Attached files
file | filename |
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EX-4.1 - Intellect Neurosciences, Inc. | v182674_ex4-1.htm |
EX-4.4 - Intellect Neurosciences, Inc. | v182674_ex4-4.htm |
EX-4.2 - Intellect Neurosciences, Inc. | v182674_ex4-2.htm |
EX-4.3 - Intellect Neurosciences, Inc. | v182674_ex4-3.htm |
EX-99.1 - Intellect Neurosciences, Inc. | v182674_ex99-1.htm |
EX-99.2 - Intellect Neurosciences, Inc. | v182674_ex99-2.htm |
EX-99.3 - Intellect Neurosciences, Inc. | v182674_ex99-3.htm |
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): April 23,
2010
Intellect
Neurosciences, Inc.
|
(Exact
Name Of Registrant As Specified In Its
Charter)
|
Delaware
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(State
or Other Jurisdiction of
Incorporation)
|
333-128226
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20-2777006
|
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
|
7
West 18th Street, New York, NY
|
10011
|
|
(Address
of Principal Executive Offices)
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(Zip
Code)
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(212)
448-9300
|
(Registrant’s
Telephone Number, Including Area
Code)
|
(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))
|
¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item1.01. Entry Into a Material Definitive Agreement.
Pursuant
to a Subscription Agreement between Intellect Neurosciences, Inc. (the
“Company”) and the signers thereto, on April 23, 2010 (the “Closing Date”), the
Company issued and sold for an aggregate purchase price of
$2,320,000: (i) Secured Convertible Promissory Notes (the “Notes”) with an
aggregate principal amount of $580,000, (ii) 58,000,000 shares of the Company’s
Common Stock at a per share price of $.03 and (iii) 77,333,334 Class
A Warrants, 77,333,334 Class B Warrants and 77,333,334 Class C
Warrants. Net proceeds from the sale of the securities of
approximately $2,220,000 is being held in escrow and distributed to the Company
on a monthly basis pursuant to the terms of an Escrow Agreement executed by the
parties.
Description of the Convertible Promissory Notes
Each Note
may be converted into shares of the Company’s common stock, $0.001 par value per
share (“Common Stock”), at a conversion price per share of $0.03, subject to
certain adjustments as provided in the terms of the Notes. The Notes bear
interest at 14% annually and mature on April 22, 2013. The Notes are not
entitled to dividends, distributions or other payments.
The
occurrence of any of the following events of default shall at the option of the
holder of the Notes make all sums due on the Notes, including unpaid principal
and interest, immediately due and payable, upon demand:
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·
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Failure
to pay principal, interest or any other sum due under the Note when it’s
due;
|
|
·
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If
the Company or any subsidiary breaches any material covenant or other term
or condition of the note in any material respect and such breach, if
subject to cure, continues for a period of five days after written notice
to the Company from the holder of the
Note;
|
|
·
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If
any material representation or warranty of the Company made in the Notes
is false or misleading in any material respect as of the date made and on
the Closing Date;
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·
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Any
dissolution, liquidation or winding up of the Company or Material
Subsidiary (as defined in the Notes) or any substantial portion of the
business taken as a whole;
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·
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Any
cessation of operations of the Company or any Material
Subsidiary;
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·
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Delisting
of the Common Stock from the OTC Bulletin Board (the “Principal Market”);
A failure to comply with the requirements for continued listing on a
Principal Market for a period of five (5) consecutive trading days; or
notification from a Principal Market that the Company is not in compliance
with the conditions for such continued listing on such Principal
Market;
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|
·
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A
default by the Company or any subsidiary under any one or more
obligations in an aggregate monetary amount in excess of $100,000 for more
than twenty days after the due date, unless the Company or such subsidiary
is contesting the validity of such obligation in good faith and has
segregated cash funds equal to not less than one-half of the contested
amount; provided,
however, that the continuation of a default that first occurred
prior to the Closing Date shall not constitute an Event of Default under
the Note;
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·
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A
Securities and Exchange Commission (“SEC”) or judicial stop trade order or
Principal Market trading suspension that lasts for five or more
consecutive trading days;
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·
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The
Company’s failure to timely deliver Common Stock to the holder of the Note
as required by the Note;
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·
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If
the Company fails to reserve sufficient shares for conversion
of the Note;
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2
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·
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If
the Company restates any financial statements filed by it with the SEC for
any date or period from two years prior to the Closing Date until the Note
is no longer outstanding and if the result of such restatement would by
comparison to the unrestated financial statements have constituted a
Material Adverse Effect (as defined in the
Notes);
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·
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If
the Company effects a reverse split of its Common Stock without twenty
days prior written notice to the holders of the
Notes;
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·
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If
the Company fails to notify the holder of the Notes of anything
that the Company is obligated to notify them of pursuant to the Notes;
and
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·
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A
default that occurs by the Company of a material term, covenant, warranty
or undertaking of any other agreement to which the Company and the holder
of the Notes are parties, or the occurrence of a material event of default
under any such other agreement to which the Company and the holders of the
Notes are parties which is not cured after any required notice and/or cure
period.
