SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 12, 1996
COMPREHENSIVE ENVIRONMENTAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Delaware 0-17072 11-2844247
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
72B Cabot Street,
West Babylon, New York 11704
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (516) 694-7060
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Effective as of the close of business on September 12, 1996, Michael
O'Reilly ("O'Reilly), the President of Trade-Winds Environmental Restoration,
Inc. ("Trade-Winds"), the principal operating subsidiary of Comprehensive
Environmental Systems, Inc. (the "Company"), became Chairman, President, Chief
Executive Officer and sole director of the Company as a result of the
resignations of Donald Kessler ("Kessler"), who had been Chairman, President and
Chief Executive Officer of the Company; Leo J. Mangan ("Mangan"), who had been
Chief Operating Officer and a director of the Company; and James W. Nearen
("Nearen"), who had been a director of the Company. Their resignations were
effected pursuant to separate termination agreements (respectively, the "Kessler
Termination Agreement," "Mangan Termination Agreement" and "Nearen Termination
Agreement," and, collectively, the "Termination Agreements").
Also, effective September 12, 1996, approximately $4,500,000 of
inter-company indebtedness of Trade-Winds to the Company was converted to
additional capital of Trade-Winds.
The change of management and conversion of debt are essential parts of
the Company's plan to focus upon its core business of providing environmental
remediation services. Mr. O'Reilly anticipates the appointment of new members to
the Company's Board of Directors, including two independent directors with
relevant industry experience.
Kessler Termination Agreement
As the Company's President and Chief Executive Officer, Kessler was
being paid an annual salary of approximately $108,000. In addition, the Company
had granted to Kessler a non-qualified option (the "Kessler Option") to purchase
100,000 shares of the Company's common stock ("Common Stock") exercisable until
March 31, 2000 at a price of $1.50 per share.
Pursuant to the Kessler Termination Agreement, the Kessler Option was
surrendered to the Company and cancelled and the Company agreed to pay Kessler
$216,000, of which $40,000 was paid on September 12, 1996 and the balance of
$176,000 was evidenced by a promissory note issued by the Company and
Trade-Winds that is payable, without interest, beginning October 1, 1996, in 48
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bi-weekly installments of $3,666.67. The Company also agreed to pay all premiums
for one year for Kessler's existing health and car insurance policies and, also,
for such one-year period, to provide Kessler with the use of the car it had been
providing him for business purposes. The parties exchanged general releases and
the Company restated and confirmed its obligations to indemnify Kessler against
claims based on matters occurring during his employment.
Mangan Termination Agreement
Mangan was employed under an agreement with the Company expiring March
31, 2001 (the "Mangan Employment Agreement"). The Mangan Employment Agreement
permitted Mangan's early termination by the Company, subject to the immediate
payment of a lump sum to Mangan, equal to his salary for the unexpired balance
of his employment term (approximately $835,000), plus an amount equal to the
product of the annual premiums for his health, life and disability insurance
maintained by the Company over the number of unexpired years of the employment
term (approximately $125,000 ). Pursuant to the Mangan Employment Agreement, the
Company had granted Mangan a non-qualified option (the "$.01 Option") to
purchase 2,000,000 shares Common Stock, exercisable at a price of $.01 per share
during a five-year period following the termination by the Company of Mangan's
employment, his death or specified changes in control of the Company. The
Company had also granted Mangan a non-qualified option (the "$1.50 Option") to
purchase 250,000 shares of Common Stock exercisable until March 31, 2000 at a
price of $1.50 per share.
Under the Mangan Termination Agreement, the Company agreed to pay
Mangan $900,000, of which $250,000 was paid on September 12, 1996, and the
balance of $650,000 was evidenced by promissory note issued by the Company and
Trade-Winds that provides for payments, without interest, of $100,000 in March
1997 and $550,000 in 78 bi-weekly installments, beginning October 1, 1996, of
$7,000 and a final installment of $4,000. Mangan also received 881,000 shares of
common stock of ICIS Management Group Inc. ("ICIS") owned by the Company. As of
September 12, 1996, the closing bid price of the common stock of ICIS on NASDAQ
was approximately $.53.
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Mangan retained the $1.50 Option, as modified to reduce the exercise
price to $0.53 per share (the market price of the Common Stock on September 9,
1996) and a non-qualified option, granted to Mangan on September 9, 1996, to
purchase 500,000 shares of Common Stock at $.27 per share. The Company agreed to
pay all premiums for one year for Mangan's existing health, disability and car
insurance policies being maintained and relinquished to Mangan all of the
Company's interest in the $2,000,000 split-dollar life insurance policy covering
Mangan's life without charging Mangan or such policy for any forgiveness of
indebtedness income with respect to such policy. The Company also transferred
ownership to Mangan of the car it had been providing him for business purposes.
The parties exchanged general releases and the Company restated and confirmed
its obligations to indemnify Mangan against claims based on matters occurring
during his employment.
Nearen Termination Agreement
The Company had entered into a retainer agreement ("Nearen Retainer
Agreement") with Nearen on March 25, 1996 pursuant to which Nearen had been
serving as a consultant and special securities counsel to the Company. Pursuant
to the Nearen Termination Agreement, the Company agreed to issue to Nearen
75,000 shares of Common Stock and, in the event Nearen is unable to generate a
cash value of at least $37,500 from the sale of such 75,000 shares, the Company
agreed to issue to Nearen such additional shares of Common Stock the sale of
which, combined with the sale of such 75,000 shares, would generate $37,500 in
cash value.
Management Options
On September 9, 1996, the Board of Directors granted O'Reilly a
non-qualified option to purchase 400,000 shares of Common Stock, exercisable
until September 2001 at an exercise price of $0.53 per share (the market price
of the Common Stock on the date of grant) and repriced a non-qualified option,
previously granted to O'Reilly, to purchase 250,000 shares of Common Stock at
any time until March 2000, at $1.50 per share, so that the new exercise price is
$0.53 per share.
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On September 12, 1996, the Board of Directors granted O'Reilly a
non-qualified option (the "2,000,000 Option") to purchase 2,000,000 shares of
Common Stock at an exercise price of $.01 per share, exercisable for a five-year
period commencing on the earlier of (i) the date of notice of termination of his
employment as Chief Executive Officer of the Company, (ii) the date of his
death, or (iii) the date of change of a majority of the Board of Directors of
the Company other than through actions by the Board of Directors in creating and
filling vacancies on the Board, or change of controlling stockholders of the
Company.
The Board's decision to grant these new options to O'Reilly and
reprice his other options was based upon an assessment of Trade-Winds' growth
and prospects under O'Reilly's guidance, the additional duties O'Reilly is
assuming by becoming Chairman, President and Chief Executive Officer of the
Company while continuing to serve as President of Trade-Winds and other
contributions O'Reilly has made to the Company, including personally
guaranteeing obligations of the Company and Trade-Winds under performance bonds
and equipment financing arrangements.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Nos.
10a Termination Agreement, dated as of September 4, 1996,
by and between Leo J. Mangan and Comprehensive
Environmental Systems, Inc.
