among the Company, GZA
GeoEnvironmental, Inc. and Messrs. Simon and Guertin dated
May 1, 1996
10.49 Form of Purchase and Sale Agreement between GZA
GeoEnvironmental, Inc. and, respectively, John E. Ayres,
Joseph D. Guertin, Jr., and Steven J. Trettel, to buy and receive
each sellers' one-sixth (1/6) interest as a beneficiary of GZA
Investment Associates Trust
10.50 Summary of Memorandum dated September 12, 1995 outlining
Donald T. Goldberg's arrangement with the Company following
his retirement as CEO and as a full-time employee
13.1 Annual Report to Stockholders of the Company for the
fiscal year ended February 29, 1996
22.1 Subsidiaries of the Registrant
23.2 Consent of Independent Accountants
15
<PAGE> 16
SCHEDULE II
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
Years Ended February 28, 1994,
February 28, 1995, and February 29, 1996
<CAPTION>
Balance at Charged to
beginning costs and Balance at
Description of year expenses Write-offs end of year
----------- ------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended February 28, 1994
Allowance for doubtful accounts
(deducted from accounts
receivable).................... $544,000 $278,000 $362,000 $460,000
Year ended February 28, 1995
Allowance for doubtful accounts
(deducted from accounts
receivable)..................... $460,000 $392,000 $168,000 $684,000
Year ended February 29, 1996
Allowance for doubtful accounts
(deducted from accounts
receivable)...................... $684,000 $240,000 $150,000 $774,000
</TABLE>
16
<PAGE> 17
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 in its
behalf by the undersigned, thereunto duly authorized.
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
Date: May 24, 1996 /s/
--------------------------
Leonard M. Seale
Chief Executive Officer
Date: May 24, 1996 /s/
--------------------------
Joseph P. Hehir
Chief Financial Officer
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/
- --------------------- Principal Executive May 24, 1996
Leonard M. Seale Officer and Director
/s/
- --------------------- Director May 24, 1996
Donald T. Goldberg
/s/
- --------------------- Director May 24, 1996
M. Joseph Celi
/s/
- --------------------- Director May 24, 1996
Lawrence Feldman
- --------------------- Director
Michael A. Powers
- --------------------- Director
Irvine G. Reinig, II
17
<PAGE> 18
/s/
- --------------------- Director May 24, 1996
Paul F. Gorman
- --------------------- Director
Dr. Lewis Mandell
/s/
- --------------------- Director May 24, 1996
Dr. Thomas W. Philbin
- --------------------- Director
Timothy W. Devitt
18
<PAGE> 1
Exhibit 10.22
STOCKHOLDERS' AGREEMENT
-----------------------
This Agreement, made this 1st day of May, 1996, by and among Richard M.
Simon of Newton, Massachusetts and Joseph D. Guertin, Jr., of Acton,
Massachusetts, (collectively, the "Stockholders" and each a "Stockholder"), and
Goldberg-Zoino Associates of New York, P.C. a professional services corporation
(the "Company").
W I T N E S S E T H
-------------------
WHEREAS, the Stockholders are the holders of record of all the issued and
outstanding capital stock of the Company;
WHEREAS, each Stockholder is a principal stockholder of GZA
GeoEnvironmental Technologies, Inc., a Delaware corporation ("GZA
Technologies");
WHEREAS, GZA GeoEnvironmental, Inc., a Massachusetts corporation ("GZA"),
is a wholly owned operating subsidiary of GZA Technologies and the Stockholders
are employees of GZA;
WHEREAS, each of the Company and GZA will derive a substantial portion of
its revenues from its business dealings with the other, and is dependent on the
other for referrals and for other assistance and services and the Stockholders
and the Company desire to strengthen and enhance their beneficial strategic
relationship with GZA and GZA Technologies; and
WHEREAS, the Stockholders desire to provide for continuity and stability in
the stock ownership and management of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter appearing, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. RESTRICTION ON TRANSFER OF SHARES. Except as otherwise expressly
permitted by this Agreement, no Stockholder shall sell, assign, convey, donate,
encumber, pledge, hypothecate or otherwise dispose of, whether or not for value,
by operation of law or otherwise (collectively, "transfer"), any share of
capital stock of the Company now owned or hereafter acquired by him (each a
"Share" and collectively, the "Shares"), or any interest in any Shares, to any
person or entity whatsoever.
2. PERMITTED TRANSFERS.
-------------------
2.1 PERMITTED TRANSFEREES. Anything in the foregoing Section 1 to the
contrary notwithstanding, a Stockholder may transfer all or any part of his
Shares either to the Company, or to an individual (a "Permitted Transferee") who
(a) is authorized under the laws of the State of New York to practice
professional engineering within such State, (b) is then a full-time employee of
or paid consultant to, and an executive or statutory officer (hereinafter
referred to as an "Officer") of, either GZA or of GZA Technologies, and (c)
agrees in writing to be bound by the provisions of (i) this Agreement, (ii) that
certain Voting Trust Agreement of even date herewith among the Company, GZA
Technologies, the Stockholders and Richard M. Simon, as Trustee, as now in
effect or from time to time amended (the "Voting Trust Agreement").
2.2 APPROVAL BY STOCKHOLDERS. No transfer by a Stockholder to a Permitted
Transferee, or to the Company, of any Shares (other than pursuant to Section 3
below), shall take place except with the approval of all of the Stockholders of
the Company (excluding, for such purpose, the Stockholder transferring the
Shares in question).
2.3 PURCHASE PRICE. No transfer by any Stockholder of any Shares, or
repurchase by the Company of any Shares, shall be effected at a purchase price,
whether paid in the form of cash, other securities or other property, having a
value in excess of the Redemption Price, as defined below.
2.4 PROHIBITED TRANSFERS VOID. Any purported transfer of Shares by a
Stockholder not in conformity with this Section 2 shall be null and void and of
no effect, and the Company shall not effect or register any such purported
transfer on the stock transfer records of the Company.
3. MANDATORY REDEMPTION BY THE COMPANY.
-----------------------------------
19
<PAGE> 2
3.1 REDEMPTION EVENTS. Upon occurrence in respect of any Stockholder
of any of the following events (each a "Redemption Event"), such Stockholder
shall sell to the Company, and the Company shall repurchase and redeem from
such Stockholder, all of the Shares then owned by him, at a price in cash equal
to the price per share actually paid by the Stockholder for each such Share at
the time of its original issuance to him (the "Redemption Price"):
(a) The Stockholder shall cease to be employed by the Company for any
reason whatsoever, including, without limitation, by reason of
resignation, death or disability;
(b) The Stockholder, if an individual, shall become legally disqualified
to practice professional engineering within the State of New York;
(c) The Stockholder, if an individual, shall cease for any reason
whatsoever, including, without limitation, by reason of resignation,
death, disability or removal from office, to be both (i) a full-time
employee of or paid consultant to GZA or GZA Technologies and (ii) an
officer of GZA;
(d) The Stockholder shall be permanently disabled (whether or not such
disability results in termination of his employment by either the
Company or GZA, for purposes of this subsection, a Stockholder shall
be deemed to be permanently disabled if, by reason of a medical
condition or disease, he shall be unable, for any period of six
consecutive months, to perform on a full-time basis his material
responsibilities as an officer, director and employee of the Company
and an employee and Officer of GZA.
(e) The Stockholder shall file or commence, or there shall be filed or
commenced against the Stockholder, a petition or proceeding under any
federal or state bankruptcy or insolvency law or other law providing
for the relief of debtors;
(f) A final judgment shall be rendered against the Stockholder in any
amount in excess of $100,000, which judgment, if not stayed or
vacated, has not been discharged in full within 30 days of the
expiration of any time for appeal;
(g) The Shares of any Stockholder shall be subjected to an attachment
issued by any court of competent jurisdiction; or
(h) The Stockholder shall fail fully to comply with or perform any of his
obligations under this Agreement.
3.2 CLOSING; PAYMENT OF REDEMPTION PRICE. The consummation of the
redemption of the Shares and payment of the Redemption Price (the "Closing")
shall take place on the tenth (10th) business day following the occurrence of
the Redemption Event giving rise to such redemption, at the principal office of
the Company, or at such other place and time as shall be agreed upon by the
Stockholder and the Company. At the Closing, the Stockholder shall deliver to
the Company a certificate or certificates representing all of his Shares, duly
endorsed for transfer or accompanied by duly executed stock powers, and the
Company shall deliver to the Stockholder the Redemption Price, in cash or by
check.
3.3 RIGHTS AS STOCKHOLDER FOLLOWING REDEMPTION EVENT. Upon the occurrence
of any Redemption Event in respect of any Stockholder, the sole right of such
Stockholder in respect of his Shares shall be to receive the Redemption Price
therefor, and following such Redemption Event such Stockholder shall not be
entitled to vote or receive any dividend or distribution in respect of his
Shares or otherwise to exercise any right of a Stockholder of the Company.
3.4 INDEMNIFICATION AGREEMENT. Notwithstanding the occurrence of any
Redemption Event in respect of any Stockholder, that certain Indemnification
Agreement dated May 1, 1996 among the Stockholders and GZA Technologies shall
continue in full force and effect in accordance with its terms and each
Stockholder, including the Stockholder affected by such Redemption Event, shall
be entitled to the benefit of the provisions thereof, notwithstanding his having
ceased for any reason to be a stockholder, officer, or employee of GZA or of GZA
Technologies, as the case may be.
4. CUSTODY OF CERTIFICATES; LEGEND
-------------------------------
4.1 LEGEND. Certificates representing any Shares shall have endorsed
thereon a legend in substantially the following form:
The securities represented by this certificate are subject to
restrictions on transfer, to redemption rights of the Corporation, and
to other provisions set forth in a Stockholders' Agreement and a
Voting Trust Agreement between the original holder of this
certificate, the Corporation, and certain others, copies of which will
be furnished to the holder hereof without charge upon written request.
20
<PAGE> 3
4.2 DELIVERY OF CERTIFICATES TO TRUSTEE. Promptly following the execution
of this Agreement, each Stockholder shall deliver to the Trustee named in the
said Voting Trust Agreement the certificate or certificates representing all of
his Shares, accompanied by a stock power or powers, duly executed in blank,
relating thereto.
5. ISSUANCE OF CAPITAL STOCK BY THE COMPANY. The Company shall not issue any
shares of its capital stock, or transfer any shares of its capital stock held in
its treasury, except to an individual who at the time of such issuance would
qualify as a Permitted Transferee as defined in Section 2.1 above.
6. TERM. This Agreement shall continue in force indefinitely, unless terminated
by written agreement of the Company and all of the Stockholders and with the
written consent of the Board of Directors of GZA Technologies.
7. SEVERABILITY. If any provision of this Agreement shall be determined to be
invalid, illegal or otherwise unenforceable by any court of competent
jurisdiction, the validity, legality and enforceability of the other provisions
of this Agreement shall not be affected thereby. Any invalid, illegal or
unenforceable provision of this Agreement shall be severable, and after any such
severance, all other provisions hereof shall remain in full force and effect.
8. ENTIRE AGREEMENT; AMENDMENT AND MODIFICATION. This Agreement constitutes the
entire and only agreement among the Company and the Stockholders respecting the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, among them concerning such subject matter. No modification,
amendment, waiver or termination of this Agreement or of any provision hereof
shall be binding unless made in writing, signed by an authorized officer of the
Company, by all of the Stockholders, and with the written consent of the Board
of Directors of GZA Technologies. To the extent that any of the provisions
hereof are or may be construed to be inconsistent with the provisions of the
Voting Trust Agreement, the provisions of the Voting Trust Agreement shall be
deemed paramount and controlling prior to the termination thereof or the
determination by a court of competent jurisdiction in a final judgment that the
Voting Trust Agreement is not enforceable. Failure of any party to insist upon
strict compliance with any of the terms, covenants or conditions hereof shall
not be deemed a waiver of such party's right to require future performance of
any such term, covenant or condition.
9. SPECIFIC PERFORMANCE. Each party acknowledges that money damages alone will
not adequately compensate the other parties to this Agreement for breach of the
covenants and agreements herein and, therefore, the parties agree that in the
event of the breach or threatened breach of any such covenant or agreement, in
addition to all other remedies available to the parties at law, in equity or
otherwise, any party, (including any party who, under applicable law, may be a
third party beneficiary of this Agreement, including, without limitation, GZA
Technologies), shall be entitled to injunctive relief compelling specific
performance of, or other compliance with, the terms hereof. The Company shall
not be required (i) to transfer on its books any Shares which shall have been
sold or transferred in violation of any provision of this Agreement or (ii) to
treat as the owner of such Shares, or to pay dividends to, any transferee to
whom any such Shares shall have been sold or transferred.
10. FURTHER ACTIONS. The parties agree to execute such further instruments and
to take such further actions as may reasonably be necessary to carry out the
intent of this Agreement.
11. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and be
binding upon, the legal representatives, successors and assigns of the Company
and the heirs, legal representatives, successors and assigns of each of the
Stockholders.
12. CHOICE OF LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the substantive laws of The Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
contract under seal as of the date first above written.
GOLDBERG-ZOINO ASSOCIATES OF NEW YORK, P.C.
By: /s/ Richard M. Simon
----------------------------------------
Richard M. Simon, President
STOCKHOLDERS
21
<PAGE> 4
/s/ Richard M. Simon
----------------------------------
Richard M. Simon
/s/ Joseph D. Guertin
----------------------------------
Joseph D. Guertin
STOCK POWER
FOR VALUE RECEIVED, I, Richard M. Simon, hereby sell, assign and
transfer unto Richard M. Simon as Trustee under that certain Voting Trust
Agreement dated as of May 1, 1996, all One Hundred (100) shares of the common
stock of GOLDBERG-ZOINO ASSOCIATES OF NEW YORK, P.C., a New York professional
services corporation, standing in my name on the books of said Corporation
represented by Certificate No. 6, and do hereby irrevocably constitute and
appoint said Corporation's attorney to transfer the said stock on the books of
said Corporation with full power of substitution in the premises.
Dated as of May 1, 1996 /s/ Richard M. Simon
----------------------------
Richard M. Simon
In presence of
- -----------------------------------
STOCK POWER
FOR VALUE RECEIVED, I, Joseph D. Guertin, Jr., hereby sell, assign and
transfer unto Richard M. Simon as Trustee under that certain Voting Trust
Agreement dated as of May 1, 1996, all One Hundred (100) shares of the common
stock of GOLDBERG-ZOINO ASSOCIATES OF NEW YORK, P.C., a New York professional
services corporation, standing in my name on the books of said Corporation
represented by Certificate No. 7, and do hereby irrevocably constitute and
appoint said Corporation's attorney to transfer the said stock on the books of
said Corporation with full power of substitution in the premises.
Dated as of May 1, 1996 /s/ Joseph D. Guertin, Jr.
-----------------------------
Joseph D. Guertin, Jr.
