UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of earliest event reported): June
25, 2008
MEDASORB
TECHNOLOGIES CORPORATION
(Exact
name of registrant as specified in its charter)
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Nevada
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000-51038
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98-0373793
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(State
or other jurisdiction
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(Commission
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(I.R.S.
Employer
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of
incorporation)
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File
Number)
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Identification
Number)
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7
Deer
Park Drive, Suite K, Monmouth Junction, New Jersey 08852
(Address
of principal executive office) (Zip Code)
Registrant’s
telephone number, including area code: (732)
329-8885
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):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule
14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13c-4(c))
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Item
1.01.
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Entry
into a Material Definitive Agreement.
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Private
Placement
As
described in more detail below under Item 3.02 (Unregistered Sales of Equity
Securities), on June 25, 2008, pursuant to a Subscription Agreement we entered
into with ten accredited investors, we completed a $4.275 million private
placement of Series
B 10% Cumulative Convertible Preferred Stock, par value $.001 per share (“Series
B Preferred Stock”). The form of Subscription Agreement is filed as Exhibit 4.1
to
this
Current Report on Form 8-K, and
the summary
thereof contained herein does not purport to be complete and is subject to
and
qualified in its entirety by reference to the actual text of the Subscription
Agreement.
Amendments
to Series A Preferred Stock Designation and Warrants
As
one of
the conditions to the closing of the Series B Preferred Stock private placement,
we entered into an Agreement and Consent with the holders of more than 80%
of
our outstanding shares of Series A 10% Cumulative Convertible Preferred Stock,
par value $0.001 per share (the “Series A Preferred Stock”) and the holders of
more than 80% of the outstanding common stock purchase warrants issued to the
purchasers of our Series A Preferred stock (the “Class A Warrants”). Pursuant to
the Agreement and Consent, the holders of the Series A Preferred Stock consented
to (i) the private placement of the Series B Preferred Stock, which ranks senior
to the Series A Preferred Stock, (ii) the amendment and restatement to the
Certificate of Designation with respect to the Series A Preferred Stock, (iii)
the permanent waiver of the anti-dilution protection previously provided to
certain holders of the Series A Preferred Stock; (iv) the waiver of all
pre-emptive rights and rights of first refusal previously provided to such
holders of Series A Preferred Stock with respect to the private placement of
the
Series B Preferred Stock, and (v) the waiver in full of all registration rights
previously provided to such holders of the Series A Preferred Stock. In
connection with such Agreement and Consent, the conversion price applicable
to
the Series A Preferred Stock held by certain of the parties to such consent
who
were granted anti-dilution rights in connection with their investment in the
Series A Preferred Stock and who participated in the private placement of Series
B Preferred Stock was reduced from $1.25 to $.26. The conversion price of the
Series B Preferred Stock held by all of the parties who were granted
anti-dilution rights will be subject to reduction and the holders of the Series
B Preferred Stock who participated in the private placement will have their
conversion price subject to further reduction as set forth on Schedule A to
the
Agreement and Consent in the event that
within the 60-day period following the initial closing of the private placement
of Series B Preferred Stock (the “Initial Closing”), we raise aggregate gross
proceeds of $1.5 million from the holders of Series A Preferred Stock, their
affiliates, and/or persons introduced to us by such holders and their affiliates
(the “Additional Offering”).
In
addition, pursuant to the Agreement and Consent, the holders of the Class A
Warrants consented to the permanent waiver of the anti-dilution protection
previously provided to certain holders of the Class A Warrants. In connection
with the Agreement and Consent, the exercise price applicable to the Class
A
Warrants held by certain of the parties to the Agreement and Consent who
participated in the offering was reduced from $2.00 to $.52. The exercise price
of all of the Class A Warrants held by the parties to the Agreement and Consent
will be subject to further reduction as
set
forth on Schedule A to the Agreement and Consent in
the
event of the completion of the Additional Offering. The
foregoing summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the actual text of the Amendment
to
the Series A Certificate of Designation, and the Agreement and Consent,
filed
as
Exhibit 4.3 and 4.4, respectively, to this Current Report on Form
8-K.
| Item
3.02 |
Unregistered
Sales of Equity
Securities.
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On
June 25, 2008, we
sold
(i) 42,750
shares of our Series B Preferred Stock, at a price of $100 per share and (ii)
a
security (the “Additional Security”) to purchase additional shares of Series B
Preferred Stock within 15 months following the Initial Closing at $100 per
share, to a group of ten accredited investors led by NJTC
Venture Fund SBIC, L.P. (“NJTC”) in a private offering exempt from registration
pursuant to Section 4(2) and Regulation D (Rule 506) under the Securities Act
of
1933, as amended (the “Securities Act”). The 42,750 shares of Series
A Preferred
Stock are initially convertible into 122,142,857 shares
our common stock, par value $.001 per share (“Common Stock”). In addition, in
connection with the private placement, $175,000 in principal amount of
indebtedness was converted into 1,750 additional shares of Series B Preferred
Stock.
