Item 1.01. Entry into a Material Definitive Agreement
Definitive Merger Agreement
On January 9, 2023, Ra Medical Systems, Inc., a Delaware corporation (the
"Company" or "Ra Medical"), completed its acquisition of Catheter Precision,
Inc., a privately-held Delaware corporation ("Catheter"), pursuant to an Amended
and Restated Agreement and Plan of Merger (the "Merger Agreement"), by and among
the Company, Catheter, Rapid Merger Sub 1, Inc., a newly-created wholly-owned
subsidiary of the Company ("First Merger Sub"), and Rapid Merger Sub 2, LLC, a
newly-created wholly owned subsidiary of the Company ("Second Merger Sub" and
together with First Merger Sub, the "Merger Subs"), entered into on January 9,
2023, pursuant to which the First Merger Sub merged with and into Catheter, with
Catheter being the surviving corporation (the "First Merger Surviving Company")
and a wholly-owned subsidiary of the Company (the "First Effective Time"), and
then, immediately following the First Effective Time, and as part of the same
overall transaction, the First Merger Surviving Company merged with and into the
Second Merger Sub (the "Second Effective Time"), with the Second Merger Sub
being the surviving limited liability company (the "Second Merger Surviving
Company") (such transactions collectively, the "Merger," with the Company
following the Merger being referred to herein as the "Post-Merger Combined
Company"). The Merger Agreement amends and restates in its entirety the
Agreement and Plan of Merger (the "Original Agreement") entered into between the
parties to the Original Agreement on September 9, 2022.
Catheter has three product areas that it intends to pursue. Its lead product,
named VIVO™ (an acronym for View Into Ventricular Onset) is an FDA-cleared and
CE Mark product that utilizes non-invasive inputs to locate the origin of
ventricular arrhythmias, and, through its use, the physician can identify
patients for invasive catheter ablation, and with those patients, reduce the
amount of time in the invasive procedure. Ventricular arrhythmias include
ventricular tachyarrhythmias and premature ventricular arrhythmias, diseases
which affect millions of patients that are not well treated today. While much
past growth in the electrophysiology market has been for atrial fibrillation,
Catheter believes that ventricular arrhythmias represent a large growth area
moving forward. It also intends to pursue a second generation of Amigo®, a
robotic arm previously cleared by both FDA and CE, which serves as a catheter
control device that can be remotely controlled outside of the procedure room.
Catheter has demonstrated that patient outcomes could potentially be enhanced
by utilization of this device. Catheter is working toward a third product
release in the first half of 2023, which is a vessel closure device that would
assist in the closure of the insertion site of the percutaneous catheter or
other device used within the body. It is estimated that the worldwide market for
this closure assist device is over one million procedures per year.
Immediately upon the First Effective Time, each share of common stock of
Catheter, par value $0.001 ("Catheter Common Stock") issued and outstanding
immediately prior to the First Effective Time (subject to certain exclusions set
forth in the Merger Agreement) was converted into the right to receive a number
of shares of a new class of the Company's preferred stock, designated Series X
Convertible Preferred Stock, par value $0.0001 per share (the "Series X
Preferred Stock"), calculated in the manner described below.
Each share of Catheter Common Stock previously outstanding now represents a
. . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
To the extent required by Item 2.01 of Form 8-K, the information in Item 1.01 of
this Current Report on Form 8-K is incorporated by reference into this Item
2.01.
Item 3.02. Unregistered Sales of Equity Securities.
To the extent required by Item 3.02, the information contained in Item 1.01 of
this Current Report on Form 8-K is incorporated by reference into this Item
3.02. The shares of Company Common Stock, warrants and preferred stock are being
offered and sold in transactions exempt from registration under the Securities
Act, in reliance on Section 4(a)(2) thereof, because the offer and sale of such
securities does not involve a "public offering" as defined in Section 4(a)(2) of
the Securities Act, and other applicable requirements were met.
The shares of Company Common Stock issuable pursuant to the Merger Agreement
have not been registered under the Securities Act and securities may not be
offered or sold in the United States absent registration or an exemption from
registration under the Securities Act and any applicable state securities laws
laws (although the Company plans file a registration statement for the resale of
common stock as described above). Neither this Current Report on Form 8-K nor
any of the exhibits attached hereto is an offer to sell or the solicitation of
an offer to buy shares of common stock or any other securities of the Company.
