Attached files
| file | filename |
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| EX-4.1 - CHINA AGRITECH INC | v163148_ex4-1.htm |
| EX-4.2 - CHINA AGRITECH INC | v163148_ex4-2.htm |
| EX-10.2 - CHINA AGRITECH INC | v163148_ex10-2.htm |
| EX-10.1 - CHINA AGRITECH INC | v163148_ex10-1.htm |
| EX-99.1 - CHINA AGRITECH INC | v163148_ex99-1.htm |
UNITED
STATES
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): October 19,
2009
CHINA
AGRITECH, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-49608
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75-2955368
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(State
of Incorporation)
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(Commission
File No.)
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(IRS
Employer ID No.)
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Room
3F No. 11 Building, Zhonghong International Business Garden
Future
Business Center,
Chaoyang
North Road, Chaoyang District, Beijing, China 100024
(Address
of Principal Executive Offices)
Registrant’s
Telephone Number, Including Area Code:
(86)10-59621278
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):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
Securities Purchase
Agreement
On October 19, 2009, China Agritech,
Inc. (the “Company”), a Delaware corporation, entered into and consummated a
Securities Purchase Agreement (the “Purchase Agreement”) with Carlyle Asia
Growth Partners IV, L.P. and CAGP IV Co-Investment, L.P. (collectively, the
“Investors”), who are qualified institutional buyers, pursuant to which the
Company issued (i) 1,392,768 shares of common stock, par value $0.001 per
share (the “Shares”), and warrants (collectively, the “Warrants”) to purchase up
to 928,514 shares of common stock, par value $0.001 per share (the “Warrant
Shares”), at an initial exercise price of approximately $10.77 per share, which
is subject to adjustment. The total aggregate purchase price was
$15,000,000. The exercise price of the Warrants has a floor of approximately
$3.0657 per share, and in the event that the Warrants are exercised at that
price, the Company would issue an additional 2,333,331 shares (the “Additional
Warrant Shares”), for an aggregate of 3,261,845 shares issued pursuant to the
Warrants.
The adjustment resulting in the
issuance of the Additional Warrant Shares would only occur if the Company does
not meet the Net Income Target, as defined below. Pursuant to the Purchase
Agreement, the Company is also obligated to issue up to 3,500,000 shares of
common stock (the “Make-Good Shares”) to the Investors in the event that the
Company fails to meet a predetermined net income target of $11.5 million for the
fiscal year ending December 31, 2009 (the “Net Income Target”). For
purposes of this transaction and pursuant to the Purchase Agreement, “Net
Income” is defined as the consolidated net income of the Company and its
subsidiaries for the calendar year ending December 31, 2009 as reported in the
Company’s audited financial statements for the fiscal year ending December 31,
2009, excluding any income attributable to non-recurring, extraordinary
transactions, including acquisitions and divestitures engaged in by the Company
and its subsidiaries, but increased by (i) any non-cash charges incurred as
a result of the transactions contemplated under the Purchase Agreement and by
the other transaction documents, including without limitation, the issuance of
the Warrants or any Warrant Shares or Additional Warrant Shares issued
thereunder, and any issuance of Make-Good Shares and (ii) reasonable
expenses incurred in connection with any bona fide public offering of
the Company’s securities. If the Company meets the Net Income Target
it will not issue any Additional Warrant Shares or any Make-Good
Shares. The Purchase Agreement limits the Investors’ beneficial
ownership of the Company’s common stock to 19.99% of the shares
issued and outstanding immediately prior to the closing of the transaction
described herein (the “Beneficial Ownership Limitation”) until such time as the
Company has satisfied in full the provisions of Regulation 14C with respect to
the approval by written consent in lieu of a meeting the Company received from
stockholders holding a majority of the Company’s common stock issued and
outstanding approving the Purchase Agreement, the transaction documents, and the
transactions contemplated thereby.
