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Item 1.01
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement
On January 3, 2020, Leap
Therapeutics, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with institutional investors named therein (collectively, the “Purchasers,” and each, a
“Purchaser”), providing for a private placement transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company will issue and sell
1,421,801 shares of the Company’s Series A Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, par
value $0.001 per share (the “Series A Preferred Stock”), at a purchase price of $10.54 per share, and 1,137,442
shares of the Company’s Series B Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, par value
$0.001 per share (the “Series B Preferred Stock”) at a purchase price of $10.55 per share, and one (1) share of
the Company’s Special Voting Stock, par value $0.001 (the “Special Voting Stock”) entitling the Purchaser
of Series A Preferred Stock to elect one member of the Company’s Board of Directors for aggregate gross proceeds to the
Company of approximately $27 million (the “Transaction”).
Subject to approval by the Company’s stockholders, the
Series A Preferred Stock will be automatically converted into (i) pre-funded warrants (the “Pre-Funded Warrants”) to
purchase 14,218,010 shares of the Company’s Common Stock, par value $0.001 (the “Common Stock”), in the form
attached to the Securities Purchase Agreement as Exhibit C and (ii) warrants to purchase an aggregate of either (x) 14,218,010
Pre-Funded Warrants or (y) 14,218,010 shares of Common Stock (or Pre-Funded Warrants) at an exercise price of $2.11 per share of
Common Stock (or Pre-Funded Warrants) in the form attached to the Securities Purchase Agreement as Exhibit D (the “Series
A Coverage Warrants”). Subject to approval by the Company’s stockholders, the Series B Preferred Stock will be automatically
converted into (i) an aggregate of 11,374,420 shares of Common Stock and (ii) warrants to purchase an aggregate of 11,374,420 shares
of the Common Stock at an exercise price of $2.11 per share in the form attached to the Securities Purchase Agreement as Exhibit
E (the “Series B Coverage Warrants”).
The conversion of the Series A Preferred Stock, the Series B
Preferred Stock and the issuance of the Pre-Funded Warrants, the Series A Coverage Warrants, the Series B Coverage Warrants and
the Common Stock is subject to the approval of the stockholders of the Company (the “Required Stockholder Approval”).
Pursuant to the terms of the Securities Purchase Agreement, the Company will call a meeting of its stockholders within ninety (90)
days following the closing of the Transaction, to vote on the following proposals: (i) to approve an increase in the number of
shares of Common Stock that the Company is authorized to issue from one hundred ten million (110,000,000) shares to two hundred
fifty million (250,000,000) shares; and (ii) to approve (1) the issuance of Common Stock and Pre-Funded Warrants, as applicable,
upon the conversion of the Series A Preferred Stock and Series B Preferred Stock, as applicable, (2) the issuance of the Series
A Coverage Warrants and Series B Coverage Warrants upon the conversion of the Series A Preferred Stock and Series B Preferred Stock,
as applicable, and (3) the issuance of Common Stock upon the exercise of the Pre-Funded Warrants and the Series A Coverage Warrants
and Series B Coverage Warrants, in each case for purposes of Rule 5635 of the Nasdaq Stock Market Rules (collectively, the “Stockholder
Proposals”).
The foregoing description of the Securities Purchase Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement,
which is filed herewith as Exhibit 10.1 and incorporated herein by reference. The foregoing description of the Pre-Funded
Warrants, Series A Coverage Warrants and Series B Coverage Warrants does not purport to be complete and is qualified in its entirety
by reference to the full text of the form of Pre-Funded Warrants, Series A Coverage Warrants and Series B Coverage Warrants, which
is filed herewith as Exhibits 4.1, 4.2 and 4.3, respectively, and incorporated herein by reference.
The representations, warranties and covenants contained in the
Securities Purchase Agreement were made solely for the benefit of the parties to the Securities Purchase Agreement and may be subject
to limitations agreed upon by the contracting parties. Accordingly, the Securities Purchase Agreement is incorporated herein by
reference only to provide investors with information regarding the terms of the Securities Purchase Agreement and not to provide
investors with any other factual information regarding the Company or its business, and should be read in conjunction with the
disclosures in the Company’s periodic reports and other filings with the SEC.
Voting Agreement
Concurrently with the execution of
the Securities Purchase Agreement, the Company entered into voting agreements (each, a “Voting Agreement”) with
several of its existing stockholders, pursuant to which each stockholder agreed, in any annual, special or adjourned meeting
of the stockholders of the Company at which the Stockholder Proposals are presented to the Company’s stockholders for
approval, that it will vote, by proxy or otherwise, all of its shares of voting capital stock of the Company (i) in favor of
the Stockholder Proposals and such other matters as may be necessary or advisable to consummate the Transactions, and (ii)
against the approval or adoption of any proposal made in opposition to, or in competition with, the Stockholder Proposals or
the Transactions, and against any other action that is intended, or could reasonably be expected, to otherwise materially
impede, interfere with, delay, postpone, discourage or adversely affect the consummation of the Transactions. The Voting
Agreements terminate upon the earliest to occur of (1) immediately following a meeting of the Company’s
stockholders at which the Stockholder Proposals are voted upon and the Required Stockholder Approval is obtained, which
meeting is duly called and held for such purpose and at which a quorum was present and acting throughout, and (2) the
termination of the Securities Purchase Agreement at any time prior to the consummation of the closing contemplated under the
Securities Purchase Agreement.
The foregoing description of the Voting Agreement does not purport
to be complete and is qualified in its entirety by reference to the form of Voting Agreement attached to the Securities Purchase
Agreement as Exhibit I, which is filed herewith as Exhibit 10.1, and incorporated herein by reference.
Registration Rights Agreements
In addition, concurrently with the execution of the Securities
Purchase Agreement, the Company entered into two registration rights agreements (the “Registration Rights Agreements”)
with the Purchasers, pursuant to which the Company agreed, following demand by any Purchaser, to file with the Securities and Exchange
Commission (“SEC”) a Registration Statement on Form S-3 covering the resale of the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock, Series B Preferred Stock or exercise of the Pre-Funded Warrants, Series A Coverage
Warrants and Series B Coverage Warrants (as applicable) by the Purchasers as promptly as reasonably practicable following such
demand, and in any event within sixty (60) days after such demand.
The foregoing description of the Registration Rights Agreements
does not purport to be complete and is qualified in its entirety by reference to the forms of Registration Rights Agreements attached
to the Securities Purchase Agreement as Exhibits G and H, which is filed herewith as Exhibit 10.1, and incorporated herein by reference.
Placement Agency Agreement
Raymond James & Associates, Inc. acted
as the placement agent for the Transaction pursuant to a letter agreement with the Company dated as of January 3, 2020 (the “Placement
Agent Agreement”). Pursuant to the Placement Agency Agreement, the Company agreed to pay the Placement Agent a fee representing
a blended rate of 3.4074% of the gross proceeds received by the Company from the sale of the Series A Preferred Stock, Series
B Preferred Stock and Special Voting Stock, plus the reimbursement of certain expenses.
The foregoing description of the Placement Agent Agreement does
not purport to be complete and is qualified in its entirety by reference to the full text of the Placement Agency Agreement, which
is filed herewith as Exhibit 10.2, and incorporated herein by reference.