Item 1.01.
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Entry into a Material Definitive Agreement.
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On January 31, 2017, Tokai
Pharmaceuticals, Inc. (Tokai or the Company) entered into a stock purchase agreement (Stock Purchase Agreement) with certain purchasers named therein (the Purchasers) under which the Purchasers agreed
to purchase approximately $4,000,000 of Tokai common stock through the purchase of 3,603,601 shares of Tokai common stock at a price of $1.11 per share. The Stock Purchase Agreement provides for the purchase and sale of the Companys common
stock to occur at the time of the closing of the Transaction, as defined below, subject to customary closing conditions, including the closing of the Transaction.
The Stock Purchase Agreement was entered into pursuant to the Companys previously disclosed commitment letter with Otic Pharma, Ltd., a
private limited company organized under the laws of the State of Israel (Otic), and the Purchasers, under which the Purchasers agreed to invest up to $7,000,000 of new capital in Otic and/or Tokai prior to or upon the closing of the
Transaction. The remaining $3,000,000 will be invested in Otic prior to the closing of the Transaction through the exercise of outstanding warrants.
Also as previously disclosed, the Stock Purchase Agreement and the commitment letter were executed in connection with a share purchase
agreement, dated December 21, 2016, among Tokai, Otic and the shareholders of Otic named therein (the Selling Shareholders), pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in
the share purchase agreement, each Selling Shareholder agreed to sell to Tokai, and Tokai agreed to purchase from each Selling Shareholder, all of the ordinary and preferred shares of Otic owned by such Selling Shareholder (the
Transaction). The Transaction is expected to close during the first half of 2017, subject to certain specified closing conditions.
Pursuant to the Stock Purchase Agreement, Tokai and the Purchasers have also agreed to enter into a registration rights agreement (the
Registration Rights Agreement) upon the closing of the sale of shares pursuant to the Stock Purchase Agreement, under which Tokai will agree to file a registration statement on Form S-3 to register the shares issued pursuant to the Stock
Purchase Agreement under the Securities Act of 1933, as amended (the Securities Act) within 45 days following the closing of the sale of such shares and to use its commercially reasonable efforts to cause such registration statement to
be declared effective under the Securities Act promptly but, in any event, no later than the 120th day following the closing date. After registration pursuant to these rights, these shares will become freely tradable without restriction under the
Securities Act.
The foregoing description of the Stock Purchase Agreement and the Registration Rights Agreement, and the transactions
contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement and the form of Registration Rights Agreement, which are filed as Exhibit 10.1 hereto and which are incorporated
herein by reference. The Stock Purchase Agreement and the form of Registration Rights Agreement have been included to provide investors and security holders with information regarding their terms. They are not intended to provide any other factual
information about Tokai, Otic, the Purchasers or their respective subsidiaries and affiliates. The Stock Purchase Agreement contains representations and warranties by the Purchasers, on the one hand, and by Tokai, on the other hand, made solely for
the benefit of the other. Certain representations and warranties in the Stock Purchase Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors,
or may have been used for the purpose of allocating risk between the Purchasers and Tokai. Accordingly, the representations and warranties in the Stock Purchase Agreement should not be relied on by any persons as characterizations of the actual
state of facts about Tokai at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Stock Purchase Agreement, which subsequent information
may or may not be fully reflected in Tokais public disclosures.