chxd_8k.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): November 27,
2009
CHINA
XD PLASTICS COMPANY LIMITED
(Exact
name of registrant as specified in charter)
Nevada
(State
or other jurisdiction of incorporation)
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333-134073
(Commission
File Number)
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04-3836208
(IRS
Employer Identification No.)
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No. 9
Qinling Road, Yingbin Road Centralized Industrial Park
Harbin
Development Zone, Heilongjiang, China 150078
(Address
of principal executive offices and zip code)
86-451-84346600
(Registrant’s
telephone number including area code)
(Former
Name and Former Address)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12(b))
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
November 27, 2009, the Registrant entered into a securities purchase agreement
(the “Purchase
Agreement”), with institutional and individual investors (the “Investors”), pursuant
to which the Registrant will sell 15,188 shares of Series C Convertible
Preferred Stock, par value $0.001 per share (the “Series C Preferred
Stock”) at a purchase price of $1,000 per share, and two series of
warrants, Series A Warrants and Series B Warrants (collectively, the “Warrants”), for gross
proceeds of approximately $15.2 million (the “Financing”). The
closing of the Financing is expected to occur on December 1, 2009 (the “Closing
Date”).
For a
period of seven months and six trading days after the Closing Date the Company
shall not (a) file any registration statements, other than in connection with
the Financing, or (b) offer, sell, grant or otherwise dispose of any of its, or
its subsidiaries’ Common Stock or securities exercisable or convertible into
shares of Common Stock, debt, preferred stock or other instrument or security
that is, at any time convertible into or exchangeable or exercisable for shares
of Common Stock, or securities exercisable to convertible into shares of Common
Stock (a “Subsequent
Placement”). In addition to the foregoing restrictions, for a
period of eighteen (18) months after the Closing Date, the Investors have a
right to participate in any Subsequent Placement; except that the foregoing
restrictions shall not apply to (x) certain issuances of the Company’s
securities, including, without limitation, (i) under an approved equity
incentive plan, and (ii) in connection with mergers, acquisitions, strategic
business partnerships or joint ventures, in each case with non-affiliated third
parties and otherwise on an arm's-length basis, the primary purpose of which is
not to raise additional capital, or (y) in connection with certain qualified
underwritten public offerings.
The
Series C Preferred Stock is convertible into the Company’s common stock, par
value $0.001 per share (the “Common Stock”), at a
conversion price of $4.60 per share and will accrue cumulative dividends at the
rate of 6% per annum until maturity on December 1, 2012. If the
Series C Preferred Stock is converted prior to maturity, the Company will pay
the holder an amount equal to the total dividend that would accrue on the Series
C Preferred Stock from the Closing Date through maturity, less any dividend
payments already made with respect to the converted Series C Preferred
Stock. Any shares of Series C Preferred Stock outstanding at maturity
will be redeemed by the Company for the conversion amount at such
time. The holders of the Series C Preferred Stock are entitled, at
their option, to have the shares of Series C Preferred Stock redeemed prior to
maturity upon the occurrence of (a) certain triggering events (such as, without
limitation, the failure to have the Registration Statement declared effective
and maintain effectiveness pursuant to the terms of the Registration Rights
Agreement, the failure to convert the Preferred Stock or pay dividends when due
as provided in the Certificate of Designations (as hereinafter defined) and
suspension from trading or failure of the Common Stock to be listed on a
national securities exchange for a period of five (5) consecutive
trading days or for more than an aggregate of ten (10) trading days in any
365-day period) and (b) a change in control, as set forth in the Certificate of
Designations of the Series C Convertible Preferred Stock (the “Certificate of
Designations”) to be filed with the Secretary of State of the State of
Nevada on or prior to the Closing Date.
The
Investors have a beneficial ownership limitation on the conversion of the Series
C Preferred Stock and on the exercise of the Warrants, such that no holder may
convert its shares of Series C Preferred Stock or exercise its Warrants, if
after such conversion or exercise the holder would beneficially own, together
with its affiliates, more than 4.99% of the then issued and outstanding shares
of the Company’s Common Stock. Each holder may lower this limitation percentage
at any time or waive or increase this limitation percentage upon 61 days’ prior
written notice to the Company.
Series
A Warrant
The
Series A Warrants are exercisable into 1,320,696 shares of Common Stock at an
exercise price of $5.50 per share. The Series A Warrant will be
initially exercisable six months after the closing of the transaction, and have
a term of five years. The Series A Warrants contain anti-dilution
protection provisions which, in addition to adjustments for customary corporate
events, such as the subdivision or combination of the Company’s shares of Common
Stock, provide for an adjustment in the exercise price if the Company issues
additional shares of its Common Stock or securities convertible or exchangeable
for Common Stock at a purchaser price per share less than $5.50. The exercise
price would be reduced to such purchase price, but in no event would it be less
than $4.40.
