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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-20317
__________________
GLOBAL SPILL MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0270266
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2300 Computer Avenue (Bldg. G-25), Willow Grove, Pennsylvania 19090
(Address of principal executive officers, including zip code)
Registrant's telephone number, including area code: (215) 830-1351
________________
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.001 Par Value)
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
x
Yes _ No _
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporation by reference
in Part III of this Form 10-KSB or any amendment to this Form 10-K SB [].
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The issuer's revenues for the year ended June 30, 1996 were
$17,043,156, all of which were from discontinued operations.
As of February 12,1997, 2,516,463 shares of Common Stock ($.001
par value) were issued and outstanding and fully paid and
non-assessable. The aggregate market value of the Common Stock held by
non-affiliates was approximately $627,901, determined by the closing
sale price on that same day based upon 2,511,602 shares owned by
non-affiliates.
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TABLE OF CONTENTS
Part I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholders
Matters
Item 6. Management's Discussion and Financial Analysis
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accountants and Accounting
and Financial Disclosures
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons:
Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Part IV
Item 13. Exhibits and Reports on Form 8-K
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PRELIMINARY STATEMENT
(as of the date of the filing hereof)
1. This form 10-KSB is being filed by Global Spill Management, Inc.
("Global") with the Securities and Exchange Commission (SEC) upon
the assumption and for the reasons that:
a) the Form 10-K purportedly filed by Global with the SEC in
October, 1996, was ineffective and deficient (and is
specifically disavowed) in that such filing (prepared and filed
by counsel for Phoenix Wrecking Corporation (Phoenix)) (i)
was an improper filing because it was not in compliance with
General Instruction D to Form 10-K and, therefore, not
authorized to be filed on behalf of Global, and (ii) contained
(a) no audited Global financials for the fiscal year ended June
30, 1996, (b) inaccuracies and misleading information
concerning Phoenix and the then existing agreement and
relationship between Global and Phoenix, and (c) the signatures
thereto of designees of Phoenix who did not then constitute a
majority of the Global Board of Directors or represent a duly
appointed officer of Global; and,
b) this Form 10-KSB contains all information relevant to Global
during the period July 1, 1995, through and including the date
hereof.
2. It is important to reiterate here that Global is a non-operating
"shell" corporation. Although Global's remaining liabilities are
minimal as of February 12, 1997, the bulk of Global's assets are
represented by non-liquid tangibles that require collection or sale
in order to realize the cash value of their carrying costs.
3. The present management of Global consists of Messrs. David R. Stith
and Herbert S. McDonald (directors) and Ms. Desiree L. Pierson
(Assistant Secretary). Mr. Stith has executed this Form 10-KSB in
his capacity as interim President of Global. (See "Legal
Proceedings" herein for information concerning the one item of
dispute that must be resolved before Mr. Stith is able to assume
the office of President of Global.)
4. Global has instructed its special securities counsel to prepare,
file and prosecute three separate and instinct lawsuits for and on
behalf of Global and its shareholders. The lawsuits have been and
will be filed against
(i) former General Counsel for filing two improper Form S-8
Registration Statements with the SEC and causing to be issued an
aggregate of 1,135,000 shares of Global Common Stock pursuant
thereto (filed December 20, 1996);
(ii)the recipients of such 1,135,000 shares for unjust enrichment,
for absence
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of consideration and for conspiracy to defraud
Global in receiving and selling all such 1,135,000 shares
(filed December 27, 1996); and,
(iii)the diverse persons who have engaged in a concerted effort to
utilize Global as the vehicle to (a) seek financing by means of
an offshore offering (Reg S) transaction in order to (b) enrich
Phoenix (and the principals and associates thereof) at the
expense of Global and its shareholders. In addition, such
third lawsuit will also allege that such persons also engaged
in a conspiracy to depress the market value of Global Common
Stock by actively and deliberately arranging with certain
broker- dealers and market-makers to short Global Common Stock
upon the specific premise that such short selling would be
covered by the delivery of Reg S stock. Finally, such
conspiracy also entails an active effort to force Global out of
business, thereby completing the short sale process.
5. The financial statements included herein are audited for the two
fiscal years ended June 30, 1996 and 1995. The footnotes to such
financial statements must, therefore, reflect all matters that are
covered by such two years' audit. In that connection, shareholders
are reminded that many of such footnotes have historical value only
and that, in terms of the financial condition of Global as of the
date hereof, reference should be made to the body of this Form
10-KSB as well as to Form 10-QSB for the quarters ended September
30 and December 31, 1996.
6. Global intends to concentrate upon the prosecution of the legal
matters referred to in paragraph 4 hereinabove and to continue to
reduce all of its available assets to cash. Management believes
such two objectives, if realized, will best serve the interests of
Global shareholders. The Plan of Reorganization (the "Plan")
detailed in this Form 10-KSB has been substantially completed.
Except for the prior acquisition of Phoenix such Plan would have
been realized in full. Management has no reservations in
expressing the belief that Phoenix' advisers utilized Phoenix to
perpetrate a gross fraud upon Global, in that Phoenix (a) was not
capable of being audited for the period ended June 30, 1996, (b)
was not as represented in the previous audited financial statements
delivered to Global by Phoenix' advisers prior to the acquisition
thereof, and (c) was the instrumentality utilized to effect a
concerted conspiracy to obtain Global Common Stock, to sell such
stock and to orchestrate a massive short selling campaign intended
to depress the value of Global Common Stock to the advantage of
Phoenix' advisers and their market-maker, broker-dealer
conspirators. Global will utilize all means at its disposal to
attempt to compensate its shareholders. The Preliminary Statement
must be read in conjunction with the information set forth
hereinafter under the caption "The History of the Proposed
Transaction with Phoenix."
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PART I
Item 1. Description of Business
Global Spill Management, Inc., a Nevada corporation (hereinafter
referred to as Global), was organized under the laws of the State of
Nevada on September 26, 1990, under the name Happy Mergers, Inc.
("Happy Mergers"). On November 25, 1991, Global Spill Management,
Inc., a Delaware corporation organized on June 12, 1991, was merged with
and into Happy Mergers. Happy Mergers, which was the surviving
corporation, changed its name to Global Spill Management, Inc.
PLAN OF REORGANIZATION
In April, 1996, because of a demonstrable inability to meet its
debts as they matured, Global and its designated financial advisors
determined to undertake a comprehensive Plan of Reorganization (the
"Plan"). Such Plan included the (a) sale of the four operating
subsidiaries for cash consideration only, (b) liquidation of the debt
due to the senior secured creditor (Meridian Bank), (c) elimination of
debt in its entirety, and (d) reclassification of the issued and
outstanding shares of Common Stock. The Plan also included the
acquisition by Global of a going business, one that would permit Global
to satisfy the then continuous listing standards of NASDAQ (on which
Small Cap market shares of Global Common Stock were listed). The
results of the implementation of the Plan were as follows:
Sale of Subsidiaries
On June 28, 1996 (as to three subsidiaries) and effective June 30, 1996
(as to one subsidiary), Global sold either the capital stock or the
assets (subject to liabilities) of its then four operating
subsidiaries. The proceeds of such four sales amounted to $980,000.
Such $980,000, plus $170,000 paid by Global, plus $50,000 paid prior to
September 30, 1996, by one of its former subsidiaries, amounting in the
aggregate to $1,200,000, was paid to Meridian Bank in full and complete
satisfaction of the secured indebtedness of Global to Meridian Bank in
the principal amount of approximately $1,480,000 (including accrued
interest as at June 30, 1996). Global was a co-maker and co-guarantor
of the Note of a former subsidiary, in the principal amount of
$100,000, issued to Meridian Bank under date of June 28, 1996. Such
note provided for a discount of $50,000 if paid prior to September 30,
1996. The co-maker paid such $50,000 prior to September 30, 1996;
Global repaid $37,500 of such $50,000 to the co-maker prior to
September 30, 1996. The balance of $12,500 is being withheld by Global
pending the resolution by the co-maker of certain litigation to which
each of the co-maker and Global is a party (and which Global believes
is the responsibility of the co-maker pursuant to the June 28, 1996,
sale agreement). Meridian Bank released its lien and executed a
General Release in favor of Global on June 28, 1996.
As a result of such sales, Global ceased to be an operating company.
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Elimination of Debt
In addition to the discharge of all obligations due to Meridian Bank,
Global also undertook the elimination of all other debt. Employment
contracts (under which Global was obligated in the amounts of
$1,230,600 for 1996 and $848,000 for 1997, respectively), were
terminated, lease obligations were canceled and general, unsecured
creditors (other than those owed minimal amounts or those professionals
and firms continuing to provide necessary services for Global), were
resolved with an offer of 37.5 cents on the dollar.
Giving effect to (a) the satisfaction of the indebtedness due Meridian
Bank and (b) the liabilities assumed by the purchasers of the four
operating subsidiaries, being treated herein as having occurred on June
28, 1996, Global remained, as of June 30, 1996, with fixed liabilities
of $591,000. Commencing in July 1996, Global, as an alternative to
creditor proceedings that would have involved legal and accounting
costs disproportionate to the dollar amount of its remaining
liabilities, commenced a voluntary plan of payment at a discount.
Creditors were offered an immediate settlement equal to 37.5% on the
dollar (except for claims under $100 (which were liquidated in full)).
Such offer, denominated as a common law composition, required that all
creditors be treated equally. Such offer resulted, as of October 1,
1996, in $565,000 in the aggregate of claims being settled for the sum
of $238,000. As of January 31, 1997, total liabilities of Global were
approximately $150,000, of which $130,000 is represented by the claim
of one creditor (Global's former securities counsel) with whom Global is
in litigation. Global intends to assert counterclaims with respect to
certain of the legal work performed by such creditor. (See "Legal
Proceedings" hereinafter.)
To assist Global in the completion of its internal reorganization plan
adopted on June 28, 1996, including the sale of the operating
subsidiaries, the liquidation of the senior secured creditor, the
composition plan with general unsecured creditors, the obtaining of a
funding commitment for a minimum of $900,000, and the termination of
employment contracts, lease obligations, acquisition debt and sundry
other payables, Global retained the law firm of Adelman Lavine Gold &
Levin and The Fulcrum Group and IDIICO (as consultants) to assist in the
implementation and resolution of these matters. From June 28, 1996,
through December 31, 1996, the law firm has billed $70,357 and has been
paid $46,567; and the Fulcrum Group has billed $56,250 and has been
paid in full. In addition, Global retained its former CFO to bring its
books and records current, discharge accounting obligations incurred
pursuant to the contracts of sale of the four subsidiaries and provide
the accounts payable information incident to the composition of the
claims of general, unsecured creditors. From June 28, 1996, through the
date hereof Global paid such former CFO the sum of $53,612. (See Part
III, Item 9, hereinafter.)
As of the date hereof, Global has total indebtedness of approximately
$150,000, which includes one creditor in the amount of $130,000. Such
amount does not encompass any sums Global may be forced to pay as a
result of current litigation. (See "Legal Proceedings" hereinafter.)
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Acquisition of Phoenix
Because Global would not, as a result of such Plan, (a) be an operating
company, and (b) remain in compliance with NASDAQ continuous listing
requirements, Global, on June 28, 1996 (the date on which the sales of
the operating subsidiaries was effected), agreed to acquire 100% of the
issued and outstanding shares of capital stock of Phoenix Wrecking
Corporation (Phoenix), a New York corporation which was also engaged in
the remediation business. The proposed acquisition of Phoenix, which
was publicly announced on July 1, 1996, was rescinded nune pro tunc on
November 6, 1996.
On June 28, 1996, the Global Board adopted resolutions providing for the
purchase of 100% of the capital stock of Phoenix. Phoenix was
acquired in exchange for an aggregate of 6 million shares of Global
Common Stock issued July 10, 1996. On June 28, 1996, two of the five
members of the Board of Directors of Global were replaced by designees
of Phoenix (Karl Schwab and Roger Imperial) and Mr. Schwab was named
President (and CEO) of Global. It is a matter of dispute whether, on
September 30, 1996, two additional Phoenix nominees were appointed to
the Board (Charles Chillingworth, Esq. and George Weast).
Since the shareholders of Phoenix gained voting control of Global
pursuant to the acquisition, Phoenix became the acquiring company.
Accordingly, the acquisition of Phoenix which was to have been
accounted for as a reverse acquisition wherein the acquired company
(Phoenix) would have been deemed to have acquired the acquiring
company (Global). Staff Accounting Bulletin Topic 2 Item (A)(2) and
APB Opinion 16, Paragraph 70, under GAAP, states that:
"Acquiring Corporation...The Board concludes that presumptive
evidence of the acquiring corporation in combinations effected
by an exchange of stock is obtained by identifying the former
common stockholder interests of a combining company which
either retain or receive the larger portion of the voting
rights in the combined corporation. That corporation should be
treated as the acquired unless other evidence clearly indicates
that another corporation is the acquirer. For example, a
substantial investment of one company in common stock of
another before the combination may be evidence that the
investor is the acquiring corporation."
(See "The History of the Proposed Transaction with Phoenix" hereinafter.)
Common Stock Reconciliation
The reclassification of the Common Stock also contemplated by the Plan
took the form of two Amendments to the Articles of Incorporation. Such
Amendments, filed on May 13, and July 2, 1996, changed the authorized
and unissued and the issued and outstanding shares of Common Stock as
follows: an aggregate of 25,000,000 shares of Common Stock were
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authorized for issuance and an aggregate of 18,493,980 issued and
outstanding shares of Common Stock were changed into 616,463 shares on
the basis of a 30-1 reverse split. All Common Stock numbers referred
to hereinafter give effect to such 30-1 reverse split.
Between July 1, 1995 and June 30, 1996, Global sold securities as
follows:
a) In September, 1995, Global sold an aggregate of 27,500
shares of Common Stock for the sum of $220,000;
b) In October, 1995, Global sold a $100,000 Convertible
Debenture; and,
c) In April, 1996, Global sold a $350,000 Convertible Debenture.
(Subsequent thereto, Global has received additional funding
aggregating $591,500 in disposable proceeds through and
including January 31, 1997.)
Excluding the transactions initiated by Phoenix and described
hereinafter, Global has, since June 30, 1996, caused the following
shares to be issued:
(616,463 issued and outstanding giving effect to the May 13, 1996,
Amendment to the Articles of Incorporation):
100,000 shares being deemed to have been issued on June 28, 1996, upon
conversion of a Convertible Debenture (in the principal amount of
$50,000) issued in 1992 (plus all accrued interest thereon, the
cancellation of a long-term employment contract having a remaining
liability of $43,750 and the forgiveness of accrued interest of
$2,500); and,
750,000 shares (being deemed to have been issued on June 28, 1996),
250,000 shares (on August 19, 1996), and 800,000 shares (on October 13,
1996), the aggregate having been issued in exchange for cash value of
$941,500, plus a commitment to fund such additional amount as is
necessary to discharge the remaining liabilities of approximately
$150,000 existing as of the date hereof, and to continue to fund
current, on-going expenses.
As of the date hereof, therefore, Global has an aggregate of 2,516,463
shares of its Common Stock validly issued, fully paid and
non-assessable.
The History of the Proposed Transaction with Phoenix
During the period subsequent to June 28, 1996, in which two nominees of
Phoenix served on the Global Board and a nominee of Phoenix was
appointed President of Global, and three directors of Global remained
on the Board of Global, it was intended that, until all required SEC
and NASDAQ filings were effected, until a Form 10-K (with fully audited
financials) would be filed by Global for its fiscal year ended June
30, 1996 (consolidated with Phoenix), and until Rule 14f-1 promulgated
under the Securities Exchange Act of 1934 (the "1934 Act") was complied
with, Phoenix would be operated as a wholly-owned subsidiary of Global,
would (by virtue of the reverse merger) designate counsel and
accountants to and for both Global and Phoenix, and
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would undertake no transactions not in the ordinary course of business.
Phoenix did in fact name such counsel and accountants. However,
despite the fact that no meetings of the Board of Global were held
subsequent to June 28, 1996, and prior to September 30, 1996 (the
validity of which meeting is questionable), the nominees of Phoenix to
the Board of Global and the nominee of Phoenix as President, executed,
in the name of and on behalf of Global, the following documents and
caused to be issued the following shares:
a) two Form S-8 filings with the SEC, on each of August 2 and
September 19, 1996, pursuant to which an aggregate of 385,000
shares and an aggregate of 750,000 shares, respectively, were
issued to persons selected by Phoenix. (Generally speaking,
Form S-8 provides a mechanism by which shares may be registered
under the 1933 Act for services to be rendered pursuant to an
employee benefit plan). At the time each such Form S-8 was
filed with the SEC, Global was not then "current" in its
filings with the SEC; therefore, pursuant to the General
Instructions to the use of Form S-8, such Form was not available
to Global as a means of registering securities under the
Securities Act of 1933 (the "1933 Act"). In addition, no
meetings of the Board of Global were held between June 28,
1996, and September 30, 1996 (the validity of which meeting is
in dispute), at which action would be required to have been
taken by the Board both to authorize such Form S-8 filings and
to provide the necessary resolutions to permit the Transfer
Agent to issue the aggregate of 1,135,000 shares purportedly
registered pursuant to such Form S-8 filings. Such filings
were prepared and filed by the law firm selected by Phoenix to
become counsel to Global. (The same law firm filed, on October
4, 1996, the Form 8-K required to have been filed within fifteen
days of June 28, 1996, to render Global "current" in its
filings.) On October 18, 1996, Global brought this matter to
the attention of the SEC when Global sought permission to
withdraw such two Form S-8 filings;
Global believes that, to the extent any of such aggregate of
1,135,000 shares registered pursuant to such two Form S-8
filings may have been sold, the sellers thereof are required to
rescind such sales, return the consideration received therefor
and return the shares to Global for cancellation. To the extent
that any of such 1,135,000 shares may not have been sold,
Global, on October 21, 1996, advised its Transfer Agent to
impose stop transfer instructions thereagainst. Global has
made full disclosure, both orally and in writing, to each of the
SEC and NASDAQ with respect to the two S-8 filings; and,
b) Under date of September 26, 1996, the Phoenix nominees caused to
be issued an aggregate of 1,564,000 shares of Global's Common
Stock. Such shares were issued in the name of six different
persons. The six names were furnished to Phoenix by Suisse
Capital Complex (Suisse) of Indianapolis, Indiana. On October
21, 1996, Global surrendered for cancellation all of such
1,564,000 shares. Phoenix simultaneously advised Suisse that
it had taken such action because, upon information and belief,
the six different persons had violated
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Regulation S in that the six were "affiliates" and were required
to file a 13(d) with the SEC (and did not) and because, the
total amount of funding ($2 million) not having been received
by Phoenix, the issuance had never "come to rest" and that a
continuous offering may not be the basis for a Regulation S
exempt transaction. Not- withstanding, Suisse has instituted
proceedings seeking the recovery of the $1.3 million on the
basis that the Phoenix designees issued Global Debentures to
Suisse in that amount.
When it became apparent that Phoenix would be unable to deliver a timely
audited financial statement to Global, would be unable to file a timely
Form 10-KSB with the SEC (with audited financials), would be unable to
meet the representations made by Phoenix in the June 27, 1996,
acquisition agreement with Global, and would be unable to assist Global
in any meaningful manner, the Phoenix nominees to the Global Board
caused to be issued a press release, dated October 25, 1996. Such
press release announced that, of the 6 million shares of Global
originally issued for Phoenix, an aggregate of 2 million thereof would
be retired and the balance (4 million) would be converted into
Convertible Preferred Stock (with no conversion permitted for one
year).