In presence of
- -----------------------------------
22
<PAGE> 1
Exhibit 10.23
VOTING TRUST AGREEMENT
----------------------
THIS AGREEMENT, made this last day of May, 1996, by and among Goldberg-Zoino
Associates of New York, P.C., a New York professional services corporation
(together with its successors, the "Company"), the stockholders of the Company
who have executed the signature page hereto (the "Beneficiaries"), Richard M.
Simon as Trustee, and his successors in trust (the "Trustees") and GZA
GeoEnvironmental Technologies, Inc., a Delaware corporation ("GZA
Technologies").
WHEREAS, the Beneficiaries are the holders of record of 100% of the issued
and outstanding capital stock of the Company being common stock, without par
value (the "Common Stock"), and
WHEREAS, the Beneficiaries deem it necessary, advisable and in their best
interests, in order to secure continuity, stability and centralization of policy
and management of the Company, to deposit all of their Common Stock with the
Trustee, and
WHEREAS, the Beneficiaries, the Company and GZA Technologies have agreed
upon the Trustee, and upon the form of this Agreement, and
WHEREAS, the Trustee is an individual duly licensed to practice
professional engineering in the State of New York, and
WHEREAS, the Trustee has consented to act under this Agreement for the
purposes herein provided,
NOW, THEREFORE, it is hereby agreed as follows:
1. FILING OF AGREEMENT. A copy of this Agreement, and of every amendment
hereto, shall be filed at the principal office of the Company in Buffalo, New
York and in the principal office of GZA Technologies in Newton Upper Falls,
Massachusetts (collectively, the "Principal Offices") and shall be open to the
inspection of any stockholder of the Company, or any beneficiary of the trust
under this Agreement, daily during business hours.
2. CONVEYANCE OF COMMON STOCK. Subject to the terms and conditions hereof,
each Beneficiary does hereby grant, assign, transfer, pledge and convey to the
Trustee such Beneficiary's entire right, title and interest in the shares of
Common Stock set forth next to his name on Schedule A to this Agreement. All
right, title and interest in the shares of Common Stock so granted, assigned,
transferred, pledged and conveyed to the Trustee and any shares of capital stock
of the Company hereafter acquired by the Beneficiaries, together with all
distributions, dividends, proceeds and rights with respect thereto, are herein
collectively referred to as the "Trust Estate".
3. DECLARATION OF TRUST. The Trustee declares that he will hold the Trust
Estate in trust upon and subject to the terms and conditions set forth herein
for the use and benefit of the Beneficiaries. To the extent that the provisions
hereof are or may be construed as inconsistent with the provisions of that
certain Stockholders' Agreement of even date among the Company and its
stockholders (the "Stockholders' Agreement"), the provisions hereof shall be
deemed paramount and controlling prior to the termination hereof or the
determination by a court of competent jurisdiction in a final judgment that this
Agreement is not enforceable.
4. DEPOSIT OF STOCK CERTIFICATES. The Beneficiaries shall initially deposit
with the Trustee certificates for such number of shares of Common Stock as is
set forth next to the Beneficiaries name on Schedule A to this Agreement and,
additionally, shall so deposit any shares of Common Stock received by a
Beneficiary after the date of this Agreement. All such stock certificates shall
be endorsed or accompanied by such instruments of transfer as to enable the
Trustee to cause such certificates to be transferred into the name of the
Trustee. Such certificates shall be surrendered by the Trustee to the Company
and cancelled, and new certificates therefor shall be issued to and held by the
Trustee in the name of the Trustee as voting trustee. Such new certificates
shall state that they are issued pursuant to this Agreement, and that fact shall
also be stated in the transfer books of the Company.
5. LEGAL TITLE TO TRUST ESTATE. No person except the Trustee shall have
legal title to any part of the Trust Estate. No transfer or purported transfer,
by operation of law or otherwise, of any right, title or interest of a
Beneficiary in and to the Trust Estate shall operate to terminate this Agreement
or the Trust created hereby or effect any dissolution or entitle any successor
or transferee of any Beneficiary to an accounting or to any other right with
respect to the Trust Estate.
6. DELIVERY UPON TERMINATION OF AGREEMENT. Promptly following the
termination of this Agreement, the Trustee shall deliver to the Beneficiaries
certificates for the number of shares of Common Stock properly distributable to
them (together with any moneys
23
<PAGE> 2
and property received by the Trustee and properly distributable to such persons
in respect thereof). Such delivery shall be made only after payment by the
persons entitled to receive such stock certificates of a sum sufficient to cover
any stamp tax or governmental charge in respect of the transfer of such stock
certificates. Upon such delivery, such persons shall have no further rights
under this Agreement.
At any time subsequent to 30 days after the termination of this Agreement,
the Trustee may deposit with the Company stock certificates representing the
number of shares of Common Stock then held by him in trust hereunder (together
with any moneys and property received by the Trustee and properly distributable
thereon), with authority in writing to the Company to deliver the same in like
manner and upon the same terms and conditions provided in the preceding
paragraph; and upon such deposit all further liability of the Trustee for
delivery of such stock certificates (and such moneys and property, if any) shall
cease.
7. DIVIDENDS AND DISTRIBUTIONS. Any dividends or distributions in respect
of the Common Stock deposited with the Trustee, whether in cash, securities or
other property, shall be held by the Trustee subject to the terms of this
Agreement.
8. DISSOLUTION OR LIQUIDATION. In the event of the dissolution or total or
partial liquidation of the Company, whether voluntary or involuntary, the
Trustee shall receive the moneys, securities, rights or property to which the
holders of the Common Stock deposited hereunder are entitled and the Trustee
shall hold the same subject to the terms of this Agreement, unless or to the
extent otherwise directed by all of the parties hereto (including their
successors and assigns, as appropriate) by a writing signed by all such persons.
9. MERGER OR CONSOLIDATION. In case the Company is merged into or
consolidated with another corporation, or all or substantially all of the assets
of the Company are transferred to another corporation, then in connection with
such transfer the term "Company" for all purposes of this Agreement shall be
deemed to include such corporation, and the Trustee shall receive and hold under
this Agreement any stock of such corporation received on account of the
ownership, as Trustee hereunder, of the Common Stock held prior to such merger,
consolidation or transfer, and any moneys or other property so received shall be
held as provided herein. The term "Common Stock" shall be deemed to include any
stock which may be received by the Trustee pursuant to this Paragraph 9 in
respect of or in exchange for all or any part of the Common Stock held
hereunder.
10. VOTING OF STOCK. Until the termination of this Agreement pursuant to
Paragraph 16, the Trustee shall have the right to exercise in person or by his
nominees or proxies, all Stockholders' rights and powers in respect of all
Common Stock deposited hereunder, including the right to vote thereon and to
take part in or consent to any corporate or stockholders' action of any kind
whatsoever. Such right to vote shall include the right of the Trustee to vote
for the election of directors (including himself as a director), and in favor of
or against any resolution or proposed action of any character whatsoever which
may be presented at any meeting or for the consent of stockholders. Without
limiting such general right, it is understood that such resolution or action may
include the mortgaging or pledging of all or any part of the property of the
Company, the lease or sale of all or any part of the property of the Company for
cash, securities or other property, the amendment of the Company's charter or
by-laws, the dissolution of the Company or the consolidation, merger,
reorganization or recapitalization of the Company.
11. ACCEPTANCE OF TRUST ESTATE AND CERTAIN DUTIES. The Trustee accepts the
Trust created hereby and agrees to perform the same pursuant to the terms of
this Agreement, and the Trustee agrees to receive and disburse, or cause to be
received and disbursed, all moneys constituting part of the Trust Estate in
accordance with the terms hereof. The Trustee shall not be liable to any
Stockholder or any other person or party to this Agreement by reason of any act
done or omitted, any error of judgment, or any mistake of fact or law, unless
such act, omission, error or mistake is made intentionally and in bad faith, or
recklessly. Without limiting the generality of the foregoing, the Trustee shall
have no liability for any action taken by him that is required to be taken under
the Stockholders' Agreement of even date herewith among the parties hereto. GZA
Technologies hereby agrees jointly and severally to indemnify the Trustee
against any loss, liability or expense incurred by the Trustee which arises out
of or in connection with his service as Trustee hereunder, including the cost or
expense of defending any claim of liability therefor, which is not due to the
Trustee's intentional bad faith or recklessness. The Trustee may consult with
counsel of his own choice, at the expense of GZA Technologies, and shall have no
liability whatsoever for any action taken or omitted in good faith in accordance
with the advice of such counsel. Trustee shall be named as an Insured Person in
GZA Technologies; Directors' and Officers' or Executive Liability Insurance
Policies.
12. SEGREGATION OF FUNDS. Moneys received by the Trustee hereunder shall be
deposited in an interest-bearing account with a bank designated by the Board of
Directors of GZA Technologies under such general conditions as may be prescribed
by law and by the general banking department of such bank. Such account shall be
deemed a part of the Trust Estate to be held for the benefit of the
Beneficiaries. Disbursements therefrom, as authorized by the Trustee, may be
made from time to time by the Trustee to the Beneficiaries so as to reimburse
the Beneficiaries in the amount of any federal or state taxes then or
theretofore due to be paid by the Beneficiaries and assessed solely and directly
upon income or gain of the Beneficiaries derived from the Common Stock.
13. VALIDITY OF ACTIONS. Any sale or other conveyance of the Common Stock,
or vote or other approval of the Common Stock, by the Trustee made in accordance
with this Agreement shall be binding upon all persons and shall be effective for
the purpose so
24
<PAGE> 3
taken, including without limitation, the transfer and conveyance of all right,
title and interest of the Trustee and the Beneficiaries in and to the Common
Stock. No person shall be required to inquire as to the authorization,
necessity, expediency or regularity of any such action, including without
limitation, the sale or conveyance of the Common Stock or, in such instance, as
to the application of any sale or other proceeds with respect thereto by the
Trustee.
14. ADMISSION OF ADDITIONAL BENEFICIARIES AND TRANSFER OF A BENEFICIARY'S
INTEREST. Subject to the applicable provisions of the Stockholders' Agreement,
and conditions hereinafter set forth, (i) the Trustee may consent at any time
and from time to time to the admission of one or more additional Beneficiaries,
and (ii) the Trustee may consent to, and, provided the Trustee shall have so
consented, a Beneficiary may convey all or any portion of his right, title and
interest in and to this Agreement, the Trust Estate and the Trust created
hereby. The admission of an additional Beneficiary, or the transfer of the
right, title and interest of an existing Beneficiary as aforesaid, shall be
subject to the following further conditions: (i) such additional Beneficiary or
transferee shall be a "Permitted Transferee" as defined in the Stockholders'
Agreement (for purposes of this Agreement, a "Qualified Person"); (ii) such
additional Beneficiary or transferee shall have entered into an amendment or
amendments to the Stockholders' Agreement, and this Voting Trust Agreement,
whereby such additional Beneficiary or transferee becomes a party to each of
such agreements, agrees to be bound by terms of, and undertakes all of the
obligations of a Beneficiary or other party under, this Agreement and said other
agreements, such amendments in each case to be satisfactory to the parties
hereto.
15. RESIGNATION OR REMOVAL. The Trustee hereunder may at any time resign by
mailing or delivering to the Company, GZA Technologies and each of the
Beneficiaries a written resignation, to take effect on such date specified
therein. In the event of death, incompetence or resignation of the Trustee
hereunder or in the event the Trustee is no longer an officer of GZA
GeoEnvironmental, Inc., a Massachusetts Corporation (a wholly-owned subsidiary
of GZA Technologies), a successor Trustee, who shall be a Qualified Person,
shall be nominated by those Qualified Persons who are officers of GZA
GeoEnvironmental, Inc. or of GZA Technologies and elected by all of the
Beneficiaries (the "Holders").
The Holders, with the written approval of the Board of Directors of GZA
Technologies, may remove any Trustee hereunder by their due execution and
acknowledgment of a deed of removal, filed in the Principal Offices, a copy of
which shall be delivered to the Trustee. Such removal shall become effective
only upon delivery to the Trustee of such deed of removal, together with copies
of the instruments appointing a successor Trustee and acceptance by such
successor Trustee of such appointment (which instruments shall have been duly
executed and filed in the Principal Offices) or upon the Trustee's written
acceptance of such removal, whichever occurs first. In the event the Trustee
shall cease for any reason (other than his death, incompetence or resignation)
to be a Qualified Person, he shall forthwith be removed by the Holders, with the
written approval of the Board of Directors of GZA Technologies, and a successor
Trustee appointed as set forth in the preceding paragraph.
The rights, powers, and privileges of the Trustee named hereunder shall be
possessed by the successor Trustee with the same force and effect as though such
successor had originally been a party to this Agreement.
16. TERMINATION OF TRUST. This Agreement shall terminate and shall be of no
further force or effect upon the earlier of:
(i) the merger or transfer of all or substantially all of the assets
of the Company into GZA Technologies or any wholly owned subsidiary of GZA
Technologies; and
(ii) ten years after the date and year first above written whereupon
all moneys and other properties and proceeds constituting the Trust Estate
shall be distributed in accordance with the provision of Paragraph 6 hereof
unless this Agreement shall have been extended by the parties hereto for an
additional period in compliance with applicable laws;
otherwise this Agreement and the Trust created hereby shall continue in full
force and effect in accordance with the terms hereof.
17. COMPENSATION AND EXPENSES. The Trustee shall serve without
compensation. The Trustee shall have the right to incur and pay such reasonable
expenses and charges, and to employ and pay such attorneys, accountants and
other agents, as he may deem necessary or desirable for carrying out the terms
and provisions of this Agreement. The full amount of any such expenses or
charges incurred and paid by the Trustee shall be promptly reimbursed to the
Trustee, upon his request, by the Beneficiaries in proportion to their interests
in the Common Stock deposited hereunder. In lieu of seeking such reimbursement,
the Trustee may, at his sole option, deduct the full amount of any such expenses
or charges from the dividends or other moneys or property received by the
Trustee on the Common Stock deposited hereunder, in proportion to the interests
of the Beneficiaries therein. Notwithstanding anything to the contrary contained
herein, the Trustee may, prior to taking any action under this Agreement
(whether or not required by the terms hereof), request from the Beneficiaries
reasonable security against the expenses and charges which may be incurred
thereby, and prior to the receipt thereof, the Trustee shall be under no
obligation to take any such action. Nothing herein contained shall disqualify
the Trustee from serving the
25
<PAGE> 4
Company, GZA Technologies, its affiliates or any of its subsidiaries as an
officer or director or in any other capacity and from receiving compensation
therefor.
18. NOTICES. Unless otherwise specifically provided in this Agreement, any
notice to or communication with the Beneficiaries shall be deemed to be
sufficiently given or made if mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to such persons at their
respective addresses appearing on the books of the Trustee, or delivered in
person at such addresses. The addresses of the Beneficiaries, as shown on the
books of the Trustee, shall in all cases be deemed to their addresses for all
purposes under this Agreement. Every notice so given shall be effective, whether
or not actually received, and, if mailed, the date of mailing shall be the date
such notice is deemed given for all purposes.
