in the united states bankruptcy court for the …omnimgt.com/cmsvol2/pub_47225/686803_420.pdf · 2...

24811927.3 08/27/2018

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re:

Dex Liquidating Co. (f/k/a Dextera Surgical Inc.),1

Debtor.

Chapter 11 Case No. 17-12913 (KJC) Hearing Date: September 18, 2018 at 1:30 p.m. (ET) Objection Deadline: September 10, 2018 at 4:00 p.m. (ET)

MOTION OF THE DEBTOR FOR ENTRY OF AN ORDER APPROVING STIPULATIONS BY AND AMONG THE DEBTOR AND ALPHA CAPITAL ANSTALT,

SABBY HEALTHCARE MASTER FUND, LTD. AND SABBY VOLATILITY WARRANT MASTER FUND, LTD. RESOLVING, INTER ALIA,

OBJECTIONS TO DISPUTED CLAIMS

The above-captioned debtor and debtor-in-possession (the “Debtor”), by and through its

undersigned counsel, hereby file this motion (the “Motion”), pursuant to section 105(a) of title

11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), and Rule 9019

of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) for the entry of an order

(the “Settlement Order”), substantially in the form attached hereto as Exhibit “A,” approving

(I) the Stipulation By and Among the Debtor and Alpha Capital Anstalt Resolving Objections to

Claim No. 101 (the “Alpha Stipulation”) and (II) the Stipulation By and Among the Debtor and

Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd. Resolving

Objections to Claim Nos. 13 And 14 (the “Sabby Entities Stipulation,” together with the Alpha

Stipulation as, the “Settlement Stipulations”), copies of which are attached to the proposed

Settlement Order as Exhibits 1 and 2, respectively. In support of this Motion, the Debtor

respectfully states as follows:

1 The last four digits of the Debtor’s federal tax identification number are 7832. The Debtor’s address is 7

West 41st Avenue- #245, San Mateo, CA 94403.

Case 17-12913-KJC Doc 420 Filed 08/27/18 of 13

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JURISDICTION AND VENUE

1. The United States Bankruptcy Court for the District of Delaware (the “Court”)

has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended

Standing Order of Reference from the United States District Court for the District of Delaware,

dated February 29, 2012. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2),

and the Debtor confirms its consent pursuant to Local Rule 9013-l(f) of the Local Rules of

Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of

Delaware to entry of a final order by the Court in connection with the Motion to the extent that it

is later determined that the Court, absent consent of the parties, cannot enter final orders or

judgments in connection herewith consistent with Article III of the United States Constitution.

2. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory bases for the relief sought herein are section 105(a) of the

Bankruptcy Code and Bankruptcy Rule 9019.

BACKGROUND

I. General Background

4. On December 11, 2017, the Debtor filed a voluntary petition for relief with the

Court under chapter 11 of the Bankruptcy Code. The Debtor continues to manage its property as

a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

5. On December 11, 2017, the Debtor entered into an agreement to sell substantially

all of its assets (the “Sale”) to Aesculap, Inc. or its designee (the “Buyer”).

6. At a hearing on January 24, 2018, the Court approved the Sale and entered the

Order (WITH REVISIONS) (A) Approving Asset Purchase Agreement With Aesculap, Inc.,

(B) Authorizing Sale of Debtor’s Assets Free and Clear of Interests; (C) Authorizing Assumption


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and Assignment of Certain of the Debtor’s Executory Contracts; (D) Granting Related Relief

[Docket No. 160] (the “Sale Order”).

7. The closing of the Sale to the Buyer pursuant to the Sale Order occurred on

February 20, 2018.

8. Of the $17.3 million purchase price under the parties’ asset purchase agreement,

the Buyer paid the Debtor a gross amount of approximately $15.3 million. An additional $2.0

million was paid into escrow, to be held for two years for potential indemnification claims.

9. Subsequent to the closing of the Sale, the Debtor changed its name from Dextera

Surgical Inc. to Dex Liquidating Co.

10. On April 18, 2018, the Debtor filed the Debtor’s Chapter 11 Plan of Liquidation

(as such Plan may be amended, the “Plan”) and the Disclosure Statement Relating to Debtor’s

Chapter 11 Plan of Liquidation [Docket Nos. 249 and 250, respectively].

II. The Disputed Claims

11. Pursuant to a Registration Statement under the Securities Act of 1933 filed with

the United States Securities and Exchange Commission on Form S-1, and effective on May 11,

2017, the Debtor offered for sale 8,000 shares of Series B Convertible Preferred Stock along

with, inter alia, certain Series 1 Common Stock Purchase Warrants (the “Warrants”) each

exercisable, pursuant to its terms, for one share of the Debtor’s common stock at an exercise

price per share equal to $0.27.

12. Section 3(d) of the Warrants, provides, in pertinent part, as follows:

Notwithstanding anything to the contrary, in the event of a Fundamental Transaction . . . the Company or any Successor Entity (as defined below) shall, at the Holder's option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by


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paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, if the Fundamental Transaction is not within the Company's control, including not approved by the Company's Board of Directors, Holder shall have the option to require the Company or any Successor Entity to purchase its Warrant for the Black Scholes Value of the unexercised portion of this Warrant as of the date of consummation of such Fundamental Transaction using the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder's election (or, if later, on the effective date of the Fundamental Transaction). “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. . . . For the avoidance of doubt, if, at any time while this Warrant is outstanding, a Fundamental Transaction occurs, pursuant to the terms of this Section 5(d), the Holder shall not be entitled to receive more than one of (i) the consideration receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction, (ii) an amount of cash equal to the Black Scholes Value of the remaining unconverted portion of this Warrant on the date of the consummation of such Fundamental Transaction, or (iii) the assumption by the Successor Entity of all of the obligations of the Company under this Warrant and the other Transaction Documents and the option to receive a


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security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant.

See Warrants at section 3(d).

13. Pursuant to section 3(d) of the Warrants, the following events are defined as a

“Fundamental Transaction:”

If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination).

See Warrants at section 3(d).

14. Alpha Capital Anstalt (“Alpha”) holds one Warrant exercisable for approximately

6,666,667 shares of Debtor’s common stock.

15. Sabby Healthcare Master Fund, Ltd. (“SHMF”) holds one Warrant exercisable for

approximately 4,444,445 shares of Debtor’s common stock.


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16. Sabby Volatility Warrant Master Fund, Ltd. (“SVWMF,” together with SHMF as,

the “Sabby Entities”) holds one Warrant exercisable for approximately 2,222,222 shares of

Debtor’s common stock.

17. The Sabby Entities and Alpha each allege that the Sale constitutes a

“Fundamental Transaction” under section 3(d) of the Warrants and that, as a result of the Sale,

they have claims against the Debtor equal to the Black Scholes Value of the unexercised portion

of the Warrants.

18. By electronic mail dated January 29, 2018, Sabby Management, LLC, sought to

“elect” on behalf of the Sabby Entities to receive cash pursuant to section 3(d) of the Warrants.

19. By letter dated March 20, 2018, Alpha purported to exercise its alleged rights

under section 3(d) of the Warrants.

20. On January 16, 2018, the Debtor filed its schedules of assets and liabilities and

statement of financial affairs [Docket Nos. 134-3] (as amended, supplemented, or otherwise

modified, the “Schedules”). On January 23, 2018, the Debtor filed its amended Schedules

[Docket No. 154].

21. On February 14, 2018, the Court entered the Order (I) Establishing Deadlines For

Filing Proofs of Claim, Including 503(b)(9) Claims, and (II) Approving the Form and Manner of

Notice Thereof [Docket No. 181], which, inter alia, established April 11, 2018 at 5:00 p.m. as

the general bar date for filing all non-governmental claims against the Debtor.

22. On or about January 29, 2018, SHMF filed Claim No. 13 (the “SHMF Claim”) in

the total, unsecured amount of $1,432,114.56.

23. On or about January 29, 2018, SVWMF filed Claim No. 14 (the “SVWMF

Claim”) in the total, unsecured amount of $716,057.26.