On or about October 20, 1996 (with the imminent expiration of the
thirty-day extension requested by Global from NASDAQ in which to file
its 10-KSB for June 30, 1996), it became obvious that there existed no
possibility of obtaining a Phoenix audit for the period ended June 30,
1996. Accordingly, on November 6, 1996, the Global-Phoenix transaction
was rescinded nune pro tunc, the Phoenix designees to the Global Board
resigned and Karl Schwab resigned as President of Global. Such
rescission was intended to cancel the Phoenix-Global transaction as if
the same had never occurred.
The references in this subsection to the questionable and disputed Board
meeting of Global on September 30, 1996, are attributable to Rule 14f-1
promulgated under the 1934 Act. Briefly stated: Rule 14f-1 provides
that if, pursuant to any arrangement or understanding with the
person(s) acquiring securities in a transaction subject to Section 13(d)
of the 1934 Act, any persons are to be named to the Board of the issuer
and who thereby will constitute a majority of the Board, and no
meeting of the shareholders is called to cause such election to the
Board, a Proxy Statement complying with Regulation 14A of the 1934 Act
must be filed with the SEC. This was why, on June 28, 1996, only two
nominees of Phoenix were appointed to the Global Board and three
nominees of Global previously on the Board remained as directors. This
is also why no purported meeting of September 30, 1996, could have
validly appointed any additional Phoenix nominees to the Global Board.
(The transaction that is subject to Section 13(d) of the Act is the
issuance of the 6 million shares of Global stock to the shareholders of
Phoenix on July 10, 1996, of which 6 million shares 4 million shares
were issued to Begonia Corporation (a company controlled by the
majority shareholders of Phoenix)). Such 4 million shares represented
more than five (5%) percent of the issued and outstanding shares of
Global Common Stock commencing on July 10, 1996, and lasting until
such shares were cancelled on or about October 21, 1996. (And even
when cancelled on or about October 21, 1996, such shares were to be
converted into $4 million principal amount of Preferred Stock itself
convertible into 4 million shares of Common Stock.) Begonia only
ceased to be a party subject to the filing requirements of
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Section 13(d) when the transaction between Global and Phoenix was
rescinded nune pro tunc on November 6, 1996.
Upon the assumption that the 1,197,500 shares of Global still not
returned for cancellation (out of the 6 million shares originally
issued on July 10, 1996, for Phoenix) may be cancelled because the
transaction with Phoenix has been rescinded nune pro tunc, and upon the
further assumption that the aggregate of 1,135,000 shares issued
pursuant to the two improperly filed Form S-8 filings are not validly
issued, fully paid and non-assessable because such shares either were
not registered for public sale, or were issued without consideration
(because no services were rendered to Global by the recipients), or
were not authorized to be issued by the Global Board, the result is
that Global would have an aggregate of 2,516,463 shares of its Common
Stock validly issued, fully paid and non-assessable as of the date
hereof.
Item 2. Properties
Since June 28, 1996 (the date on which Global divested itself of
all of its operating subsidiaries), the principal offices of Global
have been located at 2300 Computer Avenue (Bldg. G-25), Willow Grove,
Pennsylvania 19090, on a month-to-month leasehold basis. Such premises
have been occupied by Global's former Chief Financial Officer
principally for the purposes of completing the June 30, 1996, audited
and September 30, 1996, unaudited (first quarter) financial
statements, closing-out the books and accounts of the subsidiaries
disposed of on June 28, 1996, resolving the remaining creditor claims,
and assisting in the preparation of the June 30, 1995, and 1996 tax
returns. Global does not expect to continue such lease after the date
of the filing hereof.
Global owns a 2,400 square foot office building and garage (400
feet) located on approximately 10 acres of land (waterfront property)
in Camden, New Jersey. Global intends, upon the resolution of certain
environmental issues, to offer such parcel and building and garage for
sale for cash.
Item 3. Legal Proceedings
Global is a defendant in several lawsuits in which the principal
defendant is the former Global subsidiary that performed allegedly
negligent remediation work for the particular plaintiff. Global is
vigorously defending all such suits, on the basis that Global is not a
proper party defendant because Global entered into no contractual
relationship with the particular plaintiff and bears no responsibility
to such plaintiff.
Prior to June 30, 1995, Global (upon the advice of former counsel
that sales of Common Stock for promissory notes was legal under Nevada
law), sold to Corporate Relations Group, Orlando, Florida (CRG), and to
Financial Asset Management, Phoenix, Arizona (FAM), 1,150,000 and
300,000 shares, respectively, of Global's pre-reverse split authorized
and unissued Common Stock. CRG is indebted to Global today in the
amount of $677,000 and FAM is indebted to Global today in the amount of
$209,375, each such amount representing the remaining balance on the
purchase price for such shares. Global believes that all such shares
have
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been sold by CRG and FAM. Global has instructed counsel to pursue
diligently the collection of both amounts.
On August 30, 1995, Global sold an aggregate of 750,000 shares of
its pre-reverse split, authorized and unissued Common Stock to Fondo de
Adquisiciones E Inversionnes (FONDO), a Costa Rican entity, for the
sum of $220,000. Such shares were sold pursuant to a purchase
agreement that provided for the filing of a Registration Statement on
Form S-3 pertaining thereto. When such filing could not be timely
effected, an additional 75,000 shares were issued to FONDO (the penalty
for non-filing provided for in the purchase agreement). On October 19,
1995, FONDO executed an Offshore Securities Subscription Agreement,
thereby converting the transaction into a Regulation S (Reg S)
transaction. The $220,000 received by Global was paid to American
Marine, Inc. (AMI) pursuant to a contract entered into by Global with
AMI to acquire the latter. Global's sale of Common Stock to FONDO was
arranged by CRG; and counsel for CRG executed the documents delivered
to Global by FONDO. Global apparently received assurances from CRG
that Global would be paid the outstanding promissory notes previously
issued to Global by CRG, as well as that CRG would assist Global in
obtaining the balance of the AMI purchase price. CRG arranged that CKN
Holding Corporation (CKN) would provide the funding required by Global
for the completion of the AMI purchase. To accomplish such funding,
Global issued to CKN an aggregate of 5,274,818 shares of pre-reverse
split, authorized, unissued Global Common Stock. CRG failed to pay the
remaining balance on its promissory notes to Global and CKN failed to
provide any funding for Global. (The CKN shares were retired by
Global on August 14, 1996.) Global, as a direct result of such
failures, defaulted in its obligations to AMI and, thereby, forfeited
the sum of $220,000 deposited with AMI.
In July 1996, FONDO instituted an action against Global in Florida
state court seeking the return of $220,000. Global has filed a motion
to dismiss the Florida action on jurisdictional and procedural grounds.
That motion is pending as of the date hereof. The gravamen of FONDO's
complaint appears to be that Global failed to register the 825,000
shares under the 1933 Act. Global's position is that the agreement
with FONDO provided solely and exclusively for the issuance of an
additional 75,000 shares of Global Common Stock by Global to FONDO and
for no monetary compensation. Subsequent to the initiation by FONDO of
its Florida action, Global discovered documents indicating that, under
date of December 29, 1995, Global, FONDO and CKN entered into an
agreement pursuant to which FONDO agreed to sell its shares to CKN for
the sum of $354,750 and to release Global from any other claims by
FONDO.
Dependent upon the resolution of the presently pending motion to
reargue the motion to dismiss, Global intends to assert, either in the
pending action or in any other action commenced by FONDO or in a
separate action to be instituted by Global, that FONDO, CRG and CKN were
and are "affiliates" (as that term is defined by the 1933 Act), that
CRG has not liquidated its own promissory note to Global, that CRG and
CKN are directly responsible for Global's loss of the sum of $220,000
deposited with AMI, and that FONDO, CRG and CKN violated Rule 10b-5
promulgated under the 1934 Act in failing to apprise Global of the
relationship between FONDO and CRG and in failing to advise Global that CKN
had no demonstrable ability to provide the
10
<PAGE>
balance of the financing necessary to complete the AMI transaction.
In September, 1996, Global was sued for the sum of $130,000 by its
former securities counsel. At a meeting held on November 15, 1996,
with such law firm, Global again proposed that such law firm accept
the 37.5% settlement accepted by virtually all other general, unsecured
creditors. (See Plan of Reorganization hereinabove.) Global also
advised such law firm that, were the matter to proceed, at least five
specific transactions to which Global was a party and which were
undertaken during the period such law firm represented Global, would be
asserted by Global as affirmative defenses and/or counterclaims to
such law firm's claim. As of the date hereof, Global has received an
extension of time in which to file its answer to such complaint, during
which period of time Global is to furnish such law firm with additional
information relevant to the proposed settlement offer and claims to be
asserted in defense of the action.
Global has been threatened with litigation by Peter V. White, a former
Global Executive Vice President, Chief Financial Officer and Treasurer.
Mr. White (through his attorneys) has demanded payment to him by Global
of amounts allegedly due pursuant to a termination agreement entered
into between Mr. White and Global upon Mr. White's resignation of all
positions with Global as of June 30, 1995. (Global's alleged liability
under such termination amounts to $57,000.) Mr. White deferred
instituting such litigation, upon information and belief, until
Global, as of September 30, 1996, discharged the sum of $98,816 due and
payable by Global to Great West Indemnity (GW). GW had been Global's
medical insurance carrier for all covered employees of Global. Prior
management had defaulted in Global's monetary obligations to GW. The
Plan of Reorganization included the resolution of all amounts due GW;
the $98,816 was paid to GW; and all employee medical claims through
and including April 30, 1996 (the GW cut-off date (with notification
thereof tendered to all Global employees)) are now being paid by GW.
One of such claimants is Mr. White; and he is expected to receive an
amount in excess of approximately $102,904 from GW. Global had
advised counsel for Mr. White that, apart from causing GW to pay Mr.
White's medical claims, Global will make no further payments of any
kind whatsoever to Mr. White, that the termination agreement between Mr.
White and Global is ultra vires, and that counterclaims will be
asserted against Mr. White by Global (should litigation be instituted
by the latter) raising matters commencing in 1992 (to the extent that
the same are not barred by any relevant Statue of Limitations).
Global has been advised by David R. Stith, a director, that Mr. Stith
has claims against Global for unpaid medical expenses and for amounts
due pursuant to an employment contract with a subsidiary of Global.
The amount claimed thereunder is $150,000. All amounts due Mr. Stith
pursuant to his claim for medical expense reimbursement have been paid.
(See the paragraph immediately preceding.) On June 28, 1996, the Board
adopted a resolution pursuant to which the Camden, New Jersey,
property (see Item 2 hereinabove) owned by Global would be transferred
to Mr. Stith in exchange for a General Release from Mr. Stith. Mr.
Stith later rejected such offer. (See the discussion in Item 7
hereinafter concerning Global's guaranty of obligations of former
subsidiaries.) On November 15, 1996, the Board and Mr. Stith agreed to
offset the employment claim against the cancellation of a note
receivable from Mr. Stith. (See Item 13 hereinafter concerning the
previous note payable by Mr. Stith, in the amount of $169,000, to
Global.)
11
<PAGE>
In November 1996, Global was sued by Alpine Petroleum Company/Raymond
Kerwood (Plaintiff) pursuant to a certain consulting agreement entered
into between Global and Plaintiff on December 1, 1994. Plaintiff
claims it is due the amount of $51,000 through August 1, 1996. Global
intends to defend vigorously such lawsuit upon the basis that such
consulting agreement was entered into in connection with Global's
acquisition of Professional Pipe Services Corporation (Propipe) on
December 1, 1994; that such consulting agreement was a disguised
attempt to increase the acquisition cost of Propipe by Global; that
Common Stock of Global was issued to Plaintiff as a shareholder of
Propipe (and that Plaintiff executed a Stock Restriction Agreement)
with respect to the shares of Global Common Stock received by Plaintiff
as a shareholder of Propipe; that Plaintiff performed no services for
Global pursuant to such consulting agreement; that the execution and
delivery of the disputed consulting agreement to Plaintiff was an ultra
vires act on the part of Global; that Plaintiff has been fully
compensated by its receipt of shares of Global Common Stock in
exchange for its interest in Propipe; and that (in any event) the sale
by Global of Propipe to the latter's former principal shareholder on
June 28, 1996, effectively rescinded such alleged consulting
agreement. (See the discussion in Item 7 hereinafter.)
On November 6, 1996, judgment was entered against Global in the amount
of $37,500 in favor of Walter Benjamin (WB) by a New Jersey Superior
Court. WB had been a judgment creditor of American Industrial Marine
Services, Inc. (AIMS). Global had purchased AIMS on February 9, 1993,
in exchange for shares of Global Common Stock. During the period in
which Global owned AIMS the latter suffered significant operating
losses. On April 4, 1994, Global sold AIMS to Omnicorp Corporation
(OMNI) in exchange for a $200,000 promissory note and shares of OMNI
capital stock. The $200,000 note was issued in connection with Global's
simultaneous injection of an additional $200,000 in cash into AIMS.
When such $200,000 note was not paid, OMNI caused AIMS to convey a
parcel of real estate in Plainfield, New Jersey, to Global. WB was
able to convince the New Jersey Superior Court that such conveyance
represented a fraudulent conveyance. Global has not yet determined
whether to appeal the judgment. Global believes that the value of the
parcel exceeds the amount of the judgment.
In November, 1996, Global was sued by Suisse in New York State Supreme
Court (trial court). Suisse alleges that it funded $1.3 million upon
the receipt of Global Debentures executed and delivered to Suisse by
the Phoenix designees. Suisse further alleges that such amount was
wire transferred to a Phoenix account maintained in a Queens County,
New York, bank. Global held no Board meetings between June 28 and
September 30, 1996 (the later being disputed): and, the minutes
prepared for such disputed meeting by Phoenix' designee as counsel
contain no mention of Suisse, of the prior issuance of Global
debentures to Suisse, or of the receipt by Phoenix of $1.3 million of
Suisse funding. Global intends to defend vigorously such action, on the
basis that Global's Board did not authorize any Reg S transaction or
any other funding by Suisse, any Global documents delivered to Suisse
were fraudulently executed and delivered by Phoenix nominees, none of
the alleged Suisse funding was received by Global and the rescission
agreement between Global and Phoenix specifically provides that the
liability for any Suisse proceeds rests with Phoenix. (See "The
History of the Proposed Transaction with Phoenix" hereinabove.)
12
<PAGE>
Item 4. Submission of Matters to a Vote of Securities Holders
The following matters were submitted to a vote of the securities
holders:
1. Election of Directors and increase of authorized shares
from twenty five million (25,000,000) to forty million
(40,000,000) shares on December 14, 1995; and
2. On each of May 13 and July 2, 1996, pursuant to Nevada law, Global
submitted for vote by a majority of its securities holders (without
meeting), two proposed Amendments to Global's Articles of
Incorporation. Each such proposed Amendment was approved, resulting in
the authorized and unissued shares of Global Common Stock being 25
million shares and the shares of Common Stock being converted (on a
30-1 basis) into an aggregate of 616,463 shares. (See "Common Stock
Reconciliation" in Part I, Item 1 hereinabove.)
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
On July 29, 1992, Global's Common Stock commenced quotation on the
NASDAQ Small Cap Market (NASDAQ) under the symbol GSMI. (The symbol
was changed to GEGI coincident with the May 13, 1996, Amendment to the
Articles of Incorporation.) The following table sets forth the
reported low bid and high asked quotations for Global's Common Stock on
NASDAQ for the period July 1, 1994, to September 30, 1996. (The
quarters set forth below are based on Global's June 30 fiscal year
period.) Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions and may not represent actual
transactions:
Bid Ask
--- ---
Quarter Ended Low High
- ------------- --- ----
September 30, 1994 $1 13/16 $2 1/8
December 31, 1994 1 1/2 1 5/8
March 31, 1995 3/4 27/32
June 30, 1995 5/6 13/32
September 30, 1995 3/8 7/16
December 30, 1995 1/4 11/32
March 31, 1996 7/32 9/32
June 30, 1996 3 1/4 4 1/4
September 30, 1996 11/16 8 3/4
December 31, 1996 0.01 3/8
13
<PAGE>
(The prices stated for June 30, September 30, 1996 and December 31,
1996, give effect to the 1 for 30 reverse split effective May 13,
1996.)
On November 26, 1996, Global's Common Stock was delisted from
trading on NASDAQ, at which time Global's Common Stock commenced
listing on the over-the-counter pink sheets. Such delisting was
prompted by Global's inability to file a timely Form 10-K with audited
financials for the fiscal year ended June 30, 1996. (In addition, the
NASDAQ hearing held on November 21, 1996, raised issues relating to the
issuance of the aggregate of 1,135,000 S-8 Common Stock and the Reg S
transaction with Suisse. See The History of the Proposed Transaction
with Phoenix hereinabove.) Having been delisted, Global is now
required to meet NASDAQ standards applicable to an initial listing
application. Presently, such criteria include $4 million in total
assets, $2 million in capital and surplus, $1 million market value of
the public float and a minimum bid price of $3 per share. There can
be no assurance that Global will be able to meet such initial listing
requirements, that Global's Common Stock will be included on NASDAQ
even if such initial listing requirements are met, or that thereafter
the requirements for continuous listing will continue to be met. In
any such event, Global's Common Stock would continue to be traded on
the over-the-counter pink sheets, in which event a shareholder may find
it more difficult to dispose of (or to obtain accurate quotations as to
the price of) Global's Common Stock.
As of September 30, 1996, there were 2,516,463 shares of Common
Stock validly issued and outstanding, fully paid and non-assessable.
(See "Common Stock Reconciliation" in Part I, Item 1 hereinabove).
There were a total of 448 holders of record as of December 9, 1996.
Global believes, based upon available information, that there are in
excess of 1,000 beneficial owners of Global Common Stock. No shares of
Global's authorized Preferred Stock have ever been issued.
DIVIDENDS
The payment of dividends, if any, by Global rests within the
discretion of its Board of Directors and depends, among other things,
upon Global's earnings, its capital requirements, its financial
condition, as well as other relevant factors. As of the date hereof,
Global has not issued or declared any dividends. Global does not
anticipate paying any dividends on its Common Stock in the foreseeable
future.
14
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Global's business strategy, as discussed in previous public filings,
proved to be an abysmal failure. Global's total revenues (while growing
in recent years), which amounted to in excess of $19 million for the
fiscal year and ended June 30, 1995, were achieved at the expense of
operating profit. Global has reported net losses aggregating
approximately $5 million for the three fiscal years ended June 30,
1995. The absence of operating profits dictated that Global attempt to
meet its obligations by repeated resort to the equity and debt markets.
Such method of financing proved to be no longer feasible after the end
of the third quarter ended March 31, 1996. (See Plan of Reorganization
in Part I hereinabove.)
In addition, prior management subverted Global's announced business
strategy by engaging in transactions that effectively belied Global's
stated business purpose. Thus: Global's announced business theory
was that, because of the risks inherent in any business having
environmental overtones (as, for example, see the business history of
Johns Manville), Global would itself remain a non-operating holding
company, actual operations would be conducted only by and through
wholly-owned subsidiaries, and a firm, unimpeachable dichotomy would
exist between the non-operating parent and the operating subsidiaries.