Any notice to the Trustee, the Company or GZA Technologies shall be
delivered in person or shall be given by certified or registered mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below such other address as such party may from time to time furnish in
writing to the other parties hereto.
All distributions of cash, securities or other property by the Trustee to
the Beneficiaries may be made, in the discretion of the Trustee, in the same
manner as provided for the giving of notices to the Beneficiaries.
19. NO MODIFICATIONS. No term or provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a writing entered
into by the parties hereto and, as to the execution of any such writing by GZA
Technologies, accompanied by a certificate of the Secretary or Assistant
Secretary of said corporation certifying that such execution and delivery of any
such writing by GZA Technologies had specifically been approved by the Board of
Directors of said corporation.
20. SPECIFIC PERFORMANCE. Each party acknowledges that money damages alone
will not adequately compensate the other parties to this Agreement for breach of
the covenants and agreements herein and, therefore, the parties agree that in
the event of the breach or threatened breach of any such covenant or agreement,
in addition to all other remedies available to the parties at law, in equity or
otherwise, any party, shall be entitled to injunctive relief compelling specific
performance of, or other compliance with, the terms, hereof.
21. GOVERNING LAW. This Agreement has been made in, and shall be governed
by and construed in accordance with, the laws of The Commonwealth of
Massachusetts.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall have the same force and effect as
if it were the sole original Agreement.
23. CAPTIONS. Paragraph titles or captions contained in this Agreement are
inserted only for convenience of reference and in no way define, limit, extend
or describe the scope of this Agreement or the intent of any provisions hereof.
IN WITNESS WHEREOF, the Company, the Trustee, the Beneficiaries and GZA
Technologies have executed this Agreement as an instrument under seal as of the
date first above written.
GOLDBERG-ZOINO ASSOCIATES GZA GEOENVIRONMENTAL
OF NEW YORK, P.C. TECHNOLOGIES, INC.
By /s/ By /s/
----------------------------------- -----------------------------
Richard M. Simon, President Leonard M. Seale
Chief Executive Officer
By /s/
-----------------------------------
Richard M. Simon, Trustee
By /s/
-----------------------------------
Richard M. Simon, Stockholder
By /s/
-----------------------------------
Joseph D. Guertin, Jr., Stockholder
26
<PAGE> 5
SCHEDULE A
----------
NUMBER OF SHARES OF COMMON STOCK DEPOSITED WITH
NAME OF BENEFICIARY TRUSTEE
- --------------------------------------------------------------------------------
Richard M. Simon 100
Joseph D. Guertin, Jr. 100
Exhibit 10.24
INDEMNIFICATION AGREEMENT
-------------------------
This Agreement, made this 1st day of May, 1996, by and among Richard M.
Simon, of Newton, Massachusetts and Joseph D. Guertin, Jr., of Acton,
Massachusetts, (collectively the "Stockholders"), GZA GeoEnvironmental, Inc., a
Massachusetts corporation ("GZA"), and GZA GeoEnvironmental Technologies, Inc.,
a Delaware corporation ("GZA Technologies"),
W I T N E S S E T H
-------------------
WHEREAS, the Stockholders are the holders of record of 100% of the issued
and outstanding capital stock of Goldberg-Zoino Associates of New York, P.C., a
New York professional services corporation ("GZANY") and each of the
Stockholders is a director and officer of GZANY; and
WHEREAS, each Stockholder is an employee of GZA GeoEnvironmental, Inc.
("GZA");
WHEREAS, each Stockholder is a principal stockholder of GZA Technologies,
which is the holder of all the issued and outstanding capital stock of GZA;
WHEREAS, each of GZANY and GZA will derive a substantial portion of its
revenues from its business dealings with the other, and is dependent on the
other for referrals and for other assistance and services, and, accordingly it
is in the best interest of GZA and GZA Technologies for the Stockholders to
serve as stockholders, directors and officers of GZANY; and
WHEREAS, in order to induce the Stockholders to continue to serve as
stockholders, directors and officers of GZANY, GZA's parent, GZA Technologies,
has agreed to indemnify the Stockholders against liabilities arising in
connection with his serving in such capacities.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter appearing, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. INDEMNIFICATION.
---------------
(a) GZA Technologies shall indemnify a Stockholder if such Stockholder is
or was a party or is threatened to be made a party to or is otherwise involved
with any threatened, pending or completed claim, action or proceeding, on
account of or arising out of actions performed by or inaction on the part of
such Stockholder with respect to occurrences taking place when, or by reason of
the fact that, the Stockholder is or was a director, officer, or stockholder of
GZANY, against any of the following (collectively, "Claims"):
(i) expenses (including attorneys' fees);
(ii) judgments, fines, assessments or penalties; and
(iii) losses, claims, damages or liabilities, including without limitation
amounts paid in settlement
27
<PAGE> 6
actually incurred by the Stockholder in connection with such claim, action or
proceeding.
(b) GZA Technologies shall indemnify a Stockholder if such Stockholder is
or was a party or is threatened to be made a party to or is otherwise involved
with any threatened, pending or completed claim, action or proceeding, on
account of or arising out of actions performed by or inaction on the part of
such Stockholder with respect to occurrences taking place when, or by reason of
the fact that, the Stockholder is or was an employee, consultant or agent of
GZANY, against all Claims (as defined in Section 1, subsection (a) above).
2. CERTAIN TAX AND OTHER MATTERS. The indemnification provided hereunder shall,
without limiting the generality of the foregoing, include:
(a) indemnification of each Stockholder against assessments, penalties,
interest and other liabilities that he may incur to any federal, state or local
tax authority for or on account of taxes, and other expenses (including
attorneys' fees) arising out of or incurred by reason of any dividend or
distribution in respect of the capital stock of GZANY, any sale, assignment or
other transfer by GZANY to any third party (including any affiliate of GZA
Technologies or GZANY) of all or any substantial part of the assets of GZANY,
any sale or transfer of the capital stock of GZANY, or any merger or
consolidation affecting GZANY (collectively, a "Reorganization Transaction")
effected by the Stockholder or GZANY at the written request or direction of, or
with the written consent of, the Board of Directors of GZA Technologies; and
(b) indemnification against Claims of negligence, design liability or
professional liability, whether alleged to be that of a Stockholder individually
or of any other employee, consultant or agent of GZANY.
(c) GZA Technologies shall provide commercial general, professional and
pollition liability insurance for GZANY as a named insured with the same
coverage and limits as provided GZA. Each Stockholder shall be a Named or
Additional Insured on all such policies. Each Stockholder and officer of GZANY
shall be named as an Insured Person in any GZA Technologies directors' and
officers' or executive liability policies.
3. NO EMPLOYMENT AGREEMENT. Nothing contained in this Agreement is intended to
create or shall create in the Stockholders any right to continued employment.
4. EXPENSES; INDEMNIFICATION PROCEDURE.
-----------------------------------
(a) ADVANCEMENT OF EXPENSES. GZA Technologies shall advance all expenses
reasonably incurred by a Stockholder in connection with the defense of any
claim, action or proceeding described in Section 1 hereof. If such Stockholder
shall be adjudicated by a court order or judgment from which no right of appeal
exists to be not entitled to indemnification by GZA Technologies as authorized
hereby, such Stockholder hereby undertakes to promptly repay all such amounts
advanced by GZA Technologies, to the extent that the amounts so advanced are
adjudicated to have exceeded the indemnification to which he was entitled. The
advances to be made hereunder shall be paid by GZA Technologies to the
applicable Stockholder within twenty (20) days following delivery of a written
request thereof by such Stockholder to GZA Technologies.
(b) NOTICE/COOPERATION BY STOCKHOLDER. A Stockholder shall give GZA
Technologies notice within forty-five (45) days after the commencement of any
action or proceeding, or the assertion by any third party of a claim, or threat
thereof, against such Stockholder, for which indemnification will or could be
sought under this Agreement. GZA Technologies shall not be liable to indemnify a
Stockholder under this Agreement if such notice is not given as aforesaid. In
addition, a Stockholder shall give GZA Technologies such information and
cooperation as it may reasonably require and as shall be within Stockholder's
power. GZA Technologies shall not be liable to indemnify a Stockholder under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.
(c) PROCEDURE. (1) Any amounts payable by GZA Technologies pursuant to the
indemnification provided for in Section 1 shall be paid no later than twenty
(20) days after receipt of the written request of a Stockholder. If a claim is
brought by a Stockholder under this Agreement, and if such claim is not paid in
full by GZA Technologies within sixty (60) days after a written request by a
Stockholder for payment thereof was first received by GZA Technologies, the
Stockholder may, but need not, at any time thereafter bring an action against
GZA Technologies to recover the unpaid amount of the claim and, subject to
Section 12 of this Agreement, Stockholder shall also be entitled to be
reimbursed for the expense (including reasonable attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action
or proceeding in advance of its final disposition) that the applicable
Stockholder is not entitled to be indemnified hereunder, but the burden of
proving such defense shall be on GZA Technologies, and the Stockholder shall be
entitled to receive interim payments of expenses pursuant to Subsection 3(a)
unless and until such defense shall be finally adjudicated by court order or
judgment from which no further right of appeal exists.
(2) If GZA Technologies refuses or rejects a Stockholder's claim for
indemnification hereunder, and in the event the Stockholder shall thereafter
seek judicial enforcement of this Agreement, neither the failure of GZA
Technologies (including its
28
<PAGE> 7
Board of Directors, any committee or subgroup of the Board of Directors, or
independent legal counsel ) to have made a determination that indemnification of
the Stockholder is proper in the circumstances nor an actual determination by
GZA Technologies (including its Board of Directors, any committee or subgroup of
the Board of Directors, or independent legal counsel) that the Stockholder is
not entitled under the terms of this Agreement to be indemnified, shall create a
presumption in any proceeding seeking such enforcement that the Stockholder is
or is not entitled to indemnification hereunder.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice of a
prospective claim pursuant to Section 4(b) hereof, GZA Technologies has in
effect any insurance, including, without limitation, director and officer
liability insurance, which may provide for payment of or reimbursement for, such
claim, GZA Technologies shall give prompt notice of the assertion of such claim
to each issuer of such insurance in accordance with the procedures set forth in
the respective policies. GZA Technologies shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Stockholder,
all amounts payable as a result of such proceeding in accordance with the terms
of such polices.
(e) INSURANCE OFFSET. GZA Technologies' obligation to provide
indemnification to a Stockholder under this Agreement shall be reduced to the
extent the Stockholder actually receives indemnification from any other source
(including any otherwise applicable insurance coverage) available to the
Stockholder.
(f) SELECTION OF COUNSEL. In the event GZA Technologies shall be obligated
under Section 4(a) hereof to pay the expenses of any proceeding or threatened
proceeding against a Stockholder, GZA Technologies shall be entitled to
participate in such proceeding and, to the extent it shall wish, to assume the
defense of such proceeding, with counsel approved by applicable Stockholder,
which approval shall not be unreasonably withheld. Upon the delivery to the
Stockholder of written notice of its election to assume such defense, approval
of such counsel by the Stockholder and retention of such counsel by GZA
Technologies, GZA Technologies will not be liable to the Stockholder under this
Agreement for any fees of counsel or other expenses subsequently incurred by
such Stockholder in connection with the defense of the same proceeding, except
for fees and expenses incurred by such Stockholder as a consequence of the
Stockholder's obligation to cooperate with GZA Technologies in the defense of
such matters (as set forth in Section 4 hereof). Notwithstanding the foregoing,
(i) a Stockholder shall have the right to employ his own counsel in any such
proceeding at such Stockholder's expense; and (ii) if (A) the employment of
counsel by a Stockholder has been previously authorized by GZA Technologies, or
(B) the Stockholder shall have reasonably concluded that there may be a conflict
of interest between GZA Technologies and such Stockholder in the conduct of such
defense or that such counsel and the Stockholder have basic disagreements as to
the proper method of managing the litigation, or (C) GZA Technologies shall not,
in fact, have employed counsel to assume the defense of such proceeding, then
the reasonable fees and expenses of the Stockholder's counsel shall be paid by
GZA Technologies.
5. NONEXCLUSIVITY. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which a Stockholder may be entitled under GZA
Technologies' or GZANY's charter or by-laws, any agreement, any vote of
disinterested directors, applicable law, or otherwise. The indemnification
provided under this Agreement shall continue as to each Stockholder for any
action taken or not taken by such Stockholder while serving in an indemnified
capacity even though the Stockholder may have ceased to serve in such capacity
at the time of commencement of any claim or action for which indemnification is
requested.
6. PARTIAL INDEMNIFICATION. To receive indemnification hereunder, a Stockholder
need not establish that he is entitled to indemnification of all the expenses or
costs incurred by him in respect of which he seeks such indemnification, and if
a Stockholder is entitled under any provision of this Agreement to
indemnification by GZA Technologies for some or a portion of the expenses,
judgments, fines or penalties actually or reasonably incurred by him in the
investigation, defense, appeal or settlement of any claim, civil action or
proceeding, but not, however, for the total amount thereof, GZA Technologies
shall nevertheless indemnify such Stockholder for the portion of such expenses,
judgments, fines or penalties to which the Stockholder is entitled.
7. MUTUAL ACKNOWLEDGEMENT. Both GZA Technologies and the Stockholders
acknowledge that in certain instances, applicable law or applicable public
policy could be construed to prohibit GZA Technologies from indemnifying the
Stockholders under this Agreement or otherwise. Nothing in this Agreement is
intended to require or shall be construed as requiring GZA Technologies to do or
fail to do any act in violation of any applicable law. GZA Technologies'
inability, as a result of a binding order of any court of competent
jurisdiction, to perform its obligations under this Agreement shall not
constitute a breach of this Agreement and GZA Technologies' compliance with any
such order shall constitute compliance with this Agreement.
8. SEVERABILITY. The provisions of this Agreement shall be severable as provided
in this Section 9. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then GZA Technologies
shall nevertheless indemnify Stockholder to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
29
<PAGE> 8
9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding, GZA
Technologies shall not be obligated pursuant to the terms of this Agreement:
(a) EXCLUDED ACTS. To indemnify Stockholder for any acts or omissions or
transactions from which a director, officer, or stockholder may not be relieved
of liability under applicable law; or
(b) CLAIMS INITIATED BY STOCKHOLDER. To indemnify or advance expenses to a
Stockholder with respect to proceedings or claims initiated or brought
voluntarily by such Stockholder and not by way of defense, except (i) with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law and (ii)
declaratory judgment or similar proceedings brought to obtain a judicial
interpretation of an applicable statute or regulation, provided that such
indemnification or advancement of expenses may be provided by GZA Technologies
in specific cases if the Board of Directors has approved the initiation or
bringing of such suit; or
(c) UNAUTHORIZED REORGANIZATION TRANSACTION. To indemnify a Stockholder for
any liabilities, losses or expenses incurred by the Stockholder and arising out
of a Reorganization Transaction not effected at the written request or direction
or with the written consent of the Board of Directors of GZA Technologies; or
(d) INSURED CLAIMS. To indemnify a Stockholder for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to such Stockholder by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by GZA Technologies, GZA
or GZANY.