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24. On or about March 30, 2018, Alpha filed Claim No. 101 (the “Alpha Claim,”

collectively with the SHMF Claim and the SVWMF Claim as, the “Disputed Claims”) in the

total, unsecured amount of “at least” $712,738.16.

25. Each of the Disputed Claims asserts alleged claims under section 3(d) of the

Warrants based upon the closing of the Sale.

26. Other than Alpha and the Sabby Entities, no other holder of Warrants purported to

exercise its alleged rights under section 3(d) of the Warrants or filed a claim against the Debtor

or its estate, and the time for exercising any such alleged rights or for filing a proof of claim

against the Debtor expired many months ago.

III. The Settlement Stipulations

27. The Debtor denies that the closing of the Sale gives rise to any claims under the

Warrants and, accordingly, raised a number of objections (the “Objections”) to the Disputed

Claims. Specifically, the Debtor (a) disputes that the closing of the Sale entitles any holder of

Warrants to a claim under section 3(d) of the Warrants, or otherwise, (b) disputes, in the case of

the Sabby Entities, that the Sabby Entities timely exercised their alleged rights under section 3(d)

of the Warrants; (c) disputes the methodology used by Alpha and the Sabby Entities to calculate

the Disputed Claims; and (d) in the alternative, asserts that the Disputed Claims must be

subordinated to the same level as the Debtor’s common stock pursuant to section 510(b) of the

Bankruptcy Code.

28. Each of Alpha and the Sabby Entities dispute the Debtor’s Objections.

29. By letter dated June 18, 2018 (the “Sabby Letter”), the Sabby Entities threatened

and alleged certain claims against the Debtor’ present and former officers and directors. While


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not as direct, Alpha raised questions regarding unspecified conduct of the Debtor’s officers and

directors.

30. By letter dated June 28, 2018, the Debtor responded to, and denied the allegations

in, the Sabby Letter. Similarly, the Debtor responded to the questions raised by Alpha.

31. The Debtor exchanged additional information with each of Alpha and the Sabby

Entities regarding the Sale, the Debtor’s Chapter 11 Case and the Disputed Claims.

32. The Debtor and each of Alpha and the Sabby Entities engaged in good faith,

arms-length negotiations in an attempt to resolve their disputes and differences, including the

Objections. Subject to Court approval, the Debtor, Alpha and the Sabby Entities now desire to

resolve such disputes without the time, expense, and uncertainty attendant with litigation over

such issues, including the Disputed Claims, on the terms set forth in the Settlement Stipulations,

copies of which are attached to the proposed Settlement Order as Exhibits 1 and 2.

33. Subject to the terms and conditions of the Alpha Stipulation, including, without

limitation, the occurrence of the Stipulation Effective Date, the Alpha Stipulation provides,

generally, that:2

The Alpha Claim shall be reduced, and allowed as a general unsecured claim in the total amount of $425,000.00 (the “Allowed Alpha Claim”), with prejudice to Alpha’s ability to amend the Allowed Alpha Claim or file further claims against the Debtor or its estate.

The Allowed Alpha Claim shall be paid, without interest, within five (5) business days of the Stipulation Effective Date.3

2 This description of the Alpha Stipulation is meant to only be a summary of the key provisions of the

stipulation. To the extent there is any inconsistency between this summary and the Alpha Stipulation, the terms of the Alpha Stipulation shall control.

3 If the Court approves all terms and conditions of the Alpha Stipulation except for this provision, which is contained in paragraph 5 of the Alpha Stipulation, then the Debtor and Alpha shall remain bound to the remaining terms and conditions of the Alpha Stipulation and the Allowed Alpha Claim shall be treated as a General Unsecured Claim under the Debtor’s Plan and paid promptly after the Effective Date of the Debtor’s Plan.


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Effective on the Stipulation Effective Date, and except for the rights and

obligations created under the Alpha Stipulation, the Debtor and Alpha shall generally release each other and their respective present and former officers, directors, employees, successors and assigns.

34. Subject to the terms and conditions of the Sabby Entities Stipulation, including,

without limitation, the occurrence of the Stipulation Effective Date, the Sabby Entities

Stipulation provides, generally, that:4

The SHMF Claim shall be reduced, and allowed as a general unsecured claim in the total amount of $283,333.33 (the “Allowed SHMF Claim”), with prejudice to SHMF’s ability to amend the Allowed SHMF Claim or file further claims against the Debtor or its estate.

The SVWMF Claim shall be reduced, and allowed as a general unsecured claim in the total amount of $141,666.67 (the “Allowed SVWMF Claim,” collectively with the Allowed SHMF Claims as, the “Allowed Sabby Entities Claims”), with prejudice to SVWMF’s ability to amend the Allowed SVWMF Claim or file further claims against the Debtor or its estate.

The Allowed Sabby Entities Claims shall be paid, without interest, within five (5) business days of the Stipulation Effective Date.5

Effective on the Stipulation Effective Date, and except for the rights and obligations created under the Sabby Stipulation, the Debtor and the Sabby Entities shall generally release each other and their respective present and former officers, directors, employees, successors and assigns.

RELIEF REQUESTED

35. By this Motion, the Debtor seeks the entry of the proposed Settlement Order,

pursuant to Bankruptcy Code section 105(a) and Bankruptcy Rule 9019(a), (i) approving the

4 This description of the Sabby Entities Stipulation is meant to only be a summary of the key provisions of

the stipulation. To the extent there is any inconsistency between this summary and the Sabby Entities Stipulation, the terms of the Sabby Entities Stipulation shall control.

5 If the Court approves all terms and conditions of the Sabby Entities Stipulation except for this provision, which is contained in paragraph 6 of the Sabby Entities Stipulation, then the Debtor and the Sabby Entities shall remain bound to the terms and conditions of the Sabby Entities Stipulation and the Allowed Sabby Entities’ Claims shall be treated as General Unsecured Claims under the Debtor’s Plan and paid promptly after the Effective Date of the Plan.


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Settlement Stipulations and (ii) granting such other and further relief as this Court deems just and

proper.

BASIS FOR RELIEF REQUESTED

36. Bankruptcy Rule 9019(a) provides, in relevant part, “[o]n motion by the trustee

and after notice and a hearing, the court may approve a compromise or settlement.” Fed. R.

Bankr. P. 9019(a). “[T]he authority to approve a compromise settlement is within the sound

discretion of the bankruptcy court.” E.g., In re Key3Media Group, Inc., 336 B.R. 87, 92 (Bankr.

D. Del. 2005). The standard for approval of a proposed compromise is well established – a court

should approve a compromise where it “is fair, reasonable, and in the interest of the estate.” In

re Marvel Entm’t Group, Inc., 222 B.R. 243, 249 (D. Del. 1998) (quoting In re Louise’s, Inc.,

211 B.R. 798, 801 (D. Del. 1997)); see Myers v. Martin (In re Martin), 91 F.3d 389, 394 (3d Cir.

1996).

37. When considering the best interest of the estate, a court must “balance the value

of the claim that is being compromised against the value to the estate of the acceptance of the

compromise proposal.” In re Martin, 91 F.3d at 393. In striking this balance, the court should

consider: (1) the probability of success in litigation; (2) the likely difficulties in collection;

(3) the complexity of the litigation involved and the expense, inconvenience and delay

necessarily attending it; and (4) the paramount interest of creditors. Id.

38. A court does not have to be convinced that the settlement is the best possible

compromise; rather, the court must conclude that the settlement is within the reasonable range of

litigation possibilities. In re World Health Alternatives, Inc., 344 B.R. 291, 296 (Bankr. D. Del.

2006). A court will normally accept the judgment of the movant as long as a legitimate business

justification exists. E.g., Martin, 91 F.3d at 395.


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39. Applying the foregoing standards to the present case, the Debtor has concluded, in

the proper exercise of its business judgment, that the resolutions embodied in the Settlement

Stipulations, at a fraction of the filed amounts of the Disputed Claims, are fair, reasonable, and in

the best interest of the Debtor, its estate, creditors and interest holders.