This concept was substantially impaired when prior management caused
Global to, among other things, guaranty the employment contracts of
subsidiary managers, guaranty contractual obligations of subsidiaries
and guaranty as co-surety performance/completion indemnity bonds
required to be delivered by the subsidiaries in the normal course of
business. None of these actions was disclosed to the independent
members of the Board of Directors; and none of these actions was the
subject of disclosure in previously filed public documents.
As a direct consequence of the implementation of the Plan of
Reorganization described in Part I hereinabove, Global has (as of June
30, 1996) disposed of all its operations and may today be fairly
characterized as a non-operating "shell" corporation. Therefore, there
is no need for discussion herein of prior results of operations, of
year-to-year operating results and comparisons, and of liquidity and
capital resources. As of the date hereof, Global is able to meet its
debts as they mature, which obligations (giving effect to the completion
of the Plan of Reorganization described in Part I hereinabove) consist
(except for approximately $150,000 of disputed items) exclusively of
legal, accounting and miscellaneous expenses endemic to any public
company.
Management believes that its principal focus today should be directed
toward the (a) realization of the cash value of Global's remaining
assets and (b) acquisition of a going concern that will provide
stability of operation and cash flow. Management also recognizes the
importance of the reliance it places upon the provider of funds
previously utilized to liquidate creditor claims to fulfill its
commitment to furnish such additional amounts as are required to
eliminate in full the remaining approximate $150,000 of creditor
claims.
15
<PAGE>
Item 7. Financial Statements
Consolidated Financial Statements specified by this Item 7 are
presented following Item 13., in Part IV of this report.
Item 8. Changes in and Disagreements with Accountants of Accounting and
Financial Disclosure
This Item is inapplicable.
PART III
Item 9. Directors and Executive Officers of the Company
The executive officers, directors and key personnel of Global are
as follows: (the information set forth hereunder is as of June 30, 1996
(the end of the fiscal period), and gives effect to the resignations of
directors whose services were terminated by Global upon the sale of
the subsidiaries occurring on June 28, 1996, and to the appointment of
designees of Phoenix Wrecking Corporation (see Part I hereinabove) to
the Board of Directors and to the position of President having been
rescinded nune pro tunc as of November 6, 1996.
Name Age Positions held with the Company
Thomas D. Lewis, Sr. 51 Chairman, Chief Executive
Officer and Director
David R. Stith 69 Vice Chairman and Director
Herbert S. McDonald 61 Director
Biographies of the directors and executive officers of Global are set
forth below. All directors hold office until the next annual
stockholders meeting and until their successors have been elected and
qualified or until their death, resignation, retirement, removal or
disqualification. Vacancies in the existing Board are filled by
majority vote of the remaining directors. Officers of Global serve at
the will of the Board of Directors.
Thomas D. Lewis, Sr. has been Chairman and Chief Executive Officer
of the Company since April 20, 1994. From July 1, 1991 to April 20,
1994, Mr. Lewis served as a consultant to the Company. Mr. Lewis was
the founder of Total Recovery, Inc., an environmental contracting
company founded in 1979, and was its President, Chief Executive Officer
and sole shareholder from 1979 to April 1994. In July 1991, the
Company purchased all the environmental contracting
16
<PAGE>
and consulting assets and business of Total Recovery and thereafter such
environmental contracting business has been conducted by GSM Environmental,
Inc., the Company's subsidiary in Parker Ford, Pennsylvania. Mr. Lewis has been
active in the petroleum and environmental industries for over 25 years,
including transportation and disposal of hazardous and non-hazardous waste,
tank removal and installation, and emergency spill response. In 1991, Mr.
Lewis was the Federal appointed receiver of The Jack Frost Sugar factory in
Philadelphia, Pennsylvania, overseeing the Environmental Protection Agency
mandated clean- up of the defunct factory under the auspices of the Federal
Bankruptcy Court.
David R. Stith became Vice Chairman and a Director of Global on
November 1, 1991, and of the Company on November 25, 1991. Mr. Stith
founded Underwater Technics in 1967 and has served as its Chairman and
President since such date. Mr. Stith led the crew that cleaned up the
major oil spills from the tankers the "Elias," the "Mellon," and the
"Athos." Mr. Stith was also involved in underwater testing for the
National Aeronautics and Space Administration, and led the crew that
dove for sunken treasure on the Spanish Gallon "San Jose" which sank off
Colombia in 1708.
Herbert S. McDonald became a director of Global on December 27,
1995. Mr. McDonald has, since January 1993, been the President of The
Fulcrum Group, a management consulting firm specializing in the
restructuring and merger/acquisition of corporate clients. Prior
thereto, Mr. McDonald was (since August 1990) the President (CEO) and
principal shareholder of European Automotive Products, Inc., a major
importer of higher end German automotive parts. Prior thereto, Mr.
McDonald was the President (CEO) and principal shareholder of Fulcrum
Investments, a firm making investments in manufacturing, leasing,
automobile dealerships and real estate. (See Plan of Reorganization
hereinabove for the amounts paid The Fulcrum Group by Global to assist
in the implementation of such Plan of Reorganization.)
No director, officer or affiliate of Global is an adverse party to
Global or any of its subsidiaries in any material proceeding. (See
"Litigation" hereinabove.)
Item 10. Executive Compensation
The following table sets forth the cash compensation earned by each
of Global's executive officers for the fiscal year ended June 30, 1996
(the "named executive officers"). Global became a reporting company
under the Securities Exchange Act of 1934 on July 29, 1992, the
effective date of its Registration Statement on Form 8-A.
Directors who are also officers of the Company receive no
remuneration for their services as directors, other than reimbursement
of expenses incurred in connection with such service. It is the
current policy of Global not to pay director's fees or other forms of
remuneration to directors who are not officers of Global, other than
reimbursement of expenses incurred in connection with such service as a
director.
17
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Other Annual
Name and Principal Position Year Salary($) Bonus($) Compensation($)(2)
<S> <C> <C> <C> <C>
Thomas D. Lewis, Sr. 1996 183,980 ---- 28,560
Chairman of the Board, 1995 178,345 ---- ----
Chief Executive Officer (1) 1994 29,920 ---- ----
(2)
Aubrey L. Pettit, Jr. (3)(2) 1996 84,502 ---- 28,560
President, General Counsel 1995 163,051 ---- ----
& Secretary 1996 155,510 ---- ----
David R. Stith 1996 74,997 ---- ----
Vice Chairman 1995 150,500 10,313 ----
1994 150,500 ---- ----
Dana A. Kaas (3) 1996 91,864 ---- ----
Chief Operating Officer 1995 61,242 ---- ----
1994 ---- ---- ----
Robert K. Moskovitz 1996 115,000 ---- ----
Vice President - Finance 1995 13,269 ---- ----
(Resigned June 28, 1996) 1994 ---- ---- ----
</TABLE>
__________________
(1) From July 1, 1992 to April 20, 1994, Mr. Lewis served as a consultant
to the Company, at an annual consulting fee of $175,000 per annum. Mr.
Lewis' employment contract was terminated on June 28, 1996.
(2) In August, 1995, Messrs. Lewis and Pettit each received 50,000 shares
of pre-reverse split Common Stock of Global having a value of $28,075.
None of the other named executive officers received perquisites or
other personal benefits.
(3) Employment terminated on January 3, 1996.
18
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Prior to June 28, 1996, Global had in effect various plans designed to
benefit senior management. These included a Senior Management Incentive
Compensation Plan, an Equity Incentive Plan, management employment contracts,
a Qualified Profit Sharing Plan and an Employee Stock Purchase Plan. Each and
all of such compensation arrangements was canceled as of June 28, 1996.
Aggregate employment and consulting agreement obligations of Global for the
fiscal years ending June 30, 1997 and 1998, respectively, would have amounted
to $848,800 and $395,500, respectively.
The following tables set forth the number and percentage of Global's
shares of Common Stock owned of record and beneficially by (a) each person or
entity owning more than five percent of such shares, (b) each executive
officer and director, and (c) all executive officers and directors as a group
as of June 30, 1996 (giving effect to the May 13, 1996, reverse split):
Name and Address(1)(2) Number of Shares Owned Percentage
Thomas D. Lewis, Sr. (3)(4)(5) 23,333 3.8%
77 Wells Road
Parkerford, PA 19457
David R. Stith (3)(4)
721 St. Davids Avenue
Warminster, PA 18974 4,861 *
Herbert S. McDonald (6)
160 Abraham's Lane
Villanova, PA 19085 ---- ----
All Officers and Directors
as a Group (3 persons) 23,194 1.1%
__________________
* Less than 1%
(1) Unless otherwise noted, Global believes that all persons named in the
above table have sole voting and dispositive power with respect to all
shares of Common Stock beneficially owned by them.
(2) Based on 616,463 shares of Global's Common Stock issued and outstanding
at June 30, 1996.
(3) These individuals may be deemed "parents" and/or "promoters" of Global
under the rules
19
<PAGE>
and regulations of the Securities Act by virtue of their efforts in
the organization of Global.
(4) Executive officer and director.
(5) Owned jointly with spouse.
(6) Director.
Item 12. Certain Relationship and Related Transactions
Employment Agreements
For information regarding former employment agreements for Messrs.
Lewis, Pettit, and Stith, see "Item 11. Executive Compensation-Employment
Agreements."
Receivable
Mr. David R. Stith, the President and former majority stockholder of
Underwater Technics, borrowed $169,000 from Underwater Technics prior to its
acquisition by Global. Such indebtedness is evidenced by a promissory note,
dated November 27, 1991, payable over a twenty year period (or upon the death
of Mr. Stith, if earlier), and bearing interest on the unpaid balance thereof
at the rate of 7% per annum. Such interest had been accrued through June 30,
1992, and is payable at November 30, 1996. After November 30, 1996, interest
shall accrue and be paid annually. The promissory note is secured by the
assignment of certain life insurance proceeds. During the year ended June 30,
1996, accrued interest amounting to $11,898 was forgiven. In December 1995,
Global discontinued payment under Mr. Stith's employment contract and on June
28, 1996, the Board of Directors voted to offset Global's remaining obligation
under the employment agreement by delivery of the Camden property to Mr. Stith.
Mr. Stith rejected such proposal. (See "Legal Proceedings" hereinabove.) On
November 15, 1996, the Board agreed to cancel Mr. Stith's obligation to Global
and Mr. Stith agreed not to pursue his employment contract claim against Global.
20
<PAGE>
PART IV
Item 13. Exhibits, Financial Statements and Reports on Form 8-K
(a) 1. All financial statements - see index to Consolidated
Financial Statements on pages __.
2. Exhibits - see exhibits, as indicated below, attached.
Schedules not included are omitted because they are not applicable, or
are not required, or the information is shown in the Consolidated Financial
Statements or the Notes thereto.
(b) The following Current Reports on Form 8-K were filed by the
Company with the Securities and Exchange Commission during the last quarter of
the period covered by this Annual Report on Form 10-KSB:
(i) None.
(The following Exhibits are applicable to the period commencing July 1,
1995, and terminating as of the date of the filing of this Form 10-KSB.)
A. Certificate of Amendment of Articles of Incorporation, filed January 26,
1996.
B.Amendment to Articles of Incorporation, filed May 13, 1996.
C. Amendment to Articles of Incorporation, filed July 3, 1996.
D. Agreement, dated June 27, 1996, between Registrant and shareholders of
Phoenix Wrecking Corporation.
E. Rescission Agreement, dated November 6, 1996, between Registrant and
shareholders of Phoenix Wrecking Corporation.
F. Memorandum from counsel to Registrant summarizing subsidiary sales
effected as of June 28, 1996.
G. Press Releases issued by Registrant since July 1, 1995.
(I) July 1, 1996
(ii) August 29, 1996
(iii) September 3, 1996
(iv) October 23, 1996
(v) October 25, 1996 (#1)
(vi) October 25, 1996 (#2)
(vii) November 7, 1996
21
<PAGE>
H. Disputed Form S-8 filing under the 1993 Act, dated August 2, 1996, and
relating to 385,000 shares (incorporated herein by reference).
I. Disputed Form S-8 filing under the 1933 Act, dated September 19, 1996,
and relating to 750,000 shares (incorporated herein by reference).
J. Disputed Form 8-K filed on October 4, 1996 (incorporated herein by
reference).
27. Financial Data Schedule.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized on February 17, 1997.
GLOBAL SPILL MANAGEMENT, INC.
By: /s/_________________________
David R. Stith,
Acting President & Director
February 17, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on February 17, 1997.
Signatures Title Date
/s/ Acting President and Director February 17, 1997
_______________________
David R. Stith
/s/ Director February 17, 1997
_______________________
Herbert S. McDonald
/s/ Acting Principal Financial February 17, 1997
_______________________ and Accounting Officer
Allan Esrine
23
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
______________________________________________
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
__________________________________________
Page
Report of Independent Certified Public Accountants--
BDO Seidman, LLP 25
Consolidated Balance Sheets 26
Consolidated Statements of Operations 27
Consolidated Statements of Stockholders' Equity (Deficit) 28
Consolidated Statements of Cash Flows 29-30
Notes to Consolidated Financial Statements 31-45
24
<PAGE>
Report of Independent Certified Public Accountants
Global Spill Management, Inc.
Willow Grove, Pennsylvania
We have audited the accompanying consolidated balance sheet of Global Spill
Management, Inc. and subsidiaries as of June 30, 1996, and the related
consolidated statements of operations, capital deficit, and cash flows for
each of the two years in the period ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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.
The Company has undertaken a plan of reorganization which includes the
discontinuance of all operating activities. Upon completion, the Company
plans to identify and acquire other businesses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Spill Management, Inc.
and subsidiaries as of June 30, 1996, and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1996,
in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
deficiencies in working capital and equity at June 30, 1996, potential
obligations from prior environmental contracting activities and has incurred
significant recurring losses in past years. These matters raise substantial
doubt about its ability to continue as a going concern. That subject, as well
as managements' plans in regard to liquidating its liabilities and reducing
ongoing operating expenses, are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
November 15, 1996
25
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Balance Sheet
June 30, 1996
-----
Assets
Current assets
Cash $ 62,016
Net assets available for sale (Notes 2, 3 and 4)805,000
------------
Total current assets $ 867,016
============
Liabilities and Capital Deficit
Current liabilities
Notes payable, stockholder (Note 6) $ 50,000
Notes payable, bank (Notes 3 and 4) 1,134,553
Current maturities of long-term debt (Note 5) 117,255
Notes payable, other (Note 7) 932,727
Accounts payable (Note 16) 532,023
Accrued expenses 281,732
------------
Total current liabilities 3,048,290
------------
Commitments and contingencies (Notes 1, 2, 4, 6, 13, 14, 15 and 16)
Capital deficit (Notes 8, 9 and 12)
Preferred stock, $.001 par value
Authorized 5,000,000 shares, none issued --
Common stock, $.001 par value,
Authorized 25,000,000 shares
Issued and outstanding 1,466,468 1,466
Additional paid-in capital 12,498,463
Deficit (14,681,203)
------------
Total capital deficit (2,181,274)
------------
Total liabilities and capital deficit $867,016
============
See accompanying notes to consolidated financial statements.
26
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Operations
Year ended June 30, 1996 1995
------- --------
Revenues $ -- $ --
Operating expenses
General and administrative expenses255,800287,850
Loss on investment and note receivable 90,000260,000
Debenture conversion expense (Note 12) 2,595,703 --
Interest expense 394,304 287,726
----------- -----------
Total operating expenses 3,335,807835,576
----------- -----------
(Loss) from continuing operations (3,335,807) (835,576)
(Loss) from discontinued operations (Note 2) (6,724,912) (591,531)
----------- -----------
Net (loss) $(10,060,719) $(1,427,107)
============ ===========
(Loss) per share from continuing operations $ (5.47) $ (2.15)
(Loss) per share from discontinued operations (11.02) (1.53)
----------- -----------
Net (loss) per share $ (16.49) $ (3.68)
============ ===========
Weighted average number of shares outstanding610,044388,171
============ ===========
See accompanying notes to consolidated financial statements.
27
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Capital Deficit
Years ended June 30, 1995 and 1996
<TABLE>
<CAPTION>
Additional
Common Paid-InSubscriptions
StockCapital Receivable(Deficit)
---------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, July 1, 1994 $ 9,045 $6,864,870$ (408,333) $(3,193,377)
Spin-off of Acme(1,100) (1,262,841) -- --
Acquisition of Land 'N Sea 424 499,576 -- --
Exercise of options 50 49,950 -- --
Exercise of warrants 100 49,900 (50,000) --
Issuances for payment of services 690 124,380 -- --
Common stock issued through private placement 6,7644,124,662 (2,725,000) --
Payment of subscriptions -- -- 1,515,706 --
Adjustment to subscriptions
resulting from decline in
market value of Common Stock -- (1,169,752) 1,169,752
Common Stock issued to
employees through employee
stock purchase plan 1 1,864 -- --
Net (loss) for the year -- -- -- (1,427,107)
---------- ----------- ------------- -------------
Balance, June 30, 1995 15,974 9,282,609 (497,875) (4,620,484)
1 for 30 reverse stock split (15,442) 15,442 -- --
Shares issued for services 37 56,213 -- --
Stock issued for cash 28 219,972 -- --
Shares issued as additional
consideration for acquired
companies 19 296,588 -- --
Stock issued upon conversion
of debentures 850 2,959,853 -- --
Payment of subscriptions -- -- 108,438 --
Adjustment to subscriptions resulting
from decline in market value of
Common Stock -- (189,437) 189,437 --
Allowance for subscriptions
receivable -- (200,000) 200,000 --
Other adjustments -- 57,223 -- --
Net (loss) for the year -- -- -- (10,060,719)
---------- ----------- ------------- -------------
Balance, June 30, 1996 $ 1,466 $12,498,463 $ $(14,681,203)
========== =========== ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
Global Spill Management, Inc
and Subsidiaries
Consolidated Statements of
Cash Flows
Years ended June 30, 1996 1995
------ ------
Cash flows from operating activities
Net (loss) from continuing operations $(3,335,807) (835,576)
Net (loss) from discontinued operations (6,724,912) (591,531)
Adjustments to reconcile net income (loss) to
net cash (used) in operating activities
Depreciation and amortization 376,714 495,157
Issuance of common stock for services 56,250 125,063
Loss on investment and note receivable 90,000 260,000
Bond conversion expense 2,595,703 --
Loss on sale of subsidiaries 183,252 --
Gain on abandonment of subsidiary (311,058) --
Write-off of goodwill 4,697,254 --
Other, net 246,925 --
Provision for doubtful accounts -- 42,226
Loss on sale of assets, net -- 13,394
Loss on abandonment of assets 165,190 --
Write-off of other assets 179,531 --
(Increase) decrease in assets
Accounts receivable 977,47717,399
Inventory 18,090 39,481
Prepaid expenses and other assets 359,716 (4,646)
Increase (decrease) in liabilities
Accounts payable (56,271) (47,412)
Accrued expenses 82,864 (74,591)
----------- ---------
Net cash (used) in operating activities (399,084) (561,036)
----------- ---------
Cash flows from investing activities
Purchases of equipment -- (337,718)
Proceeds from sale and disposal of equipment -- 86,132
Decrease in amounts due to related parties 169,970 11,898
Proceeds from sale of subsidiaries 175,000 --
Cash balance of subsidiary at date of sale -- (232,961)
Acquisitions -- (2,275,583)
----------- ---------
Net cash provided (used) by investing activities 344,970 (2,748,232)
----------- ---------
Cash flows from financing activities
Borrowings on line of credit, net 54,553 502,792
Payments of deferred financing equity costs -- (20,477)
Proceeds from long-term debt -- 321,404
Repayments of long-term debt (450,428) (449,121)
Issuance of common stock, net of expenses 220,000 1,456,426
Payments of common stock receivables 108,438 1,515,706
----------- ---------
Net cash (used) provided by financing activities (67,437) 3,326,730
----------- ---------
29
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of
Cash Flows
Years ended June 30, 1996 1995
------ ------
Net (decrease) increase in cash $ (121,551) $ 17,462
Cash, at beginning of year 183,567 166,105
---------- ----------
Cash, at end of year $ 62,016 $ 183,567
========== ==========
Supplemental disclosure of cash flow information
Cash paid during the year for
Interest $ 354,610 $ 228,003
Taxes $ -- $ 15,405
========== ==========
Noncash investing and financing activities
Amounts to be collected upon sale
of subsidiaries $ 805,000 $ --
Capital leases for equipment -- 290,268
Stock issued as additional
consideration for acquired companies 296,607 --
Issuance of common stock upon
conversion of debenture 2,960,703 --
Debenture converted to common stock (365,000) --
Acquisition of Companies
Fair value of assets acquired $ $ 6,410,239
Liabilities assumed -- (2,881,429)
Stock issued -- (500,000)
Notes payable -- (3,028,810)
Spin-off of Company
Assets -- 1,331,555
Liabilities -- (67,614)
Acquisition of treasury stock -- 1,263,941
Retirement of treasury stock -- (1,263,941)
Short-term note receivable from
private placement of common stock -- 2,775,000
Reduction in purchase price -- (1,169,752)
---------- ----------
$ $ 1,605,248
========== ==========
See accompanying notes to consolidated financial statements.
