UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended June 30, 1996
Commission file No. 33-68304
Green Oasis Environmental, Inc.
(Exact name of small business issuer as specified in its charter.)
Florida 57-0970282
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
184 East Bay Street
Suite 302
Charleston, South Carolina 29401
(Address of principal executive offices (Zip Code)
Issuer's telephone number, including area code (803) 722-5771
Check whether the issuer(1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months, and (2) has been subject
to such filing requirements for the past 90 days.
YES [ X ] NO [ ]
State the number of shares outstanding of each of the
issuer's classes of Common Equity, as of the latest practicable
date.
Class of Common Stock Outstanding at June 30, 1996
--------------------- -----------------------------
$.01 Par Value 5,470,349 Shares
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
Index
Part I. Financial Information
Item 1.
Financial Statements (Unaudited) Page Number
Condensed Balance Sheets
June 30, 1996, and
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Statements of Operations
Three and six months ended June 30,
1996 and 1995, and
September 24, 1991 (Inception),
through June 30, 1996 . . . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows
Six months ended June 30, 1996
and 1995, and September 24,
1991 (Inception), through
June 30, 1996. . . . . . . . . . . . . . . . . . . . . . . . .5
Notes to Condensed Financial Statements . . . . . . . . . . .6-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . . . 11-13
Part II. Other Information
Item 3. Preferred Stock Dividends in Arrears. . . . . . . .14
Item 6(a). Exhibits . . . . . . . . . . . . . . . . . . . . . .14
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1996 1995
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 5,000 $ 5,000
Prepaid expenses (Note C) 116,000 -
---------- ----------
Total current assets 121,000 5,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 55,000 56,000
OTHER ASSETS
Loans - related parties 141,000 141,000
Patent costs 48,000 47,000
---------- ----------
TOTAL ASSETS $ 365,000 $ 249,000
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Notes payable (Note C) $ 270,000 $ 520,000
Accounts payable, trade (Note C) 582,000 789,000
Accounts payable, professional
fees (Note C) 417,000 655,000
Accrued interest 127,000 102,000
Accrued payroll taxes 71,000 71,000
Deposits received for equipment sales 80,000 80,000
Due to stockholders 57,000 57,000
Due to related parties 62,000 2,000
Deposits received for distribution
fees 118,000 118,000
---------- ----------
Total current liabilities 1,784,000 2,394,000
---------- ----------
CONVERTIBLE LONG-TERM DEBT 2,000 2,000
---------- ----------
COMMITMENTS AND CONTINGENT
LIABILITIES (Note F) - -
---------- ----------
REDEEMABLE, PREFERRED STOCK 42,000 42,000
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Series A preferred stock 6,000 6,000
Common stock, $.01 par value;
20,000,000 shares authorized, 5,470,349
(1996) and 5,166,773 (1995) issued and
outstanding 55,000 52,000
Additional paid-in capital 3,731,000 3,120,000
Deficit accumulated during the
development stage (5,255,000) (5,257,000)
Note receivable - related party (Note B) - (110,000)
---------- ----------
Total stockholders' equity (deficiency) (1,463,000) (2,189,000)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $ 365,000 $ 249,000
========== ==========
<FN>
See Notes to Condensed Financial Statements.
3
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended Period From
June 30, June 30, September 24,
--------------------- --------------------- 1991
(Inception),
Through
1996 1995 1996 1995 March 31,1996
--------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales of equipment $ - $1,550,000 $ - $1,550,000 $ 2,075,000
Interest and other
income - 12,000 - 12,000 18,000
Loss on sale of property
and equipment - (5,000) - (5,000) -
--------- ---------- ---------- ---------- --------------
Total revenues - 1,557,000 - 1,557,000 2,093,000
--------- ---------- ---------- ---------- --------------
COSTS AND EXPENSES
Research and development 6,000 27,000 11,000 344,000 4,532,000
General and administrative
- legal and accounting 78,000 4,000 125,000 74,000 1,129,000
General and administrative
- other 57,000 17,000 84,000 43,000 711,000
Salaries and benefits - 77,000 - 129,000 807,000
Operations and marketing 16,000 3,000 16,000 3,000 474,000
Interest expense and
loan costs 13,000 19,000 28,000 41,000 324,000
--------- ---------- --------- ---------- --------------
Total expenses 170,000 147,000 264,000 634,000 7,977,000
--------- ---------- --------- ---------- --------------
INCOME (LOSS) BEFORE
INCOME TAXES (BENEFIT)
AND EXTRAORDINARY GAIN (170,000) 1,410,000 (264,000) 923,000 (5,884,000)
INCOME TAXES (BENEFIT) - - - - -
EXTRAORDINARY GAIN
(Note D) 266,000 - 266,000 - 645,000
--------- ---------- --------- ---------- --------------
NET INCOME (LOSS) $ 96,000 $1,410,000 $ 2,000 $ 923,000 $ (5,239,000)
========= ========== ========= ========== ==============
Earnings (loss) per common
share
Income (loss) before
extraordinary item $ (0.03) $ 0.27 $ (0.05) $ 0.18 $ (1.49)
Extraordinary item 0.05 - 0.05 - 0.16
--------- ---------- --------- ---------- --------------
Net income (loss) $ 0.02 $ 0.27 $ - $ 0.18 $ (1.33)
========= ========== ========= ========== ==============
Earnings (loss) per common
share - assuming full
dilution
Income (loss) before
extraordinary item $ (0.03) $ 0.26 $ (0.05) $ 0.18 $ (1.49)
Extraordinary item 0.05 - 0.05 - 0.16
--------- ---------- --------- ---------- --------------
Net income (loss) $ 0.02 $ 0.26 $ - $ 0.18 $ (1.33)
========= ========== ========= ========== ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,205,930 5,119,923 5,189,357 5,111,566 4,043,176
========= ========== ========= ========== ==============
<FN>
See Notes to Condensed Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Period From
September 24,
Six Months Ended 1991
June 30, (Inception),
---------------------- Through
1996 1995 June 30, 1996
--------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used in operating
activities $(168,000) $ (197,000) $ (3,437,000)
--------- ---------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment - - (183,000)
Proceeds of sale of property and
equipment - 40,000 62,000
Loans to related parties - (56,000) (336,000)
Collection of loans to related
parties - 109,000 235,000
Patent costs (1,000) (3,000) (48,000)
Deposits paid (1,000) - (1,000)
Loans granted to distributors
and others - - (7,000)
Initial payments received for
distribution rights - - 198,000
--------- ---------- -------------
Net cash provided by (used in)
investing activities (2,000) 90,000 (80,000)
--------- ---------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of convertible debt
securities - - 565,000
Proceeds of common stock issues 110,000 19,000 986,000
Proceeds of preferred stock issues - - 1,024,000
Proceeds of loans from stockholders 60,000 138,000 621,000
Proceeds of notes - - 520,000
Proceeds of Series A notes - - 105,000
Payments of convertible debt
securities - (5,000) -
Issue costs - - (21,000)
Purchase of treasury stock - - (24,000)
Payments of loans from stockholders - (43,000) (95,000)
Increase (decrease) in bank overdraft - (1,000) -
Payments of notes and debentures - - (155,000)
Other payments - (1,000) (4,000)
--------- ---------- -------------
Net cash provided by financing
activities 170,000 107,000 3,522,000
--------- ---------- -------------
Cash and cash equivalents
Net increase (decrease) during
the period - - 5,000
Balance at beginning of period 5,000 - -
--------- ---------- -------------
Balance at end of period $ 5,000 $ - $ 5,000
========= ========== =============
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Common stock issued for services rendered,
preferred stock conversion,
debt conversion, and loan costs $ 614,000 $ 38,000 $ 2,883,000
========= ========== =============
Capital lease obligation incurred to
purchase equipment $ - $ - $ 12,000
========= ========== =============
Deposit converted to preferred
stock $ - $ - $ 80,000
========= ========== =============
Debt issued for equipment and services and
loans collected or exchanged
for services $ - $ - $ 56,000
========= ========== =============
Provision for repurchase of stock from
stockholders who accepted
rescission offer $ - $ - $ 57,000
========= ========== =============
Company vehicle transferred to officer
as payment of loan $ - $ 13,000 $ -
========= ========== =============
Accrued salaries applied to related
party note $ - $ 100,000 $ -
========= ========== =============
No interest nor income taxes were paid in any period.
See Notes to Condensed Financial Statements.
5
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The balance sheet as of June 30, 1996, the statements of
operations for the three months and six months ended
June 30, 1996 and 1995, and September 24, 1991 (inception),
to June 30, 1996, and the statements of cash flows for the
six months ended June 30, 1996 and 1995, and September 24,
1991 (inception), to June 30, 1996, have been prepared by
the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by
the rules and regulations of the Securities and Exchange
Commission. In the preparation of the above described financial
statements, all adjustments of a normal and recurring nature have
been made. The Company believes that the accompanying unaudited
financial statements contain all adjustments necessary to present
fairly the results of operations and cash flows for the interim
periods presented. Further, management believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that the financial statements be read
in conjunction with the annual financial statements and notes
thereto. The results of operations for the three months and six
months ended June 30, 1996, are not necessarily indicative of the
results to be expected for the year.
B. RELATED PARTY TRANSACTIONS
Chief Executive Officer. At December 31, 1995, a balance of
$110,000 remained from a note receivable for the purchase of
1,000,000 shares of common stock due from the Chief Executive
Officer for the exercise of a stock option granted in 1993.
Payments in cash of $110,000 during 1996 paid the balance in
full as of June 30, 1996. Also, the Chief Executive Officer
loaned the Company $60,000 to use for paying expenses during the
quarter ended June 30, 1996; the total owed him at that date is
$62,000.
Investment in Limited Partnership. The Company has become the
general partner in a South Carolina limited partnership known as
GOE Plant Partnership I, L.P. (the "Partnership") which was formed
on June 28, 1996. The purpose of the Partnership is to purchase
and operate the Company's distillation processing equipment which
was built as the prototype in 1993. The Company plans to sell the
prototype to the Partnership as soon as the Partnership is able to
sell limited partnership interests to raise the approximately
$1,200,000 purchase price. Though much of the cost of producing
the equipment has already been expensed as research and development
costs, certain improvements to the equipment are not complete, and
the Company expects to incur additional costs for the thermal oxidizer
and other items prior to the completion of the sale to the Partnership.
Also, the South Carolina Department of Health and Environmental Control
("DHEC") must approve the installation and operation of the distillation
plant. The Partnership will lease space from the Company on which to
construct the operating plant.
The Company's duties as general partner are to operate and maintain
the distillation plant and to perform all duties of general management.
The Company will receive 10% of the net income from the Partnership
while the limited partners will receive a 90% allocation of net income.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
B. RELATED PARTY TRANSACTIONS (CONTINUED)
Investment in Limited Partnership (Continued).
The Company will provide warrants at no additional cost to be sold with
the limited partnership interests. The warrants may be exercised to
purchase up to 15,000 shares of the Company's common stock and are
exercisable for 180 days at a price of $3.50 per share. The Company
will assign no value to the warrants when they are issued.
C. ISSUANCE OF COMMON STOCK
Troubled Debt Restructing. During the second quarter of 1996, the
Company negotiated with several of its creditors who were owed trade
payables and legal fees. The Company and the creditors agreed upon a
conversion price of $3.00 to $3.15 per share and converted $476,000
in accounts payable to common stock. Amounts in excess of the payable
balances totaling $57,000 were also negotiated as prepayments of
future legal fees. The stock values agreed upon were the approximate
average of the market prices at the time of the agreements. Upon the
issuance of the stock certificates the market price of the stock had
fallen to $1.60. Thus, at the time of consummation the Company
recognized an extraordinary gain on the restructuring of the debt
(Note D). Certain of the agreements contained provisions for the
issuance of additional shares of stock if market prices fall below a
floor amount for a three-month period of time.
Prepaid Expenses. As noted above, the Company has recorded $57,000 in
prepaid legal fees from the issuance of common stock during the second
quarter of 1996. In addition, the Company recorded $75,000 in prepaid
consulting services in March 1996, of which $21,000 has been amortized
as general and administrative expense. The balance of $116,000 presented
as prepaid expenses as of June 30, 1996, also includes $5,000 in prepaid
rent.
Settlement of Lawsuit. The Conmpany settled a lawsuit for approximately
$16,000 by issuing 7,500 shares of its common stock in full settlement
of all the claims of the petitioner (Note D).
Exercise of Stock Option. The holder of the $500,000 note which is in
default agreed to convert $250,000 of the debt to common stock at $2.50
per share pursuant to his stock option agreement.
D. EXTRAORDINARY GAIN
A gain in the amount of $266,000 was recognized during the second quarter
of 1996 from the restructuring of debt. On June 27, 1996, 176,576 shares
of common stock were issued to settle $549,000 in trade payables,
professional fees, and a lawsuit. The difference between the negotiated
settlements and the stock value on the date of the transfer of the equity
interests to the creditors is the amount recorded as a gain.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
E. UNCERTAINTY - GOING CONCERN
The Company's continued existence is dependent upon its ability to
obtain financing to allow further development of its products to meet
design specifications and regulatory requirements as well as to continue
production. Without fully operational products and the financing
necessary, there is substantial doubt about the Company's ability to
continue as a going concern. In addition, there are uncertainties
related to the outcome of matters in litigation that cannot presently
be determined.
Management continues to seek additional sources of financing from
private sources. There can be no assurance, however, that the
negotiations will be successful.
F. COMMITMENTS AND CONTINGENT LIABILITIES
At the end of March 1995, the Company ceased its research and
development activities and dismissed its production employees due
to the lack of money to continue its operations. The plant has
been closed since that time.
The Company is subject to a number of lawsuits and claims arising
out of the ordinary conduct of its business, including those
related to commercial transactions. Various suppliers have
obtained judgments against the Company for amounts owed to them for
products and services sold to the Company; the Company has recorded
as liabilities the amounts that it believes are due at settlement
of these obligations but has not yet paid such obligations.
On November 21, 1994, the Company extended a rescission offer which
expired on December 22, 1994, to all of its stockholders because
some of its securities were sold in violation of securities laws.
The rescission offer gave all stockholders the right to revoke and
rescind all purchases of the Company's stock and agreed to pay 12%
interest from the date of purchase by the stockholder to the date
of repurchase by the Company. Stockholders owning 20,000 shares
of common stock and 7,000 shares of preferred stock accepted the
rescission offer. As of July 17, 1996, the funds to repay the
$57,000 owed plus interest have not been available. However, the
amount has been recorded as a liability by the Company. On
February 23, 1996, pursuant to an Order of Judgment between the
Company and one stockholder, the Company agreed to pay $5,000 plus
interest at 12% per annum from April 23, 1993, and $1,000 in
attorney's fees. In connection with the sale of unregistered
securities, the South Carolina Secretary of State and the Company
executed a Consent Order on July 25, 1995, in which the Company
agreed to discontinue issuing, offering, and selling securities
in South Carolina until such securities are registered and also
to make a good faith effort to honor the rescission offer made to
the South Carolina investors.