40. The Settlement Stipulations also satisfy the Martin factors set forth above. While

the Debtor was confident that the Court would ultimately disallow the Disputed Claims or reduce

and subordinate such claims to the same level as the Debtor’s common stock pursuant to section

510(b) of the Bankruptcy Code, Alpha and the Sabby Entities were equally as confident that the

Court would allow their claims as filed.

41. Further, the Objections to the Disputed Claims involve numerous factual and legal

issues that would be time consuming and costly for the Debtor to litigate. Specifically, litigation

over the Disputed Claims would have included one or more rounds of written discovery,

numerous depositions, expensive expert testimony, extensive briefing, and multiple hearings.

The cost and delay inherent in such litigation would have negatively impacted both the Debtor’s

ability to move forward with its Plan, as drafted, and the timing and amount of proposed

distributions to creditors and interest holders.

42. The Settlement Stipulations also resolve Alpha’s and the Sabby Entities’

allegations against the Debtor’s officers and directors. The Debtor disputes that any such claims

exist or that the allegations have any merit whatsoever, but recognizes that pursuit or litigation of

such claims could have given rise to costly indemnification claims against the Debtor.

43. Resolution of the Disputed Claims pursuant to the Settlement Stipulations, the

only claims asserted by any holders of Warrants, will permit the Debtor to move promptly

toward confirmation of its Plan. The Debtor’s ability to resolve all alleged claims related to the


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Warrants quickly and efficiently, combined with the positive impact this resolution will have on

other creditors and interest holders, was a significant factor in the Debtor’s decision to enter into

the Settlement Stipulations. The Debtor was also willing to agree to pay the claim amounts

provided for in the Settlement Stipulations shortly after the Stipulation Effective Date because

these settlements will ensure that the Debtor will have sufficient cash on hand to be able to pay

all remaining general unsecured creditors in full, with interest, following confirmation of the

Plan. Further, prompt payment of such claims will avoid the need to pay interest on such claims.

44. Given that the Debtor’s decision to enter into both Settlement Stipulations was

driven, in significant part, by the avoidance of litigation costs and the ability to resolve all issues

related to alleged claims arising from or relating to Warrants, each of the Alpha Stipulation and

the Sabby Entities Stipulation is expressly contingent on Court approval of the other.

45. Finally, as noted above, the Settlement Stipulations are the result of substantial,

good faith, arms-length negotiations between the Debtor and each of Alpha and the Sabby

Entities. The resolutions reflected in the Settlement Stipulations clearly reflect a result that is

favorable to the Debtor’s estate and constitute a reasonable exercise of the Debtor’s business

judgment. Accordingly, for the foregoing reasons, the Debtor respectfully submits that the

Martin factors are satisfied and the Court should enter an order approving the Settlement

Stipulations.


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WHEREFORE, the Debtor respectfully requests that the Court enter the Proposed

Settlement Order (a) approving the Settlement Stipulations and (b) granting the Debtor such

further relief as is just and proper.

Dated: August 27, 2018 SAUL EWING ARNSTEIN & LEHR LLP

/s/ Mark Minuti Mark Minuti (DE Bar No. 2659) Monique Bair DiSabatino (DE Bar No. 6027) 1201 N. Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19801 Telephone: (302) 421-6840 Facsimile: (302) 421-5873 [email protected] [email protected]

Counsel for Debtor and Debtor-in-Possession


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In re:


Debtor.

Chapter 11 Case No. 17-12913 (KJC) Hearing Date: September 18, 2018 at 1:30 p.m. (ET) Objection Deadline: September 10, 2018 at 4:00 p.m. (ET)

NOTICE OF MOTION

PLEASE TAKE NOTICE that on August 27, 2018, the above-captioned debtor and debtor-in-possession (the “Debtor”) filed the Motion of the Debtor for Entry of an Order Approving Stipulations by and among the Debtor and Alpha Capital Anstalt, Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd. Resolving, Inter Alia, Objections to Disputed Claims (the “Motion”) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).

PLEASE TAKE FURTHER NOTICE that objections, if any, to the entry of an order approving the Motion must be (a) in writing and served on or before September 10, 2018 at 4:00 p.m. (prevailing Eastern Standard Time) (the “Objection Deadline”); (b) filed with the Clerk of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801; and (c) served as to be received on or before the Objection Deadline by the undersigned attorneys for the Debtor.

PLEASE TAKE FURTHER NOTICE THAT only objections made in writing and timely filed and received, in accordance with the procedures above, will be considered by the Bankruptcy Court at the hearing described below.

PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE MOTION WILL BE HELD ON SEPTEMBER 18, 2018 AT 1:30 P.M. (PREVAILING EASTERN TIME) BEFORE THE HONORABLE KEVIN J. CAREY, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET STREET, 5th FLOOR, COURTROOM 5, WILMINGTON, DELAWARE 19801.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING.



Case 17-12913-KJC Doc 420-1 Filed 08/27/18 Page 1 of 2

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Dated: August 27, 2018 SAUL EWING ARNSTEIN & LEHR LLP

/s/ Mark Minuti Mark Minuti (DE Bar No. 2659) Monique Bair DiSabatino (DE Bar No. 6027) 1201 N. Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19801 Telephone: (302) 421-6840 Facsimile: (302) 421-5873 [email protected] [email protected]

Counsel for Debtor and Debtor-in-Possession


24811927.3 08/27/2018

EXHIBIT A

Proposed Order


24811927.3 08/27/2018


In re:


Debtor.

Chapter 11 Case No. 17-12913 (KJC) Re: Docket No. ____

ORDER APPROVING STIPULATIONS BY AND AMONG THE DEBTOR AND ALPHA CAPITAL ANSTALT, SABBY HEALTHCARE MASTER FUND, LTD.

AND SABBY VOLATILITY WARRANT MASTER FUND, LTD. RESOLVING, INTER ALIA, OBJECTIONS TO DISPUTED CLAIMS

Upon consideration of the Motion of the Debtor for Entry of an Order Approving

Stipulations by and among the Debtor and Alpha Capital Anstalt, Sabby Healthcare Master

Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd. Resolving, Inter Alia, Objections to

Disputed Claims (the “Motion”);2 and this Court having jurisdiction over this matter pursuant to

28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United

States District Court for the District of Delaware, dated February 29, 2012; and this Court having

found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and that this Court may

enter a final order consistent with Article III of the United States Constitution; and this Court

having found that venue of this proceeding and the Motion in this district is proper pursuant to

28 U.S.C. §§ 1408 and 1409; and this Court having found that the Debtor’s notice of the Motion

and opportunity for a hearing on the Motion were appropriate and no other notice need be

provided; and having heard the evidence and statements in support or in opposition of the relief

requested therein at a hearing, if any, before this Court (the “Hearing”); and this Court having


West 41st Avenue- #245, San Mateo, CA 94403. 2 Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Motion.


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determined that the legal and factual bases set forth in the Motion and at the Hearing, if any,

establish just cause for the relief granted herein; and this Court having found that the relief

requested in the Motion demonstrates a sound exercise of the Debtor’s business judgment and is

in the best interest of the Debtor, its estate, creditors, and other parties in interest; and upon all of

the proceedings before this Court; and after due deliberation and sufficient cause appearing

therefore, it is

ORDERED, ADJUDGED, AND DECREED THAT:

1. The Motion is GRANTED as set forth herein.

2. The Alpha Stipulation annexed hereto as Exhibit 1 is hereby APPROVED.

3. The Sabby Entities Stipulation annexed hereto as Exhibit 2 is hereby

APPROVED.

4. The Alpha Claim is hereby reduced and allowed as a general unsecured claim in

the total amount of $425,000.00 (the “Allowed Alpha Claim”), with prejudice to Alpha’s ability

to amend the Allowed Alpha Claim or file further claims against the Debtor or its estate.

5. The SHMF Claim is hereby reduced and allowed as a general unsecured claim in

the total amount of $284,750.00 (the “Allowed SHMF Claim”), with prejudice to SHMF’s ability

to amend the Allowed SHMF Claim or file further claims against the Debtor or its estate.

