AND EXCHANGE COMMISSION
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Report (Date of earliest event reported): February 15, 2008
AUTOMOTIVE SYSTEMS, INC.
name of registrant as specified in its charter)
or other jurisdiction
Henglong Road, Yu Qiao Development Zone
District, Jing Zhou City
Republic of China
of principal executive offices, with zip code)
telephone number, including area code)
name or former address, if changed since last report)
1.01 Entry into a Material Definitive Agreement.
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
3.02 Unregistered Sales of Equity Securities.
February 15, 2008, pursuant to a previously announced Securities Purchase
Agreement dated February 1, 2008, we issued to two institutional investors,
$35,000,000, Senior Convertible Notes with an original principal amount of
$35,000,000 and common stock Warrants to purchase 1,317,865 shares of common
stock. We received $17,500,000 cash and the investors deposited another
$17,500,000 cash in escrow to be delivered to us upon the satisfaction or waiver
of certain conditions. Of the $35,000,000, Lehman Brothers provided $30,000,000
Investments, L.P., which is managed by Yorkville Advisors, LLC, provided
Convertible Notes are unsecured and are convertible into common stock at a
conversion price of $8.8527 per share, subject to possible downward adjustments,
including a semiannual reset (but the reset not to be to
below $7.0822 per share) based on our stock price. Subject to earlier
redemption in circumstances that include default, failure to close the
previously announced acquisition of a certain minority interest in our Jingzhou
Henglong Automotive Parts Co. subsidiary, change of control, or extreme stock
price levels, the Senior Convertible Notes will mature five years after the
closing; the investors also have a direct redemption right on the second and
third anniversaries of the closing. The Senior Convertible Notes are convertible
at the holders' option; also, semiannually, we can force conversion of a portion
of the Senior Convertible Notes if our stock price attains certain levels.
Senior Convertible Notes will bear interest at an annual rate increasing over
time from 3% to 5%; if the Senior Convertible Notes are repaid or redeemed
rather than being converted we must make an additional make-whole payment
which, together with interest already paid, will equate to gross interest of
exercise price of the Warrants is $8.8527 per share, subject to possible
downward adjustments based on a weighted-average antidilution formula. The
Warrants will expire one year after the closing.
undertook, pursuant to a Registration Rights Agreement entered into at the
closing, to register for resale the Senior Convertible Notes, the Warrants,
the shares of common stock underlying the Senior Convertible Notes and
issuance of Senior Convertible Notes and Warrants was made pursuant to the
Securities Act Section 4(2) registration exemption.
to the requirements of the Securities Exchange Act of 1934, the registrant
duly caused this report to be signed on its behalf by the undersigned hereunto