30
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Summary of Accounting Policies
________________________________________________________________________________
Organization Global Spill Management, Inc. ("Global") was
and Principles incorporated in June 1991, to acquire, operate
of Consolidation and develop environmental contracting and
consulting companies and related businesses.
The accompanying consolidated financial statements
include the accounts of Global Spill Management,
Inc. and its wholly owned subsidiaries (the after
elimination of all significant intercompany
balances and transactions.
The Company has undertaken a plan of
reorganization which includes the discontinuance
of all operating activities (see Notes 2 and 3).
Upon completion, the Company plans to identify
and acquire other businesses.
Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Fair Value The Company follows Statement of Financial
of Financial Accounting Standards (SFAS No. 107), "Disclosures
Instruments about Fair Value of Financial Instruments," which
requires disclosures of fair value information
about certain financial instruments. The
carrying amounts of the Company's financial
instruments, consisting of cash, notes payable
and accounts payable, approximate their fair
value.
Income Taxes Income taxes are calculated using the liability
method specified by Statement of Accounting
Standards No. 109, "Accounting for Income Taxes."
Environmental Environmental expenditures that relate to existing
Expenditures conditions caused by past operations, and which
do not contribute to current or future revenues,
are charged to expense. Liabilities are recorded
when environmental assessments and/or cleanups
are probable, and the costs can be reasonably
estimated. Generally, the timing of these
accruals have coincided with the Company's
commitment to a formal plan of action.
-31-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Summary of Accounting Policies
________________________________________________________________________________
Revenue Service revenues are recognized as the services
Recognition are performed. Such revenues also include the
cost of services subcontracted to third parties
that are reimbursed to the Company by its
customers. Product revenues are recognized when
the products are shipped.
(Loss) The (loss) per share data are computed by dividing
Per the loss applicable to common stock by the
Share weighted average number of common shares outstand-
ing. For the years ended June 30, 1996 and 1995,
outstanding warrants and options were excluded
from the computation because their effect would
have been antidilutive.
Options and During 1995, the FASB adopted Statement of
Warrants Financial Accounting Standards No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation,"
which has recognition provisions that establish a
fair value based method of accounting for
stock-based employee compensation plans and
established fair value as the measurement basis
for transactions in which an entity acquires
goods or services from nonemployees in exchange
for equity instruments. SFAS 123 also has
certain disclosure provisions. Adoption of the
recognition provisions of SFAS 123 with regard to
these transactions with nonemployees was required
for all such transactions entered into after
December 15, 1995, and the Company adopted these
provisions as required. The recognition
provision with regard to the fair value based
method of accounting for stock- based employee
compensation plans is optional. The Company has
decided to continue to apply Accounting
Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees," for
its stock-based employee compensation
arrangements. APB 25 uses what is referred to as
an intrinsic value based method of accounting.
The disclosure provisions of SFAS 123 are
effective for fiscal years beginning after
December 15, 1995. The Company will provide the
disclosures when required.
Reclassifications Certain amounts which had been included in the
1995 financial statements have been reclassified
to conform with the 1996 presentation.
-32-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
1. Going Concern The Company's financial statements have been
presented on the basis that it is a going
concern, which contemplates the realization of the
cash values of its remaining assets and the
satisfaction of its remaining liabilities. The
Company has incurred (prior to the disposition of
its operating subsidiaries as discussed in Note
2) substantial operating losses and at June 30,
1996 had significant deficiencies in working
capital and equity. The Company believes that it
has the available sources of cash necessary to
liquidate its remaining liabilities as well as to
fund its reduced level of operating expenses.
In addition, the Company does not maintain
insurance coverage to insulate it from potential
litigation, which could result from claims in the
future under The Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
as amended in 1986 (the "Superfund Act") or any
other claims, should they arise (see Note 14).
The Company plans to deal with these subjects in
the following manner: to convert its assets into
cash, to prosecute to conclusion the various
Phoenix-related matters (see Note 16), and to
utilize its public status to effect an
acquisition of a going business. These plans must
be considered in terms of the risks, difficulties
and problems usually encountered in effecting such
actions.
The Company's ability to continue as a going
concern is dependent upon the successful
resolution of the foregoing factors. The
financial statements do not include any
adjustments relating to the (a) realization of
cash from the sale of certain assets or (b)
satisfaction of liabilities, should the Company be
unable to continue as a going concern.
-33-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
2. Discontinued During 1996, as a result of significant losses
Operations from the Company's operations and an inability to
obtain sufficient working capital, the Company
discontin- ued all operating activities of its
environmental contracting and consulting
companies and related businesses. As discussed in
Note 3, the Company sold Land N' Sea
Environmental Services, Inc. ("LNS"), GSM
Environmental, Inc. ("GSMI") and Global
Environmental, Inc. ("GE") and agreed to sell
Allied Environmental, Inc., Allied Environmental
Services West, Inc. and Professional Pipe
Services Corporation ("Propipe"). The Company's
other operating subsidiary, Environmental
Disposal Options Corporation ("EDOC"), was shut
down in March 1996. EDOC was subsequently put
into involuntary bankruptcy by its creditors and
is currently liquidating its assets in accordance
with Chapter 7 of the United States Bankruptcy
Code.
As a result of the disposal of all its operations,
the Company recorded a charge of $4,816,372 as a
loss on disposal of discontinued operations. This
amount included, among other things, a writeoff of
goodwill amounting to $4,697,255, and a charge
for $183,250, representing a loss on the sales and
abandonment of the Company's subsidiaries. There
were no material losses incurred during the phase
out period.
The operating results from discontinued operations
for 1996 and 1995 are summarized as follows:
Year ended June 30, 1996 1995
----------------------
Total revenues $17,043,156$19,217,195
Gross profit 4,136,242 4,683,772
(Loss) from discontinued
operations
(Loss) from discontinued
operations $(1,908,540)$ (591,531)
(Loss) on disposal of
discontinued operations (4,816,372) -
----------------------
$(6,724,912) $(591,531)
======================
-34-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
(Loss) per share amounts from discontinued
operations are summarized as follows:
Year ended June 30,1996 1995
----------------------
(Loss) from discontinued
operations
(Loss) from discontinued
operations $ (3.13)$ (1.53)
(Loss) from disposal of
discontinued operations (7.89) -
----------------------
$ (11.02)$ (1.53)
======================
Assets and liabilities included in net assets
available for sale consist primarily of the
following:
Cash $ 771
Accounts receivable 2,164,648
Other current assets 41,794
Fixed assets, net 163,162
Other, net 71,021
Accounts payable and
accrued expenses (1,557,202)
Long-term debt (79,194)
-----------
$ 805,000
===========
3. Sale of On June 28, 1996, the Company sold all of the
Subsidiaries issued and outstanding stock of its subsidiaries,
Land 'N Sea Environmental Services, Inc. ("LNS"),
GSM Environmental, Inc. ("GSMI") and Global
Environmental, Inc. ("GE") for $175,000 in cash.
LNS was purchased by a former employee and
stockholder of the Company for $75,000. GSMI and
GE were purchased by the Company's former
chairman of the board and chief executive officer
for $100,000.
On June 28, 1996, the Company entered into an
agreement to sell the assets net of substantially
all of the liabilities of Allied Environmental,
Inc. and Allied Environmental Services, West,
Inc., in exchange for Common Stock of the
purchaser, Eastern Environmental Services, Inc.
(EESI") valued at $700,000. The sale was
consummated in July 1996.
-35-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
On June 30, 1996, the Company signed an agreement
to sell the assets, net of substantially all of
the liabilities, of Professional Pipe Services
Corporation ("Propipe") to a former employee and
stockholder of the Company for $105,000 in cash.
The sale was completed in July 1996.
All of the proceeds from the sale of the
subsidiaries, including $700,000 received upon
sale of the EESI shares, which amounted to
$980,000, were used to pay down the notes
payable, bank (see Note 4).
4. Notes Payable, The Company had a revolving line of credit of
Bank $1,150,000 with a bank that was to have expired
in October 1995. The interest rate on the line of
credit was the prime rate of interest plus two
percent (11.00% at June 30, 1996).
On December 29, 1995, the Company negotiated an
increase in this line of credit to $1,350,000 and
extended the maturity date to January 31, 1996.
On the extended expiration date of line of credit
agreement, the Company was unable to repay the
$1,350,000 owed to the lender. On April 25, 1996,
the Company entered into a forbearance agreement
with the lender, extending the expiration date to
May 31, 1996. Such borrowings under the line of
credit were collateralized by substantially all
of the assets of the Company.
In June 1996, the bank agreed to release its liens
for a payment of $1,200,000. The payments to the
bank included $980,000, which represented the
total proceeds from the sales of the subsidiaries
discussed in Note 3 and an additional payment by
the Company of $220,000, of which $170,000 was
made in June 1996. The release took place in July
1996, at which time approximately $280,000 was
forgiven by the Bank. The gain from forgiveness
will be recorded in fiscal year 1997.
-36-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
5. Long-Term Debt June 30, 1996
-----------
Capitalized lease obligations,
with implicit rates of 6% to 18%,
payable monthly until May 2000. $ 17,255
Subordinated convertible debenture
payable monthly until November 1, 1998,
interest at 13.75% per annum. 100,000
-----------
117,255
Less current maturities of
long-term debt 117,255
-----------
$ -
===========
Subsequent to June 30, 1996, the above obligations
and their related accrued interest ($15,000) were
satisfied by a payment of $52,130.
6. Note Payable,
Stockholder
The noe was payable to the Company's former chief
executive officer and is unsecured. Subsequent
to June 30, 1996, $37,500 was paid and the
remaining balance of $12,500 was due on September
20, 1996.
7. Notes Payable, The notes are payable to the former executives of
Other the Company's subsidiaries, Allied Environmental
Services, Inc. and Allied Environmental Services,
West, Inc. Interest was payable at prime plus 2%.
Concurrent with the sale of the Allied entities,
the notes and related accrued interest were
forgiven (see Note 3 above). The gain from
forgiveness will be recorded in fiscal year 1997.
8. Stock Options In September 1991, the Company adopted the Global
Spill Management Equity Incentive Plan (the
"Plan"), in order to provide directors, officers
and certain key employees with stock options and
awards. As amended on January 26, 1994, the
number of shares of Common stock reserved under
the plan was increased to 50,000. Options
granted may be either incentive or nonqualified
stock options, with an exercise price equal to or
more than the fair market value of the underlying
Common Stock at grant date. The
-37-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
options will be exercisable over ten years
from the grant date and will have vesting terms
ranging from 1 to 4 years as determined by the
Compensation Committee of the Board of Directors.
Under the Plan, each non-employee director is
granted in June of each year a nonqualified
option to purchase 67 shares of Common Stock. In
addition, the Plan allows the Company to make
Common Stock awards to employees, based on
performance milestones determined by the Board of
Directors. Also, the Plan allows for the
granting of stock appreciation rights as defined.
Options outstanding and the related exercise price
are as follows:
Option Price
Per Share Outstanding Exercisable
-------------- ----------- -----------
Balance,
July 1, 1994 $60.00-$138.30 14,56212,999
Granted 10.80-60.00 25,086 -
Forfeited or
cancelled 10.80-138.30 (1,226) -
Balance,
June 30, 1995 10.80-138.30 38,42231,135
Granted 5.00 95,00095,000
Forfeited or
cancelled 10.80-138.30 (38,422) (31,135)
-------------- ----------- -----------
Balance,
June 30, 1996$5.00 95,000 95,000
============== =========== ===========
-38-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
9. Subscriptions The Company has fully reserved promissory notes
Receivable receivable in the amounts of $200,000 with face
amounts totalling $886,375, issued to the Company
in 1995 as payment for the purchase price of
shares of Common Stock. The Company is pursuing
the collection of these notes (see Note 13).
Although the Company and the makers of such
promissory notes previously determined to reduce
the face amount of such notes if the fair value of
the common stock purchased decreased, the Company
has not determined that such notes remain in full
force and effect because (a) the shares were sold
by the makers of such notes without regard to
such decline in price, (b) the applicable
Registration Statement relating to such shares
and notes was not amended to reflect any change
in the terms of such notes as described therein,
and (c) the purchasers of such shares were
(pursuant to Rule 10b-6) delivered a Prospectus
that did not reflect any change in the face
amount of the notes.
10. Benefit Plans In February 1993, the Company adopted a profit
sharing plan (the "Profit Sharing Plan") pursuant
to Section 401(k) of the Internal Revenue Code of
1986, as amended. Under the Profit Sharing Plan,
contributions may be made by the Company as
matching contributions, qualified non-elective
contributions and discretionary contributions.
Such contributions may consist of cash and/or
stock. No contributions to the Profit Sharing
Plan were made by the Company for the years ended
June 30, 1996 and 1995.
11. Income Taxes The Company had deferred tax assets of
approximately $3,300,000 as of June 30, 1996,
related to net operating loss carryforwards
("NOL"), which have yet to be utilized. As a
result of the sale of the Company's operating
subsidiaries and the issuance of additional shares
of Common Stock, the amount of the NOL of
approximately $9,800,000 may be limited. Also,
the utilization of these losses, if available, to
reduce the future income taxes will depend upon
the generation of sufficient taxable income prior
to the expiration of the net operating loss
carryforwards. Therefore, at June 30, 1996, the
Company established a 100% valuation allowance
against the deferred tax assets as the likelihood
of recognizing this benefit cannot be certain.
The net operating losses will expire in various
years through June 2011.
-39-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
12. Common Stock In April 1996, the Company borrowed $315,000 from
an investor in exchange for a subordinated
convertible debenture in the amount of $350,000.
Based on the conversion provisions, the debenture
was convertible into 119,658 shares of stock. On
June 28, 1996, the debentures were converted into
750,000 shares of common stock and charged
operations for $2,284,990 as a debenture bond
conversion expense in accordance with Statement of
Financial Accounting Standards 84. The remaining
original issue discount of $35,000 was also
charged to operations.
On June 28, 1996, a $50,000 debenture was
converted into 100,000 shares of common stock.
As a result of the conversion, the Company charged
operations for $310,713 as a bond conversion
expense.
On May 13, 1996, the Company effected a 1 for 30
reverse stock split. All references in the
accompanying statements to the number of shares
and per share amounts have been adjusted to
reflect the reverse stock split.
On July 2, 1996, the Company amended its
Certificate of Incorporation to increase the
authorized shares of common stock to 25,000,000
shares.
13. Litigation The Company is a defendant in several lawsuits in
which the principal defendants are the former
subsidiaries that performed allegedly negligent
remediation work for a particular plaintiff. The
Company is vigorously defending all such suits,
on the basis that it is not a proper party
defendant because the parent company has no
contractual relationship with the respective
plaintiffs and bears no responsibility to such
plaintiffs.
Prior to June 30, 1995, the Company (upon the
advice of former counsel that sales of Common
Stock for promissory notes was legal under Nevada
law), sold to Corporate Relations Group, Orlando,
Florida (CRG), and to Financial Asset Management,
Phoenix, Arizona (FAM), 21,667 and 10,000 shares,
respectively, of the Company's authorized and
unissued Common Stock. CRG is currently indebted
to the Company in the original amount of $677,000
and FAM is currently indebted to the Company in
the original amount of $209,375, each such amount
representing the remaining balance on the
purchase price for such shares. The Company
believes that all such
-40-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
shares have been sold by CRG and FAM. The
Company has instructed counsel to pursue
diligently the collection of both amounts.
The Company is a co-defendant, along with Phoenix
(see Note 16) and others, in a lawsuit filed in
November 1996 in the New York State Supreme Court
which alleges that the Company received $1.3
million in exchange for debentures executed by
the Company and delivered to the plaintiff by the
designees of Phoenix. The Company intends to
vigorously defend such action, on the basis that
the Company's board did not authorize the
transaction and that the documents delivered by
the Phoenix nominees were fraudulently executed.
The Company maintains that they did not receive
any of the funds and that the recision agreement
between the Company and Phoenix specifically
provides that the liability rests with Phoenix.
On August 30, 1995, the Company sold an aggregate
of 25,000 shares authorized and unissued Common
Stock to Fondo de Adquisiciones E Inveslonnes
("FONDO"), a Costa Rican entity, for the sum of
$220,000. Such shares were sold pursuant to a
purchase agreement that provided for the filing
of a Registration Statement on Form S-3 pertaining
to those shares. When such filing could not be
timely effected, an additional 2,500 shares were
issued to FONDO (the penalty for non-filing
provided for in the purchase agreement). On
October 19, 1995, FONDO executed an Offshore
Securities Subscription Agreement, thereby
converting the transaction into a Regulation S
("Reg S") transaction. The $220,000 received by
the Company was paid to American Marine, Inc.
("AMI"), pursuant to a contract entered into by
the Company with AMI to acquire the latter. The
Company's sale of Common Stock to FONDO was
arranged by CRG and counsel for CRG executed the
documents delivered to the Company by FONDO. The
Company apparently received assurances from CRG
that the Company would be paid the outstanding
promissory notes previously issued to the Company
by CRG, as well as that CRG would assist the
Company in recovering the balance of the AMI
purchase price. CRG arranged that CKN Holding
Corporation ("CKN") would provide the funding
required by the Company for the completion of the
AMI purchase. To accomplish such funding, the
Company issued to CKN an aggregate of 175,827
shares of Common Stock. CRG failed to pay the
remaining balance on its promissory notes to the
Company and CKN failed to provide any funding for
the Company. (The
-41-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
CKN shares were retired by the Company on August
14, 1996.) The Company, as a direct result of
such failures, defaulted in its obligations to
AMI and, thereby, forfeited the sum of $220,000
deposited with AMI.
