EXPLANATORY
NOTE
This
Amendment No. 1 on Form 8-K/A (the “8-K/A”) amends and restates in its entirety
the Current Report on Form 8-K for IR Biosciences Holdings, Inc. (the
“Company”) dated August 8, 2008 and filed with the Securities and Exchange
Commission on August 11, 2008 (the “Original 8-K”) to supplement the description
of the agreements and transactions described in Item 1.01 with respect to the
minimum conversion price of the 0% interest convertible debentures.
Item
1.01 Entry into a Material Definitive Agreement
Purchase Agreement with
Brencourt Multi-Strategy International LTD
On August
8, 2008, IR Biosciences Holdings, Inc. (the “Company”) entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with certain funds for which
Brencourt Advisors, LLC is the investment manager (the “Buyers”), pursuant to
which the Buyers agreed to purchase from the Company (i) up to $5 million of 10%
subordinated secured convertible debentures (the “Convertible Debentures”),
which shall be convertible into shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”) and (ii) warrants to acquire up to
2,500,000 additional shares of Common Stock (the “Warrants”) (the
“Financing”). The Warrants are exercisable after the six month and
one day anniversary from the date of issuance and have a term of exercise equal
to five years. A copy of the Purchase Agreement is attached hereto as
Exhibit
10.1.
The
closing of the Financing occurred on August 8, 2008, at which time the Company
sold to the Buyers $5 million of the Convertible Debentures and the
Warrants. Obligations under the Convertible Debentures are guaranteed
by ImmuneRegen BioSciences, Inc., the Company’s wholly-owned subsidiary (the
“Guarantor”). The Company’s obligations under the Convertible Debentures are
secured by (i) all of the assets and property of the Guarantor pursuant to a
Security Agreement by and between the Company and the Guarantor in favor of the
Buyer, a copy of which is attached to this Current Report as Exhibit 10.3; and
(ii) by Patent Collateral of the Company and the Guarantor in accordance with a
Patent Security Agreement by and among the Company, the Buyer and the Guarantor,
a copy of which is attached to this Current Report as Exhibit
10.4. The security interests granted to the Buyer are subject
to and subordinated to the senior security interests granted by the Company and
Guarantor to YA Global Investments, L.P. Notwithstanding the
subordinated security interests granted to the Buyer, the Company is permitted
to pay and the Buyer may receive any regularly scheduled payment of principal,
interest, liquidated damages, buy-in compensation or other amounts due and
payable on the Financing.
The
Convertible Debentures mature on August 8, 2013, unless extended by the holder,
and accrue interest at the rate of 10% per annum. Interest is payable
in cash quarterly on the last day of each calendar quarter beginning on
September 30, 2008, or at the Company’s option (i) if “Equity Conditions” (as
defined in the Convertible Debentures) are satisfied, it may be paid by the
issuance of Common Stock or (ii) by issuance of a 0% interest convertible
debenture with a five year term of exercise and a minimum conversion price of
$0.30conversion price floor of $0.30 per share. The Company was
required to prepay interest for the first and last quarters of the term of the
Convertible Debentures. The Convertible Debentures are convertible at
any time at the option of the holder into shares of the Company’s Common Stock
at a price equal to $1.55 per share.
At any
time after the six-month anniversary of the issuance of the Convertible
Debentures, the Company may redeem a portion or all amounts outstanding under
the Convertible Debentures prior to August 8, 2013 provided that certain
conditions to redemption have been satisfied. The Company may
force a conversion of the Convertible Debentures into Common Stock, provided
that specified conditions have been satisfied. Holders of the
Convertible Debentures are subject to limitations on their right to convert the
Convertible Debentures, or receive shares of Common Stock as payment of
interest, if after giving effect to such conversion or receipt of shares, the
holder would be deemed to beneficially own more than 9.98% of the Company’s then
outstanding Common Stock. Upon the occurrence of certain events of
default defined in the Convertible Debentures, including the Company’s failure
to pay the holder any amount of principal, interest, or other amounts when due,
the full principal amount of the Convertible Debentures, together with interest
and other amounts due, become immediately due and payable in cash at the
“Mandatory Default Amount” as defined in the Convertible
Debentures.
In the
event the Company effects any “Fundamental Transaction” as defined in the
Convertible Debentures, including a merger or consolidation of the Company,
completion of a tender offer or exchange offer, or sale of substantially all of
its assets, the holder has the right to receive, upon any subsequent conversion
of the Convertible Debentures, the same kind and amount of securities, cash
and/or property that the holder would have been entitled to receive upon the
occurrence of the Fundamental Transaction if it held one share of Common Stock
for each conversion share of Common Stock (the “Alternate
Consideration”). In addition, any successor to the Company or
surviving entity shall issue to the holder a convertible debenture with a
principal amount equal to the Convertible Debentures then held by the holder,
plus all accrued and unpaid interest and other amounts, and with the same terms
and conditions as the Convertible Debentures including the right to convert into
the Alternate Consideration.
