Attached files
| file | filename |
|---|---|
| EX-4.7 - TM Entertainment & Media, Inc. | v171261_ex4-7.htm |
| EX-3.3 - TM Entertainment & Media, Inc. | v171261_ex3-3.htm |
| EX-4.8 - TM Entertainment & Media, Inc. | v171261_ex4-8.htm |
| EX-4.6 - TM Entertainment & Media, Inc. | v171261_ex4-6.htm |
| EX-99.1 - TM Entertainment & Media, Inc. | v171261_ex99-1.htm |
| EX-10.18 - TM Entertainment & Media, Inc. | v171261_ex10-18.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): January 12, 2010
CHINA
MEDIAEXPRESS HOLDINGS, INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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001-33746
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20-8951489
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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Room 2805, Central Plaza, Wanchai Hong
Kong
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N/A
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: +852 2827
6100
(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 (see General Instruction A.2. below):
¨ 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
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
January 12, 2010, China MediaExpress Holdings, Inc., a Delaware corporation (the
“Company”),
entered into a securities purchase agreement (the “Purchase Agreement”),
with Starr Investments Cayman II, Inc. (“Starr”). Under this
agreement, Starr will, subject to various terms and conditions, purchase from
the Company 1,000,000 shares of Series A Convertible Preferred Stock, par
value US$0.001 (the “Purchased Shares”),
and warrants (the “Purchased Warrants”)
to purchase 1,545,455 shares of the Common Stock, par value US$0.001, of the
Company (“Common
Stock”), for an aggregate purchase price of US$30,000,000. Concurrently,
certain shareholders of the Company will transfer (the “Share Transfer”)
150,000 shares of Common Stock to Starr for no additional cash consideration
(the “Transferred
Shares”)
Further
details regarding these agreements and transactions are set forth
below.
Purchase
Agreement
The
Purchased Shares Purchase
On
January 12, 2010, the Company entered into the Purchase Agreement with Starr and
certain of the Company’s controlling stockholders, pursuant to which Starr will,
subject to the terms and conditions contained therein, purchase the Purchased
Shares and the Purchased Warrants for an aggregate purchase price of
$30.0 million. The terms of the Purchased Shares will be set forth in the
Certificate of Designations described below. The purchase of the Purchased
Shares will close no later than the fifth business day following
satisfaction or waiver of all of the closing conditions set forth in the
Purchase Agreement.
Governance
Arrangements
Pursuant
to the Purchase Agreement and the Certificate of Designations, Starr will be
entitled to designate one individual to the Company’s board of directors. Starr
will continue to be able to designate a director under the terms of the Purchase
Agreement and the Certificate of Designations so long as Starr beneficially owns
at least 3% of the Company’s Common Stock on a fully-diluted and as
converted basis.
In
addition, until the earlier of the date on which Starr no longer beneficially
owns at least 3% of the Company’s Common Stock on a fully-diluted and as
converted basis, the Company will not adopt or make, without the affirmative
vote or consent of the holders of at least a majority of the outstanding
Purchased Shares voting as a separate class, given in person or by proxy, either
in writing or at a meeting:
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•
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any amendment of its Certificate
of Incorporation or Bylaws of the Company or any subsidiary in a manner
adverse to the rights, preferences or privileges of the Purchased
Shares;
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increase or decrease the total
number of authorized Purchased Shares;
or
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any amendment of the agreements
pursuant to which it controls its operating entities in the People’s Republic
of China (“PRC”).
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Lock-Up
and Transfer Restrictions
For the
six-month period from the closing of the issuance of the Purchased Shares, Starr
will not be permitted to transfer or otherwise dispose of its interest in the
Purchased Shares, Purchased Warrants or Transferred Shares or in any shares of
Common Stock issued upon conversion of the Purchased Shares or exercise of the
Purchased Warrants (other than to its permitted transferees or pursuant to
certain other customary exceptions).
Preemptive
Rights
For so
long as Starr continues to beneficially own 3% or more of the Company’s Common
Stock on a fully-diluted and as converted basis, it will have customary
preemptive rights in the event the Company offers securities to any person to
purchase an amount of securities in the offering in proportion to the percentage
of the Company’s Common Stock on a fully-diluted and as converted basis
held by Starr at the time of the offering.
