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): July
28, 2016
Enumeral Biomedical Holdings, Inc.
(Exact name of registrant as specified in
its charter)
|
Delaware
(State or Other Jurisdiction
of Incorporation) |
000-55415
(Commission File
Number) |
99-0376434
(I.R.S. Employer
Identification Number) |
|
200 CambridgePark Drive, Suite 2000
Cambridge, Massachusetts
(Address of Principal Executive Offices) |
|
02140
(Zip Code) |
(617) 945-9146
(Registrant’s telephone number, including
area code)
N/A
(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:
¨
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))
| Item 1.01 | Entry into a Material
Definitive Agreement. |
On July 29, 2016 (the “Closing Date”),
Enumeral Biomedical Holdings, Inc. (the “Company”) entered into a Subscription Agreement (the “Subscription
Agreement”) with certain accredited investors (the “Buyers”), pursuant to which the Buyers purchased the
Company’s 12% Senior Secured Promissory Notes (the “Notes”) in the aggregate principal amount of $3,038,256
(before deducting placement agent fees and expenses of approximately $385,337), which includes $38,256 pursuant to an
over-allotment option (the “Note Offering”). The Company intends to use the net proceeds from this Note Offering
for working capital and general corporate purposes.
The proceeds for the sale of the Notes were held in escrow,
pending closing of the purchase and sale of the Notes, pursuant to the terms of an Escrow Agreement (the “Escrow Agreement”)
among the Company, the Placement Agent (as defined below) and the escrow agent.
The Company’s obligations under the Notes are secured,
pursuant to the terms of an Intellectual Property Security Agreement (the “Security Agreement”), dated as of the Closing
Date, among the Grantors (as defined below), the Buyers and the collateral agent for the Buyers named therein, by a first priority
security interest in all now owned or hereafter acquired intellectual property of the Company and Enumeral Biomedical Corp., a
wholly-owned subsidiary of the Company (the “Subsidiary” and together with the Company, the “Grantors”),
except to the extent such intellectual property cannot be assigned or the creation of a security interest would be prohibited by
applicable law or contract.
The Notes have an aggregate principal balance of $3,038,256, and
a stated maturity date of 12 months from the date of issuance. The principal on the Notes bears interest at a rate of 12% per annum,
payable monthly commencing on September 1, 2016. Interest is payable in shares (the “Repayment Shares”) of common stock,
$0.001 par value per share, of the Company (the “Common Stock”), provided, however, that interest will not be calculated
or accrued in a manner that triggers anti-dilution adjustment on the Company’s existing warrants that were issued in connection
with the Company’s July 2014 private placement transaction (the “July 2014 Warrants”). In the event that on an
interest payment date, the July 2014 Warrants’ anti-dilution provision would be triggered by the payment of interest in Common
Stock, interest payments on the Notes may be paid in cash. The Notes will rank senior to all existing indebtedness of the Company,
except as otherwise set forth in the Notes.
The Notes provide that the maturity date of all of the outstanding
principal amount of the Notes, together with accrued and unpaid interest due thereon, will accelerate to the date, on or after
September 1, 2016, on which the Company completes and closes (i) an offering involving the sale of at least $5,000,0000 of equity
securities or securities convertible into or exercisable for equity securities by the Company, or in the case of a solicitation
of the exercise of outstanding July 2014 Warrants (a “Warrant Solicitation”), an offering in which the Company receives
at least $2,000,000 (both such offerings being an “Equity or Equity Equivalent Offering”), or (ii) an alternative financing
transaction not constituting an Equity or Equity Equivalent Offering, including transactions involving a business combination,
debt financing, asset sale or other financing transaction, which, directly or indirectly, increases the Company’s cash and
cash equivalent assets by not less than $5,000,000 (an “Alternative Financing” and together with the Equity or Equity
Equivalent Offering, a “Qualified Offering”).
Upon the closing of a transaction that would be deemed to be
a Qualified Offering but for the fact that such transaction closes prior to September 1, 2016 (a “Non-Qualified Offering”),
the maturity date of all of the outstanding principal amount of the Notes, together with accrued and unpaid interest due thereon,
will accelerate to September 1, 2016.