Item 3.03. Material Modifications to Rights of Security Holders.
The information disclosed in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
To the extent required by Item 5.02 of Form 8-K, the information in Item 1.01 of
this Current Report on Form 8-K is incorporated into this Item 5.02.
Pursuant to the terms of the Merger Agreement, as of immediately following the
First Effective Time, Richard Mejia, Jr. and Joan Stafslien resigned from the
Board of Directors and any committees of the Board of Directors to which they
belonged and David Jenkins (Class II) and James Caruso (Class III) were
appointed to the Board of Directors, with Mr. Jenkins becoming Executive
Chairperson of the Board, to serve until the next annual meeting of
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stockholders at which the members of their respective classes stand for election
(subject to the Company's amended and restated bylaws) or until such director's
earlier death, resignation or removal or until such director's successor is duly
elected and qualified. There were no disagreements between Mr. Mejia or Ms.
Stafslien and the Company on any matter relating to the Company's operations,
policies or practices. Mr. Jenkins's service as Executive Chair is subject to
the discretion of the Board.
David Jenkins
David A. Jenkins has spent most of his career as an entrepreneur in the medical
device industry, and has established numerous companies including Catheter,
where he currently serves as the CEO and as Chairman of Catheter's Board. He
served as Chairman and CEO of Arrhythmia Research Technology and oversaw the
introduction to the market of Cardiolab, the first dual monitor, 32 channel
electrophysiology recording system. This technology was later acquired by
General Electric and continues to be sold into the marketplace today. Another of
Mr. Jenkins' companies, EP MedSystems, Inc., was sold to St. Jude Medical, Inc.,
now part of Abbott, in 2008. Mr. Jenkins also founded and served as the CEO of
Transneuronix, Inc., a maker of implantable stimulators for the treatment of
weight loss, which was later sold to Medtronic in 2005. Mr. Jenkins holds a
degree in accounting from the University of Kansas, and a master's degree in
business from the University of Texas, Austin. He began his career in public
accounting with the firm Coopers and Lybrand.
James Caruso
Mr. Caruso has been performing limited consulting services through Adesha
Medical since 2016. He served as Vice President, Chief Financial Officer,
Corporate Secretary and Treasurer of Catheter Precision from 2010 to 2016. From
2008 to 2010, Mr. Caruso served as a Site Manager for the St Jude Medical Atrial
Fibrillation Division (NYSE : STJ). From 2007 to 2008, Mr. Caruso served as
Vice President, Chief Financial Officer, Secretary and Treasurer of EP
MedSystems, Inc. (NASDAQ : EPMD). Mr. Caruso previously served as a Vice
President of Finance for St Jude Medical Neuro division, Advanced
Neuromodulation Systems, Inc., HiTronics Designs, Inc., and Micron Products,
Inc. (AMEX : PMR). Mr. Caruso began his career at Deloitte (previously
Deloitte & Touche). Mr. Caruso holds a BA from Rutgers College, New Brunswick
NJ. and an MBA from Fordham University, New York, NY. and is a Certified Public
Accountant. Mr. Caruso serves on the Board's Audit Committee.
Mr. Jenkins has no family relationships that require disclosure pursuant to Item
401(d) of Regulation S-K, and Mr. Jenkins and Mr. Caruso have not been involved
in any transactions that require disclosure pursuant to Item 404(a) of
Regulation S-K, other than as described below. There is no arrangement or
understanding between Mr. Jenkins or Mr. Caruso and any other person pursuant to
which they were named to their positions other than as set forth in the Merger
Agreement. Mr. Jenkins has entered into an agreement with the Company to serve
as Executive Chairman of the Board at an annual salary of $300,000. Mr. Jenkins
is entitled to participate in the Company's bonus and stock incentive plans for
officers and employees, and Mr. Caruso is eligible to receive the Company's
standard non-employee director compensation for Board and committee membership.
At the closing of the Merger, the Company repaid approximately $1,075,000
million of personal, interest free loans made by Mr. Jenkins to Catheter. Mr.
