Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On September 22, 2016,
Galectin Therapeutics Inc., a Nevada corporation (the “
Company
”) entered into a Securities Purchase Agreement (the “
Purchase Agreement
”) with 10X Fund, L.P., a Delaware limited partnership
(“
Purchaser
”). Pursuant to the Purchase Agreement, the Company has agreed to issue and sell to Purchaser, and Purchaser has agreed to purchase from the Company at closings held or to be held on September 22, 2016 and
September 29, 2016 (i) an aggregate of 1,500,000 shares of the Company’s Series B-3 Convertible Preferred Stock (the “
Series B-3 Preferred Stock
”) with an aggregate stated value of $1,500,000 million and convertible
into such number of shares of the Company’s common stock, par value $0.001 per share (“
Common Stock
”) determined by dividing (A) $1.00
plus
any accrued but unpaid dividends by (B) the closing price of the
Common Stock on the day prior to issuance of the Series B-3 Preferred Stock
plus
$0.09375, and (ii) warrants to purchase 0.75shares of Common Stock for every share of Common Stock into which the Series B-3 Preferred Stock is convertible
(the “
Series B-3 Warrants
”). The terms and conditions of the Series B-3 Preferred Stock are more fully described below under “Terms of the Series B-3 Preferred Stock.” The terms and conditions of the warrants are more
fully described below under “Terms of the Common Stock Purchase Warrants”. Of the 6,000,000 shares of Series B-3 Preferred Stock authorized on September 22, 2016, 1,500,000 have been or will be issued and sold under the Purchase
Agreement. By amending the Purchase Agreement the Company may also issue and sell to Purchaser all or part of the remaining 4,500,000 shares of Series B-3 Preferred Stock at closings occurring after September 29, 2016 (the “Subsequent
Closings”).
On September 22, 2016, the initial closing date under the Purchase Agreement, the Company issued and sold to Purchaser:
(i) 375,000 shares of Series B-3 Preferred Stock convertible into 139,211 shares of Common Stock; and (ii) Series B-3 Warrants exercisable to purchase 104,408 share of Common Stock. The remaining 1,125,000 shares of Series B-3 Preferred
Stock will be issued on Thursday, September 29, 2016, with the conversion price and the number of Series B-3 Warrants to be issued determined by the closing price of the Common Stock on Wednesday, September, 28, 2016,
plus
$0.09375.
In addition, pursuant to a Lock-Up Agreement entered into between the Company and Purchaser, as consideration for the Purchaser’s agreement not to sell
any shares of Series B Preferred Stock (as defined below) for a period of 18 months, subject to certain exceptions, the Company issued to the Purchaser warrants to purchase 500,000 shares of the Common Stock and agreed to issue additional warrants
to purchase up to such additional shares of Common Stock in connection with sales of B-3 Preferred Stock equal to the product of 500,000 shares multiplied by a fraction, the numerator of which is the aggregate purchase price paid to the Company in
the applicable sale of Series B-3 Preferred Stock and the denominator of which is $6,000,000, of which warrants to purchase 125,000 shares of Common Stock were or will be issued in connection with the initial sale of Series B-3 Preferred Stock for
$1,500,000.
Pursuant to the Purchase Agreement, as additional consideration for the lock-up described above, the Company further agreed to issue warrants
to purchase up to such additional shares of Common Stock in connection with sales of Series B-3 Preferred Stock equal to 0.1667 times the purchase price paid for the Series B-3 Preferred Stock, up to 1,000,000 shares in the aggregate, of which
warrants to purchase 250,000 shares of Common Stock were or will be issued in connection with the initial sale of Series B-3 Preferred Stock for $1,500,000 (collectively, such warrants together with the warrants issuable pursuant to the Lock-Up
Agreement, the “
Lock-Up Warrants
”). The aggregate number of shares of Common Stock issuable upon the exercise of all Lock-Up Warrants, including warrants that may be issued upon any Subsequent Closing will not exceed 2,000,000
shares.
Pursuant to the Purchase Agreement, the Company has granted Purchaser certain rights to participate in certain future equity financings of the
Company.
The Purchase Agreement contains customary representations, warranties, covenants and closing conditions by and among the parties. Upon any
Subsequent Closing under the Purchase Agreement, such representations and warranties must be accurate in all material respects, such covenants must have been performed and such closing conditions must have been satisfied or waived, including without
limitation no material adverse effect having occurred with respect to the Company prior to any Subsequent Closing.
The Company expects that any Subsequent Closing will occur on or before November 22, 2016 (the
“
Final Purchase Date
”). However, such date may be extended.
