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Item
1.01
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Entry
Into a Material Definitive Agreement
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On
January 4, 2018, Microbot Medical Ltd. (“Microbot”), a wholly-owned subsidiary of Microbot Medical, Inc. (the
“Registrant”), entered into an agreement (the “Agreement”) with CardioSert Ltd., a company formed
under the laws of Israel (CardioSert”), to acquire certain patent-protected technology owned by CardioSert (the
“Technology”). With the closing of the acquisition expected in April 2018, CadioSerts’ issued U.S. patent and three patent
applications pending worldwide will be added to Microbot’s patent portfolio which will then have a patent portfolio of
25 issued/allowed patents and 15 patent applications pending worldwide. The Registrant believes that the Technology, when
added to the Registrant’s existing robotic capabilities, will be consistent with the Registrant’s strategy to
develop micro-robotic technologies for surgeries utilizing the natural and artificial lumens in the human body and to expand
and enhance the Registrant’s intellectual property portfolio and allow it to enter adjacent medical spaces and
applications.
Pursuant
to the Agreement, Microbot made an initial payment of $50,000 to CardioSert, and has 90-days to complete the acquisition. At the
end of the 90-day period, at Microbot’s sole option, CardioSert shall assign and transfer the Technology to Microbot and
Microbot shall:
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Pay
CardioSert $250,000;
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Cause
the issuance to CardioSert of 100,000 restricted shares of common stock of the Registrant, subject to a 12 month lockup from
the date of issuance; and
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Make
future earn-out payments as follows:
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For
Type 1 Products (as defined in the Agreement), 10% of Net Sales (as defined in the Agreement), until the aggregate paid or
deemed to be paid to CardioSert is equal to $300,000 and 7% of Net Sales thereafter; and
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For
Type 2 Products (as defined in the Agreement), 5% of Net Sales, until the aggregate paid or deemed to be paid to CardioSert
is equal to $300,000 and 3% of Net Sales thereafter.
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In
no event shall the earn-out exceed 50% of Net Profit (as defined in the Agreement), provided that in any event the earn-out payments
will cover the payments to be made by Microbot to the Israel National Technological Innovation Authority (formerly known as the
Office of the Chief Scientist of the Ministry of Economy).
Microbot
shall be permitted to grant licenses for the purpose of commercialization of the Type 1 Products or the Type 2 Products, in which
case CardioSert shall be entitled to receive either (a) earn-out payments with respect to the sales of such products by the licensee,
or (b) 15%-50% of any consideration received by Microbot under such license.
CardioSert’s
right to receive earn-out payments shall continue until the later of (a) the date of expiration and/or invalidation of the last
of the patents being purchased by Microbot or (b) ten years from the date of the first commercial sale of a product on a country-by-country
and on a product-by-product basis.
CardioSert
shall further be entitled to the following milestone payments:
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For
Type 1 Products, $150,000 upon the first successful animal trials, and $300,000 (which may be paid in common stock of the
Registrant upon certain conditions) upon FDA approval.
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For
Type 2 Products, $150,000 upon the first successful animal trials, and $300,000 (which may be paid in common stock of the
Registrant upon certain conditions) upon FDA approval.
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CardioSert
shall have the option to receive 15% of the consideration received by Microbot upon a sale of the Technology if CardioSert agrees
to waive its right to have any such acquiror assume CardioSert’s rights and obligations under the Agreement.
The
Agreement may be terminated by Microbot at any time during the 90-day pre-closing period, and otherwise for convenience upon 90-days
notice. The Agreement may be terminated by CardioSert in case the first commercial sale does not occur by the third anniversary
of the date of signing of the Agreement except in the event that Microbot has invested more than $2,000,000 in certain development
stages, or the first commercial sale does not occur within 50 months. In each of the above termination events, or in case of breach
by Microbot, CardioSert shall have the right to buy back the Technology from Microbot for $1.00, upon 60 days prior written notice,
but only 1 year after such termination. Additionally, the Agreement may be terminated by either party upon breach of the other
(subject to cure).
CardioSert
agreed to assist Microbot in the development of the Technology for a minimum of one year, for a monthly consultation fee of NIS40,000
covering up to 60 consulting hours per month.
During
the term of the agreement and for an additional period of three years thereafter, each of the Founders (as defined in the Agreement)
and CardioSert agree not to develop, sell, market, design or manufacture product or any part thereof which compete either directly
or indirectly with the Type 1 Product and/or which embody the Invention (as defined in the Agreement) nor assist any third party
in doing so. Microbot agreed, if applicable, for the one year period following Microbot’s decision not to exercise the option
or during the period of six months following the exercise of the buy-back right, not to internally develop a competing product.
Each
party to the Agreement made customary representations and warranties to the other, and each agreed to indemnify the other for
losses resulting from any gross negligence, willful misconduct of or a breach of the representations and/or warranty given by
the indemnifying party under the Agreement.
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the copy
of the Agreement, which is attached hereto as Exhibit 10.1, and which is incorporated herein by reference.
The
representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties
to the Agreement and may be subject to limitations agreed upon by the contracting parties. Accordingly, the Agreement is incorporated
herein only to provide investors with information regarding the terms of the Agreement and not to provide investors with any other
factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s
periodic reports and other filings with the SEC.