Closing
Conditions
Appointment
of Director
The
closing of the issuance of the Purchased Shares is conditioned upon the Starr
board member nominee being appointed and Starr receiving satisfactory evidence
of such appointment.
2
Receipt
of Transferred Shares
The
closing of the issuance of the Purchased Shares is conditioned upon Starr
receiving the Transferred Shares.
Other
Closing Conditions
The
closing of the issuance of the Purchased Shares is also subject to satisfaction
or waiver of other customary conditions, including compliance with covenants and
the accuracy of representations and warranties provided in the Purchase
Agreement, including that no material adverse effect shall have occurred with
respect to the Company prior to the closing of the issuance of the Purchased
Shares and that the Company shall have adopted a program with respect to
compliance with the US Foreign Corrupt Practices Act and the NYSE Amex LLC
having approved the Company’s application to list additional shares in
connection with the transaction.
Post-Closing
Covenants
After the
closing, the Company is obligated to, among other things, within 3 months (a)
effect the transfer of certain of the assets held in the PRC to other companies
controlled by it in the PRC and enter into licensing arrangements with respect
thereto, and (b) amend the terms of the agreements pursuant to which it controls
its operating entities in the PRC to the reasonable satisfaction of Starr, seek
approval from the State Administration for Radio and Television for the
broadcasting of certain video programming not later than December 31, 2010 and
implement a program regarding compliance with the US Foreign Corrupt Practices
Act not later than April 30, 2010.
Termination
The
Purchase Agreement may be terminated at any time prior to closing in certain
circumstances, including:
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by mutual written consent of
Starr and the Company;
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by either party if any
governmental entity shall have taken action prohibiting any of the
contemplated transactions;
or
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by either party if the other
party is in breach of, or has failed to comply with, any of its
representations, warranties or covenants, and such breach or failure to
comply is not curable, or has not been cured within 10 days of
receipt of notice thereof.
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Fees
and Expenses
Upon the
closing of the issuance of the Purchased Shares, the Company will pay up to
$200,000 of the reasonable fees and expenses of Starr associated with the
transaction incurred through the earlier of the closing or the termination of
the Purchase Agreement.
Survival
The
Purchase Agreement contains customary representations and warranties. Certain of
these representations and warranties will survive for 36 months following the
closing.
Purchased
Warrants
General
The
Purchased Warrants entitle the holder thereof to purchase up to 1,545,455 shares
of the Company’s Common Stock at an exercise price of $6.47 per share at any
time prior to the fifth anniversary of the date of issuance. The
Purchased Warrants contain customary anti-dilution adjustment provisions and may
be exercised for cash or cancellation of indebtedness owed to the holder by the
Company. The Purchased Warrants may be redeemed by the Company for
$.01 per Purchased Warrant if at any time the closing price of the Company’s
Common Stock is greater than or equal to $14 for a period of 20 trading days
over any 30 consecutive trading days.
3
Certificate
of Designations
General
The
Company does not currently have any shares of preferred stock issued and
outstanding, and, therefore, the Purchased Shares will be the Company’s most
senior equity security. The Purchased Shares will be convertible into shares of
the Company’s common stock at the rates described below. The Purchased Shares
have no stated maturity; however, the shares of Purchased Shares automatically
convert to Common Stock on the fourth anniversary of their
issuance.
Ranking
The
Purchased Shares will have an initial liquidation preference of $30 per share
and will rank senior to the Company’s Common Stock and any other stock that
ranks junior to the Purchased Shares with respect to distributions of assets
upon the liquidation, dissolution or winding up of the Company.
The
shares of Purchased Shares will be equity interests in the Company and will not
constitute indebtedness. In the event of bankruptcy, liquidation, dissolution,
reorganization or similar proceeding with respect to the Company, its
indebtedness will effectively rank senior to the Purchased Shares, and the
holders of the indebtedness will be entitled to the satisfaction of any amounts
owed to them prior to the payment of the then applicable liquidation preference
of any capital stock, including the Purchased Shares.
