SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported):
August
17, 2009 (August 17,
2009)
General
Environmental Management, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
|
Nevada
(State of
Other Jurisdiction of
Incorporation)
|
33-55254-38
(Commission
File Number)
|
87-0485313
(IRS
Employer Identification
No.)
|
3191
Temple Avenue, Suite 250 Pomona, California
(Address
of Principal Executive Offices)
91768
(Zip
Code)
(909)
444-9500
(Registrant's
Telephone Number, Including Zip Code)
n/a
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communication pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13c-4(c)
Item
1.01 Entry into a Material Definitive Agreement
On August
17, 2009, the Registrant entered into a Stock Purchase
Agreement ("Agreement") with MTS Acquisition Company ("MTS"), a
privately held company, pursuant to which the Registrant sold all of the issued
and outstanding common stock of GEM Mobile Treatment Services, Inc. (“GEM MTS”),
GEM MTS is a provider of mobile wastewater treatment and vapor recovery services
with locations in California and Texas.
GEM MTS
was purchased by MTS, a corporation owned by two former senior
executives of the Registrant. Consideration for the sale was in the
form of a promissory note in the aggregate amount of $5.6 million, the
assumption by MTS of approximately $1.0 million of accounts payable and possible
future royalties. The consideration was immediately assigned by
Registrant to CVC California, LLC, ("CVC") GEM's senior secured
lender. As the notes are paid to CVC, GEM's indebtedness to CVC will
be reduced. Total reduction in indebtedness to CVC could amount to more than $7
million.
The
promissory note for $5,600,000 bears interest at 8%. On the first day
of each calendar month commencing September 1, 2009 through and including August
1, 2010, accrued interest on the outstanding principal is due and
payable. Thereafter, principal and interest under this Note is
payable in thirty-six (36) consecutive equal monthly installments of principal
and interest of $174,321.50 each, with the first installment due and payable on
September 1, 2010, and with subsequent installments due and payable on the first
day of each calendar month thereafter through and including August 1,
2013.
All or
any portion of the unpaid principal balance of this note, together with all
accrued and unpaid interest on the principal amount being prepaid, may at the
MTS’s option be prepaid in whole or in part, without premium or
penalty.
The
Registrant also entered into a revolving credit agreement with MTS which is
collateralized by accounts receivable. The revolving credit note has
a maximum value of $700,000 and bears interest at the greater of (a) the Prime
Rate as in effect from time to time plus two (2%) percent, or (b) ten (10%)
percent.
Concurrent
with the closing of the sale of GEM MTS, the Registrant assigned with full
recourse and full representation and warranty of title and ownership the
promissory note, the revolving credit agreement and the revolving credit note to
CVC California, LLC, the Registrant’s
senior lender.
The
Registrant also entered into a subordinated collateral agreement with GEM MTS in
order to secure potential obligations related to indemnification payments it may
hereafter become obligated to make to MTS in accordance with the
Agreement.
Item
2.01 Completion of Acquisition or Disposition of Assets
See Item
1.01
Item
9.01 Financial Statements and Exhibits
Attached
to this report is the Stock Purchase Agreement, Collat, etc the press release
issued by the registrant announcing the completion of the
acquisition.
| Exhibit
No. |
Description |
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10.32
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Stock
Purchase Agreement
Dated August 17, 2009
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10.33
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Purchase
Money Note Dated August 17, 2009
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10.34
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Revolving
Credit Agreement Dated August 17, 2009
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10.35
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Revolving
Credit Note Dated August 17, 2009
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10.36
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Subordinated
Collateral Agreement Dated August 17, 2009
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10.37
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Assignment
and Assumption of Loan Documents Dated August 17,
2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| General Environmental Management, Inc |
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/s/ Timothy
Koziol
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Timothy Koziol, Chief Executive Officer
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