Item 1.01
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Entry into a Material Definitive Agreement
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On July 15, 2019, Delcath Systems, Inc. (the Company) closed on its previously reported securities purchase agreement, dated July 11,
2019 (the Securities Purchase Agreement), entered into with certain accredited investors (each an Investor and, collectively, the Investors) pursuant to which the Company issued to the Investors an aggregate of
20,000 shares of Series E Convertible Preferred Stock, par value $0.01 per share (the Series E Preferred Stock), at a price of $1,000 per share (the Private Placement). Pursuant to the Securities Purchase Agreement, the
Company also issued to each Investor a warrant (a Warrant) to purchase a number of shares of common stock of the Company, par value $0.01 per share (Common Stock), equal to the number of shares of Common Stock issuable upon
conversion of the Series E Preferred Stock purchased by the Investor. Each Warrant has an exercise price equal to $0.06, subject to adjustment in accordance with the terms of the Warrants (the Exercise Price), and are exercisable at any
time beginning on the date that the Company effects a reverse stock split until 5:00 p.m. (NYC time) on the date that is five years following the date that the Company effects a reverse stock split.
As previously reported, each share of the Series E Preferred Stock has a par value of $0.01 per share and a stated value equal to $1,000 (the Stated
Value) and is convertible at any time at the option of the holder into the number of shares of Common Stock determined by dividing the stated value by the conversion price of $0.06, subject to certain limitations and adjustments (the
Conversion Price). Except for certain adjustments, the holders of Series E Preferred Stock are entitled to receive dividends on shares of Series E Preferred Stock equal (on an as converted basis) to and in the same form as
dividends paid on shares of the Common Stock. Any such dividends that are not paid to the holders of the Series E Preferred Stock will increase the Stated Value. No other dividends will be paid on shares of Series E Preferred Stock. The Series E
Preferred Stock vote on an as converted basis on all matters submitted to the holders of Common Stock for approval, subject to certain limitations and exceptions. The affirmative vote of the holders of a majority of the then outstanding
shares of the Series E Preferred Stock is required to increase the number of authorized shares of Series E Preferred Stock or to alter or change adversely the powers, preferences or rights given to the Series E Preferred Stock, or to amend the
Companys organizational documents in any manner that adversely affects the rights of the holders of the Series E Preferred Stock. Upon any liquidation of the Company, the holders of the Series E Preferred Stock are entitled to receive out of
the assets of the Company an amount equal to the Stated Value plus any accrued and unpaid dividends thereon for each share of Series E Preferred Stock before any distribution or payment is made to the holders of the Common Stock.
The Conversion Price and the Exercise Price may, upon each of (i) the third trading day following the date that the Company effects a reverse stock
split, (ii) the date that the initial registration statement to be filed pursuant to the Registration Rights Agreement (as further discussed below) is declared effective by the United States Securities and Exchange Commission (SEC),
and (iii) in the event that all of the registrable securities (as defined in the Registration Rights Agreement) are not then registered on an effective registration statement, the date that all of the shares underlying the Preferred Stock and
Warrants may be sold pursuant to Rule 144, be reduced, and only reduced, to equal the lesser of (x) the then effective Conversion Price or Exercise Price, as applicable, and (y) 90% of the average of the five daily volume weighted average
prices of the Common Stock immediately prior to such dates. In the event of a reduction in the Exercise Price, the aggregate number of Warrant Shares shall be increased such that the aggregate Exercise Price of the Warrants on the day immediately
following such reduction in the Exercise Price is equal to the aggregate Exercise Price immediately prior to such adjustment. In addition, from the date of issuance of the Preferred Stock and Warrants until such time that the Companys Common
Stock is listed or quoted on a national exchange, the Conversion Price and the Exercise Price are subject to price-based anti-dilution protections.