6. The SVWMF Claim is hereby reduced and allowed as a general unsecured claim

in the total amount of $140,250.00 (the “Allowed SVWMF Claim”), with prejudice to

SVWMF’s ability to amend the Allowed SVWMF Claim or file further claims against the Debtor

or its estate.


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7. The Debtor is authorized to pay the Allowed Alpha Claim, the Allowed SHMF

Claim and the Allowed SVWMF Claim (the “Allowed Claims”) as set forth in the Settlement

Stipulations.

8. The Warrants held by Alpha and the Sabby Entities shall be deemed surrendered

to the Debtor for cancellation effective on payment of the Allowed Claims, and the Debtor shall

be authorized to take any such actions reasonably necessary to instruct the Warrant Agent (as

defined in the Warrants) to cancel and retire the Warrants.

9. From and after the full payment of the Allowed Claims, the Debtor’s Claims

Agent appointed in this case is authorized to take any and all actions necessary to effectuate this

Order and the Settlement Stipulations including, without limitation, amending the claims register

in this Chapter 11 Case to reflect the terms of this Order and the Settlement Stipulations.

10. This Court shall retain jurisdiction over the Parties with respect to all matters

arising from or related to the implementation of this Order.

Dated: __________________, 2018

_________________________________ Honorable Kevin J. Carey United States Bankruptcy Judge


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EXHIBIT 1

ALPHA STIPULATION


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In re:


Debtor.

Chapter 11 Case No. 17-12913 (KJC)

STIPULATION BY AND BETWEEN THE DEBTOR AND

ALPHA CAPITAL ANSTALT RESOLVING, INTER ALIA, OBJECTIONS TO CLAIM NO. 101

Dex Liquidating Co. (f/k/a Dextera Surgical Inc.), debtor and debtor-in-possession (the

“Debtor”) in the above-captioned chapter 11 case (the “Chapter 11 Case”) and Alpha Capital

Anstalt (“Alpha”) (each of the Debtor and Alpha are sometimes referred to individually as a

“Party” and collectively, as the “Parties”), hereby stipulate and agree, by and through their

respective counsel, as follows (the “Stipulation”):

RECITALS

WHEREAS, on December 11, 2017 (the “Petition Date”), the Debtor filed a voluntary

petition for relief with the United States Bankruptcy Court for the District of Delaware (the

“Court”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”);

WHEREAS, the Debtor continues to manage its property as a debtor in possession

pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;

WHEREAS, on December 11, 2017, the Debtor entered into an agreement to sell

substantially all of its assets (the “Sale”) to Aesculap, Inc. or its designee (the “Buyer”);




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WHEREAS, at a hearing on January 24, 2018, the Court approved the Sale and entered

the Order (WITH REVISIONS) (A) Approving Asset Purchase Agreement With Aesculap, Inc.,

(B) Authorizing Sale of Debtor’s Assets Free and Clear of Interests; (C) Authorizing Assumption

and Assignment of Certain of the Debtor’s Executory Contracts; (D) Granting Related Relief

[Docket No. 160] (the “Sale Order”);

WHEREAS, the closing of the Sale to the Buyer pursuant to the Sale Order occurred on

February 20, 2018;

WHEREAS, subsequent to the closing of the Sale, the Debtor changed its name from

Dextera Surgical Inc. to Dex Liquidating Co.;

WHEREAS, on April 18, 2018, the Debtor filed the Debtor’s Chapter 11 Plan of

Liquidation (as such plan may be amended, the “Plan”) and the Disclosure Statement Relating to

Debtor’s Chapter 11 Plan of Liquidation [Docket Nos. 249 and 250, respectively];

WHEREAS, pursuant to a Registration Statement under the Securities Act of 1933 filed

with the United States Securities and Exchange Commission on Form S-1, and effective on May

11, 2017, the Debtor offered for sale 8,000 shares of Series B Convertible Preferred Stock along

with, inter alia, certain Series 1 Common Stock Purchase Warrants (the “Warrants”);

WHEREAS, Alpha holds one Warrant exercisable for approximately 6,666,667 shares of

the Debtor’s common stock (the “Alpha Warrant”);

WHEREAS, Sabby Healthcare Master Fund, Ltd (“SHMF”) holds one Warrant

exercisable for approximately 4,444,445 shares of the Debtor’s common stock and Sabby

Volatility Warrant Master Fund, Ltd. (“SVWMF,” collectively with SHMF as, the “Sabby

Entities”) holds one Warrant exercisable for approximately 2,222,222 shares of the Debtor’s

common stock;


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WHEREAS, the Sabby Entities and Alpha allege that the Sale constitutes a

“Fundamental Transaction” under section 3(d) of the Warrants and that, as a result of the Sale,


of their Warrants;

WHEREAS, by letter dated March 20, 2018, Alpha purported to exercise its alleged

rights under section 3(d) of the Warrants as a result of the closing of the Sale;

WHEREAS, by electronic mail dated January 29, 2018, Sabby Management, LLC,

sought to “elect” on behalf of the Sabby Entities to receive cash pursuant to section 3(d) of the

Warrant as a result of the Sale;

WHEREAS, on or about March 30, 2018, Alpha filed Claim No. 101 (the “Alpha

Claim”) in the total, unsecured amount of “at least” $712,738.16;

WHEREAS, or about January 29, 2018, SHMF filed Claim No. 13 (the “SHMF Claim”)

in the total, unsecured amount of $1,432,114.56;

WHEREAS, on or about January 29, 2018, SVWMF filed Claim No. 14 (the “SVWMF

Claim,” collectively with the SHMF Claim as the “Sabby Entities’ Claims”) in the total,

unsecured amount of $716,057.26;

WHEREAS, with the exception of Alpha and the Sabby Entities, no other holder of

Warrants purported to exercise their alleged rights under section 3(d) of the Warrants nor timely

filed claims against the Debtor or its estate;

WHEREAS, the Debtor denies that the closing of the Sale gives rise to any claims under

the Warrants, and, accordingly, raised a number of objections to the Alpha Claim and the Sabby

Entities’ Claims (the “Objections”);

WHEREAS, Alpha disputed each of the Debtor’s Objections to the Alpha Claim;


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WHEREAS, Alpha raised questions about possible claims against the Debtor’s present

and former officers and directors (the “Beach of Duty Claims”); and

WHEREAS, the Debtor denies such alleged Breach of Duty Claims;

WHEREAS, the Debtor and Alpha exchanged additional information and engaged in

good faith negotiations;

WHEREAS, a settlement of the Debtor’s disputes and differences with both Alpha and

the Sabby Entities, including the settlement of the Objections to the Alpha Claim and the Sabby

Entities’ Claims will resolve all possible disputes, differences and claims related to the Warrants

given, inter alia, that no other holders of Warrants timely exercised their alleged rights under

Section 3(d) of the Warrants, nor timely filed claims against the Debtor based upon or arising

under Warrants;

WHEREAS, the Debtor has made it clear to Alpha that it would not settle its disputes

and differences, including its Objections to the Alpha Claim, unless it was also able to reach a

settlement of its disputes and differences with the Sabby Entities, including its Objections to the

Sabby Entities’ Claims;

WHEREAS, the Debtor and Alpha desire to resolve all of their disputes and differences,

including their disputes and differences related to the Alpha Claim without the time, expense,

and uncertainty attendant with further litigation over any such Alpha Claim, based upon the

terms set forth herein, subject to the entry of a Final Order (as defined below) by the Court

approving this Stipulation following notice and an opportunity to be heard pursuant to Rule 9019

of the Federal Rules of Bankruptcy Procedure; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises

hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of


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which is hereby acknowledged, and with the intent to be legally bound hereby, the Debtor and

Alpha stipulate and agree as follows:

STIPULATION

1. Each of the Recitals set forth above is incorporated by reference as though set

forth fully at length herein.

