| Item 1.01 | Entry into a Material Definitive Agreement. |
Business Combination Agreement
On
November 30, 2022, Iris Acquisition Corp, a Delaware corporation (“we,” “our,” or “Iris”), Iris
Parent Holding Corp., a Delaware corporation (“ParentCo”), Liminatus Pharma, LLC, a Delaware limited liability company (“Liminatus”),
Liminatus Pharma Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ParentCo (“Liminatus Merger Sub”),
and SPAC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ParentCo (“SPAC Merger Sub” and together
with Liminatus Merger Sub, the “Merger Subs”), entered into a business combination agreement (as it may be amended, supplemented
or otherwise modified from time to time, the “Business Combination Agreement”): (a) Liminatus Merger Sub will merge with
and into Liminatus (the “Liminatus Merger”), with Liminatus surviving the Liminatus Merger as a direct wholly-owned subsidiary
of ParentCo, and (b) simultaneously with the Liminatus Merger, SPAC Merger Sub will merge with and into Iris (the “SPAC
Merger” and, together with the Liminatus Merger, the “Mergers”), with Iris surviving the SPAC Merger (the “SPAC
Surviving Subsidiary”) as a direct wholly-owned subsidiary of ParentCo (the transactions contemplated by the foregoing clauses (a) and
(b) the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement,
the “Transactions”).
The terms of the Business Combination Agreement, which contains customary
representations and warranties, covenants, closing conditions and other terms relating to the Mergers and the other Transactions contemplated
thereby, are summarized below. Capitalized terms used in this Current Report on Form 8-K but not otherwise defined herein have the
meanings given to them in the Business Combination Agreement.
Effect of the Business Combination on Existing Iris Equity
Subject to the terms and conditions of the Business Combination Agreement,
the Business Combination will result in, among other things, the following:
|
• |
immediately prior to the effective time of the Mergers (the “Effective Time”), every issued and outstanding Unit will be automatically separated and broken out into its constituent parts and the holder thereof shall be deemed to hold one share of Class A Common Stock, par value $0.0001 per share (the “Class A Shares”) and one-fourth of one whole redeemable warrant that was included as part of each Unit (the “Public Warrants”), and such underlying constituent securities of Iris shall be converted in accordance with the applicable terms of the Business Combination Agreement, and in accordance with the terms of the Warrant Agreement (defined below), no fractional Public Warrants shall be issued upon separation of the outstanding Units, but shall instead be rounded down to the nearest whole Public Warrant; |
|
• |
immediately prior to the Effective Time, each issued and outstanding share of the Class B Common Stock, par value $0.0001 per share (the “Class B Shares”) will, in accordance with our Certificate of Incorporation, be converted automatically into and thereafter represent one Class A Share; |
|
• |
at the Effective Time, each issued and outstanding Class A Share will be converted automatically into and thereafter represent the right to receive one share of common stock, par value $0.0001 per share of ParentCo (“ParentCo Common Stock”), following which all Class A Shares will cease to be outstanding and will automatically be canceled and will cease to exist, and the holders of certificates previously evidencing Class A Shares outstanding immediately prior to the Effective Time will cease to have any rights with respect to such shares, except as provided in the Business Combination Agreement or by applicable Law, and each certificate formerly representing Class A Shares will thereafter represent only the right to receive the relevant amount for such Class A Shares in accordance with the applicable provisions of law and Iris’s governing documents; |
|
• |
at the Effective Time, each issued and outstanding Public Warrant will, in accordance with the terms of the Warrant Agreement, immediately and automatically represent the right to purchase shares of ParentCo Common Stock on the same terms and conditions as are set forth in the Warrant Agreement (each a “ParentCo Public Warrant”); |
|
• |
at the Effective Time, each issued and outstanding non-redeemable warrant of Iris that was issued by Iris in a private placement at the time of the consummation of our initial public offering, entitling the holder thereof to purchase one Class A Share at $11.50 per share (the “Private Placement Warrants”), except those issued to Cantor Fitzgerald & Co. (“Cantor”), will be forfeited. In accordance with the terms of the Warrant Agreement, the Private Placement Warrants issued to Cantor shall immediately and automatically represent the right to purchase shares of ParentCo Common Stock on the same terms and conditions as are set forth in the Warrant Agreement (each a “ParentCo Private Placement Warrant”); and |
|
• |
at the Effective Time, each share of common stock of SPAC Merger Sub outstanding immediately prior to the Effective Time will be converted into an equal number of shares of common stock of Iris each of which is held by ParentCo, with the same rights, powers and privileges as the shares so converted, and such shares will constitute the only outstanding shares of capital stock of Iris. |
Consideration
The aggregate consideration to be paid in the Transactions to the direct
or indirect owners of Liminatus will consist of 25.0 million shares of ParentCo’s common stock. The number of shares of the equity
consideration was determined based on $10.00 per share value for ParentCo’s common stock.
