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
July
17, 2009
Date of Report (Date of earliest event
reported)
___________________________________________________________
SAFESTITCH
MEDICAL, INC.
(Exact
Name of Registrant as Specified in Charter)
___________________________________________________________
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Delaware
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0-19437
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11-2962080
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(State
of Other Jurisdiction
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(Commission
File Number)
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(I.R.S.
Employer
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of
Incorporation)
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Identification
Number)
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4400
Biscayne Boulevard, Suite A-100, Miami, Florida 33137
(Address
of principal executive offices) (Zip
Code)
(305)
575-6000
(Registrant’s
telephone number, including area code)
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):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR
240.13e-4(c))
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Item
1.01
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Entry
Into a Material Definitive
Agreement.
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Item
3.02
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Unregistered
Sales of Equity Securities.
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Item
3.03
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Material
Modification to Rights of Security
Holders.
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Item
5.03
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Amendment
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
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On July
21, 2009, SafeStitch Medical, Inc., a Delaware corporation (the “Company”),
entered into a securities purchase agreement (the “Current Purchase Agreement”)
with a private investor (the “Current Investor”), pursuant to which the Current
Investor agreed to purchase an aggregate of up to 2,000,000 shares (the “Current
Shares”) of the Company’s newly-designated 10.0% Series A Cumulative Convertible
Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), at a
purchase price of $1.00 per share. On July 22, 2009, the Company
closed on the issuance of 2,000,000 Current Shares under the Current Purchase
Agreement for aggregate consideration of $2.0 million.
The
Company issued the Current Shares in reliance upon the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended (the
“Act”). The Current Investor represented to the Company that such
person was an “accredited investor” as defined in Rule 501(a) of the Act and
that the Current Shares were being acquired for investment
purposes. The Current Shares have not been registered under the Act
and are “restricted securities” as that term is defined by Rule 144 under the
Act. The Company has not undertaken to register the Current Shares,
and no registration rights have been granted to the Current Investor in respect
of the Current Shares.
Additionally,
on July 21, 2009, the Company entered into a second securities purchase
agreement (the “Future Purchase Agreement”) with certain other private investors
(the “Future Investors”), pursuant to which the Future Investors agreed to
purchase an aggregate of up to 2,000,000 shares of Series A Preferred Stock (the
“Future Shares”) at a purchase price of $1.00 per share. The Company
is not obligated to consummate the sale of the Future Shares under the Future
Purchase Agreement, and the Company may elect, in its sole discretion, to
consummate such sale on any date on or prior to June 30, 2010, subject to
providing the Future Investors ten days written notice of such closing
date. Among the Future Investors who have obligated themselves to
potentially acquire a portion of the Future Shares are Hsu Gamma Investment,
L.P., an entity of which Dr. Jane Hsiao, the Company’s Chairman of the Board, is
general partner, Jeffrey G. Spragens, the Company’s Chief Executive Officer,
President and a director, and Frost Gamma Investments Trust, a trust controlled
by Dr. Phillip Frost, who is the largest beneficial owner of the Company’s
outstanding common stock (collectively, the “Related Party
Investors”). Each of the Related Party Investors is the beneficial
owner of more than 10% of the Company’s common stock.
On July
17, 2009, the Company filed with the Secretary of State of the State of Delaware
a Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of 10.0% Series A Cumulative
Convertible Preferred Stock, and Qualifications, Limitations and Restrictions
Thereof (the “Certificate of Designation”). A summary of the
Certificate of Designation is set forth below:
Dividends
Holders
of the Series A Preferred Stock are entitled to receive, when, as and if
declared by the Company’s Board of Directors, dividends on each share of Series
A Preferred Stock at a rate per annum equal to 10.0% of the sum of (a) $1.00,
plus (b) any and all declared and unpaid and accrued dividends thereon, subject
to adjustment for any stock split, combination, recapitalization or other
similar corporate action (the “Liquidation Amount”).
Voting
The
Holders of Series A Preferred Stock have the right to receive notice of any
meeting of holders of the Company’s common stock, par value $0.001 per share
(“Common Stock”), or Series A Preferred Stock and to vote (on an as-converted
into Common Stock basis) upon any matter submitted to a vote of the holders of
Common Stock or Series A Preferred Stock. Except as otherwise
expressly set forth in the Company’s Restated Certificate of Incorporation, as
amended from time to time, the holders of Series A Preferred Stock will vote on
each matter submitted to them with the holders of Common Stock and all other
classes and series of the Company’s capital stock entitled to vote on such
matter, taken together as a single class.
Rank
With
respect to dividend distributions and distributions upon liquidation, winding up
or dissolution of the Company, the Series A Preferred Stock ranks senior to all
classes of Common Stock and to each other class of the Company’s capital stock
existing now or hereafter created that are not specifically designated as
ranking senior to or pari
passu with the Series A Preferred Stock. The Company may not
issue any capital stock that is senior to or pari passu with the Series A
Preferred Stock unless such issuance is approved by the holders of at least 66
2/3% of the issued and outstanding Series A Preferred Stock voting separately as
a class.
Liquidation
Preference
Upon the
occurrence of a Liquidation Event (as defined in the Certificate of
Designation), holders of Series A Preferred Stock are entitled to be paid,
subject to applicable law, out of the assets of the Company available for
distribution to its stockholders, an amount in cash (the “Liquidation Payment”)
for each share of Series A Preferred Stock equal to the greater of (x) the
Liquidation Amount for each share of Series A Preferred Stock outstanding, or
(y) the amount for each share of Series A Preferred Stock the holders would be
entitled to receive pursuant to the Liquidation Event if all of the shares of
Series A Preferred Stock had been converted into Common Stock as of the date
immediately prior to the date fixed for determination of stockholders entitled
to receive a distribution in such Liquidation Event. Such Liquidation
Payment will be paid before any cash distribution will be made or any other
assets distributed in respect of any class of securities junior to the Series A
Preferred Stock, including, without limitation, Common Stock.
Conversion
The
holder of any share of Series A Preferred Stock may at any time and from time to
time convert such share into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing (A) the Liquidation Amount of the
share by (B) the conversion price, which is initially $1.00, subject to
adjustment as provided in the Certificate of Designation.
Redemption
To the
extent it is lawfully able to do so, the Company may redeem all of the then
outstanding shares of Series A Preferred Stock by paying in cash an amount per
share equal to $1.00 plus all declared or accrued unpaid dividends on such
shares, subject to adjustment for any stock dividends or distributions, splits,
subdivisions, combinations, reclassifications, stock issuances or similar events
with respect to the Common Stock.
The
foregoing description of the Current Purchase Agreement, Future Purchase
Agreement and the Certificate of Designation is only a summary and is qualified
in its entirety by reference to the full text of the form of Current Purchase
Agreement, the form of Future Purchase Agreement and the Certificate of
Designation, which are filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 3.1,
respectively, to this Current Report on Form 8-K, and each of which is
incorporated herein by reference.
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Item
7.01
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Regulation
FD Disclosure
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On July 23, 2009, the Company issued a
press release announcing the entry into the Current Purchase Agreement and the
Future Purchase Agreement and the issuance of the Current Shares. A
copy of the press release is furnished as Exhibit 99.1 to this Current Report on
Form 8-K and is incorporated by reference in this Item 7.01.
The press release attached as an
exhibit to this report contains various “forward looking statements” within the
meaning of Section 27A of the Act, and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), which represent the Company’s
expectations or beliefs concerning future events. When used in
the press release and this report, the terms “anticipate,” “believe,”
“estimate,” “expect” and “intend” and words or phrases of similar import, as
they relate to the Company or its subsidiaries or its management, are intended
to identify forward-looking statements. These forward-looking
statements are further qualified by important factors that could cause actual
results to differ materially from those in the forward-looking
statements. These factors include, without limitation, the Company’s
ability to protect its intellectual property, dedication of substantial
resources towards research and development efforts, product liability risks and
the effects of governmental regulation. Results actually achieved may
differ materially from expected results included in these statements as a
result of these or other factors, including those factors discussed under “Risk
Factors” set forth in Item 1A to the Company’s Annual Report on Form 10-K, as
amended, for the year ended December 31, 2008. The Company undertakes
no obligation to update, and the Company does not have a policy of updating or
revising, these forward-looking statements.
The information in this report will
not be deemed an admission as to the materiality of any information required to
be disclosed solely to satisfy the requirements of Regulation FD. The
furnishing of this information is not intended to, and does not, constitute a
determination or admission by the Company that such information is material or
complete, or that investors should consider this information before making
an investment decision with respect to any security of the Company.
The information contained in Item
7.01 to this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall
not be deemed “filed” for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing by the Company under the
Act.
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Item
9.01
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Financial
Statements and Exhibits.
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Exhibit Number
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Description
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3.1
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Certificate
of Designation of Series A Preferred Stock.
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3.2
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Restated
Certificate of Incorporation, as amended, filed as Annex A to our
Definitive Information Statement on Schedule 14C filed with the SEC on
December 7, 2007 and incorporated by reference herein.
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4.1
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Certificate
of Designation of Series A Preferred Stock. (Filed herewith as
Exhibit 3.1).
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4.2
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Specimen
Certificate for Series A Preferred Stock.
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10.1
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Form
of Current Purchase Agreement.
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10.2
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Form
of Future Purchase Agreement.
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99.1
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Press
Release dated July 23, 2009.
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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 thereunto
duly authorized.
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SAFESTITCH
MEDICAL, INC.
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By:
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/s/ Adam S. Jackson
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Name: Adam
S. Jackson
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Title:
Chief Financial Officer
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Date:
July 23, 2009
Exhibit
Index
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Exhibit Number
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Description
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3.1
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Certificate
of Designation of Series A Preferred Stock.
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3.2
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Restated
Certificate of Incorporation of the Registrant, as amended, filed as Annex
A to our Definitive Information Statement on Schedule 14C filed with the
SEC on December 7, 2007 and incorporated by reference
herein.
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4.1
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Certificate
of Designation of Series A Preferred Stock. (Filed herewith as Exhibit
3.1).
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4.2
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Specimen
Certificate for Series A Preferred Stock.
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10.1
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Form
of Current Securities Purchase Agreement.
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10.2
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Form
of Future Securities Purchase Agreement.
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99.1
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Press
Release dated July 23, 2009.
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Exhibit 3.1
CERTIFICATE
OF DESIGNATION OF THE POWERS,
PREFERENCES
AND RELATIVE, PARTICIPATING,
OPTIONAL
AND OTHER SPECIAL RIGHTS OF 10.0%
SERIES
A CUMULATIVE
CONVERTIBLE
PREFERRED STOCK, AND
QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant
to Section 151 of the
General
Corporation Law of the State of Delaware
SafeStitch
Medical, Inc. (the “Corporation”), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority conferred
upon the board of directors of the Corporation (the “Board of Directors”)
by its Amended and Restated Certificate of Incorporation (hereinafter referred
to, including as it may be amended from time to time, as the “Certificate of
Incorporation”), and pursuant to the provisions of Section 151 of the
DGCL, said Board of Directors, on June 25, 2009, duly approved and
adopted the following resolution (the “Resolution”):
RESOLVED,
that, pursuant to the authority vested in the Board of Directors by the
Corporation’s Certificate of Incorporation, the Board of Directors does hereby
create, authorize and provide for the issuance of 10.0% Series A Cumulative
Convertible Preferred Stock, par value $0.01 per share, with an initial stated
value of $1.00 per share,
consisting of 4,000,000 shares, having the designations, preferences, relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions thereof that are set forth in the Certificate of
Incorporation and in this Resolution as follows:
(a) Designation. There
is hereby created out of the authorized and unissued shares of Preferred Stock
of the Corporation a series of Preferred Stock designated as the “10.0% Series A Cumulative
Convertible Preferred Stock.” The number of shares
constituting such series shall be 4,000,000 and such shares are referred to
herein as the “Series
A Preferred Stock.” The liquidation preference of the Series A
Preferred Stock shall be $1.00 per share as
adjusted for each stock combination, stock split, recapitalization, or similar
corporate action that is the functional equivalent of any of the foregoing, with
respect to such share, plus any and all declared and accrued unpaid dividends
thereon (the “Liquidation
Amount”).
