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
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Date of Report (Date of Earliest event Reported): April 13, 2009 (April 6, 2009) |
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| CHINA BIOLOGIC PRODUCTS, INC. | ||||||||
| (Exact name of registrant as specified in its charter) | ||||||||
| Delaware | 000-52807 | 75-2308816 | ||||||
| (State of Incorporation) | (Commission File No.) | (IRS Employer ID No.) | ||||||
| No. 14 East Hushan Road, | ||||||||
| Taian City, Shandong 271000 | ||||||||
| People's Republic of China | ||||||||
| (Address of Principal Executive Offices) | ||||||||
| (+86) 538 -620-3897 | ||||||||
| Registrant's Telephone Number, Including Area Code | ||||||||
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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Written communications pursuant to Rule 425 under the Securities Act (17 CFR.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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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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 October 2, 2008, China Biologic Products, Inc. (the "Company") reported that its BVI subsidiary, Logic Express Limited ("Logic Express"), had entered into an equity transfer agreement (the "Equity Transfer Agreement"), dated September 26, 2008, with Chongqing Dalin Biologic Technologies Co., Ltd. ("Dalin"), a PRC limited liability company, and Fan Shaowen, Chen Aimin, Chen Aiguo and Yang Gang, the shareholders of Dalin (collectively the "Dalin Shareholders"), relating to the purchase of an aggregate 90% equity interest in Dalin, for a total purchase price (the "Purchase Price") of RMB194,400,000 (approximately, $28,401,122), subject to adjustment based upon the findings of the Company during its due diligence investigation of Dalin and its operating subsidiary, Qianfeng Biological Products Co. Ltd ("Qianfeng"). The Company's due diligence investigation and the payment of the Purchase Price in full was to be completed within 30 days of the execution of the Equity Transfer Agreement, or by October 26, 2008, however, the parties agreed to extend that date to April 7, 2009, pursuant to a series of supplemental agreements amending the Equity Transfer Agreement.
On April 6, 2009, Logic Express entered into a separate Equity Transfer and Entrustment Agreement (the "Entrustment Agreement"), among Logic Express, Shandong Taibang Biological Products Co., Ltd ("Taibang"), Logic Express' majority owned Chinese operating subsidiary, and the Shandong Institute of Biological Products (the "Shandong Institute"), the holder of the minority interests in Taibang, pursuant to which, Logic Express agreed to permit Taibang and the Shandong Institute to participate in the indirect purchase of Qianfeng's equity interests contemplated by the Equity Transfer Agreement. Under the terms of the Entrustment Agreement, Taibang is obligated to contribute 18% or RMB 35,000,000 (approximately, $5,116,184) of the Purchase Price and the Shandong Institute is obligated to contribute 12.86% or RMB 25,000,000 (approximately, $3,654,917) of the Purchase Price. The Shandong Institute's portion of the Purchase Price will be advanced by Taibang from undistributed profits of Taibang owed to the Shandong Institute as Taibang's minority shareholder. In addition, Taibang is entrusted to represent Logic Express in connection with the Equity Transfer Agreement for the term of the investment.
Logic Express is obligated to repay to Taibang and the Shandong Institute their respective investment amounts on or before April 6th, 2010 ("Investment Maturity Date"), along with their pro rata share, based on their percentage of the Purchase Price contributed, of any distribution on the indirect equity investment in Qianfeng payable to Logic Express during 2009. Logic Express has agreed that if these investment amounts are not repaid within 5 days of the Investment Maturity Date, then Logic Express is obligated to pay Taibang and the Shandong Institute liquidated damages equal to 0.03% of the overdue portion of the amount due until such time as it is paid. Logic Express has also agreed to pledge 30% of its ownership in Taibang (the "Pledged Interests") to the Shandong Institute as security for nonpayment.
If failure to repay continues for longer than 3 months after the Investment Maturity Date, then the Shandong Institute will be entitled to any rights associated with the Pledged Interests, including but not limited to rights of disposition and profit distribution, until such time as the investment amount has been repaid.Logic Express has also agreed to guarantee that Taibang and the Shandong Institute will receive no less than a 6% return based on their original investment amount.
