Attached files
| file | filename |
|---|---|
| EX-3.1 - China Power Equipment, Inc. | ex3-1.htm |
| EX-10.1 - China Power Equipment, Inc. | ex10-1.htm |
| EX-10.3 - China Power Equipment, Inc. | ex10-3.htm |
| EX-99.1 - China Power Equipment, Inc. | ex99-1.htm |
| EX-10.2 - China Power Equipment, Inc. | ex10-2.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 30, 2009
Commission
File Number: 333-147349
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CHINA
POWER EQUIPMENT, INC.
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(Exact
name of registrant as specified in its
charter)
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Maryland
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20-5101287
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(State
or other jurisdiction of incorporation)
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(IRS
Employer Identification Number)
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6th Floor,
Fei Jing International, No. 15 Gaoxin 6 Road
Hi-tech Industrial Development Zone Xi’an,
Shaanxi, China 710075
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(Address
of principal executive offices)
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86-29-8831-0282\
8831-0560
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(Registrant’s
telephone number, including area code)
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________________________________
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(Former
name or former address if changed since the 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:
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o
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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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
November 30, 2009, China Power Equipment, Inc. (the “Company”) entered into a
Securities Purchase Agreement (the “Purchase Agreement”) with a number of
accredited investors named therein (the “Buyers”), providing for the sale to the
Buyers of an aggregate of 4,166,667 shares (the “Shares”) of the Company’s
series B convertible preferred stock, par value $0.001 per share (the “Series B
Preferred Stock”), with attached warrants (the “Warrants”) to purchase a total
of 1,000,000 shares of its common stock, par value $0.001 per share (the “Common
Stock”), in consideration of an aggregate purchase price of $5,000,000 (the
“Private Placement”). The Series B Preferred Stock is convertible into 4,166,667
shares of Common Stock. The Series B Preferred Stock does
not pay annual dividends and shall not have any voting rights except as required
by law. The Private Placement was completed and closed on December 2, 2009 (the
“Closing Date”). A form of such Purchase Agreement is filed herewith as Exhibit
10.1.
The
Purchase Agreement contains representations and warranties of the Company and
the Buyers which are customary for transactions of this type. It also obligates
the Company to indemnify the Buyers for any losses arising out of any breach of
the agreement or failure by the Company to perform with respect to the
representations, warranties or covenants contained in the
agreement.
Covenants
The
Company also entered into several covenants in the Purchase
Agreement. These covenants include:
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·
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Applying
for listing on a national securities exchange within 180 days after the
Company becomes eligible for such listing and using commercially
reasonable efforts to have the listing completed thereafter; failure to
apply for the listing on a national securities exchange within prescribed
period of time will result in payment of liquidated damages to the Buyers
at a rate of 0.5% of the purchase price of the shares of Series B
Preferred Stock, or the shares underlying Series B Preferred Stock, then
owned of record by the Buyers, for each thirty (30) day period (pro rata
for any period less than thirty days) with the total amount of such
liquidated damages not to exceed 4.0% of the purchase price paid by the
Buyers;
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·
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Allocating
$300,000 from the proceeds of the financing to be retained in escrow for
the payment of professional fees, including audit and legal fees, which
are payable subsequent to the Closing
Date;
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·
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Delivery
of additional shares of Common Stock to the Buyers on a pro rata basis for
no additional consideration in the event that the Company’s income from
operations for each of the fiscal years ending December 31, 2009 and 2010
is less than $4,500,000 and $7,000,000 respectively, which number of
shares should be equal to the percentage of variation between the actual
net income and the target net income, provided that no additional shares
shall be delivered to the Buyers if such variation is 10% or
less;
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·
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Directors,
officers and affiliates of the Company may not sell any shares of Common
Stock in the public market during the period which is the lesser of 18
months from the Closing Date or until the date when the Buyers hold less
than 20% of the Shares;
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·
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The
Company may not effect any financing involving issuance of convertible
securities with a conversion price based on the trading prices of the
Company’s stock after the issuance of such securities or subject to reset
provisions depending on a future event; or issuance of securities in
transactions granting to purchasers the right to receive additional shares
based upon future transactions of the Company on terms more favorable than
those granted to such purchaser in such offering, which restrictions shall
be valid for the period which is the lesser of 18 months from the Closing
Date or until the date when the Buyers hold less than 20% of the
Shares;
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·
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On
or before December 1, 2010, the Company shall retain a top 10 audit firm
that is mutually acceptable to the Company and the
Buyers;
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·
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Structuring
the Company’s board of directors to be composed of five or seven directors
of which a majority shall be independent and the board of directors shall
appoint an audit committee comprised of independent directors within 90
days after the Closing Date.
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The
Warrants are exercisable for a period of three years from the date of issuance
at an initial exercise price of $2.40. After six months following the
date of issuance, the Buyers may exercise the Warrants on a cashless basis if
the shares of Common Stock underlying the Warrants (the “Warrant Shares”) are
not then registered pursuant to an effective registration
statement. In the event the Buyers exercise the Warrants on a
cashless basis, then the Company will not receive any proceeds. The
Company has the right, on at least ten (10) day written notice, to
require that the holders of the Warrants exercise the Warrants in
full and in the event the holders fail to do so, to redeem the outstanding
Warrants at a price of one cent ($.01) per share, provided that the market price
of the Company’s Common Stock shall equal or exceed $3.50 on each trading day
for the consecutive twenty (20) trading days and there is an effective
registration statement covering the resale of the Warrant Shares by the
holders. If there is no such effective registration statement covering the
resale of the Warrant Shares by the holders, the Company may require the
holders to exercise the Warrants on a cashless basis. A form of
the Warrant is filed herewith as Exhibit 10.3.
Make
Good Escrow Agreement
In
connection with the Purchase Agreement, the Company also entered into a Make
Good Escrow Agreement dated as of November 30, 2009 with the Buyers and Escrow,
LLC (the “Escrow Agent”), where the Company committed to place 2,080,000 shares
of Common Stock into escrow to be delivered to the Buyers if the Company fails
to achieve the income targets as set forth in the Purchase Agreement. A form of
such Make Good Escrow Agreement is filed herewith as Exhibit 10.2.
The
foregoing information is a summary of the agreements involved in the
transactions described above, is not complete, and is qualified in its entirety
by reference to the full text of such agreements, a copy of which are attached
as an exhibit to this Current Report on Form 8-K. Readers should
review such agreements for a complete understanding of the terms and conditions
associated with this transaction.
On
December 4, 2009, the Company issued a press release announcing the sale of the
Shares to the Buyers, a copy of which is attached hereto as Exhibit
99.1.
Item
3.02 Unregistered
Sales of Equity Securities
Reference
is made to Item 1.01 for information relating to the issuance of securities
pursuant to the Purchase Agreement.
The
issuances of the Company’s securities described herein were effectuated pursuant
to the exemption from the registration requirements of the Securities Act of
1933, as amended (the “Act”), provided by Section 4(2) of the Act and/or
Regulation D promulgated thereunder.
Item 3.03 Material Modification to Rights of
Security Holders
Reference
is made to Item 1.01 for information relating to the modification of rights of
holders of our Common Stock.
Item
9.01 Financial
Statements and Exhibits
(d)
Exhibits
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Number
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Description
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3.1
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| 10.1 | ||
| 10.2 | ||
| 10.3 | ||
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99.1
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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
Power Equipment, Inc.
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December
4, 2009
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By:
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/s/ Yongxing
Song
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Name:
Yongxing Song
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Title:
Chief Executive Officer and
President
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