SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) May 10, 1999
----------------------
MENLO ACQUISITION CORPORATION
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 0-22136 77-0332937
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation) (Commission File (IRS Employer
Number) Identification No.)
100 Misty Lane Parsippany, NJ 07054
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 560-1400
- -------------------------------------------------------------------------------
FOCUS SURGERY, INC.
- --------------------------------------------------------------------------------
(Former name or former address, if changed
since last report.)
<PAGE>
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
Item 3. Bankruptcy or Receivership.
As previously reported, on February 9, 1996, the Registrant filed for protection
under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy
Court, Northern District of California, Oakland Division (Case No. 96-41107-N).
As also previously reported, the bankruptcy court entered an order on October
28, 1998 confirming the Registrant's Second Amended Plan of Reorganization (the
"Plan"), a copy of which was filed as an Exhibit to the Registrant's Current
Report on Form 8-K dated November 20, 1998. As previously reported on Form 8-K
which was filed on March 10, 1999, Menlo Acquisition Corp. completed the
purchase of Environmental Waste Management Associates, LLC, Environmental Waste
Management Associates, Inc., Integrated Analytical Laboratories, LLC and
Integrated Analytical Laboratories, Inc. on that date.
Pursuant to the Plan, as described more fully in the Debtor's Second Amended
Disclosure Statement filed August 12, 1998 and approved by order of the
bankruptcy court filed August 26, 1998 (the "Disclosure Statement"), upon the
closing of the Registrant's acquisition of the entities and businesses described
for securities representing 95% of all the issued and outstanding shares of the
Registrant after reorganization, the executive officers and directors of the
Registrant were Richard S. Greenberg, Chairman and Chief Operating Officer,
Lawrence B. Seidman, President, General Counsel and Director, and George
Greenberg, Secretary and Director. Information concerning the acquired entities
and businesses and the persons who serve as executive officers and directors of
the Registrant after reorganization is set forth in the Disclosure Statement.
Item 4. Changes in Registrant's Certifying Accountants.
The unaudited monthly financial information the Registrant filed with the
bankruptcy court during the pendency of the Chapter 11 proceeding were filed
with the Securities and Exchange Commission under cover of Form 8-K. However,
the Registrant did not engage an independent accountant to audit its financial
statements, since at least February 9, 1996, the date on which it filed for
protection under Chapter 11, almost three years ago.
As of January 19, 1999, a new independent accountant has been engaged to audit
the Registrant's financial statements: J. H. Cohn LLP, 75 Eisenhower Parkway,
Roseland, NJ 07068. The new independent accountant had no relationship with the
Registrant prior to the new engagement.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following financial statements, pro-forma information and exhibits are filed
as part of this report, as amended:
(a)- Financial Statements of Businesses Acquired
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C., ENVIRONMENTAL
WASTE MANAGEMENT ASSOCIATES, INC., INTEGRATED ANALYTICAL LABORA-
TORIES, L.L.C. AND INTEGRATED ANALYTICAL LABORATORIES, INC.:
HISTORICAL:
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
COMBINED:
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997 F-3
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS/
MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997 F-4
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997 F-5
NOTES TO FINANCIAL STATEMENTS F-6/13
(b)- Pro Forma Financial Information
MENLO ACQUISITION CORPORATION:
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS:
INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS F-14
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1998 F-15
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1998 F-16
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATE-
MENTS (UNAUDITED) F-17
(c)- Exhibits
10.1 - Employment Agreement - Lawrence B. Seidman
10.2 - Employment Agreement - Richard S. Greenberg
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
MENLO ACQUISITION CORP.
Date: May 10, 1999 By:/ss/Richard S. Greenberg
--------------------------------
Name:Richard S. Greenberg
Title:Chairman, and Chief
Operating Officer
<PAGE>
(a)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Members/Stockholder
Environmental Waste Management Associates, L.L.C.,
Environmental Waste Management Associates, Inc.,
Integrated Analytical Laboratories, L.L.C. and
Integrated Analytical Laboratories, Inc.
We have audited the accompanying combined balance sheets of ENVIRONMENTAL WASTE
MANAGEMENT ASSOCIATES, L.L.C. (A New Jersey Limited Liability Company),
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC., INTEGRATED ANALYTICAL
LABORATORIES, L.L.C. (A New Jersey Limited Liability Company) AND INTEGRATED
ANALYTICAL LABORATORIES, INC. as of December 31, 1998 and 1997, and the related
combined statements of operations and retained earnings/members' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Companies' 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of Environmental Waste
Management Associates, L.L.C., Environmental Waste Management Associates, Inc.,
Integrated Analytical Laboratories, L.L.C. and Integrated Analytical
Laboratories, Inc. as of December 31, 1998 and 1997, and their results of
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles.