(b) Rank. The
Series A Preferred Stock shall, with respect to dividend distributions and
distributions upon liquidation, winding up or dissolution of the Corporation,
rank (i) senior to all classes of Common Stock and to each other class of
Capital Stock of the Corporation or series of Preferred Stock of the Corporation
existing or hereafter created that are not Senior Securities or Parity
Securities (collectively referred to, together with all classes of Common Stock,
as “Junior
Securities”); (ii) on a parity with any class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created,
the terms of which expressly provide that such class or series will rank on a
parity with the Series A Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up or dissolution (collectively referred
to as “Parity
Securities”), provided that any such hereafter created Parity Securities
that were not approved by the Holders in accordance with paragraph (f)(i) hereof
shall be deemed to be Junior Securities and not Parity Securities; and (iii)
junior to each other class of Capital Stock of the Corporation or series of
Preferred Stock of the Corporation hereafter created, the terms of which
expressly provide that such class or series will rank senior to the Series A
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up or dissolution of the Corporation (collectively referred to as “Senior Securities”),
provided that any such Senior Securities that were not approved by the Holders
in accordance with paragraph (f)(ii) hereof shall be deemed to be Junior
Securities and not Senior Securities.
(c) Dividends.
(i) From
the Issue Date, (A) the Holders shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on each share of Series A Preferred Stock at a rate per annum equal to 10.0%
of the Liquidation Amount per share of the Series A Preferred Stock, and (B) in
the event that the Corporation shall declare and pay or make a dividend or any
other distribution (including, without limitation, in cash, in Capital Stock
(which shall include, without limitation, any options, warrants, convertible
securities or other rights to acquire Capital Stock of the Corporation, whether
or not pursuant to a shareholder rights plan, “poison pill” or
similar arrangement), evidence of indebtedness issued by the Corporation or
other Persons or other property or assets) on or with respect to shares of any
class of Common Stock of the Corporation, then the Board of Directors shall
declare, and the Holders shall be entitled to receive in respect of each share
of Series A Preferred Stock, a dividend or distribution in an amount equal to
the amount of such dividend or distribution received by a holder of the number
of shares of Common Stock for which such share of Series A Preferred Stock is
convertible on the date of the payment of such dividend or distribution to
holders of Common Stock. All dividends provided for in clause (A)
above shall be cumulative, whether or not earned or declared, accruing on an
annual basis from the Issue Date.
In the
event that the Corporation shall not have funds legally available for, or is
otherwise prohibited by the DGCL, or any other applicable law, from paying any
amounts under this paragraph (c)(i), the obligation to pay such amounts shall be
carried forward and fulfilled when such funds are legally available and the
Corporation is permitted to do so under the DGCL or any other applicable
law.
Each
dividend shall be payable to the Holders of record as they appear on the stock
books of the Corporation on the applicable record date therefor; provided that any
dividend or distribution payable pursuant to clause (B) above of the first
paragraph of this paragraph (c)(i) shall be paid to the Holders of shares of
record as they appear on the stock books of the Corporation on the record date
applicable to holders of Common Stock and shall be paid to the Holders at the
same time such dividend or distribution is made to holders of Common Stock,
provided that such payment to all holders of Common Stock is not then prohibited
under the DGCL or any other applicable law.
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(ii) All
dividends paid with respect to shares of the Series A Preferred Stock pursuant
to paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
(iii) (A)
No full dividends shall be declared by the Board of Directors or paid or set
apart for payment by the Corporation on any Parity Securities for any period
unless full cumulative dividends have been or contemporaneously are declared and
paid in full, or declared and a sum in cash set apart sufficient for such
payment, on the Series A Preferred Stock for all periods terminating on or prior
to the date of payment of such full dividends on such Parity
Securities. If any dividends are not so paid in full, all partial
dividends declared upon shares of the Series A Preferred Stock and any Parity
Securities shall be declared pro rata so that the
amount of dividends declared per share on the Series A Preferred Stock and such
Parity Securities shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series A Preferred Stock and such Parity
Securities bear to each other.
(B) So
long as any share of the Series A Preferred Stock is outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend on any
of the Junior Securities, or make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the purchase, redemption
or other retirement of, any of the Junior Securities or any warrants, rights,
calls or options exercisable for or convertible into any of the Junior
Securities, whether in cash, obligations or shares of the Corporation or other
property, and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Junior
Securities or any such warrants, rights, calls or options (other than in
exchange for Junior Securities) unless (1) full cumulative dividends determined
in accordance herewith on the Series A Preferred Stock have been paid in full
for all periods ended prior to the date of such payment and (2) such payment is
in compliance with paragraph (f)(ii) hereof.
(C) So
long as any share of the Series A Preferred Stock is outstanding, the
Corporation shall not (except with respect to dividends as permitted by
paragraph (c)(iii)(A)) make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity Securities,
whether in cash, obligations or shares of the Corporation or other property, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Parity Securities
or any such warrants, rights, calls or options.
(iv) Dividends
payable on the Series A Preferred Stock for any period less than a year shall be
computed on the basis of a 360-day year of twelve 30-day months and, for periods
not involving a full calendar month, the actual number of days elapsed (not to
exceed 30 days).
(v) The
Corporation may, at its option, pay declared or accrued dividends on the Series
A Preferred Stock in Common Stock valued at the lower of the Current Market
Price or the Reference Issue Price on the date such dividend is declared by the
Board of Directors.
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(d) Liquidation
Preference.
(i) Upon
the occurrence of a Liquidation Event, the Holders shall be entitled to be paid
(provided that such cash payment is not then prohibited under the DGCL, or any
other applicable law) out of the assets of the Corporation available for
distribution to its stockholders an amount in cash for each share of Series A
Preferred Stock equal to the greater of (x) the sum of the Liquidation Amount
for each share of Series A Preferred Stock outstanding, including an amount in
cash equal to all declared and accrued unpaid dividends thereon to the date of
such Liquidation Event, or (y) the amount for each share of Series A Preferred
Stock the Holders would be entitled to receive pursuant to the Liquidation Event
if all of the shares of Series A Preferred Stock had been converted into Common
Stock as of the date immediately prior to the date fixed for determination of
stockholders entitled to receive a distribution in such Liquidation Event,
before any cash distribution shall be made or any other assets distributed in
respect of Junior Securities to the holders of any Junior Securities including,
without limitation, Common Stock of the Corporation (the “Liquidation
Payment”).
(ii) If
upon any Liquidation Event, the amounts payable with respect to the Series A
Preferred Stock under paragraph (d)(i)(x) above are not paid in full, the
Holders and the holders of Parity Securities will share equally and ratably in
any distribution of assets of the Corporation in proportion to the full amount
to which each is entitled upon a Liquidation Event.
(iii)
As used herein, a “Liquidation Event”
shall include (A) the closing of the sale, transfer, license, or other
disposition of all or substantially all of the Corporation’s assets, (B) the
consummation of a merger or consolidation of the Corporation with or into
another entity (except a merger or consolidation in which the holders of capital
stock of the Corporation immediately prior to such merger or consolidation
continue to hold at least 50% of the voting power of the capital stock of the
Corporation or the surviving or acquiring entity), (C) the acquisition, in one
transaction or a series of related transactions occurring after the Issue Date,
by a Person (other than an underwriter of the Corporation’s securities) or group
of Persons acting in concert, of 50% or more of the outstanding voting stock of
the Corporation, or (D) a liquidation, dissolution or winding up of the affairs
of the Corporation. For purposes of this definition, the sale or
conveyance (by lease, assignment, transfer or otherwise, in a single transaction
or series of transactions) of all or substantially all of the properties or
assets of one or more subsidiaries of the Corporation, the Capital Stock of
which constitutes all or substantially all of the Corporation’s assets, shall be
deemed to be the transfer of all or substantially all of the assets of the
Corporation. The treatment of any particular transaction or series of
related transactions as a Liquidation Event may be waived by the written consent
of the Holders of a majority of the outstanding Series A Preferred
Stock.
(e) Conversion and Anti-Dilution
Provisions.
(i) Holders’ Right to
Convert. The Holder of any share of Series A Preferred Stock
may at any time and from time to time convert such share into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
(A) the Liquidation Amount of the share by (B) the Conversion
Price. Such conversion right shall be exercised by the surrender of
the shares to be converted to the Corporation, accompanied by written notice to
the Corporation of such Holder’s election to convert in the form of Annex A
hereto.
4
(ii) Corporation’s Right to
Convert. The Corporation may, at any time, after September 5,
2009, convert the outstanding Series A Preferred Stock in whole but not in part,
with each Share of Series A Preferred Stock converting into such number of fully
paid and non-assessable shares of Common Stock as determined by dividing
(A) the Liquidation Amount of the shares by (B) the Conversion Price
then in effect, if the aggregate market value of the Common Stock (as determined
by multiplying (a) the number of shares of Common Stock outstanding (excluding
(x) the shares of Common Stock issuable upon the exercise of all outstanding
warrants and other convertible securities or instruments issued by the
Corporation, (y) all shares of capital stock issued, issuable or reserved for
issuance pursuant to or under any and all issued and outstanding options and
warrants of the Corporation and (z) the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock), by (b) the closing sale
price of a share of Common Stock, as reported on the over-the-counter bulletin
board, or, if the Common Stock has been admitted to trading on a nationally
recognized stock exchange or market quotation system (including, without
limitation, the AMEX Equities), as reported on such exchange or market quotation
system) shall, during any forty-five (45) trading days within any consecutive
ninety (90) day period, equal or exceed One Hundred Fifty Million Dollars
($150,000,000.00).
(iii) Method of Holder Initiated
Conversion. To convert a share of Series A Preferred Stock
into shares of Common Stock pursuant to subparagraph (e)(i), the Holder of such
share of Series A Preferred Stock must surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Preferred Stock, and give written notice to the
Corporation at its principal corporate office of the election to convert such
shares, and, if desired, the name of such Holder’s nominee in which the
certificates for Common Stock issued upon such conversion are to be issued;
provided, however, that a
Holder may make its conversion contingent upon the consummation of one or more
events and such Holder’s shares of Series A Preferred Stock shall not be deemed
to be converted until immediately prior to the consummation of such event(s)
(but solely for purposes of determining any record date for the stockholders of
the Corporation entitled to participate in such event(s), such conversion shall
be deemed to have occurred immediately prior to such record
date). The Corporation shall, as soon as practicable after such
surrender (and following the effectiveness of such conversion, in the case of a
conditional conversion), issue and deliver at such office to such Holder, or to
the nominee or nominees of such Holder, a certificate or certificates for the
number of shares of Common Stock to which such Holder is entitled as a result of
such conversion. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date notice of
conversion is received by the Corporation, and upon the effectiveness of such
conversion on such date, all rights of the Holder of such shares of Series A
Preferred Stock as a Holder of such shares shall cease at such time, and the
Person(s) in whose name(s) the certificates for such shares of Common Stock are
to be issued shall be treated for all purposes as having become the record
holder(s) thereof at such time; provided, however, that if a
Holder shall have elected to make its conversion contingent upon the
consummation of one or more events, such conversion shall not be effective until
immediately prior to the consummation of such event(s) (but solely for purposes
of determining any record date for the stockholders of the Corporation entitled
to participate in such event(s), such conversion shall be deemed to have
occurred immediately prior to such record date), it being understood that if
such event(s) is/are not consummated in accordance with the terms of such
conditional conversion then such conversion shall not be effective unless
consented to in writing by such Holder. Notwithstanding the
foregoing, if the Holder’s stock certificates have been lost, stolen, or
destroyed, then in lieu of delivering such certificates pursuant to this
subparagraph(e)(iii), such Holder may notify the Corporation or its transfer
agent to such effect and deliver an executed agreement, reasonably satisfactory
to the Corporation, to indemnify the Corporation from any loss incurred by it in
connection with such lost, stolen, or destroyed certificates.
5
(iv) Method of Corporation
Initiated Conversion. In the event of a conversion pursuant to
subparagraph (e)(ii), immediately prior to the close of business on the date of
receipt of notice by each Holder from the Corporation of its election to convert
all of the outstanding shares of Series A Preferred Stock, the outstanding
shares of Series A Preferred Stock shall be converted automatically without any
further action by the Holders of such shares or any other Person and whether or
not the certificates representing such shares are surrendered to the Corporation
or its transfer agent, whereupon all rights of the Holders of such shares of
Series A Preferred Stock as Holders of such shares shall cease, and the
Person(s) in whose name(s) the certificates representing the underlying shares
of Common Stock are to be issued shall be treated for all purposes as having
become the record holder(s) thereof; provided, however, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series A Preferred Stock are either delivered to the Corporation or
its transfer agent, as provided below, or the Holder notifies the Corporation or
its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement reasonably satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificates. Upon the occurrence of such conversion of Series A Preferred
Stock, the Holders shall surrender the certificates representing such shares at
the office of the Corporation or any transfer agent for the Series A Preferred
Stock or provide an indemnity agreement as described above. Thereupon, there
shall be issued and delivered to such Holder promptly at such office and in its
name as shown on such surrendered certificate or certificates (or as
contemplated by such indemnity agreement), a certificate or certificates for the
number of shares of Common Stock into which the shares of Series A Preferred
Stock surrendered were convertible on the date on which such conversion
occurred.