During 1994, the Company was involved in discussions with DHEC
regarding environmental issues in order to obtain an operating
permit in the State of South Carolina for its waste oil processing
equipment. DHEC had suspended the Company's normal operation of
the equipment in November 1993 until an operating permit was
obtained. The Company completed an on-site operational test for
purposes of obtaining an operating permit and met with DHEC
officials in March 1994.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
F. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
On July 27, 1994, the Company and DHEC signed a Consent Order
imposing a civil penalty in the amount of $20,000 for operation of
the unit without the necessary permits; the Company has paid the
penalty. DHEC subsequently denied an air construction permit after
having written a draft permit, and the Company was unable to
operate its equipment. On March 23, 1995, the Company and DHEC
signed a Consent Order following the Company's appeal of the denial
of the permit. The Consent Order allows the Company to test its
waste oil conversion equipment to demonstrate that air pollutant
emissions meet DHEC's standards. Successful demonstration of
compliance would result in the issuance of a final permit. Continuous
monitoring and other requirements regarding the operation
of the equipment as well as storage and disposal of fuel are imposed
by the Consent Order.
On July 19, 1995, a lawsuit was filed by LifeChoice International,
SA, a Greek company, which purchased two units of waste oil
conversion equipment manufactured by the Company. The suit alleges
breach of contract arising from the sale of the two units and asks
for unspecified damages. In addition, a related Antiguan company
filed suit on July 19, 1995, claiming that the Company defaulted
on payment of a $100,000 promissory note which the Company recognized
as sales revenue. The Company answered both complaints on
September 27, 1995. The Company has filed a counterclaim alleging
a breach of the plaintiff's agreement to purchase the European
distribution rights from the Company. Discovery has commenced by
the plaintiff companies. The Company will continue to vigorously
dispute the plaintiffs' claims and to defend its case, but the
outcome is not known at this time.
A settlement was reached in a lawsuit with a supplier who claimed
that the Company owed $123,000. A Confession of Judgment was
signed on October 5, 1995, in which the Company agreed to pay
$85,000 to the supplier in four equal payments beginning 90 days
from the date of execution of the judgment. Said amount has been
recorded as a liability; however, no payments have been made as of
July 17, 1996.
On November 9, 1995, Environmental Oil Services, LLC, which
purchased one of the units manufactured by the Company, filed suit
in state court in Idaho, alleging breach of contract for failure
to manufacture and install equipment that conformed to the terms
and conditions of its purchase contract. The suit seeks a refund of
$525,000 paid to the Company and $1,475,000 in lost profits. On
December 14, 1995, the Company filed a notice of removal in U.S.
District Court to remove the case from the jurisdiction of the
state court to the federal court system. The case was removed to
the District Court of South Carolina in Charleston on February 1,
1996. An answer was filed on March 4, 1996, which asserted general
denials as well as other defenses including the destruction of the
equipment by the plaintiff. In addition, the Company asserted
a counterclaim against the plaintiff for misrepresentation of facts
to potential customers of the Company which interfered with its ability
to sell its equipment to these customers. The plaintiff filed an answer
to the counterclaim on March 28, 1996. To date no discovery has taken
place by either party; however, discovery is expected to commence by
both parties shortly. The Company intends to vigorously defend itself
and to avail itself of all rights and claims under the law; however, the
outcome is not determinable at the present time.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
F. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Due to the shortage of working capital, the Company has operated
without liability insurance coverage.
In September and October 1995, five stockholders who own an
aggregate of 40,854 shares of common stock filed suits alleging
various violations of state securities and other laws, arising from
the sale of the Company's stock to the plaintiffs. The plaintiffs
seek rescission and a return of the money paid for the stock of
$71,000 with attorneys' fees and statutory interest. The opinion
of management and the Company's legal counsel is that South
Carolina securities laws prohibit these investors, who were offered
an opportunity to rescind their purchase of stock and refused the
offer, from suing to recover their investments. Because, however,
the suits involve other claims, the outcome is not determinable at
the present time.
On December 4, 1995, Caribe Environmental, Inc., and Caribbean
Sales Group filed suit alleging breach of contract. The claim is
that $50,000 was paid as a deposit on equipment to be furnished by
the Company. The suit seeks the return of the $50,000 deposit
which was received in 1995. The Company filed its answer setting
forth defenses to this claim. On January 30, 1996, an order of
attachment was authorized, and the equipment has been sealed;
however, it remains at the plant site. The Company acknowledges
that the deposit should be returned and has recorded the amount as
a liability.
On December 28, 1995, Pensacola Pollution Control, Inc. filed suit
against the Company seeking return of a $25,000 deposit paid toward
the purchase of a waste oil recycling unit. Prior to answering the
complaint, the parties entered a Confession of Judgment for the
amount of the debt and accrued interest and attorneys' fees of 10%.
The amount is recorded as a liability.
On January 4, 1996, the Company entered into a lease agreement for
office space in Charleston, South Carolina. The lease term is for
one year through January 1997 at $1,000 per month. The Company
moved its office to the new location during January 1996.
On April 15, 1996, the Company leased land for an assembly,
storage, and processing facility from Allied Terminals, Inc. in
Charleston, South Carolina. The lease is for an area of two acres
for ten years. The annual rent is $24,000 beginning six months
from the date of signing. Rent increases are based on the consumer
price index each year. A lease fee of $6,000 was due upon signing
the lease. No additional rents are due for the first six months.
The Company is designing a facility to be constructed at the site.
The plant was moved from Mount Pleasant, South Carolina, in April
1996.
On April 23, 1996, the Company and Approved Oil Services, Inc., a
waste-oil collection company in Denver, Colorado, signed a letter
of intent for the purchase of Approved Oil by the Company. The
purchase price will be paid in cash and securities of the Company.
The parties will negotiate the purchase price after completion of
due diligence.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following information should be read in conjunction with the
Condensed Financial Statements and the notes thereto included in Item 1
of this Quarterly Report, and the financial statements and the notes
thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995.
Results of Operations for the Three Months and Six Months Ended
June 30, 1996
Green Oasis is a development stage company which was organized as
a Florida corporation on September 24, 1991. Since its inception,
Green Oasis has been engaged principally in product design,
development, testing, production and patent application activities and
in the pursuit of selling distributorships for the exclusive right to
distribute its waste oil conversion equipment, known as
EnviroEconomics Systems, in various geographical areas of the United
States and other countries. It has also begun developing markets for
the EnviroEconomics Systems and had shipped three units to customers
by the end of 1994. For the period September 24, 1991 (inception),
to June 30, 1996, Green Oasis incurred a cumulative net loss of
$5,239,000. For the three-month and six-month periods ended June 30,
1996, the Company incurred a net loss before extraordinary items of
$170,000 and $264,000 respectively. For the same period in 1995,
the net income was $1,410,000 for the three months ended June 30, 1995,
and $923,000 for the six months ended June 30, 1995. Green Oasis'
ability to fully utilize net operating loss carryforwards for tax
purposes is subject to certain limitations.
The Company's revenues are derived from sales of waste oil conversion
equipment. The Company has generated no revenues in 1996. In the
second quarter of 1995, the Company recognized revenues from the sale of
two systems in the amount of $1,550,000. The Company has no current
production; however, as referenced in Note B to the Condensed Financial
Statements, the Company has agreed to sell the prototype unit which was
constructed in 1993 to the limited partnership and, if such sale is
accomplished, Green Oasis will generate revenue in the ensuing quarter.
There can be no assurance that the Company will be able to sell the
prototype or that the Company will be able to attain or sustain
profitability.
As discussed in Note F to the Condensed Financial Statements, the
Company had exhausted its cash by the end of March 1995, and its
production and research and development activities ceased as of then.
Thus, the research and development costs recorded by Green Oasis for
the June 30, 1996, quarter are minimal. Operations and marketing expenses
of $16,000 in the second quarter of 1996 include payments to employees,
rent, and travel and entertainment; these costs were $3,000 in the
second quarter of 1995. The increase is due to moving the plant and
renting space for a future production site. Legal and accounting costs
have increased in 1996 due to filing the 1994 and 1995 Securities and
Exchange Commission reports in 1996 as well as defending lawsuits filed
against the Company. No officer salaries were paid in 1996 as compared
to $77,000 in the June 1995 quarter and $129,000 for the six months ended
June 30, 1995. Interest expense continues to accrue during 1996; interest
expense includes service charges from suppliers, and $6,000 less in
service charges was recorded for the June 1996 quarter than in the
June 1995 quarter. No deposits from equipment were received in 1996.
<PAGE>
Liquidity and Capital Resources
Green Oasis has funded its operations from inception through June 30,
1996, primarily through loans or sales of common stock and preferred stock,
in the aggregate amount of $4,842,000, and the sale of three units of waste
oil recycling equipment in the amount of $2,075,000.
The decrease in accounts payable during the six months ended June 30,
1996, was almost entirely due to exchanging trade payables and legal fees
for common stock of the Company. On June 27, 1996, the Company issued
176,576 shares of common at a market value of $1.60 per share for the
settlement of $476,000 of debt, $57,000 of prepaid legal fees, and a $16,000
lawsuit. The Company negotiated the number of shares to be issued for the
settlement of the debts at $3.00 to $3.15 per share. When the shares were
issued, however, the stock value had decreased to $1.60.
In addition, the holder of the $500,000 note exercised his option to
convert the debt to stock by converting half of the principal to 100,000
shares of common stock at the $2.50 per share exercise price. The Chief
Executive Officer paid the balance of $110,000 due on a note for the
exercise of a 1993 stock option during the six months of 1996 and loaned
the Company $60,000 to use for paying expenses.
Green Oasis is currently dependent upon the proceeds of debt and
equity financings and loans to complete market testing and to complete
the design, development, and testing of a commercial version of the
EnviroEconomics System. The proceeds must also fund Green Oasis'
working capital requirements, including the payment of employee salaries.
Additionally, the Company requires working capital to fund the work in
process inventory during the production of units for sale to customers.
As of June 30, 1996, Green Oasis had a net working capital deficit of
$1,663,000.
Commercial production of the Company's products will require
additional work to complete the integration of the thermal oxidizer
into the waste oil conversion equipment. The thermal oxidizer was
added to the original design in 1994 based on recommendations of
engineering consultants and DHEC. The thermal oxidizer's purpose is
two-fold: to contain any air emissions and to supply heat for the
thermal cracking process. The use of the thermal oxidizer is not the
only technology available to accomplish these procedures, however, and
the Company can either continue to develop the units to accommodate
the thermal oxidizer or it can use an enclosed gas flare system which
it believes will simplify the process. Due to the lack of funds after
March 31, 1995, Green Oasis has not operated a production process nor
completed any significant further development of the design of the
system since that date. Consequently, the Company has not yet
completed all research and development for its waste oil conversion
equipment, and there can be no assurance that it will be able to
obtain the financing to complete the development of such equipment.
The Company is presently defending a number of lawsuits, most of
which are from various creditors, especially suppliers, who have not
been paid for their products and services. The Company has recorded
liabilities for the amounts that it believes can settle those
judgments and obligations. Two other suits involve the customers to
whom the three units were sold. These suits are being defended
vigorously by the Company which believes that it has meritorious
defenses, and in some instances, valid counterclaims. There can be
no assurances, however, as to the outcome of the lawsuits. See Note
F to the Condensed Financial Statements.
<PAGE>
Liquidity and Capital Resources (Continued)
The Company and Approved Oil Services, Inc. of Denver, Colorado,
have signed a letter of intent for Green Oasis to purchase the waste
oil collector's operations. The purchase price is being negotiated
and will be paid in cash and securities of Green Oasis.
On June 28, 1996, the Company became the general partner in a South
Carolina limited partnership which has been formed to raise capital
through the sale of limited partnership interests. The Partnership
intends to purchase the Company's equipment for approximately
$1,200,000 and to operate a waste oil distillation plant. The Company's
management will also manage the Partnership. The sale of the equipment
will provide working capital to Green Oasis so that its research and
development activities can continue as well as manufacturing of
equipment for sale to customers. There can be no assurances, however,
that enough capital will be raised from the sale of the partnerhsip
interests to finance the equipment purchase.
Green Oasis is continuing to negotiate with its creditors for
further reduction of its payables and notes. The amount that creditors
may consider converting during the remainder of 1996 approximates $700,000.
<PAGE>
Part II. Other Information
Item 3. Preferred Stock Dividends in Arrears
Amount of dividends in
Due date of arrears at
dividends July 17, 1996
----------- ----------------------
June 30, 1993 $ 10,451
December 31, 1993 32,772
June 30, 1994 43,436
December 31, 1994 50,479
June 30, 1995 3,080
December 31, 1995 3,080
June 30, 1996 3,080
----------
$ 146,378
==========
Item 6(a). Exhibits
The exhibits listed on the accompanying Index to Exhibits on page 16
are filed as part of this Report.
<PAGE>
SIGNATURE
In accordance with the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Green Oasis Environmental, Inc.
(Registrant)
Date: July 23, 1996 /s/ William D. Carraway
-------------------- -------------------------------------
William D. Carraway
President and Chief Executive Officer
(Chief Financial Officer)
<PAGE>
Index to Exhibits
Exhibit No. Description Page
10.22 Agreement of Limited Partnership
of GOE Plant Partnership I, L.P. ________
10.23 Warrant to purchase up to 15,000
shares of common stock of Green
Oasis Environmental, Inc. ________
10.24 Certificate of Limited Partnership
of GOE Plant Partnership I, L.P. ________
10.25 Sale of equipment and installation
agreement between Green
Oasis Environmental, Inc. and
GOE Plant Partnership I, L.P. ________
11 Statement of Computation of
Earnings per share ________
<PAGE>
EXHIBIT 10.22
THE PARTNERSHIP INTERESTS OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND SUCH LAWS. THE PARTNERSHIP INTERESTS CAN NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
AND SUCH LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE
ACT AND SUCH LAWS.
AGREEMENT OF
LIMITED PARTNERSHIP OF
GOE PLANT PARTNERSHIP I, L.P.
This Agreement of Limited Partnership ("Agreement") is made and
entered into as of the ___ day of June, 1996, by and among Green Oasis
Environmental, Inc., a Florida corporation (the "General Partner"),
Christopher McG. Holmes, a resident of the State of South Carolina (the
"Original Limited Partner"), and those other parties who from time to time
execute this Agreement or counterparts hereof as limited partners and whose
names shall be set forth on Schedule I attached hereto (the "Limited Partners").
W I T N E S S E T H:
WHEREAS, the General Partner and the Original Limited Partner hereby
form a limited partnership under the South Carolina Uniform Limited
Partnership Act; and
WHEREAS, it is the intent of the Partnership to admit Limited Partners
to the Partnership for the purpose of acquiring the additional capital needed
to effectuate the purposes of the Partnership as set forth in this Agreement;
and
WHEREAS, in furtherance of the purposes referred to above, the parties
hereto desire to provide for, among other things, (i) the withdrawal of the
Original Limited Partner; (ii) the admission of the Limited Partners; and
(iii) the payment of Capital Contributions by the Partners to the Partnership.