J.H. COHN LLP
Roseland, New Jersey
March 11, 1999
F-2
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS 1998 1997
------ ------------- -------------
Current assets:
Cash $ 24,722 $ 4,130
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $565,855 and $193,325 4,832,722 4,111,737
Unbilled receivables 107,276 411,254
Affiliates 284,963 316,236
Prepaid expenses and other current assets 82,193 59,556
Due from affiliate 27,001 122,000
Due from stockholder 784,351
---------- ----------
Total current assets 5,358,877 5,809,264
Equipment and furnishings, net of
accumulated depreciation of
$550,222 and $173,200 1,019,842 913,355
Other assets 37,886 14,704
---------- ----------
Totals $6,416,605 $6,737,323
========== ==========
LIABILITIES AND STOCKHOLDER'S/MEMBERS'
EQUITY
Current liabilities:
Notes payable - bank $ 400,000 $1,310,000
Current portion of long-term debt 106,248 50,000
Accounts payable 610,201 584,685
Customer deposits 522,725 342,256
Accrued expenses and other liabilities 236,077 114,369
Due stockholder 54,825 54,825
Deferred tax liabilities 7,300 18,000
----------- -----------
Total current liabilities 1,937,376 2,474,135
Long-term debt, noncurrent portion 274,480
----------- -----------
Total liabilities 2,211,856 2,474,135
----------- -----------
Commitments and contingencies
Stockholder's/members' equity:
Common stock 60,000 60,000
Additional paid-in capital 76,500 76,500
Retained earnings/members' equity 4,068,249 4,126,688
----------- -----------
Total stockholder's/
members'equity 4,204,749 4,263,188
----------- -----------
Totals $6,416,605 $6,737,323
========== ==========
See Notes to Combined Financial Statements.
F-3
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS/
MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
OPERATIONS 1998 1997
---------- ----------
Gross revenue $12,848,430 $9,753,084
Direct project costs and other costs of 5,856,090 3,528,256
operations ------------ ----------
Net revenue 6,992,340 6,224,828
----------- ---------
Expenses:
Labor and related expenses 1,869,015 1,712,049
Selling, general and administrative 4,859,712 4,071,122
Interest 90,355 41,588
--------------- -------------
Totals 6,819,082 5,824,759
------------- -----------
Income from operations 173,258 400,069
------------- ------------
Other income (expense):
Write-off of amounts due from affiliates (306,375) (532,998)
Gain on disposal of vehicle 9,611
Administrative fee income 48,000 78,000
Sundry 14,432 19,052
-------------- ------------
Totals (243,943) (426,335)
------------- ------------
Loss before income taxes (70,685) (26,266)
------------- -------------
Provision (credit) for state income taxes:
Current (1,546) 55,733
Deferred (10,700) (77,000)
------------- -------------
Totals (12,246) (21,267)
------------- -------------
Net loss (58,439) (4,999)
RETAINED EARNINGS/MEMBERS'
EQUITY
-------------------------
Balance, beginning of year 4,126,688 4,131,687
------------- -----------
Balance, end of year $ 4,068,249 $4,126,688
============ ==========
See Notes to Combined Financial Statements.
F-4
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
-------- --------
Net loss $ (58,439) $ (4,999)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 377,020 231,369
Bad debts 529,945 41,635
Write-off of amounts due from affiliates 306,375 532,998
Gain on disposal of vehicle (9,611)
Deferred income taxes (10,700) (77,000)
Changes in operating assets and liabilities:
Accounts receivable - trade (1,250,930) 645
Unbilled receivables 303,978 (156,514)
Accounts receivable - affiliates 31,273 (221,217)
Prepaid expenses and other current assets (22,637) 22,199
Other assets (23,182) (863)
Accounts payable 25,516 77,030
Customer deposits 180,469 79,466
Accrued expenses and other liabilities 121,708 66,618
------------- ------------
Net cash provided by operating activities 510,396 581,756
------------- ------------
Investing activities:
Purchase of equipment and furnishings (483,507) (555,188)
Advances to affiliate (211,376) (95,000)
Insurance proceeds on disposal of vehicle 10,604
Repayments from (advances to) stockholder 784,351 (196,375)
------------- ------------
Net cash provided by (used in) investing 89,468 (835,959)
activities
------------- ------------
Financing activities:
Repayment of note payable - bank and
long-term debt (694,272) (60,000)
Proceeds of note payable - bank 115,000 1,310,000
Repayment of note payable - officer (1,000,000)
------------- -----------
Net cash provided by (used in) (579,272) 250,000
financing activities
------------- -----------
Net increase (decrease) in cash 20,592 (4,203)
Cash, beginning of year 4,130 8,333
------------- -----------
Cash, end of year $ 24,722 $ 4,130
============= ============
Supplemental disclosure of cash flow data:
Interest paid $ 90,355 $ 41,588
============= ============
Income taxes paid $ 60,800 $ 550
============= ============
See Notes to Combined Financial Statements.
F-5
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies: Organization and
principles of combination: Environmental Waste Management Associates,
Inc. and Integrated Analytical Laboratories, Inc. (the "Incs.") were
incorporated in the State of New Jersey in 1987. Effective April 1,
1998, the sole stockholder of the Incs. caused certain assets,
primarily equipment, to be contributed to two newly formed New Jersey
limited liability companies, Environmental Waste Management
Associates, L.L.C. and Integrated Analytical Laboratories, L.L.C. (the
"L.L.Cs."), whose primary member is a trust of which the sole
stockholder is the beneficiary. Concurrent with this transaction, the
L.L.Cs. assumed substantially all of the operations of the Incs. This
business combination was accounted for substantially as a pooling and,
accordingly, had no effect on previously reported financial
information.
The accompanying combined financial statements include the accounts
of the L.L.Cs. and the Incs. All significant intercompany
accounts and transactions have been eliminated in combination. As
used herein, the "Company" refers to the L.L.Cs. and the Incs.,
collectively.
Business:
The Company, having offices in Parsippany, West Windsor and
Randolph, New Jersey, provides consulting, remedial, disposal and
laboratory testing services with regard to environmental
compliance primarily throughout the tri-state area and eastern
Pennsylvania.
Use of estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Concentrations of credit risk: Financial instruments which potentially
subject the Company to concentrations of credit risk consist
primarily of cash and trade accounts receivable. The Company
places its cash with high credit quality financial institutions.
At times, such amounts exceed Federally insured limits.