Any dispute arising out of or related to the Entrustment Agreement that cannot be resolved by the parties is subject to binding arbitration before the Taian Arbitration Committee, in Taian City, Shandong, China.
The foregoing description does not purport to be a complete statement of the parties' rights and obligations under the Entrustment Agreement, or the transactions contemplated thereby or a complete explanation of the material terms thereof. The foregoing description is qualified in its entirety by reference to the Entrustment Agreement attached hereto as Exhibit 10.6 and incorporated herein by reference. For details regarding terms of the Equity Transfer Agreement, as amended by the four previous supplemental agreements, see the Company's Current Reports on Form 8-K filed on October 2, 2008, November 12, 2008, November 20, 2008, December 18, 2008 and April 1, 2009, respectively.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
| Exhibit | |
| No. | Description |
| 10.1 | Equity Transfer Agreement, dated September 26, 2008, among Logic Express, Dalin and certain shareholders of Dalin (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 2, 2008) |
| 10.2 | English Translation of Supplemental Agreement, dated November 3, 2008, among Logic Express, Fan Shaowen, as representative of the Dalin shareholders and Dalin (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on November 7, 2008) |
| 10.3 | English Translation of Second Supplemental Agreement, dated November 14, 2008, among Logic Express, Fan Shaowen as representative of the Dalin shareholders and Dalin (incorporated by reference to Exhibit 10.3 to the Company's Current report of Form 8-K filed on November 20, 2008). |
| 10.4 | English Translation of the Amended Equity Transfer Agreement, dated December 12, 2008, among Logic Express, Dalin, and certain shareholders of Dalin (incorporated by reference to Exhibit 10.4 to the Company's Current report of Form 8-K filed on December 18, 2008). |
| 10.5 | English Translation of the Supplemental Agreement, dated March 31, 2009, among Logic Express, Dalin, and certain shareholders of Dalin (incorporated by reference to Exhibit 10.5 to the Company's Current report of Form 8-K filed on April 1, 2009). |
| 10.6* | English Translation of the Equity Transfer and Entrustment Agreement, dated April 6, 2009, among Logic Express, Shandong Taibang Biological Products Co., Ltd. and the Shandong Institute of Biological Products. |
| * Filed herewith | |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CHINA BIOLOGIC PRODUCTS, INC. | ||
| Date: April 13, 2009 | /s/ Chao Ming Zhao | |
| Chao Ming Zhao | ||
| President and Chief Executive Officer | ||
EXHIBIT INDEX
| Exhibit | |
| No. | Description |
| 10.1 | Equity Transfer Agreement, dated September 26, 2008, among Logic Express, Dalin and certain shareholders of Dalin (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 2, 2008) |
| 10.2 | English Translation of Supplemental Agreement, dated November 3, 2008, among Logic Express, Fan Shaowen, as representative of the Dalin shareholders and Dalin (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on November 7, 2008) |
| 10.3 | English Translation of Second Supplemental Agreement, dated November 14, 2008, among Logic Express, Fan Shaowen as representative of the Dalin shareholders and Dalin (incorporated by reference to Exhibit 10.3 to the Company's Current report of Form 8-K filed on November 20, 2008). |
| 10.4 | English Translation of the Amended Equity Transfer Agreement, dated December 12, 2008, among Logic Express, Dalin, and certain shareholders of Dalin (incorporated by reference to Exhibit 10.4 to the Company's Current report of Form 8-K filed on December 18, 2008). |
| 10.5 | English Translation of the Supplemental Agreement, dated March 31, 2009, among Logic Express, Dalin, and certain shareholders of Dalin (incorporated by reference to Exhibit 10.5 to the Company's Current report of Form 8-K filed on April 1, 2009). |
| 10.6* | English Translation of the Equity Transfer and Entrustment Agreement, dated April 6, 2009, among Logic Express, Shandong Taibang Biological Products Co., Ltd. and the Shandong Institute of Biological Products. |
| * Filed herewith |
Exhibit 10.6
Equity Transfer and Entrustment Agreement
(English Translation)
This Equity Transfer Agreement is entered between the following parties:
Party A: Logic Express Inc. ("Logic
Express")
Party B: Shandong Taibang Biological Products Co., Ltd
("Taibang")
Party C: Shandong Institute of Biological Products
("Shandong Institute")
Whereas:
Party A and Party B is the lawful shareholder of Party B.