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
Article I
Formation and Name; Filings; Place of Business; Term
1.01 Formation and Name. The parties have formed a limited partnership
under the South Carolina Uniform Limited Partnership Act under the name of
<PAGE>
"GOE Plant Partnership I, L.P.". The General Partner may, in compliance with
all requirements of the Act, change the name of the Partnership from time to
time.
1.02 Filings. The General Partner, on behalf of the Partnership, shall
file with the Office of the Secretary of State of the State of South Carolina
a Certificate of Limited Partnership for the purpose of forming the Partnership
as a limited partnership pursuant to the Act. The Partners agree to take such
further actions and make such filings as may be required to maintain the
Partnership as a limited partnership under the Act.
1.03 Place of Business; Registered Office and Registered Agent. The
principal place of business and the mailing address of the Partnership shall
be 184 East Bay Street, Charleston, South Carolina 29401, or such other place
or places as the General Partner may at any time or from time to time
determine. The General Partner may establish additional places of business
of the Partnership when and where required by the Partnership's business.
The registered office of the Partnership shall be 184 East Bay Street,
Charleston, South Carolina 29401 and the registered agent at that address is
William D. Carraway.
1.04 Term. The Partnership shall dissolve on June 30, 2016 unless
sooner dissolved according to the terms of this Agreement.
Article II
Definitions
2.01 Definitions. The terms defined in this Section 2.01 (except as
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Agreement shall have the respective meanings herein
set forth.
"Act" means the South Carolina Uniform Limited Partnership Act of 1976
as enacted and amended from time to time.
"Affiliate" means (a) any Person directly or indirectly controlling,
controlled by or under common control with another Person, (b) any Person
owning or controlling 10 per cent or more of the outstanding voting securities
of those other Persons, (c) any officer, director or partner of that Person,
and (d) if that other Person is an officer, director, or partner, any company
for which that Person acts in any such capacity.
"Agreement" means this Agreement of Limited Partnership, as amended
from time to time.
"Bankruptcy" or "Bankrupt" means, with respect to any Partner, the
Partner making an assignment for the benefit of creditors, becoming a party
to any liquidation or dissolution action or proceeding with respect to that
Partner, or any bankruptcy, reorganization, insolvency or other proceeding
for the relief of financially distressed debtors with respect to that Partner,
or a receiver, liquidator, custodian or trustee being appointed for that
<PAGE>
Partner or a substantial part of that Partner's assets, and, if any of the
same occur involuntarily, the same not being dismissed, stayed or discharged
within 90 days; or the entry of an order for relief against that Partner
under Title 11 of the United States Code. A Partner shall be deemed Bankrupt
if the Bankruptcy of that Partner shall have occurred and be continuing.
"Business" means the operation of a business for the conversion of
waste motor oil into marketable fuels through the acquisition, maintenance
and operation of the Equipment.
"Capital Account" means, with respect to any Partner, (i) the amount
of cash that Partner has contributed to the Partnership as set forth in
Schedule I, plus (ii) the net fair market value of any property that Partner
has contributed to the Partnership, plus (iii) the amount of income or gain,
or items thereof allocated to that Partner (including tax exempt income), but
excluding any income or gain described in Internal Revenue Service Regulation
1.704-1(b)(4)(i), and plus (iv) the amount of Partnership liabilities assumed
by such Partner or secured by any Partnership property distributed to such
Partner other than the liabilities referred to in (vi) below, less (v) the
amount of losses, costs and expenses (or items thereof) allocated to that
Partner, less (vi) the amount of all cash and the net fair market value of
all property distributed to that Partner, and less (vii) that Partner's share
of any other expenditures of the Partnership that are not deductible by the
Partnership for federal income tax purposes and not allowable as additions to
the basis of Partnership property. A Capital Account shall be maintained
for each Partner in accordance with the Code and the Regulations thereunder,
including Treasury. Reg. 1.704-1(b).
"Capital Contribution" means the total amount of cash and agreed fair
market value of any other property contributed or agreed to be contributed,
as the context requires, to the Partnership by each Partner, pursuant to
Schedule I or otherwise pursuant to the terms of this Agreement. Any
reference to a Partner's Capital Contribution shall include the Capital
Contribution made by a predecessor holder of the interest of that Partner.
"Capital Transaction" means a transaction in which all or any portion
of the Equipment is transferred, conveyed or sold (except sale of personal
property in the ordinary course of business), including a condemnation or
other taking, or any financing or refinancing of the Equipment.
"Cash Expenditures" means all disbursements of cash during the year
(excluding distributions to Partners), including, without limitation, payment
of operating expenses, payment of principal and interest on the Partnership's
indebtedness, cost of repair and rehabilitation of the Equipment, amounts
allocated to reserves by the General Partner, any net increase in reserves
and the payment of the fees and reimbursement of expenses as set forth in
Article VI.
"Cash Flow" means the excess of Cash Receipts over Cash Expenditures.
Cash Flow shall be determined separately for each Fiscal Year or portion
thereof.
"Cash Flow from Operations" means Cash Flow resulting from the
operation of the Business other than from capital transactions.
<PAGE>
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived, including, without limitation, cash from operations,
net insurance recoveries, Capital Contributions, and the net reduction in
the amount of any reserve maintained by or for the Partnership.
"Certificate" means the Certificate of Limited Partnership, as
amended from time to time, required under the Act to be filed in the office
of the Secretary of State of South Carolina.
"Code" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision or provisions of succeeding law), and the regulations
promulgated thereunder (the "Regulations").
"Consent" means either the written consent of a Person to do the act
or thing for which the consent is solicited, or the act of granting such
consent, as the context may require.
"Equipment" means a distillation processing plant used to convert
waste oil into marketable fuels using the EnviroEconomics System Process
developed by the General Partner.
"Fiscal Year" means the fiscal year of the Partnership, which shall
end each December 31.
"General Partner" means Green Oasis Environmental, Inc., a Florida
corporation, and any other Person admitted as a General Partner pursuant to
Article IX.
"IRS" means the Internal Revenue Service.
"Limited Partner" or "Limited Partners" means any Person or Persons
admitted to the Partnership except the General Partner and the Original
Limited Partner (except to the extent the General Partner and/or the Original
Limited Partner acquire Partnership Interests pursuant to Section 4.03) and
shall include a Substitute Limited Partner in that person's capacity as a
Limited Partner of the Partnership.
"Memorandum" means the private placement memorandum used by the
Partnership in connection with the sale of Partnership Interests, as that
document may subsequently be amended or supplemented.
"Net Income or Loss" means the Partnership net income or loss from
the operation of the Partnership Business and investment of any of its assets
(including the sale, exchange or other disposition of all or any portion of
its assets or property), as determined for federal income tax purposes on an
annual basis (or for a shorter period if required by the Agreement), under
the accrual method of accounting, or such other method as is chosen by the
General Partner. Any adjustments made pursuant to Section 743 of the Code
shall not be taken into account in determining net income or loss. Every
item of income, gain, loss, deduction, credit, or tax preference entering
<PAGE>
into the computation of that net income or loss, or applicable to the period
during which that net income or loss was realized, shall be considered
allocated to each Partner in the same proportion as net income or losses are
allocated to that Partner.
"Notice" means a writing containing the information required by this
Agreement to be communicated to any Person, sent by registered, certified or
regular mail, postage prepaid, to that Person at the last-known address of
that person; provided, however, that any communication containing that
information sent to that Person and actually received by that Person shall
constitute Notice for the purposes hereof.
"Partner" or "Partners" means the General Partner and any Limited
Partner or Limited Partners.
"Partnership" means the limited partnership formed pursuant to this
Agreement as it may from time to time be constituted, amended and, if
necessary, reconstituted.
"Partnership Interest" means the percentage ownership interest of a
Partner in the Partnership at any particular time as set forth on Schedule I
attached hereto, as amended from time to time. The price of a Partnership
Interest, purchased from the Partnership, shall be $50,000. Reference to a
majority, or specified percentage, in interest of the Limited Partners, means
Limited Partners who, in the aggregate, own greater than 50%, or the
specified percentage, respectively, of the total number of Partnership
Interests held by all Limited Partners. The Partnership Interest
specifically includes the right of that Partner to any and all benefits to
which that Partner may be entitled as provided in this Agreement and in the
Act, together with the obligations of that Partner to comply with all the
terms and provisions of this Agreement and the Act.
"Person" means any individual, partnership, corporation, trust or
other entity.
"Subscription Agreement" means an agreement signed by a Limited
Partner, in the form attached to the Memorandum, by which the Limited Partner
agrees to purchase Partnership Interests.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.02.
2.02 Interpretation. Words of the masculine gender shall be deemed
and construed to include correlative words of the feminine and neuter
genders, and vice versa, when applicable. Words importing the singular
number shall include the plural number, and vice versa, unless the
context otherwise dictates.
<PAGE>
Article III
Purpose and Business of the Partnership
3.01 Purpose of the Partnership. The purpose of the Partnership is
to operate a business for the conversion of waste motor oil into marketable
fuels through the acquisition, maintenance and operation of the Equipment.
3.02 Authority of the Partnership. To carry out its purpose, and not
in limitation thereof, the Partnership, acting by and through the General
Partner, is empowered and authorized to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to, or convenient
for the furtherance and accomplishment of its purpose, and for the protection
and benefit of the Partnership including, but not limited to the following:
(a) Own and maintain the Equipment and acquire and own such personal
property as may be necessary to effectuate the foregoing purpose;
(b) Enter into any kind of activity, and perform and carry out
contracts or agreements of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the Business of the Partnership;
(c) Borrow money and issue evidences of indebtedness, or assume
indebtedness, in furtherance of the Partnership Business and secure any such
indebtedness by mortgage, pledge or other lien on the Equipment, or any other
asset of the Partnership; and
(d) Subject to the limitations expressly set forth elsewhere in this
Agreement, negotiate for and conclude agreements for the sale or other
disposition of the Equipment, or for any financing or refinancing of the
Equipment.
Article IV
Partners and Capital Contributions
4.01 General Partner. The name, address and Capital Contribution of
the General Partner is set forth on Schedule I.
4.02 Original Limited Partner; Withdrawal. Effective upon the
admission of the first Limited Partner pursuant to Section 4.03, the Original
Limited Partner shall automatically withdraw from the Partnership and his
Capital Contribution thereupon shall be refunded to him.
4.03 Limited Partners.
(a) The General Partner shall offer and may issue and sell up to
30 Partnership Interests to Persons desiring to become Limited Partners.
Unless specifically waived by the General Partner, the minimum number of
Partnership Interests that may be subscribed for by a Limited Partner shall
be one Partnership Interest. Upon receipt of Subscription Agreements and
<PAGE>
cash or in kind contributions, the General Partner may accept such
Subscription Agreements and admit such Persons as Limited Partners. At such
time, Schedule I of this Agreement shall be amended to reflect such admission
and the effective date thereof. There may be more than one such admission
date, each of which shall be reflected in a revised Schedule I. Subscriptions
may be accepted from no more than 35 non-accredited investors, as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, with immediate family members (and any trust for the benefit of any
such person) being counted as a single investor.
(b) Each person who shall be listed as a Limited Partner on Schedule
I shall have executed a Subscription Agreement, which shall authorize the
General Partner, as attorney-in-fact for such Person, to execute this
Agreement on behalf of such Person, and shall further provide that such
Person agrees to be bound by the terms of this Agreement as a Limited Partner.
Each Subscription Agreement shall have been accepted by the General Partner.
Each Limited Partner shall have contributed to the Partnership, in cash or in
kind, that amount of capital which shall be set forth opposite his or her
name on Schedule I.
(c) The Limited Partners shall have no liability to provide funds or
make Capital Contributions to the Partnership other than the Capital
Contributions as set forth in their Subscription Agreements.
(d) No Limited Partner shall be paid interest on his Capital
Contribution.
4.04 Return of Capital Contributions of the Partners. Except as
otherwise provided in this Agreement, the Partnership shall not redeem or
repurchase any Partnership Interests and no Partner shall be entitled to
demand or receive the return of his Capital Contribution. No Limited
Partner shall have the right to receive any property from the Partnership
other than cash.
4.05 Additional Capital Contributions. If deemed necessary by the
General Partner, each Partner shall be required to contribute additional
Capital Contributions in accordance with the following procedure:
(a) (i) Each Partner shall contribute to the Partnership's
capital the funds required, in the same ratio as his percentage Partnership
Interest bears to all percentage Partnership Interests of all Partners.
(ii) If any Partner (hereinafter called "the Defaulting Partner")
shall fail (within ten (10) days after written demand) to contribute his share
of any capital contribution required pursuant to this Section 4.05, there
shall be the following consequences:
(A) The non-defaulting Partners and the Partnership shall
have such rights, remedies and privileges against the Defaulting Partner as
may be available under the law including, without limitation, the right to
recover from the Defaulting Partner the amount of the contribution in default
("the Deficiency").
<PAGE>
(B) (I) The non-defaulting Partners, or any of them, shall
have the right, without further notice, to advance the Deficiency. If more
than one non-defaulting Partner shall desire to advance the Deficiency, each
such non-defaulting Partner shall advance the portion of the Deficiency
determined by multiplying the Deficiency by a fraction, the numerator of
which shall be the percentage Partnership Interest of such non-defaulting
Partner and the denominator of which shall be the total of the percentage
Partnership Interests of all of the non-defaulting Partners desiring to
advance the Deficiency. All advances of the Deficiency shall be repayable
by the Defaulting Partner. The share of the Defaulting Partner in any
ordinary or liquidating distributions to which he would otherwise become
entitled under this Agreement shall be applied to the repayment to each
advancing Partner, on a pro rata basis, of the portion of the Deficiency
which he has advanced and the interest and penalty payable thereon, before
any part of such distributions shall be paid to the Defaulting Partner.
(II) Unless the total amount advanced by a
non-defaulting Partner has been repaid within sixty (60) days, or such longer
period as the advancing Partner may designate, after the date of the Purchase
Notice (as defined in the next succeeding clause below), each advancing
Partner shall (if he shall elect to do so by written notice ("Purchase Notice")
to the Defaulting Partner) be deemed to have purchased, for a price equal to
the amount of his respective advance of the Deficiency which is unpaid, that
portion of the percentage Partnership Interest of the Defaulting Partner
which bears the same ratio to the entire percentage Partnership Interest of
the Defaulting Partner as the unpaid advance bears to such sum plus all other
then unpaid advances of the Deficiency by other non-defaulting Partners. Such
purchase by a non-defaulting Partner shall be deemed to have occurred sixty
(60) days (or such longer period as the advancing Partner may designate)
after the date of the Purchase Notice. Any such purchase shall be in full
satisfaction of the Defaulting Partner's obligation to the advancing Partner.