2. This Stipulation is subject to and conditioned upon satisfaction of the following

two conditions (the first business day on which both of the following conditions are satisfied

shall be, the “Stipulation Effective Date”):

A. The entry of a Final Order of the Court approving this Stipulation pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure after notice and an opportunity to be heard (the “Alpha 9019 Motion”). As used herein, “Final Order” shall mean an order or judgment of the Court as to which (a) the time to appeal, petition for certiorari, or motion for argument or rehearing has expired and as to which no appeal, petition for certiorari, or motion for re-argument or rehearing shall then be pending, or (b) in the event that an appeal, writ for certiorari, re-argument or rehearing thereof has been sought, such order of the Court shall have been affirmed by the highest court to which an appeal, petition for certiorari or re-argument or rehearing was sought and the time to take any further appeal, petition for certiorari, or motion for re-argument or rehearing shall have expired; provided, however, that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure or Rule 9024 of the Federal Rules of Bankruptcy Procedure may be filed with respect to such order, as long as such a motion has not actually been filed; and

B. The entry of a Final Order of the Court approving a stipulation pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure after notice and an opportunity to be heard (the “Sabby Entities 9019 Motion”) resolving the Debtor’s disputes and differences with the Sabby Entities, including the Debtor’s Objections to the Sabby Entities’ Claims, on terms and conditions satisfactory to the Debtor in its sole and absolute discretion (the “Sabby Entities Stipulation”).

3. The Debtor shall file the Alpha 9019 Motion and the Sabby Entities 9019 Motion

(which may be combined into one motion) within five (5) business days of execution of this

Stipulation and the Sabby Entities Stipulation, and such motion(s) shall be scheduled for the next


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available omnibus hearing date, or as soon thereafter as the Court can accommodate the Parties.

The Debtor shall also schedule a hearing on its Disclosure Statement for the same hearing date

and request a hearing for confirmation of the Plan on or before November 30, 2018.

4. Effective on the Stipulation Effective Date, the Alpha Claim shall be reduced and

allowed as a general unsecured claim in the total amount of $425,000.00 (the “Allowed Alpha

Claim”), with prejudice to Alpha’s ability to amend the Allowed Alpha Claim or file further

claims against the Debtor or its estate, provided, however, that if the Court enters a Final Order

approving a Sabby Entities Stipulation that results in the Sabby Entities receiving a greater

allowed claim than Alpha, on a per Warrant basis, then the Allowed Alpha Claim shall be

increased to equal the allowed Sabby Entities’ claim amount, on a per Warrant basis.

5. Within five (5) business days of the Stipulation Effective Date, the Debtor shall

pay the Allowed Alpha Claim in full, without interest, pursuant to payment instructions provided

by Alpha to the Debtor. Effective upon payment of the Allowed Alpha Claim, Alpha hereby

surrenders the Alpha Warrant to the Debtor for cancellation, and authorizes the Debtor to take

any such actions reasonably necessary to instruct the Warrant Agent (as defined in the Alpha

Warrant) to cancel and retire the Alpha Warrant.

6. Effective upon the Stipulation Effective Date, and except for the rights and

obligations created by this Stipulation, the Debtor, on behalf of itself and its estate and the

Debtor’s successors or assigns, does hereby fully and finally compromise and settle with, and

forever release, remise, relieve, waive, relinquish and discharge Alpha, and each of its present

and former officers, directors, employees, agents, attorneys, shareholders and their respective

successors and assigns, from all claims, all causes or causes of action, suits, debts, dues,

demands, obligations, charges, costs, expenses (including but not limited to attorneys’ fees),


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sums of money, controversies, damages, accounts, agreements, covenants, contracts, judgments,

reckonings, liens and liabilities of every kind and nature whatsoever, whether at law or in equity,

whether based upon statute, common law or otherwise, whether matured, contingent or non-

contingent, whether direct or indirect, whether known or unknown, whether suspected or

unsuspected, whether or not hidden and without regard to the subsequent discovery or existence

of different or additional facts, which the Debtor ever had, now has, or may claim to have from

the beginning of the world to the Stipulation Effective Date referring or relating to the Warrants,

the Alpha Claim, the Objections, the Breach of Duty Claims, the Debtor, the Debtor’s operations

or the Chapter 11 Case. Without limiting the generality of the foregoing, the Debtor

acknowledges that there is a possibility that, subsequent to the execution of this Stipulation, it

will discover facts, or incur or suffer claims, which were unknown or unsuspected at the time this

Stipulation was executed, and which if known by it at that time may have materially affected the

decision to execute this Stipulation. The Debtor further acknowledges and agrees that by reason

of this Stipulation and the waiver and release and discharge contained herein, it is assuming any

risk of such unknown or unsuspected facts and such unknown or unsuspected claims. The

Debtor has been advised of the existence of Section 1542 of the California Civil Code which

provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Notwithstanding such provisions, the waiver and release and discharge contained herein shall

constitute a full waiver and release and discharge in accordance with its terms and the Debtor (i)

expressly waives and relinquishes, to the fullest extent permitted by law, the provisions, rights,


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and benefits of any statute or principle of public policy or common law of the United States, or

of any state thereof (including Section 1542 of the California Civil Code) or any other country,

which either narrowly construes releases purporting by their terms to release such unknown or

unsuspected claims in whole or in part, or restricts or prohibits the releasing of such claims and

(ii) expressly acknowledges and agrees, to the fullest extent permitted by law, that all such

provisions, rights, and benefits are inapplicable due to the governing law provision set forth in

paragraph 19 of this Stipulation.

7. Effective on the Stipulation Effective Date, and except for the rights and

obligations created by this Stipulation, Alpha, on behalf of itself and its successors or assigns,

does hereby fully and finally compromise and settle with, and forever release, remise, relieve,

waive, relinquish and discharge the Debtor, the Debtor’s estate and each of the Debtor’s past and

present officers, directors, employees, agents, attorneys, shareholders and the Debtor’s

successors and assigns (the “Debtor Releasees”) from all claims, all causes or causes of action,

suits, debts, dues, demands, obligations, charges, costs, expenses (including but not limited to

attorneys’ fees), sums of money, controversies, damages, accounts, agreements, covenants,

contracts, judgments, reckonings, liens and liabilities of every kind and nature whatsoever,

whether at law or in equity, whether based upon statute, common law or otherwise, whether

matured, contingent or non-contingent, whether direct or indirect, whether known or unknown,

whether suspected or unsuspected, whether or not hidden and without regard to the subsequent

discovery or existence of different or additional facts, which Alpha ever had, now has, or may

claim to have from the beginning of the world to the Stipulation Effective Date referring or

relating to the Warrants, the Alpha Claim, the Objections, the Breach of Duty Claims, the

Debtor, the Debtor’s operations or the Chapter 11 Case. Without limiting the generality of the


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foregoing, Alpha acknowledges that there is a possibility that, subsequent to the execution of this

Stipulation, it will discover facts, or incur or suffer claims, which were unknown or unsuspected

at the time this Stipulation was executed, and which if known by it at that time may have

materially affected the decision to execute this Stipulation. Alpha further acknowledges and

agrees that by reason of this Stipulation and the waiver and release and discharge contained

herein, it is assuming any risk of such unknown or unsuspected facts and such unknown or

unsuspected claims. Alpha has been advised of the existence of Section 1542 of the California

Civil Code which provides:



constitute a full waiver and release and discharge in accordance with its terms and Alpha (i)









8. From and after the full payment of the Allowed Alpha Claim amount, the Debtor

and the official Claims Agent appointed in this case are authorized to take any and all actions


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necessary to effectuate this Stipulation including, without limitation, amending the claims

register in this Chapter 11 Case to reflect the terms of this Stipulation.

9. This Stipulation is the entire agreement between the Parties with respect to the

subject matter hereof. This Stipulation supersedes any and all agreements, whether written or

oral, that may have previously existed between the Parties with respect to the matters set forth

herein. No statements, promises, or representations have been made by any Party to any other,

or relied upon, and no consideration has been offered, promised, expected or held out other than

as expressly provided for herein.

10. Each of the undersigned counsel represents and warrants that he/she is authorized

and empowered to execute and deliver this Stipulation on behalf of his/her client(s), and to bind

it/them to the terms and conditions of this Stipulation.