NOW THEREFORE, through friendly consultation based on equality, voluntariness, and mutual benefits, Party A, Party B and Party C hereby execute this Equity Transfer and Entrustment in the following material respects:
1. Party A agrees to purchase 48.6% of equity interest of Guiyang Qianfeng Biological Products Co., Ltd ("Qianfeng") with total consideration of RMB 194,400,000 ("Total Consideration);
2. Party A agrees that Party B and Party C to participate in the investment in Qianfeng and to entitle their portion of investment income generated from investment in Qianfeng for the year of 2009 in proportion to the actual contribution made by Party B and Party C. Following is details: a) Party B agrees to invest in amount of RMB 35,000,000, which accounts for 18% of the Total Consideration. b) Party C agrees to invest in amount of RMB 25,000,000 which accounts for 12.86% of the Total Consideration. Party B will pay for RMB 25,000,000 on behalf of Party C due to undistributed profit belonged to Party C still remaining in Party B. Both Party B and Party C will wire their respective investment funds to a designated account provided by Party A immediately when this agreement becomes effective. The investment duration for both Party B and Party C is one year, effective through April 7th, 2009 to April 6th, 2010("Investment Maturity Date");
3. Investment return and allocation: Party B and Party C shall entitle to their proportional investment return from investment income in Qianfeng for the year of 2009. Specifically, the Total Consideration made by Party A to pursue the investment in Qianfeng is RMB 194,400,000, Party A will distribute 18% and 12.86% of the total investment income to Party B and Party C, respectively.
4. Party A guarantees to repay Party B and Party C for their respective investment principal together with pro rata investment income within five days of investment maturity Date. Party A agrees that the respective pro rata investment income for Party B and Party C shall no less than 6% of investments made by Party B and Party C. If the investment income generated from Qianfeng for the year of 2009 is less than 6% of investments made by Party B and Party C, Party A will make up the balance for Party B and Party C.
5. Party A will pledge its 30% ownership in Party B (the "Pledged Interest") to both Party B and Party C. Party A shall entrust Party B to pursue the investment in Qianfeng via signing the equity transfer agreement with the original shareholder who intended to transfer its equity interest. The entrustment period shall last until Party A repay Party B and Party C for their respective investment principal together with pro rata investment income.
6. If Party A fails to repay Party B and Party C on a timely basis, Party A will indemnify both Party B and Party C 0.03% of overdue portion including investment principal and prospective investment income for each day as liquidated damages. If Party A fails to repay Party B and Party C three month from the investment maturity date, Party B and Party C shall entitle to any rights associated with Pledged Interest including but not limited to the following rights: disposition, profit distribution. Party B and Party C shall return the Pledged Interest to Party A after receiving the repayment of principals, investment returns and liquidated damages from Party A.
7. Party A shall be fully responsible for all activities including without limited to following: activities associates with acquisition of equity interest in Qianfeng, responsibilities in connection with acquiring Qianfeng, and all incurred expenses and costs. As well, Party B and Party C shall entitle to their proportional investment income for the year of 2009 as described in section 3. Moreover, Party B shall cooperate with Party A in executing the equity transfer agreement in Qianfeng. Without written consent from Party A, Party B shall not participate in managing Qianfeng. Lastly, Party B shall fully cooperate with Party A to transfer the equity interest for Qianfeng entrusted by Party by going through equity transfer procedures with Administration for Industry and Commerce.
8. Any dispute arising out of or related to this Agreement shall be settled by negotiation by both parties. If no resolution is attained through friendly negotiation, any party may bring the compliant to Taian Arbitration Committee for a final settlement.
This Agreement will be made in three counterparts with Party A, Party B and Party C each holding one copy. Each counterpart has equal legal effect.
Date: April 6, 2009