(C) So long as a Partner shall be a Defaulting Partner,
he shall have no right to make any decision in connection with the conduct of
the business of the Partnership and for so long as any Partner shall not have
the right to vote, his percentage Partnership Interest shall be disregarded
in determining whether the required vote has been obtained.
(b) Except as otherwise provided in this Section 4.05, no Partner
shall have any obligation to contribute additional funds to the capital of
the Partnership notwithstanding that the lack of such funds may result in a
default by the Partnership under the terms of any of its obligations. However,
the Partners may advance additional funds to the Partnership as loans, and
such loans shall bear interest at two percent (2%) over the Prime Rate
published by the Wall Street Journal from time to time and shall be repayable
upon such terms as shall be designated by the Partners.
4.06 Simultaneous Admission of Limited Partners. Following the
initial admission of a Limited Partner, any Persons whose Subscription
Agreements are accepted thereafter on or before the Termination Date of the
offering of Partnership Interests, as set forth in the Memorandum, shall be
admitted as Limited Partners effective as of the date on which their
respective Subscription Agreements are accepted by the General Partner.
<PAGE>
Article V
Allocations of Net Income or Loss and Distributions
5.01 Allocation of Net Income or Loss. For tax and accounting
purposes, Net Income or Loss (other than gain or loss allocated pursuant to
Section 5.05) shall be allocated among the Partners during any Fiscal Year,
90% to the Limited Partners and 10% to the General Partner.
For the year in which a Substitute Limited Partner is admitted to the
Partnership, that Substitute Limited Partner's allocable share of the Net
Income or Loss is limited to that share of the Net Income or Loss incurred by
the Partnership during the portion of the year in which he is a member of the
Partnership based upon the number of days that the assignor Limited Partner
and the Substitute Limited Partner each was the record holder of the
Partnership Interest during the Fiscal Year. Gain or loss on a Capital
Transaction shall be allocated among Partners of record on the date of the
event giving rise to such gain or loss.
5.02 Allocation and Distribution of Cash Flow.
(a) Cash Flow from Operations during any Fiscal Year shall be
allocated 90% to the Limited Partners and 10% to the General Partner.
(b) Cash Flow from capital transactions shall be allocated 90% to
the Limited Partners and 10% to the General Partner.
(c) Cash Flow, if any, shall be distributed to the Limited Partners
within 30 days after the end of each fiscal quarter during the term of the
Partnership, or more frequently if the General Partner so elects in its sole
discretion.
5.03 Overriding Allocation Provisions.
(a) Notwithstanding any provision of this Agreement to the contrary,
if a Partner receives an unexpected adjustment, an allocation, or a
distribution described in Treas. Reg.1.704-1(b)(2)(ii)(d)(4), (5), or (6),
under Section 704 of the Code which creates or increases a deficit balance in
the Partner's Capital Account, items of income and gain shall be allocated to
that Partner in an amount and manner sufficient to eliminate the Partner's
Capital Account deficit as quickly as possible. If any allocations are made
pursuant to the previous sentence, future allocations of income or gain to
that Partner will be reduced by an amount of income or gain equal to the
amount previously allocated to the Partner under the previous sentence.
(b) If there is a net decrease in the Partnership's "minimum gain"
(as defined in Temp. Treas. Reg. 1.704-1T(b)(4)(iv)(c) or 1.704-1T(b)(4)(iv)
(h)(6)) during a fiscal year, each Partner with a deficit balance in his
Capital Account at the end of the fiscal year will be allocated, before any
other allocation of Partnership items is made pursuant to this Agreement,
items of income and gain for the fiscal year, and, if necessary, subsequent
fiscal years, in an amount equal to the greater of: (i) the portion of that
Partner's share of the net decrease in Partnership minimum gain during that
<PAGE>
year that is allocable to the disposition of the Equipment or any other
Partnership asset subject to nonrecourse liabilities; or (ii) the deficit
balance in that Partner's Capital Account at the end of that year (determined
before any allocation of Partnership income, gain, loss, deduction, or Code
section 705(a)(2)(B) expenditure for that year and excluding from that deficit
Capital Account balance any amount that Partner is deemed to be obligated to
restore pursuant to the next to last sentences of Temp. Treas.
Reg. 1.704-lT(b)(4)(iv)(f) and (h)(5) after taking, into account thereunder
any changes during that year in Partnership minimum gain or in the minimum
gain attributable to any Partner nonrecourse debt). This Section 5.03 is
intended to comply with the minimum gain charge-back requirements in Temp.
Treas. Reg. 1.704-1T(b)(4)(iv)(e) and shall be interpreted consistently
therewith.
5.04 Power of General Partner To Vary Allocations. It is the intent
of the Partners that each Partner's distributive share of Net Income or Loss,
Distributable Cash Flow and gain or loss shall be determined and allocated in
accordance with the provisions of this Article V to the fullest extent
permitted by Code section 704(b) and the Regulations thereunder. Therefore,
if the Partnership is advised that any allocation provided in this Article V
is unlikely to be respected for federal income tax purposes, the General
Partner is granted the power in Section 7.02(a), subject to certain
limitations, to amend the allocation provisions of this Agreement to the
minimum extent necessary to effect the plan of allocations and distributions
provided in this Agreement.
5.05 Allocations and Distributions Among Limited Partners. Allocations
and distributions to Limited Partners shall be allocated in proportion to
their respective Capital Contributions, except as may be otherwise expressly
provided in this Agreement.
5.06 No Priority. No Limited Partner shall have priority over any
other Limited Partner, either regarding profits, losses, credits, or
distributions or regarding any return of capital, except as provided herein.
Article VI
Compensation and Fees
6.01 Reimbursement to the General Partner for Expenses and Fees
Advanced. Other than the salaries and overhead of employees of the General
Partner, which employees shall include the General Manager and Assistant
General Manager of the Business, and the expenses associated with the
offering of the Partnership Interests, the General Partner and its Affiliates
shall be entitled to reimbursement for all expenses of the Partnership and
the Business incurred or paid by it on behalf of the Partnership, both during
the offering of Partnership Interests and thereafter, including travel, the
actual cost of goods and materials used by the Partnership, legal fees and
accounting and bookkeeping fees charged to the Partnership or the General
Partner.
<PAGE>
Article VII
Rights, Powers and Duties of the General Partner
7.01 Management and Control of the Partnership.
(a) Except as otherwise set forth in this Agreement, the General
Partner has the exclusive right to manage and control the Business of the
Partnership for the purposes herein stated and is hereby authorized to take
any and all actions it deems necessary in accordance with the provisions of
this Agreement.
(b) No Limited Partner (except one who may also be a General
Partner, and then only in its capacity as a General Partner within the scope
of its authority hereunder) shall participate in or have any control over
the Partnership business or shall have any authority or right to act for or
bind the Partnership. The exercise by the Limited Partners of any of their
voting and other rights pursuant to and in accordance with this Agreement
shall not constitute participation in or control over the Partnership
business.
7.02 Authority of the General Partner.
(a) The General Partner, on behalf of the Partnership and in
furtherance of the business of the Partnership, shall have the authority to
perform all acts that the Partnership is authorized to perform, including,
but not limited to, the following:
(1) To acquire, hold (in the Partnership's name), maintain,
operate, sell, transfer, convey, exchange, refinance or otherwise dispose of
or deal with the Equipment or any part thereof, at such price and upon such
terms as the General Partner deems to be in the best interests of the
Partnership, subject to obtaining the Consent or approval of the Limited
Partners as may be required herein;
(2) To employ, on behalf of the Partnership, legal, financial,
accounting, and operational agents, counsel and assistance, as well as
initial and nonrecurring professional evaluation, advice and recommendations
concerning and with respect to the Business and to employ Persons in the
operation and management of the business of the Partnership, on such terms
and for such compensation as the General Partner shall determine, subject,
however, to the limitations regarding compensation to the General Partner
contained herein;
(3) To open accounts and deposits and maintain funds in the
name of the Partnership in banks or savings and loan associations; provided,
however, that the Partnership's funds shall not be commingled with the funds
of any other Person; to invest in short-term debt obligations (including
obligations of federal and state governments and their agencies, commercial
paper, and certificates of deposit of commercial banks or savings institutions)
such funds as are temporarily not required for investment in the Business or
Partner distributions;
<PAGE>
(4) To cause the Partnership to make or revoke any of the
elections under the Code that are made at the Partnership level;
(5) To borrow money (and execute promissory notes) for
investment in the Business, and the payment of fees and expenses (including
fees payable to the General Partner and its Affiliates) and, if security is
required therefor, to encumber any Partnership asset, to pledge or assign its
Partnership Interest in the Partnership as collateral for any borrowing, to
assume indebtedness secured by the Equipment, and to prepay, in whole or in
part, refinance, increase, modify, consolidate or extend any note or other
security device, all of the foregoing on such terms and in such amounts as
the General Partner, in its sole discretion, deems to be in the best interests
of the Partnership;
(6) To execute, sign, and deliver in furtherance of any or all
of the purposes of the Partnership, any and all agreements, contracts,
documents, certifications, subscriptions and other instruments necessary or
convenient in connection with the business of the Partnership; all of which
may contain such terms, provisions and conditions as the General Partner, in
its sole and absolute discretion, shall deem appropriate and to do any and all
other acts or things necessary, proper, convenient or advisable to effectuate
and carry out the intent and purposes of the Partnership;
(7) To require in any Partnership contracts that the General
Partner shall not have any personal liability thereon but that third parties
are to look solely to the Partnership and its assets for satisfaction;
(8) To make and revoke any election permitted the Partnership
by any taxing authority;
(9) Notwithstanding anything herein to the contrary, to amend
this Agreement and the Certificate without the Consent or vote of any of the
Limited Partners: (i) to reflect the reduction of the Capital Accounts upon
the return of capital to Partners; (ii) to add to the representations, duties
or obligations of the General Partner or surrender any right or power granted
to the General Partner herein; (iii) to cure any ambiguity or to correct or
supplement any provision herein that may be inconsistent with any other
provision herein; and (iv) to amend the provisions of Article V relating to
the allocations among Partners if the allocations provided therein are
unlikely to be respected for federal income tax purposes. The General
Partner is empowered to amend those provisions to the minimum extent
necessary to effect the plan of allocations and distributions provided in
this Agreement. New allocations made by the General Partner described above
shall be deemed to be made pursuant to the fiduciary obligation of the
General Partner to the Partnership and the Limited Partners, and no such new
allocation shall give rise to any claim or cause of action by any Limited
Partner;
(10) To do all acts it deems necessary or appropriate for the
protection and preservation of the Partnership assets, including the
establishment of reserves;
<PAGE>
(11) To compromise, submit to arbitration, sue on or defend all
claims involving the Partnership; and
(12) To engage in any kind of activity and to perform and carry
out contracts of any kind necessary to, in connection with, or incidental to
the accomplishment of the purposes of the Partnership.
(b) The General Partner may delegate all or any of its duties under
this Agreement and in furtherance of any such delegation may appoint, employ
or contract with any person, including Affiliates, that it, in its sole
discretion, deems necessary or desirable for the transaction of the business
of the Partnership, which persons may, under the supervision of the
General Partner: (i) administer the day-to-day operation of the Partnership;
(ii) serve as the Partnership's advisors and consultants in connection with
policy and investment decisions made by the General Partner; (iii) act as
consultants, accountants, attorneys or in any other capacity deemed by the
General Partner to be necessary or desirable; and (iv) perform such other
acts or services for the Partnership as the General Partner, in its sole and
absolute discretion, may approve.
(c) No Person dealing with the General Partner shall be required to
determine its authority to make any commitment or undertaking on behalf of
the Partnership, nor to determine any fact or circumstance bearing upon the
existence of its authority.
7.03 Authority of the General Partner and Affiliates to Deal with the
Partnership. The General Partner and its Affiliates shall have the right to
contract or otherwise deal with the Partnership subject to the following
restrictions:
(a) With respect to any loans made by the General Partner to the
Partnership, the General Partner shall not (i) receive interest or other
financing charges or fees in excess of those amounts that would be charged by
third-party financing institutions on comparable loans for the same purpose
in the same geographic area, and in no event greater than two per cent above
the prime rate as published from time to time by the Wall Street Journal, or
(ii) require prepayment charges or penalties on any such loans; and
(b) The General Partner shall not cause the Partnership to loan
Partnership funds to the General Partner or any of its Affiliates.
7.04 Duties and Obligations of the General Partner.
(a) The General Partner shall take all action that may be necessary
or appropriate for the continuation of the Partnership's valid existence as
a limited partnership under the laws of the State of South Carolina.
(b) The General Partner shall cause to be prepared and shall file on
or before the due date (or any extension thereof) any federal, state, or
local tax returns required to be filed by the Partnership. The General
<PAGE>
Partner shall cause the Partnership to pay any taxes payable by the
Partnership.
(c) The General Partner shall devote to the Partnership such time as
may be necessary for the proper performance of its duties under this Agreement,
but the General Partner shall not be expected to devote its full time to the
performance of those duties.
7.05 Other Business of the General Partner.
(a) The General Partner may engage independently or with others in
other business ventures of every nature and description. Nothing in this
Agreement shall be deemed to prohibit the General Partner or any Affiliate of
the General Partner from dealing with, or otherwise engaging in business with,
Persons (other than Affiliates of the General Partner) transacting business
with the Partnership.
(b) Neither the General Partner, nor any Affiliate of the General
Partner, shall be obligated to present any particular investment opportunity
to the Partnership even if that opportunity is of a character which, if
presented to the Partnership, could be taken by the Partnership.
(c) Neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership relationship created hereby in or
to those other ventures or activities or to the income or proceeds derived
therefrom and the pursuit of those ventures, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper.
7.06 Limitation on Liability of the General Partner and Affiliates;
Indemnification.
(a) The General Partner and its Affiliates shall not be liable for
any action or inaction of the General Partner or its Affiliates if they
determined, in good faith, that course of conduct was in the best interests
of the Partnership and the course of conduct did not constitute fraud, gross
negligence or willful misconduct by the General Partner or its Affiliates, or
breach by the General Partner of its fiduciary duty or any of the terms of
this Agreement.
(b) To the maximum extent permitted under the Act, the Partnership,
its receiver or its trustee, shall indemnify, save harmless and pay all
judgments and claims against the General Partner and its Affiliates from any
liability, loss or damage incurred by them or by the Partnership by reason of
any act performed or omitted to be performed by them while acting within the
scope of the authority of the General Partner, including costs and reasonable
attorneys' fees (which attorneys' fees shall be paid as incurred) and any
amount expended in the settlement of any claim of liability, loss or damage;
provided that (i) if that liability, loss or damage arises out of any action
or inaction of the General Partner or its Affiliates, the General Partner or
its Affiliates must have determined, in good faith, that course of conduct
was in the best interests of the Partnership and that course of conduct did
not constitute fraud, gross negligence or willful misconduct by the General
Partner or its Affiliates or breach by the General Partner of its fiduciary
<PAGE>
duty or any of the terms of this Agreement or a violation of federal or state
securities laws; and (ii) any such indemnification shall be recoverable only
from the assets of the Partnership and not from the assets of the Limited
Partners. All judgments against the Partnership and the General Partner or
its Affiliates, wherein the General Partner or its Affiliates are entitled to
indemnification, must first be satisfied from Partnership assets before the
General Partner or its Affiliates are responsible for these obligations.