|
The
number of shares issuable upon conversion of the Notes is subject to adjustment
for subdivision, combination, recapitalization, reclassification, exchange or
substitution, as well as in the event of merger or sale of all or substantially
all of the Company’s assets. The Notes also benefit from anti-dilution
adjustments upon issuances of shares of Common Stock (or securities convertible
into or exchangeable or exercisable for such stock). If the Company issues
common stock at a price that is less than $0.03 (or if the Company issues
rights, warrants or other securities having an exercise, conversion or exchange
price that is less than $0.03), the conversion price of the Notes will be
reduced to a price equal to the issuance, conversion, exchange or exercise
price, as applicable, of any such securities so issued. Additional reductions of
the conversion price of the Notes will be made if the Company issues securities
at a price (or having an exercise, conversion or exchange price) less than the
conversion price of the Notes at the time of such issuances.
Description of
Warrants
Each
Warrant entitles the holder to purchase 77,333,334 shares of Common Stock. The
Series A Warrants and the Series C Warrants contain cashless exercise features.
The exercise price of the Series B Warrants is payable in cash.
The
Series A Warrants expire on the fifth anniversary of their issue date; the
Series B Warrants expire on the nine monthly anniversary of their issue date;
and the Series C Warrants expire on the sixty ninth monthly anniversary of their
issue date. The Series C Warrants are exercisable only upon the prior or
simultaneous exercise of the Series B Warrants issued by the Company to the
original holder on the issue date.
The
number of shares issuable upon exercise of the Warrants is subject to adjustment
for subdivision, combination, recapitalization, reclassification, exchange or
substitution, as well as in the event of merger or sale of all or substantially
all of the Company’s assets. The Warrants also benefit from anti-dilution
adjustments upon issuances of shares of Common Stock (or securities convertible
into or exchangeable or exercisable for such stock). If the Company issues
common stock at a price that is less than $0.03 (or if the Company issues
rights, warrants or other securities having an exercise, conversion or exchange
price that is less than $0.03), the exercise price of the Warrants will be
reduced to a price equal to the issuance, conversion, exchange or exercise
price, as applicable, of any such securities so issued. In addition, upon any
reduction of the exercise price of the Warrants, the number of shares of Common
Stock that the holder of the Warrant shall thereafter, on the exercise, be
entitled to receive shall be adjusted to a number determined by multiplying the
number of shares of Common Stock that would otherwise be issuable on such
exercise by a fraction of which (a) the numerator is the exercise price that
would otherwise be in effect, and (b) the denominator is the exercise price in
effect on the date of such exercise. Additional reductions of the exercise price
of the Warrants and adjustments to the number of shares of Common Stock issuable
upon exercise will be made if the Company issues securities at a price (or
having an exercise, conversion or exchange price) less than the exercise price
of the Warrants at the time of such issuances.
3
The
Company expects to use the net proceeds from the sale of the Notes, Common Stock
and Warrants for general corporate purposes to fund its operations and repayment
of debt.
The
Company has agreed to file a registration statemene with the SEC to register the
Common Stock the Common Stock underlying the Warrants within 45 calendar days
after the Closing Date.