Pursuant to the Purchase Agreement the
Company granted the Investors a one-year right of participation in future
offerings by the Company of shares of its common stock, debt or equity
securities convertible, exercisable or exchangeable into common stock, or debt
securities (a “Qualified Offering”). The Investors’ right of
participation was granted individually, on a pro rata basis based upon
their original respective subscription amounts, and collectively no less than $5
million and no more than $10 million. Pursuant to the Purchase
Agreement, and more fully described below, the Investors also have the right to
collectively designate one person to serve as a member of the Company’s Board of
Directors (the “Board”).
2
Warrant
The Warrants have a term of 30 months
and become exercisable six months from issuance. As described more
fully above, the Warrants have an initial exercise price of approximately
$10.77 per share, which is subject to adjustment. The exercise price
of the Warrants has a floor of approximately $3.0657 per share, and in the event
that the Warrants were exercised at that price, the Company would issue the
Additional Warrant Shares, for an aggregate of 3,261,845 shares issued pursuant
to the Warrants. The Warrant
Shares and Additional Warrant Shares are subject to customary anti-dilution
protections in the event of stock dividends or splits, cash dividends, stock
reclassifications and mergers. The Warrants are exercisable for cash and
contain a cashless exercise feature applicable only during such time when the
Warrants are exercisable but a registration statement covering the Warrant
Shares or Additional Warrant Shares is not effective.
Registration Rights
Agreement
In
connection with the transaction, the Company entered into a registration rights
agreement, pursuant to which the Company agreed to prepare and file a
registration statement covering the resale of the Shares and Warrant Shares, and
the Make-Good Shares and Additional Warrant Shares, if such shares are issued
(collectively, the “Registrable Securities”), with the SEC. The Company will
file such registration statement on the earlier of the 30th
calendar day following the completion by the Company of a Qualified Offering or
January 31, 2010. The Company is required to keep the registration
statement continuously effective under the Securities Act of 1933, as amended
(the “Securities Act”), until such date as is the earlier of the date when all
of the securities covered by that registration statement have been sold or the
date on which such securities may be sold without any restriction pursuant to
Rule 144 (the “Financing Effectiveness Period”). The Company will pay
liquidated damages of 1.5% of the aggregate purchase price paid by each holder
pursuant to the Purchase Agreement per month, payable in cash, up to a maximum
of 4.5% of the aggregate subscription amount paid by such holder pursuant to the
Purchase Agreement, if the registration statement is not filed within the
foregoing time period, is not declared effective within 90 days following the
initial filing or 120 days if there is a full review by the United States
Securities and Exchange Commission (the “SEC”), or ceases to be effective for
more than 30 consecutive calendar days or more than an aggregate of 45 calendar
days during any 12-month period prior to the expiration of the Financing
Effectiveness Period. However, no liquidated damages will be paid
with respect to any Registrable Securities that are not registered because the
Company is not permitted to include all Registrable Securities in any
registration statement due to any publicly-available SEC guidance or the
Securities Act.
Voting
Agreement
In
connection with the Purchase Agreement, (i) the Company, (ii) the Investors,
(iii) Yu Chang, our Chief Executive Officer, President & Secretary, (iv)
Xiao Rong Teng, a member of our Board of Directors, (v) China Tailong Group
Limited, which is owned by Mr. Chang, and (vi) Sammi Holdings Limited, which is
owned 85% by Mr. Chang and 15% by Ms. Teng (China Tailong Group, Limited and
Sammi Holdings Limited being the “Additional Stockholders”), entered into a
voting agreement whereby Mr. Chang, Ms. Teng and the Additional Stockholders
agreed to vote their respective shares of common stock at each annual meeting of
the Company’s stockholders or at any other meeting or pursuant to each written
consent of the Company’s stockholders, in each such case, at which or pursuant
to which, members of the Board are to be elected for one individual designated
by the Investors (jointly) to be appointed as a member of the Board of
Directors. In the event that the Board determines that the Investors’
designee qualifies an “independent director” as defined and determined in
accordance with Rule 5605(a)(2) of the Nasdaq Marketplace Rules, the Company,
Mr. Chang, Ms. Teng and the Additional Stockholders agreed to take any and all
action necessary so as to cause the Investors’ designee to be appointed to each
committee of the Board, including, but not limited to, the audit and
compensation committees of the Board; provided, however, that for
inclusion on the audit committee, such designee must also meet the requirements
for service on the audit committee as set forth in Rule 5605(c)(2)(A) of the
Nasdaq Marketplace Rules. The Investors’ right to designate a member
of the Board terminates at such time as the Investors, together, do not own at
least 5.0% of the shares of common stock of the Company, calculated on a fully
diluted basis. In order to effect the appointment of the Investors’
designee, the Board will increase the number of its members from five to
six.