Article VIII
Rights and Obligations of Limited Partners
8.01 Management of the Partnership. No Limited Partner, in that
status, shall take part in the management or control of the business of the
Partnership nor transact any business in the name of the Partnership. The
Limited Partners shall, however, have the powers and be entitled to exercise
the rights given to the Limited Partners by the terms of this Agreement and
under the Act, and the exercise of these rights and powers shall not
constitute participation by the Limited Partners in the control of the
Partnership's business. No Limited Partner shall have the right or power to:
(i) withdraw or reduce his contribution to the capital of the Partnership
except as a result of the dissolution and termination of the Partnership,
(ii) bring an action for partition against the Partnership, or (iii) cause
the dissolution and termination of the Partnership by court decree or
otherwise, except as set forth in this Agreement.
8.02 Transfer of Interest. If any Limited Partner desires to sell,
transfer, convey or otherwise dispose of his Partnership Interest, or any
portion thereof, he must first offer such Partnership Interest to the General
Partner, for the General Partner to purchase on the same terms and conditions
as such Limited Partner would offer to third parties. If after 30 days of
receipt of Notice offering such Partnership Interest, the General Partner has
not purchased the Partnership Interest from the offering Limited Partner, the
Limited Partner may sell such Partnership Interest to a third party on the
same terms and conditions offered to the General Partner; provided, however,
such third party shall only be admitted as a Limited Partner upon compliance
with Section 10.02 of this Agreement.
8.03 Limitation on Liability of Limited Partners. The liability of
each Limited Partner shall be limited to his Capital Contribution.
8.04 Power of Attorney.
(a) The General Partner, and its successors as General Partner, is
appointed the true and lawful attorney for each Limited Partner and in his
name, place and stead, may make, consent to, execute, sign, acknowledge,
swear to, file for recording at the appropriate public offices and publish:
(1) This Agreement and the Certificate;
<PAGE>
(2) All certificates, applications, fictitious name registrations
and amendments and cancellations thereof, instruments, and documents that may
be required under law, or by any state or governmental agency, or as may be
appropriate for the conduct of Partnership business, its continuation,
dissolution or termination;
(3) Any amendments to this Agreement, the Certificate and any
other document necessary to implement and give effect to any of the provisions
of this Agreement, and any provision to which the Consent of the Limited
Partners has been obtained;
(4) The correction of a false or erroneous statement in this
Agreement or in the Certificate; and
(5) All elections that may be made by the Partnership or the
Partners in respect of the Partnership under the Code.
(b) Each Limited Partner consents to execute and deliver to the
General Partner, within five days after the receipt of the General Partner's
written request therefor, such other and further powers of attorney and
instruments as the General Partner deems necessary to carry out the purposes
of this Section 8.04.
(c) In recognition of the fact that each of the Limited Partners
under this Agreement will be relying upon the power of the General Partner to
act as contemplated by this Agreement in any filing and other action by it on
behalf of the Partnership, the appointments and grants of authority made in
the Subscription Agreements and herein are special powers of attorney, coupled
with an interest, and shall survive the death, bankruptcy, dissolution or
incompetence of any Partner and the assignment by any Partner of his
Partnership Interest; provided that in the event of such an assignment, the
foregoing appointments and grants of authority shall survive only until such
time as the assignee is admitted to the Partnership and all required
documents and instruments have been duly executed, filed and recorded to
effectuate that substitution.
8.05 Exchange of Partnership Interest for Common Stock. Within the
first five (5) days of any calendar month during the Term of the right granted
under this Section 8.05, any Limited Partner shall have the right to exchange
his Partnership Interest for Green Oasis Environmental, Inc. ("Green Oasis")
common stock at a price which is equal to 80% of the average bid price of the
last five (5) business days of the preceding month. The Term of the right
granted under this Section 8.05 shall be three (3) years, commencing on the
one year anniversary of this Partnership Agreement and terminating on the five
year anniversary of this Partnership Agreement. A Limited Partner shall
exercise his right under this Section 8.05 by concurrently exchanging all,
but not less than all, of his Partnership Interest for the common stock.
<PAGE>
A Limited Partner may exchange all, but not less than all, of his
Partnership Interest for Green Oasis common stock, by delivering to Green
Oasis a written notice in the form of the Exchange Notice of Exhibit I of
the Memorandum.
Green Oasis is authorized to issue 20,000,000 shares of common stock.
Green Oasis will reserve at all times for the Term of the right granted under
this Section 8.05, free from all preemptory rights, out of its treasury or
authorized but unissued shares, or both, sufficient shares for the exercise of
the exchange. Shares of common stock issued pursuant to exercise of the
exchange shall be validly issued, fully paid and non-assessable.
Article IX
Withdrawal or Removal of a General Partner; Transfer
of Interest; Successor or Additional General Partner
9.01 Removal of a General Partner.
(a) The General Partner may be removed, without cause, if, and only
if, such removal is approved by 75% of all Partnership Interest held by
Limited Partners, excluding Limited Partners who are Affiliates of the
General Partner. If a General Partner is removed from the Partnership
without cause, that General Partner shall retain all of its Partnership
Interest in the capacity of a Limited Partner, including its interest in Net
Income and Loss and Distributable Cash Flow in the same percentages as it
would have received as General Partner. If the General Partner's removal
shall have been for cause, the General Partner's Partnership Interest (but
not the Partnership Interest held by the General Partner as a Limited Partner)
shall be assigned to any remaining General Partner or to such successor
General Partner as may replace the removed General Partner, in accordance
with Section 9.05. A General Partner shall be removed for cause only if at
least a majority in interest of the Limited Partners, excluding Limited
Partners who are Affiliates of the General Partner, determine and vote that
the removal was for cause and that determination is affirmed under the
arbitration provision below.
(b) The following shall be grounds for removal for cause of a
General Partner:
(1) Any intentional, material failure to meet its obligations
under this Agreement, or any intentional material violation of any other
provision of this Agreement or any provision of applicable law; or
(2) Conducting its own affairs or those of the Partnership in
such manner as would intentionally cause the termination of the Partnership
for federal income tax purposes or intentionally cause it to be treated as an
association taxable as a corporation.
(c) If the Limited Partners approve the removal of a General Partner
for cause by the requisite 75% vote, that General Partner may, within 30 days
after its notification in writing of such removal for cause, file an objection
in writing that the removal is not justified as a "for cause" removal. If the
<PAGE>
objection is timely filed, the question of whether that removal shall be for
cause or not for cause shall be submitted to arbitration pursuant to Section
14.01. All Partners shall have the right to appear before the arbitrator.
The Limited Partners, as a group, shall have all of the rights of a party in
interest before that arbitrator enjoyed by the General Partner, but only if a
majority in interest of the Limited Partners shall vote to exercise such
right. Pending the final decision of the arbitrator, the removed General
Partner shall retain its entire Partnership Interest as a Limited Partner.
(d) If a General Partner is removed, but not for cause as defined
above, the retention of any Partnership Interest that it owns as a Limited
Partner shall be subject to the right of a successor General Partner to
purchase such Partnership Interest for an amount to be agreed upon by the
removed General Partner and the successor General Partner. If they cannot
agree on mutually acceptable terms for such purchase, the question shall be
submitted to arbitration pursuant to Section 14.01. The successor General
Partner waives his right to purchase the Partnership Interest of the removed
General Partner unless, within 60 days of becoming a successor General
Partner, he gives to the removed General Partner Notice of his intent to
exercise that right.
(e) In any event, if a General Partner is removed, the Partnership
shall pay to it and its Affiliates all of the fees and reimbursements, if any,
set forth in the Agreement and Memorandum payable to that General Partner and
its Affiliates as of the effective date of its removal as a General Partner.
The full amount of the fees shall be paid to the removed General Partner no
later than 30 days after the effective date.
9.02 Resignation or Withdrawal of a General Partner. A General
Partner may not resign or withdraw from the Partnership without providing 60
days' prior written notice to all Limited Partners and, if there is no
remaining General Partner, providing a successor General Partner pursuant to
Section 9.05.
9.03 Transfer of Interest. A General Partner may not transfer or
sell any portion of its Partnership Interest without the prior Consent of a
majority in interest of the Limited Partners; provided, however, this Section
shall not apply to a sale or transfer pursuant to a resignation or withdrawal
of a General Partner in accordance with Section 9.02 or to the pledge or
assignment of a General Partner's Partnership Interest to a lending
institution as security for borrowing by that General Partner or an Affiliate
or as security for borrowing by or on behalf of the Partnership or to a sale
or transfer by a General Partner of any Limited Partnership Interest owned by
such General Partner.
9.04 Continuing Liability. If a General Partner resigns or withdraws
from the Partnership pursuant to Section 9.02, sells or transfers its
Partnership Interest pursuant to Section 9.03, or is removed pursuant to
Section 9.01, that General Partner shall be, and shall remain, liable for all
obligations and liabilities incurred by it as a General Partner before the
effective date of such removal but shall be free of any obligations or
liabilities incurred on account of the activities of the Partnership from and
after that date.
<PAGE>
9.05 Admission of a Successor or Additional General Partner. A
General Partner may at any time designate one or more additional Persons to
be a General Partner, subject to the General Partner and that Person agreeing
upon the Partnership Interest of that Person as a General Partner, and
provided that the interests of the Limited Partners shall not be affected
thereby. That Person shall become a successor or additional General Partner
only upon meeting the following conditions:
(a) The admission of that Person shall have been consented to by a
majority in interest of the Limited Partners;
(b) If the designated Person is a corporation, it shall have provided
the Partnership with evidence satisfactory to the Partnership of its authority
to become a General Partner and to be bound by terms of this Agreement;
(c) The designated person shall have accepted and agreed to be bound
by all the terms and provisions of this Agreement;
(d) The admission of the designated person is in conformity with the
Act and none of the actions taken in connection with the admission of the
designated Person will cause the termination or dissolution of the Partnership
or will cause it to be classified other than as a Partnership for federal
income tax purposes; and
(e) Any required or appropriate amendments and filings required under
the Act shall have been properly performed.
9.06 Effect of Bankruptcy, Death, Withdrawal, Dissolution or
Incompetency of a General Partner.
(a) In the event of the Bankruptcy, adjudication of incompetency,
withdrawal, death or dissolution of a General Partner, the business of the
Partnership shall be dissolved, unless reformed pursuant to Section 13.04.
(b) Upon the occurrence of any such event, that General Partner
shall immediately cease to be a General Partner and its interest shall
terminate; provided that the termination shall not affect any rights,
obligations, or liabilities of such General Partner then existing (whether or
not those rights, obligations or liabilities were known or had matured) or
the value, if any, of the interest of that General Partner.
<PAGE>
Article X
Transferability of Partnership Interest
10.01 Restrictions on Transfer of Partnership Interest.
(a) A Limited Partner may sell, transfer or assign, in whole or in
part, his Partnership Interest only if such sale, transfer or assignment is
in accordance with this Article X and only if such sale, transfer or
assignment will not affect the tax status of the Partnership or cause the
termination of the Partnership for federal income tax purposes.
Notwithstanding the foregoing, no Limited Partner may sell, transfer, convey
or otherwise dispose of any portion of his Partnership Interest without
having first offered such Partnership Interest to the General Partner in
accordance with Section 8.02 of this Agreement.
(b) Except as provided in this Article X, and as required by
operation of law, the Partnership shall not be obligated for any purpose
whatsoever to recognize the assignment by any Limited Partner of his
Partnership Interest until the Partnership has received actual notice thereof.
(c) Except for transfers by bequest, or under the laws of intestacy,
no Limited Partner shall sell, assign or otherwise transfer his Partnership
Interest, or any fraction thereof, unless the General Partner shall have
consented thereto and the Partnership Interests are registered under the
Securities Act of 1933 and any applicable state securities laws, or that
Limited Partner obtains an opinion of counsel which is satisfactory to the
General Partner that the Partnership Interests may be sold in reliance on an
exemption from the registration requirements, it being the understanding of
each Limited Partner that the Partnership has no obligation or intention to
register the Partnership Interests for resale under any federal or state
securities laws or to take any action that would make available any exemption
from the registration requirements of those laws. Those transfers shall be
by written instrument signed by the assigning Limited Partner, in such
form satisfactory to the General Partner, the terms of which are not in
contravention of any provisions of the Agreement, and shall be effective
only upon receipt by the General Partner.
(d) In no event shall a Limited Partner's Partnership Interests, or
any portion thereof, be sold, assigned or transferred (i) to a minor or an
incompetent, unless by will or intestate succession, and then only if a legal
representative of that minor or incompetent has been duly appointed according
to law; (ii) to any person not permitted to be a transferee under applicable
law, including, in particular but without limitation, applicable federal and
state securities laws; (iii) if, in the opinion of tax counsel to the
Partnership, such assignment would result in the termination under the Code of
the Partnership's taxable year or its status as a partnership for federal
income tax purposes; (iv) to a tax-exempt entity, a charitable remainder
trust or to a nonresident alien; or (v) if such assignment would affect the
Partnership's existence or qualification as a limited partnership under the
Act or the applicable laws of any other jurisdiction in which the Partnership
is then conducting business. Any such attempted assignment without the
<PAGE>
express written approval of the General Partner shall be void and ineffectual
and shall not bind the Partnership.
(e) From and after the effective date of a valid transfer or
assignment, an assignee or transferee shall be entitled to receive
distributions of Cash Flow and allocations of Net Income or Loss from the
Partnership attributable to the transferred Partnership Interests; provided,
however, the Partnership and the General Partner shall be entitled to treat
the Limited Partner who is the assignor or transferor of the Partnership
Interests as the absolute owner thereof in all respects, and shall incur no
liability for distributions of Cash Flow or allocations of Net Income or Loss
which are made in good faith to the Assignor or Transferor Limited Partner,
until such time as the written instrument of assignment or transfer has been
received by the Partnership, and the effective date of assignment or transfer
of Partnership Interests shall be the later of the last day of the month
during which (i) the Partnership receives the written instrument of assignment,
or (ii) the date on which that transfer by operation of law occurs.
10.02 Admission of Substitute Limited Partners.
(a) Subject to the other provisions of this Article X, an assignee of
the Partnership Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee or other recipient on any disposition
of that Partnership Interest in compliance with Section 10.01) shall be deemed
admitted as a Limited Partner only upon the satisfactory completion of the
following:
(1) Consent by the General Partner (which Consent shall be
within its sole discretion);
(2) Acceptance and agreement by the assignee to be bound by the
terms of this Agreement and such other documents or instruments as the General
Partner may require;
(3) Execution of a counterpart of this Agreement, evidencing the
Consents and agreements above, by the assignee;
(4) If the assignee is a corporation, provision to the General
Partner of evidence of its authority to become a Limited Partner; and
(5) Payment by the assignee to the Partnership of a transfer fee
that is sufficient to cover all reasonable expenses connected with the
substitution.