At the closing of a Qualified Offering (or September 1, 2016
in the event the Company completes a Non-Qualified Offering), the outstanding principal and interest then due on the Notes will
be payable, at the discretion of the Company, in cash or shares of Common Stock; provided, however, that cash may only be paid
if, after taking into account such payments, the Company will have a minimum of $10,000,000 in cash, cash equivalents and marketable
securities. Payments made in Common Stock will be based on a valuation per share equal to 50% of the price per share of the Common
Stock sold in the Equity or Equity Equivalent Offering or the price at which such securities can be converted into or exercised
for Common Stock. In the event of a sale of the Company during the term of the Notes (including a merger (whether or not the Company
is the surviving entity or not), acquisition, tender offer for a majority of the shares of the outstanding Common Stock), each
holder of a Note will be entitled to receive an amount equal to one and a half times the principal amount of, and any accrued and
unpaid interest on, such holder’s Note at the closing of such sale; provided, however, that such sale preference amount shall
be paid either in cash or in equivalent amount of securities of the acquiring entity at the acquiring entity’s discretion.
Pursuant to the terms of the Notes, a transaction that triggers this 1.5x sale preference will not also trigger the acceleration
and conversion features described above.
The Notes provide that if the Company fails to pay any principal
amount or interest due under the Notes within 5 business days of the date such payment is due, or upon the occurrence of other
event of default under the terms of the Notes (which such event of default continues beyond any applicable cure period), the entire
unpaid principal balance of the Note, together with any accrued and unpaid interest thereon, will become due and payable, without
presentment, demand, protest or notice of any kind.
Pursuant to the terms of a Placement Agency Agreement (the “Placement
Agency Agreement”), dated as of June 21, 2016, between the Company and the placement agent for the Note Offering (the “Placement
Agent”), in connection with the closing of the Note Offering, the Placement Agent was paid a commission equal to ten percent
(10%) of the gross proceeds of the Offering. The Placement Agency Agreement also provides that, in the event that the Company completes
a Qualified Offering or a Non-Qualified Offering during the term of the Notes, the Placement Agent, or its designees, will receive
ten-year warrants to purchase a number of shares of Common Stock equal to 10% of the Repayment Shares issued at maturity in connection
with such Qualified Offering or Non-Qualified Offering, as applicable, with an exercise price per share equal to the price per
share at which payments in shares are made to the Buyers (the “Placement Agent Warrants”). To the extent that the Company
completes a Warrant Solicitation constituting an Equity or Equity Equivalent Offering which involves a restructuring of the warrant
exercise price and amount of shares exercisable, the exercise price of the Placement Agent Warrants will reflect the average exercise
price. However, in the event that the Notes are repaid in cash in full prior to the closing of a Qualified Offering or Non-Qualified
Offering, and under circumstances where payment in cash is permitted under the Subscription Agreement, the Placement Agent shall
not be entitled to any warrants.
The Placement Agency Agreement also provides that if, within
12 months of the first closing of the Note Offering, the Company completes a financing or similar transaction with a party introduced
to the Company by the Placement Agent in connection with the Note Offering (a “Fee Tail Party”), the Placement Agent
shall be entitled to receive a cash commission from the Company in an amount equal to 10% of the gross amount of the financing
transaction with the Fee Tail Party. In addition, if such financing transaction involves the issuance to the Fee Tail Party of
equity securities or securities exercisable, convertible or exchangeable for equity securities, the Placement shall also be entitled
to receive a ten-year warrant to purchase the equivalent of 10% of the equity securities issued or issuable to the Fee Tail Party
at the price per share paid or to be paid by the Fee Tail Party. Any Placement Agent Warrants shall only be issued at such time
and to the extent that such issuance would not trigger an anti-dilution adjustment with respect to the July 2014 Warrants.
Pursuant to the terms of the Placement Agency Agreement, the
Company agreed to pay the Placement Agent’s legal counsel’s fees in the amount of $50,000 and the Placement Agent’s
legal counsel’s reasonable out of pocket expenses related to the Note Offering (not to exceed $5,000 in the aggregate).
