-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tyen/IM/xaYRHeWHOOlYxdYFzMierEHpP08UE9Bz20XMuoXa1fDuwyVleGLFTGcV ayMeauvHlTP7412UAGfGnQ== 0000950135-96-002316.txt : 19960525 0000950135-96-002316.hdr.sgml : 19960525 ACCESSION NUMBER: 0000950135-96-002316 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960524 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GZA GEOENVIRONMENTAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000852004 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 043051642 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17882 FILM NUMBER: 96572505 BUSINESS ADDRESS: STREET 1: 320 NEEDHAM ST CITY: NEWTON UPPER FALLS STATE: MA ZIP: 02164 BUSINESS PHONE: 6179690700 MAIL ADDRESS: STREET 1: 320 NEEDHAM STREET CITY: NEWTON UPPER FALLS STATE: MA ZIP: 02164 10-K 1 GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. 1 SECURITIES AND EXCHANGE COMMISSION ---------------------------------- WASHINGTON, D.C. 20549 ---------------------- FORM 10-K --------- Annual Report Pursuant to Section 13 or 15(d) --------------------------------------------- of the Securities Exchange Act of 1934 -------------------------------------- FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996 Commission File No. O-13965 ----------------- GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. --------------------------------------- (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 --------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (617) 969-0700 -------------- 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 ------------------- 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 --- --- 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 --- --- Number of Shares of Common Stock outstanding at May 15, 1996 3,929,486 --------- 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 ----------------------------------- 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. -- 2 PART I ------ ITEM 1. BUSINESS - ---------------- GENERAL - ------- 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 - -------- 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. 2 3 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 3 4 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 4 5 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. 5 6 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 - -------------- 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. 6 7 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 - --------- 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 - ------- 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 - ----------- 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 - ---------------------------------- 7 8 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 8 9 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 - -------------------------------------------------- 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 - --------- 9 10 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 - ------------------ 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 - ------------------------- 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 - ----------------------------------------------------------- Not Applicable PART II 10 11 ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS - -------------------------------------------------------------------------------- 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 - ------------------------------- 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. 11 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - ------------------------------------------------------------------------------- OF OPERATIONS - ------------- 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 - --------------------------------------------------- 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 - ----------------------------------------------------------------------- FINANCIAL DISCLOSURE - -------------------- None. PART III -------- ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; - ---------------------------------------------------------------------------- EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND - --------------------------------------------------------------------------- MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------------- 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 ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) - -------------------------------------------------------------------------------- AND (2) - ------- 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 12 13 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 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 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 16 SCHEDULE II GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE VALUATION AND QUALIFYING ACCOUNTS Years Ended February 28, 1994, February 28, 1995, and February 29, 1996
Balance at Charged to beginning costs and Balance at Description of year expenses Write-offs end of year ----------- ------- -------- ---------- ----------- 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
16 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 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 EX-10.22 2 STOCKHOLDERS' AGREEMENT 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 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 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 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 EX-10.23 3 VOTING TRUST AGREEMENT 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 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 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 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 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 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 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 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 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 EX-10.24 4 INDEMNIFICATION AGREEMENT 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 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 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 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 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 EX-10.49 5 PURCHASE AND SALE AGREEMENT 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 2 /s/ By: - ----------------------------- ------------------------------ JOSEPH D. GUERTIN /s/ By: - ----------------------------- ------------------------------ STEVEN J. TRETTEL 33 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 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 EX-10.50 6 SUMMARY OF MEMORANDUM 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. EX-13.1 7 ANNUAL REPORT 1 Exhibit 13.1 SUMMARY OF FINANCIAL INFORMATION
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: 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
36 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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.
