SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
(Amendment No.__)
Environmental Power Corporation
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
29406-L-10-2
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(CUSIP Number)
Steven I. Himelstein, Esq.
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10077
(212) 415-9200
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 23, 2001
--------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. []
(Continued on following pages)
(Page 1 of 8 Pages)
Page 2 of 8
SCHEDULE 13D
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CUSIP NO. 29406-I-2
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John J. Burke
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
N/A
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
N/A
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
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SOLE VOTING POWER
7
NUMBER OF 436,183
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 436,183
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
436,183
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
N/A
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.6%
13
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TYPE OF REPORTING PERSON*
14
IN
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Page 3 of 8
SCHEDULE 13D
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CUSIP No. 29406-L-2
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Item 1. Security and Issuer: Common Stock, $.01 par value per share of
Environmental Power Corporation, a Delaware corporation (the "Company"). The
address of the Company's principal executive office is 500 Market Street,
Suite 1E, Portsmouth, NH 03801.
Item 2. Identity and Background:
-----------------------
(a) The person filing this Statement is John J. Burke.
(b) Mr. Burke's business address is 622 North Water Street, Suite 200,
Milwaukee, WI 53202.
(c) Mr. Burke is a real estate developer with Burke Properties Inc., 622 North
Water Street, Suite 200, Milwaukee, WI 53202.
(d) Criminal proceedings - none
(e) Civil proceedings - none
(f) Citizenship - Mr. Burke is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration: Not applicable.
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The transaction giving rise to the filing of this Amendment was an exchange
of existing Microgy shares for securities of the Company. Mr. Burke
purchased the Microgy securities exchanged with personal funds.
Item 4. Purpose of Transaction.
----------------------
On June 23, 2001 (the "Closing Date"), the Company acquired approximately
87.7% of the outstanding common stock of Microgy in exchange for securities of
the Company pursuant to a Share Exchange Agreement (the "Exchange Agreement")
dated as of June 20, 2001 among the Company, Microgy and the Principal Microgy
Shareholders, as defined therein. Mr. Burke is a Principal Microgy Shareholder
The Company issued an aggregate of 5,521,549 shares of the Company's common
stock, $.01 par value ("Common Stock") and 197,760.7 shares of the Company's
newly designated Series B Convertible Preferred Stock, $.01 par value (the "EPC
Preferred Stock"), to the Principal Microgy Shareholders in exchange for
15,919,147 shares of Microgy common stock. Each share of Preferred Stock, which
votes with the Common Stock on an as converted basis, will automatically be
converted into ten shares of Common Stock upon an increase in the authorized
common stock to an amount sufficient to allow conversion of the Preferred Stock.
The exchange ratio (the "Exchange Ratio") used was 0.3468495 shares of Common
Stock and 0.0124228 shares of Preferred Stock for each share of Microgy common
stock. The Exchange Ratio was determined by negotiations among the Company,
Microgy and the primary Principal Microgy Shareholders. The Exchange Ratio is
based on all of the fully diluted equity of Microgy being exchanged for 45% of
the fully diluted equity of the Company, assuming exercise or conversion of all
derivative securities. Pursuant to Section 2.4 of the Agreement, the Exchange
Ratio may be adjusted to reflect certain issuances of equity by the Company to
generate funds to be available for financing Microgy. However, holders of
approximately 94% of the Microgy common stock exchanged have waived their right
to adjustments in the Exchange Ratio. The Principal Microgy Shareholders
included two Microgy shareholders who executed Joinder Agreements, becoming
parties to the Exchange Agreement. At the closing, one of the Principal Microgy
Shareholders also exchanged a warrant to purchase 800,000 shares of Microgy
common stock for a warrant to purchase securities of the Company based on the
Exchange Ratio.
The Exchange Agreement provides that, within 30 days of the Closing Date, the
Board of Directors of the Company will be enlarged from five to eight members
and the three resulting vacancies will be filled by designees of the Principal
Microgy Shareholders (including replacements or substitutes similarly
designated, the "Microgy Designees").