In July 1996, FONDO instituted an action against
the Company in a Florida state court seeking the
return of $220,000. The Company has filed a
motion to dismiss the Florida action on
jurisdictional and procedural grounds. That
motion is pending as of the date hereof. FONDO's
complaint appears to be that the Company agreed
to convert the Reg S sale into a filing pursuant
to Form S-3 under the Securities Act of 1993.
The Company's position is that the agreement with
FONDO provided solely and exclusively for the
issuance of an additional 2,500 shares of Common
Stock by the Company to FONDO and for no monetary
compensation. Subsequent to the initiation by
FONDO of its Florida action, the Company
discovered documents indicating that, under the
date of December 29, 1995, the Company, FONDO and
CKN entered into an agreement pursuant to which
FONDO agreed to sell its shares to CKN for the
sum of $354,750 and to release the Company from
any other claims by FONDO.
Dependent upon the resolution of the presently
pending motion to dismiss, the Company intends to
assert, either in the pending action or in any
other action commenced by, FONDO or in a separate
action to be instituted by the Company, that
FONDO, CRG and CKN were and are "affiliates" (as
that term is defined by the Securities Act of
1993), that CRG has not liquidated its own
promissory note to the Company, that CRG and CKN
are directly responsible for the Company's loss
of the sum of $220,000 deposited with AMI, and
that FONDO, CRG and CKN violated Rule 10b-5
promulgated under the Securities Exchange Act of
1934 in failing to apprise the Company of the
relationship between FONDO and CRG, and in failing
to advise the Company that CKN had no
demonstrable ability to provide the balance of the
financing necessary to complete the AMI
transaction.
-42-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
14. Environmental The Superfund Act imposes strict joint and several
Risks liability upon the generators of hazardous
substances and those transporters who have
arranged for disposal of hazardous substances or
those who have selected the disposal site for
such substances. All such persons may be liable
for waste site investigation, waste site cleanup
and natural resource damages, regardless of
whether they exercised due care and complied with
all relevant laws and regulations. Such costs
can be substantial. Certain of the Company's
subsidiaries were transporters of hazardous waste
materials, but should not be liable therefore,
unless they are deemed to have arranged for such
disposal or the selected disposal sites. The
Company's policy and practice is to refrain from
arranging for the disposal of hazardous
substances, including waste, and/or the selection
of disposal sites, and to have the generator do
so. However, there can be no assurance that the
Company will not fail to adhere to such practice
and thereby be potentially liable for claims in
connection with the transportation and disposal
of such materials.
15. Commitments Operating Leases
and
Contingencies No operating leases existed at June 30, 1996.
Rent expense was $42,483 and $137,400 in fiscal
1996 and 1995, respectively.
Employment and Consulting Agreements
The Company had employment contracts with three
executive officers and other key employees with
remaining terms up to five years at approximately
their past compensation. At June 30, 1996, these
contracts were terminated and the Company
believes it has no ongoing obligations with any of
these three individuals. Specifically, the
Chairman voluntarily resigned his position upon
the consummation of the sale of the subsidiaries.
The Vice Chairman's contractual obligation to the
Company, amounting to $169,960, was offset
against similar amounts owed by the Company to the
Vice Chairman. The $169,960 was charged to
discontinued operations at June 30, 1996. The
President's contract was terminated as a result of
just cause. All other employment contracts were
terminated as a result of the sale of the
subsidiaries.
-43-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
16. Subsequent Subsequent to June 30, 1996, as part of a
Events reorganization plan, Global Spill Management,
Inc., the parent company, negotiated a settlement
with several of its unsecured creditors. The
settlement called for a one time payment of
$0.375 of every dollar owed in exchange for an
unconditional release from any claim of the
creditor for any additional amounts. As a result,
the Company settled $565,000 in claims resulting
in a forgiveness of approxi- mately $238,000.
The Company executed and delivered, on June 28,
1996, a Stock Purchase and Exchange Agreement
("Agreement") with the stockholders of Phoenix
Wrecking Corporation ("Phoenix") pursuant to which
the Company, on July 10, 1996, issued an
aggregate of 6 million shares of its Common Stock
in exchange for 100% of the issued and
outstanding shares of capital stock of Phoenix.
Such Agreement was the subject of a Rescission
Agreement dated November 6, 1996.
The Company announced that consummation of the
Agreement was subject to the delivery by Phoenix
of a definitive audit for Phoenix' fiscal year
ended June 30, 1996; delivery of the certificates
of capital stock of Phoenix and the closing
documents required pursuant to the Agreement. The
aforementioned deliveries never occurred nor was
the Phoenix audit ever performed.
In the opinion of the Company and its counsel, the
Phoenix transaction was never consummated, the
acquisition was rescinded and any transactions or
agreements purportedly entered into by Phoenix on
behalf of the Company were null and void. In
addition, the shares issued to acquire Phoenix
have been retired. Further, an attempt by
Phoenix to change the name of the Company was
also unauthorized and is similarly null and void.
In August and September 1996, the officers of
Phoenix and their legal counsel filed two
Registration Statements on Form S-8 causing to be
issued an aggregate of 1,135,000 shares of the
Common Stock of the Company. At the time each
Form S-8 was filed, the Company was not current in
its filings with the SEC and, therefore, pursuant
to the general instructions to the use of this
form, such form was not available as a means of
registering securities. In addition, the
Company's board of directors did not authorize the
-44-
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
________________________________________________________________________________
transactions and provide the necessary
resolutions to permit the issuance of the stock.
The Company has brought a lawsuit against the
officers of Phoenix and certain other individuals
involved in the sale of the securities, as
discussed above. The lawsuit contends that the
defendants, among other things, violated Section
10(b) of the Securities Exchange Act of 1934,
committed common law fraud, breached their
fiduciary duty to the Company and its shareholders
and were unjustly enriched. The Company has also
brought suit against Phoenix's legal counsel for
legal malpractice and breach of contract for their
involvement in the matter discussed above.
Subsequent to June 30, 1996, the Company issued
1,050,000 shares of common stock for
approximately $600,000 in cash.
-45-
<PAGE>
EXHIBIT A
GLOBAL SPILL MANAGEMENT, INC.
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Global Spill Management, Inc., a corporation organized under the laws of
the State of Nevada, by its President and Secretary does hereby certify:
1. That the Board of Directors of said corporation at a meeting duly
convened and held on the 14th day of December, 1995, passed a resolution
declaring that the following change and amendment in the Articles of
Incorporation is advisable.
RESOLVED, that Article Fourth of said Articles of Incorporation be
amended, to read as follows:
"FOURTH: The amount of the total authorized capital stock of this
Company is 40,000,000 shares of Common Stock, of the par value of $.001 each,
and 5,000,000 shares of Series Preferred Stock, of the par value of $.001 each,
for total authorized capital of Forty-Five Thousand Dollars ($45,000).
The designation and rights of the Series Preferred Stock shall be set
forth by the Board of Directors of the corporation, including, without.
limitation, (a) the distinctive designation of each Series and the number of
shares that shall constitute such Series; (b) the dividend rate for such Series,
if any; (c) the price at which the shares of such Series may be redeemed if such
shares are redeemable; (d) the purchase or sinking fund provisions, if any, for
the purchase or redemption of shares of such Series; (e) any preferential amount
payable upon each share of such Series in the event of liquidation, dissolution
or winding up of the Corporation; (f) the voting rights, if any, of shares of
the Series; (g) the terms and conditions, if any, upon which shares of such
Series may be converted into shares of other classes or Series of shares of the
Corporation, or other securities; and the (h) relative rights of priority of
each class as to dividends and assets."
<PAGE>
2. That the number of shares of the Corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is 22,943,754; that the
said change and amendment was approved and authorized by the vote of a majority
of stockholders holding a majority of the shares of Common Stock (par value
$.001 per share) of the Corporation at the Annual Meeting of Stockholders duly
called and held on December 14, 1995 at which a quorum was present and acting
throughout.
IN WITNESS WHEREOF, the said Global Spill Management, Inc. has caused
this certificate to be signed by its President and its Secretary and its
corporation seal to be hereto affixed this 12th day of January, 1996.
GLOBAL SPILL MANAGEMENT, INC.
By: /s/ Stuart H. Berry
-------------------------------
Stuart H. Berry
President
By: /s/ Desiree L. Pierson
-------------------------------
Desiree L. Pierson
Secretary
<PAGE>
EXHIBIT B
GLOBAL SPILL MANAGEMENT, INC.
CERTIFICATE TO CHANGE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
(Pursuant to Section 78.207 of the General Corporation Law of the State of
Nevada)
It is hereby certified that:
1. The name of the corporation (the "Corporation") is:
Global Spill Management, Inc
2. The current number of authorized shares and the par value, if any, of
each class and series, if any, of the shares of the Corporation before the
change(s) herein certified are:
NUMBER PAR VALUE CLASS SERIES
------ --------- ----- ------
40,000,000 $.001 per share Common Stock --
5,000,000 $.001 per share Preferred Stock --
3. The current number of authorized shares and the par value, if any, of
each class and series, if any, of the shares of the Corporation after the
change(s) herein certified are:
NUMBER PAR VALUE CLASS SERIES
------ --------- ----- ------
1,333,333 $.001 per share Common Stock --
5,000,000 $.001 per share Preferred Stock --
4. The number of shares of each affected class and series, if any, to be
issued after the change in exchange for each issued share of the same class or
series is:
IN EXCHANGE FOR
NUMBER OF SHARES (NUMBER OF SHARES
TO BE ISSUED CURRENTLY ISSUED) CLASS SERIES
- ---------------- ----------------- ----- ------
792,295 23,768,846 Common Stock --
5. The provisions, if any, for the issuance of factional shares, or for the
payment of money or the issuance of scrip to stockholders otherwise entitled to
a fraction of a share and the percentage of outstanding shares affected thereby
are as follows: Fractional shares will be rounded up or down to the nearest
whole number.
6. The foregoing change was authorized pursuant to a resolution of the
Board of Directors of the Corporation dated May 10, 1996 and is to become
effective pursuant thereto on Wednesday. May 15. 1996.
<PAGE>
7. No approval of the aforesaid change by any of the stockholders of the
Corporation is required.
8. There is no provision in the Articles of Incorporation of the
Corporation, as amended, prohibiting the procedure hereinbefore described.
9. The change(s) herein certified will be effective at 9:00 A.M. on
Wednesday, May. 15. 1996.
Signed on: May 10, 1996
By: /s/ Thomas D. Lewis, Sr.
-----------------------------------
Thomas D. Lewis, Sr., President/CEO
By: /s/ Desiree Pierson
-----------------------------------
Desiree Pierson. Secretary
STATE OF PA
------
COUNTY OF CHESTER
---------
On May 10, 1996 personally appeared before me, a Notary Public, for the
State and County aforesaid, each of Thomas D, Lewis, Sr. as President and
Desiree Pierson, as Secretary', of Global Spill Management, Inc., each of whom
respectively acknowledged that he or she executed the above instrument.
<PAGE>
EXHIBIT C
GLOBAL SPILL MANAGEMENT, INC.
CERTIFICATE TO CHANGE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
(Pursuant to Section 78.207 of the General Corporation Law of the State of
Nevada)
It is hereby certified that:
1. The name of the corporation (the "Corporation") is:
GLOBAL SPILL MANAGEMENT INC.
2. The current number of authorized shares and the par value, if any, of
each class and series, if any, of the shares of the Corporation before the
change(s) herein certified are:
NUMBER PAR VALUE CLASS SERIES
------ --------- ----- ------
1,333,333 $.001 per share Common Stock --
5,OOO,OOO $.001 per share Preferred Stock --
3. The current number of authorized shares and the par value, if any, of
the shares of the Corporation after the change(s) herein certified are:
NUMBER PAR VALUE CLASS SERIES
------ --------- ----- ------
25,000,000 $.001 per share Common Stock --
5,000,000 $.001 per share Preferred Stock --
4. The number of shares of each affected class and series, if any, to be
issued after the change in exchange for each issued share of the same class or
series is:
NONE
5. There is no provision for the issuance of fractional shares or for the
payment of money or the issuance of scrip.
6. The foregoing change was authorized pursuant to a Resolution of the
Board of Directors dated June 28, 1996, and is to become effective pursuant
thereto on Wednesday, July 3, 1996.
<PAGE>
7. No approval of the aforesaid change by any of the stockholders of the
Corporation is required.
8. There is no provision in the Articles of Incorporation of the
Corporation, as amended, prohibiting the procedure hereinbefore described.
9. The change(s) herein certified will be effective at 9:00 A.M. on
Wednesday, July 3, 1996.
SIGNED ON: JUNE 28, 1996
By: /s/ Thomas D. Lewis, Sr.
-----------------------------------
Thomas D. Lewis, Sr., President/CEO
By: /s/ Desiree Pierson
-----------------------------------
Desiree Pierson, Secretary
STATE OF PENNSYLVANIA )
COUNTY OF PHILADELPHIA )
On June 28, 1996, personally appeared before me, a Notary Public, for the
State and County aforesaid, each of Thomas D. Lewis, Sr. as President and CEO
and Desiree Pierson as Secretary of GLOBAL SPILL MANAGEMENT, INC., each of whom
respectively acknowledged that he or she executed the above instrument.
/s/ Carol Dolan-Lander
-----------------------------------
Notary Public
<PAGE>
EXHIBIT D
STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (the "Agreement") is made and
entered into as of the 27th day of June, 1996, by and between Global Spill
Management, Inc., a Nevada corporation (the "Company"), and the individuals
whose names appear on the signature page hereof (the "Shareholder").
RECITALS
A. As of the date hereof, there are an aggregate of 1,333,333 shares of the
Company's Common Stock, $.001 par value (the "Company's Common Stock")
authorized, of which 1,366,466 shares are issued and outstanding. The Board of
Directors will no later than June 28, 1996 duly authorize the amendment of the
Company's Certificate of Incorporation so as to increase the authorized Common
Shares to 25,000,000 and upon the filing of such amendment which will occur no
later than July 3, 1996, 6,000,000 shares are to be issued as herein below more
fully described in Section 1.2 of this Agreement.
B. Phoenix Wrecking Corp., a New York corporation ("Phoenix"), whose issued
and outstanding common stock, (the "Phoenix Stock") is owned, beneficially and
of record, by the individuals whose names appear on the signature page hereof
under the designation "Shareholders," who together own all of the issued and
outstanding shares of the Phoenix Stock, each owning the number of shares set
forth opposite their respective names.
C. The parties hereto intend that the issuance of the shares of the
Company's Common Stock in exchange for the Phoenix Stock shall qualify as a
"tax-free" reorganization as contemplated by the provisions of Section
368(a)(1)(B) of the Internal Revenue Code of 1954, as amended.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
1. ISSUANCE, SALE AND PURCHASE OF SHARES.
1.1 Purchase and Sale.
At the Closing to be held in accordance with the provisions of Section 2
below, the Company agrees to sell, and each of the Shareholders agree, severally
and not jointly, to purchase from the Company the aggregate number of authorized
and newly issued shares of the Company's Common Stock determined as provided in
Section 1.2 below. In consideration for the issuance and sale of the Company's
Common Stock to the Shareholders, and as payment in full of the purchase price
for the Company's Common Stock to be issued to, and purchased at the Closing,
each shall deliver to the Company certificates of common stock or shares
evidencing the ownership of Phoenix, together with duly executed stock powers to
effectuate the transfer of same.
1
<PAGE>
1.2 Shares Issuable.
An aggregate of 6,000,000 shares of the Company's Common Stock shall be
purchased by and issued and sold to the Shareholders.
2. CLOSING.
The consummation of the sale to and purchase by the Shareholders (the
"Closing") shall occur at the offices of Sommer & Schneider LLP at 4:00 P.M.,
EST time, on the 27th of June, 1996, or at such other place and/or on such other
time and date as the parties may agree upon (the "Closing Date"). If the Closing
fails to occur by June 27, 1999, or by such later date to which the Closing may
be extended as provided hereinabove, this Agreement shall automatically
terminate, all parties shall pay their own expenses incurred in connection
herewith, and no party hereto shall have any further obligations hereunder;
provided, however, that no such termination shall constitute a waiver by any
party or parties which is/are not in default of any of its or their respective
representations, warranties or covenants if any other party or parties is in
default of any of its or their respective representations, warranties or
covenants under this Agreement. At the Closing, as conditions thereto:
2.1 Deliveries by Company.
The Company shall deliver, or cause to be delivered to the Shareholders:
(a) As soon after the closing, as is feasibly possible and no later than
July 3, 1996, certificates for the shares of the Company's Common Stock
being purchased for their respective accounts, in form and substance
reasonably satisfactory to the Shareholders and their counsel;
(b) The certificates, resolutions, opinions and resignations specified in
Section 6.3 below;
(c) All of the books and records of the Company.
2.2 Shareholders' Deliveries.
The Shareholders shall deliver to the Company:
(a) A stock certificate or certificates evidencing the ownership of each
Purchaser, of all shares of Phoenix Stock owned by them, respectively,
duly endorsed for transfer to the Company; and
(b) The certificates of each Purchaser, specified in Section 6.4.
2
<PAGE>
2.3 Escrow.
Pending the completion of the actions precedent and subsequently referred
to in subparagraphs 3.3 through 3.6 inclusive and the conditions set forth in
paragraph 6 hereof, all items referred to in subparagraph 2.1 and 2.2 hereof
shall be held in escrow by Sommer & Schneider LLP as hereinafter provided in
paragraph 7.3 hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser, as follows:
3.1 Organization and Corporate Power.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and is duly qualified and in
good standing to do business as a foreign corporation in each jurisdiction in
which such qualification is required and where the failure to be so qualified
would have a materially adverse effect upon the Company. The Company has all
requisite corporate power and authority to conduct its business as now being
conducted and to own and lease the properties which it now owns and leases. The
Company's Certificate of Incorporation as amended to date, certified by the
Secretary of State of Nevada, and the By-laws of the Company as amended to date,
certified by the President and the Secretary of the Company, which have been
delivered to the Shareholders prior to the execution hereof, are true and
complete copies thereof as in effect as of the date hereof.
3.2 Authorization.
The Company has full power, legal capacity and authority to enter into this
Agreement, to execute all attendant documents and instruments necessary to
consummate the transaction herein contemplated, and to issue and sell the Common
Stock to each Purchaser, and to perform all of its obligations hereunder. This
Agreement and all other agreements, documents and instruments to be executed in
connection herewith have been effectively authorized by all necessary action,
corporate or otherwise, on the part of the Company, which authorizations remain
in full force and effect, have been duly executed and delivered by the Company,
and no other corporate proceedings on the part of the Company are required to
authorize this Agreement and the transactions contemplated hereby, except as
specifically set forth herein. This Agreement constitutes the legal, valid and
binding obligation of the Company and is enforceable with respect to the Company
in accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, priority or other laws of court
decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies. Neither
the execution and delivery of this Agreement, nor the consummation by the
Company of any of the transactions contemplated hereby, or compliance with any
of the provisions hereof, will (i) conflict with or result in a breach or,
violation of, or default under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, lease, credit agreement or other
agreement, document, instrument or obligation (including, without limitation,
any of its charter documents) to which the Company is a party or by which the
Company or any of its assets or properties may be bound, or (ii) violate any
3
<PAGE>
judgment, order, injunction, decree, statute, rule or properties of the Company.
No authorization, consent or approval of any public body of authority is
necessary for the consummation by the Company of the transactions contemplated
by this Agreement.