10b Termination Agreement, dated as of September 4, 1996,
by and between Donald Kessler and Comprehensive
Environmental Systems, Inc.
10c Termination Agreement, dated as of September 4, 1996,
by and between James W. Nearen and Comprehensive
Environmental Systems, Inc.
10d Employment Agreement, dated April 1, 1995, between Leo
J. Mangan and Comprehensive Environmental Systems, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPREHENSIVE ENVIRONMENTAL SYSTEMS, INC.
Registrant
By:/s/ Michael O'Reilly
-------------------------------------
Michael O'Reilly
President and Chief Executive Officer
Date: September 26, 1996
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TERMINATION AGREEMENT
---------------------
This Agreement is entered into as of September 4, 1996, by and between
Comprehensive Environmental Systems, Inc., a Delaware corporation (the
"Company"), and Leo J. Mangan ("Mangan").
RECITALS
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WHEREAS, the Company and Mangan desire to voluntarily and amicably
terminate their association, as provided in this Agreement, without creating any
implication that there has been any disagreement or dispute between Mangan and
the Company pertaining to any policies or procedures adopted or followed by the
Company.
NOW, THEREFORE, in consideration of the covenants contained herein,
the parties agree as follows:
1. Termination of Employment Agreement. The Employment Agreement,
------------------------------------
entered into as of April 1, 1995, between the Company and Mangan, is hereby
terminated. However, the provisions of Section 5.0 (Covenant Not to Disclose)
shall survive such termination and remain in full force and effect for a period
of two years.
2. Resignation. Mangan hereby resigns as Chief Operating Officer and a
-----------
director of the Company, effective at the close of business on the date hereof.
3. Cash Payments to Mangan. The Company agrees to pay Mangan, in cash,
-----------------------
the total sum of $900,000, without deduction for taxes or otherwise, of which
$250,000 is being paid simultaneously with execution and delivery of this
Agreement, $100,000 is payable to Mangan on March 10, 1997, and the balance of
$550,000 is payable to Mangan in 79 bi-weekly installments, commencing October
1, 1996, of which the first 78 installments shall be $7,000 and the last
installment shall be $4,000. These payments shall be made by a Company check
mailed to the address of Mangan specified below for notices. The installment
payments totalling $650,000 are evidenced by a promissory note (the "Promissory
Note") of the Company and its subsidiary Trade-Winds Environmental Restoration,
Inc. ("Trade-Winds") being delivered to Mangan with this Agreement.
<PAGE>
4. Transfer of Shares. Simultaneously with the execution and delivery
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of this Agreement, 881,000 shares of common stock of ICIS Management Group, Inc.
(the "ICIS Shares"), are being transferred to Mangan, of which 256,000 shares
are being transferred by the Company and 625,000 shares are being transferred by
Trade-Winds. The Company and Trade-Winds (by its signature below) jointly and
severally represent and warrant to Mangan that the ICIS Shares are being
transferred to him free and clear of any claim of any kind by any third party.
Mangan represents and warrants to the Company that he is acquiring the ICIS
Shares solely for his own account for investment and not with a view to their
distribution.
5. Options. The option granted to Mangan, effective May 26, 1995, to
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purchase 250,000 shares of the Company's common stock (the "May Option") shall
remain in effect in accordance with the terms of the Option Certificate No.
2/Mangan as modified and superseded by Amended Option Certificate No. 2/Mangan.
The option granted to Mangan, effective March 10, 1995 (the "March
Option") to purchase 2,000,000 shares of the Company's common stock is hereby
surrendered by Mangan and cancelled. Mangan represents and warrants that he has
not exercised any portion of the March Option and he has not permitted any other
party to acquire any right or interest in or to the March Option or the
underlying shares. Simultaneously with the execution and delivery of this
Agreement, there is being surrendered to the Company the original optional
certificate for the March Option and a certificate for the 2,000,000 shares of
the Company's common stock that was deliverable upon exercise of the March
Option and was being held in escrow by James W. Nearen Jr. pursuant to the
Escrow Agreement dated August 4, 1995 between the Company and Mangan, which
agreement is hereby cancelled.
6. Title to Automobile. Simultaneously with the execution and delivery
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of this Agreement, the Company is transferring all of its right, title and
interest in and to the 1991 Infiniti automobile (the "Mangan Automobile") that
has been provided by the Company to Mangan in connection with his employment.
The Company represents and warrants that such transfer is being made to Mangan
free and clear of any claim of any kind by any third party.
7. Insurance. For a period of 12 months from the date of this
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Agreement, the Company shall pay all premiums for the COBRA policy to be
provided to Mangan for the same premiums as for his current health insurance
provided by the Company, disability insurance currently maintained by Mangan and
paid for by the Company and automobile insurance currently maintained by Mangan
for the Mangan Automobile and paid for by the Company.
In addition, simultaneously with the execution and delivery of this
Agreement, the Company is relinquishing to Mangan all of its interest in the $2
million split dollar whole life insurance policy (the "Life Policy") owned by
Mangan that insures Mangan's life and for which the Company has been paying the
premiums. However, the Company agrees to continue to pay the premiums when due
under the Life Policy with respect to the 12 month period following the date of
this Agreement. The Company hereby waives any right to charge Mangan or such
policy with respect to forgiveness of indebtedness income with respect to the
Life Policy.
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Mangan shall be responsible for paying the premiums when due with
respect to the insurance coverage referred to in this Section and the Company's
sole responsibility shall be to pay Mangan the amount of such premiums five
business days prior to their due date. The failure to make such payments to
Mangan when due shall also constitute a default under the Promissory Note
entitling Mangan to accelerate the maturity of the Promissory Note, as provided
therein, if default continues beyond the applicable cure periods referred to in
the Promissory Note.
8. Indemnification. The Company shall indemnify Mangan for all his
---------------
acts taken in the performance of his duties to, or for the benefit of, the
Company and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Company or its subsidiaries, and with respect to any claim
of criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, to the full extent permitted by the laws of Delaware (in addition
to any provisions relating to any further indemnification under any article of
incorporation, by-law, agreement (including this Agreement), or separate vote of
stockholders or directors of the Company), and in the event of the necessity
thereunder of the making of a determination of whether the applicable standard
of conduct was met for indemnity, such determination shall be made by
independent legal counsel or by the stockholders. The Company shall advance such
expenses (including reasonable attorney's fees and disbursements for counsel
reasonably acceptable to Mangan and the Company) in accordance with this Section
upon receipt by the Company of a written undertaking in accordance with Delaware
law to the Company by or on behalf of Mangan to repay to the Company such amount
if it is ultimately determined that he is not entitled to such indemnification.
Fischbein Badillo Wagner Harding shall be deemed reasonably acceptable counsel
to Mangan and the Company provided such firm is not disqualified by a conflict.
Mangan agrees to cooperate with the Company, at the Company's expense and to the
extent reasonably requested by the Company, in connection with any claim
asserted against the Company for which indemnification may be sought by Mangan
and any other claim asserted by or against the Company based on acts or
omissions occurring while Mangan was associated with the Company.