10. DURATION OF AGREEMENT. This Agreement shall continue until and terminate
upon the later of: (a) ten years after the Stockholders have ceased to serve in
any of the capacities set forth in Section 1 above; and (b) the final
termination of all pending or threatened actions, suits, proceedings or
investigations to which any of the Stockholders may be subject by reason of his
service in any such capacity. The indemnification provided under this Agreement
shall continue as to a Stockholder who has ceased for any reason to serve in any
of the capacities set forth in Section 1 above, with respect to actions,
inactions or occurrences that took place prior to the termination of this
Agreement and while the Stockholder served in any such capacity.
11. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
12. ATTORNEYS' FEES. In the event that any action is instituted by a Stockholder
under this Agreement to enforce or interpret any of the terms hereof, such
Stockholder shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by the Stockholder with respect to such
action, unless as a part of such action, a court of competent jurisdiction
determines that each of the material assertions made by the Stockholder as a
basis for such action was not made in good faith or was frivolous. In the event
of an action instituted by or in the name of GZA Technologies under this
Agreement or to enforce or interpret any of the terms of this Agreement, a
Stockholder shall be entitled to be paid all court costs and expenses, including
attorneys' fees incurred by such Stockholder in defense of such action
(including with respect to Stockholder's counterclaims and cross-claims made in
such action), unless as a part of such action the court determines that each of
the Stockholder's material defenses to such was made in bad faith or was
frivolous.
13. ENTIRE AGREEMENT; AMENDMENT AND MODIFICATION. This Agreement constitutes the
entire and only agreement among the Stockholders, GZA Technologies and GZA
respecting the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, among them concerning such subject matter. No
modification, amendment, waiver or termination of this Agreement or of any
provision hereof shall be binding unless made in writing, signed by an
authorized officer of GZA Technologies and each of the Stockholders. Failure of
any party to insist upon strict compliance with any of terms, covenants or
conditions hereof shall not be deemed a waiver of such party's right to require
future performance of any such term, covenant or condition.
14. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and be
binding upon, the legal representatives, successors and assigns of each of GZA
Technologies and GZA and the heirs, legal representatives, successors and
assigns of each of the Stockholders.
15. CHOICE OF LAW. This Agreement shall be governed by, and construed and
enforced in accordance with the substantive laws of the State of New York,
without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
contract under seal as of the date first above written.
30
<PAGE> 9
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/
-----------------------------------------
Leonard M. Seale, Chief Executive Officer
By: /s/
-----------------------------------------
Richard M. Simon, Stockholder
By: /s/
-----------------------------------------
Joseph D. Guertin, Jr., Stockholder
31
<PAGE> 1
SCHEDULE A
----------
NUMBER OF SHARES OF COMMON STOCK DEPOSITED WITH
NAME OF BENEFICIARY TRUSTEE
- --------------------------------------------------------------------------------
Richard M. Simon 100
Joseph D. Guertin, Jr. 100
Exhibit 10.24
INDEMNIFICATION AGREEMENT
-------------------------
This Agreement, made this 1st day of May, 1996, by and among Richard M.
Simon, of Newton, Massachusetts and Joseph D. Guertin, Jr., of Acton,
Massachusetts, (collectively the "Stockholders"), GZA GeoEnvironmental, Inc., a
Massachusetts corporation ("GZA"), and GZA GeoEnvironmental Technologies, Inc.,
a Delaware corporation ("GZA Technologies"),
W I T N E S S E T H
-------------------
WHEREAS, the Stockholders are the holders of record of 100% of the issued
and outstanding capital stock of Goldberg-Zoino Associates of New York, P.C., a
New York professional services corporation ("GZANY") and each of the
Stockholders is a director and officer of GZANY; and
WHEREAS, each Stockholder is an employee of GZA GeoEnvironmental, Inc.
("GZA");
WHEREAS, each Stockholder is a principal stockholder of GZA Technologies,
which is the holder of all the issued and outstanding capital stock of GZA;
WHEREAS, each of GZANY and GZA will derive a substantial portion of its
revenues from its business dealings with the other, and is dependent on the
other for referrals and for other assistance and services, and, accordingly it
is in the best interest of GZA and GZA Technologies for the Stockholders to
serve as stockholders, directors and officers of GZANY; and
WHEREAS, in order to induce the Stockholders to continue to serve as
stockholders, directors and officers of GZANY, GZA's parent, GZA Technologies,
has agreed to indemnify the Stockholders against liabilities arising in
connection with his serving in such capacities.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter appearing, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. INDEMNIFICATION.
---------------
(a) GZA Technologies shall indemnify a Stockholder if such Stockholder is
or was a party or is threatened to be made a party to or is otherwise involved
with any threatened, pending or completed claim, action or proceeding, on
account of or arising out of actions performed by or inaction on the part of
such Stockholder with respect to occurrences taking place when, or by reason of
the fact that, the Stockholder is or was a director, officer, or stockholder of
GZANY, against any of the following (collectively, "Claims"):
(i) expenses (including attorneys' fees);
(ii) judgments, fines, assessments or penalties; and
(iii) losses, claims, damages or liabilities, including without limitation
amounts paid in settlement
27
<PAGE> 2
actually incurred by the Stockholder in connection with such claim, action or
proceeding.
(b) GZA Technologies shall indemnify a Stockholder if such Stockholder is
or was a party or is threatened to be made a party to or is otherwise involved
with any threatened, pending or completed claim, action or proceeding, on
account of or arising out of actions performed by or inaction on the part of
such Stockholder with respect to occurrences taking place when, or by reason of
the fact that, the Stockholder is or was an employee, consultant or agent of
GZANY, against all Claims (as defined in Section 1, subsection (a) above).
2. CERTAIN TAX AND OTHER MATTERS. The indemnification provided hereunder shall,
without limiting the generality of the foregoing, include:
(a) indemnification of each Stockholder against assessments, penalties,
interest and other liabilities that he may incur to any federal, state or local
tax authority for or on account of taxes, and other expenses (including
attorneys' fees) arising out of or incurred by reason of any dividend or
distribution in respect of the capital stock of GZANY, any sale, assignment or
other transfer by GZANY to any third party (including any affiliate of GZA
Technologies or GZANY) of all or any substantial part of the assets of GZANY,
any sale or transfer of the capital stock of GZANY, or any merger or
consolidation affecting GZANY (collectively, a "Reorganization Transaction")
effected by the Stockholder or GZANY at the written request or direction of, or
with the written consent of, the Board of Directors of GZA Technologies; and
(b) indemnification against Claims of negligence, design liability or
professional liability, whether alleged to be that of a Stockholder individually
or of any other employee, consultant or agent of GZANY.
(c) GZA Technologies shall provide commercial general, professional and
pollition liability insurance for GZANY as a named insured with the same
coverage and limits as provided GZA. Each Stockholder shall be a Named or
Additional Insured on all such policies. Each Stockholder and officer of GZANY
shall be named as an Insured Person in any GZA Technologies directors' and
officers' or executive liability policies.
3. NO EMPLOYMENT AGREEMENT. Nothing contained in this Agreement is intended to
create or shall create in the Stockholders any right to continued employment.
4. EXPENSES; INDEMNIFICATION PROCEDURE.
-----------------------------------
(a) ADVANCEMENT OF EXPENSES. GZA Technologies shall advance all expenses
reasonably incurred by a Stockholder in connection with the defense of any
claim, action or proceeding described in Section 1 hereof. If such Stockholder
shall be adjudicated by a court order or judgment from which no right of appeal
exists to be not entitled to indemnification by GZA Technologies as authorized
hereby, such Stockholder hereby undertakes to promptly repay all such amounts
advanced by GZA Technologies, to the extent that the amounts so advanced are
adjudicated to have exceeded the indemnification to which he was entitled. The
advances to be made hereunder shall be paid by GZA Technologies to the
applicable Stockholder within twenty (20) days following delivery of a written
request thereof by such Stockholder to GZA Technologies.
(b) NOTICE/COOPERATION BY STOCKHOLDER. A Stockholder shall give GZA
Technologies notice within forty-five (45) days after the commencement of any
action or proceeding, or the assertion by any third party of a claim, or threat
thereof, against such Stockholder, for which indemnification will or could be
sought under this Agreement. GZA Technologies shall not be liable to indemnify a
Stockholder under this Agreement if such notice is not given as aforesaid. In
addition, a Stockholder shall give GZA Technologies such information and
cooperation as it may reasonably require and as shall be within Stockholder's
power. GZA Technologies shall not be liable to indemnify a Stockholder under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.
(c) PROCEDURE. (1) Any amounts payable by GZA Technologies pursuant to the
indemnification provided for in Section 1 shall be paid no later than twenty
(20) days after receipt of the written request of a Stockholder. If a claim is
brought by a Stockholder under this Agreement, and if such claim is not paid in
full by GZA Technologies within sixty (60) days after a written request by a
Stockholder for payment thereof was first received by GZA Technologies, the
Stockholder may, but need not, at any time thereafter bring an action against
GZA Technologies to recover the unpaid amount of the claim and, subject to
Section 12 of this Agreement, Stockholder shall also be entitled to be
reimbursed for the expense (including reasonable attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action
or proceeding in advance of its final disposition) that the applicable
Stockholder is not entitled to be indemnified hereunder, but the burden of
proving such defense shall be on GZA Technologies, and the Stockholder shall be
entitled to receive interim payments of expenses pursuant to Subsection 3(a)
unless and until such defense shall be finally adjudicated by court order or
judgment from which no further right of appeal exists.
(2) If GZA Technologies refuses or rejects a Stockholder's claim for
indemnification hereunder, and in the event the Stockholder shall thereafter
seek judicial enforcement of this Agreement, neither the failure of GZA
Technologies (including its
28
<PAGE> 3
Board of Directors, any committee or subgroup of the Board of Directors, or
independent legal counsel ) to have made a determination that indemnification of
the Stockholder is proper in the circumstances nor an actual determination by
GZA Technologies (including its Board of Directors, any committee or subgroup of
the Board of Directors, or independent legal counsel) that the Stockholder is
not entitled under the terms of this Agreement to be indemnified, shall create a
presumption in any proceeding seeking such enforcement that the Stockholder is
or is not entitled to indemnification hereunder.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice of a
prospective claim pursuant to Section 4(b) hereof, GZA Technologies has in
effect any insurance, including, without limitation, director and officer
liability insurance, which may provide for payment of or reimbursement for, such
claim, GZA Technologies shall give prompt notice of the assertion of such claim
to each issuer of such insurance in accordance with the procedures set forth in
the respective policies. GZA Technologies shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Stockholder,
all amounts payable as a result of such proceeding in accordance with the terms
of such polices.
(e) INSURANCE OFFSET. GZA Technologies' obligation to provide
indemnification to a Stockholder under this Agreement shall be reduced to the
extent the Stockholder actually receives indemnification from any other source
(including any otherwise applicable insurance coverage) available to the
Stockholder.
(f) SELECTION OF COUNSEL. In the event GZA Technologies shall be obligated
under Section 4(a) hereof to pay the expenses of any proceeding or threatened
proceeding against a Stockholder, GZA Technologies shall be entitled to
participate in such proceeding and, to the extent it shall wish, to assume the
defense of such proceeding, with counsel approved by applicable Stockholder,
which approval shall not be unreasonably withheld. Upon the delivery to the
Stockholder of written notice of its election to assume such defense, approval
of such counsel by the Stockholder and retention of such counsel by GZA
Technologies, GZA Technologies will not be liable to the Stockholder under this
Agreement for any fees of counsel or other expenses subsequently incurred by
such Stockholder in connection with the defense of the same proceeding, except
for fees and expenses incurred by such Stockholder as a consequence of the
Stockholder's obligation to cooperate with GZA Technologies in the defense of
such matters (as set forth in Section 4 hereof). Notwithstanding the foregoing,
(i) a Stockholder shall have the right to employ his own counsel in any such
proceeding at such Stockholder's expense; and (ii) if (A) the employment of
counsel by a Stockholder has been previously authorized by GZA Technologies, or
(B) the Stockholder shall have reasonably concluded that there may be a conflict
of interest between GZA Technologies and such Stockholder in the conduct of such
defense or that such counsel and the Stockholder have basic disagreements as to
the proper method of managing the litigation, or (C) GZA Technologies shall not,
in fact, have employed counsel to assume the defense of such proceeding, then
the reasonable fees and expenses of the Stockholder's counsel shall be paid by
GZA Technologies.
5. NONEXCLUSIVITY. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which a Stockholder may be entitled under GZA
Technologies' or GZANY's charter or by-laws, any agreement, any vote of
disinterested directors, applicable law, or otherwise. The indemnification
provided under this Agreement shall continue as to each Stockholder for any
action taken or not taken by such Stockholder while serving in an indemnified
capacity even though the Stockholder may have ceased to serve in such capacity
at the time of commencement of any claim or action for which indemnification is
requested.
6. PARTIAL INDEMNIFICATION. To receive indemnification hereunder, a Stockholder
need not establish that he is entitled to indemnification of all the expenses or
costs incurred by him in respect of which he seeks such indemnification, and if
a Stockholder is entitled under any provision of this Agreement to
indemnification by GZA Technologies for some or a portion of the expenses,
judgments, fines or penalties actually or reasonably incurred by him in the
investigation, defense, appeal or settlement of any claim, civil action or
proceeding, but not, however, for the total amount thereof, GZA Technologies
shall nevertheless indemnify such Stockholder for the portion of such expenses,
judgments, fines or penalties to which the Stockholder is entitled.
7. MUTUAL ACKNOWLEDGEMENT. Both GZA Technologies and the Stockholders
acknowledge that in certain instances, applicable law or applicable public
policy could be construed to prohibit GZA Technologies from indemnifying the
Stockholders under this Agreement or otherwise. Nothing in this Agreement is
intended to require or shall be construed as requiring GZA Technologies to do or
fail to do any act in violation of any applicable law. GZA Technologies'
inability, as a result of a binding order of any court of competent
jurisdiction, to perform its obligations under this Agreement shall not
constitute a breach of this Agreement and GZA Technologies' compliance with any
such order shall constitute compliance with this Agreement.