3.3 Capitalization.
The authorized capital stock of the Company consists of 1,500,000 shares of
Common Stock (the "Company's Common Stock") and 5,000,000 shares of Preferred
Stock. As of the date of Closing there will be 1,276,466 shares of Common Stock
issued and outstanding. No shares of Preferred Stock are now or will, at the
time of closing, be issued and outstanding. As of the date of Closing, the Board
of Directors and a majority of shareholders will have duly authorized an
amendment of the Company's Certificate of Incorporation so as to increase the
number of authorized Common Shares from 1,500,000 to 25,000,000. Said amendment
to the Certificate of Incorporation will be duly and properly filed as soon
after the Closing as is feasibly possible. All of the outstanding shares of the
Company's Common Stock have been, and all of the Company's Common Stock to be
issued and sold to each Purchaser pursuant to this Agreement, when issued and
delivered as provided herein will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive or similar rights. There currently are
no rights, agreements or commitments of any character obligating the Company,
contingently or otherwise, to register any shares of its capital stock under any
applicable federal or state securities laws.
3.4 Financial Condition.
The Company has, in combination with its primary lender, reached agreements
to sell all of its several subsidiaries, except Environmental Disposal Option
Corporation ("EDOC"). All of such sales will be consummated as soon after
Closing as is feasibly possible but no later than June 28, 1996. As a result of
such sales, the unsatisfied liabilities of the Company will not exceed $150,000,
and the Company will have no other liabilities of kind nature of description,
direct, secondary or contingent.
3.5 Subsidiaries.
The subsidiaries of the Company are being set forth on Schedule 3.5 annexed
hereto and made a part hereof. As set forth in paragraph 3.4 above, the sale of
each of said subsidiaries will be consummated as soon after Closing as is
feasibly possible, but no later than June 28, 1996. EDOC will, with the
exception of Phoenix, remain as the only subsidiary of the Company.
3.6. Absence of Liabilities.
Except as reflected on Schedule 3.6, the Company will, after the sale of
the subsidiaries as set forth in 3.4 and 3.5 hereof, have no liabilities or
obligations whether accrued, due or to become due, contingent or otherwise.
4
<PAGE>
3.7 No Pending Material Litigation or Proceedings.
There are no actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened against or affecting the Company (including
actions, suits or proceedings where liabilities may be adequately covered by
insurance) at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, court, board, bureau, agency or
instrumentality, domestic or foreign, or affecting any of the officers or
directors of the Company in connection with the business, operations or affairs
of the Company, which might result in any adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of the
Company, or which might prevent the sale of the transactions contemplated by
this Agreement. The Company is not subject to any voluntary or involuntary
proceeding under the United States Bankruptcy Code and has not made an
assignment for the benefit of creditors.
3.8 Brokerage.
The Company has no obligation to any person or entity for brokerage
commissions, finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement.
3.9 Investment Representation.
The Company, through its current officers and directors, has the knowledge
and experience in business and financial matters to meaningfully evaluate the
merits and risks of the issuance of the Company's Common Stock in exchange and
consideration for the Phoenix Stock as contemplated hereby. The Company
understands and acknowledges that the shares of Stock were originally issued to
the Shareholders, and will be sold and transferred to the Company, without
registration or qualification under the Securities Act of 1933, as amended, or
any applicable state securities or "Blue Sky" law, in reliance upon specific
exemptions therefrom, and in furtherance thereof the Company represents that the
Phoenix Stock will be taken and received by the Company for its own account for
investment, with no present intention of a distribution or disposition thereof
to others. The Company further acknowledges and agrees that the certificates
representing the Phoenix Common Stock of the Company shall bear a restrictive
legend, in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE "ACT"), ARE
RESTRICTED SECURITIES, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A
TRANSACTION WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
IS NOT REQUIRED TO BE REGISTERED UNDER THE ACT."
5
<PAGE>
3.10 Disclosure.
Neither this Agreement, nor any certificate, exhibit, or other written
document or statement, furnished to the Shareholders by the Company in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to be stated in order to make the statements contained
herein or therein not misleading.
3.11 Tax Returns and Payments.
All tax returns and reports, including, without limitation, all foreign
returns and reports, of the Company required by law to be filed have been duly
filed, and all taxes, assessments, fees and other governmental charges
heretofore levied upon any properties, assets, income or franchises of the
Company which are due and payable have been paid, except as otherwise reflected
in the Financial Statements. No extension of time for the assessment of
deficiencies in any federal or state tax has been requested of or granted by the
Company.
3.12 Contracts.
The Company is not a party to or bound by any contract or commitment,
whether written or oral, except as relates to the sale of its subsidiaries.
3.13 Compliance with Law and Government Regulations.
The Company is in compliance with all applicable statutes, regulations,
decrees, orders, restrictions, guidelines and standards, whether mandatory or
voluntary, imposed by the United States of America, any state, county,
municipality or agency of any thereof, and any foreign country or government to
which the Company is subject. Without limiting the generality of the foregoing,
the Company has filed all reports and statements required to be filed pursuant
to the Securities Act of 1933 (the "1933 Act") and Securities Exchange Act of
1934 (the "1934 Act") including all periodic reports required under the Section
13 or 15 of the Exchange Act and Form SR reports under Rule 463 of the
Securities Act of 1933. Each of such reports was complete, did not contain any
material misstatement of or omit to state any material fact.
(a) In conducting the business, operations and properties of its
subsidiaries, the Company has, in all material respects, duly complied
and is presently in all material respects duly complying with all
applicable laws (whether statutory or otherwise), rules, regulations,
orders, building and other codes, zoning and other ordinances, permits,
licenses, authorizations, judgments and decrees of all federal, state,
local or, to Seller's knowledge, foreign governmental authorities,
including, but not limited to, the Federal Occupational Safety and
Health Act, ERISA, National Labor Relations Act, Civil Rights Act,
Immigration Reform and Control Act of 1986, Age Discrimination in
Employment Act, the Water Pollution Control Act and all applicable
domestic and foreign laws, rules and regulations relating to the safe
conduct of business, employment discrimination, wages and hours,
employment of illegal aliens, collective bargaining, the payment of
withholding
6
<PAGE>
and social security taxes, product labeling, antitrust, consumer
protection, occupational safety and health, consumer product safety,
the importation of goods, product liability, currency exchange,
securities and trading-with-the-enemy matters.
(b) To the best of Company's knowledge (i) Company in respect of all of its
subsidiaries has obtained and adhered to all necessary permits and
other approvals, including interim status under the Federal Solid Waste
Disposal Act, necessary to store, dispose of and otherwise handle
hazardous wastes, if any, and have reported, to the extent required by
all federal, state, local and, to Company's knowledge, foreign
statutes, laws, ordinances, regulations, rules, permits, judgments,
orders and decrees, all past and present sites, if any, owned and/or
operated by Company's subsidiaries where hazardous wastes have been
treated, stored or disposed of; (ii) there has been no spill,
discharge, leak, emission, injection, escape, dumping or any other
release of any kind onto any property of or used by the Company and/or
its subsidiaries or into the environment surrounding any such property
of any toxic or hazardous waste or substance, as such terms are defined
under any applicable law, ordinance, regulation or rule; and (iii)
there is no on-site or off-site location to which the Company and/or
its subsidiaries has transported hazardous wastes or arranged for the
transportation of hazardous wastes, which site is the subject of any
federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against the Company for any
clean-up cost, remedial work, damage to natural resources or personal
injury, including, but not limited to, claims under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980.
(c) The Company (i) has no knowledge and (ii) has not received any written
notification from any third party (including but not limited to
employees and government agencies) of any present or past failure so to
comply or has knowledge of any present condition, activity, incident,
action or plan which may interfere with or prevent continued compliance
with any laws, rules or regulations or which may give rise to any
common law or statutory liability, or otherwise form the basis of any
material claim, action, suit, proceeding, hearing or investigation
which would have a material adverse effect on the Company.
3.14 Investment Company Act.
The Company is familiar with the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder (the "1940 Act"), is not presently
an "investment company" within the meaning of the 1940 Act, and has conducted
its affairs so as not to be considered an "investment company" as defined in the
1940 Act.
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4. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS.
The principal Shareholders described on Schedule 4.0 hereby represent and
warrant to the Company as follows (it being acknowledged that the Company is
entering into this Agreement in material reliance upon each of the following
representations and warranties, and that the truth and accuracy of each
constitutes a condition precedent to the obligations of the Company hereunder):
4.1. Authorization.
The Shareholders have full power, legal capacity and authority to enter
into this Agreement, to execute all attendant documents and instruments
necessary to consummate the transactions herein contemplated, and to perform all
of the obligations to be performed by them hereunder. This Agreement and all
other agreements, documents and instruments to be executed by the Shareholders
in connection herewith have been duly executed and delivered and constitute the
legal, valid and binding obligation of the Shareholders executing and delivering
the same, and its enforceable with respect to them in accordance with its terms,
except as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, priority or other laws or court decisions relating to or
affecting generally the enforcements of creditors' rights or affecting the
availability of equitable remedies. No authorization, consent or approval of any
public body or authority is necessary for the consummation by the Shareholders
of the transactions contemplated hereby.
4.2 Ownership of Phoenix Stock.
The Shareholders own the shares of Phoenix Stock to be transferred to the
Company free and clear of (i) any lien, charge, mortgage, pledge, conditional
sale agreement, or other encumbrance of any kind or nature whatsoever, and (ii)
any claim as to ownership thereof or any rights, powers or interest therein by
any third party, whether legal or beneficial, and whether based on contract,
proxy or other document or otherwise. All of the shares of Phoenix Stock have
been duly authorized and validly issued and are fully paid and non-assessable.
4.3 Organization and Corporate Power.
Phoenix is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and is duly qualified and in
good standing to do business as a foreign corporation in each jurisdiction in
which such qualification is required and where the failure to be so qualified
would have a materially adverse effect upon business. Phoenix has all requisite
corporate power and authority to conduct business as now being conducted and to
own and lease the properties which it now owns and leases. The Certificate of
Incorporation of Phoenix, as amended to date, and the By-laws of Phoenix as
amended to date, certified by Phoenix's President and Secretary, which have been
delivered to the Company prior to the execution hereof, are true and complete
copies thereof as in effect at the date hereof.
8
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4.4 Financial Statements.
Attached hereto as Schedule 4.4 are true and complete copies of Phoenix's
financial statements. Such financial statements (and the notes related thereto)
are herein sometimes collectively referred to as the "Phoenix Financial
Statements." The Phoenix Financial Statements (i) are derived from the books and
records of Phoenix, which books and records have been consistently maintained in
a manner which reflects, and such books and records do fairly and accurately
reflect, the assets and liabilities of Phoenix, (ii) fairly and accurately
present the financial condition of Phoenix as of the respective dates of such
statements and the result of operations for the periods indicated therein, (iii)
have been prepared in all material respects in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise disclosed in the notes thereto).
4.5 No Pending Material Litigation or Proceedings.
Except as disclosed in Schedule 4.5 or the Phoenix Financial Statements,
there are no actions, suits or proceedings pending or, to the best knowledge of
the Shareholders, threatened against or affecting the Shareholders or Phoenix
(including actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before any federal, state,
municipal or other governmental department, commission, court, board, bureau,
agency or instrumentality, domestic or foreign, or affecting any of the officers
or directors of Phoenix in connection with the business, operations or affairs
or Phoenix which might result in any material adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of Phoenix,
or the transfer to the Company of the Phoenix Stock by the Shareholders or any
of the obligations to be performed by the Shareholders under this Agreement.
Neither Phoenix nor the Shareholders are subject to any voluntary or involuntary
proceeding under the United States Bankruptcy Code, nor have they made an
assignment for the benefit of creditors.
4.6 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in the Phoenix
Financial Statements, and as to matters arising in the ordinary course of its
business since such date, Phoenix has no liability(s) or obligation(s) (whether
accrued, to come due, contingent or otherwise) which individually or in the
aggregate could have a materially adverse effect on the business, assets,
properties, condition (financial or otherwise) or prospects of Phoenix Wrecking
Corp.
4.7 Absence of Certain Developments.
Since June 30, 1995, there has been no materially adverse change in the
condition (financial or otherwise) of Phoenix or in its assets, liabilities,
properties, business, operations and prospects.
9
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4.8 Investment Representation.
Each Purchaser has the knowledge and experience in business and financial
matters to meaningfully evaluate the merits and risks of the purchase and
acquisition of the Company's Common Stock in exchange and consideration for the
shares of Phoenix Stock owned by each as contemplated hereby. Each Purchaser
acknowledges that the shares of the Company's Common Stock to be issued in the
transactions contemplated hereby will be issued by the Company without
registration or qualification or other filings being made under the Federal
Securities Act of 1933, as amended, or the securities or "Blue Sky" laws of any
state, in reliance upon specific exemptions therefrom, and in furtherance
thereof they represent that the shares of the Company's Common Stock to be
received by them will be taken for their own account for investment, with, no
present intention of a distribution or disposition thereof to others. The
Shareholders agree that the certificate(s) representing the shares of the
Company's Common Stock issued to them shall be subject to a stop-transfer order
and shall bear a restrictive legend, in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ARE
RESTRICTED SECURITIES, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A
TRANSACTION WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
IS NOT REQUIRED TO BE REGISTERED UNDER THE ACT."
4.9 Brokerage.
Neither the Shareholders nor Phoenix have entered into an agreement with
any individual or entity with respect to the payment of a finder's fee in
connection with the transactions contemplated by this Agreement.
4.10 Disclosure.
Neither this Agreement, nor any certificate, exhibit, or other written
document or statement, furnished to the Company by the Shareholders in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to be stated in order to make the statements contained
herein or therein not misleading.
5. COVENANTS OF THE PARTIES PRIOR TO THE CLOSING.
5.1 Access to Properties and Records.
The Company the Shareholders shall each give to the other and authorized
representatives thereof full access, during reasonable business hours, in such a
manner as not unduly to disrupt normal business activities, to any and all of
the premises, properties, contracts, books, records
10
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and affairs of the Company or Phoenix, as the case may be, and will cause the
officers of the Company or Phoenix, as the case may be, to furnish any and all
data and information pertaining to its business that the other may from time to
time reasonably require. Unless and until the transactions contemplated by this
Agreement have been consummated, each party and its representatives shall hold
in confidence all information so obtained and if the transactions contemplated
hereby are not consummated will return all documents herein above referred to
and obtained therefrom. Such obligation of confidentiality shall not extend to
any information which is shown to have been previously (i) known to the party
receiving it (ii) generally known to others engaged in the trade or business of
the Company or Phoenix, as the case may be (iii) part of public knowledge or
literature, or (iv) lawfully received from a third party.
5.2 Corporate Existence, Rights and Franchises.
The current officers and directors of the Company and the Shareholders
shall each take all necessary actions to cause the Company and Phoenix,
respectively, to maintain in full force and effect its corporate existence,
rights, franchises and good standing, and shall not cause or permit to be made
any change in the Articles or By-Laws of the Company or Phoenix, as the case may
be.
5.3 No Obligations or Liabilities.
The Company and Phoenix shall not incur any liability or obligation of any
amount, kind or nature whatsoever, which has not been either disclosed in full
or satisfied or discharged in full as of the date of the Closing.
5.4 Conduct of Business in the Ordinary Course.
The Shareholders shall take all necessary actions to cause Phoenix, to
operate their business diligently in the ordinary course of business as an
ongoing concern, and will use their best efforts to preserve intact Phoenix's
operations at current levels and to maintain the books, accounts and records of
Phoenix in the usual, regular and ordinary manner, on a basis consistent with
past practice in recent periods.
5.5 Conduct of Company Prior to the Closing.
Between the date hereof and the Closing:
(a) The Company will keep the Shareholders informed as to its affairs and
will consult with the Company on all matters pertaining to its business
and affairs;
(b) The Company will not enter into any agreement, contract or commitment,
whether written or oral, or engage in any transaction without the
consent of the Shareholders;
11
<PAGE>
(c) The Company will not declare any dividends or distributions in respect
of its capital stock, or amend its Certificate of Incorporation or
By-Laws, without the prior consent of the Shareholders;
(d) The Company will not incur any indebtedness for money borrowed or issue
or sell any debt securities, or incur or suffer to be incurred any
liability or any nature whatsoever, without the consent of the
Shareholders; and
(e) The Company will not authorize, issue, sell purchase or redeem any
shares of its capital stock without the prior consent of the
Shareholders.
6. CONDITIONS TO THE OBLIGATION OF THE PARTIES.
The respective obligations of the parties hereto to consummate the
transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Closing, of the following conditions:
6.1 Regulatory Approvals.
There shall have been obtained any and all permits, approvals and
qualifications of, and there shall have been made or completed all filings,
proceedings and waiting periods, required by any governmental body, agency or
regulatory authority which are required for the consummation of the transactions
contemplated hereby.
6.2 No Action or Proceeding.
No claim, action, suit, investigation or other proceeding shall be pending
or threatened before any court or governmental agency which presents a
substantial risk of the restraint or prohibition of the transactions
contemplated by this Agreement or the obtaining of material damages or other
relief in connection therewith.
6.3 Obligations of the Shareholders.
The obligations of the Shareholders hereunder to consummate the
transactions contemplated by this Agreement are expressly subject to the
satisfaction of each of the further conditions set forth below, any or all of
which may be waived by the Shareholders, in whole or in part, without prior
notice; provided, that no such waiver of a condition shall constitute a waiver
by Shareholders of any of their rights or remedies, at law or in equity, if the
Company shall be in default or breach of any of its representations, warranties
or covenants under this Agreement:
(a) The Company shall have performed the agreements and covenants to be
performed by it under this Agreement prior to the Closing, there shall
have been no material adverse change in the condition (financial or
otherwise), assets, liabilities, earnings or business of the Company
since March 31, 1996, and the representations and warranties of the
Company contained herein shall, except as contemplated or permitted by
this Agreement or as qualified in writing a writing
12
<PAGE>
dating as of the date of the Closing delivered to the Shareholders with
their approval indicated thereon, be true in all material respects on
and as of such, and the Shareholders shall have received certificates,
dated as of date of the Closing, signed by the chief executive officer
of the Company, reasonably satisfactory to the Shareholders to such
effect;
(b) The Shareholders shall have received resolutions (certified as of the
date of the Closing as being in full force and effect by an appropriate
officer of the Company) duly adopted by the Board of Directors of the
Company approving this Agreement and the other documents, agreements
and instruments to be entered into by the Company as provided herein,
which shall be in form and substance reasonably satisfactory to the
Shareholders and their counsel;
(c) The Shareholders shall have received from the Secretary of Company, a
Secretary Certificate dated as the date of the Closing, satisfactory to
the Shareholders and their counsel, to the effect that:
(1) The Company is duly incorporated and validly existing as a
corporation under the laws of the State of Nevada and has all
requisite corporate power to own, lease and operate its properties
and to carry on its business as now being conducted;
(2) All outstanding shares of the Company's Common Stock have been
duly authorized and validly issued, are fully paid and
non-assessable and free of preemptive or similar rights, and
conform to the description thereof in the Registration on
Statement (or any amendment or supplement thereto);
(3) All outstanding warrants of the Company have been duly authorized
and validly issued, are binding obligations of the Company in
accordance with their respective terms, and conform to the
description thereof in the Registration Statement (or any
amendment or supplement thereto) and the Company has reserved and
set aside a sufficient number of shares of its Common Stock to be
issued upon the exercise of such warrants and such shares, when
issued and paid for in accordance with the terms of the warrants
will be validly issued, fully paid and non-assessable and free of
preemptive or similar rights;
(4) This Agreement has been duly authorized, executed and. delivered
by the Company and is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
term, subject, as to enforcement of remedies, to applicable,
bankruptcy, insolvency, moratorium, and other laws affecting the
rights of creditors generally and to equitable principles;
(5) The execution, delivery and performance of this Agreement,
compliance with all provisions thereof, and consummation of the
transactions
13
<PAGE>
contemplated thereby by the Company will not conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the Certificate of Incorporation or ByLaws of the
Company or, to counsel's knowledge, any material agreement,
indenture or other instrument to which the Company is a party or
is bound or violate any law or regulation or, to counsel's
knowledge, any administrative ruling or court decree applicable to
the Company or its properties;
(6) No consent, approval, authorization or order of any court,
regulatory body, administrative agency or other governmental body
is required for the consummation of the issuance and sale of the
Company's Common Stock as contemplated by this Agreement;
(7) There are no material legal or governmental proceedings required
to be described in the Registration Statement (or any amendment or
supplement thereto) or any documents to be described in the
Registration Statement (or any amendment or supplement thereto) or
to be filed as an exhibit to the Registration Statement that are
not described or filed as required, and to counsel's knowledge,
the descriptions of the terms of any document contained in the
Registration Statement (or any amendment or supplement thereto)
are correct in all material respects;
(8) The Registration became effective under the 1933 Act and, to the
knowledge of counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings
for that purpose are pending before or are contemplated by the
Commission;
(9) The Registration Statement and any supplements or amendments
thereto (except for financial statements, scheduled and other
financial and statistical data included therein, as to which
counsel need express no opinion) comply as to form in all material
respects with the 1933 Act and the rules and regulations of the
Commission thereunder;
(10) The Registration Statement does not contain any untrue statement
of any material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
The Company is not an "investment company" within the meaning of the
1940 Act.
In rendering the foregoing opinion, counsel may rely, as to matters of
fact, upon certificates of officers of the Company and on certificates
of public official, and may base its opinion on such reasonable
investigations and assumptions as shall be set forth in such opinion.