Series
B Warrant
The
Series B Warrants are exchangeable for a maximum of 1,178,722 shares of Common
Stock at an exercise price of $0.0001 per share. The Series B
Warrants automatically become exercisable into shares of Common Stock on the
date (the “First Date
of Determination”) that is six trading days after the earlier of the date
that the shares of Common Stock underlying the Series C Preferred Stock and the
Warrants are initially registered under an effective resale registration
statement (the “Effective Date”) or
the six month anniversary of the Closing Date (the “Exemption Date”) if
the market value of the Company’s Common Stock (as described below) is less than
$4.60. The number of shares issuable under the Series B Warrant on
the First Date of Determination shall be based upon the difference between $4.60
and the market value of our Common Stock (the “Initial
Issuance”). The Series B Warrant also provides for the
additional issuance of shares of Common Stock under the Series B Warrant if the
initial resale registration statement does not register all of the shares of
Common Stock underlying the Series C Preferred Stock. Such subsequent
issuance would occur on the date that is six trading days after the later of the
Effective Date or the Exemption Date (the “Second Date of
Determination”). The number of additional shares issuable
would be determined in the same manner as the Initial Issuance.
The
market value of the Common Stock shall be calculated as 82.5% of the lower of
(1) the arithmetic average of the weighted average price of the Common Stock for
each trading day during the five (5) consecutive trading days immediately
preceding the applicable date of determination, and (2) the closing bid price of
the Common Stock on the trading day immediately preceding the First Date of
Determination or the Second Date of Determination, as applicable, but will not
result in a market price lower than $4.00. If the market value of our Common
Stock is not less than $4.60 during each of two applicable pricing periods, no
shares of Common Stock would be issuable under the Series B
Warrant.
Registration
Rights Agreement
In
connection with the Financing, we entered into a registration rights agreement
(the “RRA”)
with the Investors in which we agreed to file a registration statement (the
“Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) to register at
least 130% of the number of shares of Common Stock underlying the Series C
Preferred Stock (the “Conversion Shares”)
and the Warrants (the “Warrant Shares”) no
later than thirty (30) days after the Closing Date. We have agreed to
use our best efforts to have the Registration Statement declared effective
within sixty (60) calendar days after the Closing Date, or ninety (90) calendar
days after the Closing Date in the event the Registration Statement is subject
to a “full review” by the SEC. In the event we are unable to register
all of the Registrable Securities on the Registration Statement, due to the
SEC’s application of Rule 415, we have agreed to file such number
of additional registration statements as necessary to register all of
the remaining Registrable Securities.
We are
required to keep all applicable registration statements continuously effective
under 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”). We will pay liquidated damages of 2% of each
holder’s initial investment in the Units sold in the Financing per month, if the
Registration Statement is not filed or declared effective within the foregoing
time periods or ceases to be effective prior to the expiration of the Financing
Effectiveness Period. However, no liquidated damages shall be paid
(i) with respect to any securities being registered that we are not permitted to
include in the Registration Statement due to the SEC’s application of
Rule 415, or (ii) with respect to any Investor, solely because such Investor is
required to be described as an underwriter under applicable securities laws, and
such Investor elects not to have its shares registered.
Lock-Up
Agreement
In
connection with the Financing, we entered into separate Lock-Up Agreements with
five affiliated persons and entities of the Company (the “Affiliates”). Pursuant
to the terms of the Lock-Up Agreements, each of the Affiliates has agreed not to
offer, sell, contract to sell, assign, transfer, hypothecate gift, pledge or
grant a security interest in, or other wise dispose of any shares of
our Common Stock that such Affiliates presently own or may acquire after the
Closing Date during the period commencing on the Closing Date and expiring on
the date that is one year after the Closing Date (the “Lock-up
Period”).
A copy of
the Purchase Agreement, the Form of each of the Series A and Series Warrants,
the Registration Rights Agreement, the Certificate of Designations setting forth
the terms of the Series C Preferred Stock and the Form of Lock-up Agreement are
filed as exhibits hereto. The description of the transactions
pursuant to the Purchase Agreement, and our obligations under the Certificate of
Designations, the Registration Rights Agreement, the Lock-up Agreements and the
Warrants 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 and
incorporated by reference into this Current Report on Form 8-K.
Item
8.01 Other
Events
On November 27, 2009, the Company
issued a press release announcing the signing of the Purchase
Agreement. A copy of the press release is attached hereto as Exhibit
99.1.
Item
9.01 Financial
Statements and Exhibits.
(d)
Exhibits.
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Exhibit No.
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Description
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3.1
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Form
of Certificate of Designation
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4.1
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Form
of Series A Warrant
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4.2
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Form
of Series B Warrant
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10.1
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Securities
Purchase Agreement, dated November 27, 2009
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10.2
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Registration
Rights Agreement, dated November 27, 2009
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10.3
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Form
of Lock-Up Agreement
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99.1
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Press
Release
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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.
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CHINA
XD PLASTICS COMPANY LIMITED
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/s/
Jie Han
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Name:
Jie Han
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Title:
Chief Executive Officer and Chairman
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