SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): March 31, 1999
WASTEMASTERS, INC.
(Exact name of registrant as specified in its charter)
Maryland 0-12914 52-1507818
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1117 Perimeter Center West,
Suite 500 East,
Atlanta, Georgia 30338
(Address of principal executive offices) (Zip Code)
(404) 888-0158
(Registrant's telephone number, including area code)
<PAGE>
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On March 30, 1999, the Registrant completed the sale to J. Marcus
Enterprises, Inc. its interest in the following subsidiaries and assets
pursuant to a Lease/Purchase Agreement dated January 1, 1999: Wood
Management, Inc., a New Jersey corporation; Mini-Max Enterprises, Inc., a
New Jersey corporation; Tri-State Waste Disposal, Inc., a New Jersey
corporation; Southeastern Research & Recovery, Inc., a South Carolina
corporation; Atlantic Coast Demolition & Recycling, Inc., a Pennsylvania
corporation (hereinafter, the "Corporations"); and all of the real estate
and personal property used by the Registrant in the operation of that
landfill in Lisbon, Ohio (hereinafter, the "Landfill"). Under the
Lease/Purchase Agreement, the purchase price for the Corporations and the
Landfill under was originally payable as follows: $1 million at closing; $2
million one year from closing; $2 million two years from closing; and $2
million three years from closing; provided, however, that the buyer had the
option of making the payment due on the first anniversary of closing by
delivering $50,000 and 400,000 shares of its restricted common stock; the
buyer had the option of making the payment due on the second anniversary of
closing by delivering $75,000 and 400,000 shares of its restricted common
stock; and the buyer had the option of making the payment due on the third
anniversary of closing by delivering $125,000 and 400,000 shares of its
restricted common stock.
As of the date of closing, the Registrant owed the buyer
$1,119,213.59, of which $1,000,000 was applied to the amount of the
purchase price due at the closing. The buyer prepaid the amount due on the
first anniversary after the closing by issuing the Registrant 400,000
shares of common stock and cancelling $50,000 of the indebtedness to the
buyer. With respect to the balance due under for the purchase of the
Corporations and the Landfill, the buyer executed a note in the principal
amount of $4,000,000, of which $2,000,000 is payable on the second
anniversary of closing and the remaining $2,000,000 is payable on the third
anniversary of closing; provided, that the buyer can satisfy the payment
due on the second anniversary of closing by delivering 400,000 shares of
its common stock and cash in the amount $75,000, and can satisfy the amount
due on the third anniversary of closing by delivering 400,000 shares of its
common stock and cash in the amount of $125,000.
The Registrant satisfied the remaining obligation to the buyer in the
amount of $69,213.59 by agreeing to provide consulting services to the
buyer relating to the Corporations and the Landfill.
The buyer is controlled by the former general counsel for the
Registrant. The Registrant decided to enter into the Agreement in order
to allow the Registrant to concentrate on its Florida operations, and to
raise capital to fund such operations.
Item 3. Bankruptcy or Receivership.
On March 5, 1999, Sales Equipment Co., Inc., Inc., a wholly-owned
subsidiary of the Registrant, filed a Chapter 11 petition in the United
States Bankruptcy Court for the Northern District of Georgia, Atlanta
Division. Venue for the case was recently transferred to Oklahoma City,
Oklahoma.
On April 22, 1999, American Recycling & Management, Inc., a wholly-
owned subsidiary of the Registrant, filed a Chapter 11 petition in the
United States Bankruptcy Court for the Southern District of Florida, Miami
Division.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
Not Applicable.
Item 6. Resignations of Registrant's Directors.
On May 6, 1999, Michael J. Smith as a director and president of the
Registrant. Mr. Smith provided a letter of resignation which did not
indicate that his resignation was as a result of any disagreement with the
Registrant.
At a board meeting on March 24, 1999, the Registrant appointed
Frederick Beisser and Dennis O'Neill to fill two of the Regisrant's vacant
board positions. On April 29, 1999, the Registrant's board formed audit
and compensation committees, both of which consist of Frederick Beisser,
Dennis O'Neill and Leon Blaser.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Businesses Acquired: Not
applicable.
(b) Pro Forma Financial Information: To be added by amendment.