Redemptions
Pursuant
to our charter and the Trust Agreement (defined below), eligible holders of Class A Shares may elect to redeem all or a portion
of such holder’s Class A Shares (the “SPAC Share Redemptions”), at the per-share price, payable in cash, equal
to such holder’s pro rata share of Iris’s trust account, by tendering the Class A Shares of such holder for redemption
not later than 5:00 p.m. Eastern Time on the date that is two Business Days prior to the date of the special meeting of the holders
of Class A Shares and Class B Shares to be called for the purpose of voting on proposals related to the Transactions (“Stockholder
Meeting”).
Listing of New Parent Common Stock
Shares of ParentCo Common Stock and ParentCo Public Warrants are expected
to be listed on the Nasdaq Stock Market LLC (the “Nasdaq”).
Representations and Warranties and Covenants
Each of the parties to the Business Combination Agreement have made
representations, warranties and covenants in the Business Combination Agreement that are customary for transactions of this nature.
Conditions to Each Party’s Obligations
Consummation
of the transactions contemplated by the Business Combination Agreement is subject to customary conditions of the respective parties,
and conditions customary to special purpose acquisition companies, including the approval of Iris’s stockholders and Liminatus’s
members. In addition, consummation of the Transactions is subject to other closing conditions, including, among others: (a) if required,
the expiration of the waiting period (or extension thereof) under the Hart-Scott Rodino Antitrust Improvement Act of 1976 (the “HSR
Act”), (b) the absence of any order, writ, judgment, injunction, temporary restraining order, stipulation, determination,
decree or award entered by or with or under the authority of any governmental entity or arbitral institution in effect enjoining or prohibiting
the consummation of the Transactions, and the absence of any law that makes consummation of the Transactions illegal or otherwise prohibited,
(c) approval by the Iris stockholders at the Stockholder Meeting of the Transactions, the adoption of a long term incentive plan,
and the appointment of members of the ParentCo board of directors, (d) after giving effect to all SPAC Share Redemptions and the
PIPE Equity Investment (defined below), Iris shall have consolidated net tangible assets of at least $5,000,001 (as calculated and
determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon the closing
of the Mergers after giving effect to the Transactions, and (e) the ParentCo Proxy/Registration Statement (as defined in the Business
Combination Agreement) shall have become effective, no stop order shall have been issued by the SEC and remain in effect and no proceeding
seeking such a stop order shall have been threatened or initiated by the SEC and remain pending, (f)
receipt of approval for listing on Nasdaq for the shares of ParentCo Common Stock to be
issued in connection with the Mergers, (g) delivery by the other parties of all closing deliveries, documents and other
items required to be delivered by such parties as required by the Business Combination Agreement, and (h) the completion of the
PIPE Equity Investment and Convertible Notes Investment (as defined below).
Termination
The Business Combination Agreement may be terminated and the transactions
contemplated by the Business Combination Agreement abandoned at any time prior to the Closing only as follows:
|
• |
by the mutual written consent of Liminatus and Iris; |
|
• |
by Liminatus or Iris by written notice to the other Party if any applicable law is in effect making the consummation of the transactions contemplated by the Business Combination Agreement illegal or any final, non-appealable order is in effect permanently preventing the consummation of the transactions contemplated by the Business Combination Agreement; provided, however, that the right to terminate the Business Combination Agreement pursuant to this provision shall not be available to any party whose breach of any representation, warranty, covenant or agreement of the Business Combination Agreement resulted in or caused such final, non-appealable order or other action (including, with respect to Liminatus, any breach by ParentCo); |
|
• |
by Liminatus or Iris by written notice to the other Party if the consummation of the transactions contemplated by the Business Combination Agreement shall not have occurred on or before June 7, 2023 (the “Outside Date”); provided, however, that the right to terminate the Business Combination Agreement under this provision shall not be available to any party that has materially breached any of its representations, warranties, covenants or agreements under the Business Combination Agreement (including, with respect to Liminatus, any breach by ParentCo) if such material breach is the primary cause of or has resulted in the failure of the transactions contemplated by the Business Combination Agreement to be consummated on or before such date; |
|
• |
by Liminatus by written notice to Iris if Iris breaches any of its representations or warranties contained in the Business Combination Agreement or breaches or fails to perform any of its covenants contained in the Business Combination Agreement, which breach or failure to perform (i) would render a condition precedent to Liminatus’ obligations to consummate the transactions set forth in Section 4.1(c)(i) or Section 4.1(c)(ii) of the Business Combination Agreement not capable of being satisfied, and (ii) after the giving of written notice of such breach or failure to perform to Iris by Liminatus, cannot be cured or has not been cured by the earlier of the Outside Date and thirty (30) days after receipt of such written notice and Liminatus has not waived in writing such breach or failure; provided, however, that the right to terminate the Business Combination Agreement under this provision shall not be available to Liminatus if Liminatus is then in material breach of any representation, warranty, covenant or agreement contained in the Business Combination Agreement; |
