Item 1.01
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Entry into a Material Definitive Agreement
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On August 19, 2019, Delcath Systems, Inc. (the Company) closed on its previously reported securities purchase agreement, dated August 15,
2019 (the Securities Purchase Agreement), entered into with certain accredited investors (each an Investor and, collectively, the Investors) pursuant to which the Company issued to the Investors an aggregate of
9,510 shares of Series
E-1
Convertible Preferred Stock, par value $0.01 per share (the Series
E-1
Preferred Stock), at a price of $1,000 per share (the
Private Placement). Pursuant to the Securities Purchase Agreement, the Company also issued to each Investor a warrant (a Warrant) to purchase a number of shares of common stock of the Company, par value $0.01 per share
(Common Stock), equal to the number of shares of Common Stock issuable upon conversion of the Series
E-1
Preferred Stock purchased by the Investor. Each Warrant has an exercise price equal to
$0.06, subject to adjustment in accordance with the terms of the Warrants (the Exercise Price), and are exercisable at any time beginning on the date that the Company effects a reverse stock split until 5:00 p.m. (NYC time) on the date
that is five years following the date that the Company effects a reverse stock split.
The Company has now raised a total of $29.5 million since July
2019. As previously reported, on July 15, 2019, the Company received gross proceeds of $20 million from the private placement of the Companys Series E Convertible Preferred Stock, par value $0.01 per share (the Series E
Preferred Stock).
The offering of the Series
E-1
Preferred Stock is being led by fundamental healthcare
investors, including Rosalind Advisors and Altium Capital.
As previously reported, each share of the Series
E-1
Preferred Stock has a par value of $0.01 per share and a stated value equal to $1,000 (the Stated Value) and is convertible at any time at the option of the holder into the number of shares of Common Stock determined by dividing the
stated value by the conversion price of $0.06, subject to certain limitations and adjustments (the Conversion Price). Except for certain adjustments, the holders of Series
E-1
Preferred Stock are
entitled to receive dividends on shares of Series
E-1
Preferred Stock equal (on an as converted basis) to and in the same form as dividends paid on shares of the Common Stock. Any such dividends
that are not paid to the holders of the Series
E-1
Preferred Stock will increase the Stated Value. No other dividends will be paid on shares of Series
E-1
Preferred
Stock. The Series
E-1
Preferred Stock vote on an as converted basis on all matters submitted to the holders of Common Stock for approval, subject to certain limitations and exceptions. The
affirmative vote of the holders of a majority of the then outstanding shares of the Series
E-1
Preferred Stock is required to increase the number of authorized shares of Series
E-1
Preferred Stock or to alter or change adversely the powers, preferences or rights given to the Series
E-1
Preferred Stock, or to amend the Companys
organizational documents in any manner that adversely affects the rights of the holders of the Series
E-1
Preferred Stock. Upon any liquidation of the Company, the holders of the Series
E-1
Preferred Stock and the holders of the Series E Preferred Stock will be entitled to receive out of the assets of the Company, on a
pari passu
basis, an amount equal to the Stated Value plus any accrued
and unpaid dividends thereon for each share of Series
E-1
Preferred Stock and Series E Preferred Stock before any distribution or payment is made to the holders of the Common Stock.
The Conversion Price and the Exercise Price may, upon each of (i) the third trading day following the date that the Company effects a reverse stock
split, (ii) the date that the initial registration statement to be filed pursuant to the Registration Rights Agreement (as further discussed below) is declared effective by the United States Securities and Exchange Commission (SEC),
and (iii) in the event that all of the registrable securities (as defined in the Registration Rights Agreement) are not then registered on an effective registration statement, the date that all of the shares underlying the Preferred Stock and
Warrants may be sold pursuant to Rule 144, be reduced, and only reduced, to equal the lesser of (x) the then effective Conversion Price or Exercise Price, as applicable, and (y) 90% of the