UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): December 20, 2004
ENHANCE BIOTECH, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 13-3944580
(State or Other Jurisdiction (IRS Employer
of Incorporation) (Commission File Number) Identification No.)
712 Fifth Avenue, 19th Floor, New York, NY 10019
(Address of principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (646) 723 8940
Not Applicable
(Former Name or 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):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
(a) As previously announced, on December 20, 2004, the Registrant completed the
merger (the "Merger") of Ardent Acquisition Corp. ("AAC"), a wholly-owned
subsidiary of the Registrant, with and into Ardent Pharmaceuticals, Inc.
("Ardent"), whereby Ardent Pharmaceuticals, Inc. has become a wholly owned
subsidiary of the Registrant. The Merger was pursuant to the terms and
conditions of the Agreement and Plan of Merger dated August 11, 2004 (the
"Agreement and Plan of Merger") by and among The Registrant, AAC, and Ardent,
which was previously filed by the Registrant and is refiled as Exhibit 10.1
hereto, as such Agreement and Plan of Merger was amended by Amendment No. 1
thereto dated November 20, 2004 ("Amendment No. 1") by and among The Registrant,
AAC, and Ardent, which Amendment No. 1 is filed as Exhibit 10.2 to this Current
Report on Form 8-K. The Agreement and Plan of Merger, as so amended, is
sometimes hereafter referred to as the "Agreement and Plan of Merger".
Except for certain "Excluded Shares" and "Contingent Fee Shares," as defined
below, upon the conclusion of the Merger, on a fully diluted basis, the
Registrant's shareholders who were shareholders of the Registrant immediately
prior to the Merger owned approximately fifty-five percent (55%), and the former
Ardent securities holders own approximately forty-five percent (45%), of the
common stock, par value $0.001 per share (the "Common Stock") of the Registrant.
"Excluded Shares" include any shares of Common Stock that may be issued upon
exercise, exchange or conversion of either (i) securities sold in a "Qualified
Financing" or (ii) a certain warrant to purchase 1.5 million shares of Common
Stock issued to Bioaccelerate, Inc. ("Bioaccelerate") on August 11, 2004. The
Excluded Shares were excluded from the calculation of aggregate share ownership
percentages for the Registrant's shareholders and former Ardent securities
holders set forth in the preceding paragraph. The Registrant has also reserved
shares of Common Stock (the "Contingent Fee Shares") for issuance in settlement
of certain fee arrangements entered into by Ardent with its financial advisor
for this transaction (sometimes hereinafter referred to as "Century Capital).
The Contingent Fee Shares will reduce the number of shares which would otherwise
have been available to Ardent's shareholders as merger consideration. As used in
the Merger Agreement, the term "Qualified Financing" means an equity financing
by the Registrant of at least $10,000,000 with a minimum valuation of at least
$1.50 per share of Common Stock.
Upon the effectiveness of the Merger, each outstanding share of Ardent common
and preferred stock was cancelled automatically and converted into shares of the
Registrant's Common Stock. Also, Ardent options, warrants and certain
convertible notes which may be exercised or converted to receive shares of
Ardent common stock, were converted into securities (or convertible notes, in
the case of the convertible notes) which may be exercised or converted to
receive shares of the Registrant's Common Stock. In addition, the Registrant
reserved for issuance sufficient shares to cover such exercises or conversions
as of the conclusion of the Merger (or at maturity of the note in the case of
the convertible notes). The shares of Common Stock issued or reserved for
issuance at the closing of the Merger are sometimes referred to as the "Merger
Shares." The Registrant reserved for issuance the Contingent Fee Shares,
consisting of 319,171 shares of Common Stock, of which approximately 234,171
shares are to be issued within fifteen (15) days subsequent to the consummation
of the Merger and the balance may be issued upon the occurrence of certain other
events.