(c) Exhibits:
Regulation
S-B Number Exhibit
10.1 Closing Agreement between Wastemasters, Inc. and
J. Marcus Enterprises, Inc. dated March 31, 1999
Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S
Not Applicable.
<PAGE>
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 thereunto duly authorized.
WASTEMASTERS, INC.
Date: May 19, 1999 By: /s/ Douglas Holsted
Douglas Holsted,
Chief Financial Officer
CLOSING AGREEMENT
THIS TRANSFER AND ASSIGNMENT is executed as of March 30, 1999, by and
between WasteMasters, Inc. ("WMI") and Global Eco-Logical Services, Inc.
("Global").
WHEREAS, WMI and Global entered into a Lease/Purchase Agreement dated
January 1, 1999 (the "Lease"), wherein WMI leased its interest in the
following described property (collectively, the "Property"), to wit: Wood
Management, Inc., a New Jersey corporation; Mini-Max Enterprises, Inc., a
New Jersey corporation; Tri-State Waste Disposal, Inc., a New Jersey
corporation; Southeastern Research & Recovery, Inc., a South Carolina
corporation; Atlantic Coast Demolition & Recycling, Inc., a Pennsylvania
corporation (hereinafter, the "Corporations"); and all of the real
(hereinafter, the "Landfill Realty") and personal property (hereinafter,
the "Landfill Personalty") normally used by the Lessor in the operation of
that landfill in Lisbon, Ohio;
WHEREAS, the Lease contained an option to purchase the Property, which
Global has exercised;
WHEREAS, Global has extended certain loans to WMI in the amount of
$894,117.60 since January 1, 1999, which loans are summarized on Exhibit A
attached hereto;
WHEREAS, the Corporations had aggregate negative net working capital
in the amount of $232,573.45 as of January 1, 1999 which is summarized on
Exhibit A and which negative working capital was the responsibility of WMI
under the Lease;
WHEREAS, WMI paid $29,246.25 to satisfy certain obligations of Global
after January 1, 1999, which payments are summarized on Exhibit A;
WHEREAS, Global paid $21,768.79 in expenses of WMI after January 1,
1999, which payments are summarized on Exhibit A;
WHEREAS, the total indebtedness of WMI to Global was $1,119,213.59 as
of the date of this Agreement;
WHEREAS, Global has exercised its option to purchase the Property
pursuant to paragraph 22 of the Lease, and has agreed to accelerate payment
of the first annual installment on the terms set forth herein;
WHEREAS, the parties have executed this Agreement to evidence the
conveyance of the Property to Global, and the settlement and compromise of
the obligations of WMI to Global.
NOW THEREFORE, for the consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party hereto, WMI and
Global hereby agree as follows:
1. Payment of Initial Purchase Price for Property. In consideration
for the initial purchase price of the Property, Global hereby releases and
discharges WMI and its subsidiaries from $1,000,000 of their current
obligation to Global.
2. Payment of First Annual Installment for Property. In
consideration for the first annual installment of the Property as set forth
in paragraph 22(a) of the Lease, Global hereby releases and discharges WMI
and its subsidiaries for $50,000 of their current obligation to Global, and
will issue WMI 400,000 shares of common stock of Global, which common stock
will bear a restrictive legend in accordance with Rule 144 of the
Securities and Exchange Commission.
3. Consulting Services of WMI. In consideration for consulting
services to be rendered by WMI from time to time in connection with the
transfer of ownership of the Property to Global, Global agrees to pay WMI
$69,213.59, which amount shall be paid by cancellation of the remaining
balance of the current obligation to Global.
4. Execution of Promissory Note. The parties hereby agree that the
balance of the purchase price for the Property, being $4,000,000, shall be
satisfied by Global's execution of the Promissory Note which is attached
hereto as Exhibit B.
5. Transfer and Assignment of Corporations. WMI hereby sells,
transfers, assigns, delivers and conveys to Global, its successors and
assigns, or its designee, all right, title and interest of WMI in and to
the common stock of the Corporations, and any claim which WMI has against
the Corporations (other than any claim for enforcement of the obligations
created by this Assignment).