9. No Knowledge. Mangan represents and warrants to the Company that he
------------
has no actual knowledge of any pending or threatened litigation against the
Company or of any material liability, actual or contingent, of the Company,
including any material liability pursuant to any agreement or commitment to
which the Company is bound or any of its properties is subject, except (i) as
reflected in accordance with generally accepted accounting principles in the
Company's consolidated balance sheet dated April 30, 1996 and the notes thereto
set forth in the Company's Form 10-KSB for the fiscal year ended April 30, 1996,
(ii) such liabilities incurred since April 30, 1996 in the ordinary course of
the Company's business in accordance with past practice and, (iii) as set forth
in Attachment A hereto.
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10. Surrender of Credit Cards, etc. Simultaneously with the execution
-------------------------------
and delivery of this Agreement, Mangan is delivering to the Company all credit
cards, keys and other property belonging to the Company; however, the cellular
phone used by Mangan is hereby transferred to Mangan on the understanding that
he will pay all bills for phone and other charges relating thereto that are
incurred after the date of this Agreement.
11. Mutual Releases. The Company and Trade-Winds knowingly and
----------------
voluntarily remise, release, acquit, satisfy, and forever discharge Mangan, and
Mangan similarly remises, releases, acquits satisfies, and forever discharges
the Company and Trade- Winds of and from all, and all manner of action and
actions, cause of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, covenants, contracts, controversies, agreements (other
than the performance of this Agreement), promises, variances, trespasses,
damages, judgments, executions, claims and demands whatsoever, in law or in
equity, which the parties, their employees, officers, directors, and
stockholders and their heirs, successors, personal representatives and assigns
ever had, now have or may have in the future against each other relating to
Mangan's employment, serving as an officer or director, acquiring or being a
stockholder and/or the termination of his employment and/or services as an
officer, director or stockholder of or with the Company, in each case with
respect to acts or omissions occurring at any time prior to and including the
date of this Agreement and whether known or unknown. The claims released by the
parties include, but are not limited to, any and all common law claims,
including claims for fraud in the inducement, fraud, misrepresentation,
concealment, rescission, restitution, recoupment, express or implied contract
claims, claims for breach of implied covenant of good faith and fair dealing,
claims for any violation of any securities, tax laws and public policy of the
State of New York or the United States of America or any other jurisdiction, and
all claims arising under any federal, state, or local law, it being understood
and agreed that this Agreement and general release is the compromise of
potential claims and is not to be construed as an admission of liability on the
part of either party, any and all such liability being expressly denied. The
parties hereby covenant and agree with each other not to file any lawsuit,
notify any regulatory, self regulatory organization or NASDAQ, or initiate any
legal or administrative action against each other or their directors, officers
or stockholders, to assert any such claims. Also excluded from the scope of this
Section is any claim involving criminal wrongdoing by Mangan resulting in a
conviction not subject to further appeal.
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12. Entire Agreement. This document contains the entire agreement
-----------------
between the parties with respect to its subject matter and all prior
discussions, understandings, negotiations and agreements are merged herein.
13. Notices. Any notice or communication required or permitted
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hereunder shall be deemed given when delivered personally or when deposited in
the United States mails, by certified mail, return receipt requested, postage
prepaid:
If to the Company at:
Comprehensive Environmental Systems, Inc.
72-B Cabot Street
West Babylon, NY 11704
If to Mangan, to him at:
3640 North Federal Highway, No. 209
Pompano, FL 33064
In any case, with a copy to:
Noah Nunberg, Esq.
Fischbein Badillo Wagner Harding
909 Third Avenue
New York, NY 10022
Notices may be sent to such other address of which either party may notify the
other party by notice similarly given.
14. Binding Effect. This Agreement shall be binding upon and inure to
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the benefit of the parties and their respective successors, assigns, heirs or
personal representatives. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement, except as provided in this Section.
15. Amendment; Waiver. This Agreement may be amended, modified,
------------------
superseded, cancelled, renewed or extended, and the provisions hereof may be
waived, only by a written instrument executed by the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision hereof shall in no
manner effect the right at a later time to enforce such provision. No waiver by
either party of the breach of any provision of this Agreement, in one or more
instances, shall be deemed to be a further or continuing waiver of any such
breach or a waiver of the breach of any other provision of this Agreement.
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16. Severability. If any provision or any portion of any provision of
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this Agreement is judicially determined to be unenforceable, the enforceability
of the remaining provisions shall not be affected or impaired. Furthermore, such
unenforceable provision shall be deemed replaced by a provision that is
enforceable and comes closest to expressing the intention of the unenforceable
provision.
17. Expenses. If any action at law or in equity is necessary to
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enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which such party may be entitled.
18. No Off-Set. The Company shall not have any right of off-set with
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respect to its obligations under this Agreement.
19. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
20. Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall neither constitute a portion of this Agreement
nor affect in any way the interpretation of this Agreement. Additionally, this
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Agreement to be drafted.
21. Independent Counsel. The parties hereto acknowledge that Fischbein
-------------------
Badillo Wagner Harding has acted as counsel for the Company in connection with
the negotiation and drafting of this Agreement. Mangan has been advised that he
should obtain separate counsel to review this Agreement and he has had the
opportunity to do so. Mangan waives any right to disqualify Fischbein Badillo
Wagner Harding from continuing to act as counsel for the Company in any
subsequent proceeding or matter.
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22. Voluntary Agreement. The parties hereto have entered into this
--------------------
Agreement knowingly, intelligently and voluntarily. No coercion of any kind has
been exercised to force any party to agree to any of the provisions contained
herein.
23. Further Assurances. Each party will execute and deliver such other
------------------
documentation and take or cause to be taken such other action as shall be
reasonably requested by the other party to effectuate and implement the terms of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument, effective as of the day and year first above written.
COMPREHENSIVE ENVIRONMENTAL SYSTEMS, INC.
By:/s/ Michael O'Reilly
-----------------------------------------
Michael O'Reilly, Authorized Signatory
/s/ Leo J. Mangan
-----------------------------------------
Leo J. Mangan
Trade-Winds Environmental Restoration, Inc. agrees to be bound by the
provision of Sections 4 and 11 of the above Termination Agreement to the extent
provided in such Sections.
TRADE-WINDS ENVIRONMENTAL RESTORATION, INC.
By:/s/ Michael O'Reilly
-----------------------------------------
Michael O'Reilly, President
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ATTACHMENT A
The following are matters of which Mangan has actual knowledge that
could result in litigation, threatened litigation, or material liabilities,
actual or contingent:
1. A claim by the Company against Alora Capital et al. concerning common stock
of the Company that was improperly released.
2. An action against Mohave Shores Development, Inc. et al., for the recovery of
sums advanced in anticipation of the development of land in Arizona and Nevada.
3. An action against the Company commenced by Robert Fuerzeig, the Company's
former chairman and present.