Ardent securities holders have the right to receive Merger Shares according to
the following exchange ratios (rounded to 6 decimal places for example only),
which is subject to adjustment as provided below:
Ardent Enhance
------ -------
1 share Common Stock* = 0.728920 Shares of Enhance Common Stock
1 share Series A Preferred Stock* = 10.413143 Shares of Enhance Common Stock
1 share Series B Preferred Stock* = 7.289198 Shares of Enhance Common Stock
1 share Series C Preferred Stock* = 0.801812 Shares of Enhance Common Stock
1 share Series D 1 Preferred Stock = 1.228070 Shares of Enhance Common Stock
1 share Series D 2 Preferred Stock = 0.842105 Shares of Enhance Common Stock
* The exchange ratios for Ardent common stock as well as Ardent Series A, B and
C Preferred Stock reflect the completion of certain transactions pursuant to
which the Contingent Fee Shares are to be issued to Ardent's financial advisor,
and assume that the entire amount of the Registrant's Common Stock which may be
issued to Ardent's financial advisor is so issued.
As a consequence, upon the effectiveness of the Merger, in the aggregate, the
outstanding shares of Ardent common and preferred stock were converted into, and
the outstanding Ardent options, warrants and convertible notes became
exercisable or convertible to receive, approximately the following number of
shares of Enhance Common Stock:
Ardent Common Stock** 16,999,116 Shares
Ardent Options** 3,964,857 Shares
Ardent Warrants* * 887,858 Shares
Ardent Convertible Promissory Notes** 258,584 Shares
Series A Preferred Stock** 1,251,139 Shares
Series B Preferred Stock** 875,797 Shares
Series C Preferred Stock** 801,812 Shares
Series D 1 Preferred Stock 1,034,604 Shares
Series D 2 Preferred Stock 2,187,340 Shares
** The number of shares of Registrant's Common Stock allotted for Ardent common
stock, as well as for Ardent Series A, B and C Preferred Stock, reflect the
completion of certain transactions pursuant to which the Contingent Fee Shares
are to be issued to Ardent's financial advisor, and assume that the entire
amount of the Registrant's Common Stock which may be issued to Ardent's
financial advisor is so issued.
As a consequence of the effectiveness of the Merger, Ardent securities are to
receive approximately 23,149,808 newly-issued Merger Shares, in the aggregate.
The Registrant has reserved approximately 5,111,299 Merger Shares in the
aggregate for issuance upon exercise of outstanding options, warrants and
convertible promissory notes of Ardent not exercised or terminated prior to the
Merger. Approximately 319,171 Contingent Fee Shares have been reserved for
issuance.
Pursuant to the Agreement and Plan of Merger, as amended, the Registrant entered
into a Registration Rights Agreement, dated as of December 20, 2004 (the
"Registration Rights Agreement"), the form of which is filed as Exhibit 10.3 to
this Current Report on Form 8-K. Pursuant to the Registration Rights Agreement,
the Registrant has agreed to file a registration statement under the Securities
Act to register up to 30,000 shares of the Registrant's Common Stock issued to
each Ardent shareholder as merger consideration as soon as practicable after a
Qualified Financing, but in no event later than 150 days following the closing
of the Merger. Pursuant to the Registration Rights Agreement, the Registrant
agreed to use its commercially reasonable best efforts thereafter to cause such
registration statement to be declared effective by the Securities and Exchange
Commission ("SEC") as soon as practicable on or after the 180th day following
the closing of the Merger. The Registrant agreed to furnish corresponding
registration rights to its existing shareholders who do not have freely-trading
shares. The Registrant also agreed that if the Common Stock is then listed on a
national stock exchange, the Registrant will file a listing application with
such exchange, and use its best efforts to have admitted to trading on such
exchange all shares of Common Stock issued to Ardent shareholders as merger
consideration that are covered by a registration statement under the Securities
Act which has been declared effective by the SEC. The Registrant agreed to use
its commercially reasonable best efforts to keep each such registration
statement continuously effective, subject to customary blackout periods and
exceptions, for one year following the date upon which each such registration
statement is declared effective by the SEC (such period to be extended by the
duration of any such blackout period or other period in which the registration
statement does not continue to be effective).
Pursuant to the Agreement and Plan of Merger, as amended, the Registrant also
agreed to file with the SEC, no later than 180 days after the closing of the
Merger, a Registration Statement on Form S-8 covering the shares of Common Stock
to be issued upon exercise of Ardent stock options which continue to be
outstanding after the closing of the Merger, and to use its best efforts to have
such Registration Statement become and remain continuously effective under the
Securities Act. The Registrant agreed that if the Registrant is then listed on a
national stock exchange, the Registrant shall file with such exchange a listing
application and use its best efforts to have such shares admitted to trading
thereon upon exercise of those stock options. The Registrant agreed to furnish
corresponding registration rights in respect of the shares of Common Stock
underlying warrants or options held by Bioaccelerate, Inc., the largest holder
of the Registrant's securities. All but 1,500,000 of the underlying shares held
by Bioaccelerate will continue to be subject to a 12-month lock-up
notwithstanding registration.