11. Alpha represent and warrant that it currently holds the Alpha Warrant and the

Alpha Claim and that no portion of such claim or warrants have been cancelled, sold or assigned.

Alpha shall not sell, transfer or assign the Alpha Warrant or the Alpha Claim.

12. In the event of any ambiguity in this Stipulation, no inferences shall be drawn

against any Party on the basis of authorship of this Stipulation.

13. No modification, amendment or waiver of any of the terms or provisions of this

Stipulation shall bind any Party unless such modification, amendment or waiver is in writing, has

been approved by the Court, and has been executed by a duly authorized representative of the

Party (or the successor thereto) against whom such modification, amendment or waiver is sought

to be enforced.

14. If any part of this Stipulation is held to be unenforceable by any court of

competent jurisdiction, the unenforceable provision shall be deemed amended to the least extent


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possible to render it enforceable and the remainder of this Stipulation shall remain in full force

and effect.

15. If the Court approves, by Final Order, the Sabby Entities Stipulation and all terms

and conditions of this Stipulation, except for timing of the payment of the Allowed Alpha Claim

in paragraph 5, the Stipulation Effective Date shall be the Effective Date of the Debtor’s Plan,

and the Allowed Alpha Claim shall be treated as a General Unsecured Claim under the Debtor’s

Plan and paid, in full, pursuant to the Plan within five (5) business days after Effective Date of

the Debtor’s Plan. Effective upon payment of the Allowed Alpha Claim, Alpha hereby

surrenders the Alpha Warrant to the Debtor for cancellation, and authorizes the Debtor to take

any such actions reasonably necessary to instruct the Warrant Agent (as defined in the Alpha

Warrant) to cancel and retire the Alpha Warrant.

16. If either (1) the Debtor fails to perform its obligations under this Stipulation, or

(2) the Stipulation Effective Date does not occur on or before December 31, 2018, then Alpha

may elect, in its sole and absolute discretion, to terminate this Stipulation by providing written

notice of such termination to the undersigned counsel for the Debtor, and, upon such termination,

this Stipulation shall be null and void and no further force or effect whatsoever and no Party

shall have any obligation to any other Party arising out of this Stipulation and no statement made

herein may be used by or against any Party or any non-Party for any purpose.

17. Alpha shall support, and if entitled to vote, shall vote in favor of the Debtor’s Plan

provided that such Plan is consistent with this Stipulation.

18. Alpha shall not acquire additional Warrants and shall not encourage or assist any

other party in pursuing claims against the Debtor or the Debtor Releasees, including without

limitation, based upon Warrants.


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19. This Stipulation shall be governed by and construed in accordance with the

Bankruptcy Code and, where not inconsistent, the laws of the State of Delaware, without regard

to the conflict of laws principles thereof.

20. Except as expressly set forth herein, this Stipulation shall be binding upon and

inure to the benefit of the Parties and their respective successors, assignees, agents, attorneys and

representatives.

21. The Parties acknowledge and agree that the Court shall retain jurisdiction over all

disputes concerning or related to the subject matter of this Stipulation.

22. This Stipulation may be executed in one or more counterparts, including by

facsimile and/or electronic mail, each of which when so executed shall be deemed to be an

original, and all of which, when taken together, shall constitute one and the same Stipulation.

SAUL EWING ARNSTEIN & LEHR LLP /s/ Mark Minuti Mark Minuti (DE #2659) Monique Bair DiSabatino (DE #6027) 1201 North Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19899-1266 (302) 421-6840 / 6898 (302) 421-5873 / 5864 (Fax) [email protected] [email protected] Counsel for Debtor and Debtor in Possession Dated: August 26, 2018

KLEHR HARRISON HARVEY

BRANZBURG LLP /s/ Richard M. Beck Richard M. Beck, Jr. (DE #3370) 919 Market Street, Suite 1000 Wilmington, DE 19801 (302) 552-5501 (302) 426-1189 (Fax) [email protected] Counsel for Alpha Dated: August 26, 2018


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EXHIBIT 2

SABBY ENTITIES STIPULATION


IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re:

Dex Liquidating Co. (f/k/a Dextera Surgical Inc.),'

Chapter 11

Case No. 17-12913 (KJC)

Debtor.

STIPULATION BY AND AMONG THE DEBTOR AND SABBY HEALTHCARE

MASTER FUND, LTD. AND SABBY VOLATILITY WARRANT MASTER FUND, LTD. RESOLVING. INTER ALFA, OBJECTIONS TO CLAIM NOS. 13 AND 14

Dex Liquidating Co. (f/k/a Dextera Surgical Inc.), debtor and debtor-in-possession (the

"Debtor") in the above-captioned chapter 11 case (the "Chapter 11 Case") and Sabby Healthcare

Master Fund, Ltd. ("SHMF") and Sabby Volatility Warrant Master Fund, Ltd. ("SVWMF "

together with SHMF as the "Sabby Entities") (each of the Debtor, SHMF and SVWMF are

sometimes referred to individually as a "Party" and collectively as, the "Parties"), hereby

stipulate and agree, by and through their respective counsel, as follows (the "Stipulation"):

RECITALS

WHEREAS, on December 11, 2017 (the "Petition Date"), the Debtor filed a voluntary

petition for relief with the United States Bankruptcy Court for the District of Delaware (the

"Court") under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code");

WHEREAS, the Debtor continues to manage its property as a debtor in possession

pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;

WHEREAS, on December 11, 2017, the Debtor entered into an agreement to sell

substantially all of its assets (the "Sale") to Aesculap, Inc. or its designee (the "Buyer");

The last four digits of the Debtor's federal tax identification number are 7832. The Debtor's address is 7


24808704.4 08/24/2018

iD


WHEREAS, at a hearing on January 24, 2018, the Court approved the Sale and entered

the Order (WITH REVISIONS) (A) Approving Asset Purchase Agreement With Aesculap, Inc.,

(B) Authorizing Sale of Debtor 's Assets Free and Clear of Interests; (C) Authorizing Assumption

and Assignment of Certain of the Debtor 's Executory Contracts; (D) Granting Related Relief

[Docket No. 160] (the "Sale Order");

WHEREAS, the closing of the Sale to the Buyer pursuant to the Sale Order occurred on

February 20, 2018;

WHEREAS, subsequent to the closing of the Sale, the Debtor changed its name from

Dextera Surgical Inc. to Dex Liquidating Co.;

WHEREAS, on April 18, 2018, the Debtor filed the Debtor 's Chapter 11 Plan of

Liquidation (as such plan may be amended, the "Plan") and the Disclosure Statement Relating to

Debtor 's Chapter 11 Plan of Liquidation [Docket Nos. 249 and 250, respectively];

WHEREAS, pursuant to a Registration Statement under the Securities Act of 1933 filed

with the United States Securities and Exchange Commission on Form S-1, and effective on May

11, 2017, the Debtor offered for sale 8,000 shares of Series B Convertible Preferred Stock along

with, inter alia, certain Series 1 Common Stock Purchase Warrants (the "Warrants");

WHEREAS, SHMF holds one Warrant exercisable for approximately 4,444,445 shares

of the Debtor's common stock and SVWMF holds one Warrant exercisable for approximately

2,222,222 shares of the Debtor's common stock (collectively, the "Sabby Entities Warrants");

WHEREAS, Alpha Capital Anstalt ("Alpha") holds one Warrant exercisable for

approximately 6,666,667 shares of the Debtor's common stock;

WHEREAS, the Sabby Entities and Alpha allege that the Sale constitutes a

"Fundamental Transaction" under section 3(d) of the Warrants and that, as a result of the Sale,

2 24808704.4 08/2412018



of their Warrants;

WHEREAS, by electronic mail dated January 29, 2018, Sabby Management, LLC,

sought to "elect" on behalf of the Sabby Entities to receive cash pursuant to section 3(d) of the

Warrant as a result of the Sale;

WHEREAS, by letter dated March 20, 2018, Alpha purported to exercise its alleged

rights under section 3(d) of the Warrants as a result of the closing of the Sale;

WHEREAS, or about January 29, 2018, SHMF filed Claim No. 13 (the "SHMF Claim")

in the total, unsecured amount of $1,432,114.56;

