Item 1.01. Entry into a Material Definitive Agreement.
Exchange Agreement
On July 29, 2020, Spring Bank Pharmaceuticals, Inc. ("Spring Bank") entered into
a share exchange agreement (the "Exchange Agreement") with F-star Therapeutics
Limited, a private company registered in England and Wales ("F-star"), and the
holders of issued shares in the capital of F-star and the holders of convertible
notes of F-star each as set forth therein (each a "Seller", and collectively
with holders of F-star securities who subsequently become parties to the
Exchange Agreement, the "Sellers"), pursuant to which, subject to the
satisfaction or waiver of the conditions set forth in the Exchange Agreement,
Spring Bank will acquire the entire issued share capital of F-star (including
all shares issuable in connection with the Note Conversion and the Pre-Closing
Financing or converted pursuant to the Share Conversion (in each case, as
defined below)) with F-star Therapeutics, Inc. to continue as the combined
organization (the "Exchange"). The Exchange is intended to constitute a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended.
At the closing of the Exchange (the "Closing"), each ordinary share of F-star
will be sold to Spring Bank in exchange for a number of shares of Spring Bank
common stock, $0.0001 par value per share, based on the exchange ratio formula
in the Exchange Agreement (the "Exchange Ratio"), rounded to the nearest whole
share of Spring Bank common stock after aggregating all fractional shares
issuable to each Seller. All issued and outstanding F-star stock options granted
under three legacy equity incentive plans will become exercisable in full
immediately prior to the Closing. All holders of stock options and restricted
stock units granted by F-star under the F-star 2019 Equity Incentive Plan will
be entitled to exchange those options and restricted stock unit awards for
options and awards on the same terms (including vesting) for Spring Bank common
stock, based on the Exchange Ratio. The articles of association of F-star have
been amended to ensure that any F-star shares issued at any time after the
execution and delivery of the Exchange Agreement will be acquired on the terms
set forth in the Exchange Agreement. All unvested issued and outstanding Spring
Bank options and restricted stock units will be accelerated and vested in full
immediately prior to the Closing and, following such acceleration, each option
that has an exercise price greater than the then current trading price for
shares of Spring Bank common stock will expire on the date of the Closing, to
the extent not exercised prior to the Closing. The Exchange Ratio may be
adjusted to the extent that (i) Spring Bank's expected net cash as of Closing is
less than $15.0 million or greater than $17.0 million, (ii) F-star does not
raise at least $25.0 million in the Pre-Closing Financing (as defined below),
and (iii) to account for the actual proceeds raised in the Pre-Closing
Financing. Should the Closing occur after September 30, 2020, the $15.0 million
and $17.0 million thresholds will each be reduced by $250,000 on October 30,
2020 and on the last day of each 30-day period thereafter until the Closing
occurs. These and other adjustments to the Exchange Ratio are described further
in the Exchange Agreement. Immediately following the Closing and assuming an
Exchange Ratio of 0.5338 (which assumes both that Spring Bank's valuation will
not be adjusted as a result of the expected net cash at Closing and that F-star
raises $25.0 million in the Pre-Closing Financing), the holders of F-star's
share capital (including all F-star shares issued in connection with the Note
Conversion, the F-star Share Conversion and PreClosing Financing) are expected
to own approximately 61.2% of the outstanding capital stock of Spring Bank. The
Exchange Ratio will be adjusted to give effect to the Reverse Stock Split
described below.
For purposes of calculating Spring Bank's net cash, Spring Bank will be entitled
to include the net cash proceeds from certain transactions involving its STING
antagonist program and its legacy assets occurring prior to Closing. In the
event that Spring Bank's anticipated net cash at closing would exceed the sum of
$17.8 million plus the Additional Commitments (as defined below), Spring Bank
will dividend out such excess net cash to its stockholders of record as of
immediately prior to the Closing.
In connection with the Exchange, Spring Bank will prepare and file with the U.S.
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-4 that will contain a proxy statement / prospectus, and will seek the approval
of Spring Bank's stockholders with respect to certain actions, including, but
not limited to, the following (collectively, the "Spring Bank Stockholder
Matters"):
• the issuance of Spring Bank common stock to the holders of F-star share
capital pursuant to the Exchange (the "Exchange Issuance") and the change
of control of Spring Bank resulting from the Exchange pursuant to
pertinent Nasdaq rules; and
• the amendment of Spring Bank's certificate of incorporation to effect a
reverse split of all outstanding shares of the Spring Bank common stock
at a reverse stock split ratio as mutually agreed to by Spring Bank and
F-star (the "Reverse Stock Split") and to change Spring Bank's name to
F-star Therapeutics, Inc. upon the closing of the Exchange.