(v) Adjustments to Number of
Shares and Conversion Price. The number of shares of Common
Stock issuable upon conversion of each share of Series A Preferred Stock shall
be adjusted from time to time as follows:
(A) If,
after the Issue Date, the Corporation (I) pays a dividend or makes a
distribution on its Common Stock in shares of its Capital Stock, (II) subdivides
its outstanding shares of Common Stock into a greater number of shares, (III)
combines its outstanding shares of Common Stock into a smaller number of shares,
or (IV) issues by reclassification of its shares of Common Stock any shares of
Capital Stock of the Corporation (including any reclassification in connection
with a merger or consolidation in which the Corporation is the surviving
corporation), then the number of shares of Common Stock issuable upon conversion
of each share of Series A Preferred Stock shall be adjusted so that the Holder
of any share of the Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number and kind of shares of Capital
Stock that such Holder would have owned immediately following such action had
such share of Series A Preferred Stock been converted immediately prior thereto,
and the Conversion Price shall be appropriately adjusted to reflect any such
event. An adjustment made pursuant to this subparagraph (e)(v)(A)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination, or
reclassification. Such adjustment shall be made successively whenever
any event described above shall occur.
6
(B) If,
after the Issue Date, the Corporation issues or sells any shares of Common Stock
or is deemed to have issued or sold any shares of its Common Stock (including
Common Stock deemed to have been issued or sold pursuant to subparagraph
(e)(v)(D)(III) as a result of the issuance of any options, warrants or
convertible securities) for consideration of less than the Reference Issue
Price, then the Conversion Price shall be reduced so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to such date by a fraction (x) the numerator of which shall be the number of
shares of Common Stock outstanding on such date plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so issued or sold (or deemed issued or sold) (or the aggregate
conversion price or exercise price of the warrants, options or convertible
securities so issued or sold (or deemed issued or sold)) would purchase at the
Reference Issue Price per share of Common Stock on such date, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock issued
or sold (or deemed issued or sold) (or into which the warrants, options or
convertible securities so issued or sold (or deemed issued or sold) are
convertible).
(C) Notwithstanding
any of the other provisions of this subparagraph (e)(v), no adjustment shall be
made to the Conversion Price pursuant to subparagraph (e)(v)(B) as a result of
any of the following:
(I) the
grant of Common Stock or options, warrants, or rights to purchase Common Stock
to employees, officers, directors or strategic partners of the Corporation and
its subsidiaries under compensation plans and agreements approved in good faith
by the Board of Directors; provided that, in the case of options, warrants or
rights to purchase Common Stock, the exercise price per share of Common Stock
shall not be less than the Current Market Price per share of Common Stock on the
date such option, warrant or other right is issued;
(II) the
issuance or deemed issuance of any Common Stock in connection with
the closing of any (i) acquisition or license by the Company of assets of a
third party in an arm’s-length transaction or (ii) the consummation of a merger
or consolidation of the Corporation with or into another entity to the extent
such transaction(s) is or are approved by the legally adopted vote or consent of
the Board of Directors;
(III) without
duplication of clause (I) above, the issuance of securities upon exercise or
conversion of options, warrants, rights or other securities that are outstanding
on the Issue Date, including the warrants issuable to the Holders of the Series
A Preferred; and
7
(IV) the
issuance of securities for which an adjustment is made under another provision
of this subparagraph (e)(v).
(D) The
following rules shall apply for purposes of this subparagraph
(e)(v):
(I) In
the case of the issuance or sale (or deemed issuance or sale) of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or the expenses
allowed paid or incurred by the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
(II) In
the case of the issuance or sale (or deemed issuance or sale) of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be valued at the Fair Market Value thereof;
(III) In
the case of the issuance or sale of options or warrants to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock, or options or warrants to purchase or rights to
subscribe for such convertible or exchangeable securities, the following
provisions shall apply for all purposes of this subparagraph
(e)(v):
(a) The
aggregate maximum number of shares of Common Stock deliverable upon exercise
(assuming the satisfaction of any conditions to exercisability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) of such options or warrants to purchase or
rights to subscribe for Common Stock shall be deemed to have been issued at the
time such options, warrants, or rights were issued and for consideration equal
to the consideration (determined in the manner provided in this subparagraph
(e)(v)(D)), if any, received by the Corporation upon the issuance of such
options, warrants, or rights plus the minimum exercise price provided in such
options, warrants, or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(b) The
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange (assuming the satisfaction of any conditions to convertibility
or exchangeability, including, without limitation, the passage of time, but
without taking into account potential antidilution adjustments) for any such
convertible or exchangeable securities or upon the exercise of options or
warrants to purchase rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options, warrants,
or rights were issued and for a consideration equal to the consideration, if
any, received by the Corporation for any such securities or options, warrants,
or rights, plus the minimum additional consideration, if any, to be received by
the Corporation (without taking into account potential antidilution adjustments)
upon the conversion or exchange of such securities or upon the exercise of such
options, warrants or rights and subsequent conversion or exchange of the
underlying convertible or exchangeable securities, as appropriate (the
consideration in each case to be determined in the manner provided in this
subparagraph (e)(v)(D)).
8
(c) In
the event of any change in the number of shares of Common Stock deliverable or
in the consideration payable to the Corporation upon exercise of such options,
warrants, or rights with respect to either Common Stock or such convertible or
exchangeable securities or upon conversion of or in exchange for such
convertible or exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion Price, to the
extent in any way affected by or computed using such options, warrants, rights
or securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any payment
of such consideration upon the exercise of any such options, warrants or rights
or the conversion or exchange of such securities.
(d) Upon
the expiration of any such options, warrants or rights with respect to either
Common Stock or such convertible or exchangeable securities or the termination
of any such rights to convert or exchange, the Conversion Price, to the extent
in any way affected by or computed using such options, warrants, rights or
securities shall be recomputed to reflect the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options,
warrants or rights with respect to Common Stock, upon the conversion or exchange
of such securities, or the number of shares of Common Stock issuable upon
conversion or exchange of the convertible or exchangeable securities that were
actually issued upon exercise of options, warrants or rights related to such
securities.
(e) The
number of shares of Common Stock deemed issued and the consideration deemed paid
thereof pursuant to subparagraphs (e)(v)(D)(III)(a) and (b) shall be
appropriately adjusted to reflect any change, termination, or expiration of the
type described in either subparagraph (e)(v)(D)(III)(c) or (d).
(E) Notwithstanding
any of the other provision of this subparagraph (e)(v)(D), no adjustment shall
be made to the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock or the Conversion Price as a result of an event for
which an adjustment is made under another provision of this paragraph
(e).
(F) For
purposes of this subparagraph (e)(v), no adjustment of the Conversion Price
shall be made in an amount less than 1/100th of one cent per share; provided that any
adjustments that are not required to be made by reason of this sentence shall be
carried forward and shall be taken into account in any subsequent adjustment
made.
9
(vi) Fractional
Shares. No fractional shares of Common Stock shall be issued
upon the conversion of any share or shares of Series A Preferred Stock but
instead, upon conversion, at the option of the exercising Holder, either (i)
fractional shares shall be rounded up to the nearest whole share and the
exercising Holder shall pay to the Corporation the portion of the Conversion
Price per share represented by such fractional share or (ii) the Corporation
shall pay to the exercising Holder the portion of the Current Market Price per
share of Common Stock represented by such fractional share. If more
than one such share of Series A Preferred Stock is surrendered for conversion at
the same time by the same Holder, the number of full shares that are issuable
upon the conversion thereof shall be computed on the basis of the aggregate
number of shares so surrendered.
(vii) Mergers;
Etc. If there is (i) any consolidation, merger, or conversion
of form of legal entity to which the Corporation is a party, other than a
consolidation or a merger that does not result in any reclassification or
exchange of, or change in, outstanding shares of the Common Stock and other than
a Liquidation Event, or (ii) any other event that causes the holders of Common
Stock to receive a different or additional kind or amount of shares of stock or
other securities or other property (other than an event for which an adjustment
in the kind and amount of shares of stock or other securities or other property
for which the Series A Preferred Stock is convertible is otherwise made pursuant
to this paragraph (e) and other than a Liquidation Event), then the Holder of
each share of Series A Preferred Stock then outstanding shall have the right
upon conversion pursuant to the terms hereof to receive the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation, merger or other event by a holder of the number of shares of
Common Stock issuable upon conversion of such share immediately prior to such
consolidation, merger or other event, subject to adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
paragraph (e). The provisions of this subparagraph (e)(vii) shall
similarly apply to successive consolidations, mergers and other
events.
(viii) Reserves. The
Corporation covenants that it will at all times reserve and keep available,
solely for the purpose of issuance upon conversion of the shares of Series A
Preferred Stock, such number of shares of Common Stock as shall be issuable upon
the conversion of all such outstanding shares, provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion of shares of Series A Preferred
Stock by delivery of shares of Common Stock that are held in the treasury of the
Corporation.
(ix) Transfer
Taxes. The Corporation shall pay any and all documentary,
stamp, issue or transfer taxes, and any other similar taxes payable in respect
of the issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of the Holder of the shares of Series A Preferred Stock to
be converted and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or has established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
10
(x) No Adjustment Less than Par
Value. No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock.
(xi) Notice of
Adjustment. Whenever the Conversion Price or conversion
privilege is adjusted, the Corporation shall promptly mail to Holders a notice
of the adjustment briefly stating the facts requiring the adjustment and the
manner of computing it.
(xii) Notice of Certain
Transactions. In the event that:
(A) the
Corporation proposes to take any action which would require an adjustment in the
Conversion Price;
(B) the
Corporation proposes to consolidate or merge with, or transfer all or
substantially all of its property and assets to, another Person and stockholders
of the Corporation must approve the transaction; or
(C) there
is a proposed Liquidation Event;
the
Corporation shall mail to the Holders a notice stating the proposed record or
effective date, as the case may be. The Corporation shall mail the
notice at least ten days before such record or effective date, whichever is
first.
(f) Voting
Rights.
(i) Generally. The
Holders shall have the right to receive notice of any meeting of holders of
Common Stock or Series A Preferred Stock and to vote upon any matter submitted
to a vote of the holders of Common Stock or Series A Preferred
Stock. Except as otherwise expressly set forth in the Certificate of
Incorporation (including this Certificate of Designation and all other
Certificates of Designation with respect to other classes or series of
securities), the Holders shall vote on each matter submitted to them with the
holders of Common Stock and all other classes and series of Capital Stock
entitled to vote on such matter, taken together as a single class.
(ii) Special
Matters. For so long as at least 66 2/3% of the shares of
Series A Preferred Stock that have been issued under this Certificate of
Designation as of the applicable record date remain outstanding, the Corporation
may not effect any of the following after the Issue Date without the consent and
approval of the holders of a majority of the outstanding shares of Series A
Preferred Stock, voting or consenting, as the case may be, as one class,
separately from the holders of each other class and series of securities of the
Corporation, in person or by proxy, either in writing or by resolution adopted
at an annual or special meeting.
(1) the authorization or issuance of (or
reclassification of any Junior Securities to) any class of (or the amendment of
any terms of) Parity Securities;
11
(2) the authorization or issuance of (or
reclassification of any Junior Securities or Parity Securities to) any class of
(or the amendment of any terms of) Senior Securities; and
(3) (A) the amendment or waiver of any of
the terms of this Certificate of Designation or (B) the amendment or waiver of
any other terms of the Certificate of Incorporation so as to affect (whether by
merger, consolidation or otherwise) the specified rights, powers, preferences,
or voting rights of the Series A Preferred Stock, including, in each case, any
action to increase or decrease the number of authorized shares of Series A
Preferred Stock.