4. An action between the Company and Spartan Dismantling Corp. et al. concerning
a failed joint venture with that firm.
5. An action between the Company and Biddle et al. concerning claims involving
various stock placements.
6. An action between Alter Sales co., Inc. and Nick Morf concerning claims that
Morf misappropriated funds advanced by the Company for the benefit of Alter
Sales Co., Inc. Included in this dispute are various articles that have been
written or may be written in the future concerning Dan Dorfman, Donald Kessler
or others. In particular was one potentially damaging article by Business Week
wherein Morf was quoted. Future articles could appear that hold the Company in a
negative light. Morf has repeatedly threatened to hold Mangan and the company in
a negative light and could either assert some counter or cross claim against the
Company or leak stories to the media in an attempt to damage the Company.
7. An action between Lee Mangan and a Houston, Texas bankruptcy trustee for the
estate of Nicholas Bachynsky concerning a pledge of securities as collateral for
a promissory note.
8. An investigation by the SEC concerning Alter Sales Co., Inc.
9. An investigation by the Justice department in New York concerning conduct of
certain promoters. It is believed that this matter relates to the
Dorfman/Kessler matter, but due to the secrecy of these proceedings, it is
unclear.
10. An investigation by the SEC concerning trading in the securities of
Organogenisis, Inc. and Other Issuers.
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11. An investigation by the Justice department in Los Angeles concerning conduct
of certain promoters who may have participated with the Company in the placement
of securities.
12. Reputedly, there is an ongoing investigation by the Justice Department
(location unknown) and, possibly, the SEC of certain promoters previously
associated with the Company - most notably, Grant Curtis and Tim Masley.
However, it is unclear if this is true, the status of any investigation or any
other persons associated with the Company are involved.
13. L. Harris Environmental and Spartan Dismantling Corp. are being sued by a
Floral Park, NY remediation company. No additional details on this matter are
available.
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TERMINATION AGREEMENT
---------------------
This Agreement is entered into as of September 4, 1996, by and between
Comprehensive Environmental Systems, Inc., a Delaware corporation (the
"Company"), and Donald Kessler ("Kessler").
RECITALS
--------
WHEREAS, the Company and Kessler desire to voluntarily and amicably
terminate their association, as provided in this Agreement, without creating any
implication that there has been any disagreement or dispute between Kessler and
the Company pertaining to any policies or procedures adopted or followed by the
Company.
NOW, THEREFORE, in consideration of the covenants contained herein,
the parties agree as follows:
1. Termination of Employment Agreement. The employment of Kessler by
------------------------------------
the Company in all capacities, is hereby terminated.
2. Resignation. Kessler hereby resigns as President and Chief
-----------
Executive Officer and Chairman of the Company, effective at the close of
business on the date hereof.
3. Cash Payments to Kessler. The Company agrees to pay Kessler, in
-------------------------
cash, the total sum of $216,000, without deduction for taxes or otherwise, of
which $40,000 is being paid simultaneously with the execution and delivery of
this Agreement and the balance of $176,000 is payable to Kessler in 48 bi-weekly
installments of $3,666.67 commencing October 1, 1996. These payments shall be
made by a Company check mailed to the address of Kessler specified below for
notices. The installment payments totalling $176,000 are evidenced by a
promissory note (the "Promissory Note") of the Company and its subsidiary
Trade-winds Environmental Restoration, Inc. ("Trade-Winds") being delivered to
Kessler with this Agreement.
4. Options. Simultaneously with the execution and delivery of this
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Agreement, the option granted to Kessler to purchase 100,000 shares of the
Company's common stock at $1.50 per share is being surrendered to the Company
and cancelled.
5. Use of Automobile. For one year after the date hereof, the Company
-----------------
shall continue to pay the rental obligations (which includes insurance) for, and
provide Kessler with the use of, the 1992 Jaguar automobile which the Company
has heretofore been providing him in connection with his employment.
<PAGE>
6. Insurance. For a period of 12 months from the date of this
---------
Agreement, the Company shall pay all premiums for the COBRA policy to be
provided to Kessler for the same premiums as for his current health insurance
provided by the Company.
Kessler shall be responsible for paying the premiums when due with
respect to the insurance coverage referred to in this Section and the Company's
sole responsibility shall be to pay Kessler the amount of such premiums five
business days prior to their due date. The failure to make such payments to
Kessler when due shall also constitute a default under the Promissory Note
entitling Kessler to accelerate the maturity of the Promissory Note, as provided
therein, if default continues beyond the applicable cure periods referred to in
the Promissory Note.
7. Indemnification. The Company shall indemnify Kessler for all his
---------------
acts taken in the performance of his duties to, or for the benefit of, the
Company and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Company or its subsidiaries, and with respect to any claim
of criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, to the full extent permitted by the laws of Delaware (in addition
to any provisions relating to any further indemnification under any article of
incorporation, by-law, agreement (including this Agreement), or separate vote of
stockholders or directors of the Company), and in the event of the necessity
thereunder of the making of a determination of whether the applicable standard
of conduct was met for indemnity, such determination shall be made by
independent legal counsel or by the stockholders. The Company shall advance such
expenses (including reasonable attorney's fees and disbursements for counsel
reasonably acceptable to Kessler and the Company) in accordance with this
Section upon receipt by the Company of a written undertaking in accordance with
Delaware law to the Company by or on behalf of Kessler to repay to the Company
such amount if it is ultimately determined that he is not entitled to such
indemnification. Fischbein Badillo Wagner Harding shall be deemed reasonably
acceptable counsel to Kessler and the Company provided such firm is not
disqualified by a conflict.
Kessler agrees to cooperate with the Company, at the Company's expense
and to the extent reasonably requested by the Company, in connection with any
claim asserted against the Company for which indemnification may be sought by
Kessler and any other claim asserted by or against the Company based on acts or
omissions occurring while Kessler was associated with the Company.
-2-
<PAGE>
8. No Knowledge. Kessler represents and warrants to the Company that
------------
he has no actual knowledge of any pending or threatened litigation against the
Company or of any material liability, actual or contingent, of the Company,
including any material liability pursuant to any agreement or commitment to
which the Company is bound or any of its properties is subject, except (i) as
reflected in accordance with generally accepted accounting principles in the
Company's consolidated balance sheet dated April 30, 1996 and the notes thereto
set forth in the Company's Form 10-KSB for the fiscal year ended April 30, 1996,
(ii) such liabilities incurred since April 30, 1996 in the ordinary course of
the Company's business in accordance with past practice and, (iii) as set forth
in Attachment A hereto.
9. Surrender of Credit Cards, etc. Simultaneously with the execution
-------------------------------
and delivery of this Agreement, Kessler is delivering to the Company all credit
cards, keys and other property belonging to the Company.
