UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 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
):
September
28, 2009
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ThermoEnergy Corporation
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(Exact
name of registrant as specified in its
charter)
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Delaware
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(State
or other jurisdiction of
incorporation)
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33-46104-FW
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71-00659511
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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124
West Capitol Avenue, Suite 880, Little Rock, Arkansas
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72201
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(Address
of principal executive offices)
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(Zip
Code)
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(501) 376-6477
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(Registrant’s
telephone number, including area
code)
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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 (
see
General Instruction A.2.
below):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications 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 28, 2009, we issued to a group of investors our 8% Secured Convertible
Promissory Notes in the aggregate principal amount of $1,680,000 (the
“Convertible Notes”). The Convertible Notes were issued to the
following persons in the amounts indicated:
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Investor
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Note Amount
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Empire
Capital Partners, LP
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$
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133,333
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Empire
Capital Partners, Ltd
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$
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133,333
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Empire
Capital Partners Enhanced Master Fund, Ltd
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$
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133,333
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Robert
S. Trump
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$
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1,000,000
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The
Quercus Trust
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$
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280,000
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In
connection with the issuance of the Convertible Notes, on September 28, 2009 we
amended and restated the following outstanding promissory notes (the “Restated
Notes”) in the aggregate original principal amount of $3,550,000 held by the
investors to whom we issued Convertible Notes or their affiliates:
|
Note
Holder
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Original Issuance
Date
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Principal Amount
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Empire
Capital Partners, LP
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April
24, 2009
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$
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100,000
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Empire
Capital Partners, Ltd
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April
24, 2009
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$
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100,000
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Empire
Capital Partners Enhanced Master Fund, Ltd
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April
24, 2009
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$
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100,000
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Scott
A. Fine
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April
24, 2009
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$
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100,000
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Peter
J. Richards
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April
24, 2009
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$
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100,000
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Robert
S. Trump
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December 19, 2008
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$
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500,000
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The
Quercus Trust
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June
25, 2009
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$
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150,000
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The
Quercus Trust
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February
11, 2009
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$
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250,000
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The
Quercus Trust
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September 15, 2008
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$
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2,000,000
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As
amended, the Restated Notes are identical in form to the Convertible
Notes. The Convertible Notes and the Restated Notes are also
identical in form to the 8% Secured Convertible Promissory Note in the principal
amount of $600,000 that we issued to Focus Fund, L.P. on August 21, 2009 (the
“Focus Fund Note”). In connection with the transaction, on September
28, 2009, we amended and restated the Focus Fund Note to change the price at
which the principal and interest of the Focus Fund Note is convertible into
shares of our Common Stock from $0.30 per share to $0.24 per share (the same
price at which the Convertible Notes and the Restated Notes are convertible)
and
to change the maturity date to December 31, 2010 (the maturity date of the
Convertible Notes and the Restated Notes)
. The Convertible
Notes, the Restated Notes and the Focus Fund Note, as so amended, are referred
to herein as the “Notes” and the holders of the Notes are referred to herein as
the “Investors”.
The Notes
bear interest at the rate of 8% per annum and become due and payable on the
earlier to occur of (i) the closing of the Second Tranche of the Series B
Convertible Preferred Stock financing contemplated by that certain Term Sheet
dated September 16, 2009 and executed by the Investors (the “Financing”) or (ii)
December 31, 2010. Upon the closing of the Second Tranche of the
Financing, the entire outstanding principal amount of the Notes, plus any
accrued and unpaid interest thereon, shall convert automatically into the
securities to be issued in the Financing (the “Financing Securities”) at the
price per share at which such Financing Securities will be issued in the
Financing.
The
Investors have the right at any time and from time to time until the principal
and interest on the Notes have been paid in full, to convert the outstanding
principal amount of the Notes, and any accrued and unpaid interest thereon, into
shares of our Common Stock at a price of $0.24 per share (the “Conversion
Price”). The Conversion Price represents a discount of approximately
38% below the closing price for our Common Stock in the over-the-counter market
on September 28, 2009 (the date on which the Convertible Notes were
issued and the Restated Notes and Focus Fund Notes were amended). The
Notes may not be prepaid without the prior written consent of the
Investors.
The Notes
contain other conventional provisions, including for the acceleration of our
repayment obligations upon the occurrence of certain specified Events of
Default.
The form
of the Notes is filed as Exhibit 4.1 to this Current Report on Form 8-K and the
foregoing description of the Notes is qualified in its entirety by reference to
such Exhibit.
Our
obligations under the Notes are secured, pursuant to a Security Agreement dated
as of September 28, 2009 (the “Security Agreement”), by the grant to the
Investors of a security interest in the entirety of our Membership Interest
(representing an 85% beneficial ownership) in ThermoEnergy Power Systems, LLC
(“TEPS”) and any and all proceeds from the transfer, assignment or other
permitted disposition thereof. TEPS is the subsidiary through which
we conduct the Power segment of our business. TEPS holds the patent
on the ThermoEnergy Integrated Power Systems Technology, a power
plant design that utilizes an alternative thermodynamic combustion pathway that
eliminates atmospheric emissions of mercury, acid gasses and particulates and
captures carbon dioxide in pressurized liquid form. TEPS holds
a 50% membership interest in Thermo-Babcock Carbon Capture LLC.
The
Security Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K
and the foregoing description of the Security Agreement is qualified in its
entirety by reference to such Exhibit.