Jenkins' daughter, Missiaen Huck, serves as non-executive chief operating
officer of the Company's Catheter subsidiary, at an annual salary of
$165,000. She is also eligible to participate in in the Company's bonus and
stock incentive plans for officers and employees. In connection with the Merger,
Mr. Jenkins and affiliates received approximately 9,182.089 shares of
Convertible Preferred Stock, four of his adult children, including Ms.
Huck, received in the aggregate approximately 1,284.342 shares of Convertible
Preferred Stock, and Ms. Huck received converted options to purchase 144,168
shares of Ra Common Stock at exercise prices ranging from $0.58 per share to
$2.01 per share. Mr. Caruso received 9.711 shares of Convertible Preferred Stock
in connection with the Merger.
McGuire Change of Control Agreement Amendment
At the Closing, the Company entered into an Amendment to Change in Control and
Severance Agreement with Mr. McGuire (the "Change of Control Agreement
Amendment") to amend the Change in Control definition in the Agreement to be the
period beginning three months prior to either (i) a Change of Control or (ii)
the Company consummating the Merger. The foregoing description of the material
terms of the Change of Control Agreement Amendment is qualified in its entirety
by reference to the Change of Control Agreement Amendment, a copy of which is
attached hereto as Exhibit 10.6 and incorporated by reference.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
To the extent applicable, the disclosure under Item 1.01 above is incorporated
by reference herein.
Series X Convertible Preferred Stock
On January 9, 2023, the Company filed a Certificate of Designation of
Preferences, Rights and Limitations of the Series X Convertible Preferred Stock
with the Secretary of State of the State of Delaware (the "Series X Certificate
of Designation") in connection with the Merger referenced in Item 1.01 above.
The Series X Certificate of Designation establishes the rights of the shares of
the Series X Convertible Preferred Stock, which is intended to have economic
rights equivalent to the Company's Common Stock, but has only limited voting
rights.
Holders of Series X Preferred Stock are entitled to receive dividends on shares
of Series X Preferred Stock equal, on an as-if-converted-to-Common-Stock basis,
and in the same form as dividends actually paid on shares of the Common Stock.
Subject to stockholder approval of the Common Conversion Feature, the Series
X Preferred Stock is convertible into Common Stock at rate of 1,000 shares of
Common Stock for every one share of Series X Preferred Stock that is converted.
Except as otherwise required by law, the Series X Preferred Stock does not have
voting rights. However, as long as any shares of Series X Preferred Stock are
outstanding, the Company will not, without the affirmative vote of the holders
of a majority of the then outstanding shares of the Series X Preferred Stock,
(a) alter or change adversely the powers, preferences or rights given to the
Series X Preferred Stock, (b) alter or amend the Certificate of Designation,
(c) amend its certificate of incorporation or other charter documents in any
manner that adversely affects any rights of the holders of Series X Preferred
Stock, (d) increase the number of authorized shares of Series X Preferred Stock,
or (e) enter into any agreement with respect to any of the foregoing.
Additionally, the approval of the holders of a majority of the Series
X Preferred Stock is required for certain change of control transactions,
provided that this approval right will terminate upon stockholder approval of
the conversion of the Series X Preferred Stock. The Series X Preferred Stock
does not have a preference upon any liquidation,
dissolution or winding-up of the Company.