8. SEVERABILITY. The provisions of this Agreement shall be severable as provided
in this Section 9. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then GZA Technologies
shall nevertheless indemnify Stockholder to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
29
<PAGE> 4
9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding, GZA
Technologies shall not be obligated pursuant to the terms of this Agreement:
(a) EXCLUDED ACTS. To indemnify Stockholder for any acts or omissions or
transactions from which a director, officer, or stockholder may not be relieved
of liability under applicable law; or
(b) CLAIMS INITIATED BY STOCKHOLDER. To indemnify or advance expenses to a
Stockholder with respect to proceedings or claims initiated or brought
voluntarily by such Stockholder and not by way of defense, except (i) with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law and (ii)
declaratory judgment or similar proceedings brought to obtain a judicial
interpretation of an applicable statute or regulation, provided that such
indemnification or advancement of expenses may be provided by GZA Technologies
in specific cases if the Board of Directors has approved the initiation or
bringing of such suit; or
(c) UNAUTHORIZED REORGANIZATION TRANSACTION. To indemnify a Stockholder for
any liabilities, losses or expenses incurred by the Stockholder and arising out
of a Reorganization Transaction not effected at the written request or direction
or with the written consent of the Board of Directors of GZA Technologies; or
(d) INSURED CLAIMS. To indemnify a Stockholder for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to such Stockholder by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by GZA Technologies, GZA
or GZANY.
10. DURATION OF AGREEMENT. This Agreement shall continue until and terminate
upon the later of: (a) ten years after the Stockholders have ceased to serve in
any of the capacities set forth in Section 1 above; and (b) the final
termination of all pending or threatened actions, suits, proceedings or
investigations to which any of the Stockholders may be subject by reason of his
service in any such capacity. The indemnification provided under this Agreement
shall continue as to a Stockholder who has ceased for any reason to serve in any
of the capacities set forth in Section 1 above, with respect to actions,
inactions or occurrences that took place prior to the termination of this
Agreement and while the Stockholder served in any such capacity.
11. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
12. ATTORNEYS' FEES. In the event that any action is instituted by a Stockholder
under this Agreement to enforce or interpret any of the terms hereof, such
Stockholder shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by the Stockholder with respect to such
action, unless as a part of such action, a court of competent jurisdiction
determines that each of the material assertions made by the Stockholder as a
basis for such action was not made in good faith or was frivolous. In the event
of an action instituted by or in the name of GZA Technologies under this
Agreement or to enforce or interpret any of the terms of this Agreement, a
Stockholder shall be entitled to be paid all court costs and expenses, including
attorneys' fees incurred by such Stockholder in defense of such action
(including with respect to Stockholder's counterclaims and cross-claims made in
such action), unless as a part of such action the court determines that each of
the Stockholder's material defenses to such was made in bad faith or was
frivolous.
13. ENTIRE AGREEMENT; AMENDMENT AND MODIFICATION. This Agreement constitutes the
entire and only agreement among the Stockholders, GZA Technologies and GZA
respecting the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, among them concerning such subject matter. No
modification, amendment, waiver or termination of this Agreement or of any
provision hereof shall be binding unless made in writing, signed by an
authorized officer of GZA Technologies and each of the Stockholders. Failure of
any party to insist upon strict compliance with any of terms, covenants or
conditions hereof shall not be deemed a waiver of such party's right to require
future performance of any such term, covenant or condition.
14. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and be
binding upon, the legal representatives, successors and assigns of each of GZA
Technologies and GZA and the heirs, legal representatives, successors and
assigns of each of the Stockholders.
15. CHOICE OF LAW. This Agreement shall be governed by, and construed and
enforced in accordance with the substantive laws of the State of New York,
without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
contract under seal as of the date first above written.
30
<PAGE> 5
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/
-----------------------------------------
Leonard M. Seale, Chief Executive Officer
By: /s/
-----------------------------------------
Richard M. Simon, Stockholder
By: /s/
-----------------------------------------
Joseph D. Guertin, Jr., Stockholder
31
<PAGE> 1
Exhibit 10.49
PURCHASE AND SALE AGREEMENT
AGREEMENT made as of this _______ day of ______________ 1996.
_________________________ ("the seller") agrees to sell, transfer and assign,
and GZA GEOENVIRONMENTAL, INC. ("Buyer") agrees to buy and receive, upon the
terms hereinafter set forth Seller's entire one-sixth (1/6) interest
("Interest") as a beneficiary of the GZA Investment Associates Trust ("the
trust") under Declaration of Trust dated November 21, 1984 ("the Trust
Agreement"), subject to the terms and conditions set forth herein.
1. Seller's Interest in the Trust shall be transferred by a good and sufficient
assignment of beneficial interest ("Assignment") running to the Buyer, or to the
nominee designated by the Buyer by written notice to the Seller at least three
days before the Assignment is to be delivered as herein provided, and said
Agreement shall convey a good and clear marketable title thereto, free from all
liens and encumbrances.
2. The agreed purchase price for said Interest is ($12,000) Twelve Thousand
dollars of which
$ 2,000 have been paid as a deposit this day and
$ 10,000 shall be paid at the time of delivery of the Assignment in cash, or
by certified, cashier's, treasurer's or bank check.
----------------------------
$ 12,000 Total
3. The Assignment shall be delivered at ten o'clock A.M. on the 8th day of
February, 1996, at the office of Mofenson & Nicoletti, unless otherwise agreed
upon in writing. It is agreed that time is of the essence of this agreement.
4. If the Seller shall be unable to give title or to make a transfer and
assignment of the Interest in the Trust, all as herein stipulated, Seller shall
use reasonable efforts to remove any defects in title as provided herein, or to
make the said Interest conform to the provisions hereof in which event the
Seller shall give written notice thereof to the Buyer at or before the time for
performance hereunder, and thereupon the time for performance hereof shall be
extended for a period of thirty days. If at the expiration of the extended time
the Seller shall have failed so to remove any defects in title, all as herein
agreed, then any payments made under this Agreement shall be forthwith refunded
and all other obligations of the parties hereto shall cease and upon such real
property. Such representation and warranty shall survive the closing of the sale
of the interest.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the
date first above written.
GZA GEOENVIRONMENTAL, INC.
/s/ By:
- ----------------------------- ------------------------------
JOHN E. AYRES
32
<PAGE> 2
/s/ By:
- ----------------------------- ------------------------------
JOSEPH D. GUERTIN
/s/ By:
- ----------------------------- ------------------------------
STEVEN J. TRETTEL
33
<PAGE> 3
EXHIBIT A
AMENDMENT
GZA INVESTMENT ASSOCIATES TRUST
The undersigned, being cumulatively the holders of two-thirds (2/3) of the
issued and outstanding beneficial interests of the GZA Investments Associates
Trust ("the Trust") under Declaration of Trust dated November 21, 1984 and
recorded at Book 5887, Page 95 of the Plymouth County Registry of Deeds ("the
Declaration"), do hereby amend the Declaration, pursuant to the power and
authority granted to the beneficiaries pursuant to Section 5 thereof, as
follows:
1. The provisions of Section 7 of the Declaration which prohibit "the sale,
assignment or transfer of any beneficial interest in the Trust [by any
beneficiary], except to another beneficiary or to his or her issue or to the
executor, administrator, heirs or legatees of a deceased holder, "without first
offering such beneficial interest to other beneficiaries, are hereby waived,
released and made inapplicable with respect to the sale, transfer and assignment
by the undersigned of their respective beneficial interests to GZA
GeoEnvironmental, Inc. pursuant to their respective Purchase and Sale Agreements
made and entered into as of _________________, 1996 ("the Transactions").
2. The Transactions are hereby authorized, ratified and affirmed
notwithstanding said provisions of Section 7 of the Declaration which have been
made inapplicable pursuant to this Amendment.
3. The provisions of this Amendment shall not be applicable to any other
transaction relating to any person who is not a party to the Transactions and no
such person may claim any benefit, waiver or release of any of the provisions of
the Declaration as a result of this Amendment.
4. Any party to the Transactions may, and is hereby authorized to, record an
original counterpart of this Amendment in any Registry of Deeds where the
Declaration is recorded.
EXECUTED as of the day of , 1996 by and among the
undersigned beneficiaries of the Trust.
- ----------------------------------- ------------------------------------
JOHN E. AYRES JOSEPH D. GUERTIN
- ----------------------------------- ------------------------------------
STEVEN J. TRETTEL DONALD T. GOLDBERG
34
<PAGE> 4
Then personally appeared the above-named JOHN E. AYRES, and acknowledged
the forgoing instrument to be his free act and deed, before me.
------------------------------------
Notary Public
My Commission expires:
Then personally appeared the above-named JOSEPH D. GUERTIN, and acknowledged
the forgoing instrument to be his free act and deed, before me.
------------------------------------
Notary Public
My Commission expires:
Then personally appeared the above-named STEVEN J. TRETTEL, and acknowledged
the forgoing instrument to be his free act and deed, before me.
------------------------------------
Notary Public
My Commission expires:
Then personally appeared the above-named DONALD T. GOLDBERG, and
acknowledged the forgoing instrument to be his free act and deed, before me.
------------------------------------
Notary Public
My Commission expires:
35
<PAGE> 1
Exhibit 10.50
Summary
of
Memorandum Dated September 12, 1995 Outlining
Donald T. Goldberg's Arrangement with the Company
Following His Retirement as CEO and as a Full-Time Employee
Following his retirement as Chief Executive Officer on September 21, 1995, Mr.
Goldberg will continue as Chairman of the Board of Directors of the Company and
will work with senior geotechnical engineering staff as a Consulting
Geotechnical Engineer. Mr. Goldberg's role as Consultant will include support
of geotechnical engineering activities, representation of GZA in professional
organizations, market/business development, and close client contact. These
activities will require on average half-time.
The terms of this arrangement are as follows:
- a biweekly consulting fee of $3,846.15
- status as an Independent Contractor with no fringe benefits
- either party can terminate the arrangement at any time
- the arrangement will be reviewed periodically and changed as required
Note: This arrangement was approved by unanimous vote of the Board of
Directors at their meeting on September 29-30, 1995.
<PAGE> 1
Exhibit 13.1
<TABLE>
SUMMARY OF FINANCIAL INFORMATION
<CAPTION>
Years ended 2/29/96 2/28/95 2/28/94 2/28/93 2/29/92
- -------------------------------------------------------------------------------------------------------------
(In thousands except per share
amounts)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Net revenues $40,158 $40,995 $40,620 $37,641 $34,247
Income (loss) from continuing operations 1,250 1,222 2,420 1,567 (4,597)
Income (loss) from continuing operations
before taxes 1,283 1,272 2,718 1,770 (4,391)
Net income (loss) from continuing operations 798 822 1,672 1,091 (3,001)
Net income (loss) from discontinued operations (99) (2,216) 4 (151) (104)
Net income (loss) 699 (1,394) 1,676 940 (3,105)
Net income (loss) per share from
continuing operations $ .21 $ .22 $ .45 $ .29 $ (.81)
Net income (loss) per share from
discontinued operations $ (.03) $ (.59) -- $ (.04) $ (.03)
Net income (loss) per share $ .18 $ (.37) $ .45 $ .25 $ (.84)
Weighted average shares outstanding 3,857 3,780 3,732 3,714 3,714
Dividends per common share -- -- -- -- --
BALANCE SHEET DATA:
Working capital $18,175 $16,582 $17,745 $14,704 $12,864
Total assets 36,715 39,111 38,294 32,854 30,704
Long-term debt (less current portion) 1,860 2,730 3,409 790 150
Stockholders' equity $22,465 $21,685 $22,807 $20,837 $19,920
</TABLE>
36
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
<TABLE>
The following table sets forth, for the periods indicated, (i) the percentage
which certain items in the consolidated statements of operations of the Company
bear to net revenues, and (ii) the percentage increase (decrease) in the dollar
amount of such items from year to year.
<CAPTION>
Year-to-Year
Percentage of Net Percentage,
Revenues Increase (Decrease)
- ---------------------------------------------------------------------------------------------------------------------
Year Ended Fiscal Years
- ---------------------------------------------------------------------------------------------------------------------
February February February 1996 vs. 1995 vs.
29, 1996 28, 1995 28, 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenues 100% 100% 100% (2)% 1%
Salaries and related costs 72 73 69 (3) 6
General and administrative expenses 25 24 25 -- (1)
Income from continuing operations 3 3 6 2 (50)
Other income (expense), net -- -- 1 (34) (83)
Provision for income taxes 1 1 3 8 (57)
Net income from continuing operations 2 2 4 (3) (51)
Net income (loss) from discontinued operations -- (5) -- 96 --
Net income (loss) 2 (3) 4 150 (183)
</TABLE>
General
The Company's gross revenue includes the cost of services and materials
subcontracted to third parties and certain expenditures (e.g., for travel,
telephone and reproduction charges) that, under the terms of the Company's
contracts, are billed to clients, generally at an added charge, for
reimbursement by the clients. Net revenues exclude the amount of such
reimbursable costs and expenditures but include the corresponding added charges.
Accordingly, the Company regards net revenues, which reflect services provided
and revenues earned directly by the Company, as the primary measure of its
business growth.
Salaries and related costs include the cost of professional, clerical
and administrative salaries and related costs such as taxes, insurance,
performance-based bonuses and other fringe benefits. General and administrative
expenses include costs of marketing, professional development and training,
professional and general liability insurance, claims and legal proceedings,
occupancy, depreciation, amortization and clerical and administrative overhead.
In May 1995, the Company discontinued operations of its specialty
construction business; accordingly, the financial statements have been
reclassified and the prior years results have been restated to report separately
the operating results of this business. The following discussion and analysis
relates to the continuing operations of the Company. (See Note 11 of Notes to
Consolidated Financial Statements).
Fiscal 1996 and 1995 Versus Prior Years
Net Revenues. The Company's net revenues decreased by approximately $837,000
(2.0%) in fiscal 1996 and increased by approximately $375,000 (0.9%) in fiscal
1995. The decrease in fiscal 1996 is attributable to decreases in volume and
project profit margins of the Company's consulting and drilling businesses which
were offset by increased volume and project profit margins for remediation
activities. Net revenue growth for fiscal 1995 was attributable primarily to
growth in the volume of the Company's consulting and drilling businesses which
were offset by anticipated adjustments on certain long term contracts totaling
approximately $211,000, lower project profit margins and decreased remediation
activities.
Salaries and Related Costs. Salaries and related costs decreased by
approximately $833,000 (2.8%) in fiscal 1996 and increased by approximately
$1,637,000 (5.8%) in fiscal 1995. The decrease in fiscal 1996 reflects a
reduction in the size of the Company's staff and decreased health insurance
cost, which were offset, in part, by an increase in performance-based bonuses
and increased workers' compensation insurance costs. The increase in fiscal 1995
is attributable primarily to an increase in the size of the Company's staff
37
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
and increased health insurance cost, which were offset, in part, by net
reduction in workers' compensation insurance cost and performance-based bonuses.
General and Administrative Expenses. General and administrative expenses
decreased by approximately $32,000 (0.3%) in fiscal 1996 and by approximately
$64,000 (0.6%) in fiscal 1995. The decrease in 1996 reflects reductions in
professional liability claims and related legal expenses, and reductions in
business development and bad debt expenses which were offset, in part, by lower
recoveries of business related expenses, higher occupancy cost, increased
consulting fees, and increased general and professional liability insurance
premiums. The decrease in fiscal 1995 reflects reductions in proposal and
internal administrative project costs, lower occupancy cost from closing two
offices in fiscal 1994, and reduction in employee relocation expenses which were
offset, in part, by an increase in professional liability claims and related
legal expenses, and higher bad debt expenses.
