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): June 30, 2004
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GREENMAN TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13776 71-0724248
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7 Kimball Lane
Building A
Lynnfield, MA 01940
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(Address of principal executive offices, including zip code)
(781) 224-2411
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(Registrant's telephone number, including area 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
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On June 30, 2004 GreenMan Technologies, Inc. entered into a $9 million credit
facility (the "Credit Facility") with Laurus Master Fund, Ltd. ("Laurus Funds"),
a New York-based institutional fund. The Credit Facility consists of a $5
million convertible, revolving working capital line of credit and a $4 million
convertible term loan.
The revolving working capital line has a three-year term. Borrowings bear
interest at the prime rate published in The Wall Street Journal from time to
time plus 1.0%, and are convertible into shares of our common stock at the
option of Laurus Funds. Subject to certain limitations, Laurus Funds will have
the right, but not the obligation, to convert the first $1 million of borrowings
under the working capital line into our common stock at a price of $1.31 (a 10%
premium over the average closing price of the common stock on the American Stock
Exchange for the 22-day period ending June 30, 2004). The conversion price for
each subsequent $1 million dollars of borrowings will be adjusted upward if the
average closing price of our common stock on the American Stock Exchange for the
22-day period preceding such subsequent conversion exceeds the prior closing
average (so that the conversion price will reflect a 10% premium over the new
closing average). The amount we may borrow at any time under this revolving
facility is based on our eligible accounts receivable and our eligible inventory
with an advance rate equal to 90% of our eligible accounts receivable (90 days
or less) and 50% of finished goods inventory up to a maximum of $1,000,000.
The term note also has a three-year term and bears interest at the prime rate
published in The Wall Street Journal from time to time plus 1.0%. Interest on
the loan is payable monthly. Principal will be amortized over the term of the
loan, commencing on November 1, 2004, with minimum monthly payments of principal
of $125,000. Laurus Funds has the option to convert some or all of the principal
and interest payments into common stock at a price of $1.25 (a 5% premium over
the average closing price of our common stock on the American Stock Exchange for
the 22-day period ending June 30, 2004) (the "Fixed Conversion Price"). Subject
to certain limitations, regular payments of principal and interest will be
automatically convertible into common stock if the average closing price of the
common stock for the five trading days immediately preceding a payment date is
greater than or equal to 110% of the Fixed Conversion Price.
We will be required to pay a premium of 2% of the amount of each principal
payment under the revolving working capital line and/or the term note made in
cash. In addition, we will be required to pay a premium of 20% of the
then-outstanding balance of the term note if we prepay that note.
In connection with the financing, we also issued to the Laurus Funds two
warrants to purchase up to an aggregate of 1,380,000 shares of our common stock
at prices ranging from $1.56 to $2.28, which reflect premiums of between 25% and
75% over the 22-day average described above.
We have agreed to register for resale under the Securities Act of 1933 the
shares of common stock issuable to Laurus Funds upon conversion of borrowings
under the Credit Facility and upon exercise of the warrants.
The interest rate under each of the notes is subject to downward adjustment on a
monthly basis (but not to less than 0%). The downward adjustment will be in the
amount of 200 basis points for each incremental 25% increase in the average
closing price of our common stock over the then applicable conversion price of
the note for the five-day period preceding such monthly determination date if we
have at that time registered for resale all of the shares of our common stock
underlying the notes and warrants we are issuing to Laurus Funds in this
transaction, or 100 basis points for each incremental 25% increase in the
average closing price of our common stock over the then applicable conversion
price of the note for the five-day period preceding such monthly determination
date if we have not at that time registered for resale all of such shares.
The amount of our common stock Laurus Funds may hold at any given time is
limited to no more than 4.99% of our outstanding capital stock and no more than
25% of our aggregate daily trading volume determined over the five-day period
prior to the date of determination. These limitations may be waived by Laurus
Funds and do not apply if we are in default. In addition, the total number of
shares of our common stock issuable to Laurus Funds pursuant to these notes and
warrants is limited to 3,801,237 without approval of our stockholders.
The conversion price applicable to each of the notes and the exercise price of
each of the warrants is subject to adjustment on a full ratchet basis if we
issue shares of our common stock (or common stock equivalents) at a price per
share less than the applicable conversion or exercise price. There are
exceptions for issuances of stock and options to our employees and for certain
other ordinary course stock issuances.
Subject to applicable cure periods, amounts borrowed under the Credit Facility
are subject to acceleration upon certain events of default, including: (i) any
failure to pay when due any amount we owe under the Credit Facility; (ii) any
material breach by us of any other covenant made to Laurus Funds; (iii) any
misrepresentation made by us to Laurus Funds in the documents governing the
Credit Facility; (iv) the institution of certain bankruptcy and insolvency
proceedings by or against us; (v) the entry of certain monetary judgments
against us that are not paid or vacated for a period of 30 business days; (vi)
suspensions of trading of our common stock; (vii) any failure to deliver shares
of common stock upon conversions under the Credit Facility; (viii) certain
defaults under agreements related to any of our other indebtedness; and (ix)
changes of control of our company. Substantial fees and penalties are payable to
Laurus Funds in the event of a default.
Our obligations under the Credit Facility are secured by a first priority
security interest in all of our assets, including pledges of the capital stock
of our active subsidiaries. These subsidiaries have also guaranteed our
obligations and have granted a security interest in all of their assets to
secure these guarantees.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
None
(b) Pro Forma Financial Information
(c) Exhibits.
Exhibit 99.1 Press release of the registrant dated July 6, 2004
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.
GREENMAN TECHNOLOGIES, INC.
(Registrant)
By: /s/ Charles E. Coppa
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Charles E. Coppa
Chief Financial Officer
Date: July 7, 2004