UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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) February 12, 2010
Diligent
Board Member Services, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-53205
|
26-1189601
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
39
West 37 St. 8th
Floor
New
York, NY 10018
(Address
of principal executive offices) (Zip Code)
(212)
741-8181
(Registrant's
telephone number, including area code)
Not
Applicable
(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):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | 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.
Diligent
Board Member Services, Inc. (“Diligent”) has entered into a conditional
agreement dated February 12, 2010 with Services Share Holding LLC (“Services”)
restructuring its Promissory Note and Security Agreement dated October 1, 2007
in the original principal amount of $6.8 million (the
“Note”). Services is an affiliate of Diligent, as its members include
several executive officers, directors and significant shareholders of
Diligent.
Prior to
the restructuring, the Note was carried at $1,361,791 based on an impairment
charge booked in 2008 and was secured by a pledge of a total of 21,678,597
shares of Diligent common stock under two separate pledge
agreements. Under the conditional agreement, the Note would be
restructured as follows:
* Services
will prepay in cash US$1,010,430 against the outstanding balance of the
Note. Services will also transfer and surrender to Diligent
11,650,000 shares of the Diligent common stock currently pledged as security for
the Note. The surrendered shares will be cancelled, and Diligent will
credit Services with a prepayment against the Note of US$3,075,676 for the
surrendered shares. The aggregate of the prepayments against the
principal balance of the Note will therefore be US$4,086,106.
* The
terms of the Note will be amended to increase the interest rate from 5% to 6.5%
per annum on the outstanding principal balance of US$3,075,685, to extend the
maturity date of the loan from October 1, 2010 to October 1, 2012 and to change
the interest payments from quarterly in arrears to annual interest payments in
arrears on January 1 of each year until the Note is paid in
full. Diligent will continue to hold 5,205,597 Diligent shares as
security against the balance of the Note.
The
agreement is conditional upon Diligent shareholder approval in accordance with
applicable New Zealand Stock Exchange Rules at Diligent’s annual shareholder
meeting on May 28, 2010 (New Zealand time). No proxies are being
solicited at this time and will only be solicited pursuant to the Company’s
proxy statement for the annual meeting.
If the
shareholders approve the conditional agreement, the transaction is anticipated
to close on May 28, 2010 (New York time).
On
February 17, 2010, Sprint Street Partners, L.P., a significant shareholder of
Diligent and an affiliate of David Liptak, (one of our directors), purchased
2,500,000 shares of Diligent common stock from Services in a private transaction
for approximately $607,910, the proceeds of which have been deposited in a
escrow account to fund a portion of the cash prepayment under the conditional
agreement. On February 16, 2010, Corcoran Consulting LLC purchased
823,000 shares of Diligent common stock in a private transaction for
approximately $200,124, the proceeds of which have been deposited in a escrow
account to fund a portion of the cash prepayment under the conditional
agreement. On February 8, 2010 NZ time, Services sold an aggregate of
1,500,000 shares of Diligent common stock in six separate private transactions
for approximately NZ$525,000, the proceeds of which have been deposited in a
escrow account to fund a portion of the cash prepayment under the conditional
agreement. The escrow account proceeds will be distributed to fund
prepayment of the Note upon the closing under the conditional
agreement.
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.
|
DILIGENT
BOARD MEMBER SERVICES, INC.
|
|||
|
Date: February
24, 2010
|
By:
|
/s/ Robert Norton | |
| Robert Norton | |||
| Executive Vice President and | |||
| General Counsel | |||