All shares of merger consideration issued to former Ardent security holders
shall be "restricted shares" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and may not be freely traded until either
covered by an effective registration statement filed with the SEC under
applicable laws (as well as any corresponding filings which may be required
under state or other securities laws) or disposed of pursuant to an available
exemption to such registration, and certificates evidencing such shares will be
legended accordingly.
In addition, pursuant to the Agreement and Plan of Merger, as amended, the
Registrant obtained and delivered to Ardent agreements by each holder of 5% or
more of the Registrant's outstanding shares known to the Registrant for each
such holder's shares of the Registrant's Common Stock to be subject to a lock-up
period restricting transfer of such shares for a period of 12 months after the
effectiveness of the Merger, with such lock-up to end earlier with respect to
any shares covered by a registration statement filed by the Registrant pursuant
to the Securities Act and declared effective by the SEC. Pursuant to the
Agreement and Plan of Merger, Ardent obtained and delivered to the Registrant
agreements by its officers and directors to cause shares underlying Ardent
options to be subject to the same lock-up arrangements as those described above.
Notwithstanding the Registrant's agreements, there can be no assurance that the
Registrant will ever file any such registration statement and, even if so, that
any such registration statement will ever become effective, or that once
effective, such effectiveness will be maintained.
Pursuant to the Agreement and Plan of Merger, as amended, at the effective time
of the Merger the following individuals, designated by the former board of
directors of Ardent, were elected to fill vacancies on the Board of Directors of
the Registrant: Dr. Kwen-Jen Chang (also known as Ken Chang), Mr. Jinn Wu and
Mr. Timothy C. Gupton.
In addition, pursuant to the Agreement and Plan of Merger, as amended, Mr.
Christopher Every continues in his positions as a Director of the Registrant and
as the President and Chief Executive Officer of the Registrant, and effective
upon the Merger the Registrant entered into an employment agreement with Mr.
Every, in the form filed as Exhibit 10.4 to this Current Report on Form 8-K (the
"Christopher Every Employment Agreement"). The Christopher Every Employment
Agreement is a three-year employment agreement which provides for an annual base
salary of $225,000, an annual bonus at the Board's discretion based on achieving
performance targets, and a stock bonus equal to $35,000 on each of the first,
second and third anniversaries of the effective date of the Merger. Also, on the
effective date, pursuant to the Registrant's 2004 Incentive Plan, the Registrant
granted to Mr. Every options to purchase 1.4 million shares of Common Stock
subject to the following vesting schedule: 25% of options vested on the date of
grant and 25% will vest on each of the first, second and third anniversaries of
the date of grant. If Mr. Every's employment is terminated without cause by the
employer or for good reason by the executive, Mr. Every would be entitled to the
following: (i) continuing salary payments over a severance period of twelve (12)
months if terminated on or after the first anniversary of the effective date of
the Merger or continuing salary payments over a severance period lasting until
the second anniversary of the effective date if terminated prior to the first
anniversary of the effective date, (ii) any accrued but unpaid salary, bonus,
expenses and benefits, (iii) continuing coverage under employee benefit plans
during the severance period, and (iv) unvested options scheduled to vest over
the severance period shall vest immediately upon termination.
In accordance with the Agreement and Plan of Merger, as amended, upon the
effectiveness of the Merger, Dr. Kwen-Jen Chang (also known as Ken Chang) became
the Chief Science Officer and President--Asia Pacific Operations for the
Registrant, and the Registrant entered into an employment agreement with Dr.