WHEREAS, on or about January 29, 2018, SVVVMF filed Claim No. 14 (the "SVWMF

Claim," collectively with the SHMF Claim as the "Sabby Entities' Claims") in the total,

unsecured amount of $716,057.26;

WHEREAS, on or about March 30, 2018, Alpha filed Claim No. 101 (the "Alpha

Claim") in the total, unsecured amount of "at least" $712,738.16;

WHEREAS, with the exception of the Sabby Entities and Alpha, no other holder of

Warrants purported to exercise their alleged rights under section 3(d) of the Warrants nor timely

filed claims against the Debtor or its estate;

WHEREAS, the Debtor denies that the closing of the Sale gives rise to any claims under

the Warrants and, accordingly, raised a number of objections to the Sabby Entities' Claims and

the Alpha Claim (the "Objections");

WHEREAS, the Sabby Entities dispute each of the Debtor's Objections to the Sabby

Entities' Claims;

3 24808704.4 08/24/2018


WHEREAS, by letter dated June 18, 2018 (the "Sabby Letter"), the Sabby Entities

threatened and alleged certain claims against the Debtor's present and former officers and

directors;

WHEREAS, by letter dated June 28, 2018, the Debtor responded to, and denied the

allegations in, the Sabby Letter;

WHEREAS, the Debtor and the Sabby Entities exchanged additional information and

engaged in good faith negotiations;

WHEREAS, a settlement of the Debtor's disputes and differences with both the Sabby

Entities and Alpha, including the settlement of the Objections to the Sabby Entities' Claims and

the Alpha Claim will resolve all possible disputes, differences and claims related to the Warrants

given, inter alia, that no other holders of Warrants timely exercised their alleged rights under

Section 3(d) of the Warrants, nor timely filed claims against the Debtor based upon or arising

under the Warrants;

WHEREAS, the Debtor has made it clear to the Sabby Entities that it would not settle its

disputes and differences, including its Objections to the Sabby Entities' Claims, unless it was

also able to reach a settlement of its disputes and differences with Alpha, including its Objections

to the Alpha Claim;

WHEREAS, the Debtor and the Sabby Entities desire to resolve all of their disputes and

differences, including their disputes and differences related to the Sabby Entities' Claims,

without the time, expense, and uncertainty attendant with further litigation over any such Sabby

Entities' Claims, based upon the terms set forth herein, subject to the entry of a Final Order (as

defined below) by the Court approving this Stipulation following notice and an opportunity to be

heard pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure; and

4 24808704.4 08/24/2018


NOW, THEREFORE, in consideration of the foregoing and of the mutual promises

hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of

which is hereby acknowledged, and with the intent to be legally bound hereby, the Debtor and

the Sabby Entities stipulate and agree as follows:

STIPULATION

1. Each of the Recitals set forth above is incorporated by reference as though set

forth fully at length herein.

2. This Stipulation is subject to and conditioned upon satisfaction of the following

two conditions (the first business day on which both of the following conditions are satisfied

shall be the "Stipulation Effective Date"):

A. The entry of a Final Order of the Court approving this Stipulation pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure after notice and an opportunity to be heard (the "Sabby Entities 9019 Motion"). As used herein, "Final Order" shall mean an order or judgment of the Court as to which (a) the time to appeal, petition for certiorari, or motion for argument or rehearing has expired and as to which no appeal, petition for certiorari, or motion for re-argument or rehearing shall then be pending, or (b) in the event that an appeal, writ for certiorari, re-argument or rehearing thereof has been sought, such order of the Court shall have been affirmed by the highest court to which an appeal, petition for certiorari or re-argument or rehearing was sought and the time to take any further appeal, petition for certiorari, or motion for re-argument or rehearing shall have expired; provided, however, that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure or Rule 9024 of the Federal Rules of Bankruptcy Procedure may be filed with respect to such order, as long as such a motion has not actually been filed; and

B. The entry of a Final Order of the Court approving a stipulation pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure after notice and an opportunity to be heard (the "Alpha 9019 Motion") resolving the Debtor's disputes and differences with Alpha, including the Debtor's Objections to the Alpha Claim, on terms and conditions satisfactory to the Debtor in its sole and absolute discretion (the "Alpha Stipulation").

5 24808704.4 08/24/2018


3. The Debtor shall file the Alpha 9019 Motion and the Sabby Entities 9019 Motion

(which may be combined into one motion) within five (5) business days of execution of this

Stipulation and the Alpha Stipulation, and such motion(s) shall be scheduled for the next

available omnibus hearing date, or as soon thereafter as the Court can accommodate the Parties.

The Debtor shall also schedule a hearing on its Disclosure Statement for the same hearing date

and request a hearing for confirmation of the Plan on or before November 30, 2018.

4. Effective on the Stipulation Effective Date, the SHMF Claim shall be reduced and

allowed as a general unsecured claim in the total amount of $283,333.33 (the "Allowed SHMF

Claim"), with prejudice to SHMF's ability to amend the Allowed SHMF Claim or file further

claims against the Debtor or its estate, provided, however, that if the Court enters a Final Order

approving an Alpha Stipulation that results in Alpha receiving a greater allowed claim than

SHMF, on a per Warrant basis, then the Allowed SHMF Claim shall be increased to equal the

Alpha allowed claim amount, on a per Warrant basis.

5. Effective on the Stipulation Effective Date, the SVWMF Claim shall be reduced

and allowed as a general unsecured claim in the total amount of $141,666.67 (the "Allowed

SVWMF Claim," collectively with the Allowed SHMF Claim as the "Allowed Sabby Entities'

Claims"), with prejudice to SVWMF's ability to amend the Allowed SVWMF Claim or file

further claims against the Debtor or its estate; provided, however, that if the Court enters a Final

Order approving an Alpha Stipulation that results in Alpha receiving a greater allowed claim

than SVWMF, on a per Warrant basis, then the Allowed SVWMF Claim shall be increased to

equal the Alpha allowed claim amount, on a per Warrant basis.

6. Within five (5) business days of the Stipulation Effective Date, the Debtor shall

pay the Allowed Sabby Entities' Claims in full, without interest, pursuant to payment

6 24808704.4 08/24/2018


instructions provided by the Sabby Entities to the Debtor. Effective upon payment of the

Allowed Sabby Entities' Claims, the Sabby Entities hereby surrenders the Sabby Entities'

Warrants to the Debtor for cancellation, and authorizes the Debtor to take any such actions

reasonably necessary to instruct the Warrant Agent (as defined in the Sabby Entities' Warrants)

to cancel and retire the Sabby Entities' Warrants.

7. Effective upon the Stipulation Effective Date, and except for the rights and

obligations created by this Stipulation, the Debtor, on behalf of itself and its estate and the

Debtor's successors or assigns, does hereby fully and finally compromise and settle with, and

forever release, remise, relieve, waive, relinquish and discharge the Sabby Entities, and each of

their present and former officers, directors, employees, agents, attorneys, shareholders and their

respective successors and assigns, from all claims, all causes or causes of action, suits, debts,

dues, demands, obligations, charges, costs, expenses (including but not limited to attorneys'

fees), sums of money, controversies, damages, accounts, agreements, covenants, contracts,

judgments, reckonings, liens and liabilities of every kind and nature whatsoever, whether at law

or in equity, whether based upon statute, common law or otherwise, whether matured, contingent

or non-contingent, whether direct or indirect, whether known or unknown, whether suspected or

unsuspected, whether or not hidden and without regard to the subsequent discovery or existence

of different or additional facts, which the Debtor ever had, now has, or may claim to have from

the beginning of the world to the Stipulation Effective Date referring or relating to the Warrants,

the Sabby Entities' Claims, the Objections, the Sabby Letter, the Debtor, the Debtor's operations

or the Chapter 11 Case. Without limiting the generality of the foregoing, the Debtor

acknowledges that there is a possibility that, subsequent to the execution of this Stipulation, it

will discover facts, or incur or suffer claims, which were unknown or unsuspected at the time this