Concentrations of credit risk with respect to trade accounts
receivable are limited as the Company closely monitors the
extension of credit to its customers while maintaining allowances
for potential credit losses. Management does not believe that
significant credit risk exists at December 31, 1998.
Equipment and furnishings:
Equipment and furnishings are stated at cost, less accumulated
depreciation. Depreciation is computed using accelerated methods
over estimated useful lives which range from five to ten years.
F-6
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies (continued):
Advertising:
The Company expenses the cost of advertising and promotions
as incurred. Advertising costs charged to operations
amounted to $188,932 and $145,442 in 1998 and 1997,
respectively.
Income taxes:
The Incs., with the consent of their stockholder, have
elected to be treated as "S" Corporations under the
applicable sections of the Internal Revenue Code. Under
these sections, corporate income or loss, in general, is
allocated to the stockholder for inclusion in his personal
income tax returns. Accordingly, there is no provision for
Federal income tax in the accompanying combined financial
statements.
The Incs. have also elected to be treated as "S"
Corporations for New Jersey state income tax purposes.
However, the State of New Jersey does impose a tax on "S"
Corporation income at a reduced rate and, accordingly, a
provision for such tax has been provided in the accompanying
combined financial statements for income attributable to the
Incs.
The Incs. account for state income taxes pursuant to the
asset and liability method which requires deferred income
tax assets and liabilities be computed annually for
differences between the financial statement and tax bases of
assets and liabilities that result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to
the amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus
the change during the period in deferred tax assets and
liabilities.
Deferred tax liabilities arise from the Incs.' election to
utilize the cash basis of accounting for income tax
purposes.
The L.L.Cs. are New Jersey limited liability companies and,
as such, are treated as partnerships for Federal and state
income tax purposes. A partnership is not a tax paying
entity for Federal or state income tax purposes. Income or
loss of a limited liability company is reported in the
individual member's income tax returns and, accordingly, no
provision for income tax has been recorded in the
accompanying combined financial statements for income
attributable to the L.L.Cs.
F-7
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies (concluded):
Recent accounting pronouncements:
The Financial Accounting Standards Board has issued certain
pronouncements as of December 31, 1998 that will become
effective in subsequent periods; however, management does
not believe that any of those pronouncements will affect any
financial accounting measurements or disclosures the Company
will be required to make.
Note 2 - Equipment and furnishings:
Equipment and furnishings consist of the following
1998 1997
Equipment $1,197,269 $ 805,460
Furniture and fixtures 139,413 103,379
Vehicles 95,669 45,904
Leasehold improvements 137,711 131,812
------------ ------------
1,570,062 1,086,555
Less accumulated depreciation 550,220 173,200
------------ ------------
Totals $1,019,842 $ 913,355
========== ===========
Depreciation expense amounted to $377,020 and $231,369 in 1998
and 1997, respectively.
Note 3 - Notes payable - bank:
At December 31, 1997, notes payable - bank consisted of two
notes. The first note consisted of outstanding borrowings which
totaled $1,000,000 under a $1,000,000 line of credit with PNC
Bank which expired on July 31, 1998. The line of credit was
extended to July 31, 1999 in the amount of $750,000. At December
31, 1998, notes payable - bank consist of outstanding borrowings
under the $750,000 line of credit which bear interest at the
prime rate plus .75% (an effective rate of 8.50%).
Outstanding borrowings are secured by substantially all of the
Company's assets and are guaranteed by the stockholder/members
and affiliated companies which are either wholly-owned or
substantially owned by the stockholder/members. The line of
credit contains certain covenants, the most restrictive of which
includes the maintenance of a maximum capital funds ratio, as
defined.
At December 31, 1997, the second note consisted of $310,000
outstanding under another credit facility which matured in July
1998. Upon maturity, outstanding borrowings were converted to a
$425,000 term loan (see Note 4).
F-8
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 4 - Long-term debt:
At December 31, 1998, the term loan is payable in monthly
installments of $8,854 plus interest at 200 basis points over
the bank's four year cost of funds rate (an effective rate of
7.90% at December 31, 1998) until July 2002, at which time the
unpaid balance is due. The loan is secured by substantially all
of the Company's assets and guaranteed by the stockholder/member
and affiliated companies which are either wholly-owned or
substantially owned by the stockholder/member. The long-term
debt outstanding at December 31, 1997 was repaid in 1998 when it
became due.
Principal amounts due under the term loan in each of the years
subsequent to December 31, 1998 are as follows:
Year Ending
December 31, Amount
------------ ------
1999 $106,248
2000 106,248
2001 106,248
2002 61,984
Note 5 - Retirement plan:
The Company maintains a retirement plan qualifying under Section
401(k) of the Internal Revenue Code which allows eligible
employees to defer a portion of their income through
contributions to the plan. The Company makes contributions to
the plan for the benefit of the employees subject to certain
limitations. The Company's contributions amounted to $73,929 and
$68,819 in 1998 and 1997, respectively.
Note 6 - Related party transactions:
At December 31, 1998 and 1997, the amounts due from affiliate
consist of noninterest bearing cash advances that are due on
demand. During 1998, the Company determined that amounts due
from an affiliate totaling $306,375 were uncollectible and
written off. During 1997, certain other affiliates of the
Company commenced bankruptcy proceedings. As such, the Company
determined that amounts due from these affiliates totaling
$532,998 were uncollectible and written off in 1997.
At December 31, 1998 and 1997, the amounts due from/to
stockholder consisted of noninterest bearing, unsecured advances
due on demand.