|
• |
by Iris by written notice to Liminatus if Liminatus breaches any of its representations or warranties contained in the Business Combination Agreement or Liminatus breaches or fails to perform any of its covenants contained in the Business Combination Agreement, which breach or failure to perform (i) would render a condition precedent to Iris’s obligations to consummate the transactions set forth in Section 4.1(b)(i) or Section 4.1(b)(ii) of the Business Combination Agreement not capable of being satisfied, and (ii) after the giving of written notice of such breach or failure to perform to Liminatus by Iris, cannot be cured or has not been cured by the earlier of the Outside Date and thirty (30) days after the delivery of such written notice and Iris has not waived in writing such breach or failure; provided, however, that the right to terminate the Business Combination Agreement under this provision shall not be available to Iris if Iris is then in material breach of any representation, warranty, covenant or agreement contained in the Business Combination Agreement; |
|
• |
by Liminatus by written notice to Iris if Iris fails to complete an extension of the deadline by which it must complete its business combination by December 31, 2022; |
|
• |
by Liminatus by written notice to Iris if Iris fails, at any time prior to the Effective Time, to maintain the listing of publicly traded equity securities of Iris on the Nasdaq or other national securities exchange acceptable to Liminatus; |
|
• |
by Liminatus or Iris by written notice to the other party if the required vote of Iris’s stockholders is not obtained at the special meeting of Iris’s stockholders (subject to any adjournment or postponement thereof); |
|
• |
by written notice from Iris to Liminatus if the approval by Liminatus’s members of the Transactions is not obtained within ten (10) Business Days after the proxy/registration statement to be filed by ParentCo has become effective; and |
|
• |
by written notice by Iris to Liminatus, if there shall have been a Material Adverse Effect (as defined in the Business Combination Agreement) following the date of the Business Combination Agreement which is uncured and continuing. |
In the event of the valid termination of the Business Combination Agreement
pursuant to the subsections above, the Business Combination Agreement shall immediately become null and void, without any liability on
the part of any party or any other person, and all rights and obligations of each party shall cease; provided that (a) the agreements
contained in Section 8.5, Section 8.9, Section 8.10, Section 10.2 and Article XI of the Business Combination
Agreement survive any termination of the Business Combination Agreement and remain in full force and effect and (b) no such termination
shall relieve any party from any liability arising out of or incurred as a result of its fraud or its willful and material breach of the
Business Combination Agreement prior to such termination (subject to Section 11.10 of the Business Combination Agreement). Without
limiting the foregoing, and except as provided in Section 8.10 and Section 10.2 of the Business Combination Agreement (but subject
to Section 11.10 of the Business Combination Agreement) and subject to the right to seek injunctions, specific performance or other
equitable relief in accordance with Section 11.11 of the Business Combination Agreement, the parties’ sole right prior to the
closing of the Transactions with respect to any breach of any representation, warranty, covenant or other agreement contained in the Business
Combination Agreement by another party or with respect to the transactions contemplated by the Business Combination Agreement shall be
the right, if applicable, to terminate the Business Combination Agreement as set forth above.
A copy of the Business Combination Agreement is filed with this Current
Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Business Combination
Agreement is qualified in its entirety by reference thereto. The Business Combination Agreement contains representations, warranties and
covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates.
The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective
parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement.
The representations, warranties and covenants in the Business Combination Agreement are also modified in important part by the underlying
disclosure schedules which are not filed publicly and which are subject to a contractual standard of materiality different from that generally
applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts.
We do not believe that these schedules contain information that is material to an investment decision.
Certain Related Agreements
The Sponsor Agreement
Concurrently with the execution of the Business Combination Agreement, Iris,
Liminatus, and Iris Acquisition Holdings LLC, a Delaware limited liability company (the “Sponsor”), entered into a support
agreement (the “Sponsor Support Agreement”), pursuant to which the Sponsor agreed to, among other things, (i) appear
at the Stockholder Meeting and vote all of its shares of Class B common stock of Iris it holds or has the power to vote (including
any acquired in future) in favor of the Business Combination Agreement and the Transactions contemplated thereby, (ii) be bound by
certain transfer restrictions with respect to its shares of Class B common stock of Iris, and (iii) not redeem any of its shares
of Class B common stock of Iris in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement.