Counsel may also rely on the opinions of other counsel with respect to
regulatory matters and matters concerning laws of
14
<PAGE>
jurisdictions other than those to which counsel is admitted.
Certificates and opinions so relied upon shall be satisfactory to the
Shareholders and their counsel.
(d) The aggregate liabilities of the Company due or to become due, accrued,
contingent, conditional or otherwise shall not exceed $150,000 after
the sale of all of the subsidiaries of the Company except EDOC, which
sales will be fully consummated no later than June 28, 1996.
(e) The Shareholders shall have received the written resignation of all of
the present officers and Directors of the Company and the nominees of
the Shareholders shall have been appointed by the resigning directors
to fill the vacancies created by their resignation.
6.4 Obligations of the Company.
The obligation of the Company hereunder to consummate the transactions
contemplated by this Agreement are expressly subject to the satisfaction of each
of the further conditions set forth below, any or all of which may be waived by
the Company, in whole or in part, without prior notice; provided, that no such
waiver of a condition shall constitute a waiver by Company of any of its rights
or remedies, at law or in equity, if the Shareholders shall be in default or
breach of any of their representations, warranties or covenants under this
Agreement:
(a) The Shareholders shall have performed the agreements and covenants to
be performed by them under this Agreement prior to the Closing, there
shall have been no material adverse change in the condition (financial
or otherwise), assets, liabilities, earnings or business of Phoenix
since June 30, 1996, and the representations and warranties of the
Shareholders contained herein shall, except as contemplated or
permitted by this Agreement or as qualified in writing a writing dating
as of the date of the Closing delivered to the Company with its
approval indicated thereon, be true in all material respects on and as
of such, and the Company shall have received certificates, dated as of
date of the Closing, signed by the chief executive officer of Phoenix
reasonably satisfactory to the Company to such effect;
(b) The Company shall have received resolutions (certified as of the date
of the Closing as being in full force and effect by an appropriate
officer of any corporate Purchaser) duly adopted by the Board of
Directors of the such Purchaser approving this Agreement and the other
documents, agreements and instruments to be entered into by the
Shareholders as provided herein, which shall be in form and substance
reasonably satisfactory to the Company and its counsel;
15
<PAGE>
7. ADDITIONAL AGREEMENTS OF THE PARTIES.
7.1 Taxes and Expenses.
The Company and the Shareholders shall each pay all of their own respective
taxes, attorneys' fees and other costs and expenses payable in connection with
or as a result of the transactions contemplated hereby and the performance and
compliance with all agreements and conditions contained in this Agreement
respectively to be performed or observed by each of them.
7.2 Expiration of Representations and Warranties.
The respective representations and warranties contained herein and in any
other document or instrument delivered by or on behalf of the Company, and the
Shareholders, shall survive the Closing. Nothing contained in this Section 8.2
shall in any way affect any obligations or any party under this Agreement that
are to be performed, in whole or in part, at any time after the Closing, nor
shall it prevent or preclude any party from pursuing any and all available
remedies at law or in equity for actual fraud in the event that, prior to the
Closing, any other party had actual knowledge of any material breach of any of
its representations and warranties herein but failed to disclose to or actively
concealed such knowledge prior to the Closing from the other party(s) to whom
the representations and warranties were made.
7.3 Escrow Agent.
Sommer & Schneider LLP shall act as Escrow Agent to hold all documents
referred to in subparagraphs 2.1 and 2.2 hereof until the conditions set forth
in subparagraphs 3.3 through 3.6 and paragraph 6 hereof have been completed and
or satisfied. The Escrow Agent shall have no liability or obligation hereunder,
except to deliver the document in accordance with the terms of this
Agreement.
8. MISCELLANEOUS.
8.1 Other Documents.
Each of the parties hereto shall execute and deliver such other and further
documents and instruments, and take such other and further actions, as may be
reasonably requested of them of the implementation and consummation of this
Agreement and the transactions herein contemplated.
8.2 Parties in Interest.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and the heirs, personal representatives, successors and assigns
of all of them, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
16
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8.3 Governing Law.
This Agreement is made and shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of New York.
8.4 Notices.
All notices, requests or demands and other communications hereunder must be
in writing and shall be deemed to have been duly made if personally delivered or
mailed, postage prepaid, to the parties as follows:
(a) If to the Company to:
With Copies to:
Herbert H. Sommer, Esq.
Sommer & Schneider LLP
600 Old Country Road, Suite 535
Garden City, NY 11530
(b) If to Purchaser:
With Copies to:
Any party hereto may change its address by written notice to the other
party given in accordance with this Section 8.4.
8.5 Entire Agreement.
This Agreement and the exhibits and schedules attached hereto contain the
entire agreement between the parties and supersede all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, which are not embodied herein or in an exhibit hereto,
and that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally.
17
<PAGE>
This Agreement may be amended or any term hereof may be changed, waived,
discharged, or terminated by an agreement in writing signed by all parties
hereto.
8.6 No Equitable Conversion.
Prior to the Closing, neither the execution of this Agreement nor the
performance of any provision contained herein shall cause any party hereto to be
or become liable in any respect for the operations of the business of any other
party, or the condition or property owned by any other party, for compliance
with any applicable laws, requirements, or regulations of, or taxes,
assessments, or other charges now or hereafter due to any governmental
authority, or for any other charges or expenses whatsoever pertaining to the
conduct of the business or the ownership, title, possession, use, or occupancy
of any other party.
8.7 Headings.
The captions and headings used herein are for convenience only and shall
not be construed as a part of this Agreement.
8.8 Attorneys' Fees.
In the event of any litigation between the parties hereto, the
non-prevailing party shall pay the reasonable expenses, including the attorneys'
fees, of the prevailing party in connection therewith.
8.9 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one and
the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
Global Spill Management, Inc.
Desiree L. Pierson By: __________________________________
- ------------------------------ Thomas D. Lewis Sr., President
Secretary
"Shareholders" Number of Phoenix
Shares Owned
------------
18
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EXHIBIT E
Rescission of the
Stock Purchase and Exchange Agreement
of June 27, 1996 and the
Amendment of October 6. 1996
That certain Stock Purchase and Exchange Agreement dated June 27, 1996, by
and between Global Spill Management, Inc., a Nevada corporation ("Global"), and
the Shareholders of Phoenix Wrecking Corporation, a New York corporation
("Phoenix"), modified by the Amendment of the Stock Purchase and Exchange
Agreement dated October 6, 1996, is hereby rescinded by the parties, and the
parties hereby agree as follows:
1. Global, Phoenix and the Former Shareholders of Phoenix have determined,
upon the available information, that the proper and appropriate course of
action, based upon consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, is to rescind
the transaction, nunc pro tunc, entirely and completely.
2. All of the Common Stock which was issued by Global to the Shareholders
of Phoenix, most of which has already been returned to the Transfer Agent for
cancellation, is hereby fully canceled, made ineffective and valid for no
purpose whatsoever.
3. All of the funds which came to Phoenix by virtue of Debentures sold to
various entities through Suisse Capital Complex, Inc. ("Suisse Capital"), are
not to be the obligations of Global, and Phoenix is to deal with Suisse Capital
for the orderly repayment of the funds advanced through Suisse Capital. However,
Phoenix does not hereby take on any obligations which were not heretofore
existing to Suisse Capital or persons making claims through the services of or
funds advanced by Suisse Capital. However, Phoenix does not, by virtue of its
undertaking herein to repay to Suisse Capital such funds as were actually
received by Phoenix from Suisse Capital, assume any express or implied
obligation to repay to Suisse Capital any amount(s) other than the exact
amount(s) actually transmitted to and received by Phoenix from Suisse Capital.
Phoenix specifically disclaims any responsibility for or obligation to any third
party claiming compensation for the funds actually transmitted to Phoenix by
Suisse Capital.
<PAGE>
Global agrees that, with respect to Suisse Capital. Global will refer to Phoenix
for disposition any and all matters relating to Suisse Capital. Global agrees
not to incur legal expenses and other expenses, which might be construed to be
the obligation of Phoenix, in dealing with Suisse Capital, but rather to refer
all those questions and issues to Phoenix for proper handling.
4. In consideration of the execution of this agreement, and other good and
valuable consideration, and excepting the matters which are set forth above,
Phoenix and Global do mutually hereby remise, release, acquit, satisfy, and
forever discharge the other party, and their respective officers, directors and
employees, and the consultants, Philip Schwab and Allan Esrine, from all, and
all manner of action and actions, cause and causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever, in law or in equity, which
said party ever had, now has, or which any personal representative, successor,
heir or assign of said party, hereafter can, shall or may have, against the
other party, for, upon or by reason of any matter, cause or thing whatsoever
arising from the acquisition of Phoenix by Global. However, the Law Firm of
Sommer & Schneider, LLP, its employees and principals, and other consultants and
advisers not named herein are specifically not released by either party.
Dated this 6th day of November, 1996.
Global Spill Management, Inc. Former Shareholders of
Phoenix Wrecking Corporation
By: /s/ Karl Schwab By: /s/ Karl Schwab
------------------------- -------------------------------
Karl Schwab, President Karl Schwab
Their authorized representative
Phoenix Wrecking Corporation
By: /s/ Karl Schwab
-------------------------------
Karl Schwab, President
<PAGE>
EXHIBIT F
ADELMAN LAVINE GOLD AND LEVIN
A PROFESSIONAL CORPORATION
ATTORNEYS AND COUNSELORS AT LAW
LEWIS H. GOLD SUITE 1900
ROBERT H. LEVIN TWO PENN CENTER PLAZA
GARY M. SCHILDHORN PHILADELPHIA, PA 19102-1799
BARRY D. KLEBAN (215) 568-7515
GARY D. BRESSLER
STEVEN D. USDIN TELECOPIER (215) 557-7922
KEVIN W. WALSH
RAYMOND H. LEMISCH DIRECT DIAL:
ROBERT M. BOVARNICK July 10, 1996
DOUGLAS N. CANDEUB
ALAN I. MOLDOFF
KATHLEEN E. TORBIT
DAVID L. ZIVE
LEON R. BARSON
MATTHEW J. SWETT
DOUGLAS M. LEAVITT
LAURIE ANN KREPTO
BY FEDERAL EXPRESS
==================
Mr. Allan Esrine
ITI (Glendale)
115 E. 57th Street, 10th Floor
New York, NY 10022-2049
Re: Global Spill Management, Inc.
-----------------------------
Dear Alan:
I am enclosing with this letter copies of the documents relevant to the
sales which occurred on June 28, 1996 and the sale which occurred yesterday
(effective as of June 30, 1996) relating to the assets of Global Spill
Management, Inc. ("GSMI") or its various subsidiaries. As you will recall, on
June 28, 1996, several transactions closed. GSMI sold all of the issued and
outstanding stock it owned of Land 'N Sea Environmental Services, Inc. ("Land 'N
Sea) to Michael Thibodeau for the sum of $75,000.00. This sum was paid to
Meridian Bank, the holder of the first lien in and to the assets of Land 'N Sea.
Enclosed, among other documents relating to this transaction, are copies of that
Stock Purchase Agreement as well as the Agreement and General Release by and
among Thibodeau, GSMI, Land 'N Sea and others, the GSMI Board of Directors
Resolution authorizing such sale transaction and the certificate of the
corporate secretary regarding the Board Resolution.
A second transaction which occurred on June 28, 1996 was the sale of all
the assets of Allied Environmental Services, Inc. ("Allied") and Allied
Environmental Services, West, Inc. ("Allied West") to a newly formed company
(Allied Waste Disposal Services, Inc.) which is a subsidiary of Eastern
Environmental Services, Inc. The consideration for this transaction was the
assumption by the purchaser of substantially all liabilities of Allied and
Allied West as well as the payment of $700,000.00 in EESI stock, which stock was
sold contemporaneously at closing at a private sale with the cash proceeds
utilized to pay Meridian Bank, the holder of a first lien in and to the assets
of the Allied companies. In connection with this transaction, enclosed are,
inter
<PAGE>
Mr. Allan Esrine
July 10, 1996
Page 2
alia, copies of the Agreement of Sale and Purchase of the Assets of Allied
Environmental Services, Inc. and Allied Environmental Services West, Inc.,
Resolutions of the Board of Directors of Allied and Allied West, Resignations of
Alan Herskovitz and Stuart Berry as officers and/or directors of Allied or
Allied West, the Termination and Release Agreement executed by and among GSMI,
Allied, Allied West, Allied Environmental Mid-Atlantic, Inc., Allied Waste
Management, Inc., Herskovitz and Berry (wherein the parties released each other
of all claims other than those arising in the Purchase Agreement).
The next transaction which occurred on Friday, June 28, 1996 was between
GSMI and Thomas Lewis, Sr. As you will recall in that transaction, Thomas Lewis
released his claims against GSMI in exchange for his receipt of all issued and
outstanding shares of stock of GSM Environmental, Inc. and Global Environmental,
Inc. owned by GSMI. As part of this transaction, Mr. Lewis paid $100,000.00 to
Meridian Bank (again, the holder of a first priority lien in and to the assets
of GSMI Environmental and Global Environmental) and executed a Note in favor of
Meridian Bank for $100,000.00, which Note can be discounted to $50,000.00 if
such payment is made within ninety (90) days of June 28, 1996. GSMI executed a
Note in favor of Mr. Lewis essentially mirroring Mr. Lewis' obligations to
Meridian under his $100,000.00 Note. In connection with this transaction, I am
enclosing (among other documents) copies of the Stock Purchase Agreement between
GSMI and Mr. Lewis, the Promissory Note executed by GSMI in favor of Mr. Lewis,
the Agreement and General release executed by and among GSMI, its subsidiaries
and Mr. Lewis.
Finally, on June 28, 1996, GSMI paid to Meridian Bank the sum of
$170,000.00 a partial consideration for Meridian's release of its liens and
claims against GSMI. Meridian has agreed to provide a release to GSMI (a form of
such release in favor of the Allied Companies is enclosed separately from the
closing documents) upon the payment of all amounts due under the
above-referenced transactions, including the $50,000.00 payment still owing by
Mr. Lewis and upon the payment to the Bank of $105,000.00 resulting from the
closing on the sale of the assets of Professional Pipe Services Corporation
("Propipe") to Thomas D'Angelo which transaction closed yesterday, effective
June 30, 1996. It should be noted that the releases enclosed in the Closing
Binder accompanying this letter in favor of Meridian Bank are being held in
escrow pending the exchange with Meridian Bank of the corresponding release from
Meridian Bank.
In connection with the Propipe sale, (the consideration for which included
the assumption of substantially all of the obligations of Propipe as well as the
payment of $105,000.00) I am
<PAGE>
Mr. Allan Esrine
July 10, 1996
Page 3
enclosing copies of the Asset Purchase Agreement executed by GSMI, Propipe and
Thomas V. D'Angelo, the Assignment by Propipe of its accounts receivable to
Mr. D'Angelo, the Bill of Sale selling the assets of Propipe to Mr. D'Angelo,
the deed transferring title to Propipe's real estate to Friends Leasing
Services, Inc. (Mr. D'Angelo's assignee) and an Assignment and Assumption
Agreement pursuant to which Propipe assigned and Friends Leasing assumed the
liabilities and obligations of Propipe under its Mortgage and Note relating to
the real estate sold to Friends Leasing.
As a result of the above transactions closing, I expect to receive from
Meridian releases in favor of GSMI and its various subsidiaries in the
near future.
If you have any further questions concerning these transactions, do not
hesitate to contact me.
Sincerely,
/s/ Raymond H. Lemisch
-------------------------------
RAYMOND H. LEMISCH
RHL:md
Enclosures
cc: GSMI
<PAGE>
RELEASE
-------
1. Release. MERIDIAN BANK, a state banking corporation (hereinafter,
"Meridian") on behalf of itself and all persons and/or entities claiming by,
through and/or under it, including, but not limited to, all of its past and
present directors, shareholders, officers, trustees, administrators, agents,
parent corporations, subsidiaries, affiliates, successors and assigns, as
releasors (collectively referred to as the "Releasors"), in consideration of a
payment to it of $700,000.00 and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged and intending to
be legally bound hereby, and having full authority to take this action on behalf
of, and to bind, each and every one of the Releasors, do hereby unconditionally
remise, release and forever discharge ALLIED ENVIRONMENTAL MIDLANTIC, INC.,
ALLIED ENVIRONMENTAL SERVICES, INC., ALLIED ENVIRONMENTAL SERVICES WEST, INC.
and ALLIED WASTE MANAGEMENT, INC. (collectively, the "Companies"), their
predecessors, successors and assigns, as releasees (collectively referred to as
the "Releasees"), of and from any and all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, agreements, promises,
warranties, guarantees, representations, liens, mechanics' liens, judgments,
claims, counterclaims, crossclaims, defenses and/or demands whatsoever,
including claims for contribution and/or indemnity, arising under or related to
that certain Loan Agreement dated December 23, 1992, as amended through the date
hereof (the "Loan Agreement") among Meridian, the Companies and various
affiliates of the Companies (the entities that have executed this Release other
than the Companies and Meridian are collectively referred to herein as the
"Affiliates"), and any other instrument or document entered into by the
Companies or any of them related thereto or in connection therewith (such
documents together with the Loan Agreement, the "Loan Documents"), and
regardless of whether such claim is past or present, asserted or unasserted,
contingent or liquidated, at law or in equity, or resulting from an assignment,
if any (collectively referred to as "Claims"), which any of the Releasors ever
had, have and/or hereafter can, shall or may claim to have against any of the
Releasees, for or by reason of any cause, matter or thing whatsoever related to
the obligations of the Companies to Meridian under the Loan Documents (the
"Obligations"), arising from the beginning of time to the date of execution of
this Release.