The
Warrants have an exercise price, subject to adjustments, of $2.00 per share and
are exercisable at any time on or after February 8, 2009 and prior to February
8, 2014. The Warrants provide a right of cashless exercise if, at the
time of exercise, there is no effective registration statement registering the
resale of the shares underlying the Warrants. To the extent not
previously exercised, the Warrants will automatically be exercised
via cashless exercise on February 8, 2014. Holders of the Warrants
are subject to limitations on their right to exercise the Warrants, if after
giving effect to the exercise, a holder and its affiliates would be deemed to
beneficially own more than 4.99% of the Company’s then outstanding Common
Stock.
If, at
anytime beginning from the 6 month anniversary date of the Purchase Agreement,
the Company fails to satisfy the current public information requirements under
Rule 144, the Company is required to pay to the Buyers an amount in cash equal
to 2% of the aggregate subscription amount of the Buyers’ securities on the day
of such failure and on every 30th day, bearing interest at the rate of 1.5% per
month, until it is cured or such information is not required. Subject
to any prior rights granted to YA Global Investments, L.P., the Buyers have a
right to participate in up to an amount equal to 50% of any subsequent financing
that involves the issuance of the Company’s capital stock or indebtedness for so
long as the Convertible Debentures are outstanding. The Buyers
also have registration rights in that it may include the shares issued and
issuable pursuant to the Convertible Debentures and Warrants in certain
registration statements filed by the Company.
The
summary of the Purchase Agreement and the Financing set forth above do not
purport to be a complete statement of the terms of the Purchase Agreement and
the Financing. This summary is qualified in its entirety by reference
to the full text of the Purchase Agreement attached hereto as Exhibit 10.1, the
Convertible Debenture attached hereto as Exhibit 4.1, the Warrant attached
hereto as Exhibit 4.2, the Guaranty attached hereto as Exhibit 10.2, the
Security Agreement attached hereto as Exhibit 10.3 and the Patent Security
Agreement attached hereto as Exhibit 10.4.
Waiver and Amendment of YA
Debentures and Warrants and Issuance of Additional Warrants
The
Company previously issued to YA Global Investments, L.P. (“YA Global”) a Secured
Convertible Debenture dated January 3, 2008 in the principal sum of $2 million
and a Secured Convertible Debenture dated June 12, 2008 in the principal sum of
$1 million (collectively, the “YA Convertible Debentures”) pursuant to a
Securities Purchase Agreement dated January 3, 2008 (the “YA
Agreement”), which are previously reported in the Company’s Form 8-K
Current Reports filed with the Securities and Exchange Commission (“SEC”) on
January 9, 2008 and June 12, 2008,
respectively. The YA Convertible Debentures are
convertible into shares of the Company’s Common Stock (the “YA Conversion
Shares”). Pursuant to the YA Agreement, the Company also issued to YA
Global warrants (the “YA Warrants”) to purchase 7,500,000 shares of Common Stock
(the “YA Warrant Shares”). On August 8, 2008, in consideration for YA
Global’s consent to the Company conducting and closing the Financing, the
Company and YA Global agreed to amend the YA Convertible Debentures to increase
the annual interest rate from 8% to 10% and adjust the Conversion Price to $1.50
(the “Amended Debentures”). Additionally, under the Amended
Debentures, YA Global may elect on or after December 31, 2009 to have the
Company redeem up to $1.5 million of the YA Global Debentures as well as the
payment of a redemption premium of 20% of the principal amount
redeemed. The Company may also pay the interest on the Amended
Debentures, at the Company’s option, in cash, 0% interest convertible debentures
with a five year term of exercise with a minimum conversion price of $0.30 per
share, or, subject to the satisfaction of certain specified equity conditions,
in shares of the Company’s Common Stock. All overdue accrued and
unpaid interest to be paid on the Amended Debentures shall be subject to a late
fee at an interest rate equal to the lesser of 18% per annum or the maximum rate
permitted by applicable law that accrues daily until all overdue amounts are
paid in full.