10. Mutual Releases. The Company and Trade-Winds knowingly and
- ---------------- voluntarily remise, release, acquit, satisfy, and forever
discharge Kessler, and Kessler similarly remises, releases, acquits satisfies,
and forever discharges the Company and Trade-Winds of and from all, and all
manner of action and actions, cause of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, covenants, contracts, controversies,
agreements (other than the performance of this Agreement), promises, variances,
trespasses, damages, judgments, executions, claims and demands whatsoever, in
law or in equity, which the parties, their employees, officers, directors, and
stockholders and their heirs, successors, personal representatives and assigns
ever had, now have or may have in the future against each other relating to
Kessler's employment, serving as an officer, director, acquiring or being a
stockholder and/or the termination of his employment and/or services as an
officer, director or stockholder of or with the Company, in each case with
respect to acts or omissions occurring at any time prior to and including the
date of this Agreement and whether known or unknown. The claims released by the
parties include, but are not limited to, any and all common law claims,
including claims for fraud in the inducement, fraud, misrepresentation,
concealment, rescission, restitution, recoupment, express or implied contract
claims, claims for breach of implied covenant of good faith and fair dealing,
claims for any violation of any securities, tax laws and public policy of the
State of New York or the United States of America or any other jurisdiction, and
all claims arising under any federal, state, or local law, it being understood
and agreed that this Agreement and general release is the compromise of
potential claims and is not to be construed as an admission of liability on the
part of either party, any and all such liability being expressly denied. The
parties hereby covenant and agree with each other not to file any lawsuit,
notify any regulatory, self regulatory organization or NASDAQ, or initiate any
legal or administrative action against each other or their directors, officers
or stockholders, to assert any such claims. Also excluded from the scope of this
Section is any claim involving criminal wrongdoing by Kessler resulting in a
conviction not subject to further appeal.
-3-
<PAGE>
11. Entire Agreement. This document contains the entire agreement
-----------------
between the parties with respect to its subject matter and all prior
discussions, understandings, negotiations and agreements are merged herein.
12. Notices. Any notice or communication required or permitted
-------
hereunder shall be deemed given when delivered personally or when deposited in
the United States mails, by certified mail, return receipt requested, postage
prepaid:
If to the Company at:
Comprehensive Environmental Systems, Inc.
72-B Cabot Street
West Babylon, NY 11704
If to Kessler, to him at:
Donald Kessler
180 East First Street
Deer Park, New York 11729
In any case, with a copy to:
Noah Nunberg, Esq.
Fischbein Badillo Wagner Harding
909 Third Avenue
New York, NY 10022
Notices may be sent to such other address of which either party may notify the
other party by notice similarly given.
13. Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties and their respective successors, assigns, heirs or
personal representatives. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement, except as provided in this Section.
14. Amendment; Waiver. This Agreement may be amended, modified,
------------------
superseded, cancelled, renewed or extended, and the provisions hereof may be
waived, only by a written instrument executed by the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision hereof shall in no
manner effect the right at a later time to enforce such provision. No waiver by
either party of the breach of any provision of this Agreement, in one or more
instances, shall be deemed to be a further or continuing waiver of any such
breach or a waiver of the breach of any other provision of this Agreement.
-4-
<PAGE>
15. Severability. If any provision or any portion of any provision of
------------
this Agreement is judicially determined to be unenforceable, the enforceability
of the remaining provisions shall not be affected or impaired. Furthermore, such
unenforceable provision shall be deemed replaced by a provision that is
enforceable and comes closest to expressing the intention of the unenforceable
provision.
16. Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which such party may be entitled.
17. No Off-Set. The Company shall not have any right of off-set with
----------
respect to its obligations under this Agreement.
18. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
19. Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall neither constitute a portion of this Agreement
nor affect in any way the interpretation of this Agreement. Additionally, this
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Agreement to be drafted.
20. Independent Counsel. The parties hereto acknowledge that Fischbein
-------------------
Badillo Wagner Harding has acted as counsel for the Company in connection with
the negotiation and drafting of this Agreement. Kessler has been advised that he
should obtain separate counsel to review this Agreement and he has had the
opportunity to do so. Kessler waives any right to disqualify Fischbein Badillo
Wagner Harding from continuing to act as counsel for the Company in any
subsequent proceeding or matter.
-5-
<PAGE>
21. Voluntary Agreement. The parties hereto have entered into this
--------------------
Agreement knowingly, intelligently and voluntarily. No coercion of any kind has
been exercised to force any party to agree to any of the provisions contained
herein.
22. Further Assurances. Each party will execute and deliver such other
------------------
documentation and take or cause to be taken such other action as shall be
reasonably requested by the other party to effectuate and implement the terms of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument, effective as of the day and year first above written.
COMPREHENSIVE ENVIRONMENTAL SYSTEMS, INC.
By:/s/ Michael O'Reilly
-----------------------------------------
Michael O'Reilly, Authorized Signatory
/s/ Donald Kessler
-----------------------------------------
Donald Kessler
Trade-Winds Environmental Restoration, Inc. agrees to be bound by the
provision of Section 10 of the above Termination Agreement to the extent
provided in such Section.
TRADE-WINDS ENVIRONMENTAL RESTORATION, INC.
By:/s/ Michael O'Reilly
--------------------------------------------
Michael O'Reilly, President
-6-
<PAGE>
ATTACHMENT A
The following are matters of which Mangan has actual knowledge that
could result in litigation, threatened litigation, or material liabilities,
actual or contingent:
1. A claim by the Company against Alora Capital et al. concerning common stock
of the Company that was improperly released.
2. An action against Mohave Shores Development, Inc. et al., for the recovery of
sums advanced in anticipation of the development of land in Arizona and Nevada.
3. An action against the Company commenced by Robert Fuerzeig, the Company's
former chairman and present.
4. An action between the Company and Spartan Dismantling Corp. et al. concerning
a failed joint venture with that firm.
5. An action between the Company and Biddle et al. concerning claims involving
various stock placements.
6. An action between Alter Sales co., Inc. and Nick Morf concerning claims that
Morf misappropriated funds advanced by the Company for the benefit of Alter
Sales Co., Inc. Included in this dispute are various articles that have been
written or may be written in the future concerning Dan Dorfman, Donald Kessler
or others. In particular was one potentially damaging article by Business Week
wherein Morf was quoted. Future articles could appear that hold the Company in a
negative light. Morf has repeatedly threatened to hold Mangan and the company in
a negative light and could either assert some counter or cross claim against the
Company or leak stories to the media in an attempt to damage the Company.
7. An action between Lee Mangan and a Houston, Texas bankruptcy trustee for the
estate of Nicholas Bachynsky concerning a pledge of securities as collateral for
a promissory note.
8. An investigation by the SEC concerning Alter Sales Co., Inc.
9. An investigation by the Justice department in New York concerning conduct of
certain promoters. It is believed that this matter relates to the
Dorfman/Kessler matter, but due to the secrecy of these proceedings, it is
unclear.
10. An investigation by the SEC concerning trading in the
securities of Organogenisis, Inc. and Other Issuers.
-7-
<PAGE>
11. An investigation by the Justice department in Los Angeles concerning conduct
of certain promoters who may have participated with the Company in the placement
of securities.