Notwithstanding
the foregoing, without the consent of each Holder, no such amendment or waiver
of the Certificate of Incorporation (whether by merger, consolidation or
otherwise) may (i) subject any Holder to any additional obligation, (ii) reduce
the Liquidation Amount of or dividend rate on the Series A Preferred Stock,
(iii) postpone the date fixed for any payment of the Liquidation Amount, or any
dividends or other payments in respect of the Series A Preferred Stock, (iv)
change the percentage of the shares of Series A Preferred Stock the Holders of
which shall be required to consent or take any other action under this paragraph
(f) or any other provision of this Certificate of Designation, (v) adversely
affect the conversion rights of the Series A Preferred Stock or (vi) adversely
affect the ranking of the Series A Preferred Stock.
(iii) Number of
Votes. In any case in which the holders of the Series A
Preferred Stock shall be entitled to vote pursuant to this Certificate of
Designation or pursuant to the DGCL or other applicable law, each Holder
entitled to vote with respect to such matter shall be entitled to vote, with
respect to each share of such Series A Preferred Stock, the number of votes that
equals the number of shares of Common Stock into which such share of Series A
Preferred Stock is then convertible.
(g) Conversion or
Exchange. The
Holders shall not have any rights hereunder to convert shares of the Series A
Preferred Stock into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of Capital Stock of the
Corporation other than as provided in this Certificate of
Designation.
(h) Reissuance of Series A
Preferred Stock. Shares
of Series A Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance with
any applicable provisions of the DGCL or other applicable law) have the status
of authorized and unissued shares of Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of Preferred Stock;
provided that any issuance of such shares of Preferred Stock must be in
compliance with the terms hereof.
(i) Business
Day. If
any payment, redemption or exchange shall be required by the terms hereof to be
made on a day that is not a Business Day, such payment, redemption or exchange
shall be made on the immediately succeeding Business Day
12
(j) Optional Redemption Right of
the Corporation. The
Corporation shall, to the extent it may lawfully do so, have the right to
redeem, upon giving fifteen (15) days’ written notice to the Series A Holders
(the “Redemption
Notice”), all of the then
outstanding shares of Series A Preferred Stock by paying in cash therefor a sum
per share equal to the Reference Issue Price, plus all declared or accrued
unpaid dividends on such shares (the “Redemption
Price”) on a date (the
“Redemption
Date”) that is no later
than thirty (30) days after the date such notice is received by the
Holders. If the Redemption Notice shall have been duly given and if,
on or before the Redemption Date, all funds necessary for such redemption shall
have been set aside by the Corporation in trust for the account of the holders
of the Series A Preferred Stock to be redeemed, so as to be available
therefore, then, from and after the mailing of the Redemption Notice,
notwithstanding that any certificate for shares of Series A Preferred Stock
so called for redemption shall not have been surrendered for cancellation, all
rights in or with respect to such shares shall terminate except the right of the
holder to (i) receive the Redemption Price, without interest, upon
compliance with the procedures specified in the Redemption Notice, or
(ii) convert such shares of Series A Preferred Stock into Common Stock
pursuant to paragraph (e)(i), not later than the fourth business day preceding
the Redemption Date.
(k) Notices. Unless
otherwise provided in this Certificate of Designation or by applicable law, all
notices, requests, demands, and other communications required or permitted
hereunder shall be in writing and shall be personally delivered, delivered by
facsimile or courier service, or mailed, certified with first class postage
prepaid, or emailed, to its address set forth on the books of the Corporation,
in the case of communications to a stockholder, and to the registered office of
the Corporation in the State of Delaware with a copy to the chief executive
officer of the Corporation at 4400 Biscayne Boulevard, Miami, Florida
33137, Attention: Jeffrey G. Spragens, for all
communications to the Corporation. Each such notice, request, demand,
or other communication shall be deemed to have been given and received (whether
actually received or not) on the date of actual delivery thereof, if personally
delivered or delivered by facsimile transmission (if receipt is confirmed at the
time of such transmission by telephone), or on the third day following the date
of mailing, if mailed in accordance with this paragraph (k), or on the day
specified for delivery to the courier service (if such day is one on which the
courier service will give normal assurances that such specified delivery will be
made); provided that no email communications shall be deemed to have been
received unless the intended recipient thereof shall reply confirming
receipt. Any notice, request, demand, or other communication
given otherwise than in accordance with this paragraph (k) shall be deemed to
have been given on the date actually received. Any stockholder may
change its address for purposes of this paragraph (k) by giving written notice
of such change to the Corporation in the manner hereinabove
provided. Whenever any notice is required to be given by law or by
this Certificate of Designation, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of notice.
(l) Definitions. As
used in this Certificate of Designation, the following terms shall have the
following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires:
“Affiliate” as applied
to any Person, means any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling”, “controlled by” and
“under common control
with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise. For purposes of this definition, a Person
shall be deemed to be “controlled by” a
Person if such latter Person possesses, directly or indirectly, power to vote
10% or more of the securities having ordinary voting power for the election of
directors of such former Person.
13
“Board of
Directors” shall have the
meaning provided in the first paragraph of this Certificate of
Designation.
“Business
Day” means any day
excluding Saturday, Sunday and any day which is a legal holiday under the laws
of the State of New York or is a day on which banking institutions located in
such state are authorized or required by law or other governmental action to
close.
“Capital
Stock” means any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interest in (however designated) capital
stock.
“Certificate
of Designation” means this
Certificate of Designation creating the Series A Preferred
Stock.
“Certificate
of Incorporation” shall
have the meaning provided in the first paragraph of this Certificate of
Designation.
“closing bid
price”: with
respect to the Common Stock on any trading day, shall mean (A) if the Common
Stock is listed or admitted to trading on any securities exchange, the closing
price, regular way, on such day on the principal exchange on which the Common
Stock is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, (B) if the Common Stock is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Corporation or (C) if neither
clause (A) nor (B) is applicable, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City of New York,
customarily published on each trading day, in each case designated by the
Corporation. If there are no such prices on a trading day, then the
closing bid price shall not be determinable for such trading
day.
“Commission” means the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act or,
if at any time after the Issue Date such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
“Common
Stock” means the
Corporation’s Common Stock, par value $0.001 per share.
“Conversion
Price” means $1.00 and
shall be subject to adjustment as provided in subparagraph (e)(v)
hereof.
“Corporation” shall have the meaning provided in the
first paragraph of this Certificate of Designation.
14
“Current
Market Price” per share of
Common Stock on any date means:
if the
Common Stock is not registered under the Exchange Act, the value of the Common
Stock determined by (A) the legally adopted vote or consent of the Board of
Directors and certified in a board resolution, or (B) if the Board of Directors
is unable or unwilling to determine such value within a period of 30 days, an
Independent Financial Advisor, or
if the
Common Stock is registered under the Exchange Act, the average of the daily
closing bid prices of the Common Stock for the 20 consecutive trading days
preceding such date, but only if the Common Stock shall have been listed on a
national securities exchange or traded through an automated quotation system
during such entire 20 trading day period. If the Common Stock shall
have not been so listed or traded for such entire 20 trading day period, the
Current Market Price per share of Common Stock shall be determined as if the
Common Stock was not registered under the Exchange Act.
“DGCL” means the General Corporation Law of
the State of Delaware.
“Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder.
“Fair Market
Value” means, with respect
to any asset or property, the price which would be negotiated in an arm’s-length
transaction, for cash, between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to
buy. Fair Market Value shall be determined (A) by the legally adopted
vote or consent of the Board of Directors and certified in a Board Resolution,
or (B) if the Board of Directors is unable or unwilling to determine such value
within a period of thirty (30) days, the Fair Market Value shall be determined
by an Independent Financial Advisor.
“Holder” means a holder of shares of Series A
Preferred Stock as reflected in the register maintained by the Corporation or
the transfer agent for the Series A Preferred Stock.
“Independent,” as applied to a Person, means that
such Person (i) is in fact independent, (ii) does not have any direct financial
interest or any material indirect financial interest in the Corporation or any
of its subsidiaries, or in any Affiliate of the Corporation or any of its
subsidiaries (other than as a result of holding securities of the Corporation in
trading accounts) and (iii) is not an officer, employee, promoter, trustee,
partner, director or Person performing similar functions for the Corporation or
any of its subsidiaries or any Affiliate of the Corporation or any of its
subsidiaries.
“Independent
Financial Advisor” means a
reputable accounting, appraisal or investment banking firm that is, in the
reasonable judgment of the Board of Directors, qualified to perform the task for
which such firm has been engaged as contemplated hereunder, nationally
recognized, disinterested and Independent with respect to the Corporation
(including its subsidiaries) and its Affiliates and reasonably acceptable to the
Required Holders.
“Issue
Date” means the first date
on which shares of the Series A Preferred Stock are
issued.
15
“Junior
Securities” shall have the
meaning provided in paragraph (b).
“Liquidation
Amount” shall have the
meaning provided in paragraph (a).
“Liquidation
Event” shall have the
meaning provided in paragraph (d)(iii).
“Liquidation
Payment” shall have the
meaning provided in paragraph (d)(i).
“Parity
Securities” shall have the
meaning provided in paragraph (b).
“Person” means an individual, corporation,
partnership, limited liability company, trust or trustee thereof, estate or
executor thereof, unincorporated organization or joint venture, court or
governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
“Preferred
Stock” means, with respect
to any Person, Capital Stock of any class or classes (however designated) of
such Person which is preferred as to the payment of dividends or distributions,
or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over Capital Stock of any other class
of such Person.
“Reference
Issue Price” means $1.00
per share of Common Stock (including Common Stock deemed to have been issued or
sold pursuant to subparagraph (e)(v)(C)(III) as a result of the issuance of any
options, warrants or convertible securities), as such amount shall be
appropriately adjusted under paragraph (e)(v) hereof for any stock dividends or
distributions, splits, subdivisions, combinations, reclassifications, stock
issuances or similar events with respect to such Common Stock occurring after
the Issue Date.
“Required
Holders” means the Holders
of a majority of the then outstanding shares of Series A Preferred
Stock.
“Resolution” shall have the meaning provided in the
first paragraph of this Certificate of Designation.
“Redemption
Date” shall have the
meaning provided in paragraph (j).
“Redemption
Notice” shall have the
meaning provided in paragraph (j)
“Redemption
Price” shall have the
meaning provided in paragraph (j)
“Senior
Securities” shall have the
meaning provided in paragraph (b).
“Series A
Preferred Stock” shall have
the meaning provided in paragraph (a).
16
IN WITNESS WHEREOF, said
Corporation has caused this Certificate of Designation to be signed by Adam S.
Jackson, its Chief Financial Officer, this 17th day of July, 2009.
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/s/
Adam S. Jackson
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Name:
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Adam
S. Jackson
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Title:
|
Chief
Financial
Officer
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17
ANNEX
A
NOTICE
OF CONVERSION
(TO
BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT
SHARES
OF SERIES A PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series A Preferred
Stock indicated below into shares of common stock, par value $0.001 per share
(the “Common
Stock”), of SafeStitch Medical, Inc., a Delaware corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as may be
required by the Corporation or its transfer agent. No fee will be charged to the
holders for any conversion, except for any such transfer taxes.
Conversion
calculations:
|
Date
to Effect
Conversion:________________________________________________________________
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|
|
Number
of shares of Series A Preferred Stock
owned:_________________________
|
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|
Number
of shares of Common Stock to be
Issued:______________________________________________
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Applicable
Conversion
Price:______________________________________________________________
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Address
for
Delivery:____________________________________________________________________
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|
HOLDER
By:__________________________________
Name:
Title:
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18
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
dated
as of July 21, 2009
by
and among
SAFESTITCH
MEDICAL, INC.
AND
THE
PURCHASERS SET FORTH ON
THE
SIGNATURE PAGES HERETO
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of July 21, 2009, by and between SafeStitch Medical, Inc. (the “Company”), a
corporation organized under the laws of the State of Delaware, with its
principal offices at 4400 Biscayne Boulevard, Suite A-100, Miami, Florida 33137
(the “Principal
Office”), and the purchasers whose names and addresses are set forth on
the signature pages hereto (the “Purchasers”). Certain
capitalized terms used but not defined herein shall have the respective meanings
set forth on Schedule
1 attached hereto.
IN
CONSIDERATION of the mutual covenants contained in this Agreement, and intending
to be legally bound hereby, the Company and the Purchasers agree as
follows:
SECTION
1. Authorization of Sale of the
Shares. Subject
to the terms and conditions of this Agreement, and the filing with the Secretary
of State of the State of Delaware of the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of the 10.0% Series A Cumulative Convertible Preferred Stock, and
Qualifications, Limitations and Restrictions Thereof, substantially in the form
attached hereto as Exhibit A (the “Certificate of
Designation”), the Company has authorized the issuance and sale to the
Purchasers in a private placement of up to an aggregate of 2,000,000 shares of 10.0% Series A
Cumulative Convertible Preferred Stock, par value $0.01 per share, of the
Company (each, a “Share”).