In
connection with the sale of the Notes, the Company, all the subsidiaries of the
Company and the holders of the Notes entered into a Security Agreement (the
“Security Agreement”). Pursuant to the Security Agreement, the Company granted
the holders a security interest in all of the Company’s tangible and intangible
assets, including its patent estate.
In
connection with the sale of the Notes, Intellect Neurosciences, USA, Inc. a
subsidiary of the Company entered into a guaranty in favor of the holders of the
Notes pursuant to which it guaranteed payment on the Notes.
The
issuance and sale of the Notes, Common Stock and Warrants were made in reliance
upon the exemption provided in Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”) and Regulation D promulgated under the Securities
Act. No form of general solicitation or general advertising was conducted in
connection with the private placement. Each purchaser of the
securities is an “accredited investor” as defined in Rule 501 under the
Securities Act.
The
foregoing descriptions of the Subscription Agreement, Notes, Warrants, the
Security Agreement and the Guarantee do not purport to be complete and are
qualified by reference to these agreements which are attached as exhibits to
this Current Report and are incorporated into this Item by
reference.
Repayment of Outstanding
Promissory Notes
As
previously reported in the Company’s quarterly report for the quarterly period
ended December 31, 2009 filed on Form 10-Q on February 16, 2010, the following
promissory notes issued by the Company are outstanding and overdue (unless
otherwise indicated):
Description of Notes
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Principal Amount
Outstanding as of
12/31/2009
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|||
Convertible
Promissory Notes issued through the fiscal year ended June 30,
2006
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$ | 75,000 | ||
Convertible
Promissory Notes issued during the fiscal year ended June 30,
2007
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$ | 5,290,118 | ||
Convertible
Promissory Notes issued during the fiscal year ended June 30,
2008
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$ | 180,000 | ||
Senior
Promissory Notes issued during the fiscal year ended June 30, 2009 (Notes
are due July 31, 2013)
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$ | 5,950,575 | ||
Senior
Promissory Notes issued August 12, 2009 due February 12,
2010
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$ | 450,000 | ||
Senior
Promissory Notes issued November 17, 2009 due February 17,
2010
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$ | 200,000 |
4
On April 23, 2010, the Company issued or agreed to issue to holders of all of the Notes listed above (except as described below), a total of 342,351,768 shares of Common Stock in repayment of the full principal amount plus all accrued and unpaid interest on such Notes. Each holder is entitled to a number of shares of Common Stock equal to the sum of the full principal amount of the Notes, plus all accrued and unpaid interest on such holder’s Notes, divided by 0.05. Holders of Notes who purchased Common Stock and Notes for total consideration of at least $500,000 in the financing transactions described above that occurred on April 23, 2010 are entitled to a number of shares of Common Stock equal to the sum of the full principal amount of the Notes held by such Purchasers, plus all accrued and unpaid interest on such holders’ Notes, divided by 0.03.
In
connection with the repayment of the Notes, each holder agreed to the
cancellation of his or her existing warrants that were issued in connection with
the original issuance of the Notes. In addition, each holder agreed not to sell,
transfer or pledge any shares of Common Stock received upon repayment of the
Notes for a period of one year. Holders of Notes who purchased Common
Stock and Notes for total consideration of at least $500,000 in the financing
transactions described above that occurred on April 23, 2010 are not subject to
this “lockup”.
A holder
of Convertible Promissory Notes issued during the fiscal year ended June 30,
2007 with an aggregate principal amount of $300,000 refused to accept repayment
of his Notes by delivery of Common Stock and continues to hold his Notes, which
remain outstanding and overdue.
Conversion of Series B
Preferred Stock
As
previously reported in the Company’s quarterly report for the quarterly period
ended December 31, 2009 filed on Form 10-Q on February 16, 2010, the Company has
outstanding 459,309 shares of Series B Convertible Preferred Stock with a
liquidation preference of $8,037,908 (the “Series B Prefs”). Accrued Series B
Pref dividends as of December 31, 2009 were $1,820,531.