F-9
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 6 - Related party transactions (concluded):
During 1998 and 1997, the Company had the following transactions
with affiliated companies which are wholly-owned or
substantially owned by the Company's stockholder/members:
1998 1997
-------- --------
Laboratory fees (income) $101,051 $137,346
Subcontractor fees (expense) 125,000
Administrative fees (income) 48,000 78,000
At December 31, 1998 and 1997, accounts payable included
$53,439 and $28,429, respectively, which was owed to
affiliated companies.
Note 7 - Commitments and contingencies:
Lease commitments:
The Company is obligated under noncancelable leases for
office space, storage space and laboratory facilities at
several locations in New Jersey, one of which is a building
owned by the stockholder. The leases expire at various dates
through August 2007 and require the Company to pay minimum
annual rentals plus its pro rata share of common area
maintenance, real estate taxes, insurance, utilities and
other occupancy costs, as defined. Rent expense, including
allocated pro rata charges, amounted to $448,417 and
$403,856 in 1998 and 1997, respectively, inclusive of
$318,762 and $298,896, respectively, paid to the
stockholder. Future minimum lease payments subsequent to
December 31, 1998 for each of the next five years and in the
aggregate are as follows:
Year Ending Nonrelated
December 31, Parties Stockholder Total
----------- ---------- ----------- -----------
1999 $111,632 $ 305,578 $ 417,210
2000 111,632 305,578 417,210
2001 38,400 305,578 343,978
2002 38,400 305,578 343,978
2003 38,400 305,578 343,978
Thereafter 38,400 1,094,989 1,133,389
---------- ----------- -----------
Totals $376,864 $2,622,879 $2,999,743
======== ========== ==========
Litigation:
In the ordinary course of business, the Company is both a
plaintiff and defendant in various legal proceedings. In the
opinion of management, resolution of these claims is not
expected to have a material adverse effect on the combined
financial position or results of operations of the Company.
F-10
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 8 - Common stock:
Common stock, no par value, consists of the following:
Shares
------------------------
Issued
and
Authorized Outstanding Amount
---------- ----------- ------
Environmental Waste Management
Associates, Inc. 2,500 100 $10,000
Integrated Analytical Laboratories, Inc. 2,500 10 50,000
--------
Total $60,000
=======
Note 9 - Fair value of financial instruments:
The Company's material financial instruments at December 31,
1998 for which disclosure of estimated fair value is required by
certain accounting standards consisted of cash, accounts
receivable, accounts payable, notes payable and long-term debt.
In the opinion of management, (i) cash, accounts receivable and
accounts payable were carried at values that approximated their
fair values because of their liquidity and/or their short-term
maturities and (ii) notes payable and long-term debt were
carried at values that approximated their fair values because
they had interest rates equivalent to those currently prevailing
for financial instruments with similar characteristics.
Note 10- Business segments:
The Company adopted Statement of Financial Accounting Standards
No. 131 ("SFAS 131"), "Disclosures about Segments of an
Enterprise and Related Information," at the beginning of 1998.
Following the provision of SFAS 131, the Company is reporting
segment revenue and income from operations in the same format
reviewed by the Company's management (the "management
approach"). The Company has two reportable segments: providing
consulting, remedial and disposal services (consulting) and
laboratory testing of soil and water for environmental hazards
(lab).
F-11
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 10- Business segments (continued):
Revenue, income from operations and other related segment
information follows:
1998 1997
------------ ----------
Gross revenue:
Consulting $ 9,372,764 $7,227,915
Lab 4,260,293 3,196,371
Inter-segment (784,627) (671,202)
------------ -----------
Totals $12,848,430 $9,753,084
=========== ==========
Direct project costs and
other costs of operations:
Consulting $ 4,637,110 $2,553,832
Lab 2,003,607 1,648,328
Inter-segment (784,627) (673,904)
-------------- ------------
Totals $ 5,856,090 $3,528,256
============ ==========
Other operating expenses:
Consulting $ 5,267,343 $4,734,315
Lab 2,026,424 1,222,394
Inter-segment (474,685) (131,950)
-------------- ------------
Totals $ 6,819,082 $5,824,759
============ ==========
Income (loss) from
operations:
Consulting $ (531,689) $ (60,232)
Lab 230,262 325,649
Inter-segment 474,685 134,652
-------------- ------------
Totals $ 173,258 $ 400,069
============= ===========
Other income (expense):
Consulting $ 228,261 $ (295,816)
Lab 2,481 4,133
Inter-segment (474,685) (134,652)
-------------- ------------
Totals $ (243,943) $ (426,325)
============= ===========
F-12
<PAGE>
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, L.L.C.,
ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, INC.,
INTEGRATED ANALYTICAL LABORATORIES, L.L.C. AND
INTEGRATED ANALYTICAL LABORATORIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 10- Business segments (concluded):
1998 1997
---------- -----------
Income (loss) before taxes:
Consulting $ (303,428) $ (356,048)
Lab 232,743 329,782
Inter-segment - -
-------------- ------------------
Totals $ (70,685) $ (26,266)
============== ============
Assets:
Cash:
Consulting $ 12,483 $ 3,110
Labs 12,239 1,020
-------------- --------------
Totals 24,722 4,130
-------------- --------------
Accounts receivable:
Consulting 4,213,123 3,870,857
Labs 1,587,540 1,533,396
Inter-segment (575,702) (565,026)
-------------- ------------
Totals 5,224,961 4,839,227
------------- -----------
Equipment and furnishings:
Consulting 425,491 438,389
Labs 594,351 474,966
-------------- ------------
Totals 1,019,842 913,355
-------------- ------------
Other assets:
Consulting 126,428 969,493
Labs 20,652 11,118
-------------- -------------
Totals 147,080 980,611
-------------- ------------
Total assets $ 6,416,605 $6,737,323
============ ==========
Note 11- Subsequent event:
On March 10, 1999, Menlo Acquisition Corp. ("Menlo"), a
publicly-held "shell company" in bankruptcy, completed the
purchase of the Company. In consideration for the sale of the
Company, the stockholders and/or members of the Company received
95% of the outstanding shares of common stock upon Menlo
reorganizing and emerging from bankruptcy.