7 24808704.4 08/24/2018


Stipulation was executed, and which if known by it at that time may have materially affected the

decision to execute this Stipulation. The Debtor further acknowledges and agrees that by reason

of this Stipulation and the waiver and release and discharge contained herein, it is assuming any

risk of such unknown or unsuspected facts and such unknown or unsuspected claims. The

Debtor has been advised of the existence of Section 1542 of the California Civil Code which

provides:



constitute a full waiver and release and discharge in accordance with its terms and the Debtor (i)









8. Effective on the Stipulation Effective Date, and except for the rights and

obligations created by this Stipulation, the Sabby Entities, on behalf of themselves and their

successors or assigns, do hereby fully and finally compromise and settle with, and forever

release, remise, relieve, waive, relinquish and discharge the Debtor, the Debtor's estate and each

8 24808704.4 08/24/2018


of the Debtor's past and present officers, directors, employees, agents, attorneys, shareholders

and the Debtor's successors and assigns (the "Debtor Releasees") from all claims, all causes or

causes of action, suits, debts, dues, demands, obligations, charges, costs, expenses (including but

not limited to attorneys' fees), sums of money, controversies, damages, accounts, agreements,

covenants, contracts, judgments, reckonings, liens and liabilities of every kind and nature

whatsoever, whether at law or in equity, whether based upon statute, common law or otherwise,

whether matured, contingent or non-contingent, whether direct or indirect, whether known or

unknown, whether suspected or unsuspected, whether or not hidden and without regard to the

subsequent discovery or existence of different or additional facts, which the Sabby Entities ever

had, now have, or may claim to have from the beginning of the world to the Stipulation Effective

Date referring or relating to the Warrants, the Sabby Entities' Claims, the Objections, the Sabby

Letter, the Debtor, the Debtor's operations or the Chapter 11 Case. Without limiting the

generality of the foregoing, the Sabby Entities acknowledge that there is a possibility that,

subsequent to the execution of this Stipulation, they will discover facts, or incur or suffer claims,

which were unknown or unsuspected at the time this Stipulation was executed, and which if

known by them at that time may have materially affected the decision to execute this Stipulation.

The Sabby Entities further acknowledge and agree that by reason of this Stipulation and the

waiver and release and discharge contained herein, they are assuming any risk of such unknown

or unsuspected facts and such unknown or unsuspected claims. The Sabby Entities have been

advised of the existence of Section 1542 of the California Civil Code which provides:


9 24808704.4 08/24/2018

41-



constitute a full waiver and release and discharge in accordance with its terms and the Sabby

Entities (i) expressly waive and relinquish, to the fullest extent permitted by law, the provisions,

rights, and benefits of any statute or principle of public policy or common law of the United

States, or of any state thereof (including Section 1542 of the California Civil Code) or any other

country, which either narrowly construes releases purporting by their terms to release such

unknown or unsuspected claims in whole or in part, or restricts or prohibits the releasing of such

claims and (ii) expressly acknowledge and agree, to the fullest extent permitted by law, that all

such provisions, rights, and benefits are inapplicable due to the governing law provision set forth

in paragraph 20 of this Stipulation.

9. From and after the full payment of the Allowed Sabby Entities' Claims, the

Debtor and the official Claims Agent appointed in this case are authorized to take any and all

actions necessary to effectuate this Stipulation including, without limitation, amending the

claims register in this Chapter 11 Case to reflect the terms of this Stipulation.

10. This Stipulation is the entire agreement between the Parties with respect to the

subject matter hereof. This Stipulation supersedes any and all agreements, whether written or

oral, that may have previously existed between the Parties with respect to the matters set forth

herein. No statements, promises, or representations have been made by any Party to any other,

or relied upon, and no consideration has been offered, promised, expected or held out other than

as expressly provided for herein.

11. Each of the undersigned counsel represents and warrants that he/she is authorized

and empowered to execute and deliver this Stipulation on behalf of his/her client(s), and to bind

it/them to the terms and conditions of this Stipulation.

10 24808704.4 08/24/2018


12. The Sabby Entities represent and warrant that they currently hold, collectively,

the Sabby Entities' Warrants and the Sabby Entities' Claims and that no portion of such claims

or the Sabby Entities' Warrants have been cancelled, sold or assigned. The Sabby Entities shall

not sell, transfer or assign the Sabby Entities' Warrants or the Sabby Entities' Claims.

13. In the event of any ambiguity in this Stipulation, no inferences shall be drawn

against any Party on the basis of authorship of this Stipulation.

14. No modification, amendment or waiver of any of the terms or provisions of this

Stipulation shall bind any Party unless such modification, amendment or waiver is in writing, has

been approved by the Court, and has been executed by a duly authorized representative of the

Party (or the successor thereto) against whom such modification, amendment or waiver is sought

to be enforced.

15. If any part of this Stipulation is held to be unenforceable by any court of

competent jurisdiction, the unenforceable provision shall be deemed amended to the least extent

possible to render it enforceable and the remainder of this Stipulation shall remain in full force

and effect.

16. If the Court approves, by Final Order, the Alpha Stipulation and all terms and

conditions of this Stipulation, except for timing of the payment of the Allowed Sabby Entities'

Claims in paragraph 6, the Stipulation Effective Date shall be the Effective Date of the Debtor's

Plan, and the Allowed Sabby Entities' Claims shall be treated as General Unsecured Claims

under the Debtor's Plan and paid, in full, pursuant to the Plan within five (5) business days of the

Effective Date of the Plan. Effective upon payment of the Allowed Sabby Entities' Claims, the

Sabby Entities hereby surrender the Sabby Entities' Warrants to the Debtor for cancellation, and

authorizes the Debtor to take any such actions reasonably necessary to instruct the Warrant

11 24808704.4 08/24/2018


Agent (as defined in the Sabby Entities' Warrants) to cancel and retire the Sabby Entities'

Warrants.

17. If either (1) the Debtor fails to perform its obligations under this Stipulation, or

(2) the Stipulation Effective Date does not occur on or before December 31, 2018, then the

Sabby Entities may elect, in their sole and absolute discretion, to terminate this Stipulation by

providing written notice of such termination to the undersigned counsel for the Debtor, and, upon

such termination, this Stipulation shall be null and void and no further force or effect whatsoever

and no Party shall have any obligation to any other Party arising out of this Stipulation and no

statement made herein may be used by or against any Party or any non-Party for any purpose.

18. The Sabby Entities shall support and, if entitled to vote, shall vote in favor of the

Debtor's Plan provided that such Plan is consistent with this Stipulation.

19. The Sabby Entities shall not acquire additional Warrants and shall not encourage

or assist any other party in pursuing claims against the Debtor or the Debtor Releasees, including

without limitation, based upon Warrants.

20. This Stipulation shall be governed by and construed in accordance with the

Bankruptcy Code and, where not inconsistent, the laws of the State of Delaware, without regard

to the conflict of laws principles thereof.

21. Except as expressly set forth herein, this Stipulation shall be binding upon and

inure to the benefit of the Parties and their respective successors, assignees, agents, attorneys and

representatives.

22. The Parties acknowledge and agree that the Court shall retain jurisdiction over all

disputes concerning or related to the subject matter of this Stipulation.

12 24808704.4 08/24/2018

4e1-


Adam ri ed man

1325 Avenue of the Americas New York, NY 10019 (212) 451-2216 (212) 451-2222 (Fax) [email protected]

23. This Stipulation may be executed in one or more counterparts, including by

facsimile and/or electronic mail, each of which when so executed shall be deemed to be an

original, and all of which, when taken together, shall constitute one and the same Stipulation.

SAUL EWING ARNSTEIN & LEHR LLP

Mark Minuti E #2659) Monique Bair DiSabatino (DE #6027) 1201 North Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19899-1266 (302) 421-6840 / 6898 (302) 421-5873 / 5864 (Fax) [email protected] [email protected]

Counsel for the Sabby Entities

Dated: August 24, 2018

Counsel for Debtor and Debtor in Possession

Dated: August 24, 2018

13 24808704,4 08/24/2018
