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
Date of
Report (Date of earliest event reported): March 26, 2010
DRAGON PHARMACEUTICAL
INC.
(Exact
name of registrant as specified in its charter)
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Florida
(State
or Other Jurisdiction of
Incorporation)
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0-27937
(Commission
File Number)
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65-0142474
(IRS
Employer
Identification
No.)
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650
West Georgia Street, Suite 310
Vancouver, British Columbia
(Address
of Principal Executive Offices)
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V6B 4N9
(Zip
Code)
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(604)
669-8817
(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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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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x
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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.
On March
26, 2010, Dragon Pharmaceutical Inc., a Florida
corporation (the "Company," "we," "our," or "us"), entered into an agreement and
plan of merger with Chief Respect Limited, a Hong Kong corporation ("Parent"),
Datong Investment Inc., a Florida corporation and a wholly owned subsidiary of
Parent ("MergerSub"), and with respect to certain sections of the merger
agreement only, Mr. Yanlin Han. Parent and Merger Sub are affiliates
of Mr. Han.
Pursuant
to the merger agreement, with the exception of shares of the Company owned by
Mr. Han which will remain issued and outstanding after the contemplated merger
(“Mr. Han’s Shares”), the Parent agreed to acquire all of the issued and
outstanding common stock of the Company in an all cash merger for $0.82 per
share, representing approximately $34.1 million in equity value. In
addition, Parent will pay holders of stock options at the closing the difference
between $0.82 per share and the exercise price for such stock option for
aggregate amount of approximately $1.7 million.
The
merger agreement provides that MergerSub will merge with and into the Company,
with the Company continuing as the surviving corporation. As a result of the
merger, the Company will become owed by Parent and Mr. Han and each outstanding
share of the Company's common stock will be converted into the right to receive
$0.82 in cash, without interest, other than (i) shares held by any shareholders
who are entitled to and who properly exercise appraisal rights under Florida law
and (ii) shares held by Mr. Han.
We made
customary representations and warranties and covenants in the merger agreement,
including, among others (i) causing a meeting of our shareholders to be held to
approve the merger and adopt the merger agreement, (ii) subject to certain
exceptions, our board of directors recommending that our shareholders approve
the merger and adopt the merger agreement, and (iii) covenants regarding
operation of our business and the business of our subsidiaries prior to the
closing.
The
merger agreement contains a "no-shop" provision, which restricts our ability to
solicit, discuss or negotiate competing proposals. Parent has
represented to the Company that it will have sufficient funds to pay the
aggregate merger consideration and all related fees and expenses. In the event
the Parent is unable to secure such funds, this will result in a breach of the
merger agreement, entitling us to a termination fee of $400,000. As a good faith
deposit, Parent agreed to deposit $3,000,000 in cash into a segregated account
to be jointly controlled by us and Mr. Han and may be used as part of the
payment for the merger consideration, of which $1,000,000 is to be deposited
upon execution of the merger agreement, and $2,000,000 upon filing the
definitive proxy statement with the Securities and Exchange Commission (the
“SEC”).
We may
terminate the merger agreement under certain specified circumstances, including
if Mr. Han, Parent or MergerSub fails to perform any of their respective
covenants or if we receive an acquisition proposal that our board of directors
determines in good faith constitutes a superior proposal and that failure to
terminate would be inconsistent with its fiduciary duties. If we terminate the
merger agreement because we receive such an acquisition proposal, we must pay
Parent a $1,000,000 termination fee.
If we
terminate the merger agreement because Mr. Han, Parent or MergerSub breaches or
fails to perform any of their respective representations or covenants, Mr. Han
must pay us $400,000.
The
foregoing summary of the merger agreement, and the transactions contemplated
thereby, does not purport to be complete and is subject to, and qualified in its
entirety by, the full text of the merger agreement, a copy of which is attached
as an exhibit to this report and incorporated herein by reference. You are
encouraged to read the merger agreement for a more complete understanding of the
merger.