Other Income (Expense). Other income (expense) decreased by approximately
$17,000 in fiscal year 1996 due in part to a net increase in borrowing cost of
approximately $134,000 which was offset, in part, by a gain of approximately
$151,000 on sale of securities.
Provision for Income Taxes. The provision for income taxes reflects effective
tax rates for fiscal 1996, 1995 and 1994 of 38%, 35% and 38%, respectively.
Differences from the 34% federal statutory rate resulted primarily from the
combined effect of the addition of provisions for state taxes (net of federal
tax benefit), tax-exempt interest income, and other non-deductible items.
Quarterly Fluctuations and Seasonality. The Company's results may fluctuate from
quarter to quarter, due to factors such as weather, the timing of major
contracts, the mix of projects on which the Company is engaged in, and the level
of subcontracted services involved, the timing of additions to the Company's
professional and support staff (who may require health and safety, technical and
project management training and, therefore, initially bill to clients a lower
percentage of their time) and the opening of new offices. The Company's first,
second and third fiscal quarters have generally been more profitable than its
fourth quarter. Operating results for any one fiscal quarter may not be
indicative of the results that will be achieved in any subsequent quarter, or
for the year.
Inflation. Management does not believe that inflation has had a significant
effect on the results of its operations.
Future Operating Results. The volume of the Company's services will continue to
be impacted by reduced federal and state government enviromental spending and
change in enviromental regulations. In addition, the industry is experiencing
a period of consolidation and the Company is experiencing increasing price
competition from competitors as well as from the marketplace. These trends are
expected to continue through the current fiscal year.
To offset the industry trends the Company is currently evaluating its cost
structure, including consolidation of technical services and administrative
activities to reduce overhead and is evaluating the contribution of all customer
services provided by the Company. In addition, the Company is aggressively
recruiting strategic hires, evaluating acqusition opportunities and geographic
expansion, better focusing its marketing efforts and investing in a Company wide
project management training program.
Liquidity and Capital Resources. Cash provided by operating activities was
$387,000 in fiscal 1996 compared to $2,085,000 in fiscal 1995. The Company made
capital expenditures of $929,000 in fiscal 1996 and $1,284,000 in fiscal 1995.
The decrease in capital expenditures in fiscal 1996 reflects the Company's
decision to discontinue operations in the specialty construction business. The
Company has a Revolving Credit and Term Loan Agreement with Fleet Bank which
provides for unsecured borrowings in the aggregate amount of $10,000,000. The
facility consists of a revolving credit line of $5,500,000 and a term loan
facility of $4,500,000. Revolving credit advances must be repaid or converted to
a term loan on July 31, 1996. Term loans are amortized in equal monthly
installments through July 31, 2000. Revolving credit advances bear interest at
the bank's floating base rate (8.25% at February 29, 1996) or, at the Company's
option, at LIBOR plus 200 basis points. Term loans bear interest at the bank's
floating base rate or, at the Company's option, at a fixed rate equal to the
bank's costs of funds plus 200 basis points. At February 29, 1996, the Company
had borrowings of $990,000 under the revolving credit line and $2,659,000 in
term loans.
The Company's cash and cash equivalents were $3,318,000 at the end of fiscal
1996 compared to $3,021,000 at the end of fiscal 1995. Short term investments
were $2,752,000 at the end of fiscal 1996 compared to $2,033,000 at the end of
fiscal 1995. These investments consist primarily of tax exempt municipal bonds,
taxable U.S. Treasury Notes, and other bonds and commercial paper. Funding
requirements for operations and for future growth are expected to be met from
existing cash and investments and funds generated from operations. The Company
believes that these sources will enable it to meet its cash requirements for at
least the next twelve months.
38
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND
To the Board of Directors and Stockholders of GZA GeoEnvironmental Technologies,
Inc. and Affiliate
We have audited the accompanying consolidated balance sheets of GZA
GeoEnvironmental Technologies, Inc. and its subsidiaries and affiliate as of
February 29, 1996 and February 28, 1995 and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the three years
in the period ended February 29, 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of GZA
GeoEnvironmental Technologies, Inc. and its subsidiaries and affiliate as of
February 29, 1996 and February 28, 1995 and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
February 29, 1996 in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand
Boston, Massachusetts
May 6, 1996
39
<PAGE> 5
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
February 29, 1996 and February 28, 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,318,000 $ 3,021,000
Restricted cash -- 1,900,000
Available-for-sale securities 2,752,000 2,033,000
Accounts receivable, net 15,655,000 15,572,000
Due from affiliate 676,000 687,000
Costs and estimated earnings in excess of
billings on uncompleted contracts 4,935,000 5,123,000
Prepaid expenses and other current assets 1,365,000 1,191,000
Refundable income taxes 138,000 493,000
Deferred income taxes 993,000 800,000
- ----------------------------------------------------------------------------------------------------------
Total current assets 29,832,000 30,820,000
Property and equipment, net 5,690,000 5,938,000
Other assets, net 1,193,000 2,121,000
Due from affiliate -- 232,000
- ----------------------------------------------------------------------------------------------------------
Total Assets $36,715,000 $39,111,000
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 990,000 $ 1,869,000
Current portion of long-term debt 799,000 835,000
Accounts payable, trade 5,485,000 6,086,000
Accrued payroll and expenses 4,383,000 5,448,000
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 11,657,000 14,238,000
- ----------------------------------------------------------------------------------------------------------
Long-term debt, less current portion 1,860,000 2,730,000
- ----------------------------------------------------------------------------------------------------------
Deferred income taxes 733,000 458,000
- ----------------------------------------------------------------------------------------------------------
Commitments and contingencies -- --
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized - 1,000,000 shares;
none issued or outstanding -- --
Common stock, $.01 par value; authorized - 14,000,000 shares;
issued and outstanding - 3,865,610 shares at February 29, 1996
and 3,824,544 shares at February 28, 1995 39,000 38,000
Capital in excess of par value 13,949,000 13,866,000
Unrealized losses on available-for-sale securities (17,000) (14,000)
Retained earnings (includes $1,263,000 and $1,502,000 of retained
earnings of the Company's consolidated affiliate at February
29, 1996 and February 28, 1995, respectively) 8,494,000 7,795,000
- ----------------------------------------------------------------------------------------------------------
Total stockholders' equity 22,465,000 21,685,000
- ----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $36,715,000 $39,111,000
==========================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
40
<PAGE> 6
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
For the Years Ended February 29, 1996, and February 28, 1995 and 1994 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $69,825,000 $64,831,000 $59,415,000
Reimbursable expenses 29,667,000 23,836,000 18,795,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net revenues 40,158,000 40,995,000 40,620,000
Costs and expenses:
Salaries and related costs 28,918,000 29,751,000 28,114,000
General and administrative expenses 9,990,000 10,022,000 10,086,000
- ---------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 1,250,000 1,222,000 2,420,000
- ---------------------------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 176,000 272,000 259,000
Gain on sale of equipment -- 41,000 41,000
Gain on insurance settlement 16,000 -- 209,000
Gain on sale of other assets 151,000 -- --
Interest expense (310,000) (263,000) (211,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Total other income 33,000 50,000 298,000
- ---------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before provision for income taxes 1,283,000 1,272,000 2,718,000
Provision for income taxes 485,000 450,000 1,046,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net income from continuing operations $ 798,000 $ 822,000 $ 1,672,000
Discontinued operations (Note 11):
Income (loss) from discontinued operations, net of income tax $ (99,000) $(2,216,000) $ 4,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 699,000 $(1,394,000) $ 1,676,000
=================================================================================================================================
Net income per share from continuing operations $ .21 $ .22 $ .45
=================================================================================================================================
Net (loss) per share from discontinued operations $ (.03) $ (.59) $ --
=================================================================================================================================
Net income (loss) per share $ .18 $ (.37) $ .45
=================================================================================================================================
Weighted average common and common equivalent shares outstanding 3,857,000 3,780,000 3,732,000
=================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
41
<PAGE> 7
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
For the Years Ended Common Stock Treasury Stock
------------------------ ---------------------
February 28, 1994 and 1995 Number of Par Value Capital in Unrealized Retained Number Cost Total
and February 29, 1996 Shares Excess of Losses on Earnings of Stockholders'
Par Value Available- Shares Equity
for-Sale
Securities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
February 28, 1993 3,716,008 $37,000 $13,319,000 $ 7,513,000 7,350 $(32,000) $20,837,000
Issuance of common stock 46,831 1,000 261,000 262,000
Reissuance of treasury stock (7,350) 32,000 32,000
Net income 1,676,000 1,676,000
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
February 28, 1994 3,762,839 38,000 13,580,000 9,189,000 -- -- 22,807,000
Issuance of common stock 61,705 -- 286,000 286,000
Change in unrealized losses
on available-for-sale securities $(14,000) (14,000)
Net loss (1,394,000) (1,394,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
February 28, 1995 3,824,544 38,000 13,866,000 (14,000) 7,795,000 -- -- 21,685,000
Issuance of common stock 41,066 1,000 83,000 84,000
Change in unrealized losses
on available-for-sale securities (3,000) (3,000)
Net income 699,000 699,000
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
February 29, 1996 3,865,610 $39,000 $13,949,000 $(17,000) 8,494,000 -- $ -- $22,465,000
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
42
<PAGE> 8
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended February 29, 1996, and February 28, 1995 and 1994 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 798,000 $ 822,000 $ 1,672,000
Adjustments to reconcile net income from continuing operations to net cash
provided by operating activities:
Discontinued operations (99,000) (2,216,000) 4,000
Depreciation and amortization 1,166,000 1,325,000 1,515,000
Gain on sale of equipment -- (41,000) (41,000)
Gain on insurance settlement (16,000) -- (209,000)
Gain on sale of other assets (151,000) -- --
Provision for deferred income taxes 69,000 (184,000) (66,000)
Changes in assets and liabilities, net effects from businesses acquired:
(Increase) decrease in accounts receivable (83,000) 370,000 (2,265,000)
Decrease (increase) in costs and estimated earnings in excess of
billings on uncompleted contracts 188,000 2,000 (271,000)
(Increase) decrease in prepaid expenses and other current assets (174,000) 456,000 (548,000)
Decrease (increase) in refundable income taxes 355,000 (493,000) 203,000
(Decrease) increase in accounts payable, trade (601,000) 2,181,000 390,000
(Decrease) increase in accrued payroll and expenses (1,065,000) 168,000 403,000
(Decrease) increase in income taxes payable -- (305,000) 305,000
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 387,000 2,085,000 1,092,000
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Decrease (increase) in restricted cash 1,900,000 (1,880,000) (20,000)
(Increase) decrease in available-for-sale securities (709,000) 1,832,000 (67,000)
Proceeds from disposal of equipment 23,000 59,000 199,000
Proceeds from sale of securities 703,000 -- --
Cash proceeds from insurance settlement -- -- 266,000
Acquisition of property and equipment (929,000) (1,284,000) (2,206,000)
Decrease (increase) in other assets 380,000 915,000 (366,000)
Decrease (increase) in due from affiliates 243,000 (919,000) --
Acquisition of businesses, net of cash acquired -- -- (878,000)
Decrease in other long-term liabilities -- -- (67,000)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 1,611,000 (1,277,000) (3,139,000)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net (repayments) borrowings of notes payable (879,000) 1,050,000 (1,535,000)
Proceeds from issuance of long-term debt - - 3,863,000
Repayments of long-term debt (906,000) (1,051,000) (354,000)
Proceeds from issuance of common stock, net 84,000 286,000 262,000
Reissuance of treasury stock - - 32,000
- --------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities (1,701,000) 285,000 2,268,000
- --------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 297,000 1,093,000 221,000
Cash and cash equivalents at beginning of year 3,021,000 1,928,000 1,707,000
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 3,318,000 $ 3,021,000 $ 1,928,000
- --------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest expense paid $ 310,000 $ 263,000 $ 211,000
Income taxes (refunded) paid, net $ (14,000) $ 984,000 $ 962,000
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
43
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Basis of Presentation. The consolidated financial statements include the
accounts of GZA GeoEnvironmental Technologies, Inc. ("the Company"), its
wholly owned subsidiary GZA GeoEnvironmental, Inc. ("GZA"), GZA's wholly
owned subsidiaries GZA Drilling, Inc., ("GZAD") and GZA Texas, Inc., ("Texas")
and GZAD's wholly owned subsidiary Delta Geotechnical Services, Inc., the
Company's wholly owned subsidiary GZA Remediation, Inc. and its wholly owned
subsidiary Grover Enterprises, Inc., the Company's wholly owned subsidiary
GZA Securities Corporation, and the Company's affiliate, through common
ownership and control, Goldberg-Zoino Associates of New York, P.C., doing
business as GZA GeoEnvironmental of New York, P.C. ("GZANY"). All material
intercompany transactions and balances have been eliminated.
Nature of the Business. The Company provides consulting services in geotechnical
engineering, applied geosciences and related environmental disciplines,
environmental seminar training, drilling and test boring services.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Revenues and Cost Recognition. Revenue from engineering service contracts is
recognized as the services are provided. Revenues from long-term contracts are
recognized on the percentage-of-completion method. Under this method, the
Company recognizes the proportion of the total profit anticipated from the
contract which the cost of the work completed bears to the estimated total cost
of the work covered under the contract. For contracts which extend over more
than one year, revisions in cost and earnings estimates during the course of the
work are reflected in the period in which the facts which require the revision
become known. Provisions for estimated losses on uncompleted contracts are made
in the period in which it is determined a loss will occur. For purposes of
determining the percentage of completion, contract costs include all material
and labor costs and those indirect costs related to contract performance.
Contracts relating to government-funded projects may include clauses under which
the contract may be terminated for the convenience of the government, or be
subject to renegotiation at the request of the government based upon certain
contractual conditions. If such contracts are terminated or renegotiated, the
Company will reflect any adjustments in the period they become known.
Cash and Cash Equivalents. Cash and cash equivalents consist of cash on hand and
investments in fixed income securities with original maturity dates of three
months or less.
Concentration of Credit Risk. Financial instruments which potentially expose the
Company to concentrations of credit risk consist primarily of trade accounts
receivable and costs and estimated earnings in excess of billings on uncompleted
contracts.
The Company has not experienced significant losses related to
receivables from individual customers or groups of customers in a particular
industry or geographic area. Due to these factors, no additional credit risk
beyond amounts provided for collection losses is believed inherent in the
Company's accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts.
Available-for-Sale Securities. Available-for-sale securities, consisting
primarily of municipal bonds with original maturity dates of three months or
more, are carried at fair value. The Company limits the amount of its
investments in any one institution to minimize exposure to loss. The investment
portfolio is reviewed monthly and investments are purchased and sold on a
regular basis. Pursuant to Statement of Financial Accounting Standards ("SFAS")
No. 115, "Accounting for Certain Investments in Debt and Equity Securities",
which the Company adopted as of March 1, 1994, the Company has classified its
debt securities as "available-for-sale." Under the provisions of SFAS No. 115,
the securities are reported at fair value, with unrealized gains and losses
excluded from earnings and reported as an adjustment to stockholders' equity.
