| Item 1.01 | Entry into a Material Definitive Agreement. |
Share Purchase Agreement
On December 27, 2022, Minerva Surgical, Inc. (the “Company”) entered into a Share Purchase Agreement (the “Purchase Agreement”) for a private placement (the “Private Placement”) with Accelmed Partners II LP ( “Accelmed”) and New Enterprise Associates (each, a “Purchaser,” and collectively, the “Purchasers”). Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchasers an aggregate of 146,627,565 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a purchase price of $0.2046 per Share, which represented a 25% premium to the trailing five-day volume-weighted average price of the Company’s common stock on December 23, 2022. The number of Shares to be sold and the price per Share are subject to adjustment for any stock splits that occur prior to closing. The gross proceeds of the Private Placement are expected to be approximately $30 million, before deducting Placement Agent fees and other offering expenses. The closing of the Private Placement is expected to occur in the first quarter of 2023, subject to the satisfaction of the closing conditions described below. Following the Private Placement, it is expected that Accelmed will own approximately 69.6% of the Common Stock.
The Purchase Agreement contains customary representations, warranties and covenants by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions. The Purchase Agreement includes pre-closing covenants of the Company that require the Company to obtain prior written consent from Accelmed to approve certain actions of the Company, including, but not limited to, issuing capital stock, paying dividends or making other distributions, incurring indebtedness, selling any material assets of the Company, entering into or amending any material contracts and making capital expenditures. The Company will seek stockholder approval for the Private Placement at a special meeting of the Company’s stockholders to occur no later than 90 days (or 150 days if the proxy statement is reviewed by the Securities and Exchange Commission (the “SEC”)) following the date of the Purchase Agreement, and it is a condition to closing that the Company’s stockholders approve the Private Placement. It is also a condition to closing that the Company’s Board of Directors be composed of a majority of directors designated by Accelmed. The Company intends to use the net proceeds from the Private Placement, together with existing cash and cash equivalents, to support operations, research and development activities, working capital, and other general corporate purposes.
In connection with the Private Placement, Accelmed will have the right, for so long as Accelmed owns twenty-five percent (25%) or more of the outstanding Common Stock (the “Accelmed Rights Period”), to designate for appointment to the Board of Directors of the Company (the “Board”) as a director the lesser of (i) the number of directors constituting a majority of the Board, and (ii) if the Company is listed at such time on a national exchange, the number of directors of the Board equivalent to Accelmed’s proportional equity ownership of shares of the Common Stock from time to time. In addition, during the Accelmed Rights Period, Accelmed has the right to designate one individual as a non-voting Board observer.
The Company and the Purchasers also have agreed to enter into a Registration Rights Agreement (the “Registration Rights Agreement”) at closing. Under the terms of the Registration Rights Agreement, the Company will be obligated to register the Shares for resale within 30 days of closing.
Piper Sandler & Co. is acting as the sole placement agent (the “Placement Agent”) for the Private Placement and the Company has agreed to pay customary placement fees and reimburse certain expenses of the Placement Agent. The Company entered into a letter agreement with the Placement Agent regarding its engagement as placement agent, pursuant to which the Placement Agent agreed to act as sole placement agent for the Private Placement.
Voting Side Letter
As a condition to consummating the Purchase Agreement and the Private Placement, on December 27, 2022, the Company entered into a Voting Side Letter (the “Voting Side Letter”) with certain stockholders of the Company, including each of the Company’s executives and directors (each, a “Stockholder,” and collectively, the “Stockholders”). The Company has obtained commitments from the Stockholders, which hold approximately 58% of the outstanding shares of Common Stock to vote in favor of the Private Placement. Pursuant to the Voting Side Letter, the Stockholders also agreed to vote to approve certain amendments to the Company’s Amended and Restated Bylaws, Amended and Restated Certificate of Incorporation, 2021 Equity Incentive Plan, and 2021 Employee Stock Purchase Plan. Each Stockholder appointed as proxies, and granted a power of attorney to, Ross A. Jaffe, M.D. and David M. Clapper, to vote in accordance with the Voting Side Letter if, and only if, such Stockholder (i) fails to vote, or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner inconsistent with the terms of the Voting Side Letter. The Stockholders also agreed to comply with certain transfer restrictions set forth in the Voting Side Letter.