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 - --------------------------------------------------------------------------------------------------------------------- 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)
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 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 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 5 CONSOLIDATED BALANCE SHEETS
February 29, 1996 and February 28, 1995 1996 1995 - ---------------------------------------------------------------------------------------------------------- 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 ==========================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 40 6 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended February 29, 1996, and February 28, 1995 and 1994 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------------------- 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 =================================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 41 7 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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 - ------------------------------------------------------------------------------------------------------------------------------------ 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 ====================================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 42 8 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended February 29, 1996, and February 28, 1995 and 1994 1996 1995 1994 - -------------------------------------------------------------------------------------------------------------------- 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 ====================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 43 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 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. 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 - ------------------------------------------------------------------------------------------------------ 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 ======================================================================================================
45 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Statements of Operations
For the Years Ended February 29, 1996 and February 28, 1995 and 1994 1996 1995 1994 - --------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------
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 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. Note 5. Accounts Receivable Accounts receivable consists of the following:
February 29, 1996 February 28, 1995 - ------------------------------------------------------------------------------- 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 ===============================================================================
All amounts billed under retainage provisions of long-term contracts are expected to be collected within one year of completion of the contracts. 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:
February 29, 1996 February 28, 1995 - -------------------------------------------------------------------------------------- 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 ======================================================================================
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 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Property and Equipment Property and equipment are stated at cost and consist of the following:
February 29, 1996 February 28, 1995 - ------------------------------------------------------------------------------------------ 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 ==========================================================================================
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. Long-term Debt. Long-term debt consists of the following:
February 29, February 28, 1996 1995 - ----------------------------------------------------------------------------------------------------------- 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 ===========================================================================================================
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 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Aggregate maturities of long term debt during the next five fiscal years are as follows:
Fiscal Year Ending - ------------------------------------------------------------------------------ 1997 $ 799,000 1998 694,000 1999 1,129,000 2000 37,000 2001 -- - ------------------------------------------------------------------------------ $2,659,000 ==============================================================================
Note 9. Accrued Payroll and Expenses Accrued payroll and expenses consist of the following:
February 29, 1996 February 28, 1995 - -------------------------------------------------------------------------------- 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 ============================================================================
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 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Information related to the Incentive Plan is summarized as follows:
Incentive Stock Options Outstanding ----------------------------------- Shares Exercise Price per Share - ------------------------------------------------------------------------------- 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 ===============================================================================
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 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 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12. Income Taxes Provision (credit) for income taxes from continuing operations consisted of the following:
February 29, 1996 February 28, 1995 February 28, 1994 - ------------------------------------------------------------------------------------- Currently payable: 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 =====================================================================================
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. Reconciliations of the U.S. federal statutory income tax rate to the effective income tax rate are as follows:
1996 1995 1994 - -------------------------------------------------------------------------------------------- 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% ============================================================================================
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:
1996 1995 - ------------------------------------------------------------------- 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)
52 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Valuation allowance 455,000 431,000 - ------------------------------------------------------------------- Total net deferred tax assets $(260,000) $(342,000) ===================================================================
53 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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:
1996 1995 - ------------------------------------------------------------------------- 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) =========================================================================
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. Future minimum lease payments under non-cancelable operating leases are as follows: 1997 $1,689,000
54 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1998 1,360,000 1999 933,000 2000 798,000 2001 656,000 - ---------------------------------------------------------------------- Total minimum lease payments $5,436,000 ======================================================================
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 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.
Fiscal 1996: High Low - --------------------------------------------------------- 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
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
Three months ended 2/29/96 11/30/95 8/31/95 5/31/95 - --------------------------------------------------------------------------------------------------------------- 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)
56 22 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
57 23 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
58 24 Richard M. Simon Executive Vice President, Professional Practice 59 EX-22.1 8 SUBSIDIARIES OF THE REGISTRANT 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 EX-23.2 9 CONSENT OF COOPERS & LYBRAND L.L.P. 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 EX-27 10 FINANCIAL DATA SCHEDULE
5 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. 1 U.S. DOLLARS YEAR FEB-29-1996 MAR-01-1995 FEB-29-1996 1 3,318,000 2,752,000 15,655,000 0 0 29,832,000 5,690,000 0 36,715,000 11,657,000 0 39,000 0 0 0 36,715,000 0 69,825,000 0 68,575,000 0 0 310,000 1,283,000 485,000 798,000 (99,000) 0 0 699,000 .18 0
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