* * *
F-13
<PAGE>
(b)
INTRODUCTION TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
On March 10, 1999, Menlo Acquisition Corp. ("Menlo"), a publicly-held "shell
company" in bankruptcy, consummated an agreement whereby it acquired 100% of
Environmental Waste Management Associates, L.L.C., Environmental Waste
Management Associates, Inc., Integrated Analytical Laboratories, L.L.C. and
Integrated Analytical Laboratories, Inc., (collectively "Environmental"). In
consideration for the sale of Environmental, the stockholders and/or members of
Environmental received 95% of the outstanding shares of common stock of Menlo
upon Menlo reorganizing and emerging from bankruptcy. Therefore, the acquisition
was treated, effective as of March 10, 1999, as a "purchase business
combination" and a reverse acquisition for accounting purposes in which Menlo
was the legal acquirer and Environmental was the accounting acquirer. The assets
and liabilities of Environmental were recorded at their historical carrying
values as of March 10, 1999 and the historical financial statements prior to
March 10, 1999 are those of Environmental. All references to the number of
shares of common stock as of dates or for periods prior to the acquisition have
been restated to reflect the number of outstanding shares of common stock
immediately after the acquisition.
The accompanying unaudited pro forma condensed combined financial statements are
based on the assumptions and adjustments described in the accompanying notes
which management believes are reasonable. The unaudited pro forma condensed
combined financial statements do not purport to represent what the combined
financial position and results of operations actually would have been if the
acquisition referred to above had occurred as of the dates indicated instead of
the actual date of consummation or what the financial position and results of
operations would be for any future periods. The unaudited pro forma condensed
combined financial statements and the accompanying notes should be read in
conjunction with the audited historical financial statements included elsewhere
herein.
F-14
<PAGE>
MENLO ACQUISITION CORP.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1998
(Unaudited)
Pro Forma Historical
----------------------- ----------------------
ASSETS Combined Adjustments Menlo Environmental
-------- ----------- ----- -------------
Current assets:
Cash $ 24,722 $ 24,722
Accounts receivable, net 5,224,961 5,224,961
Prepaid expenses and other
current assets 109,194 109,194
------------ ------------
Total current assets 5,358,877 5,358,877
Equipment and furnishings, net
of accumulated depreciation 1,019,842 1,019,842
Other assets 37,886 37,886
------------ -------------
Totals $6,416,605 $6,416,605
========== ==========
LIABILITIES AND STOCK-
HOLDERS'/MEMBERS' EQUITY
Current liabilities:
Notes payable - bank $ 400,000 $ 400,000
Current portion of
long-term debt 106,248 106,248
Accounts payable and
accrued expenses 1,431,128 1,431,128
----------- -----------
Total current liabilities 1,937,376 1,937,376
Long-term debt, noncurrent 274,480 274,480
portion
------------ ------------
Total liabilities 2,211,856 2,211,856
----------- -----------
Stockholders'/members' equity:
Common stock 526 (A) $ (59,474) 60,000
Additional paid-in capital 4,204,223 (A) 4,127,723 76,500
Retained earnings/members' - (A) (4,068,249) 4,068,249
equity
------------ ----------- -----------
Total stockholders'/members'
equity 4,204,749 - 4,204,749
----------- ----------- -----------
Totals $6,416,605 $ - $ - $6,416,605
========== =========== ====== ===========
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
F-15
<PAGE>
MENLO ACQUISITION CORP.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(Unaudited)
Pro Forma Historical
---------------------- --------------------
Combined Adjustments Menlo Environmental
-------- ----------- ----- -------------
Gross revenue $12,848,430 $12,848,430
Direct project costs and
other costs of operation 5,856,090 5,856,090
------------- -------------
Net revenue 6,992,340 6,992,340
------------- -------------
Expenses:
Labor and related expenses 1,869,015 1,869,015
Selling, general and 4,859,712 4,859,712
administrative
Interest 90,355 90,355
------------- -------------
Totals 6,819,082 6,819,082
------------- -------------
Income from operations 173,258 173,258
------------- --------------
Other income (expense):
Write-off of amounts due
from affiliates (306,375) (306,375)
Other 62,432 62,432
------------- --------------
Totals (243,943) (243,943)
------------- --------------
Loss before income taxes (70,685) (70,685)
Credit for state income taxes (12,246) (12,246)
------------- --------------
Net loss $ (58,439) $ - $ - $ (58,439)
============= ====== ====== ==============
Basic loss per common share $(.01) (B)
Weighted average common shares
outstanding 5,263,348 (B)
=========
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
F-16
<PAGE>
MENLO ACQUISITION CORP.
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
Pro forma adjustment to the unaudited condensed combined balance sheet as of
December 31, 1998:
(A) To record the recapitalization and reorganization of Menlo upon emerging
from bankruptcy in addition to consummating the acquisition and
elimination of the historical equity accounts of Environmental. Upon
completing the aforementioned, Menlo will have 40,000,000 shares of
$.0001 par value common stock authorized and 5,263,348 shares of common
stock issued and outstanding.
Pro forma adjustment to the unaudited condensed combined statement of operations
for the year ended December 31, 1998.