6. Transfer of Landfill Realty. WMI shall transfer the Landfill
Realty to Global by the execution and recordation of that deed attached
hereto as Exhibit C.
7. Indemnification of WMI. In partial consideration for the
assignment of such stock and claims in and against the Corporations to
Global, Global hereby agrees to indemnify and hold WMI and its officers,
directors, employees and subsidiaries harmless against any and all such
claims or liabilities asserted against WMI, including any attorney's fees
incurred as a result of such claims or liabilities, arising out of the
operation of, or related to, the Corporations whenever incurred, including
any liability to vendors, lessors, taxing authorities, or lenders to the
Corporations, including any liability of the Corporations or WMI on the
following judgment: American Waste Transport & Recycling, Inc. v.
WasteMasters, Inc., pending in the Superior Court of New Jersey, Burlington
County, Docket No. Bur-L-2730-98, for $80,298.42.
8. Release of WMI. In consideration for the tranactions effectuated
herein, the Corporations hereby release and discharge WMI from any claim or
liability which they may have against WMI, and the Global hereby agrees to
indemnify and hold WMI harmless against any claim or liability, including
attorney's fees incurred in defense of such claim or liability, which the
Corporations might have against WMI.
9. Turnover of Books and Records. Global and the Corporations
recognize that WMI will have an obligation to prepare audited financial
statements for the Corporations through the date of this Agreement in order
to comply with securities reporting requirements. Therefore, the
Corporations hereby agree to provide WMI and its auditors with reasonable
access to its books, records and personnel for purposes of obtaining such
audit.
10. Landfill Personalty. WMI hereby grants, conveys, sells,
transfers, sets-over and delivers unto Global, all of WMI's right, title
and interest in and to the Landfill Personalty, to have and to hold, all
and singular, the Landfill Personalty unto Global forever.
11. No Warranties. The Corporations and the Landfill Personalty are
being conveyed to Global "as is, where is" and without any warranties,
express or implied, including any warranties of merchantability or fitness
for a particular purpose.
12. Survival of Assignment. The provisions of this Assignment shall
survive the consummation of the transactions provided for herein.
13. Governing Law. This instrument shall be construed and enforced
in accordance with and governed by the laws of the State of Georgia.
14. Binding Effect. This instrument shall bind and inure to the
benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed and sealed
this Assignment as of the day and year first above written.
WASTEMASTERS, INC., a Maryland corporation
/s/ A. Leon Blaser
By: A. Leon Blaser,
Chief Executive Officer
GLOBAL ECO-LOGICAL SERVICES, INC.
/s/ Richard Tuorto
By: Richard Tuorto,
President
<PAGE>
Exhibit A
Global Eco-Logical Services, Inc.
Reconciliation of Note Receivable-Wastemasters
As of 2/28/99
- ---------------------------------------------------------------------
Wire Transfers to Wastemasters First Union account 532,097.00
Wire Transfer to CAT Recycling 200,329.05
Wire Transfer direct to creditors 15,000.00
January operating funds deposited in First Union account:
Atlantic Coast 45,954.32
Wood Mgmt 31,674.91
MiniMax 25,062.32
SRR 44,000.00
------------
Total Cash Transferred 894,117.60
Negative Working Capital (Cash, AR, AP)
transferred from subs:
Atlantic Coast 247,499.05
Wood Mgmt. 56,997.84
MiniMax (8,969.54)
SRR (79,565.77)
Lisbon Landfill 16,611.87
-----------
Net Working Capital Transferred 232,573.45
Global Payroll Paid by Wastemasters:
Atlantic Coast (6,420.62)
Wood Mgmt (4,226.95)
MiniMax (4,698.46)
SRR (9,498.76)
Lisbon Landfill (2,634.58)
Corporate (1,766.88)
-----------
Total Global Expenses Paid by WM (29,246.25)
WasteMasters Expenses Paid by Global:
T. Fenn 2,397.81
W. Tuorto 626.40
R. Tuorto 5,252.72
F. Beltran
Severance 6,718.47
Office Depot 768.31
Sterling Legal 4,160.00
Winstar 1,845.08
-----------
Total WM Expenses Paid by Global 21,768.79
-----------
Note Receivable @ 2/28/99 1,119,213.59
=============
<PAGE>
Exhibit B
PROMISSORY NOTE
$4,000,000.00 March 30, 1999
FOR VALUE RECEIVED, Global Eco-Logical Services, Inc. (hereinafter
referred to as the "Maker"), promises to pay to the order of WasteMasters,
Inc. ("Holder"), or assigns, at such place as the Holder may from time to
time designate in writing to the Maker, in lawful money of the United
States of America, the principal sum of Four Million Dollars and No Cents
($4,000,000.00), or so much as may outstanding from time to time. The
principal due under this Note shall be paid without interest in the
following manner:
1) $2,000,000 on March 30, 2001, provided that the Maker may
satisfy this payment by payment to the Holder of $75,000 cash and 400,000
shares of restricted stock of the Maker on before the due date of the
payment; and
2) $2,000,000 on March 30, 2002, provided that the Maker may
satisfy this payment by payment to the Holder of $125,000 cash and 400,000
shares of restricted stock of the Maker on before the due date of the
payment.