Chang, in the form filed as Exhibit 10.5 to this Current Report on Form 8-K (the
"Kwen-Jen Chang Employment Agreement"). The Kwen-Jen Chang Employment Agreement
is a three-year term employment agreement which provides for an annual base
salary of $222,820, eligibility to receive an annual discretionary bonus based
on the attainment of performance targets established by the Board of Directors,
and 1,000,000 options to purchase common stock of the Registrant, which options
were granted upon the effective date of the Merger. The first 250,000, or 1/4 of
the aggregate options granted, were vested on December 20, 2004, the effective
date of the Merger. The remainder vest annually in three equal parts on the next
three anniversaries. If employment is terminated without cause by the employer
or for good reason by the executive, Dr. Chang would be entitled to the
following: (i) continuing salary payments over a severance period of twelve (12)
months if terminated on or after the first anniversary of the effective date of
the Merger or continuing salary payments over a severance period lasting until
the second anniversary of the effective date if terminated prior to the first
anniversary of the effective date, (ii) any accrued but unpaid salary, bonus,
expenses, and benefits, (iii) continuing coverage under employee benefit plans
during the severance period, and (iv) unvested options scheduled to vest over
the severance period shall vest immediately upon termination.
Also pursuant to the Agreement and Plan of Merger, as amended, upon the
effectiveness of the Merger, Phillip S. Wise became the Chief Financial Officer
of the Registrant, and the Registrant entered into an employment agreement with
Mr. Wise, in the form filed as Exhibit 10.6 to this Current Report on Form 8-K
(the "Phillip S. Wise Employment Agreement"). The Phillip S. Wise Employment
Agreement is a three-year term employment agreement which provides for an annual
base salary of $225,000, eligibility to receive an annual discretionary bonus
based on the attainment of performance targets established by the Board of
Directors, stock bonus equivalent to $35,000 on each of the first three
anniversaries of the effective date of the Merger and 1,200,000 options to
purchase common stock of the Registrant, which options were granted upon the
effective date of the Merger. The first 300,000, or 1/4 of the aggregate options
granted, were vested on December 20, 2004, the effective date of the Merger. The
remainder vest annually in three equal parts on the next three anniversaries. If
employment is terminated without cause by the employer or for good reason by the
executive, Mr. Wise would be entitled to the following: (i) continuing salary
payments over a severance period of twelve (12) months if terminated on or after
the first anniversary of the effective date of the Merger or continuing salary
payments over a severance period lasting until the second anniversary of the
effective date if terminated prior to the first anniversary of the effective
date, (ii) any accrued but unpaid salary, bonus, expenses, and benefits, (iii)
continuing coverage under employee benefit plans during the severance period,
and (iv) unvested options scheduled to vest over the severance period shall vest
immediately upon termination.
SECTION 2. FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
(a) As previously announced, on December 20, 2004, the Registrant completed the
merger (the "Merger") of Ardent Acquisition Corp. ("AAC"), a wholly-owned
subsidiary of the Registrant, with and into Ardent Pharmaceuticals, Inc.
("Ardent"), whereby Ardent Pharmaceuticals, Inc. has become a wholly owned
subsidiary of the Registrant. The Merger was pursuant to the terms and
conditions of the Agreement and Plan of Merger dated August 11, 2004 (the
"Agreement and Plan of Merger") by and among The Registrant, AAC, and Ardent,
which was previously filed by the Registrant and is refiled as Exhibit 10.1
hereto, as such Agreement and Plan of Merger was amended by Amendment No. 1
thereto dated November 20, 2004 ("Amendment No. 1") by and among The Registrant,
AAC, and Ardent, which Amendment No. 1 is filed as Exhibit 10.2 to this Current
Report on Form 8-K. The Agreement and Plan of Merger, as so amended, is
sometimes hereafter referred to as the "Agreement and Plan of Merger".
(b) and (d) Except for certain "Excluded Shares" and "Contingent Fee Shares," as
defined below, upon the conclusion of the Merger, on a fully diluted basis, the
Registrant's shareholders who were shareholders of the Registrant immediately
prior to the Merger owned approximately fifty-five percent (55%), and the former
Ardent securities holders own approximately forty-five percent (45%), of the
common stock, par value $0.001 per share (the "Common Stock") of the Registrant.
"Excluded Shares" include any shares of Common Stock that may be issued upon
exercise, exchange or conversion of either (i) securities sold in a "Qualified
Financing" or (ii) a certain warrant to purchase 1.5 million shares of Common
Stock issued to Bioaccelerate, Inc. ("Bioaccelerate") on August 11, 2004. The
Excluded Shares were excluded from the calculation of aggregate share ownership
percentages for the Registrant's shareholders and former Ardent securities
holders set forth in the preceding paragraph. The Registrant has also reserved
shares of Common Stock (the "Contingent Fee Shares") for issuance in settlement
of certain fee arrangements entered into by Ardent with its financial advisor
for this transaction (sometimes hereinafter referred to as "Century Capital).