The foregoing description of the Purchase Agreement is not complete and is
qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Terms of the Series B-3 Preferred Stock
The
Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Convertible Preferred Stock, Series B-2 Convertible Preferred Stock and Series B-3 Preferred Stock (the “
Certificate of
Designations
”) removes the ability of the Series B Preferred Stock to cause a redemption of the shares of Series B Preferred Stock and also adds Series B-3 Preferred Stock as an additional subseries of Series B Preferred Stock, which has
the same rights and privileges as the Series B-1 Preferred Stock and the Series B-2 Preferred Stock except for the following items:
Dividends.
The
holders of Series B-3 Preferred Stock will be entitled to receive cumulative dividends at the rate of 8% per share per annum (compounding monthly) payable quarterly. At the Company’s option, the dividends may be paid in cash or Common
Stock valued per share at 100% of the value weighted average price per share for the 20 consecutive trading days prior to the applicable dividend payment date; provided, however, that there is an effective registration statement covering the shares
of Common Stock and the issuance of the shares does not trigger anti-dilution provisions under other agreements to which the Company is a party. If the Company does not pay any dividend on the Series B-3 Preferred Stock, dividends will accrue at the
rate of 15% per annum (compounding monthly).
Convertibility.
Each share of Series B-3 Preferred Stock is convertible, at the option
of the Holder at any time, into such number of shares of Common Stock, into by dividing (A) $1.00
plus
any accrued but unpaid dividends by (B) the closing price of the Common Stock prior to issuance of the Series B-3 Preferred
Stock
plus
$0.09375.
The foregoing description of the Certificate of Designations is not complete and is qualified in its entirety by
reference to the full text of the Certificate of Designations, a copy of which is filed herewith as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Terms of the Common Stock Purchase Warrants
The
warrants issued under the Purchase Agreement provide for the following terms and conditions.
Term; Exercise Price.
Each Series B-3 Warrant is
exercisable at $3.00 per share of Common Stock or such lesser amount (but not less than the closing price of the Common Stock on the trading day prior to the day of the issuance of the Warrants) that the parties later agree (subject to customary
anti-dilution protection adjustments) at any time on or after the date of issuance until the seventh anniversary of the respective issue date.
The foregoing description of the warrants is not complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement
and the Form of Series B-3 Warrant, a copy of each of which is filed herewith as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Terms of the Lock-Up Warrants
The warrants issued
under the Purchase Agreement provide for the following terms and conditions.
Term; Exercise Price.
Each Lock-Up Warrant is exercisable at $3.00
per share of Common Stock or such lesser amount (but not less than the closing price of the Common Stock on the trading day prior to the day of the issuance of the Warrants) that the parties later (subject to customary anti-dilution protection
adjustments) at any time on or after the date of issuance until the seventh anniversary of the respective issue date.
The foregoing description
of the warrants is not complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, the Lock-Up Agreement and the Form of Lock-Up Warrant, a copy of each of which is filed herewith as Exhibit 4.2 to
this Current Report on Form 8-K and is incorporated herein by reference.
Registration Rights Agreement
On September 22, 2016, the Company entered into a Registration Rights Agreement with Purchaser (the “
Registration Rights Agreement
”).
Pursuant to the Registration Rights Agreement, the Company agreed to use its commercially reasonable efforts to (i) register for resale under the Securities Act of 1933, as amended (the “
Securities Act
”), all shares of Common
Stock underlying (x) the Series B-3 Preferred Stock (including shares of Common Stock issued as a dividend thereon) and (y) the warrants issued under the Purchase Agreement and (ii) keep the registration statement effective for a
period of ninety (90) days or until such registrable securities have been sold. The Company has agreed to pay all registration expenses incurred by it in connection with the registration.
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the full text of the
Registration Rights Agreement, a copy of which is filed herewith as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Lock-Up Letter Agreement
On September 22, 2016, the
Company entered into a Lock-Up Letter Agreement with Purchaser (the “
Lock-Up Agreement
”). Pursuant to the Lock-Up Agreement, the Purchaser agreed that for a period of 18 months (the “
Lock-Up Period
”) it would not
sell, subject to certain limited exceptions, the Series B-3 Preferred shares or Common Stock it acquired in connection with the purchase agreement or the securities acquired purchase to the Securities Purchase Agreement between the Company and 10X
Fund dated February 12, 2009. As consideration for such lock-up, the Company agreed to issue the Lock-Up Warrants.
The foregoing description of the
Lock-Up Agreement is not complete and is qualified in its entirety by reference to the full text of the Lock-Up Agreement, a copy of which is filed herewith as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.