In the event the Maker exercises any option to satisfy a principal
payment on this Note by payment of shares of common stock and cash as set
forth above subsequent to any share dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, separation,
reorganization, or liquidation occurring after the date hereof, as a result
of which shares of any class shall be issued in respect of outstanding
shares of common stock or common stock shall be changed into the same or a
different number of shares of the same or another class or classes, then
the Holder shall receive, instead of the number of shares set forth above,
that number and class of shares equal to the number and class of shares
which the Holder would be holding had the Maker exercised such option on
the date of this Note and such shares had not been disposed of by the
Holder; provided, however, that no factional share shall be issued upon any
such exercise, and any fractional share issuable shall be rounded up the
nearest whole share.
The indebtedness evidenced by this Note may be prepaid in whole or in
part at any time without penalty or premium. Any payment of principal on
this Note which is not made when due, as herein provided, shall bear
interest at the rate of 10% per annum until paid.
If from any circumstances whatsoever fulfillment of any provision of
this Note at the time performance of such provision shall be due shall
involve transcending the limit prescribed by any applicable usury statute
or any other applicable law, with regard to obligations of like character
and amount, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, so that in no event shall any
exaction be possible under this Note or under any other instrument
evidencing or securing the indebtedness evidenced hereby, that is in excess
of the current limit of such validity, but such obligation shall be
fulfilled to the limit of such validity.
Presentment for payment, demand, protest and notice of demand, notice
of dishonor and notice of nonpayment and all other notices are hereby
waived by Maker. No failure to accelerate the debt evidenced hereby by
reason of default hereunder, acceptance of a past due installment, or
indulgences granted from time to time shall be construed (1) as a novation
of this Note or as a restatement of the indebtedness evidenced hereby or as
a waiver of such right of acceleration or of the right of the Holder
thereafter to insist upon strict compliance with the terms of this Note, or
(2) to prevent the exercise of such right of acceleration or any other
right granted hereunder or by applicable law; and Maker hereby expressly
waives the benefit of any statute or rule of law or equity now provided, or
which may hereafter be provided, which would produce a result contrary to
or in conflict with the foregoing. No extension of the time for the
payment of this Note or any installment due hereunder, made by agreement
with any person now or hereafter liable for the payment of this Note shall
operate to release, discharge, modify, change or affect the original
liability of the Maker under this Note, either in whole or in part, unless
the Holder agrees otherwise in writing. This Note may not be changed
orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is
sought.
Maker hereby waives and renounces for itself, its heirs, successors
and assigns, all rights to the benefits of any statute of limitations, any
moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement and exemption now provided, or which
may hereafter by provided, by the Constitution and laws of the United
States of America and of the State of Georgia, against the enforcement and
collection of the obligations evidenced by this Note except as described
above.
In the event that this Note is collected by law or through an attorney
at law, or under advice therefrom, the Maker agrees to pay all costs of
collection, including reasonable attorneys' fees actually incurred. This
Note shall be governed by the laws of the State of Georgia.
Given under the hand and seal of the undersigned, the date and year
indicated above.
DATED this 30th day of March 1999.
Global Eco-Logical Services, Inc.
/s/ Richard Tuorto
By: Richard Tuorto, President