(b) A Substitute Limited Partner shall be deemed to have become such
on the date on which all of the foregoing requirements have been satisfied.
(c) The General Partner and the Partnership shall cooperate with the
Person seeking to become a Substitute Limited Partner by preparing the
documentation required by this Section 10.02 and making all official filings
<PAGE>
and publications as promptly as practicable after the satisfaction by the
assignee of the conditions contained in this Article X to the admission of
that Person as a Limited Partner. The General Partner shall cause this
Agreement to be amended, if necessary, to reflect the substitution of Limited
Partners, if any, at least once in each calendar quarter.
10.03 Rights of Assignee of Partnership Interest.
(a) Except as provided in this Article X, and as required by
operation of law, the Partnership shall not be obligated for any purpose
whatsoever to recognize the assignment by any Limited Partner of his
Partnership Interest unless such assignment is in accordance with this
Article X and until the Partnership has received actual notice of such
assignment.
(b) Any person who is the assignee of all or any portion of a Limited
Partner's Partnership Interest, but does not become a Substitute Limited
Partner, and desires to make a further assignment of that Partnership Interest,
shall be subject to all the provisions of this Article X to the same extent
and in the same manner as any Limited Partner desiring to make an assignment
of his Partnership Interest.
10.04 Effect of Bankruptcy, Death or Incompetency of a Limited Partner.
The Bankruptcy, death or adjudication of incompetency of a Limited Partner
shall not cause the termination or dissolution of the Partnership, and the
Business of the Partnership shall continue. Upon any such occurrence, the
trustee, receiver, executor, administrator, committee, guardian or
conservator of such a Limited Partner shall have all the rights of that
Limited Partner for the purpose of settling or managing his estate or property,
or to assign all or any part of his Partnership Interest and to join with the
assignee in satisfying conditions precedent to the admission of the assignee
as a Substitute Limited Partner.
Article XI
Books and Records; Accounting;
Tax Elections; Reports; Fiscal Year
11.01 Books and Records. The books and records of the Partnership shall
be maintained using the method of accounting that it elects to use for federal
income tax purposes. These and all other records of the Partnership, including
information relating to the status and performance of the Business, a list of
the names and addresses of all Limited Partners, and all other records required
to be kept under the Act shall be kept at the principal office of the Partnership,
or any other office established and designated by the General Partner, and shall
be available for inspection and copying at the reasonable request, and at the
expense, of any Partner, or his duly authorized representatives during ordinary
business hours.
11.02 Reports to Partners.
(a) The General Partner shall cause to be prepared within 75 days after
the end of each fiscal year Internal Revenue Form 1065 showing the allocation of
<PAGE>
Partnership profit and loss to each Partner for the preceding fiscal year. The
Partnership will transmit to each Limited Partner his respective Schedule K-1 and
will make available to Limited Partners, upon request, copies of the entire
Form 1065.
(b) The General Partner shall cause quarterly reports to be prepared for
each fiscal quarter of the Partnership, and shall cause a copy of those reports to
be transmitted to each Limited Partner within 30 days after the end of each such
quarter.
(c) Any financial statements required under this Section 11.02 shall not be
required to be audited.
11.03 Meetings of Partners. In any matter described in this Agreement on which
any Partner is entitled to grant (or deny) his Consent or cast his vote, such Partner
may accomplish the same by attending any meeting convened for all of the Partners
entitled to vote on the matter or he may grant to any Person a special or general power
of attorney to vote for him at such meeting or he may grant (or deny) his Consent in
writing. Said written Consent may be utilized at any meeting of the Partners or it
may be utilized, without a meeting, in obtaining the Consent of Partners to a matter
submitted to all Partners entitled to grant or deny Consent on said matter.
The General Partner may in its discretion convene a meeting for any purpose, and the
General Partner shall convene a meeting upon receiving a written request signed by
Limited Partners holding at least 40% of the Partnership Interests held by the
Limited Partners, excluding Limited Partners who are Affiliates of the General
Partner. A list of the names and addresses of all Partners shall be maintained
as part of the books and records of the Partnership and made available to any
Partner or his representative at his cost. Upon receipt of Notice of a meeting
from such Limited Partners stating the purpose(s) of the meeting, the General
Partner shall provide all Partners, within 10 days after receipt of said
request, Notice of a meeting and the purpose of such meeting to be held on a
date not less than 15 nor more than 60 days after receipt of said request,
at a time and place convenient to participants.
11.04 Section 754 Elections. In the event of a transfer of all or
any part of the Partnership Interest of either a General Partner or a Limited
Partner, the Partnership may elect, pursuant to Code sections 743 and 734
(or any corresponding provisions of succeeding law), to adjust the basis of
the Partnership property. However, notwithstanding an election pursuant to
Code section 754 having been made with respect to the Partnership Interest of
any Partner, the determination of profits, losses and Capital Account balances
shall, for all purposes of this Agreement, be made without taking into account
adjustments resulting from that election, and those adjustments shall
only be taken into account on the income tax returns of the Partners affected
thereby. The affected Partners shall pay the additional cost of computing
the adjustment to income or loss resulting from that election.
11.05 Designation of Tax Matters Partner. The General Partner is
hereby designated as the Partnership's "Tax Matters Partner" pursuant to Code
section 6231, and in that capacity is hereby authorized and empowered to act
for and represent the Partnership and each of the Limited Partners before the
<PAGE>
IRS in any audit or examination of any Partnership tax return and before any
court selected by the Tax Matters Partner for judicial review of any adjustment
assessed by the IRS. The Tax Matters Partner hereby accepts that designation.
Article XII
Amendments
12.01 Proposal and Adoption of Amendments Generally.
(a) Amendments to this Agreement to reflect the addition or substitution
of a Limited Partner, the designation of an additional or successor General Partner,
or the withdrawal of a General Partner shall be made at the time and in the manner
referred to in Section 12.03. Any other amendments to this Agreement, except for
those within the General Partner's power of attorney under Section 8.03, may be
proposed in the following manner:
(1) By the General Partner, which shall give Notice to the Limited
Partners of (i) the text of that amendment, and (ii) a statement of the purpose of
that amendment; or
(2) By 40% or more in interest of the Limited Partners (excluding
Affiliates of the General Partner), who shall submit to the General Partner (i)
the text of that proposed amendment, and (ii) a statement of the purpose of that
amendment. The General Partner shall, within 10 days after receipt of any such
proposal, give Notice to all Limited Partners of that proposal and statement of
purpose, together with the views of the General Partner with respect to that
proposed amendment.
(b) Amendments proposed pursuant to Section 12.01(a), subject to the
provisions of Section 12.02, shall be adopted if approved by a majority in
interest of the Limited Partners.
(c) The General Partner shall, within a reasonable time after the
adoption of any amendment to this Agreement, make any official filings or
publications required or desirable to reflect that amendment.
12.02 Limitation on Amendments. Notwithstanding the provisions of
Section 12.01, no amendment to this Agreement may:
(a) Convert the Partnership Interest of any Limited Partner into
the Partnership Interest of a General Partner or modify the limited liability
of any Limited Partner without the Consent of that Partner;
(b) Subject to Sections 5.04, 5.05 and 7.02(a)(10), modify the order
provided in Article V for allocation of Net Income or Losses, gain or loss,
Cash Flow and net proceeds resulting from the liquidation of the Partnership
without the Consent of a majority in interest of the Limited Partners;
<PAGE>
(c) Subject to Sections 5.04, 5.05 and 7.02(a)(10), modify the method
provided in Article V of determining distributions of Distributable Cash Flow
and net proceeds resulting from the liquidation of the Partnership without the
Consent of a majority in interest of Limited Partners;
(d) Amend Article VI, without the consent of the General Partner; or
(e) Amend this Article XII or Section 13.01, without the Consent of
all Partners.
12.03 Amendments on Admission or Withdrawal of Partners.
(a) Amendments to admit a Substitute Limited Partner shall be adopted
if the conditions specified in Section 10.02, respectively, shall have been
satisfactorily complied with and the amendment shall have been signed by the
General Partner and by the Person to be substituted or added and, if a Limited
Partner is to be substituted, by the assigning Limited Partner or his
attorney-in-fact.
(b) Amendments to reflect the designation of an additional or successor
General Partner shall be adopted if the conditions specified in Article IX shall
have been satisfactorily completed and the amendment shall have been signed by the
other General Partner(s) and by that additional or successor General Partner.
(c) Amendments to withdraw or remove a General Partner, if the business
of the Partnership is continued, shall be adopted if the conditions specified in
Article IX shall have been signed by the remaining or successor General Partner(s).
Article XIII
Dissolution, Winding Up, Liquidation and Termination
13.01 Dissolution of the Partnership. The Partnership shall be dissolved
upon the earlier of the expiration of the term of the Partnership or upon:
(a) The withdrawal, removal, Bankruptcy, death, dissolution or adjudication
of incompetency of a General Partner, unless the Partnership elects to reform the
Partnership and continue business pursuant to Section 13.04;
(b) The sale or other disposition of all of the Equipment;
(c) The written consent of all Partners; or
(d) The entry of a decree of judicial dissolution under the Act.
<PAGE>
13.02 Distributions Upon Dissolution. Limited Partners shall look solely
to the assets of the Partnership for all distributions with respect to the
Partnership and their Capital Contributions thereto and share of profits and
losses for tax purposes thereof, and shall have no recourse therefor (upon
dissolution or otherwise) against any General Partner or any Limited Partner.
13.03 Winding Up and Liquidation.
(a) Upon the dissolution of the Partnership pursuant to Section 13.01,
if the Partnership shall not have been reformed pursuant to Section 13.04, the
Partnership business shall be wound up and its assets liquidated as provided
in Section 13.03(c).
(b) The General Partner shall file all certificates and notices of the
dissolution of the Partnership required by law. The General Partner shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership's property and assets; provided, however, that if the General
Partner shall determine that an immediate sale of part or all of the Partnership
property would cause undue loss to the Partners, to avoid that loss, the
General Partner may, to the extent provided by the Act, defer the liquidation
as may be necessary to satisfy the debts and liabilities of the Partnership
to persons other than the Partners.
(c) The General Partner shall apply and distribute the liquidation
proceeds in the following order of priority:
(i) to the payment of liabilities and obligations of the
Partnership including loans from the Partners, if any, and expenses of winding
up;
(ii) to the establishment of such reserves as the General
Partner may reasonably deem necessary for any contingent liabilities and
obligations of the Partnership for such period as the General Partner shall
deem advisable for the purpose of disbursing such reserves in payment of such
liabilities or obligations and, at the expiration of such period, the balance
of such reserves, if any, shall be distributed as hereinafter provided;
(iii) to the Limited Partners to the extent of the aggregate
amount of their positive Capital Account balances and then to the General
Partner to the extent of its positive Capital Account balance; and
(iv) the balance to all the Partners in the same proportions as
proceeds of a Capital Transaction are distributed pursuant to Section 5.02.
References in this Article XIII to the General Partner winding up the
Partnership business shall also be deemed to refer to such other Person as
may be authorized under the Act to take such actions if the General Partner
is unable or unwilling to do so. If the Partnership has sold, or during the
winding up period, sells all or part of the Partnerships assets in a deferred
payment sale, the winding up period may be extended for any such period as
<PAGE>
the General Partner or the Person required by law to wind up the Partnership
deems reasonably necessary to collect the proceeds of such sale and interest
thereon.
(d) Upon the dissolution of the Partnership pursuant to Section 13.01,
the accountants for the Partnership shall promptly prepare, and the General
Partner shall furnish to each Partner, a statement setting forth the assets
and liabilities of the Partnership upon its dissolution. Promptly following
the complete liquidation and distribution of the Partnership property and
assets, the Partnership accountants shall prepare, and the General Partner
shall furnish to each Partner, a statement showing the manner in which the
Partnership assets were liquidated and distributed.
13.04 Reformation of the Partnership.
(a) If dissolution occurs under Section 13.01(a) or 13.01(d), the
remaining General Partner(s) or successor General Partner(s), if any, may
reform and continue the Partnership.
(b) If the Partnership is reformed upon dissolution pursuant to
Section 13.01(a), the remaining General Partner(s) or successor General
Partner(s) shall pay to the withdrawing General Partner or its legal
representatives for its Partnership Interest such purchase price as may
be agreed upon between the withdrawing General Partner and the remaining
General Partner(s) or successor General Partner(s). Each remaining General
Partner or successor General Partner shall pay its pro rata share of the
purchase price and shall receive its pro rata share of the Partnership
Interest of the withdrawing General Partner. If the purchase price for that
interest cannot be mutually agreed upon by the remaining General Partner(s)
or successor General Partner(s) and the withdrawing General Partner or their
legal representatives, the matter shall be submitted to arbitration pursuant
to Section 14.01. Payment for the Partnership Interest shall be
made within six months of final determination of the purchase price.
(c) The remaining General Partner(s) or successor General Partner(s),
if any, are authorized and shall immediately (1) give notice to the Limited
Partners of the occurrence of that event, and (2) make, execute and file for
recordation such amendments or documents or other instruments as are necessary
to reflect the termination of the interest of that General Partner, each
Limited Partner hereby consenting to that amendment.
13.05 Termination. Upon completion of the dissolution, winding up,
liquidation and distribution of the Partnership assets, the Partners shall
cease to be Partners of the Partnership, and the General Partner shall
execute, acknowledge, and cause to be filed all certificates and notices
required by the law to terminate the Partnership.
<PAGE>
Article XIV
Miscellaneous
14.01 Arbitration. Any dispute, controversy or claim arising out of
or in connection with, or relating to, this Agreement or any breach or alleged
breach hereof, except allegations of violations of federal or state securities
laws, shall, upon the request of any party involved, be submitted to and
settled by arbitration in the City of Charleston, State of South Carolina,
pursuant to the rules then in effect of the American Arbitration Association
(or at any other place or under any other form of arbitration mutually
acceptable to the parties so involved). Any award rendered shall be final
and conclusive upon the parties and a judgment thereon may be entered in the
highest court of the forum, state or federal, having jurisdiction. The
expenses of the arbitration shall be borne equally by the parties to the
arbitration, provided that each party shall pay for and bear the cost of
its own experts, evidence, and counsel's fees.
14.02 Burden and Benefit. The covenants and agreements contained in
this Agreement shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the respective parties
hereto.
14.03 Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of South Carolina.
14.04 Descriptive Headings. The headings of the articles and sections
of this Agreement are inserted for convenience only, and shall not be deemed
to be a part of this Agreement, and in no way shall define, limit, extend or
describe the scope or intent of any provisions hereof.