In addition, the Company paid the Placement Agent a $20,000 non-accountable expense allowance.
The Placement Agency Agreement also provides that the Company
will indemnify the Placement Agent and its agents to the fullest extent permitted by law, against certain liabilities that may
be incurred in connection with the Note Offering, including certain civil liabilities under the Securities Act of 1933, as amended
(the “Securities Act”), and, where such indemnification is not available, to contribute to the payments the Placement
Agents and their respective sub-agents may be required to make in respect of such liabilities.
The Company has granted registration rights to each Buyer with
respect to the Repayment Shares, and to the Placement Agent with respect to the shares of Common Stock issuable upon exercise of
the Placement Agent Warrants, in the event a transaction occurs pursuant to which Placement Agent Warrants are issued (the “Placement
Agent Warrant Shares,” and, together with the Repayment Shares, the “Registrable Shares”). These registration
rights shall, in each case, be on a pari passu basis with, and upon substantially the same terms as, the registration rights
that may be granted to the investors in a Qualified Offering or Non-Qualified Offering. In the event of a Warrant Solicitation
involving a Warrant Restructuring (as described in the Placement Agency Agreement), the Company will, without any action by a holder
of the Notes, register the resale of the Registrable Shares, together with the shares underlying the July 2014 Warrants, as restructured.
Such registration rights will be no less favorable than those contained in the registration rights agreement executed in connection
with the issuance of the July 2014 Warrants.
The foregoing descriptions of the Subscription Agreement, Escrow
Agreement, Security Agreement, Placement Agency Agreement, and Note do not purport to be complete and are subject to, and qualified
in their entirety by, the full text of the documents, copies of which will be filed as exhibits to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ending September 30, 2016.
| Item 2.03 | Creation
of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant. |
The Company sold Notes to the Buyers in the Note Offering in
the aggregate principal amount of $3,038,256.
Reference is made to the disclosure set forth under Item 1.01
above, which disclosure is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of
Equity Securities. |
The Company sold Notes to the Buyers in the Note Offering in
the aggregate principal amount of $3,038,256. Pursuant to the terms of the Notes, shares of Common Stock may be issuable at maturity
to repay the principal and/or interest on the Notes.
Reference is made to the disclosure set forth under Item 1.01
above, which disclosure is incorporated herein by reference.
The issuances of (a) the Notes, (b) the Repayment Shares, (c)
the Placement Agent Warrants, upon issuance in the event of an applicable transaction in accordance with the terms and conditions
of the Placement Agency Agreement and (d) upon exercise of the Placement Agent Warrants, if issued, the Placement Agent Warrant
Shares, in connection with the Note Offering are exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation
D and/or Regulation S as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under of the Securities
Act as transactions by an issuer not involving any public offering. The securities sold in the Note Offering have not been registered
under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from
registration requirements. This disclosure does not constitute an offer to sell or the solicitation of an offer to buy any of the
Company’s securities, nor will there be any sales of these securities by the Company in any state or jurisdiction in which
the offer, solicitation or sale would be unlawful. The disclosure is being issued pursuant to and in accordance with Rule 135c
promulgated under the Securities Act.
| Item 5.02 | Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Executive Transition
In conjunction with the closing of the Note Offering,
Arthur H. Tinkelenberg was terminated by the Company from his positions as President and Chief Executive Officer, effective
July 28, 2016 (the “Separation Date”). Dr. Tinkelenberg will remain a member of the Company’s board of
directors. The Company intends to conduct a search for a new Chief Executive Officer with commercial drug development
experience.
As a result of Mr. Tinkelenberg’s separation of employment
with the Company, the Company’s Board of Directors designated John J. Rydzewski, the Company’s Executive Chairman,
as the Company’s “Principal Executive Officer” for SEC reporting purposes, effective as of the Separation Date.