Property, Equipment and Depreciation. Property and equipment are stated at cost.
Additions and improvements, unless of a relatively minor amount, are
capitalized. Expenditures for normal maintenance and repairs are charged
44
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to expense as incurred. The cost and related accumulated depreciation of
property and equipment sold or otherwise disposed are eliminated from the
accounts and the resulting gains or losses are reflected in income.
For financial reporting purposes, depreciation is provided using
various straight-line and accelerated methods over the estimated useful lives of
the individual assets which range from three to ten years. Leasehold
improvements are amortized on a straight-line basis over the estimated useful
life of the improvement or the remaining life of the lease, whichever is
shorter.
Other Assets. Other assets consist principally of investments in unconsolidated
companies and the excess of cost over net assets acquired resulting from
acquisitions of businesses (goodwill). Amortization of these costs is computed
on a straight-line basis over the estimated useful life of the asset, generally
twenty-five years. For the fiscal years ended February 29, 1996 and February
28, 1995, the Company recorded goodwill amortization expense of approximately
$49,000 and $78,000, respectively.
In accordance with SFAS No. 121 "Accounting for Long Lived Assets," the Company
periodically reviews the propriety of carrying amounts of its long lived and
intangible assets as well as the amortization periods to determine whether
current events and circumstances warrant adjustments to the carrying value or
estimated useful lives. At each balance sheet date, management evaluates
whether there has been a permanent impairment in the value of such assets by
assessing the carrying value against anticipated future operating results.
Factors which management considers in performing the assessment include past
and projected operating results, trends and prospects.
Income Taxes. Federal and state income taxes are based upon financial statement
income using the liability method of accounting for income taxes. Certain items
of income and expense are recognized for income tax purposes in different
periods than for financial reporting purposes. Temporary differences result
primarily from the use of accelerated depreciation methods for tax reporting
purposes.
<TABLE>
Note 2. Condensed Financial Information of Affiliate The condensed financial
information of the Company's affiliate, GZANY, at February 29, 1996 and February
28, 1995 and for each of the three years in the period ended February 29, 1996
is as follows:
Condensed Balance Sheets
February 29, 1996 and February 28, 1995 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 28,000 $ 85,000
Accounts receivable, net 358,000 320,000
Costs and estimated earnings in excess of billings on uncompleted 113,000 297,000
contracts
Due from affiliates 876,000 1,078,000
Refundable income taxes 128,000 183,000
Prepaid expenses 13,000 14,000
- ------------------------------------------------------------------------------------------------------
Total current assets 1,516,000 1,977,000
Property and equipment, net 55,000 27,000
Other assets, net 4,000 3,000
- ------------------------------------------------------------------------------------------------------
Total assets $1,575,000 $2,007,000
======================================================================================================
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 240,000 $ 368,000
Deferred income taxes 71,000 136,000
- ------------------------------------------------------------------------------------------------------
Total current liabilities 311,000 504,000
- ------------------------------------------------------------------------------------------------------
Common stock 1,000 1,000
Retained earnings 1,263,000 1,502,000
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,264,000 1,503,000
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,575,000 $2,007,000
======================================================================================================
</TABLE>
45
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Condensed Statements of Operations
<CAPTION>
For the Years Ended February 29, 1996 and
February 28, 1995 and 1994 1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenues $1,390,000 $1,596,000 $2,109,000
Costs and expenses 1,752,000 1,705,000 1,959,000
- ---------------------------------------------------------------------------------------------
Income (loss) from operations (362,000) (109,000) 150,000
Provision (benefit) for income taxes (145,000) (52,000) 84,000
- ---------------------------------------------------------------------------------------------
Net income (loss) $ (217,000) $ (57,000) $ 66,000
- ---------------------------------------------------------------------------------------------
</TABLE>
Accounts receivable, net, include $42,000 due from GZA at February 29, 1996 and
$0 due at February 28, 1995. Substantially all the amounts shown as due from
affiliates at February 29, 1996 and 1995 were due from GZA. In addition,
approximately $335,000, $361,000 and $71,000 of net revenues were billed to GZA
in fiscal 1996, 1995 and 1994, respectively.
46
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Restricted Cash
In July 1994, the Company deposited $1,900,000 into a bank account, of which
funds $1,690,000 were restricted in response to a court order pending the
outcome of legal action. In May 1995, the case was settled and the restricted
funds were released.
Note 4. Available-for-Sale Securities
On March 1, 1994, the Company adopted SFAS No. 115. The effect on the Company's
financial statements of adoption of SFAS No. 115 was immaterial. Unrealized
losses on available-for-sale securities at February 29, 1996 were approximately
$28,000 gross and $17,000 net of deferred taxes. The maturities of
available-for-sale securities held at February 29, 1996 are $1,892,000 within
one year and $860,000 from one to five years. Certain of these
available-for-sale securities have maturities in excess of one year but are
classified as current assets consistent with their use. Gross realized gains and
losses from available-for-sale securities were immaterial to the Company's
operating results.
<TABLE>
Note 5. Accounts Receivable Accounts receivable consists of the following:
<CAPTION>
February 29, 1996 February 28, 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable $12,710,000 $12,836,000
Retainage 3,719,000 3,420,000
- -------------------------------------------------------------------------------
16,429,000 16,256,000
Less-Allowance for doubtful accounts 774,000 684,000
- -------------------------------------------------------------------------------
$15,655,000 $15,572,000
===============================================================================
</TABLE>
All amounts billed under retainage provisions of long-term contracts are
expected to be collected within one year of completion of the contracts.
<TABLE>
Note 6. Unbilled Costs and Estimated Earnings on Uncompleted Contracts
Unbilled costs and estimated earnings on uncompleted contracts, which represent
revenues earned but not billed as of February 29, 1996 under the terms of the
related contracts, are as follows:
<CAPTION>
February 29, 1996 February 28, 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
Costs incurred on uncompleted contracts $2,930,000 $3,152,000
Estimated earnings 2,005,000 1,971,000
- --------------------------------------------------------------------------------------
$4,935,000 $5,123,000
======================================================================================
</TABLE>
Included in unbilled costs and estimated earnings on uncompleted contracts are
reserves of $1,200,000 and $981,000 as of February 29, 1996 and February 28,
1995, respectively, based on management's estimates of the contract values.
Management continuously evaluates and adjusts specific reserves based on
progress of contract negotiations and management's judgment of the ultimate
contract value. At the point when material changes are renegotiated or known,
the Company will reflect the appropriate adjustments. Costs incurred on
uncompleted contracts are typically billed at the end of a two-week or four-week
billing cycle.
47
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Note 7. Property and Equipment
Property and equipment are stated at cost and consist of the following:
<CAPTION>
February 29, 1996 February 28, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Machinery and equipment $ 2,470,000 $ 2,285,000
Laboratory and technical equipment 3,208,000 3,110,000
Furniture, fixtures and computer equipment 6,124,000 5,642,000
Motor vehicles, rigs and trucks 645,000 588,000
Leasehold improvements 2,408,000 2,372,000
- ------------------------------------------------------------------------------------------
14,855,000 13,997,000
Less - Accumulated depreciation and amortization 9,165,000 8,059,000
- ------------------------------------------------------------------------------------------
$ 5,690,000 $ 5,938,000
==========================================================================================
</TABLE>
Depreciation expense for the years ended February 29, 1996 and February 28, 1995
and 1994 was $1,117,000, $1,247,000 and $1,340,000, respectively
Note 8. Financing and Other Obligations
On February 28, 1994, the Company entered into a Revolving Credit and Term Loan
Agreement which replaced its previous credit facility with the same bank.
Notes Payable. Notes payable represent borrowings from a bank pursuant to a
revolving line of credit. The Company has available an unsecured revolving line
of credit under which it can borrow up to $5,500,000 in a combination of cash
and letters of credit, with interest payable monthly at the bank's corporate
base rate (8.25% at February 29, 1996) or the applicable LIBOR rate plus 200
basis points. Under the terms of the line of credit, the Company is required to
maintain a minimum net worth, working capital, current ratio, quick ratio,
tangible net worth and cash flow coverage ratio. Borrowings under this revolving
credit agreement totaled $990,000 at February 29, 1996 and $1,869,000 at
February 28, 1995. In addition, the Company had $435,000 in letters of credit
outstanding at February 29, 1996, all of which are to expire within the next
twelve months.
<TABLE>
Long-term Debt. Long-term debt consists of the following:
<CAPTION>
February 29, February 28,
1996 1995
- -----------------------------------------------------------------------------------------------------------
<C> <C> <C>
Term facility with interest rates ranging from 6.99% to 8.25% at February 29,
1996, payable in monthly installments of $66,565 $2,659,000 $3,565,000
Less - Current portion 799,000 835,000
- -----------------------------------------------------------------------------------------------------------
$1,860,000 $2,730,000
===========================================================================================================
</TABLE>
The Company also has available a $4,500,000 equipment facility, providing for
term borrowings amortized through July 31, 2000 bearing interest at the bank's
corporate base rate or a fixed rate over the term of the loan. Borrowings under
the term loan facility totaled $2,659,000 at February 29, 1996 and $3,565,000 at
February 28, 1995. The term loan facility requires maintenance of the same
ratios and financial covenants as the revolving line of credit. Borrowings under
the term loan facility expire at various dates from 1997 to 2000.
48
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Aggregate maturities of long term debt during the next five fiscal years are as
follows:
<CAPTION>
Fiscal Year Ending
- ------------------------------------------------------------------------------
<C> <C>
1997 $ 799,000
1998 694,000
1999 1,129,000
2000 37,000
2001 --
- ------------------------------------------------------------------------------
$2,659,000
==============================================================================
</TABLE>
<TABLE>
Note 9. Accrued Payroll and Expenses
Accrued payroll and expenses consist of the following:
<CAPTION>
February 29, 1996 February 28, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued payroll and related benefits $2,830,000 $2,991,000
Legal and claims reserves 743,000 1,216,000
Reserve for discontinued operations 481,000 308,000
Other 329,000 933,000
- ----------------------------------------------------------------------------
$4,383,000 $5,448,000
============================================================================
</TABLE>
Note 10. Stockholders' Equity
Stock Option Plans. Under the Company's 1989 Incentive Stock Option Plan, as
amended (the "Incentive Plan"), incentive stock options (as defined in Section
422A of the Internal Revenue Code of 1986, as amended) to purchase shares of
common stock may be issued to key employees including executive officers and
directors who are employees. The Incentive Plan is administered by the Company's
Board of Directors, which designates the optionees, option prices (which may not
be less than fair market value on the date of grant), date of grant, and terms
of options (which may not be more than ten years). All Incentive Plan options
are non-assignable. The Incentive Plan terminates when all options issuable
thereunder have been exercised.
During fiscal 1994, the shareholders voted to increase the number of
shares reserved for issuance under the Incentive Plan from 310,000 to 510,000
shares. During fiscal 1994 and fiscal 1996 the Board of Directors approved
reductions, from $6.28 to $5.25 and $5.70 to $5.25, respectively, in the
exercise price of outstanding options under the Incentive Plan. The reduced
exercise prices were not less than fair market value of the Company's common
stock on the date of the reductions and the reductions of the exercise prices of
the options did not result in compensation expense charges.
49
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Information related to the Incentive Plan is summarized as follows:
<CAPTION>
Incentive Stock Options Outstanding
-----------------------------------
Shares Exercise Price per Share
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at February 28, 1993 196,034 $6.28
Granted 98,600 6.28
Cancelled (18,700) 5.25 - 6.28
- -------------------------------------------------------------------------------
Balance at February 28, 1994 275,934 5.25
Granted 36,000 5.25 - 5.70
Cancelled (27,378) 5.25
- -------------------------------------------------------------------------------
Balance at February 28, 1995 284,556 5.25 - 5.70
Granted 23,600 5.25
Cancelled (59,878) 5.25 - 5.70
- -------------------------------------------------------------------------------
Balance at February 29, 1996 248,278 $5.25
===============================================================================
</TABLE>
As of February 29, 1996 and February 28, 1995 options for 168,498 and 164,056
shares, respectively, were exercisable, and options for 261,722 and 225,444
shares, respectively, were available to be granted under the Incentive Plan.
Under the Company's 1989 Non-Qualified Stock Option Plan (the "Non-Qualified
Plan"), up to 15,000 common stock options which are not "incentive stock
options," as defined in Section 422A, may be issued to key employees, executive
officers and directors of the Company, including directors who are not
employees. The Non-Qualified Plan is administered by the Company's Board of
Directors, which designates the optionees, option price, date of grant, and
terms of options (which may not be more than ten years). All Non-Qualified Plan
options are non-assignable. The Non-Qualified Plan terminates when all options
issuable thereunder have been exercised.
During fiscal 1994, the Board of Directors approved a reduction, from
$7.00 to $5.25, in the exercise price of outstanding options under the
Non-Qualified Plan. The reduction of the exercise price of these options did not
result in compensation expense charges.
During fiscal 1994, options to purchase 5,000 shares were granted under
the Non-Qualified Plan. At February 28, 1995, options to purchase 10,000 shares
of common stock at an exercise price of $5.25 per share were outstanding under
the Non-Qualified Plan. At February 29, 1996, all such options were exercisable.
On March 14, 1995, the Company's Board of Directors approved the GZA
1995 Stock Incentive Plan (the "Stock Plan"), and such Stock Plan was
subsequently approved by the shareholders on July 11, 1995. Pursuant to the
Stock Plan, certain key employees may be granted, at no cost, shares of
"restricted stock" of the Company in respect of past services. A condition of
receipt of any award under the Stock Plan is that the employee must either own,
or agree to acquire within one year, an equivalent number of shares. All shares
awarded under the Stock Plan vest over a five year period. The maximum number
of shares that may be granted under the Stock Plan is 200,000. Pursuant to the
Stock Plan, in March 1996, and April 1995, 5,053 and 12,418 shares,
respectively, were issued to certain employees.
Note 11. Discontinued Operations
The Company and P&P Service, Inc. (P&P) were equal joint venture partners of
Fonditek International, Inc. (Fonditek), which performed specialty construction
services. As reported in financial statements for fiscal 1995 the Company in May
1995 adopted a plan of complete liquidation and abandoned the specialty
construction business and reported results of that business as discontinued
operations.
The loss from discontinued operations for fiscal year ended February
28, 1995, net of tax benefit of $346,000, was $704,000 and the estimated loss
from liquidation and disposal of the specialty construction
50
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
business, net of tax benefit, for the fiscal year ended February 28, 1995 was
approximately $1,512,000. Revenues from discontinued operations for the years
ended February 28, 1995 and 1994 were $1,129,000 and $7,512,000, respectively.