The Contingent Fee Shares will reduce the number of shares which would otherwise
have been available to Ardent's shareholders as merger consideration. As used in
the Merger Agreement, the term "Qualified Financing" means an equity financing
by the Registrant of at least $10,000,000 with a minimum valuation of at least
$1.50 per share of Common Stock.
Upon the effectiveness of the Merger, each outstanding share of Ardent common
and preferred stock was cancelled automatically and converted into shares of the
Registrant's Common Stock. Also, Ardent options, warrants and certain
convertible notes which may be exercised or converted to receive shares of
Ardent common stock, were converted into securities (or convertible notes, in
the case of the convertible notes) which may be exercised or converted to
receive shares of the Registrant's Common Stock. In addition, the Registrant
reserved for issuance sufficient shares to cover such exercises or conversions
as of the conclusion of the Merger (or at maturity of the note in the case of
the convertible notes). The shares of Common Stock issued or reserved for
issuance at the closing of the Merger are sometimes referred to as the "Merger
Shares." The Registrant reserved for issuance the Contingent Fee Shares,
consisting of 319,171 shares of Common Stock, of which approximately 234,171
shares are to be issued within fifteen (15) days subsequent to the consummation
of the Merger and the balance may be issued upon the occurrence of certain other
events.
Ardent securities holders have the right to receive Merger Shares according to
the following exchange ratios (rounded to 6 decimal places for example only),
which is subject to adjustment as provided below:
Ardent Enhance
----- --------
1 share Common Stock* = 0.728920 Shares of Enhance Common Stock
1 share Series A Preferred Stock* = 10.413143 Shares of Enhance Common Stock
1 share Series B Preferred Stock* = 7.289198 Shares of Enhance Common Stock
1 share Series C Preferred Stock* = 0.801812 Shares of Enhance Common Stock
1 share Series D 1 Preferred Stock = 1.228070 Shares of Enhance Common Stock
1 share Series D 2 Preferred Stock = 0.842105 Shares of Enhance Common Stock
* The exchange ratios for Ardent common stock as well as Ardent Series A, B and
C Preferred Stock reflect the completion of certain transactions pursuant to
which the Contingent Fee Shares are to be issued to Ardent's financial advisor,
and assume that the entire amount of the Registrant's Common Stock which may be
issued to Ardent's financial advisor is so issued.
As a consequence, upon the effectiveness of the Merger, in the aggregate, the
outstanding shares of Ardent common and preferred stock were converted into, and
the outstanding Ardent options, warrants and convertible notes became
exercisable or convertible to receive, approximately the following number of
shares of Enhance Common Stock:
Ardent Common Stock** 16,999,116 Shares
Ardent Options** 3,964,857 Shares
Ardent Warrants* * 887,858 Shares
Ardent Convertible Promissory Notes** 258,584 Shares
Series A Preferred Stock** 1,251,139 Shares
Series B Preferred Stock** 875,797 Shares
Series C Preferred Stock** 801,812 Shares
Series D 1 Preferred Stock 1,034,604 Shares
Series D 2 Preferred Stock 2,187,340 Shares
** The number of shares of Registrant's Common Stock allotted for Ardent common
stock, as well as for Ardent Series A, B and C Preferred Stock, reflect the
completion of certain transactions pursuant to which the Contingent Fee Shares
are to be issued to Ardent's financial advisor, and assume that the entire
amount of the Registrant's Common Stock which may be issued to Ardent's
financial advisor is so issued.
As a consequence of the effectiveness of the Merger, Ardent securities are to
receive approximately 23,149,808 newly-issued Merger Shares, in the aggregate.
The Registrant has reserved approximately 5,111,299 Merger Shares in the
aggregate for issuance upon exercise of outstanding options, warrants and
convertible promissory notes of Ardent not exercised or terminated prior to the
Merger. Approximately 319,171 Contingent Fee Shares have been reserved for
issuance.