SECTION
2. Agreement to Sell and
Purchase the Shares. Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 3), the Company shall issue and sell to each Purchaser, and such
Purchaser shall buy from the Company, the number of Shares set forth on such
Purchaser’s signature page hereto for an aggregate purchase price equal to the
number of such Shares purchased by such Purchaser multiplied
by the per-Share purchase price of $1.00 (the “Purchase
Price”).
SECTION
3. Closing
3.1 Delivery of the Shares at
the Closing. The
completion of the purchase and sale of Two Million (2,000,000) Shares (the
“Closing”)
shall occur at the Principal Office as soon as practicable and as agreed to by
the parties hereto, on the date of and concurrently with the execution of this
Agreement, or on such later date or at such different location as the parties
hereto shall mutually agree, but not prior to the date on which the Closing
Conditions (as defined below) have been satisfied or waived (the “Closing
Date”).
3.2 Closing
Deliverables. At
the Closing, the Company shall deliver to each Purchaser one or more stock
certificates registered in the name of such Purchaser, or, if so indicated on
such Purchaser’s Stock Certificate Questionnaire, the form of which is attached
hereto as Appendix
I (the “Stock
Certificate Questionnaire”), in such other name(s) as designated by such
Purchaser, evidencing the number of Shares set forth on such Purchaser’s
signature page attached hereto, each bearing a restrictive legend, substantially
in the form set forth in Section 6.2.
1
3.3 Conditions to the Company’s
Obligations. The
Company’s obligation to complete the sale of the Shares at the Closing is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, unless otherwise waived (“Company Closing
Conditions”):
(a) receipt
by the Company of immediately available funds in the full amount of the
aggregate purchase price for all Shares being purchased at the
Closing;
(b) each
of the representations and warranties of each Purchaser set forth in Section 5
shall be true and correct on the date of the Closing; and
(c) each
Purchaser shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by such Purchaser on or prior to the Closing.
3.4 Conditions to Purchasers’
Obligations. Each
Purchaser’s obligation to purchase the Shares at the Closing is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
unless otherwise waived (“Purchaser Closing
Conditions” and, together with the Company Closing Conditions, the “Closing
Conditions”):
(a) each
of the representations and warranties of the Company set forth in Section 4 that
is qualified by materiality or material adverse effect or words of similar
effect shall be accurate in all respects on the Closing Date (except to the
extent any such representations and warranties expressly relate to a specific
date, in which case such representations and warranties shall be accurate as of
such date), and each of the representations and warranties of the Company set
forth in Section 4 that is not so qualified shall be accurate in all material
respects as of the Closing Date (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall be accurate in all material respects as of
such date);
(b) the
Company shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by the Company on or before the Closing; and
(c) the
Certificate of Designation shall have been filed with, and accepted for filing
by, the Secretary of State of the State of Delaware.
SECTION
4. Representations, Warranties
and Covenants of the Company. The
Company hereby represents and warrants to the Purchasers as
follows:
4.1 Issuance of
Shares. The
Company has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the Company’s issuance and sale
of the Shares. The Shares, when issued and delivered and paid for as
provided herein, will be duly authorized, validly issued, fully paid and
nonassessable and will be issued free and clear of any Encumbrances (other than
as arising under applicable securities laws or this
Agreement). Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Section 5 of this Agreement, the
Shares will be issued in compliance with all applicable federal and state
securities laws.
2
4.2 Organization and
Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified to do business in
any other jurisdiction by virtue of the nature of the businesses conducted by it
or the ownership or leasing of its properties, except where the failure to be so
qualified will not, when taken together with all other such failures, have a
Material Adverse Effect on the Company.
4.3 Charter and
Bylaws. The
Company’s Charter and Bylaws, as amended or restated to date, as filed with the
SEC, are a complete and correct copy of such documents as in effect on the date
hereof.
4.4 Capitalization. As
of the date hereof, the Company is authorized to issue 250,000,000 shares of
capital stock, consisting of 225,000,000 shares of common stock, par value
$0.001 per share (“Common Stock”), and
25,000,000 shares of preferred stock, par value $0.01 per share (“Preferred
Stock”). As of June 15, 2009, there were (i) 17,962,718
shares of Common Stock issued and outstanding, and (ii) no shares of the
Preferred Stock issued or outstanding. All such outstanding shares of
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. Except as disclosed in the SEC Documents, as of the
date hereof, there are no outstanding options, warrants, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of capital
stock of the Company, or agreements, understandings or arrangements to which the
Company is a party, or by which the Company is or may be bound, to issue
additional shares of its capital stock or options, warrants or rights to
subscribe for, calls or commitment of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any shares of any
class of its capital stock.
4.5 Authorization,
Enforceability and Related Matters. (i)
The Company has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement; (ii) the making and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated herein will not violate any provision of the Company’s Charter or
Bylaws or, except to the extent that it would not have a Material Adverse Effect
on the Company or adversely affect the Company’s ability to consummate the
transactions contemplated hereby, conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any material agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which the
Company is a party, or any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental agency or body applicable to the Company; (iii) no
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental agency or body is required in
respect of the Company’s execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated by this Agreement;
(iv) upon the execution and mutual delivery of this Agreement by the parties
hereto, this Agreement shall constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to the
enforcement of creditor’s rights and the application of equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws or the public
policy underlying such laws; and (v) there is not in effect any order enjoining
or restraining the Company from entering into or engaging in any of the
transactions contemplated by this Agreement.
3
4.6 Brokers or
Finders. No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Affiliate.
4.7 SEC
Documents. The
Company has made available to the Purchasers true and complete copies of all SEC
Documents. As of their respective dates (or if amended, as of the
date of the last amendment filed prior to the date hereof), the SEC Documents
complied in all material respects with the requirements of the 1934 Act, and
rules and regulations of the SEC promulgated thereunder, and the SEC Documents
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.8 Company Financial
Statements. The
financial statements, together with any notes thereto, included in the Company’s
Annual Report on Form 10-K as filed with the SEC on March 27, 2009 and the
Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 13, 2009
fairly present in all material respects, on the basis stated therein and on the
date thereof, the financial position of the Company at the respective dates
therein specified and its results of operations and cash flows for the periods
then ended. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles in the United States
(“GAAP”)
applied on a consistent basis except as expressly noted therein and subject in
the case of the unaudited financial statements to year-end
adjustments.
4.9 Material Changes;
Undisclosed Events, Liabilities or Developments. Since
March 31, 2009, except as specifically disclosed in any SEC Document filed
subsequent to March 31, 2009 and prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect; (ii) the Company
has not incurred any material liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP; (iii) the
Company has not altered its method of accounting; (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock; and (v) the Company has not issued any equity
securities to any of its officers, directors or Affiliates. As of the
date hereof, except for the issuance of the Shares contemplated by this
Agreement, no event, liability or development has occurred or exists with
respect to the Company or its subsidiaries or their respective business,
properties, operations or financial condition that is required to be disclosed
by the Company under applicable securities laws.
4
4.10 Full
Disclosure. No
representation or warranty made by the Company in this Agreement contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained herein not misleading.
SECTION
5. Representations, Warranties
and Covenants of the Purchasers. Each
Purchaser severally, and not jointly with any other Purchaser, represents and
warrants to the Company that:
5.1 Experience. (i)
Such Purchaser is knowledgeable, sophisticated and experienced in financial and
business matters, and is making, and is qualified to make, decisions with
respect to investments in shares representing an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and/or comparable entities, has the ability to bear the
economic risks of an investment in the Shares and has had the opportunity to
request, receive, review and consider all information it deems relevant in
making an informed decision to purchase the Shares; (ii) such Purchaser is
acquiring the number of Shares set forth on such Purchaser’s signature page
attached hereto for its own account, solely for investment and with no present
intention to distribute any of such Shares and is subject to no arrangement or
understanding with any other persons regarding the distribution of such Shares;
(iii) such Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, except in compliance
with the Securities Act of 1933, as amended (the “Securities Act”), and
the rules and regulations promulgated thereunder (the “Rules and
Regulations”) and any applicable state securities laws; (iv) such
Purchaser has, in connection with its decision to purchase the number of Shares
set forth on such Purchaser’s signature page attached hereto, relied solely upon
the representations and warranties of the Company contained in this Agreement;
(v) such Purchaser has had an opportunity to discuss this investment with
representatives of the Company and ask questions of them; and (vi) such
Purchaser is either a “qualified institutional buyer” as defined by Rule 144A
promulgated under the Securities Act or an “accredited investor” as defined by
Rule 501(a) of Regulation D promulgated under the Securities Act.
5.2 Reliance on
Exemptions. Such
Purchaser understands that the Shares and the Common Stock issuable upon
conversion of the Shares (the “Conversion Shares”
and, together with the Shares, the “Securities”) are
being offered and sold to in reliance upon specific exemptions from the
registration requirements of the Securities Act and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of such Purchaser contained in this Agreement
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
5
5.3 Confidentiality. Such
Purchaser understands that this Agreement, the information contained in all
materials provided to the Purchaser by the Company and its representatives,
including any information conveyed orally, in connection with the transactions
contemplated hereunder (“Confidential
Information”), is strictly confidential and proprietary to the Company
and is being provided to such Purchaser solely for such Purchaser’s confidential
use in connection with the transactions contemplated hereunder. Such
Purchaser agrees to use the Confidential Information solely for the purpose of
evaluating a possible investment in the Shares, and such Purchaser acknowledges
that it is prohibited from distributing, divulging or discussing any
Confidential Information, in whole or in part, with any Person, except to such
Purchaser’s financial, investment or legal advisors (such Persons, “Authorized
Advisors”), solely to the extent necessary for such Authorized Advisors
to assist such Purchaser with its proposed investment in the Shares. To the
extent that such Purchaser provides, directly or indirectly, any Confidential
Information to any Authorized Advisor, such Purchaser shall ensure that such
Authorized Advisor maintain the confidentiality of the Confidential Information
to the same extent applicable to such Purchaser as set forth in this Section
5.3. Confidential Information does not include any information that
is or becomes publicly available through no fault of such Purchaser, or that
such Purchaser is required to disclose pursuant to applicable law, regulation or
legal process; provided, however, that if such
Purchaser is requested or ordered to disclose any Confidential Information
pursuant to any court or other government order or any other applicable legal
procedure, it shall provide the Company with prompt notice of any such request
or order so that the Company may seek an appropriate protective
order.
5.4 Investment
Decision. Such
Purchaser understands that nothing in this Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. Such Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Shares.
5.5 Risk of
Loss. Such
Purchaser understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of such Purchaser’s investment,
and such Purchaser has full cognizance of and understands all of the risk
factors related to its purchase of the Shares, including, but not limited to,
those set forth in the SEC Documents. The Purchaser understands that
no representation is being made as to the future value of the
Securities.
5.6 Residency. Such
Purchaser’s principal executive offices, or primary residence, as applicable,
are in the jurisdiction set forth on such Purchaser’s signature page attached
hereto.
6
5.7 Authorization,
Enforceability and Related Matters. (i)
Such Purchaser has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement; (ii) the making and performance of this Agreement by such
Purchaser and the consummation by such Purchaser of the transactions
contemplated herein will not violate any provision of the organizational
documents of such Purchaser (if not a natural person) or, except to the extent
that it would not have a Material Adverse Effect on such Purchaser’s ability to
consummate the transactions contemplated hereby, conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any material agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument to
which such Purchaser is a party, or any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body;
administrative agency or other governmental agency or body applicable to such
Purchaser, (iii) no consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental agency or
body is required in respect of such Purchaser’s execution and delivery of this
Agreement or the consummation by such Purchaser of the transactions contemplated
by this Agreement; (iv) upon the execution and mutual delivery of this Agreement
by the parties hereto, this Agreement shall constitute a legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to the enforcement of creditor’s rights and the application
of equitable principles relating to the availability of remedies, and except as
rights to indemnity or contribution may be limited by federal or state
securities laws or the public policy underlying such laws; and (v) there is not
in effect any order enjoining or restraining the Purchaser from entering into or
engaging in any of the transactions contemplated by this Agreement.