Page 4 of 8
Under the Exchange Agreement, the Company agreed to offer (the "Subsequent
Offer") the remaining shareholders of Microgy (who own an aggregate of 2,230,126
shares of Microgy Common, warrants to purchase 850,000 shares of Microgy common
stock and options to purchase 290,000 shares of Microgy common stock) to
exchange for EPC securities based on the Exchange Ratio.
In connection with and as a condition to the Exchange Agreement, the following
agreements relating to or bearing upon the securities were executed:
A. A Stockholders' Agreement as of the Closing Date among the Company, the
Principal Microgy Shareholders, Joseph E. Cresci and Donald A. Livingston (the
"Stockholders' Agreement"). Messrs. Cresci and Livingston (the "Majority
Stockholders") are Directors, officers and principal stockholders of the
Company. The Stockholders' Agreement provides among other things, that:
1. The Company will arrange for a meeting of stockholders to present a proposal
to increase the authorized Common Stock from 20 million shares to a greater
number at least sufficient to permit the conversion of the Preferred Stock into
Common Stock and the parties will vote the shares they own or control in favor
thereof;
2. The parties will take all lawful action, including voting the shares they
own or control, to cause the proportion of Microgy Designees to the existing
five Directors (including any replacement or substitute designated by the
Majority Stockholders, the "Incumbent Directors"), to remain approximately 3:5
and for the election of the Microgy Designees and the Incumbent Directors;
3. Each Party who is a director of the Company, in such capacity (subject to
his fiduciary duties to the Company), unless agreed by a majority of the then
Incumbent Directors, will retain Messrs. Cresci and Livingston as Chairman and
Chief Executive Officer and President, respectively, and not take any action to
alter the respective powers and functions of such offices;
4. Each Principal Microgy Shareholder agreed that, unless such Principal
Microgy Shareholder has been specifically invited in writing by a majority of
the then Incumbent Directors (or in the case of (a)(i) below, has obtained the
consent of a majority of the then Incumbent Directors), such Principal Microgy
Shareholder will not in any manner, directly or indirectly, (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (i) in the
case of George A. Kast and Benjamin Brant, any acquisition of any securities (or
beneficial ownership thereof) or assets of the Company, or any of its
subsidiaries, except as contemplated in the Exchange Agreement; (ii) any tender
or exchange offer or merger or other business combination involving the Company
or any of its subsidiaries, (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company or any of its subsidiaries or (iv) any "solicitation" of "proxies" (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote any voting securities of the Company, except as
contemplated in the Stockholders' Agreement, (b) form, join or in any way
participate in a "group" (as defined under the Securities Exchange Act of 1934,
as amended), with respect to the securities of the Company, except as
contemplated in the Stockholders' Agreement, (c) otherwise act, alone or in
concert with others, to seek to control or influence the management, Board or
policies of the Company, (other than acting as a shareholder or director in the
ordinary course), (d) take any action which might force the Company to make a
public announcement regarding any of the types of matters set forth in (a)
above, (e) advise, assist or encourage any other persons in connection with the
foregoing, or (f) enter into any discussions or arrangements with any third
party with respect to any of the foregoing.
5. The Stockholders' Agreement terminates on June 30, 2003.
B. A Registration Rights Agreement as of the Closing Date with the
Principal Microgy Shareholders, the Majority Stockholders and those Microgy
security holders who exchange Microgy securities in the Subsequent Offer and
execute counterpart signature pages thereto (collectively, the "Holders") (the
"Registration Rights
Page 5 of 8
Agreement"). Pursuant to the Registration Rights Agreement, the Company agreed
to file, by November 30, 2001, a Registration Statement on behalf of the Holders
allowing holders to resell Common Stock and granted the Holders piggyback
registration rights.
Except as described in this Item 4 and elsewhere in this Schedule 13D, Mr.