3
Item
3.02 Unregistered Sales of Equity Securities.
The
information included in Item 1.01 of this Current Report on Form 8-K is hereby
incorporated by reference into this Item 3.02.
As more
fully described above, on October 19, 2009, the Company issued
(i) 1,392,768 shares of common stock, par value $0.001 per share and
warrants to purchase up to 928,514 shares of common stock, par value $0.001 per
share, at an initial exercise price of approximately $10.77 per share, which is
subject to adjustment. The total aggregate purchase price was
$15,000,000. The exercise price of the Warrants has a floor of approximately
$3.0657 per share, and in the event that the Warrants are exercised at that
price, the Company would issue an additional 2,333,331 shares, for an aggregate
of 3,261,845 shares issued pursuant to the Warrants. An adjustment resulting in
the issuance of the Additional Warrant Shares would only occur if the Company
does not meet the Net Income Target. Pursuant to the Purchase Agreement, the
Company is also obligated to issue up to 3,500,000 additional shares of common
stock to the Investors in the event that the Company does not meet the Net
Income Target.
Pursuant to its obligations under
Nasdaq Marketplace Rule 5635, the Company received the written consent of the
stockholders holding a majority of the shares of the Company’s outstanding
common stock approving the transaction. The Company intends to
promptly file an Information Statement on Schedule 14A with the SEC to satisfy
in full the provisions of Regulation 14C with respect to such written
consent. Pursuant to the Purchase Agreement, the Beneficial Ownership
Limitation terminates upon satisfaction in full by the Company of the
provisions of Regulation 14C with respect to receipt of such stockholder
approval.
The
issuance of the securities was exempt from registration pursuant to Section 4(2)
of the Securities Act and the rules and regulations promulgated thereunder by
the SEC, Rule 506 under Regulation D as promulgated under the Securities Act and
Rule 903 of Regulation S also promulgated thereunder. There was no
placement agent or underwriter in connection with this transaction.
Item
8.01 Other Events.
On October 20, 2009, the Company issued
a press release announcing the closing of the transaction described in Items
1.01 and 3.02 of this Current Report on Form 8-K.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits.
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Exhibit
No.
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Description
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4.1
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Form
of Warrant
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4.2
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Registration
Rights Agreement, dated as of October 19, 2009
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10.1
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Securities
Purchase Agreement, dated as of October 19, 2009
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10.2
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Voting
Agreement, dated as of October 19, 2009
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99.1
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Press
Release, dated as of October 20,
2009
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4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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CHINA
AGRITECH, INC.
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Date:
October 20, 2009
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/s/
Yu
Chang
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Yu
Chang
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Chief
Executive Officer
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5
Exhibit
Index
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Exhibit
No.
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Description
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4.1
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Form
of Warrant
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4.2
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Registration
Rights Agreement, dated as of October 19, 2009
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10.1
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Securities
Purchase Agreement, dated as of October 19, 2009
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10.2
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Voting
Agreement, dated as of October 19, 2009
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99.1
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Press
Release, dated as of October 20,
2009
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