(B) To adjust the weighted average number of shares outstanding based on the
assumption that the 5,263,348 shares referred to in (A) above would have
been outstanding throughout the year ended December 31, 1998.
F-17
<PAGE>
(c)
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 1st day of June, 1998, by and between Menlo
Acquisition Corp., a Delaware corporation with principal executive offices at
Lanidex Center, 100 Misty Lane, Parsippany, NJ 07054 ("Employer") and Larry
Seidman residing at 19 Veteri Place, Wayne, NJ ("Employee").
W I T N E S S E T H:
WHEREAS, Employer is desirous of employing Employee as its President
and General Counsel, and Employee is desirous of committing himself to serve
Employer in such capacity, all upon the terms and subject to the conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the receipt and sufficiency of which are acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
1. Employment. Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, upon the terms and subject to the conditions of this
Agreement.
2. Term. The employment of Employee by Employer as provided in Section 1
hereof will be from the date hereof until the fifth (5th) anniversary of
the date hereof, and then shall be automatically extended for successive
one (1) year periods, unless Employer provides at least sixty (60) days
notice in advance of year end or the term is sooner terminated as
hereinafter provided (the "Term"). Notwithstanding anything to the
contrary, Employee's and Employer's obligations accrued prior to
termination shall survive in accordance with the corresponding provisions
herein.
3. Duties; Best Efforts. Employee shall serve as President and General Counsel
of Employer and shall perform well and faithfully the duties which may be
assigned to him from time to time by the Board of Directors of Employer
("Board of Directors") and shall use his best efforts to advance the best
interests of Employer. Employee shall be permitted during the Term to
organize and operate investment partnerships that invest in publicly held
securities. Employee shall also be permitted during the term to engage in
other business activities provided such activities do not interfere with
the duties assigned to him by the Board of Directors or otherwise conflict
with his obligations hereunder.
4. Compensation.
(a) Salary. Employer shall pay to Employee a minimum salary ("Salary") of One
Hundred Fifty Thousand Dollars ($150,000) per annum. Salary will be paid in
bi-weekly installments during the Term equal to the current Salary divided
by twenty-six (26). Salary may be increased from time to time by Employer.
(b) Out-of-Pocket-Expenses. Employer shall promptly pay to Employee the
approved reasonable expenses incurred by him in the performance of his
duties hereunder, including, without limitation, those incurred in
connection with business related travel or entertainment, or, if such
expenses are paid directly by Employee, shall promptly reimburse him for
such payments, provided that Employee properly accounts therefor in
accordance with Employer's policy.
(c) Participation in Benefit Plans. Employee shall be entitled to participate
in or receive benefits under group health and hospitalization plans, stock
option plans, and other benefits, all as offered to other executive
employees of Employer from time to time.
(d) Vacation. Employee shall be entitled to paid vacation days during the Term
at the discretion of the Board of Directors but in no event less than eight
(8) weeks per year. Employee shall also be entitled to all paid holidays
given by Employer to its executives and key management employees.
(e) Annual Bonus. In addition to Salary, Employee shall receive an annual bonus
at the discretion of the Board of Directors.
5. Termination.
(a) Employee's employment hereunder shall be terminated prior to the expiration
of the Term, in the event that Employee hereafter (i) dies, (ii) becomes
disabled, (iii) shall willfully fail to perform his duties hereunder, or
(iv) Reasonable Cause.
(b) The term "Reasonable Cause" for the termination of Employee's employment
shall be limited to (i) Employee's fraud, misappropriation, embezzlement or
the like, or (ii) Employee's conviction of a crime involving moral
turpitude or conviction of a felony.
(c) For purpose of this Agreement, the Employee shall be deemed to have become
disabled and thus unable to perform his usual and customary duties for
Employer, in accordance with the definition set forth in a policy or
policies of disability insurance, if any, obtained by Employer for the
benefit of itself and/or the Employee . If there is no definition of
"disability" applicable under any such policy or policies of disability
insurance, the Employee shall be considered disabled when he is not able to
fulfill his duties with Employer. Employer shall have the right to have the
Employee examined by a licensed medical doctor designated by Employer, at
the sole expense of Employer, for the purpose of determining such
disability within the terms of this Agreement. If the Employee disputes the
findings and conclusions of the doctor chosen by Employer, then the
Employee shall be examined by a licensed medical doctor of his choice, at
the sole expense of the Employee. If the findings and conclusions of both
doctors do not agree on whether the Employee is in fact disabled within the
terms of this Agreement, then the Employee shall be examined by a third
doctor, mutually agreed to by the two previous doctors, whose fees and
expenses shall be shared equally by Employer and the Employee and whose
determination as to said claim of such disability shall be final and
conclusive.
6. Special Bonus. In addition to Annual Salary and Annual Bonus payable as
hereinabove provided, if the Employee remains employed with the Employer
through to the Effective Date (as hereafter defined), Employer shall pay to
the Employee a special bonus (the "Special Bonus") in recognition of the
Employee's services during the crucial transition period leading to a
Change of Control (as hereafter defined) in cash equal to Two and
Ninety-nine One Hundredths (2.99) times Employee's Salary as of the
Effective Date. The Special Bonus shall be paid no later than forty-five
(45) days following the Effective Date. The following definitions shall
apply to this Section 6:
(a) The "Effective Date" shall mean the first date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Employee's employment with Employer is
terminated prior to the date on which the Change of Control occurs, and if
it is reasonably demonstrated by the Employee that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) (b) "Change of Control" shall mean:
(c) (i) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the then outstanding equity interest of the Employer, Environmental
Waste Management Associates, L.L.C., a New Jersey limited liability
company, or IAL L.L.C., a New Jersey limited liability company
(individually a "Company" and collectively the "Companies") provided,
however, that the following acquisitions shall not constitute a Change of
Control: (x) any acquisition by a Company, (y) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by any of
the Companies or any entity controlled by any of the Companies.