Completion of the Exchange is subject to completion of the Pre-Closing Financing
in an amount equal to the amounts committed to as of 11:59 p.m., Eastern time,
on the 10th day prior to the scheduled date of the Company stockholders meeting
to approve the Spring Bank Stockholder Matters (the "Measurement Time") and
various customary closing conditions, including, among other things, approval
from Spring Bank stockholders of the Spring Bank Stockholder Matters. The
Exchange Agreement contains certain termination rights for both Spring Bank and
F-star, and further provides that upon termination of the Exchange Agreement
under specified circumstances, the terminating party may be required to pay the
other party a termination fee of $2 million. In addition, under certain
conditions, Spring Bank may be required to reimburse F-star for up to $750,000
of F-star's expenses.
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Following the Closing, it is expected that the board of directors of the
combined organization will consist of eight members, three of whom will be
current directors of Spring Bank and five of whom will be designated by F-star.
Following the Closing, the Company will change its name to F-star Therapeutics,
Inc. and it is expected that shares of common stock of the combined organization
will be listed on the Nasdaq Capital Market under the symbol FSTX.
The Exchange Agreement contains customary representations, warranties and
covenants of Spring Bank and F-star, including, among others, covenants that
require each of Spring Bank and F-star to (i) conduct its business in the
ordinary course during the period between the execution of the Exchange
Agreement and the Closing or earlier termination of the Exchange Agreement,
subject to certain exceptions, and (ii) not engage in certain kinds of
transactions during such period (without the prior written consent of the
other). Subject to certain terms and conditions, the Spring Bank board of
directors will recommend the approval of the Spring Bank Stockholder Matters.
Each of Spring Bank and F-star have agreed not to (i) solicit proposals relating
to alternative business combination transactions or (ii) subject to certain
exceptions, enter into discussions or negotiations or provide confidential
information in connection with any proposals for alternative business
combination transactions.
Note Conversion
F-star's issued share capital consists of ordinary shares, Seed Preference
Shares and Series A Preference Shares. Immediately prior to the Closing, the
Seed Preference Shares and Series A Preference Shares will be converted into
F-star ordinary shares (the "F-star Share Conversion"). Additionally, pursuant
to the terms of the Exchange Agreement and immediately prior to the Closing, all
issued and outstanding F-star convertible loan notes will convert into F-Star
ordinary shares (the "Note Conversion").
Pre-Closing Financing
Concurrently with the execution of the Exchange Agreement, certain existing
investors of F-star, pursuant to binding equity commitment letters by and
between each investor and F-star, agreed to subscribe in a private placement of
ordinary shares of F-star as of immediately prior to the closing of the
Exchange. Such commitments, together with any additional commitments received
prior to the Measurement Time ("Additional Commitments"), are referred to
collectively herein as the "Pre-Closing Financing".
Contingent Value Rights Agreements
At the Closing, Spring Bank, F-star, a representative of the Spring Bank
stockholders prior to the Closing, and Computershare Trust Company N.A., as the
Rights Agent, will enter into a STING Agonist Contingent Value Rights Agreement
(the "STING Agonist CVR Agreement"). Pursuant to the Exchange Agreement and the
STING Agonist CVR Agreement, each share of Spring Bank common stock held by
Spring Bank stockholders as of a record date immediately prior to the Closing
will receive a dividend of one contingent value right ("STING Agonist CVR")
entitling such holders to receive, in connection with certain transactions
involving Spring Bank's proprietary STimulator of INterferon Genes (STING)
. . .
Item 7.01. Regulation FD Disclosure.
Attached as Exhibit 99.1 is a copy of the joint press release issued by Spring
Bank and F-star on July 29, 2020 announcing the execution of the Exchange
Agreement. Spring Bank and F-star will host a joint conference call on July 30,
2020 at 7:30 a.m. Eastern Time to discuss the proposed Exchange. A copy of the
slide presentation to be used during the joint conference call is attached
hereto as Exhibit 99.2.
The information in this Item 7.01, including Exhibits 99.1 and 99.2 attached
hereto, is being furnished, shall not be deemed "filed" for any purpose, and
shall not be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
2.1* Share Exchange Agreement, dated as of July 29, 2020, by and among
Spring Bank Pharmaceuticals, Inc., F-star Therapeutics Limited and
the persons listed therein.
10.1* Form of STING Agonist CVR Agreement by and among Spring Bank,
F-star, a representative of the Spring Bank stockholders prior to
the Closing, and Computershare Trust Company N.A., as the Rights
Agent.
10.2* Form of STING Antagonist CVR Agreement by and among Spring Bank,
F-star, a representative of the Spring Bank stockholders prior to
the Closing, and Computershare Trust Company N.A., as the Rights
Agent.
10.3 Form of Company Lock-up Agreement.
10.4 Form of Seller Lock-Up Agreement.
10.5 Form of Voting Agreement.
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99.1 Press Release .
99.2 Presentation .
* Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished
to the SEC upon request.
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