NOTWITHSTANDING THE FOREGOING, this Release does not release the Companies
or their predecessors, successors or assigns from any claim or cause of action
that any Releasor has or may have arising from a fraud or fraudulent act
perpetrated by any Company or any of the officers, directors, employees,
shareholders or agents of any Company or any claim which does not arise under
the
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have caused this Release to be executed as of this 1st day of July 1996.
ATTEST: MERIDIAN BANK
/s/ Kimberly Shaffer, VP By: /s/ Helen F. Wessling
- ----------------------------- -------------------------------
Kimberly Shaffer, VP Helen F. Wessling
Vice President
AGREED TO BY:
ENVIRONMENTAL DISPOSAL OPTIONS CORPORATION
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
GSM ENVIROMENTAL, INC.
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
PROFESSIONAL PIPE SERVICES CORPORATION
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
<PAGE>
Loan Documents. In addition, this Release does not release any Affiliate from
any of their obligations to Meridian under the Loan Documents or otherwise.
2. Representations and Warranties.
a. Meridian hereby warrants and represents that it has not assigned,
pledged, hypothecated and/or otherwise divested itself and/or encumbered all or
any part of the Claims being released hereby.
b. Meridian further warrants and represents that this Release is fully
binding upon it and all of the Releasors, and that Meridian has the capacity and
authority to execute this Release on behalf of itself and the Releasors as
required by applicable law.
c. Meridian further warrants and represents that it has consulted with
counsel in connection with the execution of this Release and fully understands
the legal effect of the execution of this Release.
3. Continuing Obligations. Each Affiliate executing this Release warrants
and represents that the Obligations (as such term is defined in the certain Loan
Agreement) shall continue and shall be due and owing by it and that such
Obligations shall continue to be secured by liens on its property until it has
performed the conditions required by Meridian in order for such Affiliate to
receive from Meridian a release in form and substance similar to this Release.
4. Amendment and Waiver. No amendment of this Release, and no waiver,
discharge or termination of any one or more of the provisions hereof, shall be
effective unless set forth in writing and signed by all of the parties hereto.
5. Governing Law. This Release shall be construed in accordance with and
governed by the internal laws of the Commonwealth of Pennsylvania without
reference to conflict of laws principles.
6. Counterparts; Effectiveness. This Release may be executed in any number
of counterparts and by the different parties on separate counterparts and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute one and the same Release. This Release shall be deemed
to have been executed and delivered when Meridian has received counterparts
hereof executed by all parties listed on the signature pages hereto.
-2-
<PAGE>
GLOBAL ENVIRONMENTAL INC.
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
GLOBAL SPILL MANAGEMENT, INC.
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
UNDERWATER TECHNICS, INC.
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
GLOBAL SPILL MANAGEMENT OF DELAWARE, INC.
By: /s/ Thomas D. Lewis
- -----------------------------
Thomas D. Lewis
Chief Executive Officer
-3-
<PAGE>
ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: SS.
COUNTY OF PHILADELPHIA :
On the 1st day of July, 1996, before me, a Notary Public in and for the
State and County aforesaid, personally appeared Helen Wessling, an individual,
known to me (or satisfactorily proven) and who acknowledged herself to be the
vice president of MERIDIAN BANK, a state banking corporation, and that she as
such officer being authorized to do so, executed the within instrument and
acknowledged that he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Patricia K. Mongan
-----------------------------------
Notary Public
Patricia R. Mongan
PA Commissioner of Deeds
My Commission expires: Dec. 28, 1998
<PAGE>
EXHIBIT G
Contact: Desiree Pierson
Global Spill Management, Inc. NASDAQ; GEGI
Tel: (610) 495-3000 FOR IMMEDIATE RELEASE
GLOBAL SPILL MANAGEMENT, INC. TO
ACQUIRE PHOENIX WRECKING CORPORATION
Norristown, Pa., Monday, July l, 1996 .... Global Spill Management, Inc.
(Global) announced today that on June 27, 1996, it agreed to acquire 100% of the
capital stock of Phoenix Wrecking Corporation (Phoenix) in exchange for shares
of Global Common Stock valued at $18 million to $21 million. The announcement
was made by Thomas D. Lewis, Sr., president of Global.
Closing of the transaction with Phoenix will be completed by July 3, 1996,
subject to adjustment upon completion of the Phoenix financial statements for
the year ended June 30, 1996.
Phoenix is a solid waste management, environmental abatement and specialty
contacting company focusing on site and facility remediation. For the fiscal
years ended June 30, 1993, 1994 and 1995, Phoenix reported EBIT of $669,383,
$889,343, and $1,441,569, respectively. For the six months ended December 31,
1995, Phoenix earned $822,755 before taxes. Global estimates that, as of June
30, 1996, its tax loss carry-forward is in excess of $6 million.
Karl Schwab, President of Phoenix since its founding in 1986, and Roger A.
Imperial, chairman of the National Construction Committee of Accordia
Northeast/New York Region, and appointed by the Governor of New York as Special
Counsel to the Joint Legislative Committee of Rates and Regulations, have been
elected to the board of directors of Global. Both Schwab and Imperial are
directors of Phoenix.
Subsequent to the acquisition of Phoenix, Global sold three of its
operating subsidiaries. With the proceeds derived from such sales, Global
(a) liquidated in full all of its obligations to its bank lender, (b) discharged
approximately
<PAGE>
Global Spill Management, Inc. 2-
$1,155,058 of obligations payable in connection with a prior acquisition,
(c) transferred approximately $744,026 of equipment and mortgage loans and
capitalized lease obligations, and (d) canceled in excess of $250,000 of
long-term employment contracts.
As of June 30, 1996, Global had 616,466 shares of common stock issued
and outstanding. No shares of the authorized preferred stock were issued and
outstanding.
Thomas D. Lewis, Sr., Herbert S. McDonal, and David Stith will remain
as directors of Global, The Fulcrum Group, of Philadelphia, owned by McDonald,
also will continue to serve as a financial consultant to Global, primarily with
respect to transactions in the Delaware Valley region.
Customers served by Phoenix include Chrysler, Ford Motor, Alcoa, Con
Edison, Bethlehem Steel, Florida Power & Light, as well as various federal,
state and municipal authorities.
<PAGE>
USER23 08/29/1996 09:09 Page 1
Symbol(s) GEGI & Date
Use Page Up, Page Down, (up arrow), (down arrow), or press (return)
08/28 4:13P (RT) Global Spill GEGI.O names CEO and CFO Story 5281 (I/ENR,
I/US, I/RESF, GEGI, H/)
NEW YORK, Aug 28 (Reuter) - Global Spill Management Inc. said on Wednesday
it named Karl Schwab chief executive and president, and George Weast chief
financial officer.
The company also said that, with current contracts and several targeted
acquisitions, revenues are likely to exceed $25 million in the 1997 fiscal year.
Schwab, who replaces Thomas Lewis, Sr. as chief executive and Stuart Berri
as president, is the founder of Phoenix Wrecking Inc, which has been merged with
Global Spill.
Weast replaces Robert Moskovitz. A company spokeswoman said that Lewis,
Berri and Moskovitz resigned.
Global Spill added that it is changing its name to Indigo Industries Inc.
REUTER
Rtr 16:13 08-28-96
<PAGE>
Press Release
For Immediate Release
Global Spill Management Inc. (Indigo Industries Inc.) to acquire Recycling
Unlimited Orianna, New York, September 3, 1996 Global Spill Management Inc.
(NASDAQ-GEGI) Global Spill Management Inc. which recently announced the
intention to change their name to Indigo Industries Inc. announced today that
they have acquired Recycling Unlimited, a four acre transfer and crushing plant
in Brooklyn, NY. The plant's principal function is the processing of
construction debris. Mr. Schwab, the president of Global Spill stated "we
currently anticipate annual revenues generated from this acquisition to be
between $6,000,000 and $8,000,000 we estimate gross profits of 20%"
"With this acquisition completed and our current contracts Global could see
revenues exceed $25 million in sales for the 97 fiscal year .... we are
confident that we can maintain a gross profit margin of 20%" stated Mr. Schwab.
The terms of this acquisition have not yet been disclosed.
Global Spill Management Inc. is comprised of several divisions specializing
in solid waste management, environmental abatement and specialty contracting
that focuses on site remediation.
For further information contact investor relations at 800-531-7464.
<PAGE>
PRESS RELEASE
October 23, 1996.
GLOBAL SPILL MANAGEMENT, INC. (GEGI), announced today that a subsidiary
corporation, Indigo Industries of New York, Incorporated, was the successful low
bidder on a $1,758,000 project to demolish the former Abraham & Strauss building
located at 150 Fulton Avenue, Hempstead, New York, for the Incorporated Village
of Hempstead. This contract follows the agreement which Global made to purchase
Recycling Unlimited, Inc., for $3,200,000. Recycling Unlimited is a transfer and
crushing plant on a five acre site in the Red Hook Section of Brooklyn, New
York. The plant's principal function is the processing of construction and
demolition debris. Recycling Unlimited is expected to have sales of $6 million
to $8 million with a projected profit of approximately $1.5 million annually.
In addition, the Contract whereby Global acquired Phoenix Wrecking
Corporation has been amended to provide for the cancellation and retirement of 2
million shares of Common Stock of GEGI previously issued, and to convert 4
million shares of Common Stock to 1 million shares of Convertible Preferred
Stock. The Convertible Preferred Stock gives those shareholders a preference
over other creditors and shareholders and pays a 7% per annum dividend. The .
Convertible Preferred Stock is convertible into 4 million shares of Common Stock
after March 31, 1997.
In addition, the Company has returned 1,574,000 shares of Common Stock that
was held pursuant to a Regulation S transaction, which has now failed. The stock
has been returned for cancellation.
Finally, the Company has requested that the SEC allow the withdrawal of two
S-8 Registrations totaling 1,335,000 shares.
<PAGE>
CHILLINGWORTH & CONWAY, P.A.
ATTORNEYS AT LAW
SUITE 800
2090 PALM BEACH LAKES BLVD.
WEST PALM BEACH, FLORIDA 33409-6523
CHARLES C. CHILLINGWORTH TELEPHONE (407) 640-6000
JEANNE O. CONWAY TELEFAX (407) 640-9422
Client Number: Global Spill Management, Inc. - Press Release
Client Matter: 1365.001
Total Number of Pages: 4
To: Desiree L. Pierson
Firm:
Telefax No: 610-495-5208
From: Helen K. Fekete
Date: October 25, 1996
Phone No: (407) 640-6000
Telecopier No: (407) 640-9422
Message:
Yesterday's Press Release was not picked up by Dow Jones nor Reuters.
We are issuing a new Release today.
Please call NASD & get authorization for the attached Press Release to
Business Wire.
In addition, Mr. Esrine advises that the Press release MUST be sent by
Telefax to the "Head Trader" at each of the attached firms, We will let
Mr. Weast take care of that from this end.
Please call if you have any questions.
Copies to:
Philip Schwab/Karl Schwab @(718) 482-1130
Brenda Lee Hamilton @561 392-5089
Allan Esrine @212-832-3671
Roger Imperial @212-6x2-5337
David Stith @ 215-672-5778 (66)
George Weast @561-416-9594
<PAGE>
Released over Business Wire at __________
CONTACT: Desiree Pierson
(610) 495-6884 NASDAQ: GEGI
PRESS RELEASE
For Release October 25, 1996.
GLOBAL SPILL MANAGEMENT, INC. (GEGI), announced today that a subsidiary
corporation, Indigo Industries of New York, Incorporated, was the successful
bidder on a $1,758,000 project to demolish the former Abraham & Strauss building
located at 150 Fulton Avenue, Hempstead, New York, for the Incorporated Village
of Hempstead. In addition, the Company has entered into an agreement in which
Global proposes to purchase Recycling Unlimited, Inc., for $3,200,000. The terms
of the Contract dated August 5, 1996, are $500,000 down and a Note in the amount
of $2.7 million. The terms of the Note call for payments of $30,000 per month
towards principal plus interest at 10% on balance, with a balloon payment due in
five years. Recycling Unlimited is a transfer and crushing plant on a five acre
site in the Red Hook Section of Brooklyn, New York. The plant's principal
function is the processing of construction and demolition debris. Recycling
Unlimited is expected to have sales of $6 million to $8 million with a projected
pre-tax profit of approximately $1.5 million annually.
In addition, at a Board meeting held October 6, 1996, the Contract whereby
Global acquired Phoenix Wrecking Corporation has been amended to provide for
the cancellation and retirement of 2 million shares of Common Stock of GEGI
previously issued, and to convert 4 million shares of Common Stock held by
management to 1 million shares of Convertible Preferred Stock. The Convertible
Preferred Stock gives those shareholders a preference over other creditors and
shareholders and pays a 7% per annum dividend. The Convertible Preferred Stock
is convertible into 4 million shares of Common Stock after October 6, 1997.
In addition, the Company has canceled 1,574,000 shares of Common Stock
which were held in escrow pursuant to a Regulation S transaction, which has now
failed. Also, the Company
<PAGE>
has requested that the SEC allow the withdrawal of two S-8 Registrations
totaling 1,335,000 shares. After completion of these transactions, there will be
a total of 2,516,466 shares of GEGI Common Stock issued and outstanding.
Finally, the Board also announced that preliminary results of operations of
its Phoenix subsidiary alone for the fiscal year ended June 30, 1996, indicate a
pre-tax profit of approximately $1,796,601 (subject to audit confirmation). The
parent company (GEGI) estimates that it has, as of June 30, 1996, a NOLD in
excess of approximately $9 million.
<PAGE>
Released over Business Wire at __________
CONTACT: Desiree Pierson
(610) 495-6884 NASDAQ: GEGI
PRESS RELEASE
For Release October 25, 1996.
GLOBAL SPILL MANAGEMENT, INC. (GEGI), announced today that a subsidiary
corporation, Indigo Industries of New York, Incorporated, was the successful
bidder on a $1,758,000 project to demolish the former Abraham & Strauss building
located at 150 Fulton Avenue, Hempstead, New York, for the Incorporated Village
of Hempstead. This contract follows an agreement in which Global proposes to
purchase Recycling Unlimited. Inc., for $3,200,000. The terms of the Contract
dated August 5, 1996, are $500,000 down, monthly payments of $30,000 towards
principal plus interest at 10% on balance, with a balloon payment due in five
years. Recycling Unlimited is a transfer and crushing plant on a five acre site
in the Red Hook Section of Brooklyn, New York. The plant's principal function is
the processing of construction and demolition debris. Recycling Unlimited is
expected to have sales of $6 million to $8 million with a projected pre-tax
profit of approximately $1.5 million annually,
In addition, at a Board meeting held October 6, 1996, the Contract whereby
Global acquired Phoenix Wrecking Corporation has been amended to provide for the
cancellation and retirement of 2 million shares of Common Stock of GEGI
previously issued, and to convert 4 million shares of Common Stock held by
management to 1 million shares of Convertible Preferred Stock. The Convertible
Preferred Stock gives those shareholders a preference over other creditors and
shareholders and pays a 7% per annum dividend. The Convertible Preferred Stock
is convertible into 4 million shares of Common Stock after October 6, 1997.
In addition, the Company has canceled 1,574,000 shares of Common Stock
which were held in escrow pursuant to a Regulation S transaction, which has now
failed. Also, the Company
<PAGE>
has requested that the SEC allow the withdrawal of two S-8 Registrations
totaling 1,335,000 shares. After completing these transactions, there will
be a total of 2,516,466 shares of GEGI issued and outstanding.
Finally, the Board also announced that preliminary results of operations of
its Phoenix subsidiary alone for the fiscal year ended June 30, 1996, indicate a
pre-tax profit of approximately $1,796,601 (subject to audit confirmation). The
parent company (GEGI) estimates that it has, as of June 30, 1996, a NOLD in
excess of approximately $9 million.
<PAGE>
Contact: Desiree Pierson
(610) 495-6884
GLOBAL SPILL MANAGEMENT, INC. MAKES ANNOUNCEMENT
Global Spill Management, Inc. (GEGI) announced today that, effective
November 6, 1996, GEGI entered into a Rescission Agreement with Phoenix Wrecking
Corporation (Phoenix), pursuant to which the acquisition by GEGI of Phoenix
under an Agreement, dated June 27, 1996, has been cancelled nunc pro tunc. The
consequences of such Rescission Agreement are:
a) the cancellation of an aggregate of six million shares of GEGI issued
on July 10, 1996, to acquire Phoenix (as well as the later proposed
issuance of four million shares of Preferred Stock in lieu of such six
million shares of Common Stock):
b) the cancellation of any and all Regulation S transactions entered into
between various persons and the management of Phoenix with
indemnification by Phoenix to GEGI; and,
c) the pending request made to the SEC to cancel and permit the withdrawal
of two Registration Statements on Form S-8 filed by the management of
Phoenix on behalf of GEGI with the SEC, covering an aggregate of
1,135,000 shares of GEGI Common Stock (which, if not granted, will be
followed by a request for a stop transfer order).
One of the principal reasons for such Rescission Agreement is the inability
of Phoenix to provide GEGI with an audited financial statement for the fiscal
year ended June 30, 1996. Promptly upon learning of such fact, GEGI itself
retained an independent accounting firm to complete the audit of Global alone
for the period ended June 30, 1996. The discovery by GEGI that it would be
required to conduct its own audit independently of Phoenix resulted, among other
things, in the late filing by GEGI of its audited 10-K for the year ended June
30, 1996. That resulted in a hearing scheduled by NASDAQ for November 21, 1996
to determine if delisting is justified. At such hearing GEGI will make available
to NASDAQ all of the pertinent facts surrounding the late filing, including a
presentation by its independent auditors. This accounts for the present trading
symbol being GEGI.
GEGI had, as of June 30, 1995, total liabilities of approximately $6.5
million. As a direct result of the restructuring plan instituted early in
April, 1996. and substantially completed on June 28, 1996, and thereafter,
accounts payable of Global as of this date amount to approximately $153,000
(exclusive of current billings from professionals now working for GEGI). GEGI
believes that certain groups who have engaged in possible substantial short-
selling Of GEGI Common Stock have been spreading rumors that GEGI is
contemplating bankruptcy. Such rumors are unfounded; and the present financial
position of GEGI affords absolutely no basis for such rumors being circulated.
Giving pro form effect to the cancellation of the 1,135,000 shares issued
pursuant to the two improper Form S-8 filings, and giving further effect to the
previous retirement of the proposed Regulation S shares, GEGI has issued and
outstanding today an aggregate of 2,516,466 shares of Common Stock and no
Preferred Stock.
GEGI has been presented with several acquisition possibilities. These
proposals are presently being studied and will be determined upon prior to the
hearing with NASDAQ scheduled for November 21, l996.
<TABLE> <S> <C>
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 62
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 867
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 867
<CURRENT-LIABILITIES> 3,048
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (2,181)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 3,336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,336)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,336)
<DISCONTINUED> (6,725)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,061)
<EPS-PRIMARY> (16.49)
<EPS-DILUTED> (16.49)
</TABLE>