12. Reputedly, there is an ongoing investigation by the Justice Department
(location unknown) and, possibly, the SEC of certain promoters previously
associated with the Company - most notably, Grant Curtis and Tim Masley.
However, it is unclear if this is true, the status of any investigation or any
other persons associated with the Company are involved.
13. L. Harris Environmental and Spartan Dismantling Corp. are being sued by a
Floral Park, NY remediation company. No additional details on this matter are
available.
-8-
TERMINATION AGREEMENT
This agreement ("Agreement") is entered into this 12 day of September,
1996, by and between Comprehensive Environmental Systems, Inc. (the "Company")
and James W. Nearen, Jr. ("Nearen"). These persons or entities may be referred
to herein as the party or parties.
RECITALS
The parties enter into this agreement with respect to the following:
A. The Company entered into a retainer agreement ("Retainer Agreement")
with Nearen on March 25, 1996 employing him as special securities counsel. In
January 1996, Nearen became a director of the Company.
B. The Company and Nearen desire to terminate the Retainer Agreement in
accordance with the provisions of this Agreement.
C. The Company desires that, in connection with the termination of the
Retainer Agreement, Nearen resign as a director of the Company.
CONSIDERATION
In consideration of the payment of ten dollars ($10.00) in hand paid, other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged, and the performance of the covenants and conditions contained
herein, the parties agree as follows:
1. Recitals. The recitals stated above are incorporated herein as terms of
this Agreement.
2. Termination of Retainer Agreement. The Retainer Agreement entered into
on March 25, 1996 between the Company and Nearen is terminated.
3. Resignation. Nearen shall resign as a director of the Company, effective
on September 12, 1996 at the close of business. This resignation is being
tendered in accordance with this Agreement and not as the result of any
disagreement or dispute with the Company pertaining to the Retainer Agreement,
any policies or procedures adopted or followed by the Company.
4. Payment of Stock to Nearen. The Company shall, simultaneously with the
execution and delivery of this Agreement, deliver to Nearen 75,000 shares of its
$.0001 par value common stock which shares shall be registered. These shares
will be promptly registered on a Form S-8 or other appropriate form and/or on a
statement previously filed by the Company as determined to be appropriate or
necessary by an officer of the Company.
5. Guarantee of Value. It is the intent of the parties that Nearen receive
sufficient shares that, when sold in accordance with this Agreement, will
generate a cash value of at least $37,500. As a result, the Company desires to
secure Nearen against the effects of price risk and dilution caused by, among
other things, mergers, acquisitions, stock splits, distributions,
recapitalizations or otherwise occurring after the date hereof. Thus, in the
event Nearen is unable to realize a cash amount equal to or exceeding $37,500
from the sale of these securities, the Company will issue additional shares
registered on an appropriate form in an amount sufficient to allow Nearen to
realize the stated cash value.
6. Agreement to Limit Resale. Nearen agrees that for a period of twelve
(12) months he shall not sell or cause to be sold in any monthly period any of
the securities issued in consideration of this Agreement in excess of a value of
$3125.00 per month. Notwithstanding this term, nothing herein shall be deemed to
require Nearen to make any sales of any amount of the securities issued in
consideration hereof.
<PAGE>
7. Mutual Releases. The Company knowingly and voluntarily remises,
releases, acquits, satisfies, and forever discharges Nearen, and Nearen
similarly remises, releases, acquits, satisfies, and forever discharges the
Company, of and from all, and all manner of action and actions, cause of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
covenants, contracts, controversies, agreements (other than the performance of
this Agreement), promises, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever, in law or in equity, which the
parties, their employees, officers, directors, and shareholders and their heirs,
successors, personal representatives and assigns ever had, now have or may have
in the future relating to Nearen's employment, serving as a director, acquiring
or being a stockholder and/or termination of the Retainer Agreement and/or his
services as a director or stockholder of or with the Company, in each case with
respect to acts or omissions occurring at any time prior to and including the
date of this Agreement whether know or unknown. The claims released by the
parties include, but are not limited to, any and all common law claims,
including claims for fraud in the inducement, fraud, misrepresentation,
concealment, rescission, restitution, recoupment, express or implied contract
claims, claims for breach of implied covenant of good faith and fair dealing,
claims for any violation of any securities, tax laws and public policy of the
State of New York or of the United States of America or any other jurisdiction,
and all claims arising under any federal, state, or local law, it being
understood and agreed that this Agreement and general release is the compromise
of potential claims and is not to be construed as an admission of liability on
the part of either party, any and all such liability being expressly denied. The
parties hereby covenant and agree with each other not to file any lawsuit,
notify any regulatory, self regulatory organization or NASDAQ, or initiate any
legal or administrative action against each other or their directors, officers
or shareholders, to assert any such claims. Excluded from the scope of this
section is any claim involving criminal wrongdoing by Nearen resulting in a
conviction not subject to further appeal.
8. Indemnification. The Company shall indemnify Nearen for all his acts
taken in the performance of his duties to or for the benefit of the Company and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company or its subsidiaries, and with respect to any claim of
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, to the full extent permitted by the laws of Delaware (in addition
to any provisions relating to any further indemnification under any article of
incorporation, by-law, agreement (including this Agreement), or separate vote of
stockholders or directors of the Company), and in the event of the necessity
thereunder of the making of a determination of whether the applicable standard
of conduct was met for indemnity, such determination shall be made by the
stockholders. The Company shall advance such expenses (including reasonable
attorney's fees and disbursements for counsel reasonably acceptable to Nearen
and the Company) in accordance with this Section upon receipt by the Company of
a written undertaking to the Company in accordance with Delaware law by or on
behalf of Nearen to repay to the Company such amounts if it is ultimately
determined that he is not entitled to such indemnification. Nearen agrees to
cooperate with the Company, at the Company's expense and to the extent
reasonably requested by the Company, in connection with any claim asserted by or
against the Company based on acts or omissions occurring while Nearen was
associated with the Company. Fischbein Badillo Wagner Harding shall be deemed
reasonably acceptable counsel to Nearen and the Company provided such firm is
not disqualified by a conflict.
9. Enforcement. This Agreement may be enforced either at law or equity and
in the event of litigation, the prevailing party shall be entitled to its or
their attorney fees actually paid or incurred in the prosecution or defense of
this action.
10. No Waiver. The waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
2
<PAGE>
11. Notices. Any notice or communication required or permitted hereunder
shall be deemed given when delivered personally or when deposited in the United
States mails, by certified mail, return receipt requested, postage prepaid:
If to the Company at:
Michael O'Reilly, CEO
Comprehensive Environmental Systems, Inc.
72-B Cabot Street
West Babylon, NY 11704
If to Nearen, to him at:
James W. Nearen, Jr.
2321 NE 48th Court
Lighthouse Point, FL 33064
or to such other address of which either party or Escrow Agent may notify the
other parties by notice similarly given.
12. Third Party Beneficiaries. The provisions of this Agreement shall be
binding upon and inure to the benefit of Nearen, his heirs, estate or personal
representatives. This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement.