(c) The Registrant acquired the shares of Ardent from the security holders of
Ardent, a privately-held corporation. Although the Registrant had no
pre-existing material relationship, other than in respect of the transaction,
with any of Ardent's security holders, pursuant to the terms and conditions of
the Agreement and Plan of Merger, as amended, upon the effectiveness of the
Merger, Dr. Kwen-Jen Chang (also known as Ken Chang), Mr. Jinn Wu and Mr.
Timothy C. Gupton, all former directors of Ardent, were elected to the
Registrant's Board of Directors. In addition, pursuant to the Agreement and Plan
of Merger, as amended, upon the effectiveness of the Merger the Registrant
employed Dr. Kwen-Jen Chang, the former Chief Executive Officer, President and
Chairman of the Board of Ardent, as the Registrant's Chief Science Officer and
President--Asia Pacific Operations, and Phillip S. Wise, former Chief Financial
Officer and VP for Commercial and Business Development of Ardent, as the
Registrant's Chief Financial Officer. Messrs. Chang and Wise were employed in
their respective positions on the terms and conditions of their respective
employment agreements, the forms of which are annexed hereto as Exhibits 10.5
and 10.6, respectively.
The agreement with Dr. Chang is a three-year term employment agreement which
provides for an annual base salary of $222,820, eligibility to receive an annual
discretionary bonus based on the attainment of performance targets established
by the Board of Directors, and 1,000,000 options to purchase common stock of the
Registrant, which options were granted upon the effective date of the Merger.
The first 250,000, or 1/4 of the aggregate options granted, were vested on
December 20, 2004, the effective date of the Merger. The remainder vest annually
in three equal parts on the next three anniversaries. If employment is
terminated without cause by the employer or for good reason by the executive,
Dr. Chang would be entitled to the following: (i) continuing salary payments
over a severance period of twelve (12) months if terminated on or after the
first anniversary of the effective date of the Merger or continuing salary
payments over a severance period lasting until the second anniversary of the
effective date if terminated prior to the first anniversary of the effective
date, (ii) any accrued but unpaid salary, bonus, expenses, and benefits, (iii)
continuing coverage under employee benefit plans during the severance period,
and (iv) unvested options scheduled to vest over the severance period shall vest
immediately upon termination.
The agreement with Mr. Wise is also a three-year term employment agreement which
provides for an annual base salary of $225,000, eligibility to receive an annual
discretionary bonus based on the attainment of performance targets established
by the Board of Directors, stock bonus equivalent to $35,000 on each of the
first three anniversaries of the effective date of the Merger and 1,200,000
options to purchase common stock of the Registrant, which options were granted
upon the effective date of the Merger. The first 300,000, or 1/4 of the
aggregate options granted, were vested on December 20, 2004, the effective date
of the Merger. The remainder vest annually in three equal parts on the next
three anniversaries. If employment is terminated without cause by the employer
or for good reason by the executive, Mr. Wise would be entitled to the
following: (i) continuing salary payments over a severance period of twelve (12)
months if terminated on or after the first anniversary of the effective date of
the Merger or continuing salary payments over a severance period lasting until
the second anniversary of the effective date if terminated prior to the first
anniversary of the effective date, (ii) any accrued but unpaid salary, bonus,
expenses, and benefits, (iii) continuing coverage under employee benefit plans
during the severance period, and (iv) unvested options scheduled to vest over
the severance period shall vest immediately upon termination.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
(a) As previously announced, on December 20, 2004, the Registrant completed the
merger (the "Merger") of Ardent Acquisition Corp. ("AAC"), a wholly-owned
subsidiary of the Registrant, with and into Ardent Pharmaceuticals, Inc.
("Ardent"), whereby Ardent Pharmaceuticals, Inc. has become a wholly owned
subsidiary of the Registrant. The Merger was pursuant to the terms and
conditions of the Agreement and Plan of Merger dated August 11, 2004 (the
"Agreement and Plan of Merger") by and among The Registrant, AAC, and Ardent,
which was previously filed by the Registrant and is refiled as Exhibit 10.1
hereto, as such Agreement and Plan of Merger was amended by Amendment No. 1
thereto dated November 20, 2004 ("Amendment No. 1") by and among The Registrant,
AAC, and Ardent, which Amendment No. 1 is filed as Exhibit 10.2 to this Current
Report on Form 8-K. The Agreement and Plan of Merger, as so amended, is
sometimes hereafter referred to as the "Agreement and Plan of Merger".