Liquidation
Rights
If the
Company voluntarily or involuntarily liquidates, dissolves or winds up its
affairs, each holder of the Purchased Shares will be entitled to receive out of
the Company’s assets available for distribution to stockholders, after
satisfaction of liabilities to creditors, if any, and before any distribution of
assets is made on the Company’s Common Stock or any of our other shares of stock
ranking junior as to such a distribution to the Purchased Shares, a liquidating
distribution in the amount that is the greater of (a) the aggregate
liquidation preference of all such holder’s shares of Purchased Shares plus any
accrued but unpaid dividends thereon and (b) the amount such holder would
receive as a holder of Common Stock assuming the prior conversion of each of its
Purchased Shares.
In any
such distribution, if the Company’s assets are not sufficient to pay the
liquidation preferences in full to all holders of the Purchased Shares, the
amounts paid to the holders of Purchased Shares will be paid pro rata in accordance with
the respective aggregate liquidation preferences of those holders. In any such
distribution, the “liquidation preference” of any holder of Purchased Shares
means the initial liquidation preference of $30 plus any dividends paid by
increasing the liquidation preference of the shares of Purchased Shares plus any accrued but unpaid
dividends. If the liquidation preference has been paid in full to all holders of
the Purchased Shares then the holders of the Company’s other stock shall be
entitled to receive all of the Company’s remaining assets according to their
respective rights and preferences.
Dividends
No
dividends will accrue on the Purchased Shares.
Conversion;
Anti-Dilution Adjustments
Each
Purchased Share will be convertible into the Company’s Common Stock in an amount
equal to the then applicable liquidation preference of the Purchased Shares
(plus accrued and unpaid dividends) divided by the then applicable conversion
price. The initial conversion price is $10 per share and is subject to customary
anti-dilution adjustments for issuances of shares of Common Stock as a dividend
or distribution on shares of the Common Stock.
Automatic
Conversion
In
addition, (i) if at any time the closing price of the Company’s Common Stock is
greater than or equal to $25 for a period of 20 consecutive trading days over
any 30 consecutive trading days, (ii) if at any time the Company’s market
capitalization exceeds $1.2 billion, or (iii) on the fourth anniversary of the
issuance of the Purchased Shares, then the Company may cause the conversion of
all or part of the Purchased Shares into common stock at the then applicable
conversion price.
4
Voting
Rights
The
holders of the Purchased Shares will be entitled to vote upon all matters upon
which holders of Common Stock have the right to vote, such votes to be counted
together with all other shares of capital stock having general voting powers and
not separately as a class. The holders of the Purchased Shares will be entitled
to the number of votes as the number of shares of Common Stock as the Purchased
Shares is convertible into, subject to a cap mandated by the NYSE Amex LLC as a
result of the Purchased Shares being issued at a discount to the closing bid
price of the Company’s Common Stock immediately prior to the execution of the
Purchase Agreement.
In
addition, until the earlier of the date on which Starr no longer beneficially
owns at least 3% of the Company’s Common Stock on a fully-diluted and as
converted basis, the Company will not adopt or make, without the affirmative
vote or consent of the holders of at least a majority of the outstanding
Purchased Shares voting as a separate class, given in person or by proxy, either
in writing or at a meeting:
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•
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any amendment of its Certificate
of Incorporation or Bylaws of the Company or any subsidiary in a manner
adverse to the rights, preferences or privileges of the Purchased
Shares;
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increase or decrease the total
number of authorized Purchased Shares;
or
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any amendment of the agreements
pursuant to which it controls its operating entities in the
PRC.
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Investor
Rights Agreement
Pursuant
to the terms of an Investor Rights Agreement, Starr will have the right to
purchase a pro-rata portion of any additional shares of capital stock proposed
to be issued by the Company, and will have the right to join any of Mr. Cheng,
Ou Wen Lin or Qingping Lin (the “Founding
Stockholders”) in their sale of capital stock of the Company on a pro
rata basis, in each case in proportion to Starr’s then current percentage of
ownership of the issued and outstanding shares of Common Stock, on a fully
diluted, as-if-converted basis.