(d) (ii) Approval by the shareholders or members of any of the Companies of a
reorganization, merger or consolidation, in each case, unless, following
such reorganization, merger or consolidation, (i) more than 60% of the then
outstanding equity interest of such Company resulting from such
reorganization, merger or consolidation is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions, as their ownership, immediately prior to such reorganization,
merger or consolidation; or
(e) (iii) Approval by the shareholders or members of any of the any Companies
of (i) a complete liquidation or dissolution of such Company or (ii) the
sale or other disposition of all or substantially all of the assets of such
Company.
7. Successors. This Agreement and all rights of the parties hereunder shall
inure to the benefit of, and be enforceable by, the parties, assigns,
successors, heirs and distributees.
8. Notices. All notices, consents or other communications required or
permitted to be given by any party hereunder shall be in writing (including
telecopy or other similar writing) and shall be given by personal delivery,
certified or registered mail, postage prepaid, or telecopy (or other
similar writing) to the addresses on the first page with a copy (in the
case of notices to Employer) to Marc R. Berman, Esq., Cole, Schotz, Meisel,
Forman & Leonard, P.A., Court Plaza North, 25 Main Street, P. O. Box 800,
Hackensack, New Jersey 07602-0800, or at such other address or telecopy
number (or other similar number) as either party may from time to time
specify to the other. Any notice, consent or other communication required
or permitted to be given hereunder shall have been deemed to be given on
the date of mailing, personal delivery or telecopy or other similar means
(provided the appropriate answer back is received) thereof and shall be
conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or
telecopy or other similar means, the day of delivery thereof, except that a
change of address shall not be effective until actually received.
9. Modifications and Waivers. No term, provision or condition of this
Agreement may be modified unless to in writing and signed by both Employer
and Employee. No waiver by either party hereto of any breach by the other
party hereto of any term, provision or condition of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
10. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto relating to the subject matter hereof,
superseding all negotiations, prior discussions, preliminary agreements and
agreements relating to the subject matter hereof made prior to the date
hereof.
11. Law Governing and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey (without
giving effect to conflicts of law). The parties hereby consent to the
personal jurisdiction of the federal or state courts located in the State
of New Jersey as the exclusive forum to resolve disputes hereunder.
12. Invalidity. Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not
invalidate, make unenforceable or otherwise affect an other term of this
Agreement which shall remain in full force and effect.
13. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year set forth above.
ATTEST: MENLO ACQUISITION CORP.
_______________________________ By___________________________
WITNESS:
- ------------------------------- -----------------------------
LARRY SEIDMAN
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 1st day of June, 1998, by and between Menlo
Acquisition Corp., a Delaware corporation with principal executive offices at
Lanidex Center, 100 Misty Lane, Parsippany, NJ 07054 ("Employer") and Richard
Greenberg residing at 41-10 Erli Rd., Fair Lawn, NJ 07410 ("Employee").
W I T N E S S E T H:
WHEREAS, Employer is desirous of employing Employee as its Chairman and
Chief Operating Officer, and Employee is desirous of committing himself to serve
Employer in such capacity, all upon the terms and subject to the conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the receipt and sufficiency of which are acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
I. Employment. Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, upon the terms and subject to the conditions of this
Agreement.
1. Term. The employment of Employee by Employer as provided in Section 1
hereof will be from the date hereof until the fifth (5th) anniversary of
the date hereof (the "Term") unless sooner terminated as hereinafter
provided. On each anniversary of the date hereof, the remaining Term shall
automatically be extended for an additional one (1) year unless Employer
provides at least sixty (60) days written notice of non-renewal to Employee
in advance of such anniversary. Notwithstanding anything to the contrary,
Employee's and Employer's obligations accrued prior to termination shall
survive in accordance with the corresponding provisions herein.
2. Duties; Best Efforts. Employee shall serve as Chairman and Chief Operating
Officer of Employer and shall perform well and faithfully the duties which
may be assigned to him from time to time by the Board of Directors of
Employer ("Board of Directors") and shall use his best efforts to advance
the best interests of Employer. Employee shall be permitted during the term
to engage in other business activities provided such activities do not
interfere with the duties assigned to him by the Board of Directors or
otherwise conflict with his obligations hereunder.
3. Compensation.
(a) Salary. Employer shall pay to Employee a minimum salary ("Salary") of Two
Hundred Sixty Thousand Dollars ($260,000) per annum. Salary will be paid in
bi-weekly installments during the Term equal to the current Salary divided
by twenty-six (26). Salary may be increased from time to time by Employer.
(b) Out-of-Pocket-Expenses. Employee shall receive a general expense allowance
in the amount of Ten Thousand Dollars ($10,000) to cover expenses incurred
by him in the performance of his duties hereunder, including, without
limitation, those incurred in connection with business related travel and
entertainment. Employee shall provide receipts to Employer for all expenses
incurred.
(c) Participation in Benefit Plans. Employee shall be entitled to participate
in or receive benefits under group health and hospitalization plans, stock
option plans, and other benefits, all as offered to other executive
employees of Employer from time to time.
(d) Vacation. Employee shall be entitled to paid vacation days during the Term
at the discretion of the Board of Directors but in no event less than six
(6) weeks per year. Employee shall also be entitled to all paid holidays
given by Employer to its executives and key management employees.