Burke does not have any plans or proposals (in his capacity as a stockholder of
the Company) which relate to or would result in: (a) the acquisition by any
person of additional securities of the Company, or the disposition of securities
of the Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (d) any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, by-laws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Company by
any person; (h) causing a class of securities exchange or cease to be authorized
to be quoted in an interdealer quotation system of a registered national
securities association; (i) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Act, as amended; or (j) any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer:
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(a) Mr. Burke may be deemed to own beneficially 436,183 shares of Common
Stock as of July 23, 2001, consisting of 321,157 shares of Common Stock issued
under the Exchange Agreement and 115,026 shares of Common Stock issuable upon
conversion of EPC Preferred Stock issued under the Exchange Agreement.
The shares beneficially owned by Mr. Burke represent 2.6% of the class;
based on the 11,406,783 shares of Common Stock reported to be outstanding as of
May 14, 2001 in the Company's Form 10-Q filed for the period ending March 31,
1998, plus the 5,521,549 shares of Common Stock issued on July 23, 2001 as
described in Item 4, plus the 115,026 shares of Common Stock Mr. Burke will
receive upon conversion of his EPC Preferred Shares .
Mr. Burke is a party to the Stockholders' Agreement described in Item 4.
Within the meaning of Rule 13(d)(5) under the Securities Exchange Act of 1934,
as amended (the "Act"), the terms of the Stockholders' Agreement could be deemed
to provide for an agreement among the parties thereto to act together for the
purpose of voting and disposing of equity securities of the Company.
Accordingly, the parties thereto could be deemed to be members of a "group" and
could be deemed to be beneficial owners of all of the securities held by such
group. Mr. Burke denies the existence of such a group and disclaims beneficial
ownership of the securities held by any other person.
As of the date hereof, to the best knowledge of Mr. Burke, the table below
identifies all of the parties to the Stockholders' Agreement, in addition to Mr.
Burke, and states their ownership interests in the Company as of July 23, 2001,
based solely upon public filings and acquisition of the Company's securities
pursuant to the Exchange Agreement.
Page 6 of 8
PARTY TO STOCKHOLDER COMMON STOCK EPC COMMON STOCK COMMON STOCK COMMON STOCK PERCENTAGE OF
AGREEMENT OWNED PREFERRED ISSUABLE UPON BENEFICIALLY OUTSTANDING/2/ COMMON STOCK
STOCK OWNED CONVERSION OWNED /1/ BENEFICIALLY
OWNED /3/
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Joseph E. Cresci 4,725,348 0 0 4,725,348 16,928,332 27.9%
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Donald A. Livingston 2,461,739 0 0 2,461,739 16,928,332 14.5%
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George A. Kast 2,009,318 71,966 719,660 2,728,978 17,647,992 15.5%
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Benjamin Brant 1,959,411 70,178.5 701,785 2,661,196 17,630,117 15.1%
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Daniel J. Eastman 797,754/4/ 28,572.4/5/ 285,724 1,083,478 17,491,536 6.2%
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Steven J. Brunner 390,206 13,975.7 139,757 529,963 17,068,089 3.0%
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John P. O'Shea 96,355 3,451.1 34,511 130,866 16,962,843 0.8%
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Henry S. Krauss 16,059 575.2 5,752 21,811 16,934,084 0.1%
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Frances Luskind and 16,059 575.2 5,752 21,811 16,934,084 0.1%
Henry Krauss, as
Trustees of the Trust
U/W/O Jessie Daniels
FBO Frances Luskind
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Smithson Ventures Inc. 32,118 1,150.4 11,504 43,622 16,939,836 0.3%
Money Purchase Pension
Plan DLJSC- Custodian
FBO Deborah Salerno
Trustee
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Amro International, S.A. 64,237 2,300.7 23,007 87,244 16,951,339 0.5%
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Frank Kramer 64,237 2300.7 23,007 87,244 16,951,339 0.5%
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Hitel Group 32,118 1,150.4 11,504 43,622 16,939,836 0.3%
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1 Section 13 of the Exchange Act deems a person to be the beneficial owner of
a security, if that person has the right to acquire beneficial ownership of such
security through the conversion of another security if such other security was
acquired with the purpose or effect of changing or influencing the control of
the issuer, or as a participant in any transaction having such purpose or
effect. Therefore, the holders of EPC Preferred Stock may be deemed to be the
beneficial owners of the underlying Common Stock.