The foregoing description of the Sponsor Support Agreement does not
purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a copy of which
is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
PIPE Subscription Agreement and Convertible Note Subscription Agreement
Concurrently with the execution of the Business Combination Agreement,
ParentCo and Iris have entered into an equity subscription agreement (the “PIPE Equity Subscription Agreement”) with one accredited
investor (the “PIPE Investor”) pursuant to which the PIPE Investor has committed to purchase 1,500,000 shares of ParentCo
Common Stock at a purchase price per share of $10.00 (the “PIPE Shares”), for an aggregate purchase price of $15,000,000 (the
“PIPE Equity Investment”). The obligations to consummate the transaction contemplated by the PIPE Equity Subscription Agreement
are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business
Combination Agreement.
Simultaneously with the PIPE Equity Subscription Agreement, ParentCo
and Iris have entered into a convertible note subscription agreement (the “Convertible Note Subscription Agreement”) with
one accredited investor (the “PIPE Subscriber”) pursuant to which the PIPE Subscriber has committed to subscribe for and purchase
8% convertible notes (the “Convertible Notes”) of and from ParentCo in an aggregate principal amount of $25,000,000 (the “Convertible
Notes Investment”) due three years after the Closing of the Business Combination, with an initial conversion price of $11.50 per
share of ParentCo Common Stock, which is subject to future downward adjustment based upon the market
price of the publicly traded ParentCo Common Stock. The obligations to consummate the transactions contemplated by the Convertible Note Subscription Agreement
are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business
Combination Agreement.
In
connection with the PIPE Equity Investment and the Convertible Notes Investment, ParentCo will grant the PIPE Investor and PIPE Subscriber
certain customary registration rights as described under “Registration Rights Agreement”. The PIPE Shares
and the shares underlying the Convertible Notes have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), and will be issued in reliance on the availability of an exemption from such registration.
The foregoing descriptions of the PIPE Equity Subscription Agreement
and the Convertible Note Subscription Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions
of the PIPE Equity Subscription Agreement,Convertible Note Subscription Agreement and the form of Convertible Note, copies of which are
attached hereto as Exhibit 10.2,Exhibit 10.6 and Exhibit 10.7, respectively, and are incorporated herein by reference.
Sponsor Forfeiture Agreement
Concurrently with the execution of the Business Combination Agreement,
the Sponsor and Iris entered into a Sponsor Forfeiture Agreement (the “Forfeiture Agreement”), pursuant to which the
Sponsor agreed to forfeit 4,177,778 Private Placement Warrants effective immediately prior to the Closing.
The foregoing description of the Forfeiture Agreement does
not purport to be complete and is qualified in its entirety by the terms and conditions of the Forfeiture Agreement, a copy
of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.
Registration Rights Agreement
In connection with the consummation of the Business Combination, ParentCo
will enter into an Amended and Restated Registration Rights Agreement (the “RRA”) with Sponsor, Cantor, certain former members of Liminatus, the PIPE Investor and the PIPE Subscriber. The RRA includes, among other things,
the following provisions:
ParentCo will be required to file a resale shelf registration statement
on behalf of the ParentCo security holders party to the agreement within 30 days after the closing of the Business Combination. The RRA
also provides certain demand rights and piggyback rights to ParentCo stockholders, subject to certain specified underwriter cutbacks and
issuer blackout periods. ParentCo will bear all costs and expenses incurred in connection with the resale shelf registration statement,
any demand registration statement, any underwritten takedown, any block trade, any piggyback registration statement prior to its withdrawal
and all expenses incurred in performing or complying with its other obligations under the RRA, whether or not the registration statement
becomes effective.
The RRA will terminate with respect
to any holder party thereto, on the date that such holder party no longer holds any registrable securities.
The
foregoing description of the RRA does not purport to be complete and is qualified in its entirety by the terms and conditions of
the RRA, a form of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
Lock-Up Agreement
Concurrently
with the execution of the Business Combination Agreement, ParentCo entered into a Lock-Up Agreement (“Lock-Up
Agreement”) with Sponsor, and certain Liminatus members with respect to the shares of ParentCo Common Stock that will be issued
as consideration under the Business Combination Agreement. The Lock-Up Agreement includes, among other things, the following provisions:
Certain
Liminatus members will not be able to transfer any shares of ParentCo Common Stock beneficially owned or otherwise held by
them for a period that is the earlier of: (a) for one-third of the shares, six months after the date of closing, for one-third of
the shares, twelve months after the date of closing; and for one-third of the shares, twenty-four months after the date of closing; (b) the
date on which the closing price of the ParentCo Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and similar transactions) for any 20 trading days within any 30-trading day period or (c) the
date on which ParentCo completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results
in all of ParentCo’s stockholders having the right to exchange their shares of ParentCo common stock for cash, securities or other
property.
The
foregoing description of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by the terms and
conditions of the Lock-Up Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.