(e) Car Allowance. Employee shall receive an automobile allowance of Twelve
Hundred Dollars ($1,200) per month plus reimbursement maintenance,
automobile insurance and registration expenses.
(f) (f) Annual Bonus. In addition to Salary, Employee shall receive an annual
bonus at the discretion of the Board of Directors.
4. Termination.
(a) Employee's employment hereunder shall be terminated prior to the expiration
of the Term, in the event that Employee hereafter (i) dies, (ii) becomes
disabled, or (iii) for Reasonable Cause.
(b) The term "Reasonable Cause" for the termination of Employee's employment
shall be limited to (i) Employee's fraud, misappropriation, embezzlement or
the like, or (ii) Employee's conviction of a crime involving moral
turpitude or conviction of a felony.
(c) For purpose of this Agreement, the Employee shall be deemed to have become
disabled and thus unable to perform his usual and customary duties for
Employer, in accordance with the definition set forth in a policy or
policies of disability insurance, if any, obtained by Employer for the
benefit of itself and/or the Employee . If there is no definition of
"disability" applicable under any such policy or policies of disability
insurance, the Employee shall be considered disabled when he is not able to
fulfill his duties with Employer. Employer shall have the right to have the
Employee examined by a licensed medical doctor designated by Employer, at
the sole expense of Employer, for the purpose of determining such
disability within the terms of this Agreement. If the Employee disputes the
findings and conclusions of the doctor chosen by Employer, then the
Employee shall be examined by a licensed medical doctor of his choice, at
the sole expense of the Employee. If the findings and conclusions of both
doctors do not agree on whether the Employee is in fact disabled within the
terms of this Agreement, then the Employee shall be examined by a third
doctor, mutually agreed to by the two previous doctors, whose fees and
expenses shall be shared equally by Employer and the Employee and whose
determination as to said claim of such disability shall be final and
conclusive.
5. Special Bonus. In addition to Annual Salary and Annual Bonus payable as
hereinabove provided, if the Employee remains employed with the Employer
through to the Effective Date (as hereafter defined), Employer shall pay to
the Employee a special bonus (the "Special Bonus") in recognition of the
Employee's services during the crucial transition period leading to a
Change of Control (as hereafter defined) in cash equal to Two and
Ninety-nine One Hundredths (2.99) times Employee's Salary as of the
Effective Date. The Special Bonus shall be paid no later than forty-five
(45) days following the Effective Date. The following definitions shall
apply to this Section 6:
(a) The "Effective Date" shall mean the first date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Employee's employment with Employer is
terminated prior to the date on which the Change of Control occurs, and if
it is reasonably demonstrated by the Employee that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) (b) "Change of Control" shall mean:
(c) (i) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the then outstanding equity interest of the Employer, Environmental
Waste Management Associates, L.L.C., a New Jersey limited liability
company, or IAL L.L.C., a New Jersey limited liability company
(individually a "Company" and collectively the "Companies") provided,
however, that the following acquisitions shall not constitute a Change of
Control: (x) any acquisition by a Company, (y) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by any of
the Companies or any entity controlled by any of the Companies.
(d) (ii) Approval by the shareholders or members of any of the Companies of a
reorganization, merger or consolidation, in each case, unless, following
such reorganization, merger or consolidation, (i) more than 60% of the then
outstanding equity interest of such Company resulting from such
reorganization, merger or consolidation is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions, as their ownership, immediately prior to such reorganization,
merger or consolidation; or
(e) (iii) Approval by the shareholders or members of any of the any Companies
of (i) a complete liquidation or dissolution of such Company or (ii) the
sale or other disposition of all or substantially all of the assets of such
Company.
6. Successors. This Agreement and all rights of the parties hereunder shall
inure to the benefit of, and be enforceable by, the parties, assigns,
successors, heirs and distributees.
7. Notices. All notices, consents or other communications required or
permitted to be given by any party hereunder shall be in writing (including
telecopy or other similar writing) and shall be given by personal delivery,
certified or registered mail, postage prepaid, or telecopy (or other
similar writing) to the addresses on the first page with a copy (in the
case of notices to Employer) to Marc R. Berman, Esq., Cole, Schotz, Meisel,
Forman & Leonard, P.A., Court Plaza North, 25 Main Street, P. O. Box 800,
Hackensack, New Jersey 07602-0800, or at such other address or telecopy
number (or other similar number) as either party may from time to time
specify to the other. Any notice, consent or other communication required
or permitted to be given hereunder shall have been deemed to be given on
the date of mailing, personal delivery or telecopy or other similar means
(provided the appropriate answer back is received) thereof and shall be
conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or
telecopy or other similar means, the day of delivery thereof, except that a
change of address shall not be effective until actually received.
8. Modifications and Waivers. No term, provision or condition of this
Agreement may be modified unless to in writing and signed by both Employer
and Employee. No waiver by either party hereto of any breach by the other
party hereto of any term, provision or condition of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
9. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto relating to the subject matter hereof,
superseding all negotiations, prior discussions, preliminary agreements and
agreements relating to the subject matter hereof made prior to the date
hereof.
10. Law Governing and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey (without
giving effect to conflicts of law). The parties hereby consent to the
personal jurisdiction of the federal or state courts located in the State
of New Jersey as the exclusive forum to resolve disputes hereunder.
11. Invalidity. Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not
invalidate, make unenforceable or otherwise affect an other term of this
Agreement which shall remain in full force and effect.
12. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year set forth above.
ATTEST: MENLO ACQUISITION CORP.
_______________________________ By___________________________
WITNESS:
- ------------------------------- -----------------------------
RICHARD GREENBERG