5.8 Brokers or
Finders. No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Purchaser or of its Affiliates.
SECTION
6. Restrictions on
Transfer.
6.1 Restrictions on
Transfer. The
Securities may be disposed of only in compliance with state and federal
securities laws. In connection with any transfer of any Securities
other than pursuant to an effective registration statement or Rule 144 under the
Securities Act, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement.
6.2 General
Legend. Each
Purchaser agrees that a restrictive legend, in substantially the following form,
shall be imprinted on the Securities:
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO SAFESTITCH MEDICAL, INC., A DELAWARE
CORPORATION, AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
7
SECTION
7. Survival of Representations,
Warranties and Agreements. All
covenants, representations and warranties made by the Company and the Purchasers
herein and in any documents delivered pursuant hereto shall survive for a period
of one (1) year following the later of the execution of this Agreement or the
Closing.
SECTION
8. Independent Nature of
Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint (or
joint and several) with the obligations of any other Purchaser hereunder, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement. The decision of a
Purchaser to purchase Shares pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser. Nothing contained in
this Agreement, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any kind of entity, or create a presumption that the Purchasers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by this Agreement. Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of such Purchaser in connection with monitoring its
investment in the Securities or enforcing its rights under this
Agreement.
SECTION
9. Notices. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon delivery to the party to be notified;
(ii) when received by confirmed facsimile or (iii) one (1) business day
after deposit with a nationally recognized overnight carrier, specifying next
business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other addresses as the Company or any Purchaser may designate upon ten (10)
days’ advance written notice to the other party:
(a) if
to the Company, to:
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SafeStitch
Medical, Inc.
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4400
Biscayne Boulevard
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Suite
A-100
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Miami,
FL 33137
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Attn.:
Adam S. Jackson
|
(b) if
to a Purchaser, at its address as set forth on such Purchaser’s signature page
attached hereto.
SECTION
10. Amendments. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and each of the Purchasers. No waiver
of any provision this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
8
SECTION
11. Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
SECTION
12. Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION
13. Governing
Law. This
Agreement and any disputes or claims arising out of or in connection with its
subject matter shall be governed by and construed in accordance with the laws of
the State of Florida without regard to the rules of conflict of laws of such
state that would cause the laws of another jurisdiction to apply. The parties
hereto acknowledge and agree that venue and jurisdiction for any claim, suit or
controversy related to or arising out of this Agreement shall lie in the state
or federal courts located in Miami-Dade County, Florida. THE PARTIES
HEREBY WAIVE THE RIGHT TO JURY TRIAL OF ANY MATTERS ARISING OUT OF THIS
AGREEMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN THEM.
SECTION
14. Counterparts; Facsimile
Signatures. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.
Facsimile or other electronically scanned and transmitted signatures shall be
deemed originals for all purposes of this Agreement.
SECTION
15. Entire
Agreement. This
Agreement (including the Exhibits, Schedules and Appendices attached hereto) and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.
SECTION
16. Fees and
Expenses. Except
as expressly set forth herein, the Company, on the one hand, and each Purchaser,
on the other hand, shall pay their respective fees and expenses related to the
transactions contemplated by this Agreement.
SECTION
17. Parties. This
Agreement is made solely for the benefit of and is binding upon the Purchasers
and the Company, and no other person shall acquire or have any right under or by
virtue of this Agreement.
SECTION
18. Assignment. Except
as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns. This Agreement and the rights of each
Purchaser hereunder may be assigned by said Purchaser only with the prior
written consent of the Company. The Company may not assign this
Agreement without the written consent of each of the
Purchasers.
9
SECTION
19. Further
Assurances. Each
party agrees to cooperate fully with the other parties hereto and to execute
such further instruments, documents and agreements and to give such further
written assurance as may be reasonably requested by any other party to evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
SECTION
20. Liability Not Affected by
Knowledge or Waiver. The
right to recovery of losses or other remedy based upon breach of
representations, warranties or covenants will not be affected by any
investigation conducted, or knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of this Agreement,
with respect to the accuracy or inaccuracy of or compliance or noncompliance
with any such representation, warranty, or covenant.
[Signature
pages follow]
10
IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.
|
COMPANY:
|
|
|
SAFESTITCH
MEDICAL, INC.
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|
|
By:
|
/s/ Adam S. Jackson
|
|
Name:
|
Adam
S. Jackson
|
|
Title:
|
Chief
Financial Officer
|
Company
Signature Page to Securities Purchase Agreement
IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.
|
PURCHASER(S):
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||
|
If
a corporation or other entity:
|
UniMed Investment, Inc.
|
|
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(name
of corporation or entity)
|
||
|
By:
|
/s/ William Lu
|
|
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Name:
|
William
Lu
|
|
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Title:
|
Chairman
& CEO
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If
an individual:
|
|
|
|
Name:
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||
|
|
||
|
Name
(co-purchaser, if any):
|
||
|
Number
of Shares Purchased:
|
2,000,000
Shares
|
|
|
Contact
Information
|
Address:
|
|
|
|
||
|
|
||
|
|
||
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||
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Telephone:__________________________________________
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||
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Facsimile:___________________________________________
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||
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E-mail:______________________________________________
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||
Purchaser
Signature Page to Securities Purchase Agreement
Appendix
I
STOCK CERTIFICATE
QUESTIONNAIRE
Pursuant
to Section 3 of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that your Shares are to be registered in (this is the name that
will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
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||
|
2.
|
The
relationship between the Purchaser of the Shares and the Registered Holder
listed in response to item 1 above:
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||
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3.
|
The
mailing address of the Registered Holder listed in response to item 1
above:
|
||
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4.
|
The
Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above:
|
|
PURCHASER
|
|
|
By:
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Its:
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Schedule
1
CERTAIN DEFINED
TERMS
Definitions. The
following terms, whenever used herein, shall have the following respective
meanings for all purposes of this Agreement.
“1934 Act” means the
Securities Exchange Act of 1934, as amended.
“Affiliate” means as
to any Person (a) any Person which directly or indirectly controls, is
controlled by, or is under common control with such Person, and (b) any
Person who is a director, officer, partner or principal of such Person or of any
Person which directly or indirectly controls, is controlled by, or is under
common control with such Person. For purposes of this definition,
“control” of a
Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by ownership of
voting stock, by contract or otherwise.
“Bylaws” means the
Amended and Restated Bylaws of the Company, as may be amended from time to
time.
“Charter” means the
Amended and Restated Certificate of Incorporation of the Company, as may be
amended from time to time.
“Encumbrances” means
any and all liens, encumbrances, charges, mortgages, deeds of trust, options,
pledges, restrictions on transfer, preemptive rights, rights of first refusal or
offer, security interests, hypothecations, easements, rights-of-way or
encroachments of any nature whatsoever, whether voluntarily incurred or arising
by operation of law.
“Governmental
Authority” means any nation or country (including but not limited to the
United States) and any state, commonwealth, territory or possession thereof and
any political subdivision of any of the foregoing, including but not limited to
courts, departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
“Material Adverse
Effect” means a material adverse effect on the business, results of
operations, properties or assets of a Person; provided, however, that “Material Adverse
Effect” shall not include the impact on such business, results of
operations, properties or assets of a Person arising out of or attributable to
(i) economic conditions affecting the United States generally,
(ii) conditions or effects affecting the capital markets in the United
States generally or (iii) effects relating to the announcement of the
execution of this Agreement or otherwise to the pendency of the transactions
contemplated hereby, except to the extent that the impact of any of the
conditions or events described in the foregoing clauses (i), (ii) or (iii)
disproportionally affects such Person.
“Person” means any
individual, corporation (including any not-for-profit corporation), general or
limited partnership, limited liability partnership, joint venture, estate,
trust, firm, company (including any limited liability company or joint stock
company), association, organization, entity or Governmental
Authority.
S-1-1
“SEC” means the United
States Securities and Exchange Commission.
“SEC Documents” means
each form, report, schedule, statement and other document filed or required to
be filed by the Company with the SEC pursuant to the 1934 Act through the date
hereof, including any filed amendment to such document, whether or not such
amendment is required to be so filed. “SEC Documents” does not
include any information furnished to the SEC, including, but not limited to,
information under Items 2.02, 7.01 or 9.01 of Form 8-K.
S-1-2
Exhibit
10.2
SECURITIES
PURCHASE AGREEMENT
dated
as of July 21, 2009
by
and among
SAFESTITCH
MEDICAL, INC.
AND
THE
PURCHASERS SET FORTH ON
THE
SIGNATURE PAGES HERETO
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of July 21, 2009, by and between SafeStitch Medical, Inc. (the “Company”), a
corporation organized under the laws of the State of Delaware, with its
principal offices at 4400 Biscayne Boulevard, Suite A-100, Miami, Florida 33137
(the “Principal
Office”), and the purchasers whose names and addresses are set forth on
the signature pages hereto (the “Purchasers”). Certain
capitalized terms used but not defined herein shall have the respective meanings
set forth on Schedule
1 attached hereto.
IN
CONSIDERATION of the mutual covenants contained in this Agreement, and intending
to be legally bound hereby, the Company and the Purchasers agree as
follows:
SECTION
1. Authorization of Sale of the
Shares. Subject
to the terms and conditions of this Agreement, and the filing with the Secretary
of State of the State of Delaware of the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of the 10.0% Series A Cumulative Convertible Preferred Stock, and
Qualifications, Limitations and Restrictions Thereof, substantially in the form
attached hereto as Exhibit A (the “Certificate of
Designation”), the Company has authorized the issuance and sale to the
Purchasers in a private placement of up to an aggregate of 2,000,000 shares of 10.0% Series A
Cumulative Convertible Preferred Stock, par value $0.01 per share, of the
Company (each, a “Share”).
SECTION
2. Agreement to Sell and
Purchase the Shares. Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 3), the Company shall issue and sell to each Purchaser, and such
Purchaser shall buy from the Company, the number of Shares set forth on such
Purchaser’s signature page hereto for an aggregate purchase price equal to the
number of such Shares purchased by such Purchaser multiplied
by the per-Share purchase price of $1.00 (the “Purchase
Price”).
SECTION
3. Closing
3.1 Delivery of the Shares at
the Closing. The
completion of the purchase and sale of Two Million (2,000,000) Shares (the
“Closing”)
shall occur, at the Company’s sole election and in its sole discretion, at the
Principal Office on any date on or prior to June 30, 2010, provided
that: (i) the Company shall have provided to the Purchasers written
notice of the Closing, together with a copy of the resolutions of the Board
approving the consummation of the Closing (certified by a duly authorized
officer of the Company) on or prior to the tenth (10th)
calendar day preceding the date of the Closing (the “Closing Date”); and
(ii) the Closing Conditions (as defined below) shall have been satisfied or
waived on or prior to the Closing Date.
3.2 Closing
Deliverables. At
the Closing, the Company shall deliver to each Purchaser one or more stock
certificates registered in the name of such Purchaser, or, if so indicated on
such Purchaser’s Stock Certificate Questionnaire, the form of which is attached
hereto as Appendix
I (the “Stock
Certificate Questionnaire”), in such other name(s) as designated by such
Purchaser, evidencing the number of Shares set forth on such Purchaser’s
signature page attached hereto, each bearing a restrictive legend, substantially
in the form set forth in Section 6.2.
1
3.3
Conditions to the Company’s
Obligations. The
Company’s obligation to complete the sale of the Shares at the Closing is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, unless otherwise waived (“Company Closing
Conditions”):
(a) receipt
by the Company of immediately available funds in the full amount of the
aggregate purchase price for all Shares being purchased at the
Closing;
(b) each
of the representations and warranties of each Purchaser set forth in Section 5
shall be true and correct on the date of the Closing;
(c) each
Purchaser shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by such Purchaser on or prior to the Closing; and
(d) the
Board shall have approved the consummation of the Closing.
3.4 Conditions to Purchasers’
Obligations. Each
Purchaser’s obligation to purchase the Shares at the Closing is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
unless otherwise waived (“Purchaser Closing
Conditions” and, together with the Company Closing Conditions, the “Closing
Conditions”):
(a) each
of the representations and warranties of the Company set forth in Section 4 that
is qualified by materiality or material adverse effect or words of similar
effect shall be accurate in all respects on the Closing Date (except to the
extent any such representations and warranties expressly relate to a specific
date, in which case such representations and warranties shall be accurate as of
such date), and each of the representations and warranties of the Company set
forth in Section 4 that is not so qualified shall be accurate in all material
respects as of the Closing Date (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall be accurate in all material respects as of
such date);
(b) the
Company shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by the Company on or before the Closing;
(c) the
Certificate of Designation shall have been filed with, and accepted for filing
by, the Secretary of State of the State of Delaware; and
(d) the
Board shall have approved the consummation of the Closing.