14.05 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy, all of
which together shall constitute one Agreement, binding on all parties hereto,
notwithstanding that all parties shall not have signed the same counterparts.
14.06 Notices. Any and all notices, offers, demands, elections, or
consents required or permitted to be made under this Agreement ("Notices")
shall be in writing, signed by the party giving such Notice, and shall be
deemed given and effective (i) when hand delivered (either in person by the
party giving such Notice or by his designated agent, or by commercial courier),
or (ii) on the third business day following the day (as evidenced by proof of
mailing) upon which such Notice is deposited, postage prepaid, certified mail,
return receipt requested, with the United States Postal Service, and addressed
to the other party at such party's respective address as set forth in
Schedule I, or at such other address as such party may hereafter designate
by Notice.
14.07 Severability of Provisions. Each provision of this Agreement
shall be considered severable and if for any reason any provision that is not
essential to the effectuation of the basic purposes of this Agreement is
determined to be invalid and contrary to any existing or future law,
<PAGE>
that invalidity shall not impair the operation of or affect those provisions
of this Agreement that are valid.
14.08 Entire Agreement. This Agreement, including information
incorporated herein by reference, sets forth all of the representations,
promises, agreements and understandings among the parties hereto with respect
to the Partnership, the Partnership business, and the property of the
Partnership.
14.09 Saving Clause. If any provision of this Agreement shall be, or
shall be found to be, unenforceable under federal law or under the laws of
the State of South Carolina, that provision shall be deemed amended to
conform with those laws.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
and seals as of the first date written above.
General Partner:
Green Oasis Environmental, Inc.
By: /s/ William D. Carraway
---------------------------
Title: President
------------------------
[CORPORATE SEAL]
Original Limited Partner:
/s/ Christopher McG. Holmes
-----------------------------
(SEAL)
Christopher McG. Holmes
<PAGE>
GOE PLANT PARTNERSHIP I, L. P.
SCHEDULE I
PARTNER INFORMATION
Capital Contribution
Admission /No. Part. Interests
Name and Address Date
General Partner:
Green Oasis Environmental
184 East Bay Street
Suite 302
Charleston, South Carolina 29401 $ _______
Limited Partners:
$ / Interests
$ / Interests
$ / Interests
$ / Interests
$ / Interests
Original Limited Partner:
__________________
__________________ $ ______
<PAGE>
EXHIBIT 10.23
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE
"ACTS"). NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT HERETO
UNDER ALL OF THE APPLICABLE ACTS, OR AN OPINION OF COUNSEL
SATISFACTORY TO GREEN OASIS ENVIRONMENTAL, INC. TO THE EFFECT THAT
SUCH REGISTRATIONS ARE NOT REQUIRED.
WARRANT
to Purchase up to 15,000 (subject to adjustment
as provided herein) Shares of
the common stock, $.01 par value of
GREEN OASIS ENVIRONMENTAL, INC.
Expiring on ___________________
THIS IS TO CERTIFY THAT, for value received,_______________________, or
his assigns, (the "Holder") is entitled to purchase from Green Oasis
Environmental, Inc., a corporation formed under the laws of South Carolina
(the "Company"), at the place where the Warrant Office designated pursuant to
Section 2.1 is located, at a purchase price per share of Three and 50/100
Dollars ($3.50) (as adjusted pursuant to the terms of this Warrant, the
"Exercise Price"), up to 15,000 duly authorized, validly issued, fully paid
and nonassessable common shares, $.01 par value, of the Company (the "Shares"),
and is entitled also to exercise the other appurtenant rights, powers and
privileges hereinafter set forth. The number of Shares purchasable hereunder
and the Exercise Price paid are subject to adjustment in accordance with
Article III. This Warrant shall expire at 5:00 p.m., E.S.T., on
____________________, unless extended by the Company. Certain terms used
in this Warrant are defined in Article IV.
ARTICLE I
Exercise of Warrant
1.1 Method of Exercise. This Warrant may be exercised as a whole or in
part from time to time. To exercise this Warrant, the Holder hereof shall
deliver to the Company, at the Warrant Office designated in Section 2.1,
(a) a written notice in the form of the Subscription Notice attached as an
exhibit hereto, stating therein the election of such Holder to exercise this
Warrant in the manner provided in the Subscription Notice, (b) payment in full
of the Exercise Price (in the manner specified in Section 1.2) for all Shares
purchased hereunder ("Warrant Shares"), and (c) this Warrant. This Warrant
shall be deemed to be exercised on the date of receipt by the Company of the
Subscription Notice, accompanied by payment for the Warrant Shares and this
<PAGE>
Warrant, as aforesaid, and such date is referred to herein as the "Exercise
Date". Upon such exercise, the Company shall issue and deliver to such
Holder a certificate for the full number of the Warrant Shares purchased by
such Holder hereunder, against the receipt by the Company of the Exercise
Price payable hereunder for the Warrant Shares. The Person in whose name the
certificate(s) for Warrant Shares is to be issued shall be deemed to have
become a Holder of record of such Warrant Shares on the Exercise Date.
1.2 Exercise Price and Payment.
(a) The Exercise Price per Share shall be $3.50.
(b) All currency amounts specified in this Warrant shall refer to
U.S.Dollars.
(c) Payment shall be made by certified check, payable to the
Company, or by wire transfer to an account of the Company as the Company may
provide in written instructions.
ARTICLE II
Warrant Office; Transfer
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 184 East Bay Street, Charleston, South Carolina
29401 and may subsequently be such other office of the Company or of any
transfer agent of the Shares as to which written notice has previously been
given to the Holder of this Warrant.
2.2 Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Warrant for registration
of transfer as provided in this Article II.
2.3 Transfer of Warrants. The Company agrees to maintain at the
Warrant Office books for the registration and transfer of this Warrant. The
Company, from time to time, shall register the transfer of this Warrant in
such books upon surrender of this Warrant at the Warrant Office properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer satisfactory to the Company, provided such transfer
is made in accordance with applicable law. Upon any such transfer, a new
Warrant shall be issued to the transferee and the surrendered Warrant shall
be cancelled by the Company. The registered Holder of this Warrant shall pay
all taxes and all other expenses and charges payable in connection with the
transfer of this Warrant pursuant to this Section 2.3.
2.4 Acknowledgment of Rights. The Company will, at the time of the
exercise of this Warrant in accordance with the terms hereof, upon the request
of the registered Holder hereof, acknowledge in writing its continuing
<PAGE>
obligation to afford to such Holder any rights to which such Holder shall
continue to be entitled after such exercise in accordance with the provisions
of this Warrant, provided that if the Holder of this Warrant shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such Holder any such rights.
2.5 Expenses of Delivery of Warrants. The Company shall pay all expenses
(other than taxes) and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.6 Reservation of Shares. The Company shall reserve at all times so
long as this Warrant remains outstanding, free from preemptive rights, out of
its treasury Shares or its authorized but unissued Shares, or both, solely for
the purpose of effecting the exercise of this Warrant, sufficient Shares to
provide for the exercise hereof.
2.7 Valid Issuance. All Shares which may be issued upon exercise of
this Warrant will upon issuance by the Company be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof attributable to any act or omission by the
Company, and the Company shall take no action which will cause a contrary
result.
2.8 Restricted Securities. As of the date of this Warrant, the Warrant
Shares have not been registered under the Securities Act of 1933 (the "Act")
or under any State securities laws (the "State Laws"), and when issued, will
be "restricted securities" as such term is defined in Rule 144 promulgated
under the Act. Certificates issued representing Warrant Shares will contain
legends to the effect that the Warrant Shares have not been registered under
the Act or any State Laws. The Company has agreed to undertake to prepare
and file, on or before July 31, 1996, with the Securities and Exchange
Commission, an Offering Statement on Form 1-A covering the Warrant Shares.
If such Offering Statement is filed and becomes effective, the Warrant Shares
will no longer be "restricted securities" and the holders will be free to
sell such Warrant Shares without the restrictions contained in Rule 144, and
to submit their certificates to the Company's Transfer Agent for removal of
the legends.
ARTICLE III
Anti-Dilution Provisions
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The
applicable Exercise Price and number of Warrant Shares shall be subject to
adjustment from time to time as hereinafter in this Article III provided.
(a) Exercise Price Adjustments. References herein to "applicable
Exercise Price" shall mean the Exercise Price under Section 1.2. The
applicable Exercise Price shall be subject to adjustment from time to time as
follows:
<PAGE>
(i) Share Dividends. If the number of Shares outstanding at any
time after the date of this Warrant is increased by a stock dividend payable
in Shares or by a subdivision or split-up of Shares, then immediately after
the record date fixed for the determination of Holders of Shares entitled to
receive such stock dividend or the effective date of such subdivision or split
- - - -up, as the case may be, the Exercise Price shall be appropriately adjusted
so that the adjusted Exercise Price shall bear the same relation to the
Exercise Price in effect immediately prior to such adjustment as the total
number of Shares outstanding immediately prior to such action shall bear to
the total number of Shares outstanding immediately after such action.
(ii) Combination of Shares. If the number of Shares outstanding at
any time after the date of issuance of this Warrant is decreased by a
combination of the outstanding Shares, immediately after the effective date
of such combination, the Exercise Price shall be appropriately adjusted so
that the adjusted Exercise Price shall bear the same relation to the Exercise
Price in effect immediately prior to such adjustment as the total number
of Shares outstanding immediately prior to such action shall bear to the
total number of Shares outstanding immediately after such action.
(iii) Reorganizations, etc. In case of any capital
reorganization of the Company, or of any reclassification of the Shares, or
in case of the consolidation of the Company with or the merger or amalgamation
of the Company with or into any other Person or of the sale or other transfer
of all or substantially all of the assets of the Company to any other Person,
this Warrant shall, after such capital reorganization, reclassification,
consolidation, merger, sale or other transfer, be exercisable for the number
of shares of stock or other securities or property to which the Shares
issuable (at the time of such capital reorganization, reclassification,
consolidation, merger, sale or other transfer) upon exercise of this Warrant
would have been entitled to receive upon such capital reorganization,
reclassification, consolidation, merger, sale or other transfer if such
exercise had taken place; and in any such case, if necessary, the provisions
set forth herein with respect to the rights and interests thereafter of the
Holder of this Warrant shall be appropriately adjusted so as to be applicable,
as nearly as may reasonably be, to any capital shares or other securities or
property thereafter deliverable on the exercise of this Warrant. In case
of any distribution by the Company of any security (including rights or
warrants to subscribe for any such securities, evidences of its indebtedness,
cash or other assets) to all of the holders of Shares, then in each such case
the Exercise Price in effect thereafter shall be determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction the
numerator of which shall be the total number of outstanding Shares multiplied
by the Current Market Price on the record date mentioned below, less the fair
market value (as determined in good faith by the Board of Directors) of the
securities, evidences of its indebtedness, cash or other assets distributed
by the Company and the denominator of which shall be the total number of
outstanding Shares multiplied by the Current Market Price; such adjustment
shall become effective as of the record date for the determination of
stockholders entitled to receive such distribution. The subdivision or
<PAGE>
combination of Shares issuable upon exercise of this Warrant at any time
outstanding into a greater or lesser number of Shares (whether with or
without par value) shall not be deemed to be a reclassification of the
Shares of the Company for the purposes of this clause (iii).
(b) Warrant Share Adjustments. Upon each adjustment of the
Exercise Price pursuant to Section 3.1(a)(i), (ii) or (iii), to the extent
this Warrant has not been fully exercised at such time, the registered Holder
of the Warrant shall thereafter be entitled to purchase, at the applicable
Exercise Price resulting from such adjustment, the number of Shares
(calculated to the nearest whole share pursuant to Section 1.2) obtained by
multiplying the number of Shares purchasable pursuant hereto immediately prior
to such adjustment by a fraction the numerator of which is the applicable
Exercise Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting from such adjustment.
(c) Statement Regarding Adjustments. Whenever the Exercise Price
shall be adjusted as provided in Section 3.1(a), and upon each change in the
number of Shares issuable upon exercise of this Warrant as provided in
Section 3.1(b), the Company shall forthwith file, at the principal office of
the Company, a statement showing in detail the facts requiring such
adjustment and the Exercise Price and new number of Shares issuable that
shall be in effect after such adjustment, and the Company shall also cause a
copy of such statement to be given to the Holder of this Warrant. Each such
statement shall be signed by the Company's chief financial or accounting
officer. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 3.1(d).
(d) Notice to Holders. In the event the Company shall propose to
take any action of the type described in clause (i), (ii) or (iii) of Section
3.1(a), the Company shall give notice to the Holder of this Warrant, in the
manner set forth in Section 6.6, which notice shall specify the record date,
if any, with respect to any such action and the approximate date on which
such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect
of such action (to the extent such effect may be known at the date of such
notice) on the Exercise Price and the number, kind or class of shares
or other securities or property which shall be deliverable upon exercise of
this Warrant. In the case of any action which would require the fixing of a
record date, such notice shall be given at least 10 days prior to the date
so fixed, and in case of all other actions, such notice shall be given
at least 15 days prior to the taking of such proposed action.
ARTICLE IV
Terms Defined
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the
Section indicated:
4.1 "Board of Directors" means the Board of Directors of the Company.
<PAGE>
4.2 "Company" means Green Oasis Environmental, Inc., a corporation
organized under the laws of Florida, and any other corporation assuming or
required to assume the obligations undertaken in connection with this Warrant.
4.3 "Current Market Price" means the weighted average trading price at
which the Common Shares have traded and shall be the weighted average trading
price on each of the 20 consecutive trading days, or such lesser number of
days in which a market exists for the securities, ending five days prior to
such date, as furnished in writing to the Company by an independent nationally
recognized investment dealer selected by the Corporation for that purpose.
The weighted average price shall be determined by dividing the aggregate sale
price of all Common Shares sold in the said over-the-counter market during the
said 20 consecutive trading days, or such lesser number of days in which a
market exists for the securities, by the total number of Common Shares so sold.
If the Current Market Price cannot be determined under any of the foregoing
methods, Current Market Price shall mean the fair value per share of Shares
on such date determined by the Board of Directors in good faith, irrespective
of any accounting treatment.
4.4 "Outstanding" means, when used with reference to Shares at any date,
all issued Shares (including, but without duplication, Shares deemed issued
pursuant to Article III) at such date.
4.5 "Person" means any individual, corporation, partnership, trust,
organization, association or other entity or individual.
4.6 "Shares" means the Company's authorized common shares, $.01 par
value.
4.7 "Trading Day" see definition of Current Market Price.
4.8 "Warrant" means this Warrant and any successor or replacement
Warrant delivered in accordance with Section 2.3 or 6.8, hereof.
4.9 "Warrant Office" means the office designated by the Company
pursuant to Section 2.1 hereof.
4.10 "Warrant Shares" means the Shares purchased or purchasable by
the registered holder of this Warrant or the permitted assignees of such
holder upon exercise thereof pursuant to Article I hereof, and any Shares
received with respect thereto pursuant to Section 3.1(b).