In
connection with the issuance of the Convertible Notes, on September 28, 2009 we
issued, to the Investors who purchased Convertible Notes, Common Stock Purchase
Warrants (the “Warrants”) entitling the holder thereof to purchase, at a
purchase price of $0.50 per share (subject to adjustment for certain
extraordinary corporate events as set forth in the Warrant, the “Exercise
Price”) that number of shares of our Common Stock determined by dividing (i)
200% of the principal amounts of their respective Convertible Notes by (ii) the
Exercise Price. The Exercise Price represents a premium of
approximately 28% over the closing price for our Common Stock in the
over-the-counter market on September 28, 2009 (the date on which the
Warrants were issued).
The
Warrants may be exercised at any time on or before September 30, 2014, subject
to our right to accelerate the expiration date in the event the closing price
for our Common Stock exceeds $0.78 per share (200% of the closing price on
September 28, 2009) for a period of 30 consecutive trading days.
The
Warrants contain other conventional terms, including provisions for adjustment
in the Exercise Price and/or the securities issuable upon exercise in the event
of certain specified extraordinary corporate events, such as stock splits,
combinations, and stock dividends.
The form
of the Warrants is filed as Exhibit 4.2 to this Current Report on Form 8-K and
the foregoing description of the Warrants is qualified in its entirety by
reference to such Exhibit.
In
connection with the amendment of the Restated Notes and the Focus Fund Note, on
September 28, 2009 we amended the following outstanding Common Stock Purchase
Warrants that had been issued to Investors in connection with the issuance of
such Notes, in order to reduce the exercise price thereof to $0.50 per
share:
|
Warrant
Holder
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Date
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Warrant
Shares
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Original Exercise
Price
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Empire
Capital Partners, LP
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April
24, 2009
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500,000
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$
0.55
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Empire
Capital Partners, Ltd
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April
24, 2009
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500,000
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$
0.55
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Empire
Capital Partners Enhanced Master Fund, Ltd
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April
24, 2009
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500,000
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$
0.55
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Scott
A. Fine
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April
24, 2009
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500,000
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$
0.55
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Peter
J. Richards
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April
24, 2009
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500,000
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$
0.55
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Robert
S. Trump
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August 12, 2008
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formula-based
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$
1.50
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Focus
Fund, L.P.
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June
17, 2009
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600,000
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$
0.54
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As a result of our
issuance of the Convertible Notes and the amendment of the Restated Notes and
the Focus Fund Note, the exercise prices of certain Common Stock Purchase
Warrants issued by us to
The Quercus Trust (“Quercus”), one of the
Investors, in December 2007 and September 2008, entitling Quercus to purchase up
to an aggregate of 14,000,000 shares of our Common Stock were automatically
reduced, in accordance with the terms of such outstanding warrants, the $0.36
per share. The reduction in exercise price did not affect the number
of shares of our Common Stock issuable upon exercise of such outstanding
warrants.
J. Winder
Hughes III, a member of our Board of Directors, is the Managing Partner of
Hughes Capital Investors, LLC, the fund manager of Focus Fund, LLC, one of the
Investors.
Item
3.02 — Unregistered Sales of Equity
Securities.
The
Convertible Notes and Warrants described in Item 1.01 above were issued on
September 28, 2009 in a transaction not involving a public offering and without
registration under the Securities Act of 1933 in reliance on the exemption from
registration provided by Section 4(2) of such Act. We intend to use
the proceeds from the sale of the Notes and Warrants for working capital
purposes, to purchase fixed assets used in the development or production of the
Company’s products, to repay debt and for investment in new technologies related
to the Company’s business.
For its
services in connection with our sale of a Convertible Note and a Warrant to
Quercus, one of the Investors, we are obligated to pay Merriman Curhan Ford
& Co. a placement fee of $20,000 and to issue to that firm a Warrant (in
form substantially identical to the Warrant issued to The Quercus Trust) for the
purchase of 80,000 shares of our Common Stock. The Warrant will be
issued to Merriman Curhan Ford & Co. in a transaction not involving a public
offering and without registration under the Securities Act of 1933 in reliance
on the exemption from registration provided by Section 4(2) of such
Act.
Item
7.01 — Regulation FD Disclosure.
In
connection with the transactions reported in Item 1.01 above, we and Quercus
filed joint motions in the Delaware Court of Chancery and the United States
District Court for the Eastern District of Arkansas to dismiss the lawsuits that
Quercus had brought against us relating to investments made by Quercus in
December 2007 and September 2008. On September 28, 2009, the
proceeding in Arkansas (Quercus Trust v. ThermoEnergy Corporation, Case No.
4:09-cv-314) was dismissed. On September 30, 2009, the
proceeding in Delaware (Gelbaum et al. v. ThermoEnergy Corporation, Case No.
44850VCS) was dismissed.
We and
all of the Investors have executed Mutual Releases of claims against each other,
which Mutual Releases will be released from escrow and delivered upon the
closing of the Second Tranche of the Financing referred to in Item 1.01
above.
Item
9.01
Financial Statements and
Exhibits
(c) Exhibits.
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Exhibit
No.
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Description
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4.1
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Form
of 8% Secured Convertible Promissory Notes issued to
Investors
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4.2
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Form
of Common Stock Purchase Warrants issued to Investors
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10.1
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Security
Agreement dated as of September 28, 2009 between ThermoEnergy Corporation
and the
Investors.
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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.
Date:
October 2, 2009
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ThermoEnergy Corporation
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(Registrant)
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By:
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/s/ Dennis C.
Cossey
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Name:
Dennis C. Cossey
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Title:
Chairman and Chief Executive
Officer
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