During 2002, Ardent received $1,925,028 from an affiliate of Elan
Pharmaceuticals, pursuant to a convertible debt financing evidenced by a
convertible promissory note (the "Ardent Convertible Promossory Note") , in
connection with certain joint ventures between Ardent and Elan Pharmaceuticals.
Interest on the Ardent Convertible Promissory Note accrues at 9% per annum,
compounded on an annual basis, with the initial compounding commencing on the
date that is twelve months from and after the original issuance date. The holder
has the right to convert in full, including then-outstanding principal and
interest, into such number of common shares of Ardent that shall be obtained by
dividing the sum of then-outstanding principal and interest by $7.50. To date no
payments of principal or interest have been made to Elan on the Ardent
Convertible Promissory Note.
Pursuant to the Agreement and Plan of Merger, as amended, the Registrant shall
cause a new convertible promissory note to be issued in exchange for the Ardent
Convertible Promissory Note and the merger consideration allocated to the Ardent
Convertible Promissory Note shall be reserved by the Registrant for issuance
upon conversion of the new convertible promissory note after the effective time
of the Merger. The holder of the new convertible promissory note shall have the
right to convert in full, including the then-outstanding principal and interest,
into such number of shares of Enhance Common Stock that shall be obtained by
dividing the sum of the then-outstanding principal and interest by $10.29.
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS
(b) As previously announced, on December 20, 2004, the Registrant completed the
merger (the "Merger") of Ardent Acquisition Corp. ("AAC"), a wholly-owned
subsidiary of the Registrant, with and into Ardent Pharmaceuticals, Inc.
("Ardent"), whereby Ardent Pharmaceuticals, Inc. has become a wholly owned
subsidiary of the Registrant. The Merger was pursuant to the terms and
conditions of the Agreement and Plan of Merger dated August 11, 2004 (the
"Agreement and Plan of Merger") by and among The Registrant, AAC, and Ardent,
which was previously filed by the Registrant and is refiled as Exhibit 10.1
hereto, as such Agreement and Plan of Merger was amended by Amendment No. 1
thereto dated November 20, 2004 ("Amendment No. 1") by and among The Registrant,
AAC, and Ardent, which Amendment No. 1 is filed as Exhibit 10.2 to this Current
Report on Form 8-K. The Agreement and Plan of Merger, as so amended, is
sometimes hereafter referred to as the "Agreement and Plan of Merger". Pursuant
to the Agreement and Plan of Merger, as amended, upon the effectiveness of the
Merger Mr. Phillip S. Wise became the Chief Financial Officer of the Registrant,
replacing Mr. Linden Boyne in that position. Mr. Boyne continues to be the
Secretary of the Registrant.
(c) Pursuant to the Agreement and Plan of Merger, as amended, effective upon the
Merger, Phillip S. Wise became the Chief Financial Officer of the Registrant,
and the Registrant entered into an employment agreement with Mr. Wise, in the
form filed as Exhibit 10.6 to this Current Report on Form 8-K (the "Phillip S.
Wise Employment Agreement"). The Phillip S. Wise Employment Agreement is a
three-year term employment agreement which provides for an annual base salary of
$225,000, eligibility to receive an annual discretionary bonus based on the
attainment of performance targets established by the Board of Directors, stock
bonus equivalent to $35,000 on each of the first three anniversaries of the
effective date of the Merger and 1,200,000 options to purchase common stock of
the Registrant, which options were granted upon the effective date of the
Merger. The first 300,000, or 1/4 of the aggregate options granted, were vested
on December 20, 2004, the effective date of the Merger. The remainder vest
annually in three equal parts on the next three anniversaries. If employment is
terminated without cause by the employer or for good reason by the executive,
Mr. Wise would be entitled to the following: (i) continuing salary payments over
a severance period of twelve (12) months if terminated on or after the first
anniversary of the effective date of the Merger or continuing salary payments
over a severance period lasting until the second anniversary of the effective
date if terminated prior to the first anniversary of the effective date, (ii)
any accrued but unpaid salary, bonus, expenses, and benefits, (iii) continuing
coverage under employee benefit plans during the severance period, and (iv)
unvested options scheduled to vest over the severance period shall vest
immediately upon termination.