On April
23, 2010, the Company accepted conversion notices from each of the holders of
the Series B Pref (except as described below), and issued or agreed to issue a
total of 195,105,502 shares of Common Stock in conversion of the Series B Prefs
plus all accrued and unpaid dividends on the Series B Prefs. Each holder is
entitled to a number of shares of Common Stock equal to the sum of the Stated
Value of each share of Series B Pref ($17.50), plus all accrued and unpaid
dividends, divided by 0.05. Holders of Series B Prefs who purchased Common Stock
and Notes for total consideration of at least $500,000 in the financing
transactions described above that occurred on April 23, 2010 are entitled to a
number of shares of Common Stock equal to the sum of the full Stated Value of
the Series B Prefs held by such Purchasers, plus all accrued and unpaid
dividends on such holders’ Series B Prefs, divided by 0.03.
In
connection with the conversion of the Series B Prefs, each holder agreed to the
cancellation of his or her existing warrants that were issued in connection with
the original issuance of the Series B Prefs. In addition, each holder agreed not
to sell, transfer or pledge any shares of Common Stock received upon conversion
of the Series B Prefs for a period of one year. Holders of Series B
Prefs who purchased Common Stock and Notes for total consideration of at least
$500,000 in the financing transactions described above that occurred on April
23, 2010 are not subject to this “lockup”.
Holders
of Series B Prefs with an aggregate Stated Value of $887,000 did not
submit conversion notices and continue to hold their Series B Prefs and
warrants.
5
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant.
See Item
1.01
Item
3.02 Unregistered Sales of Equity Securities.
See Item
1.01
Item
3.03 Material Modification to Rights of Security Holders
See Item
5.03
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The
Certificate of Designations, Preferences, and Rights of Series B Convertible
Preferred Stock (the “Certificate of Designations”) as originally adopted by the
Board of Directors of the Company contains provisions for certain anti-dilution
adjustments. In particular, Section 6(g) of the Certificate of Designations
provides that if the Company issues any shares of its capital stock (other than
certain excluded stock) without consideration or for a consideration per share
less than the applicable Conversion Price (as defined in the Certificate of
Designations), then with respect to any such issuance, the applicable Conversion
Price as in effect immediately prior to each such issuance shall be lowered to a
price equal to the issuance price of any such securities so issued.
Section
5(b) of the Certificate of Designations provides that except to the extent
otherwise provided in the Certificate of Designations or otherwise required by
the General Corporation Law of the State of Delaware, the holders of more than
fifty percent (50%), in the aggregate, of the then outstanding shares of Series
B Prefs (the “Series B Preferred Majority”) may, via affirmative vote or written
consent in lieu thereof, waive any rights of the holders of the Series B Prefs
set forth in the Certificate of Designations. Effective as of April 23, 2010,
holders of Series B Prefs constituting a Series B Preferred Majority permanently
waived the provisions of Section 6(g) of the Certificate of
Designations.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
The
following exhibits are furnished as part of this Report on Form
8-K:
Exhibit
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Description
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4.1
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Form
of Convertible Promissory Note
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4.2
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Form
of Common Stock Purchase Warrant (Class A)
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4.3
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Form
of Common Stock Purchase Warrant (Class B)
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4.4
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Form
of Common Stock Purchase Warrant (Class C)
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99.1
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Subscription
Agreement, dated April 23, 2010 between the Company and the signers named
therein
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99.2
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Security
Agreement, dated April 23, 2010
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99.3
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Subsidiary
Guarantee
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6
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.
Date:
April 29, 2010
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INTELLECT
NEUROSCIENCES, INC.
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||
By:
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/s/Elliot Maza
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||
Name:
Elliot Maza
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|||
Title: President
and Chief Financial
Officer
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7
Exhibit
Index
Exhibit
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Description
|
|
4.1
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Form
of Convertible Promissory Note
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4.2
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Form
of Common Stock Purchase Warrant (Class A)
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4.3
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Form
of Common Stock Purchase Warrant (Class B)
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4.4
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Form
of Common Stock Purchase Warrant (Class C)
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99.1
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Subscription
Agreement, dated April 23, 2010 between the Company and the signers named
therein
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99.2
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Security
Agreement, dated April 23, 2010
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99.3
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Subsidiary
Guarantee
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8