In fiscal 1996 a settlement agreement for liquidation of the assets and
satisfaction or assumption of liabilities and settlement of related disputes was
entered into by P&P, Fonditek and the Company. To reflect the net effect of the
settlement for the Company's investment and related rights and obligations, the
Company recorded an additional loss from discontinued operations of $99,000, net
of tax benefit of $68,000, in fiscal 1996.
51
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Note 12. Income Taxes
Provision (credit) for income taxes from continuing operations consisted of the
following:
<CAPTION>
February 29, 1996 February 28, 1995 February 28, 1994
- -------------------------------------------------------------------------------------
Currently payable:
<S> <C> <C> <C>
State $ 162,000 $ 189,000 $ 280,000
Foreign 147,000 -- --
Federal 32,000 445,000 832,000
- -------------------------------------------------------------------------------------
341,000 634,000 1,112,000
- -------------------------------------------------------------------------------------
Deferred (prepaid):
State 23,000 (44,000) (14,000)
Federal 121,000 (140,000) (52,000)
- -------------------------------------------------------------------------------------
144,000 (184,000) (66,000)
- -------------------------------------------------------------------------------------
$ 485,000 $ 450,000 $ 1,046,000
=====================================================================================
</TABLE>
Deferred income taxes are provided to account for temporary differences between
the financial reporting basis and income tax basis of the Company's assets and
liabilities using the liability method of accounting for income taxes. Deferred
taxes represent the future income tax effect of reported differences between the
book and tax bases of the Company's assets and liabilities.
<TABLE>
Reconciliations of the U.S. federal statutory income tax rate to the effective
income tax rate are as follows:
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory income tax rate 34% 34% 34%
State and foreign income tax, net of federal income tax benefit 11 (10) 6
Interest income exempt from federal tax (4) 6 (2)
Reduction of valuation allowance (4) -- --
Non-deductible items 1 5 0
- --------------------------------------------------------------------------------------------
Effective income tax rate 38% 35% 38%
============================================================================================
</TABLE>
<TABLE>
GZA's net deferred tax asset at February 29, 1996 and February 28, 1995 consists
of gross deferred tax liabilities of $687,000 and $622,000 and deferred tax
assets of $1,402,000 and $1,395,000, respectively. The components of GZA's
deferred tax liabilities (assets) as of February 29, 1996 and February 28, 1995
are as follows:
<CAPTION>
1996 1995
- -------------------------------------------------------------------
<S> <C> <C>
Cash vs. accrual method of accounting $ 92,000 $ 164,000
Fixed assets, principally depreciation 594,000 458,000
Bad debt write-off -- (431,000)
Allowance for doubtful accounts (497,000) (272,000)
Restructuring reserve (319,000) (10,000)
Accrued vacation (258,000) (182,000)
Other accrued expenses (327,000) (500,000)
</TABLE>
52
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
Valuation allowance 455,000 431,000
- -------------------------------------------------------------------
Total net deferred tax assets $(260,000) $(342,000)
===================================================================
</TABLE>
53
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
The components of GZA's deferred income tax provision (benefit) from continuing
operations for the years ended February 29, 1996 and February 28, 1995 are as
follows:
<CAPTION>
1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Cash vs. accrual method of accounting $(71,000) $ 36,000
Depreciation 72,000 (104,000)
Allowance for doubtful accounts (31,000) (87,000)
Restructuring reserves 10,000 72,000
Other accrued expenses 164,000 (101,000)
- -------------------------------------------------------------------------
Total deferred income tax provision (benefit) $144,000 $(184,000)
=========================================================================
</TABLE>
Note 13. Retirement and Benefit Plans
The Company maintains a Profit Sharing Plan under Section 401(k) of the Internal
Revenue Code which covers all employees who meet minimum age and service
requirements. Annual Company contributions are determined by the Board of
Directors. The year-end for the profit sharing plan is December 31. Amounts
contributed by the Company under the plan vest according to a seven-year vesting
schedule. To participate in the plan, an employee must contribute a minimum of
2% of his or her base salary, and may contribute additional amounts. Participant
contributions are fully vested at all times. The Company's contributions to the
plan were $709,000, $707,000 and $673,000 in fiscal 1996, 1995 and 1994,
respectively. In fiscal 1996, 1995 and 1994, the Board of Directors voted to
make 25% of the Company's contribution to the Plan in stock of the Company. As a
result, in fiscal years 1996, 1995 and 1994, respectively, 50,663, 38,999 and
23,455 shares of the Company's stock (having a total fair value of approximately
$177,000, $176,000 and $158,000 on the date of contribution) were contributed in
addition to cash contributions of $532,000, $531,000 and $515,000, respectively.
The Company also maintains an employee stock purchase plan under which
220,000 shares of the Company's common stock are available for purchase by its
employees. Eligible employees can purchase shares of the stock at the lower of
85% of the fair market value of the stock on the first or last day of each six
month period beginning on March 1 or September 1. Monies to purchase the shares
are withheld from employee's pay through payroll deductions. Under the plan,
22,510, 26,542 and 24,668 shares were purchased for fiscal 1996, 1995 and 1994,
respectively.
Note 14. Related Party Transactions
The Company leases office space from certain stockholders and from entities
owned by certain stockholders and employees. Lease payments, net of sublease
income, to these entities totaled $989,958, $1,027,000 and $1,047,000 in fiscal
1996, 1995 and 1994, respectively. Due from affiliates represents amounts due
from the Fonditek joint venture for working capital advances. Due from
affiliates includes a note receivable of $379,000 due in monthly installments
which bears interest at the rate of 7%. These amounts will be settled as part of
the agreement to discontinue Fonditek's operations which is discussed in Note
11.
Note 15. Commitments and Contingencies
Commitments. The Company leases certain facilities under the terms of various
noncancelable operating leases, including leases with related parties described
in Note 14. Lease terms generally range from two to five years.
Additionally, the Company leases certain equipment under operating leases.
<TABLE>
Future minimum lease payments under non-cancelable operating leases are as
follows:
<S> <C>
1997 $1,689,000
</TABLE>
54
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
1998 1,360,000
1999 933,000
2000 798,000
2001 656,000
- ----------------------------------------------------------------------
Total minimum lease payments $5,436,000
======================================================================
</TABLE>
Rent expense charged to operations was $2,224,000, $2,201,000 and $2,266,000 in
fiscal 1996, 1995 and 1994, respectively.
Contingencies. The Company is a party to several legal actions arising in the
normal course of business. Management believes that the outcomes of the legal
actions to which it is a party will not, in the aggregate, have a material
adverse effect on the results of operations or financial condition of the
Company.
The Company's services involve risks of significant liability for
environmental and property damage, personal injury, economic loss, and costs
assessed by regulatory agencies. Claims may potentially be asserted against the
Company under federal and state statutes, common law, contractual
indemnification agreements or otherwise.
The Company has entered into several long-term (more than one fiscal
year) private and government funded contracts. These contracts are subject to
certain risks regarding ultimate contract values. Under one such
government-funded contract, involving services provided by the Company as a
subcontractor, the amount of services required of the Company has exceeded the
original contract estimate, and the government agency funding the project has
sought to renegotiate with the prime contractor for a reduction in the total
amounts billed. The prime contractor is engaged in final stages of discussions
with the government agency to resolve the contract dispute. Based on the
progress of discussions, the Company believes that it has recorded adequate
reserves relating to this contract. The outcome of the pending negotiations
could materially impact the future operating results of the Company, if the
price ultimately received by the Company for the additional work varies
significantly, either positively or negatively, from that currently anticipated
by the Company.
55
<PAGE> 21
SUPPLEMENTAL INFORMATION
Price Range of Common Stock (Unaudited)
The Company's common stock is traded in the over-the-counter market under the
symbol "GZEA" and is included in the National Association of Securities Common
Dealers, Inc. National Market System ("NASDAQ"). The following table sets forth
the quarterly range of high and low prices per share of common stock for the
fiscal year 1996, as reported by NASDAQ.
<TABLE>
<CAPTION>
Fiscal 1996: High Low
- ---------------------------------------------------------
<S> <C> <C>
First Quarter 4-7/8 2-3/4
Second Quarter 4-1/2 3
Third Quarter 3-7/8 2-3/4
Fourth Quarter 3-7/8 2-7/8
</TABLE>
As of May 15, 1996, the Company's common stock was held by 370 holders of
record. The Company has never paid cash dividends on its common stock, and has
no intention to pay cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings to finance growth.
Selected Quarterly Financial Data
<TABLE>
<CAPTION>
Three months ended 2/29/96 11/30/95 8/31/95 5/31/95
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
In thousands except per share amounts (unaudited)
Revenues $ 16,480 $ 19,743 $ 17,327 $ 16,275
Net revenues 9,303 10,601 10,177 10,077
Income (loss) from continuing operations (247) 1,031 99 367
Net income (loss) from continuing operations (32) 568 72 190
Net income (loss) from discontinued operations 66 -- (165) --
Net income (loss) 34 568 (93) 190
Net income (loss) per share from continuing operations $ (.01) $ .15 $ .02 $ .05
Net income (loss) per share from discontinued operations $ .01 $ -- $ (.04) $ --
Net income (loss) per share $ -- $ .15 $ (.02) $ .05
Weighted average common and
common equivalent shares outstanding 3,866 3,865 3,850 3,839
Three months ended 2/28/95 11/30/94 8/31/94 5/31/94
- ---------------------------------------------------------------------------------------------------------------
In thousands except per share amounts (unaudited)
Revenues $ 15,584 $ 20,128 $ 15,530 $ 13,589
Net revenues 9,584 10,601 10,649 10,161
Income (loss) from continuing operations (569) 430 704 657
Net income (loss) from continuing operations (139) 277 302 382
Net (loss) from discontinued operations (2,001) (25) (80) (110)
</TABLE>
56
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
Net income (loss) (2,140) 252 222 272
Net income (loss) per share from continuing operations $ (.04) $ .07 $ .08 $ .10
Net income (loss) per share from discontinued operations $ (.53) $ -- $ (.02) $ (.03)
Net income (loss) per share $ (.57) $ .07 $ .06 $ .07
Weighted average common and
common equivalent shares outstanding 3,786 3,795 3,810 3,797
</TABLE>
57
<PAGE> 23
<TABLE>
<S> <C> <C>
CORPORATE INFORMATION
Directors and Executive Officers Stockholders Information Corporate Headquarters
Donald T. Goldberg Independent Accountants GZA GeoEnvironmental
Chairman of the Board of Directors Coopers & Lybrand L.L.P. Technologies, Inc.
Boston, Massachusetts 320 Needham Street
Newton Upper Falls
Leonard M. Seale Counsel Massachusetts 02164
Director Foley, Hoag & Eliot
President, and Boston, Massachusetts
Chief Executive Officer
Registrar and Transfer Agent Operations
State Street Bank and Trust Company
Joseph P. Hehir Post Office Box 366 The Company conducts all its operations
Chief Financial Officer Boston, Massachusetts 02101 through its wholly owned subsidiaries GZA
800-426-5523 GeoEnvironmental, Inc. (GZA) and GZA
M. Joseph Celi Remediation, Inc. (GZAR); and through
Director Common Stock Listing GZA's wholly owned subsidiary GZA
Executive Vice President The common stock of GZA GeoEnvironmental Drilling, Inc.; through the Company's
Technologies, Inc. is traded over the affiliate Aquaterra Environmental
Michael A. Powers counter in the NASDAQ national market Consultants Limited, a joint venture of
Director quotation system under the symbol GZEA. the Company and Carl Bro Group (UK) Ltd.;
Senior Vice President, and through the Company's affiliate
GZA GeoEnvironmental, Inc. Annual Meeting Goldberg-Zoino of New York, P.C. (doing
The Annual Meeting of Stockholders will business as GZA GeoEnvironmental of New
Irvine G. Reinig II be held at 10:00 a.m. on July 9, 1996 at York), a New York professional service
Director the Sheraton Needham Hotel, 100 Cabot corporation wholly -owned by officers,
Street, Needham, Massachusetts directors, and stockholders of the
Lawrence Feldman Company. The Company was incorporated in
Director Stockholders Reports Delaware on May 5, 1989.
Senior Vice President A copy of the Company's 10-K, as filed
GZA GeoEnvironmental, Inc. with the Securities and Exchange
Commission, may be obtained without
Timothy W. Devitt charge by writing to Investor Relations,
Director GZA GeoEnvironmental Technologies, Inc.,
320 Needham Street, Newton Upper Falls,
Paul F. Gorman Massachusetts 02164
Director
Lewis Mandell
Director
Thomas W. Philbin
Director
John E. Ayres
Executive Vice President,
Business Development
</TABLE>
58
<PAGE> 24
Richard M. Simon
Executive Vice President,
Professional Practice
59
<PAGE> 1
Exhibit 22.1
Subsidiaries of the Registrant
------------------------------
Name of Subsidiary Jurisdiction of
- ------------------ ---------------
Incorporation
-------------
1. GZA GeoEnvironmental, Inc. Massachusetts
2. GZA Remediation, Inc. Massachusetts
3. GZA Securities Corporation Massachusetts
4. GZA Drilling, Inc. (a wholly-owned Massachusetts
subsidiary of GZA GeoEnvironmental, Inc.)
5. Delta Geotechnical Services, Inc., (a wholly-owned Massachusetts
subsidiary of GZA Drilling, Inc.)
6. Grover Enterprises, Inc. (a wholly-owned subsidiary Massachusetts
of GZA Remediation, Inc.)
7. GZA Texas, Inc. (a wholly-owned subsidiary of GZA Massachusetts
GeoEnvironmental, Inc.)
60
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
GZA GeoEnvironmental Technologies, Inc. of Form S-8 (File No. 33-63940 and File
No. 33-75688) of our reports dated May 6, 1996, on our audits of the
consolidated financial statements and financial statement schedule of GZA
GeoEnvironmental Technologies, Inc. as of February 29, 1996 and February 28,
1995, and for the three years in the period ended February 29, 1996, which
reports are included and incorporated by reference in the Company's 1996 Form
10-K. Exhibit 13.1
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 24, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF THE REGISTRANT AT FEBRUARY 29, 1996 AND
FEBRUARY 28, 1995 AND CONSOLIDATED STATEMENTS OF OPERATIONS OF THE REGISTRANT
FOR THE TWELVE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 AND 1994
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS IN THE
FORM 10-K FOR THE TWELVE MONTH PERIOD ENDED FEBRUARY 29, 1996.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<EXCHANGE-RATE> 1
<CASH> 3,318,000
<SECURITIES> 2,752,000
<RECEIVABLES> 15,655,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,832,000
<PP&E> 5,690,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 36,715,000
<CURRENT-LIABILITIES> 11,657,000
<BONDS> 0
<COMMON> 39,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 36,715,000
<SALES> 0
<TOTAL-REVENUES> 69,825,000
<CGS> 0
<TOTAL-COSTS> 68,575,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 310,000
<INCOME-PRETAX> 1,283,000
<INCOME-TAX> 485,000
<INCOME-CONTINUING> 798,000
<DISCONTINUED> (99,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 699,000
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