Following stockholder approval of the Common Conversion Feature, (i) effective
as of 5:00 p.m. (New York City time) on the second business day after the date
on which such stockholder approval is received, each share of Series X Preferred
Stock then outstanding automatically converts into 1,000 shares of Common Stock
(the "Initial Automatic Conversion); provided that the maximum number of shares
of Common Stock issued in connection with the Initial Automatic Conversion will
not exceed 40.0% (the "40.0% Limit) of the total number of shares of Common
Stock outstanding on the date of the Initial Automatic Conversion, including all
shares issued in the Initial Automatic Conversion and any shares issued in
connection with the Private Placement. If the number of shares to be issued in
the Initial Automatic Conversion exceeds the 40.0% Limit, then each shareholder
will have the number of shares to be issued to it, him or her, reduced
proportionately, based on the ratio of the total number of shares of Common
Stock that would have been issued to such shareholder to the total number of
shares of Common Stock that would have been issued to all such shareholders,
subject to any applicable beneficial ownership limitation (to be initially set
at the discretion of the shareholder and thereafter adjusted by the holder
between to a number between 4.9% and 19.9%), such that the 40.0% Limit is not
exceeded. No fractional shares of Common Stock will be issued, and any fractions
will be rounded down to the nearest whole share of Common Stock. Any shares of
Series X Preferred Stock that do not convert to Common Stock in the Initial
Automatic Conversions will remain issued as Series X Preferred Stock and will
automatically convert (a "Subsequent Automatic Conversion") to a number of
shares of Common Stock equal to 1000 shares of Common Stock per share of
preferred stock, subject to adjustment, effective as of 5:00 p.m. (New York City
time) on the second Business Day (the "Subsequent Conversion Date") after the
date the Subsequent Conversion Conditions are satisfied. Unless converted to
Common Stock in connection with an Initial Automatic Conversion or a Subsequent
Automatic Conversion, the shares of Series X Preferred Stock will not be
convertible into Common Stock. The shares of Common Stock issued upon the
Initial Automatic Conversion or upon the Subsequent Automatic Conversion are
referred to as the "Series X Conversion Shares" and shares of Series X Preferred
Stock that are converted in the Initial Automatic Conversion or in the
Subsequent Automatic Conversion are referred to as the "Series X Converted
Stock". The Series X Conversion Shares will be issued as follows: (i) Series X
Converted Stock will be automatically cancelled upon the Initial Conversion Date
or the Subsequent Conversion Date, as applicable, and converted into the
corresponding Series X Conversion Shares, which shares will be issued in book
entry form and without any action on the part of the Holders, and (ii)
Notwithstanding the cancellation of the Series X Converted Stock as described
above, Holders of Series X
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Converted Stock will continue to have any remedies provided in the Certificate
of Designation or otherwise available at law or in equity to such Holder because
of a failure by the Company to comply with the terms of the Series X Certificate
of Designation. In all cases, the Holder will retain all of its rights and
remedies for the Company's failure to convert the Series X Converted Stock.
In the event that the Common Conversion Feature is not approved by Ra Medical
. . .
Item 8.01 Other Events
On January 9, 2023, the Company issued a press release announcing the execution
of the Merger Agreement, the consummation of the Merger, the Warrant Inducement
and the Private Placement. A copy of the press release is attached as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Company will file as an amendment hereto the following financial statements
and financial information: the Catheter Unaudited Financial Statements as of and
for the periods ended September 30, 2022 and September 30, 2021, Catheter's MD&A
discussion for the periods ended September 30, 2021 and September 30, 2022, and
the unaudited Pro Forma Financial Information as of September 30, 2022 and for
the periods ended December 31, 2021 and September 30, 2022. Catheter's audited
financial statements as of December 31, 2021 and 2020, and the years then ended
were previously filed with the Company's Preliminary Proxy Statement dated
November 4, 2022.
Additional Information and Where to Find It
Additional Information and Where to Find It
This communication relates to the possible conversion of securities issued in
the Merger, the Warrant Repricing and the Private Placement, and the issuance of
securities in the Private Placement, and may be deemed to be solicitation
material in respect of the stockholder approval thereof. In connection with the
proposed approval of those conversions, the Company will file a Proxy Statement
with the SEC. This communication is not a substitute for the Proxy Statement or
any other documents that the Company may file with the SEC or send to the
Company's stockholders in connection with the proposed securities conversions
and issuances. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITYHOLDERS
ARE URGED TO READ THE PROXY STATEMENT AND ALL OTHER RELEVANT DOCUMENTS FILED OR
THAT WILL BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED SECURITIES
CONVERSIONS AND ISSUANCES AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED SECURITIES CONVERSIONS AND ISSUANCES
AND RELATED MATTERS. INVESTORS AND SECURITY HOLDERS MAY OBTAIN FREE COPIES OF
THESE DOCUMENTS (WHEN THEY ARE AVAILABLE) AND OTHER RELATED DOCUMENTS FILED WITH
THE SEC AT THE SEC'S WEBSITE AT WWW.SEC.GOV, ON RA MEDICAL'S INVESTOR RELATIONS
WEB PAGE AT HTTPS://IR.RAMED.COM/.
