gem_8k-091109.htm
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:
September
11, 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 91768
(Address
of Principal Executive Offices) (Zip Code)
(909)
444-9500
(Registrant's
Telephone Number, Including Zip Code)
________________________________________________
(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 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
On
September 4, 2008 General Environmental Management, Inc. (the “Company”) entered
into a series of agreements with CVC California, LLC, a Delaware limited
liability company (“CVC”), including a Revolving Credit and Term Loan Agreement,
a Convertible Term Note, Warrants to purchase shares of the Company's common
stock and a Registration Rights Agreement. (See Report on Form 8-K dated
September 24, 2008).
On
September 8, 2009, the Company entered into a series of agreements with CVC that
amended these agreements, including an Amended and Restated Revolving Credit and
Term Loan Agreement, an Amended and Restated Revolving Credit Note, an Amended
and Restated Convertible Term Note, a new Term Note, and Amended and Restated
Warrants to purchase shares of the Company's common stock.
Pursuant
to the Amended and Restated Revolving Credit and Term Loan Agreement, (the
"Amended Agreement") dated as of September 4, 2009 the Company issued to
CVC:
(i) an
Amended and Restated secured convertible term note (“ Convertible Note”) in the
principal amount of $6.314,700. The principal amount of the Convertible Note
bears an interest rate of fourteen percent, subject to adjustment, with interest
payable monthly commencing November 1, 2009. The principal of the convertible
Note is payable on demand or, in the absence of demand, (i) in seven (7) equal
monthly installments of $138,000 each, due and payable on the first day of each
calendar month commencing December 1, 2009 and continuing through and including
June 1, 2010, and (ii) a final installment due and payable on June 30, 2010
in an amount equal to the entire remaining principal balance of this
note. In the event of a prepayment of the Convertible Note, the
Company must pay a prepayment premium in an amount equal to (a) two (2%) percent of the
principal amount being prepaid if the prepayment is made on or prior to February
28, 2010, and (b) one (1%) percent of the principal amount being prepaid if such
prepayment is made subsequent to February 28, 2010 and prior to August 1, 2011,
unless the prepayment is made with
the proceeds received from the sale of any business unit or units of the
Company.
The
principal amount of the Convertible Note and accrued interest thereon is
convertible into shares of the Company's common stock at a price of $0.60 per
share, subject to anti-dilution adjustments. The Company has agreed to register
all of the shares that are issuable upon conversion of the Convertible
Note.
(ii) an
Amended and Restated Secured Non-convertible Revolving Credit Note in
the principal amount of up to $1.7 million (the " Revolving
Note"). The principal amount of the Revolving Note bears interest at
the rate of 10% per annum and is payable on demand (or, in the absence of
demand, on August 31, 2011, or sooner by reason of an Event of Default or other
mandatory prepayment event.
The
Revolving Note, amended and restated and superseded in its entirety the
Revolving Credit Note dated August 31, 2008 in the maximum principal amount of
$7,000,000 issued by the Company to CVC, but did not effect a novation of the
outstanding obligations of the Revolving Credit Note of August 31,
2008
(iii) a
Term Note (“Term Note ”) in the principal amount of $5.6 million. The
principal amount of the Term Note bears interest at the rate of 8% per annum and
is payable as follows: on the first day of each calendar month commencing
October 1, 2009 through and including August 1, 2010, accrued Interest on the
outstanding principal shall be due and payable. Thereafter, principal
and interest 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. There is no pre-payment penalty
in the event of a pre-payment.
On August
17, 2009, the Company had entered into a Stock Purchase Agreement with MTS
Acquisition Company ("MTS"), pursuant to which the Company sold all of the
issued and outstanding common stock of GEM Mobile Treatment Services, Inc. (“GEM
MTS”), Consideration for the sale of GEM MTS was in the form of a promissory
note (the MTS Note") in the aggregate amount of $5.6 million, (payable on the
same dates and terms as the Term Note) the assignment of
approximately $1.0 million of accounts payable and possible future
royalties. The consideration was immediately assigned to
CVC. As the MTS Note is paid to CVC by MTS, the Company's
indebtedness to CVC will be reduced.
(iv)
an Amended and Restated Warrant to purchase Two Million Seven Hundred
Thousand (2,700,000) fully paid and non-assessable shares (the “Warrant Shares”)
of the Company’s common stock, for cash at a price of $0.01 per share at any
time and from time to time from and after the date hereof and until 5:00 p.m.
(Pacific time) on August 31, 2014..
The
Convertible Note, the Revolving Note, are secured by all of our assets and the
assets of our direct subsidiary, General Environmental Management, Inc.
(Delaware) and its direct subsidiaries, General Environmental Management of
Rancho Cordova LLC, a California Limited Liability Company (including the real
property owned by General Environmental Management of Rancho Cordova LLC),
Island Environmental Services, Inc. as well as by a pledge of the equity
interests of General Environmental Management, Inc. (Delaware), General
Environmental Management of Rancho Cordova LLC, and Island Environmental
Services, Inc.
The
Amended Agreement also provided that in the event that and at such time as the
Company or any of its subsidiaries or stockholders enters into a binding
agreement with respect to any sale of all or any material portion of the
Company’s assets or the sale of a majority of the outstanding capital stock or
(if sooner) on that date which is thirty (30) days prior to any payment or
required payment in full of the outstanding obligations to CVC, CVC shall have
the right and option, exercisable effective at any time upon or after the
consummation of such sale or payment, or upon and after the occurrence and
during the continuance of an event of default, as defined in the Amended
Agreement and the ancillary documents, to require the Company to redeem and
purchase any or all warrant shares or rights to purchase warrant shares
hereunder, for a cash purchase price of $0.75 per warrant share.
The
Amended Agreement requires that EBITDA of the Company not be less than (a) $1.00
for any fiscal quarter ending on or after December 31, 2009.
The
Company has also agreed to continue to pursue the Company’s plan to restructure
its operations by offering for sale the Company’s revenue-generating business
units at prices and on terms and conditions reasonably acceptable to the Company
and CVC.
The
Company incurred expenses of approximately $75,000 to various
professional firms as reimbursement for CVC's due diligence and legal fees and
expenses incurred in connection with the transaction.
Section
5 - Corporate Governance and Management
Item
5.02 Departure of Directors or
Principal Officers; Election of Directors; Appointment of
Principal Officers.
Clyde E.
Rhodes, a member of the Board of Directors and Chief Compliance Officer of the
Company, submitted his resignation to be effective September 11,
2009. No successor has been identified or appointed.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
The
following exhibits are filed with this Current Report on Form 8-K:
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Exhibit
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Number
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Description
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10.38
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Amended
and Restated Revolving Credit and Term Loan Agreement dated as at
September 4, 2009 between General Environmental Management, Inc. and CVC
California, LLC.
|
|
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|
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10.39
|
Amended
and Restated Convertible Term Note dated as at September 4, 2009 issued by
General Environmental Management, Inc to CVC California,
LLC.
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|
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10.40
|
Amended
and Restated Revolving Credit Note dated as at September 4, 2009 issued by
General Environmental Management, Inc to CVC California,
LLC.
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|
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10.41
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Term
Note dated as at September 4, 2009 issued by General Environmental
Management, Inc. to CVC California, LLC.
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10.42
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Amended
and Restated Common Stock Purchase Warrant dated as at September 4, 2009
issued by General Environmental Management, Inc to CVC California,
LLC.
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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.
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General
Environmental Management, Inc
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Date:
September 11, 2009
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By:
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/s/
Timothy Koziol
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Timothy
Koziol
Chief
Executive Officer
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