In
addition, the Company and YA Global agreed to amend the YA Warrants to adjust
the exercise price of the warrants to $2.00 (the “YA Warrant Amendment”) and to
reduce the YA Warrant Shares to 750,000 pursuant to the terms of the YA Warrants
as a result of the Company’s 1 for 10 reverse stock split described below in
Item 8.01. The Company also agreed to issue to YA Global additional
warrants to purchase an additional 750,000 shares of Common Stock on or before
December 31, 2012 (the “Expiration Date”) at an exercise price of $2.00, subject
to adjustment (the “YA Additional Warrants”). Holders of the YA
Additional Warrants are limited in their right to exercise the YA Additional
Warrants if, upon giving effect to such exercise, it would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 9.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration
Date. The YA Additional Warrants provide a right of cashless exercise
if, at the time of exercise, there is no effective registration statement
registering the resale of the shares underlying the warrants.
The summary of the Amended Debentures,
the YA Warrant Amendment and the YA Additional Warrant set forth above do not
purport to be a complete statement of the terms of such
documents. This summary is qualified in its entirety by reference to
the full text of the Amended Debentures, attached hereto as Exhibits 4.3 and
4.4, the YA Warrant Amendment attached hereto as Exhibit 4.5, and the YA
Additional Warrant, attached hereto as Exhibit 4.6.
THIS
CURRENT REPORT IS NOT AN OFFER OF SECURITIES FOR SALE. ANY SECURITIES
SOLD IN AS DESCRIBED ABOVE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant
The
disclosure provided in Item 1.01, above, of this Form 8-K/A is hereby
incorporated by reference into this Item 2.03 with respect to the terms and sale
of, and the financial obligations created by, the Convertible
Debentures.
Item
3.02 Unregistered Sale of Equity Securities
The
disclosure provided in Item 1.01, above, of this Form 8-K/A is hereby
incorporated by reference into this Item 3.02 with respect to the terms and sale
of the Convertible Debentures, the Warrants and the issuance of the YA
Additional Warrants. YA Global and each of the Buyers represented that it is an
“accredited investor” and agreed that the securities bear a restrictive legend
against resale without registration under the Securities Act of 1933, as amended
(the “Securities Act”). The sale of the Convertible Debentures and
issuance of the Warrants and the YA Additional Warrants were made pursuant to
Section 4(2) and/or Rule 506 of Regulation D as promulgated by the U.S.
Securities and Exchange Commission under the Securities Act.
Item
7.01 Regulation FD Disclosure
On August 11, 2008, the Company issued
a press release announcing the Purchase Agreement with the Buyers. A copy of the
press release is attached to this Current Report as Exhibit 99.1 and the
information therein is incorporated herein by reference.
Item
8.01 Other Events
On July
10, 2008, the Company filed an amendment with the Delaware Secretary of State to
its Certificate of Incorporation, as amended, (the “Amended Certificate”)
effectuating a 1 for 10 reverse stock split and a reduction in the number of
authorized shares of Common Stock to 100 million. The Amended
Certificate and the reverse stock split were described in the Company’s Proxy
Statement filed with the SEC on May 9, 2008. As previously reported
in the Company’s Current Report on Form 8-K filed with the SEC on July 22, 2008,
the Amended Certificate, including the reverse stock split, was approved by the
stockholders at the Company’s annual meeting held on June 25, 2008.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits.
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Number
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Description
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4.1*
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Form
of 10% Secured Convertible Debenture due August 8, 2013 dated August 8,
2008.
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4.2*
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Form
of Common Stock Purchase Warrant dated August 8, 2008.
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4.3*
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Amendment
Number 2 to 8% Secured Convertible Debenture in the amount of $2,000,000
issued to YA Global Investments, L.P., dated January 3,
2008.
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4.4*
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Amendment
Number 2 to 8% Secured Convertible Debenture in the amount of $1,000,000
issued to YA Global Investments, L.P., dated June 12,
2008.
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4.5*
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Amendment
Number 1 to Common Stock Purchase Warrant, issued to YA Global
Investments, L.P., dated August 8, 2008.
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4.6*
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Common
Stock Purchase Warrant, issued to YA Global Investments, L.P., dated
August 8, 2008.
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10.1*
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Securities
Purchase Agreement, dated as of August 8, 2008, by and among the Company,
the Buyers, and ImmuneRegen BioSciences, Inc.
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10.2*
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Guaranty
Agreement dated as of August 8, 2008, executed by ImmuneRegen BioSciences,
Inc. in favor of the Buyers.
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10.3*
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Security
Agreement dated as of August 8, 2008, by and among the Company,
ImmuneRegen BioSciences, Inc., and the Buyers.
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10.4*
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Patent
Security Agreement dated as of August 8, 2008, by and among the Company,
ImmuneRegen BioSciences, Inc. and the Buyers.
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99.1*
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Press
Release dated August 11, 2008.
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*
Previously filed.
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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Date:
August 12, 2008
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By:
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/s/ Michael K.
Wilhelm
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Michael
K. Wilhelm
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President
and Chief Executive Officer
(Duly
Authorized Officer)
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