The
merger agreement has been included to provide investors and shareholders with
information regarding its terms. It is not intended to provide any other factual
information about the Company. The representations, warranties and covenants
contained in the merger agreement were made only for purposes of that agreement
and as of specific dates, were solely for the benefit of the parties to the
merger agreement, may be subject to limitations agreed upon by the contracting
parties, and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to investors. Investors
are not third-party beneficiaries under the merger agreement and should not rely
on the representations, warranties or covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the Company,
Parent or MergerSub or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of the representations and
warranties may change after the date of the merger agreement, which subsequent
information may or may not be fully reflected in the Company's public
disclosures.
Additional
Information and Where to Find It
This
report may be deemed to be solicitation material in respect of the proposed
merger discussed above. In connection with the proposed merger, we plan to file
a proxy statement with SEC. INVESTORS AND SHAREHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER. The final proxy statement will be mailed to our
shareholders. Investors and shareholders may obtain a free copy of the proxy
statement when it becomes available, and other documents filed by us with the
SEC, at the SEC's web site at http://www.sec.gov. Free copies of the proxy
statement, when it becomes available, and our other filings with the SEC may
also be obtained from us. Free copies of our filings may be obtained by
directing a request to Dragon Pharmaceutical, Inc., 650 West Georgia Street,
Suite 310,Vancouver, British Columbia, Canada V6B 4N9 Attention: Maggie Deng,
Secretary.
The
Company and certain of its directors, executive officers and other members of
management and employees may, under SEC rules, be deemed to be "participants" in
the solicitation of proxies from our shareholders with respect to the proposed
merger. Information regarding the persons who may be considered "participants"
in the solicitation of proxies will be set forth in our proxy statement relating
to the proposed merger when it is filed with the SEC. Information regarding
certain of these persons and their beneficial ownership of our common stock as
of May 19, 2009 is also set forth in our proxy statement for our 2009 annual
meeting of shareholders, which was filed with the SEC on June 1, 2009.
Additional information regarding the interests of such potential participants
will be included in the proxy statement and the other relevant documents filed
with the SEC when they become available.
Item
9.01 Financial Statements
and Exhibits.
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Exhibit No.
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Exhibit Description
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2.1
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Agreement
and Plan of Merger by and Among Dragon Pharmaceutical, Inc., Chief Respect
Limited, Datong Investment, Inc. and Yanlin Han dated March 26,
2010.
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99.1
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Press release dated
March 26, 2010, titled “Dragon Pharma To Be Acquired In Going
Private Transaction For $0.82 Per Share In Cash”
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The information contained in Exhibit
99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934, and shall not be deemed incorporated by
reference in any filing with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 or the Securities Act of 1933, whether made
before or after the date hereof and irrespective of any general incorporation by
reference language in any filing.
Portions of this report may constitute
“forward-looking statements” defined by federal law. Although the
Company believes any such statements are based on reasonable assumptions, there
is no assurance that the actual outcomes will not be materially
different. A number of the matters discussed in this report that are
not historical or current facts deal with potential future circumstances and
developments, in particular, whether and when the transactions contemplated by
the merger agreement will be consummated. The discussion of such matters is
qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from actual future
experience involving any one or more of such matters. Such risks and
uncertainties include: any conditions imposed on the parties in connection with
consummation of the transactions described herein; approval of the merger by our
shareholders; satisfaction of various other conditions to the closing of the
transactions described herein; and the risks that are described from time to
time in our reports filed with the SEC, including our Annual Report on Form 10–K
for the year ended December 31, 2008. This report speaks only as of its date,
and we disclaim any duty to update the information herein. Any such
statements are made in reliance on the “safe harbor” protections provided under
the Private Securities Litigation Reform Act of 1995. Additional
information about issues that could lead to material changes in the Company’s
performance is contained in the Company’s filings with the Securities and
Exchange Commission and may be accessed at www.sec.gov.
SIGNATURE
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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DRAGON PHARMACEUTICAL
INC.,
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a
Florida Corporation
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Dated: March
26, 2010
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/s/
Maggie Deng
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Maggie
Deng
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Chief
Operating Officer
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EXHIBIT
INDEX
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Exhibit No.
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Description
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2.1
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Agreement
and Plan of Merger by and Among Dragon Pharmaceutical, Inc., Chief Respect
Limited, Datong Investment, Inc. and Yanlin Han dated March 26,
2010.
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99.1
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Press release dated
March 26, 2010, titled “Dragon Pharma To Be Acquired In Going
Private Transaction For $0.82 Per Share In Cash”
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