2 Pursuant to Section 13, any shares of Common Stock not outstanding which are
issuable upon exercise of warrants or conversion of EPC Preferred Stock held by
a person have been deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person but have
not been deemed to be outstanding for the purpose of computing the percentage of
the class by any other person.
3 Based on the 11,406,783 shares of Common Stock reported to be outstanding as
of May 14, 2001 in the Company's Form 10-Q filed for the period ending March 31,
2001, plus the 5,521,549 shares of Common Stock issued on July 23, 2001 as
described in Item 4, plus the number of Common Stock this holder will receive
upon exercise of warrants or conversion of his EPC Preferred Stock (as described
in Column 4 of the above table).
4 This includes 277,480 shares of Common Stock which is issuable upon the
exercise of the Warrant that Mr. Eastman received in connection with the
Exchange Agreement.
5 This includes 9,938.24 shares of the EPC Preferred Stock which is issuable
upon the exercise of the Warrant that Mr. Eastman received in connection with
the Exchange Agreement.
Page 7 of 8
(b) The number of shares of Common Stock as to which Mr. Burke may be
deemed to (i) have sole power to vote or to direct the vote, (ii) shared power
to vote or to direct the vote, (iii) sole power to dispose or direct the
disposition, or (iv) shared power to dispose or direct the disposition is set
forth in the cover pages and such information is incorporated herein by
reference.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
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to Securities of the Issuer:
----------------------------
As of the date hereof, to the best knowledge of Mr. Burke, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
among any of the persons identified in this statement or between Mr. Burke and
any other person with respect to any securities of the Company, except as
disclosed in Item 4 above.
Item 7. Material to be Filed as Exhibits:
--------------------------------
1. Share Exchange Agreement dated as June 20, 2001, by and among
the Company, Microgy Cogeneration Systems, Inc. and the Principal
Microgy Shareholders referred to therein./6/
2. Form of Waiver Agreement given by holders of exchanged Microgy
common stock agreeing to waive their right to adjustments in the
Exchange Ratio./7/
3. Stockholders' Agreement dated as of July 23, 2001 among the
Company, Joseph E. Cresci, Donald A. Livingston and the Principal
Microgy Shareholders referred to therein./8/
4. Registration Rights Agreement dated as of July 23, 2001 among the
Company, Joseph E. Cresci, Donald A. Livingston and the Principal
Microgy Shareholders referred to therein./9/
5. Form of the Joinder to Share Exchange Agreement./10/
/6/ Incorporated by reference to Exhibit 2 to Amendment No. 7 to Joseph E.
Cresci's Schedule 13D filed on August 2, 2001.
/7/ Incorporated by reference to Exhibit 3 to Amendment No. 7 to Joseph E.
Cresci's Schedule 13D filed on August 2, 2001.
/8/ Incorporated by reference to Exhibit 4 to Amendment No. 7 to Joseph E.
Cresci's Schedule 13D filed on August 2, 2001.
9 Incorporated by reference to Exhibit 5 to Amendment No. 7 to Joseph E.
Cresci's Schedule 13D filed on August 2, 2001.
/10/ Incorporated by reference to Exhibit 6 to Amendment No. 7 to Joseph E.
Cresci's Schedule 13D filed on August 2, 2001.
Page 8 of 8
SIGNATURE
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After reasonable inquiry to and to the best of the knowledge and
belief of the undersigned, the undersigned certifies that the information set
forth in this statement by or about the undersigned is true, complete and
correct.
Date August 2, 2001
/s/ John J. Burke
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John J. Burke