2
SECTION
4. Representations, Warranties
and Covenants of the Company. The
Company hereby represents and warrants to the Purchasers as
follows:
4.1 Issuance of
Shares. The
Company has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the Company’s issuance and sale
of the Shares. The Shares, when issued and delivered and paid for as
provided herein, will be duly authorized, validly issued, fully paid and
nonassessable and will be issued free and clear of any Encumbrances (other than
as arising under applicable securities laws or this
Agreement). Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Section 5 of this Agreement, the
Shares will be issued in compliance with all applicable federal and state
securities laws.
4.2 Organization and
Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified to do business in
any other jurisdiction by virtue of the nature of the businesses conducted by it
or the ownership or leasing of its properties, except where the failure to be so
qualified will not, when taken together with all other such failures, have a
Material Adverse Effect on the Company.
4.3 Charter and
Bylaws. The
Company’s Charter and Bylaws, as amended or restated to date, as filed with the
SEC, are a complete and correct copy of such documents as in effect on the date
hereof.
4.4 Capitalization. As
of the date hereof, the Company is authorized to issue 250,000,000 shares of
capital stock, consisting of 225,000,000 shares of common stock, par value
$0.001 per share (“Common Stock”), and
25,000,000 shares of preferred stock, par value $0.01 per share (“Preferred
Stock”). As of June 15, 2009, there were (i) 17,962,718
shares of Common Stock issued and outstanding, and (ii) no shares of the
Preferred Stock issued or outstanding. All such outstanding shares of
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. Except as disclosed in the SEC Documents, as of the
date hereof, there are no outstanding options, warrants, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of capital
stock of the Company, or agreements, understandings or arrangements to which the
Company is a party, or by which the Company is or may be bound, to issue
additional shares of its capital stock or options, warrants or rights to
subscribe for, calls or commitment of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any shares of any
class of its capital stock.
3
4.5 Authorization,
Enforceability and Related Matters. (i)
The Company has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement; (ii) the making and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated herein will not violate any provision of the Company’s Charter or
Bylaws or, except to the extent that it would not have a Material Adverse Effect
on the Company or adversely affect the Company’s ability to consummate the
transactions contemplated hereby, conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any material agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which the
Company is a party, or any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental agency or body applicable to the Company; (iii) no
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental agency or body is required in
respect of the Company’s execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated by this Agreement;
(iv) upon the execution and mutual delivery of this Agreement by the parties
hereto, this Agreement shall constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to the
enforcement of creditor’s rights and the application of equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws or the public
policy underlying such laws; and (v) there is not in effect any order enjoining
or restraining the Company from entering into or engaging in any of the
transactions contemplated by this Agreement.
4.6 Brokers or
Finders. No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Affiliate.
4.7 SEC
Documents. The
Company has made available to the Purchasers true and complete copies of all SEC
Documents. As of their respective dates (or if amended, as of the
date of the last amendment filed prior to the date hereof), the SEC Documents
complied in all material respects with the requirements of the 1934 Act, and
rules and regulations of the SEC promulgated thereunder, and the SEC Documents
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.8 Company Financial
Statements. The
financial statements, together with any notes thereto, included in the Company’s
Annual Report on Form 10-K as filed with the SEC on March 27, 2009 and the
Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 13, 2009
fairly present in all material respects, on the basis stated therein and on the
date thereof, the financial position of the Company at the respective dates
therein specified and its results of operations and cash flows for the periods
then ended. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles in the United States
(“GAAP”)
applied on a consistent basis except as expressly noted therein and subject in
the case of the unaudited financial statements to year-end
adjustments.
4
4.9 Material Changes;
Undisclosed Events, Liabilities or Developments. Since
March 31, 2009, except as specifically disclosed in any SEC Document filed
subsequent to March 31, 2009 and prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect; (ii) the Company
has not incurred any material liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP; (iii) the
Company has not altered its method of accounting; (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock; and (v) the Company has not issued any equity
securities to any of its officers, directors or Affiliates. As of the
date hereof, except for the issuance of the Shares contemplated by this
Agreement, no event, liability or development has occurred or exists with
respect to the Company or its subsidiaries or their respective business,
properties, operations or financial condition that is required to be disclosed
by the Company under applicable securities laws.
4.10 Full
Disclosure. No
representation or warranty made by the Company in this Agreement contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained herein not misleading.
SECTION
5. Representations, Warranties
and Covenants of the Purchasers. Each
Purchaser severally, and not jointly with any other Purchaser, represents and
warrants to the Company that:
5.1 Experience. (i)
Such Purchaser is knowledgeable, sophisticated and experienced in financial and
business matters, and is making, and is qualified to make, decisions with
respect to investments in shares representing an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and/or comparable entities, has the ability to bear the
economic risks of an investment in the Shares and has had the opportunity to
request, receive, review and consider all information it deems relevant in
making an informed decision to purchase the Shares; (ii) such Purchaser is
acquiring the number of Shares set forth on such Purchaser’s signature page
attached hereto for its own account, solely for investment and with no present
intention to distribute any of such Shares and is subject to no arrangement or
understanding with any other persons regarding the distribution of such Shares;
(iii) such Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, except in compliance
with the Securities Act of 1933, as amended (the “Securities Act”), and
the rules and regulations promulgated thereunder (the “Rules and
Regulations”) and any applicable state securities laws; (iv) such
Purchaser has, in connection with its decision to purchase the number of Shares
set forth on such Purchaser’s signature page attached hereto, relied solely upon
the representations and warranties of the Company contained in this Agreement;
(v) such Purchaser has had an opportunity to discuss this investment with
representatives of the Company and ask questions of them; and (vi) such
Purchaser is either a “qualified institutional buyer” as defined by Rule 144A
promulgated under the Securities Act or an “accredited investor” as defined by
Rule 501(a) of Regulation D promulgated under the Securities Act.
5
5.2 Reliance on
Exemptions. Such
Purchaser understands that the Shares and the Common Stock issuable upon
conversion of the Shares (the “Conversion Shares”
and, together with the Shares, the “Securities”) are
being offered and sold to in reliance upon specific exemptions from the
registration requirements of the Securities Act and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of such Purchaser contained in this Agreement
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
5.3 Confidentiality. Such
Purchaser understands that this Agreement, the information contained in all
materials provided to the Purchaser by the Company and its representatives,
including any information conveyed orally, in connection with the transactions
contemplated hereunder (“Confidential
Information”), is strictly confidential and proprietary to the Company
and is being provided to such Purchaser solely for such Purchaser’s confidential
use in connection with the transactions contemplated hereunder. Such
Purchaser agrees to use the Confidential Information solely for the purpose of
evaluating a possible investment in the Shares, and such Purchaser acknowledges
that it is prohibited from distributing, divulging or discussing any
Confidential Information, in whole or in part, with any Person, except to such
Purchaser’s financial, investment or legal advisors (such Persons, “Authorized
Advisors”), solely to the extent necessary for such Authorized Advisors
to assist such Purchaser with its proposed investment in the Shares. To the
extent that such Purchaser provides, directly or indirectly, any Confidential
Information to any Authorized Advisor, such Purchaser shall ensure that such
Authorized Advisor maintain the confidentiality of the Confidential Information
to the same extent applicable to such Purchaser as set forth in this Section
5.3. Confidential Information does not include any information that
is or becomes publicly available through no fault of such Purchaser, or that
such Purchaser is required to disclose pursuant to applicable law, regulation or
legal process; provided, however, that if such
Purchaser is requested or ordered to disclose any Confidential Information
pursuant to any court or other government order or any other applicable legal
procedure, it shall provide the Company with prompt notice of any such request
or order so that the Company may seek an appropriate protective
order.
5.4 Investment
Decision. Such
Purchaser understands that nothing in this Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. Such Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Shares.
5.5 Risk of
Loss. Such
Purchaser understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of such Purchaser’s investment,
and such Purchaser has full cognizance of and understands all of the risk
factors related to its purchase of the Shares, including, but not limited to,
those set forth in the SEC Documents. The Purchaser understands that
no representation is being made as to the future value of the
Securities.
5.6 Residency. Such
Purchaser’s principal executive offices, or primary residence, as applicable,
are in the jurisdiction set forth on such Purchaser’s signature page attached
hereto.
6
5.7 Authorization,
Enforceability and Related Matters. (i)
Such Purchaser has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement; (ii) the making and performance of this Agreement by such
Purchaser and the consummation by such Purchaser of the transactions
contemplated herein will not violate any provision of the organizational
documents of such Purchaser (if not a natural person) or, except to the extent
that it would not have a Material Adverse Effect on such Purchaser’s ability to
consummate the transactions contemplated hereby, conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any material agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument to
which such Purchaser is a party, or any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body;
administrative agency or other governmental agency or body applicable to such
Purchaser, (iii) no consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental agency or
body is required in respect of such Purchaser’s execution and delivery of this
Agreement or the consummation by such Purchaser of the transactions contemplated
by this Agreement; (iv) upon the execution and mutual delivery of this Agreement
by the parties hereto, this Agreement shall constitute a legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to the enforcement of creditor’s rights and the application
of equitable principles relating to the availability of remedies, and except as
rights to indemnity or contribution may be limited by federal or state
securities laws or the public policy underlying such laws; and (v) there is not
in effect any order enjoining or restraining the Purchaser from entering into or
engaging in any of the transactions contemplated by this Agreement.
5.8 Brokers or
Finders. No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Purchaser or of its Affiliates.
SECTION
6. Restrictions on
Transfer.
6.1 Restrictions on
Transfer. The
Securities may be disposed of only in compliance with state and federal
securities laws. In connection with any transfer of any Securities
other than pursuant to an effective registration statement or Rule 144 under the
Securities Act, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement.
7
6.2 General
Legend. Each
Purchaser agrees that a restrictive legend, in substantially the following form,
shall be imprinted on the Securities:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE
OF REGISTRATION UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SAFESTITCH MEDICAL, INC., A DELAWARE CORPORATION, AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
SECTION
7. Survival of Representations,
Warranties and Agreements. All
covenants, representations and warranties made by the Company and the Purchasers
herein and in any documents delivered pursuant hereto shall survive for a period
of one (1) year following the later of the execution of this Agreement or the
Closing.
SECTION
8. Independent Nature of
Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint (or
joint and several) with the obligations of any other Purchaser hereunder, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement. The decision of a
Purchaser to purchase Shares pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser. Nothing contained in
this Agreement, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any kind of entity, or create a presumption that the Purchasers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by this Agreement. Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of such Purchaser in connection with monitoring its
investment in the Securities or enforcing its rights under this
Agreement.
SECTION
9. Notices. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon delivery to the party to be notified;
(ii) when received by confirmed facsimile or (iii) one (1) business day
after deposit with a nationally recognized overnight carrier, specifying next
business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other addresses as the Company or any Purchaser may designate upon ten (10)
days’ advance written notice to the other party:
(a) if
to the Company, to:
|
|
SafeStitch
Medical, Inc.
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4400
Biscayne Boulevard
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Suite
A-100
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8
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Miami,
FL 33137
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Attn.:
Adam S. Jackson
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(b) if
to a Purchaser, at its address as set forth on such Purchaser’s signature page
attached hereto.
SECTION
10. Amendments. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and each of the Purchasers. No waiver
of any provision this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
SECTION
11. Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
SECTION
12. Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION
13. Governing
Law. This
Agreement and any disputes or claims arising out of or in connection with its
subject matter shall be governed by and construed in accordance with the laws of
the State of Florida without regard to the rules of conflict of laws of such
state that would cause the laws of another jurisdiction to apply. The parties
hereto acknowledge and agree that venue and jurisdiction for any claim, suit or
controversy related to or arising out of this Agreement shall lie in the state
or federal courts located in Miami-Dade County, Florida. THE PARTIES
HEREBY WAIVE THE RIGHT TO JURY TRIAL OF ANY MATTERS ARISING OUT OF THIS
AGREEMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN THEM.
SECTION
14. Counterparts; Facsimile
Signatures. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.
Facsimile or other electronically scanned and transmitted signatures shall be
deemed originals for all purposes of this Agreement.