The
Series B Preferred Stock has a stated value of $100.00 per share and was sold
for a purchase price equal to the stated value. The Series B Preferred Stock
is
redeemable at the option of a majority of the holders of the Series B Preferred
Stock, including NJTC if it then owns 25% of the shares of Series B Preferred
Stock purchased by it on the Initial Closing (the “Required Amount”), commencing
with the fifth anniversary of the issuance of the Series B Preferred Stock
for
the stated value thereof plus any accrued but unpaid dividends upon 30 days'
prior written notice
provided
that the market price of our Common Stock on the date of such notice is less
than the conversion price of the Series B Preferred Stock at such
time.
A copy of the Certificate of Designations is filed as Exhibit 4.2 to
this
Current Report on Form 8-K,
and the summary
thereof herein does not purport to be complete and is subject to and qualified
in its entirety by reference to the actual text of the Certificate of
Designation.
The
Series B Preferred Stock has a dividend rate of 10% per annum, payable
quarterly. The dividend rate increases to 20% per annum upon the occurrence
of
the events of default specified in the Certificate of Designation. Dividends
on
the Series B Preferred Stock shall be made in additional shares of Series B
Preferred Stock. Notwithstanding the foregoing, during the first three-years
following the Initial Closing, upon the approval of the
holders of a majority of the Series B Preferred Stock, including NJTC if it
then
owns the Required Amount, at
our option we may pay dividends in cash instead of additional shares of Series
B
Preferred Stock, and after such three-year period, the holders of a majority
of
the Series B Preferred Stock, including NJTC if it then owns the Required
Amount, may require that such payments be made in cash.
The
Series B Preferred Stock is convertible into Common Stock at an initial
conversion rate of one share of Common Stock for each $.035 of stated value
or
accrued but unpaid dividends being converted. The conversion price of the Series
B Preferred Stock will be increased to $.0375 in the event that within the
60-day period following the Initial Closing ending August 24, 2008, we raise
an
additional $235,000 from the sale of Series B Preferred Stock. Subject to
certain exempted issuances, the conversion price is also subject to adjustment
if we issue additional securities for a consideration less than the then
conversion price and will be adjusted for certain dividends, distributions,
stock splits and other similar events. In addition, pursuant to a letter
agreement we entered into with NJTC, we have agreed to cause the Certificate
of
Designation to be amended (which would require us to obtain the consent of
the
holders of a majority of the shares of Series B Preferred Stock) to reduce
the
conversion price (i) from $.035 to $.0329 in the event we fail to raise at
least
$4.685 million in the aggregate (including the principal amount of convertible
debt converted into Series B Preferred Stock) in the private placement and
additional closings held by August 24, 2008, and the holders of Series A
Preferred Stock,
affiliates of such holders and persons introduced to us by such holders or
their
affiliates,
fail to
purchase $1.5 million of Series B Preferred Stock, and (ii) from $.0375 to
$.0362 in the event we raise $5.25 million or more in the aggregate (including
the principal amount of convertible debt converted into Series B Preferred
Stock) in the private placement and additional closings held by August 24,
2008,
and the holders of Series A Preferred Stock, affiliates
of such holders and persons introduced to us by such holders or their
affiliates
purchase
$1.5 million or more of Series B Preferred Stock.
Pursuant
to the Certificate of Designation designating the Series B Preferred Stock,
following the Initial Closing, and for so long as NJTC holds the Required
Amount, NJTC is entitled to elect (i) two directors to our Board of Directors,
which shall consist of six members, and (ii) two members of our compensation
committee, which shall consist of three members. As of the date hereof, NJTC
has
not yet exercised its appointment rights under the Certificate of Designation.
The Certificate of Designation and Subscription Agreement also provide one
of
the other investors in the private placement with the right to have its designee
attend our Board of Directors’ meetings as an observer as long as such investor
is the holder of at least 25% of the shares of the Series B Preferred Stock
purchased by it on the Initial Closing.
The
holders of Series B Preferred Stock will vote together with the holders of
our
Common Stock on an as converted basis on all matters submitted for a vote of
our
stockholders, provided that the consent of the holders of at least a majority
of
the shares of the Series B Preferred Stock, including NJTC (if it is then a
Holder of the Required Amount), voting as a separate class, is required with
respect to certain specified matters affecting the rights of the holders of
Series B Preferred Stock.
We
have agreed to file a registration statement under the Securities Act covering
the Common Stock issuable upon conversion of the Series B Preferred Stock within
180 days following the Initial Closing and to cause it to become effective
within 240 days of such closing. We also granted the investors demand and
piggyback registration rights with respect to such Common Stock.