ARTICLE V
Covenant of the Company
The Company covenants and agrees that this Warrant shall be binding upon
any corporation succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
<PAGE>
ARTICLE VI
Miscellaneous
6.1 Entire Agreement. This Warrant contains the entire agreement
between the Holder hereof and the Company with respect to the shares which it
can purchase upon exercise hereof and the related transactions and supersedes
all prior arrangements or understanding with respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of South Carolina.
6.3 Waiver and Amendment. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any
waiver of any term or condition, or any amendment or supplementation, of this
Warrant must be in writing. A waiver of any breach or failure to enforce any
of the terms or conditions of this Warrant shall not in any way affect, limit
or waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be
given or delivered to the Holder hereof shall be delivered at, or sent by
certified or registered mail to such Holder at the most recent address of
which the Holder hereof shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
the Company, other than such notice or documents required to be delivered to
the Warrant Office, shall be delivered at, or sent by certified or registered
mail to, the office of the Company at 184 East Bay Street, Charleston,
South Carolina 29401 or such other address as shall have been furnished by
the Company to the Holder of this Warrant.
6.7 Limitation of Liability; Not Shareholders. No provision of this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote, consent, receive dividends or receive notices other than as herein
expressly provided in respect of meetings of shareholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of
the Company. No provision hereof, in the absence of affirmative action by
the Holder hereof to purchase Shares, and no mere enumeration herein of the
<PAGE>
rights or privileges of the Holder hereof, shall give rise to any liability
of such Holder for the purchase price of any Shares or as a shareholder of
the Company, whether such liability is asserted by the Company or by
creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant; provided, however, that the original recipient
of this Warrant shall not be required to provide any such bond of indemnity
and may in lieu thereof provide its agreement of indemnity. Any Warrant
issued under the provisions of this Section 6.8 in lieu of any Warrant alleged
to be lost, destroyed or stolen, or in lieu of any mutilated Warrant, shall
constitute an original contractual obligation on the part of the Company.
This Warrant shall be promptly cancelled by the Company upon the surrender
hereof in connection with any exchange or replacement. The registered holder
of this Warrant shall pay all taxes (including securities transfer taxes) and
all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
6.10 Survival. The provisions of this Warrant shall survive the exercise
of this Warrant and the termination of the exercisability of this Warrant,
including, without limitation, Section 3.1.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: ____________, 1996.
GREEN OASIS ENVIRONMENTAL, INC.
By:______________________________
Title:_____________________________
<PAGE>
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects
to exercise purchase rights represented by said Warrant for, and to purchase
thereunder _________________________ Shares covered by said Warrant and
herewith makes payment in full therefor pursuant to Article I of such Warrant,
and requests (a) that certificates for such shares (and any securities or
other property issuable upon such exercise) be issued in the name of, and
delivered to holder at_______________________________________________________
and (b) if such Shares shall not include all of the Shares issuable as provided
in said Warrant, that a new Warrant of like tenor and date for the balance of
the Shares issuable thereunder be delivered to the undersigned.
The Exercise Price as to the _______________ Shares in the amount of
$____________is being paid concurrently herewith by direct payment accompanying
this Notice.
Holder:____________________________________
By:_______________________________________
Dated:________________, 19__
Title: _____________________________________
<PAGE>
ASSIGNMENT
For value received,___________________________________________________,
hereby sells, assigns and transfers unto ____________________________________
the within Warrant, together with all right, title and interest therein and
does hereby irrevocably constitute and appoint ________________________________
attorney, to transfer said Warrant on the books of the Company, with full
power of substitution.
________________________________
Dated:________________, 19__
<PAGE>
EXHIBIT 10.24
CERTIFICATE OF LIMITED PARTNERSHIP
OF
GOE PLANT PARTNERSHIP I, L.P.
The undersigned, desiring to form a limited partnership pursuant to the
provisions of the Uniform Limited Partnership Act of the State of South
Carolina, hereby certifies the following:
1. The name of the Partnership is "GOE Plant Partnership I, L.P."
2. The principal place of business of the Partnership and its
registered office shall be located at 184 East Bay Street, Charleston,
South Carolina, 29401 or at such other place as the General Partner shall
from time to time designate. The registered agent of the Partnership at
such address shall be William D. Carraway.
3. The name and address of the General Partner is: Green Oasis
Environmental, Inc., 184 East Bay Street, Charleston, South Carolina 29401.
4. The Partnership shall exist until June 30, 2016, unles sooner
terminated by operation of law or by agreement of the Partners.
IN WITNESS WHEREOF, the undersigned General Partner, after first
being duly sworn, has executed this Certificate under seal this 27 day
of June, 1996.
GENERAL PARTNER:
GREEN OASIS ENVIRONMENTAL, INC.
By: /s/ William D. Carraway (SEAL)
-------------------------------
Its: President
------------------------------
Signed, sealed, sworn to and
delivered in the presence of:
/s/ Mary M. Flynn
- - - -----------------------------
Unofficial Witness
/s/ Christopher McG. Holmes
- - - -----------------------------
Notary Public
My Commission Expires:
Date of Execution
by Notary Public:
[NOTARY SEAL]
<PAGE>
THE STATE OF SOUTH CAROLINA
Office of Secretary of State Jim Miles
Certificate of Existence, Limited Partnership
I, Jim Miles, Secretary of State of South Carolina Hereby certify that:
GOE PLANT PARTNERSHIP I, L.P.,
a Limited Partnership organized under the laws of the state of SOUTH
CAROLINA on July 10th, 1996, and doing business in South Carolina under
the name of:
GOE PLANT PARTNERSHIP I, L.P.
has, as of July 15, 1996, filed all reports due this office, paid all fees
due, is in existence and authorized to do business in the State of South
Carolina.
Given under my Hand and the Great
Seal of the State at Columbia this
15th day of July, 1996.
/s/ Jim Miles
------------------------------------
Jim Miles, Secretary of State
<PAGE>
EXHIBIT 10.25
SALE OF EQUIPMENT AND INSTALLATION AGREEMENT
THIS AGREEMENT made the 23 day of July, 1996 between Green Oasis
Environmental, Inc., a Florida corporation with its principal place of
business at 184 East Bay Street, Charleston, South Carolina, 29401 (the
"Seller") and GOE Plant Partnership I, L. P., a South Carolina limited
partnership with its principal place of business at 184 East Bay Street,
Charleston, South Carolina 29401 (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires
to purchase from the Seller, the Distillation Processing Plant which will be
used by the Buyer in the operation of a business for the conversion of waste
motor oil into marketable fuels.
NOW, THEREFORE, in consideration of the mutual premises, covenants, and
agreements herein contained, the adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby promise, covenant, and agree as
follows:
1. Sale of Goods. Seller shall sell and Buyer shall purchase a
converted Model 400 Distillation Processing Plant (the Equipment") at the
price and on the terms and conditions provided in Paragraph 2 of this
Agreement. In connection with the sale of the Equipment, Seller, shall
prepare the site located at the Allied Terminals, Inc. property in
Charleston, South Carolina (the "Site"), and upon completion of Site
preparation, shall install the Equipment.
2. Installation of Equipment. Seller shall install the Equipment in a
workman like manner and in compliance with any applicable law and any
regulations or other technical requirements, including, but not limited to,
the applicable provisions of any safety and operating regulations enacted
by the South Carolina Department of Health Control or by any other federal,
state, or local authority. Installation of the Equipment shall commence
on or before September 9, 1996 and shall continue thereafter until completed.
Seller estimates that installation of the Equipment shall be completed on or
about December 31, 1996. These dates are estimates only, and the Buyer
acknowledges that technical problems may arise with respect to the
installation of the Equipment and, accordingly, Seller shall not be held
responsible for any delays caused by unforeseen difficulties.
3. Purchase Price. The purchase price for the Equipment to be
purchased under Paragraph 1 hereof is One Million One Hundred and Fifty
Thousand Dollars ($1,150,000), not including the Equipment installation costs
of $100,000, the Site preparation cost of $50,000 and Tanks and Auxiliaries
at a cost of $75,000. The purchase price does not include any charges for
permits, licenses, or any applicable sales, excise or other taxes. Upon
Buyer's execution of this Agreement, Buyer shall pay to Seller the purchase
price as proceeds from the sale of Partnership Interests of the Buyer are
received. Upon completion of the offering contemplated in the Private
Placement Memorandum of the Buyer, the Seller shall have the option to
<PAGE>
obtain any unsold Partnership Interests for a price to be paid by an in
kind exchange of Equipment or other personal property for such Partnership
Interests.
4. Approvals. Seller shall be responsible for obtaining any and all
necessary documents and approvals required by applicable law, which shall
include, but not necessarily be limited to, all permits required by the
South Carolina Department of Health and Environmental Control.
5. Warranties. Seller warrants that the Equipment will comply in
every way with applicable law covering the installation and operation of such
Equipment. Seller further warrants that the Equipment will be installed in a
workman like manner, and that the Equipment will be free from defects in
material and workmanship for a period of one year from the date the Equipment
is placed in actual operation. During such one-year period, Seller shall
service the Equipment and make any repairs required without charge. Parts
required which were not defective shall be at additional cost, and Seller
shall not be required to make any repairs or replace any parts if the
Equipment was abused or not operated in accordance with the printed
instructions given to Buyer, the receipt of which is hereby acknowledged
by Buyer, at the time at the execution of this Agreement. THIS WARRANTY
IS EXPRESSLY MADE IN LIEU OF THE WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR USE AND ANY OTHER WARRANTIES EXPRESSED OR IMPLIED.
6. Limited of Remedies. The sole liability of Seller under the
warranties contained in Paragraph 5 above shall be the repair and replacement
of parts, necessary adjustments, or other repairs required to maintain the
Equipment in proper working order. Seller shall not be held liable for any
delays caused by circumstances beyond its control including, without
limitation, fire, labor problems, shortage or supplies or materials,
unforeseen difficulties in installation of the Equipment and, without
limited the foregoing, any other conditions which are beyond the Seller's
control.
7. Additional Requirements. The specifications and requirements of
the Equipment are based upon the applicable laws, regulations, and ordinances
in effect as of the date of this Agreement. Seller assumes no responsibility
whatsoever for any additional requirements imposed by such laws, regulations,
and ordinances subsequent to such date.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof. No
course of prior dealings between the parties and no usage of trade shall be
relevant or admissible to supplement, explain, or vary any of the terms of
this Agreement. Acceptance of, or acquiescence in, a course of performance
under this or any prior agreement shall not be relevant or admissible to
determine the meaning of this Agreement, even though the accepting or
acquiescing party has knowledge of the nature of the performance and an
opportunity to make objection. No other representations, understandings, or
agreements have been made or relied upon in the making of this Agreement,
<PAGE>
other than those specifically set forth herein. This Agreement can only be
modified in a writing signed by the parties or their duly authorized agents.
SELLER:
GREEN OASIS ENVIRONMENTAL, INC.
By: /s/ William D. Carraway
------------------------------
Its: President
-----------------------------
[CORPORATE SEAL]
ATTESTED:
By: /s/ Ana M. Kimsey
--------------------
WITNESS
BUYER:
GOE PLANT PARTNERSHIP I, L. P.
BY: GENERAL PARTNER
GREEN OASIS ENVIRONMENTAL, INC.
By: /s/ William D. Carraway
---------------------------
Its: President
--------------------------
<PAGE>
Item 6 Exhibits
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Company)
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Period
From
September 24,
1991
Three Months Ended Six Months Ended (Inception),
June 30, June 30, Through
---------------------- ---------------------- June 30,
1996 1995 1996 1995 1996
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
PRIMARY
Net income (loss) before
extraordinary gain $ (168,945) $1,410,059 $ (263,363) $ 923,266 $ (5,883,197)
Preferred dividends (3,080) (3,080) (3,080) (3,080) (146,378)
---------- ---------- ---------- ---------- ------------
(172,025) 1,406,979 (266,443) 920,186 (6,029,575)
Extraordinary gain 265,971 - 265,971 - 644,891
---------- ---------- ---------- ---------- ------------
Net income (loss) $ 93,946 $1,406,979 $ (472) $ 920,186 $ (5,384,684)
========== ========== ========== ========== ============
Weighted average number
of shares 5,205,930 5,119,923 5,189,357 5,111,566 4,043,176
========== ========== ========== ========== ============
Net income (loss) before
extraordinary gain $ (0.03) $ 0.27 $ (0.05) $ 0.18 $ (1.49)
Extraordinary gain 0.05 - 0.05 - 0.16
---------- ---------- ---------- ---------- ------------
Net income (loss) $ 0.02 $ 0.27 $ - $ 0.18 $ (1.33)
========== ========== ========== ========== ============
FULLY DILUTED
Net income (loss) before
extraordinary gain $ (168,945) $1,410,059 $ (263,363) $ 923,266
Preferred dividends (3,080) (3,080) (3,080) (3,080)
Interest expense adjustment
for convertible
debentures 12,500 12,500 25,000 25,000
Adjustment for dividends
on convertible preferred - 878 - 878
Interest expense adjustments
for convertible debt 47 47 94 94
---------- ---------- ---------- ----------
(159,478) 1,420,404 (241,349) 946,158
Extraordinary gain 265,971 - 265,971 -
---------- ---------- ---------- ----------
Net income (loss) $ 106,493 $1,420,404 $ 24,622 $ 946,158
========== ========== ========== ==========
Weighted average common
shares outstanding 5,205,930 5,119,923 5,189,357 5,111,566
150,000 shares in stock
options (94 average
market price of $2.33<
$2.50 option price)
150,000 shares in stock
options (94 ending
market price of $4.00>
$2.50 option price) 60,000 30,000 60,000 30,000
Assume conversion beginning
of period, debenture 1,676 1,676 1,676 1,676
Assume conversion at
beginning of period-
convertible preferred
shares - 7,800 - 7,800
Assume conversion at
6/10/95 of convertible
debt 100,000 200,000 100,000 200,000
Assume conversion of
interest accrued 36,277 16,194 31,277 11,194
---------- ---------- ---------- ----------
5,403,883 5,375,593 5,382,310 5,362,236
========== ========== ========== ==========
Income (loss) before
extraordinary gain $ (0.03) $ 0.26 $ (0.05) $ 0.18
Extraordinary gain 0.05 - 0.05 -
---------- ---------- ---------- ----------
Net income (loss) $ 0.02 $ 0.26 $ - $ 0.18
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 121
<PP&E> 76
<DEPRECIATION> (21)
<TOTAL-ASSETS> 365
<CURRENT-LIABILITIES> 1784
<BONDS> 0
<COMMON> 55
0
6
<OTHER-SE> (1524)
<TOTAL-LIABILITY-AND-EQUITY> 365
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 236
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> (264)
<INCOME-TAX> 0
<INCOME-CONTINUING> (264)
<DISCONTINUED> 0
<EXTRAORDINARY> 266
<CHANGES> 0
<NET-INCOME> 2
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