SECTION
15. Entire
Agreement. This
Agreement (including the Exhibits, Schedules and Appendices attached hereto) and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.
SECTION
16. Fees and
Expenses. Except
as expressly set forth herein, the Company, on the one hand, and each Purchaser,
on the other hand, shall pay their respective fees and expenses related to the
transactions contemplated by this Agreement.
9
SECTION
17. Parties. This
Agreement is made solely for the benefit of and is binding upon the Purchasers
and the Company, and no other person shall acquire or have any right under or by
virtue of this Agreement.
SECTION
18. Assignment. Except
as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns. This Agreement and the rights of each
Purchaser hereunder may be assigned by said Purchaser only with the prior
written consent of the Company. The Company may not assign this
Agreement without the written consent of each of the Purchasers.
SECTION
19. Further
Assurances. Each
party agrees to cooperate fully with the other parties hereto and to execute
such further instruments, documents and agreements and to give such further
written assurance as may be reasonably requested by any other party to evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
SECTION
20. Liability Not Affected by
Knowledge or Waiver. The
right to recovery of losses or other remedy based upon breach of
representations, warranties or covenants will not be affected by any
investigation conducted, or knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of this Agreement,
with respect to the accuracy or inaccuracy of or compliance or noncompliance
with any such representation, warranty, or covenant.
[Signature
pages follow]
10
IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.
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COMPANY:
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SAFESTITCH
MEDICAL, INC.
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By:
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/s/ Adam S. Jackson
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Name:
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Adam S. Jackson
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Title:
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Chief Financial
Officer
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Company
Signature Page to Securities Purchase Agreement
IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.
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PURCHASER(S):
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|||
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If
a corporation or other entity:
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Brilliant Champion Resources
Limited
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(name
of corporation or entity)
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|||
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By:
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/s/ Lee, Chao-Hsiang
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||
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Name:
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Lee,
Chao-Hsiang
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||
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Title:
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Director
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||
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If
an individual:
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|||
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Name:
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|||
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Name
(co-purchaser, if any):
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Number
of Shares Purchased:
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1,000,000 Shares
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|
Contact
Information
|
Address:
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|
|
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||
|
|
||
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||
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Telephone:
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Facsimile:
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E-mail:
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Purchaser
Signature Page to Securities Purchase Agreement
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PURCHASER(S):
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|||
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If
a corporation or other entity:
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Frost Gamma Investments
Trust
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(name
of corporation or entity)
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|||
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By:
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/s/ Phillip Frost, M.D.
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Name:
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Phillip
Frost, M.D.
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Title:
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Trustee
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||
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If
an individual:
|
|||
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Name:
|
|||
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Name
(co-purchaser, if any):
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Number
of Shares Purchased:
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447,500 Shares
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|
Contact
Information
|
Address:
|
|
|
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||
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||
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||
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Telephone:
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Facsimile:
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E-mail:
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Purchaser
Signature Page to Securities Purchase Agreement
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PURCHASER(S):
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|||
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If
a corporation or other entity:
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Hsu Gamma Investment, L.P.
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||
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(name
of corporation or entity)
|
|||
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By:
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/s/ Jane H. Hsiao, Ph.D.,
MBA
|
||
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Name:
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Jane H. Hsiao, Ph.D., MBA
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||
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Title:
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General
Partner
|
||
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If
an individual:
|
|||
|
Name:
|
|||
|
Name
(co-purchaser, if any):
|
|
Number
of Shares Purchased:
|
447,500 Shares
|
|
Contact
Information
|
Address:
|
|
|
|
||
|
|
||
|
|
||
|
|
|
Telephone:
|
|
Facsimile:
|
|
E-mail:
|
Purchaser
Signature Page to Securities Purchase Agreement
|
PURCHASER(S):
|
|||
|
If
a corporation or other entity:
|
|||
|
(name
of corporation or entity)
|
|||
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By:
|
|||
|
Name:
|
|||
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Title:
|
|||
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If
an individual:
|
/s/ Jeffrey G. Spragens
|
||
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Name:
Jeffrey G. Spragens
|
|||
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Name
(co-purchaser, if any):
|
|
Number
of Shares Purchased:
|
100,000 Shares
|
|
Contact
Information
|
Address:
|
|
|
|
||
|
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||
|
|
||
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|
|
Telephone:
|
|
Facsimile:
|
|
E-mail:
|
Purchaser
Signature Page to Securities Purchase Agreement
|
PURCHASER(S):
|
|||
|
If
a corporation or other entity:
|
|||
|
(name
of corporation or entity)
|
|||
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By:
|
|||
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Name:
|
|||
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Title:
|
|||
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If
an individual:
|
/s/ Aaron Edelstein
|
||
|
Name:
Aaron Edelstein
|
|||
|
Name
(co-purchaser, if any):
|
|
Number
of Shares Purchased:
|
5,000 Shares
|
|
Contact
Information
|
Address:
|
|
|
|
||
|
|
||
|
|
||
|
|
|
Telephone:
|
|
Facsimile:
|
|
E-mail:
|
Purchaser
Signature Page to Securities Purchase Agreement
Appendix
I
STOCK CERTIFICATE
QUESTIONNAIRE
Pursuant
to Section 3 of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that your Shares are to be registered in (this is the name that
will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
|
||
|
2.
|
The
relationship between the Purchaser of the Shares and the Registered Holder
listed in response to item 1 above:
|
||
|
3.
|
The
mailing address of the Registered Holder listed in response to item 1
above:
|
||
|
4.
|
The
Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above:
|
||
|
PURCHASER
|
|
|
By:
|
|
|
Its:
|
|
Schedule
1
CERTAIN DEFINED
TERMS
Definitions. The
following terms, whenever used herein, shall have the following respective
meanings for all purposes of this Agreement.
“1934 Act” means the
Securities Exchange Act of 1934, as amended.
“Affiliate” means as
to any Person (a) any Person which directly or indirectly controls, is
controlled by, or is under common control with such Person, and (b) any
Person who is a director, officer, partner or principal of such Person or of any
Person which directly or indirectly controls, is controlled by, or is under
common control with such Person. For purposes of this definition,
“control” of a
Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by ownership of
voting stock, by contract or otherwise.
“Bylaws” means the
Amended and Restated Bylaws of the Company, as may be amended from time to
time.
“Charter” means the
Amended and Restated Certificate of Incorporation of the Company, as may be
amended from time to time.
“Encumbrances” means
any and all liens, encumbrances, charges, mortgages, deeds of trust, options,
pledges, restrictions on transfer, preemptive rights, rights of first refusal or
offer, security interests, hypothecations, easements, rights-of-way or
encroachments of any nature whatsoever, whether voluntarily incurred or arising
by operation of law.
“Governmental
Authority” means any nation or country (including but not limited to the
United States) and any state, commonwealth, territory or possession thereof and
any political subdivision of any of the foregoing, including but not limited to
courts, departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
“Material Adverse
Effect” means a material adverse effect on the business, results of
operations, properties or assets of a Person; provided, however, that “Material Adverse
Effect” shall not include the impact on such business, results of
operations, properties or assets of a Person arising out of or attributable to
(i) economic conditions affecting the United States generally,
(ii) conditions or effects affecting the capital markets in the United
States generally or (iii) effects relating to the announcement of the
execution of this Agreement or otherwise to the pendency of the transactions
contemplated hereby, except to the extent that the impact of any of the
conditions or events described in the foregoing clauses (i), (ii) or (iii)
disproportionally affects such Person.
“Person” means any
individual, corporation (including any not-for-profit corporation), general or
limited partnership, limited liability partnership, joint venture, estate,
trust, firm, company (including any limited liability company or joint stock
company), association, organization, entity or Governmental
Authority.
S-1-1
“SEC” means the United
States Securities and Exchange Commission.
“SEC Documents” means
each form, report, schedule, statement and other document filed or required to
be filed by the Company with the SEC pursuant to the 1934 Act through the date
hereof, including any filed amendment to such document, whether or not such
amendment is required to be so filed. “SEC Documents” does not
include any information furnished to the SEC, including, but not limited to,
information under Items 2.02, 7.01 or 9.01 of Form 8-K.
S-1-2
Exhibit
99.1
SafeStitch
Medical Announces $4 Million Funding Commitment
MIAMI—(BUSINESS
WIRE)—SafeStitch Medical, Inc. (OTCBB: SFES - News) today announced that it has
entered into two stock purchase agreements with private investors, pursuant to
which SafeStitch may issue an aggregate of up to four million shares of the
Company's newly-designated 10% Series A Cumulative Convertible Preferred Stock,
par value $0.01, at a price of $1.00 per share. The Company closed on
the sale of two million shares in a private transaction for aggregate proceeds
of $2 million on July 22, 2009, and SafeStitch may elect, in its sole
discretion, to issue an additional two million shares on or before June 30,
2010. Shares issued pursuant to the agreements, including the shares
of the Company’s common stock into which the preferred shares may be converted,
are restricted securities, and no registration rights have been
granted.
"We are
pleased to receive these funds and appreciate the confidence these investors
have shown in SafeStitch’s future," said Stewart Davis, M.D., SafeStitch’s Chief
Operating Officer. Dr. Davis noted that “this infusion of capital
comes just as we are reaching major milestones in the development of our AMID
Hernia StaplerTM. We
are currently preparing our applications for US and European regulatory approval
of this device, and we plan to conduct clinical trials of the stapler this
fall.” Dr. Charles Filipi, the Company’s Medical Director, added that
the funds “will also support continued refinement of our endoscopic gastroplasty
kit as we make final preparations for human clinical trials, which we expect
will begin in 2010.”
About the
Investors
Among the
investors participating in the purchase agreements are UniMed Investment, Inc.,
Brilliant Champion Resources Limited, Frost Gamma Investments Trust, Hsu Gamma
Investment, L.P. and Jeffrey Spragens. For more information, see the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
July 23, 2009.
UniMed
Investment, Inc. and Brilliant Champion Resources Limited are entities
controlled by Ruentex Group, a prestigious conglomerate in Taiwan with
operations in textiles, construction and development, finance, medical services,
retail and education.
Frost
Gamma Investments Trust is an entity controlled by Dr. Phillip Frost, the
largest beneficial owner of the Company’s common stock.
Hsu Gamma
Investment, L.P. is an entity controlled by Dr. Jane Hsiao, the Company’s
Chairman of the Board.
Jeffrey
Spragens is the Company’s President and CEO, and a member of the Board of
Directors.
About
SafeStitch Medical, Inc.
Miami-based
SafeStitch Medical, Inc. is a medical device company primarily developing
endoscopic and minimally invasive surgical devices. SafeStitch’s
product portfolio includes endoscopic gastroplasty devices for bariatric
(obesity) surgery and repair of gastroesophageal reflux disorder (GERD), as well
as the AMID Hernia StaplerTM, a
standard bite block, an airway bite block and the SMARTTM
Dilator. The Company has also started development of devices for
excision and diagnosis of Barrett's esophagus and natural orifice transluminal
endoscopic surgery (NOTES). Information about the Company may be
found on its website at: www.safestitch.com.
This
press release contains "forward-looking statements," as that term is defined
under the Private Securities Litigation Reform Act of 1995 (PSLRA), which
statements may be identified by words such as "expects," "plans," "projects,"
"will," "may," "anticipates," "believes," "should," "intends," "estimates," and
other words of similar meaning, including statements regarding our product
development efforts, our ability to significantly improve clinical outcomes in
patients, and our ability to develop a preclinical pipeline of novel agents for
ophthalmic diseases, as well as other non-historical statements about our
expectations, beliefs or intentions regarding our business, technologies and
products, financial condition, strategies or prospects. Many factors could cause
our actual activities or results to differ materially from the activities and
results anticipated in forward-looking statements. These factors
include those described in our filings with the Securities and Exchange
Commission, as well as risks inherent in funding, developing and obtaining
regulatory approvals of new, commercially-viable and competitive products and
treatments. In addition, forward-looking statements may also be adversely
affected by general market factors, competitive product development, product
availability, federal and state regulations and legislation, the regulatory
process for new products and indications, manufacturing issues that may arise,
patent positions and litigation, among other factors. The
forward-looking statements contained in this press release speak only as of the
date the statements were made, and we do not undertake any obligation to update
forward-looking statements, except as required under applicable
law. We intend that all forward-looking statements be subject to the
safe-harbor provisions of the PSLRA.
Contact:
SafeStitch
Medical, Inc., Miami
Dr.
Stewart B. Davis, 305-575-4145