This communication shall not constitute an offer to sell or the solicitation of
an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
Participants in the Solicitation
Catheter, the Company, and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from the
stockholders of the Company in connection with the proposed securities
conversions and other proposals. Information about the Company's directors and
executive officers is set forth in the Company's Annual Report on Form 10-K for
the year ended December 31, 2021 which was filed with the SEC on March 24,
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2022, the Company's definitive proxy statement for its annual meeting of
stockholders filed on April 21, 2022, and in subsequent filings made by the
Company with the SEC. OTHER INFORMATION REGARDING THE INTERESTS OF SUCH
INDIVIDUALS, AS WELL AS INFORMATION REGARDING CATHETER'S DIRECTORS AND EXECUTIVE
OFFICERS AND OTHER PERSONS WHO MAY BE DEEMED PARTICIPANTS IN THE PROPOSED
TRANSACTION, WILL BE SET FORTH IN THE PROXY STATEMENT AND OTHER RELEVANT
MATERIALS TO BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE. YOU MAY OBTAIN
FREE COPIES OF THESE DOCUMENTS AS DESCRIBED IN THE PRECEDING PARAGRAPH.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
This communication contains forward-looking statements which include, but are
not limited to, statements regarding the plans and expectations of the combined
company regarding Catheter Precision's products, including its plans,
strategies, projected timelines and estimated markets, for and/or related to
VIVO and the Amigo and vessel closure devices described above. These
forward-looking statements are subject to the safe harbor provisions under the
Private Securities Litigation Reform Act of 1995. The Company's expectations and
beliefs regarding these matters may not materialize. Actual outcomes and results
may differ materially from those contemplated by these forward-looking
statements as a result of uncertainties, risks and changes in circumstances,
including but not limited to risks and uncertainties related to: the ability of
the parties to consummate the Private Placement, satisfaction of closing
conditions precedent to the consummation of the Private Placement, the potential
impact of decreases in the Company's stock price on the Private Placement, the
ability of the Company to timely and successfully achieve the anticipated
benefits of the Merger, including the ability of the combined company to access
the capital markets at such times and in such amounts, and on such terms, as
needed, execute its future business strategies and maintain its listing on the
NYSE American or other national stock exchange, potential application of SEC
and/or exchange "shell company" rules, and the ability of the combined company
to successfully pursue its product lines in the manner and in the timeframe
described here. Additional risks and uncertainties that could cause actual
outcomes and results to differ materially from those contemplated by the
forward-looking statements are included under the caption "Risk Factors" and
elsewhere in the Company's most recent filings with the SEC, including the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022,
Exhibits 99.7 and 99.8 attached hereto, and any prior or subsequent reports on
. . .
Item 9.01. Financial Statements and Exhibits.
The information in Item 8.01 of this Current Report on Form 8-K is incorporated
herein by reference.
(d) Exhibits
Exhibit Description
Amended and Restated Agreement and Plan of Merger, dated January 9,
2.1 2023, by and among Ra Medical Systems, Inc., Rapid Merger Sub 1, Inc.,
Rapid Merger Sub 2, LLC, and Catheter Precision, Inc.
3.1 Certificate of Designation of Series X Convertible Preferred Stock
3.2 Certificate of Designation of Series A Convertible Preferred Stock
4.1 Form of Series E Warrant
4.2 Form of Series F Warrant
4.3 Form of Series G Warrant
10.1 Amended Form of Support Agreement, by and among the Company, Catheter,
and directors, officers and certain stockholders of the Company
Amended Form of Lock-Up Agreement, by and among the Company, Catheter,
10.2 and directors, officers, certain stockholders of the Company and certain
stockholders of Catheter
10.3 Form of Inducement Letter
10.4 Securities Purchase Agreement, dated January 9, 2023, by and among the
Company and the Purchasers
10.5 Registration Rights Agreement, dated January 9, 2023, by and among the
Company and the Purchasers
Amendment to Change of Control and Severance Agreement, dated as of
10.6 January 9, 2022, by and between Ra Medical Systems, Inc. and Jonathan
Will McGuire
99.1 Press Release issued by Ra Medical, Inc. and Catheter Precision Inc.,
dated January 9, 2023
104 Cover Page Interactive Data File (formatted as inline XBRL)
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