Mr. Rydzewski is compensated pursuant to that certain Amended and Restated Employment Agreement, dated as of July 21, 2014, between
Mr. Rydzewski and the Subsidiary, which was assumed by the Company on July 31, 2014. There has been no change to Mr. Rydzewski’s
compensation in connection with his designation as Principal Executive Officer.
Mr. Rydzewski, age 63, has served as the Executive Chairman
of the Company’s board of directors since the July 2014 merger between the Company and the Subsidiary. Prior to the July
2014 merger, Mr. Rydzewski served as a director of the Subsidiary since September 2010 and as Executive Chairman of the Subsidiary’s
board since October 2011. From July 2006 to September 2011, Mr. Rydzewski was managing director of Christofferson, Robb & Co.,
an investment firm. He is a graduate of The Wharton School of the University of Pennsylvania.
Except as described above, (i)
there are no arrangements or understandings between Mr. Rydzewski and any other person pursuant to which he was selected as an
officer, (ii) there is no transaction since the beginning of the Company’s last fiscal year, or any currently proposed transaction,
between the Company and Mr. Rydzewski in which the amount involved exceeds the lesser of $120,000 or one percent of the average
of the Company’s total assets at year end for the last two completed fiscal years, and (iii) there
are no family relationships between Mr. Rydzewski and any of the Company’s directors, director nominees or executive officers.
Officer Indemnification Arrangements
On July 28, 2016, the Company entered into its standard indemnification
agreement for directors and officers with Kevin G. Sarney, Vice President of Finance, Chief Accounting Officer and Treasurer, Ahnco
Nguyen, Vice President of Research and Development, and certain other officers. The indemnification agreement provides for the
indemnification of the director or officer, as applicable, for certain expenses and liabilities (including liabilities arising
under the Securities Act) incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism,
or hearing, inquiry or investigation that may lead to the foregoing, to which he is a party, or is threatened to be made a party,
by reason of the fact that he is or was a director, officer, employee, agent or fiduciary of the Company, or any of the Company’s
subsidiaries, by reason of any action or inaction by such persons while serving as an officer, director, agent or fiduciary, or
by reason of the fact that such person was serving at the Company’s request as a director, officer, employee, agent or fiduciary
of another entity. In the case of an action or proceeding by or in the right of the Company or any of its subsidiaries, no indemnification
will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification.
The foregoing description of the indemnification agreements
does not purport to be complete and is qualified in its entirety by reference to the form of the Company’s indemnification
agreement, which was filed as Exhibit 10.45 to the Company’s Current Report on Form 8-K/A for the event occurring on July
31, 2014, as filed with the Securities and Exchange Commission on August 8, 2014, and is incorporated herein by reference.
On August 1, 2016, the Company issued a press
release with respect to the Note Offering. In accordance with Rule 135c under the Securities Act, a copy of the press release
is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and
Exhibits. |
(d) Exhibits.
| Exhibit No. |
|
Description |
| 10.1* |
|
Form of Indemnification Agreement between Enumeral Biomedical Holdings, Inc. and each of its directors and officers. |
| |
|
|
| 99.1** |
|
Press Release, dated August 1, 2016. |
*Incorporated by reference to Exhibit 10.45 to the Form 8-K/A
for the event occurring on July 31, 2014 as filed with the Securities and Exchange Commission on August 8, 2014.
**Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
ENUMERAL BIOMEDICAL HOLDINGS, INC. |
| |
|
|
| Date: August 1, 2016 |
By: |
/s/ Kevin G. Sarney |
| |
|
Name: Kevin G. Sarney |
| |
|
Title: Vice President of Finance, Chief Accounting Officer and Treasurer |
EXHIBIT INDEX
| Exhibit No. |
|
Description |
| 10.1* |
|
Form of Indemnification Agreement between Enumeral Biomedical Holdings, Inc. and each of its directors and officers. |
| |
|
|
| 99.1** |
|
Press Release, dated August 1, 2016 |
*Incorporated by reference to Exhibit 10.45 to the Form 8-K/A
for the event occurring on July 31, 2014 as filed with the Securities and Exchange Commission on August 8, 2014.
**Filed herewith.