As
of the Initial Closing, after giving effect to the private placement described
above, we had issued and outstanding 25,044,932
shares of Common Stock, shares of Series A Preferred Stock convertible into
11,256,416
shares of Common Stock, shares of Series B Preferred Stock convertible into
127,142,857 shares of Common Stock, and convertible securities, options and
warrants that may be converted into or exercised for approximately 28,425,784
additional shares of Common Stock. Under our certificate of incorporation we
are
only authorized to issue 100,000,000 shares of Common Stock. Accordingly, we
will be required to effect a reverse stock split and/or increase our authorized
shares of Common Stock to be able to permit the conversion or exercise, as
applicable, of our outstanding convertible securities. In connection therewith,
pursuant to the Subscription Agreement, each investor in the private placement
has agreed to vote in favor of an amendment to our certificate of incorporation
effecting a reverse stock split and/or increasing our authorized shares of
Common Stock providing us with sufficient authorized shares of Common Stock
to
permit the conversion of all of our outstanding convertible securities, and
we
have agreed to effect such stock split and/or increase our authorized shares
of
Common Stock within 180 days from the Initial Closing.
The
securities we sold in the private placement have not be registered under the
Securities Act, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements under
the
Securities Act.
| Item
3.03 |
Material
Modification To Rights Of Security
Holders
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The
Series B Preferred Stock has a liquidation preference over the Common Stock
(as
well as the Series A Preferred Stock). Upon a Liquidation Event, as defined
in
the Certificate of Designation designating the Series B Preferred Stock, the
holders of the Series B Preferred Stock shall be entitled to receive payment
out
of our assets in an amount equal to $100 per share of Series B Preferred Stock
plus any accrued and unpaid dividends thereon and any other fees or liquidated
damages owing thereon before any distribution or payment shall be made to the
holders of Common Stock (or holders of Series A Preferred Stock).
| Item
5.02. |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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In
connection with the private placement of Series B Preferred Stock, each of
Al
Kraus, our Chief Executive Officer, David Lamadrid, our Chief Financial Officer,
and Vincent Capponi, our Chief Operating Officer, entered into new Employment
Agreements with
the
Company. The new Employment Agreements are substantially the same as the
Employment Agreements that were replaced, except that (i) the new
Employment Agreements all
terminate on December 31, 2008 without automatic renewal, (ii) under the new
Employment Agreements, stock options will not be accelerated upon termination
of
employment, and (iii) upon termination of employment, each of Messrs. Kraus,
Lamadrid and Capponi will be entitled to severance payments of two-weeks base
salary for each year of service with the MedaSorb.
The
foregoing summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the actual text of the Employment
Agreements filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current
Report on Form 8-K.
| Item
9.01. |
Financial
Statements and Exhibits.
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(d) Exhibits.
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Exhibit
4.1
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Form
of Subscription Agreement,
dated June __, 2008, by and among MedaSorb Technologies Corporation
and
the purchasers party thereto.
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Exhibit
4.2
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Certificate
of Designations of Series B 10% Cumulative Convertible Preferred
Stock,
$.001 Par Value Per Share
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Exhibit
4.3
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Amendment
to Certificate
of Designations of Series A 10% Cumulative Convertible Preferred
Stock,
$.001 Par Value Per Share
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Exhibit
4.4
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Agreement
and Consent, dated as of June 25, 2008 among MedaSorb
Technologies Corporation and the holders of Series A 10% Cumulative
Convertible Preferred Stock party thereto.
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Exhibit
10.1
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Employment
Agreement, dated as of June 18, 2008, between Al Kraus and MedaSorb
Technologies Corporation.
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Exhibit
10.2
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Employment
Agreement, dated as of June 18, 2008, between Vincent Capponi and
MedaSorb
Technologies Corporation.
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Exhibit
10.3
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Employment
Agreement, dated as of June 18, 2008, between David Lamadrid and
MedaSorb
Technologies Corporation.
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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 hereunto
duly authorized.
Date:
July
1,
2008
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MEDASORB
TECHNOLOGIES CORPORATION |
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By: |
/s/ Al
Kraus |
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Al
Kraus, |
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President
and
Chief Executive Officer |
EXHIBIT
INDEX
| No. |
Description |
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Exhibit
4.1
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Form
of Subscription Agreement,
dated June __, 2008, by and among MedaSorb Technologies Corporation
and
the purchasers party thereto.
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Exhibit
4.2
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Certificate
of Designations of Series B 10% Cumulative Convertible Preferred
Stock,
$.001 Par Value Per Share
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Exhibit
4.3
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Amendment
to Certificate
of Designations of Series A 10% Cumulative Convertible Preferred
Stock,
$.001 Par Value Per Share
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Exhibit
4.4
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Agreement
and Consent, dated as of June 25, 2008 among MedaSorb
Technologies Corporation and the holders of Series A 10% Cumulative
Convertible Preferred Stock party thereto.
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Exhibit
10.1
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Employment
Agreement, dated as of June 18, 2008, between Al Kraus and MedaSorb
Technologies Corporation.
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Exhibit
10.2
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Employment
Agreement, dated as of June 18, 2008, between Vincent Capponi
and MedaSorb
Technologies Corporation.
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Exhibit
10.3
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Employment
Agreement, dated as of June 18, 2008, between David Lamadrid
and MedaSorb
Technologies Corporation.
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