Unassociated Document
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
September
29, 2008
(Date
of Earliest Event Reported)
China
Agri-Business, Inc.
(Exact
Name of Registrant as Specified in its Charter)
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Maryland
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333-140118
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20-3912942
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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In
the
People’s Republic of China:
Finance
Plaza, 9th Floor, Hi-Tech Road No. 42, Hi-Tech Industrial Development Zone,
Xi-An, China 710068
In
the
United States:
11
East
86th Street, New York, New York 10028
(Address
of principal executive offices)
In
the
United States: (212) 348-5600
In
the
People’s Republic of China : (86) 29-88222938
(Registrant's
telephone number, including area code)
N/A
(Former
name and 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):
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£
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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£
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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£
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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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£
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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.
Item
2.03 Creation of a Direct Financial Obligation.
Item
3.02 Unregistered Sales of Equity Securities.
On
September 29, 2008, China Agri-Business, Inc. (the “Company”) completed the
first closing (the “Closing”) of a private placement consisting of 3% unsecured
convertible notes with a conversion price of $0.50 (the “Notes”) and series C
warrants with an exercise price of $1.50 (the “C Warrants”).
In
connection with the Closing, the Company entered into subscription agreements
with two accredited investors (the “Investors”) for the sale of Notes in an
aggregate principal amount of $500,000 and C Warrants to purchase an aggregate
of 500,000 shares of the Company’s common stock. The Company received net
proceeds of $431,500 (the “Proceeds”). The Company plans to use the Proceeds to
pursue the expansion of its manufacturing and distribution operations and for
general working capital purposes.
Terms
of the Notes and Warrants
The
Notes
mature two years from the date of issuance and bear interest at the rate of
3%
per annum, payable annually in cash or in shares common stock, subject to
approval of the holder. Any interest which is not paid when due shall bear
interest at the rate of fifteen percent (15%) per annum. Any principal which
is
not paid when due shall bear interest at the rate of eight percent (8%) per
annum. The Notes are convertible at the option of the holder into common stock
of the Company at an initial conversion price of $0.50 per share (the
“Conversion Price”). The Conversion Price is subject to adjustment upon the
occurrence of stock
splits, combinations, dividends, and subsequent offerings, as set forth in
the
Notes.
Subject
to effectiveness of the registration statement (as defined below), the Company
shall have the right to prepay the Notes at 110% of the outstanding principal
amount any time prior to the maturity date, and upon thirty (30) days prior
written notice to the Holders.
The
C
Warrants have a term of three years. In addition, upon exercise of the C
Warrant, each C Warrant holder shall be issued a series D warrant (the “D
Warrants”, and collectively with the Series C Warrants, the “Warrants”). The D
Warrants shall have a term of three years and an exercise price of $2.00 per
share. The exercise price of the Warrants is subject to adjustment upon the
occurrence of stock
splits, combinations, dividends, and subsequent offerings, as set forth in
the
Warrants.
The
Company may call for the termination of any unexercised portion of the C
Warrants upon consummation of a subsequent offering by the Company of not less
than $7.5 million in gross proceeds, and upon thirty (30) days written notice
to
the holders.
A
copy of
the form of Note is annexed hereto as Exhibit 4.1 and is incorporated herein
by
reference. A copy of the form of Series C Warrant is annexed hereto as Exhibit
4.2 and is incorporated herein by reference. A copy of the form of Series D
Warrant is annexed hereto as Exhibit 4.3 and is incorporated herein by
reference.
Registration
Rights Agreement
The
Company has entered into registration rights agreements with the Investors
pursuant to which the Company has agreed to prepare and file a registration
statement (the “Registration Statement”) with the Securities and Exchange
Commission (the “Commission”) not later than 60 calendar days after the final
closing (the “Filing Date”), under which it shall seek to register for resale,
in the amounts set forth in the Registration Rights Agreement (i) the warrant
shares issuable upon exercise of the Warrants, and (ii) the conversion shares
issuable upon conversion of the Notes. In addition, the Company has agreed
to
use its good faith efforts to cause the Registration Statement to be declared
effective by the Commission within 90 calendar days from the Filing Date (or
within 120 calendar days from the Filing Date if the Registration Statement
is
reviewed by the Commission).
In
the
event that its obligations under the registration rights agreements are not
met,
the Company is subject to liquidated damages payments in an amount equal to
two
percent (2%) of the purchase price per month, subject to a maximum of twenty
four percent (24%). A copy of the form of registration rights agreement is
annexed hereto as Exhibit 10.2 and is incorporated herein by
reference.
Placement
Agent Commissions
In
connection with the Closing, the placement agent received a cash commission
of
$40,000 and an expense allowance of $25,000. In addition, the placement agent
is
entitled to receive warrants to purchase 80,000 shares of the Company’s common
stock at an exercise price of $1.00 per share for a term of three
years.
The
Company believes that this private placement is exempt from registration under
the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of
the Act and/or Regulation D promulgated thereunder.
Item
9.01 Financial Statements and Exhibits
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4.1
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Form
of 3% Convertible Note
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4.2
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Form
of Series C Warrant
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4.3
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Form
of Series D Warrant
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10.1
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Form
of Subscription Agreement
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10.2
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Form
of Registration Rights Agreement
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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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Date:
October 3, 2008
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China
Agri-Business, Inc. |
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By: |
Xiaolong
Zhou |
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Name:
Xiaolong Zhou |
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Title:
Chief Financial Officer
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