13. Entire Agreement: Amendment. This instrument contains the entire
agreement between the parties with respect to the subject matter addressed
herein and all prior discussions, understandings, negotiations and agreements
are merged herein. This Agreement may not be changed orally (and no claim of an
oral modification shall be accepted as evidence of such change) but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
14. Corporate Approval. By his or their signature(s) on this Agreement, the
undersigned officer(s) of the Company represent and warrant as follows: (i) that
they have obtained all necessary and appropriate approvals from the Company's
board of directors; (ii) that the Company is and shall remain to be legally
bound pursuant to the terms of this Agreement; and (iii) the Company through its
officer(s) signature(s) hereunder shall be deemed to have waived any claim of
defect for failure to comply with corporate policies and procedures pertaining
to the execution of agreements creating obligations of the Company. Any such
dispute shall not affect the enforceability hereof and shall be deemed to be a
dispute between the Company and its undersigned representative.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument. effective as of the day and year first above written.
Comprehensive Environmental Systems, Inc.
By: /s/ Micheal O'Reilly
Michael O'Reilly, CEO
By: /s/ James W. Nearen, Jr.
James W. Nearen, Jr.
4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of April 1,
1995, by and between Comprehensive Environmental Systems, Inc., a Delaware
corporation (the "Company") and Leo J. Mangan ("Mangan"). These persons or
entities may from time to time herein be referred to as the party or parties.
RECITALS
The parties enter into this agreement with respect to the following
facts and circumstances:
A. Mangan is presently the Chief Operating Officer of the Company.
B. The Company believes that Mangan's skills and knowledge are
essential to its continued success and, by this Agreement, desires to secure
Mangan's continued employment as Chief Operating Officer for the term expressed
below.
C. Mangan desires to be employed by the Company.
CONSIDERATION
In consideration of the mutual covenants contained herein, to give
effect to the Recitals stated above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1.0 Term. This Agreement shall commence on April 1, 1995 and shall
----
continue hereafter for a period of six (6) years (the "Term"). This Agreement
may be terminated only as provided at Section 4.0 below.
2.0 Duties. Mangan shall have the following obligations hereunder:
------
2.1 Title. Mangan shall serve the Company as its Chief Operating
-----
Officer and shall have the right and authority to utilize said title in the
conduct of his business and personal affairs.
2.2 Job Description. Mangan shall perform such duties as the
----------------
Board of Directors of the Company may from time to time direct and as are
consistent with the position of Chief Operating Officer, including specifically,
but without limitation, overseeing the day to day operations of the Company and
its subsidiaries; establishing and maintaining the Company's books, records and
accounts; and investigating acquisitions, investments and divestitures by the
Company. This provision shall not be deemed to prevent Mangan from raising
capital for the Company and being remunerated at normal market rates therefore,
nor shall such remuneration be deemed to violate any duty to the Company as a
result of his employment.
<PAGE>
2.3 Best Efforts. Mangan shall use his best efforts, business
-------------
judgment, skill and knowledge to the advancement of the business and interests
of the Company and to the discharge of his duties and responsibilities
hereunder. The term "best" shall mean the use of such nonexclusive effort as a
reasonable man would be expected to devote under the circumstances and facts
then prevailing.
3.0 Compensation and Benefits. The Company, at its expense, shall
--------------------------
provide to Mangan the following compensation and benefits:
3.1 Salary. The Company shall pay Mangan the following annual
------
salaries upon the same general terms and at the same intervals as the payment of
the salaries of other employees of the Company:
Year Amount
1995 $156,000
1996 $168,000
1997 $180,000
1998 $192,000
1999 $204,000
2000 $216,000
3.2 Insurance. The Company, at its sole expense, shall provide
---------
Mangan with (i) a policy of medical insurance that will insure Mangan regardless
of his physical location; (ii) a whole life insurance policy with death benefits
of not less than $2,000,000; and (iii) a disability policy with benefits equal
to or greater than the benefits currently provided to Mangan by the Company at
the time of execution of this Agreement.
The Company agrees to assign any policy of life insurance as
directed by Mangan to effect a split-dollar arrangement; and further agrees to
pay up and transfer any right or interest it may have to the trustee of the
insurance trust holding ownership of said policy at the time should, for any
reason, this Agreement terminate.
3.3 Payment and Reimbursement of Expenses. The Company shall
----------------------------------------
provide Mangan with an expense account against which he may charge all
reasonable travel, subsistence, entertainment and similar expenses incurred by
him in the performance of his obligations hereunder and shall promptly pay when
due all such statements and bills upon submission by Mangan and in accordance
with the then usual procedures of the company.
Additionally, the Company shall pay a reasonable sum as an
automobile allowance including the costs of leasing, insurance, maintenance and
repair.
-2-
<PAGE>
Finally, the Company shall pay the actual costs incurred by
Mangan for cellular telephone and pager communications including equipment,
service and long distance charges.
3.4 Executive Bonus. The Company shall allow Mangan to
-----------------
participate in any executive bonus plan upon the same terms and conditions as
other executive officers of Company.
3.5 Stock Options. Upon the execution hereof, the Company shall
-------------
grant and issue to Mangan non qualified options to purchase for $1.50 per share
two hundred and fifty thousand (250,000) shares of validly issued, fully paid
and non assessable common stock of the Company, $.0001 par value, including
rights to demand registration at Company expense. Said options shall conform to
the Stock Option Grant attached hereto as Exhibit A.
The Company, by its execution hereof acknowledges, confirms and
ratifies the March 10, 1995 grant to Mangan of 2,000,000 non qualified stock
options exercisable at 20% of the closing market bid price as of the last
trading day immediately preceding the date of exercise, which were approved by
the shareholders at the last annual meeting of the company, to Mangan and
confirms that the additional options being granted to Mangan in this Section 3.5
are in addition to the previous grant. A copy of the previous grant of options
is attached hereto as Exhibit B.
3.6 Vacation. Mangan shall be entitled to paid vacation each year
--------
in accordance with the following schedule:
1995 2 weeks
1996 3 weeks
1997-2000 4 weeks
All vacation time shall be taken at such times and intervals as shall be
determined by Mangan, subject to the reasonable business needs of the Company.
4.0 Termination. This Agreement may be terminated only as follows:
-----------
4.1 Death of Mangan. The death of Mangan shall terminate this
---------------
Agreement provided, however, that the Company's obligation to pay the Salary
described in Section 3.1 shall survive termination and continue through the date
on which the Term would have naturally ended pursuant to Section 1.0 except for
such early termination. Additionally, the following obligations shall survive
termination and the Company shall: (i) timely pay any statements or bills for
expenses incurred by Mangan prior to the time of his death as is described at
Section 3.3 above; (ii) disburse to Mangan's heirs or estate any executive bonus
then due and owing Mangan pursuant to Section 3.4 above; and (iii) allow
Mangan's heirs or estate to exercise, according to the terms thereof, any stock
options previously granted, granted by this Agreement pursuant to Section 3.5
above, or that may subsequently be granted by the Company.