Prior to joining Ardent, Mr. Wise was Director of Marketing for New Product
Development and Managed Care Marketing for Glaxo Wellcome. While there he gained
experience in acute care areas such as stroke and septic shock, as well as acute
and chronic cardiovascular products. Prior to the merger with Glaxo, Mr. Wise
managed the Anesthesia Marketing Department for Burroughs Wellcome. He has a
Masters in Business Administration from the Colgate Darden School of Business at
the University of Virginia and an undergraduate degree in engineering from the
Georgia Institute of Technology.
(d) Pursuant to the Agreement and Plan of Merger, as amended, upon the
effectiveness of the Merger, the following individuals, designated by the former
board of directors of Ardent, were elected to fill vacancies on the Board of
Directors of the Registrant: Dr. Kwen-Jen Chang (also known as Ken Chang), Mr.
Jinn Wu and Mr. Timothy C. Gupton. Upon election to the Registrant's Board of
Directors, Mr. Gupton became a member of the Audit Committee of the Registrant's
Board of Directors (replacing Mr. David Scales on that Committee) and became the
Chairman of the Audit Committee (replacing Mr. Lee J. Cole as Chairman, with Mr.
Cole continuing to be a member of the Audit Committee), and became a member of
the Compensation Committee of the Registrant's Board of Directors (replacing Mr.
Andrew Cosentino on that Committee), and Mr. Wu became a member of the Corporate
Governance and Nominating Committee of the Registrant's Board of Directors
(replacing Mr. Scales on that Committee).
SECTION 8 - OTHER EVENTS
ITEM 8.01 OTHER EVENTS.
On December 20, 2004, the Registrant issued a press release announcing the
completion of the merger (the "Merger") of Ardent Acquisition Corp. ("AAC"), a
wholly-owned subsidiary of the Registrant, with and into Ardent Pharmaceuticals,
Inc. ("Ardent"), whereby Ardent Pharmaceuticals, Inc. has become a wholly owned
subsidiary of the Registrant. That press release is filed as Exhibit 99.1 to
this Current Report on Form 8-K, and is incorporated herein by reference.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Registrant will file the required financial statements by amendment within 71
calendar days of the filing of this Current Report on Form 8-K.
(b) Pro Forma Financial information.
Registrant will file the required financial statements by amendment within 71
calendar days of the filing of this Current Report on Form 8-K.
(c) Exhibits.
The following exhibits are filed with this report:
10.1 Agreement and Plan of Merger dated August 11, 2004 (the "Agreement and
Plan of Merger") by and among Enhance Biotech, Inc., Ardent Acquisition
Corp., and Ardent Pharmaceuticals, Inc.
10.2 Amendment No. 1, dated November 20, 2004, by and among the Registrant, and
Ardent, to the Agreement and Plan of Merger.
10.3 Registration Rights Agreement dated December 20, 2004.
10.4 Employment Agreement dated December 20, 2004 by and between Enhance
Biotech, Inc. and Christopher Every.
10.5 Employment Agreement dated December 20, 2004 by and between Enhance
Biotech, Inc. and Kwen-Jen Chang (also known as Ken Chang).
10.6 Employment Agreement dated December 20, 2004 by and between Enhance
Biotech, Inc. and Phillip S. Wise.
99.1 Press Release dated December 20, 2004
[Signature on following page.]
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.
ENHANCE BIOTECH, INC.
By: /s/ Christopher Every
---------------------------------
Christopher Every
Chief Executive Officer
Date: December , 2004
EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.1 Agreement and Plan of Merger dated August 11, 2004 (the
"Agreement and Plan of Merger") by and among Enhance Biotech,
Inc., Ardent Acquisition Corp., and Ardent Pharmaceuticals, Inc.
10.2 Amendment No. 1, dated November 20, 2004, by and among the
Registrant, and Ardent, to the Agreement and Plan of Merger.
10.3 Registration Rights Agreement dated December 20, 2004.
10.4 Employment Agreement dated December 20, 2004 by and between
Enhance Biotech, Inc. and Christopher Every.
10.6 Employment Agreement dated December 20, 2004 by and between
Enhance Biotech, Inc. and Kwen-Jen Chang (also known as Ken
Chang).
10.6 Employment Agreement dated December 20, 2004 by and between
Enhance Biotech, Inc. and Phillip S. Wise.
99.1 Press Release dated December 20, 2004