The
Founding Stockholders will be required to pay certain Performance
Adjustment Amounts to Starr in the event the Company’s audited consolidated net
profits (“ACNP”) for 2009, 2010
or 2011 are less than US$42,000,000, US$55,000,000 and US$70,000,000,
respectively (each, a “Profits Target”). The
Performance Adjustment Amount payable in any of 2009, 2010 or 2011 will be a
fraction of US$343,462,957 proportionate to the amount by which the Company’s
ACNP in such year falls short of the then applicable Profits Target. The
Performance Adjustment Amounts will be payable in cash or stock, but only to the
extent such stock, together with the shares of Common Stock acquired or
acquirable as a result of Starr’s ownership of the Purchased Shares, the
Purchased Warrants and the Transferred Shares, will not exceed 19.9% of the
total number of shares of Common Stock issued and outstanding as of the date of
the Purchase Agreement.
As long
as Starr owns at least 3% of the issued and outstanding shares of Common Stock,
on a fully diluted, as-if-converted basis, it will also have the right (the
“Put Right”) to
require the Founding Stockholders to purchase its Purchased Shares and Common
Stock held by Starr or issued upon the conversion of Purchased Shares or
exercise of the Purchased Warrants if any of the following occurs: (1) the
Company’s ACNP for 2012 is less than its ACNP for 2011; (2) the Company fails to
achieve 50% of any Profits Target for any of 2009, 2010 or 2011; or (3) the
Company, Thousand, Bright or any Founding Stockholder materially breaches any of
the agreements in Sections 9 (Covenants) or 10 (Indemnification) of the
Securities Purchase Agreement or Sections 2 (Governance Matters), 3
(Restrictions on Transfer), 4 (Rights of First Offer), 5 (Tag-along), 6
(Performance-based Adjustment) or 9.2 (Compliance with Certificate of
Designations) of the Investor Rights Agreement, and fails to cure such breach
within 60 days following written notice of such breach by Starr.
In the
event the Founding Stockholders do not comply with their obligation to purchase
Starr’s shares under the put right or their obligations under Section 6
(Performance-based Adjustment) of the Investor Rights Agreement, Starr will have
the right to require the Founding Stockholders to sell up to all of the
Company’s capital stock directly or indirectly held by them to a third party
pursuant to a managed sale process.
Registration
Rights Agreement
The
Common Stock owned by Starr from time to time will be entitled to registration
rights pursuant to a Registration Rights Agreement (the “Registration Rights
Agreement”) to be entered into between the Company and Starr. The Company is
required to file one or more demand registration statements for an offering
intended to result in net proceeds of at least $10 million to the selling
stockholder or, in the alternative, an initial shelf registration statement
covering the sale of such Common Stock from time to time for the
benefit of Starr. If the Company breaches certain of its obligations
under the Registration Rights Agreement (including any of those related to the
requirement to timely file registration statements and including the Common
Stock issuable upon conversion of the Purchased Shares in any applicable
registration statement), the Company will be obligated to pay liquidated
damages, up to a maximum of 10% of Starr’s total investment.
5
Item 3.02 Unregistered Sales of Equity
Securities.
As
described in Item 1.01 above, pursuant to the Purchase Agreement, the
Company has agreed to sell to Starr the Purchased Shares and Purchased Warrants.
The offer and sale of the shares of Purchased Shares and Warrants through the
Securities Purchase Agreement are being made in reliance an exemption from
registration under the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof. The terms of conversion of the Purchased Shares are
set forth in Item 1.01 above. The information in Item 1.01 above is
incorporated into this Item 3.02 by reference.
A copy of
the Purchase Agreement, Certificate of Designations, Investor Rights Agreement,
Registration Rights Agreement and Purchased Warrant are incorporated herein by
reference and are filed as Exhibits 10.18, 3.3, 4.6, 4.7 and 4.8,
respectively, to this Form 8-K. The description of the transactions contemplated
by the Purchase Agreement, and our obligations under the Certificate of
Designations, Investor Rights Agreement, Registration Rights Agreement and
Purchased Warrant set forth herein do not purport to be complete and is
qualified in its entirety by reference to the full text of the exhibits filed
herewith.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit No.
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Description
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3.3
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Certificate
of Designation
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4.6
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Investor
Rights Agreement
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4.7
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Registration
Rights Agreement
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4.8
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Purchased
Warrant
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10.18
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Purchase
Agreement
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| 99.1 | Press release dated January 13, 2010 |
6
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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CHINA
MEDIAEXPRESS HOLDINGS, INC.
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Date: January
13, 2010
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By:
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/s/ Zheng Cheng
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Name:
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Zheng
Cheng
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Title:
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Chief
Executive Officer
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