-3-
<PAGE>
4.2 Termination by Company. Subject to the timely payment of the
----------------------
liquidated damages described hereafter, the Company may terminate this Agreement
upon thirty (30) days written notice to Mangan. In the event the Company
terminates this Agreement pursuant to this section or takes such action that
prevents Mangan's performance of his obligations hereunder thus.effecting a
termination, then, upon the effective date of that termination, the Company
shall pay in certified funds a lump sum amount equal to the sum of the following
: (i) the total of the remaining unpaid salary described in Section 3.1 above;
(ii) an amount equal to the annual premiums of the medical and life insurance
described at Section 3.2(i) and 3.2(ii) above for the balance of the Term; (iii)
any amounts due for reimbursement of expenses as described in Section 3.3 above;
and (iv) any executive bonus then due and owing as provided at Section 3.4
above.
In the event of any dispute between the Company and Mangan
concerning the amount due, either party by written request may request that the
Company's independent outside auditor determine the amount owing hereunder. The
costs of such determination shall be paid by the Company.
The Company acknowledges that the amount and terms for payment of
these sums constitute a fair and equitable severance provision in the nature of
a liquidated damages provision. The Company waives any claim or right that it
might otherwise have to contest the validity or terms of payment. Further, to
the extent that the amount of damages owing hereunder has been determined by its
independent outside auditor, the Company waives any claim or right that it might
otherwise have to contest the amount of the damages described in this Section
4.2. The Company also acknowledges that Mangan is relying upon the protection
provided to him by this liquidated damages provision as an inducement to his
entering into this Agreement.
The Company acknowledges that its failure to pay the above
described severance amount as liquidated damages to Mangan when due shall cause
him to suffer immediate and irreparable harm, thus entitling him to enforce the
payment of these sums by actions at law and in equity for preliminary and
permanent injunctive relief as further described in Section 8.0 below.
4.3 Termination by Mangan. Mangan may terminate this Agreement
----------------------
upon thirty (30) days written notice to the Company.
-4-
<PAGE>
5.0 Covenant Not to Disclose. Other than is necessary in the ordinary
------------------------
course of the Company's business, Mangan shall not disclose, make accessible or
use for the benefit of any other person or entity, at any time during or after
the Term, any information of a confidential, proprietary or secret nature
relating to the business, products or activities of the Company (the
"Confidential Information"). Such Confidential information shall include, but
not be limited to, information relating to plans, devices, customers, marketing
and sales. Information shall be Confidential Information whether or not such
information was developed, devised or otherwise created in whole or in part by
the efforts of Mangan, and whether or not such information is a matter of public
knowledge, unless the Company has authorized disclosure of such information to
the general public. All documents, records and other media of every kind and
description relating to the business, present or otherwise, of the Company and
any copies, in whole or in part, thereof, whether or not prepared by Mangan,
shall be the sole and exclusive property of the Company. Mangan shall safeguard
all such property and shall surrender such property in his possession or control
to the Company upon his termination of this Agreement or upon the request of the
Company following its termination of this Agreement in accordance with the terms
hereof.
6.0 Representations and Warranties of Mangan. Mangan hereby represents
----------------------------------------
and warrants to the Company that he is under no contractual or other restriction
which is inconsistent with the execution of this Agreement, the performance of
his duties hereunder, or the rights of the Company hereunder.
7.0 Counterparts and Headings. This Agreement may be executed
---------------------------
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument. The headings in this agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
8.0 Enforcement. Mangan acknowledges that he has carefully read and
-----------
considered all terms and conditions of this Agreement, including the restraints
imposed upon him Fpursuant to Section 5 hereof. Mangan agrees that said
restraints are necessary for the reasonable and proper protection of the Company
and that any breach by Mangan of such section would cause irreparable damage to
the Company. Mangan therefore agrees that the Company, in addition to any other
remedies available to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or threatened breach by Mangan of such
section. Similarly, the Company acknowledges that it has carefully read and
considered all terms and conditions of this Agreement, including the continuing
financial obligations in the event of termination, including the possibility of
lump sum payments, that may be imposed upon it pursuant to this Agreement. The
Company agrees that the financial obligations created hereby, including the
possibility of lump sum payments, are necessary for the reasonable and proper
protection of Mangan, his heirs or estate, and that any breach by the Company of
its financial obligations to Mangan pursuant to this Agreement would cause
irreparable damage to Mangan, his heirs or estate. The Company therefore agrees
that Mangan, in addition to any other remedies (including a claim for money
damages) available to him, his heirs or estate, shall be entitled to preliminary
and permanent injunctive relief against any breach or threatened breach by the
Company of this Agreement.
9.0 No Waiver. The waiver by any party of a breach of any provision of
---------
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of such provision or any other provision hereof.
10.0 Notices. Any notice or communication required or permitted
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hereunder shall be deemed given when delivered personally or when deposited in
the United States mails, by certified mail, return receipt requested, postage
prepaid:
If to the Company at:
Comprehensive Environmental Systems, Inc.
72-B Cabot Street
West Babylon, NY 11704
If to Mangan, to him at:
Leo Mangan
328 Centre Avenue
Lindenhurst, NY 11757
or to such other address of which either party may notify the other party by
notice similarly given.
11.0 Assignment: No Third Party Beneficiaries. The Company may not
------------------------------------------
assign its rights or obligations pursuant to this Agreement. Mangan may not
assign or delegate to any third party his obligations under this Agreement. In
all other respects, the provisions of this Agreement shall be binding upon and
inure to the benefit of Mangan, his heirs, estate or personal representatives.
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement, except as
provided in this Section 11.
12.0 Entire Agreement: Amendment. This instrument contains the entire
----------------------------
agreement between the parties with respect to the subject matter addressed
herein and all prior discussions, understandings, negotiations and agreements
are merged herein. This Agreement may not be changed orally (and no claim of an
oral modification shall be accepted as evidence of such change) but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
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<PAGE>
13.0 Corporate Approval. By his or their signature(s) on this
-------------------
Agreement, the undersigned officer(s) of the Company represent and warrant as
follows: (i) that they have obtained all necessary and appropriate approvals
from the Company's board of directors; (ii) that the Company is and shall remain
to be legally bound pursuant to the terms of this Agreement; and (iii) the
Company through its officer(s) signature(s) hereunder shall be deemed to have
waived any claim of defect for failure to comply with corporate policies and
procedures pertaining to the execution of agreements creating obligations of the
Company. Any such dispute shall not affect the enforceability hereof and shall
be deemed to be a dispute between the Company and its undersigned
representative.
14.0 Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument, effective as of the day and year first above written.
Attest: Comprehensive Environmental Systems,
Inc.
By: /s/ Donald J. Kessler
- ---------------------------- ------------------------------------------
Donald J. Kessler, CEO and President
Attest: Leo Mangan
By: /s/ Leo J. Mangan, Individually
- ---------------------------- ------------------------------------------
Leo J. Mangan, Individually
David K. Behanna, Attest
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