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Settlement of Lawsuits
3 Months Ended
Dec. 31, 2011
Settlement Of Lawsuits  
Settlement of Lawsuits

Note 14 – Settlement of Lawsuits

 

On December 30, 2011, the Company entered into a definitive Settlement and Release Agreement (the “Agreement”) settling two lawsuits by a former Chairman of the Company. As previously disclosed, Thomas K. Barry sought damages from the Company for failure to transfer to Mr. Barry a key-man life insurance policy and for terminating payments under a deferred compensation agreement. Please refer to the Company’s Form 10-K for the fiscal year ended September 30, 2011 for disclosure regarding the original claims. Under the Agreement, the Company paid to Mr. Barry $285,000 on January 13, 2012, and beginning next year the Company will pay Mr. Barry on or before each January 5, $40,000 plus interest compounded annually at 4% (less than one-half of the amount in Mr. Barry’s deferred compensation agreement) for the longer of ten years or Mr. Barry’s lifetime. The Company will pay for a $500,000 term life insurance policy on Mr. Barry’s life through January 5, 2031, if a policy can be obtained for less than $15,000 annually. If such a policy cannot be obtained, the Company will pay Mr. Barry $15,000 annually for the longer of ten years or Mr. Barry’s lifetime up to a maximum of 20 payments. In addition, the Company will provide certain health and prescription drug insurance benefits to Mr. Barry and his wife for life. The Company and Mr. Barry exchanged mutual general releases. The Company had previously reserved for past due payments as well as accrued a liability for future payments under the deferred compensation agreement and key-man life insurance policy. The savings associated with the reversal of past due payments and change in the liabilities for future payments under the deferred compensation agreement were recognized as a decrease to operating and maintenance expense. The reversal of accrued liability for the key man insurance policy was recognized in other income. The after tax benefit that resulted from these entries is approximately $400,000 after accounting for legal fees associated with the settlement which are shown in other deductions, net.