Item 1.01 Entry into a Material Definitive Agreement.
Purchase Agreement and Registration Rights Agreement with Aspire Capital
On December 2, 2019, Intec Pharma Ltd. (the "Company"), entered into an ordinary
shares purchase agreement (the "Purchase Agreement") with Aspire Capital Fund,
LLC, an Illinois limited liability company ("Aspire Capital"), which provides
that, upon the terms and subject to the conditions and limitations set forth
therein, Aspire Capital is committed to purchase up to an aggregate of $10.0
million of the Company's ordinary shares over the 30-month term of the Purchase
Agreement. Concurrently with entering into the Purchase Agreement, the Company
also entered into a registration rights agreement with Aspire Capital (the
"Registration Rights Agreement"), in which the Company agreed to file with the
Securities and Exchange Commission (the "SEC") one or more registration
statements, as necessary, and to the extent permissible and subject to certain
exceptions, to register under the Securities Act of 1933, as amended for the
sale of the Company's ordinary shares that have been and may be issued to Aspire
Capital under the Purchase Agreement. The Company has filed with the SEC a
prospectus supplement to the Company's effective shelf registration statement on
Form S-3 (File No. 333-230016) registering all of the ordinary shares that may
be offered to Aspire Capital from time to time.
Under the Purchase Agreement, on any trading day selected by the Company, the
Company has the right, in its sole discretion, to present Aspire Capital with a
purchase notice (each, a "Purchase Notice"), directing Aspire Capital (as
principal) to purchase up to 200,000 of the Company's ordinary shares in an
amount no greater than $500,000 per business day, up to $10.0 million of the
Company's ordinary shares in the aggregate at a per share price (the "Purchase
Price") equal to the lesser of:
? the lowest sale price of the Company's ordinary shares on the purchase date; or
? the arithmetic average of the three (3) lowest closing sale prices for the
Company's ordinary shares during the ten (10) consecutive trading days ending
on the trading day immediately preceding the purchase date.
The Company and Aspire Capital also may mutually agree to increase the dollar
amount to greater than $500,000 and the number of ordinary shares that may be
sold to as much as an additional 2,000,000 ordinary shares per business day,
respectively.
In addition, on any date on which the Company submits a Purchase Notice to
Aspire Capital in an amount equal to at least 200,000 ordinary shares, the
Company also has the right, in its sole discretion, to present Aspire Capital
with a volume-weighted average price purchase notice (each, a "VWAP Purchase
Notice") directing Aspire Capital to purchase an amount of ordinary shares equal
to up to 30% of the aggregate of the Company's ordinary shares traded on its
principal market on the next trading day (the "VWAP Purchase Date"), subject to
a maximum number of 250,000 ordinary shares. The purchase price per share
pursuant to such VWAP Purchase Notice is generally 97% of the volume-weighted
average price for the Company's ordinary shares traded on its principal market
on the VWAP Purchase Date.
The Purchase Price will be adjusted for any reorganization, recapitalization,
non-cash dividend, share split, or other similar transaction occurring during
the period(s) used to compute the Purchase Price. The Company may deliver
multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from time
to time during the term of the Purchase Agreement, so long as the most recent
purchase has been completed.
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The Purchase Agreement provides that the Company and Aspire Capital shall not
effect any sales under the Purchase Agreement on any purchase date where the
closing sale price of the Company's ordinary shares is less than $0.25. There
are no trading volume requirements or restrictions under the Purchase Agreement,
and the Company will control the timing and amount of sales of the Company's
ordinary shares to Aspire Capital. Aspire Capital has no right to require any
sales by the Company, but is obligated to make purchases from the Company as
directed by the Company in accordance with the Purchase Agreement. There are no
limitations on use of proceeds, financial or business covenants, restrictions on
future funding, rights of first refusal, participation rights, penalties or
liquidated damages in the Purchase Agreement. In consideration for entering into
the Purchase Agreement, concurrently with the execution of the Purchase
Agreement, the Company is issuing to Aspire Capital 612,520 of the Company's
ordinary shares (the "Commitment Shares"). The Purchase Agreement may be
terminated by the Company at any time, at its discretion, without any cost to
the Company. Aspire Capital has agreed that neither it nor any of its agents,
representatives and affiliates shall engage in any direct or indirect
short-selling or hedging of the Company's ordinary shares during any time prior
to the termination of the Purchase Agreement. Any proceeds from the Company
receives under the Purchase Agreement are expected to be used to fund the
Company's research and development activities, for working capital and for
general corporate purposes.
The Purchase Agreement provides that the number of ordinary shares that may be
sold pursuant to the Purchase Agreement will be limited to 7,000,394 ordinary
shares (the "Exchange Cap"), which represents 19.99% of the Company's
outstanding ordinary shares on December 2, 2019, unless shareholder approval or
an exception pursuant to the rules of the Nasdaq Capital Market is obtained to
issue more than 19.99%. This limitation will not apply if, at any time the
Exchange Cap is reached and at all times thereafter, the average price paid for
all ordinary shares issued under the Purchase Agreement is equal to or greater
than $0.48978, which is the price equal to the closing sale price of the
Company's ordinary shares immediately preceding the execution of the Purchase
Agreement. The Company is not required or permitted to issue any ordinary shares
under the Purchase Agreement if such issuance would breach its obligations under
the rules or regulations of the Nasdaq Capital Market or other applicable law
(including, without limitation, the Israeli Companies Law - 1999, as amended -
the "Companies Law"). The Company may, in its sole discretion, determine whether
to obtain shareholder approval to issue more than 19.99% of its outstanding
ordinary shares hereunder if such issuance would require shareholder approval
under the rules or regulations of the Nasdaq Capital Market or the Companies
Law.
The foregoing is a summary description of certain terms of the Purchase
Agreement and the Registration Rights Agreement and, by its nature, is
incomplete. Copies of the Purchase Agreement and Registration Rights Agreement
are filed herewith as Exhibits 10.1 and 10.2, respectively, to this Current
Report on Form 8-K and are incorporated herein by reference. All readers are
encouraged to read the entire text of the Purchase Agreement and the
Registration Rights Agreement.
The Company is filing the opinion of its counsel, Meitar Liquornik Geva Leshem
Tal, relating to the legality of the ordinary shares offered and sold pursuant
to the Purchase Agreement, as Exhibit 5.1 hereto.
Item 7.01 Regulation FD Disclosure.
On December 3, 2019, the Company issued a press release announcing that it has
entered into the Purchase Agreement with Aspire Capital. A copy of the press
release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated by reference into this Item 7.01.
In accordance with General Instruction B.2 of Form 8-K, the information set
forth in this Item 7.01 and in the attached Exhibit 99.1 shall be deemed to be
"furnished" and shall not be deemed to be "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended.
This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy the Company's ordinary shares, nor shall there
be any sale of the Company's ordinary shares in any jurisdiction in which such
an offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
5.1 Opinion of Meitar Liquornik Geva Leshem Tal, Israeli legal counsel to
the Registrant
10.1 Ordinary Shares Purchase Agreement, dated December 2, 2019 between
Intec Pharma Ltd. and Aspire Capital Fund, LLC
10.2 Registration Rights Agreement, dated December 2, 2019, between Intec
Pharma Ltd. and Aspire Capital Fund, LLC
23.1 Consent of Meitar Liquornik Geva Leshem Tal (included in Exhibit
5.1)
99.1 Press Release dated December 3, 2019, titled "Intec Pharma Announces
$10 Million Ordinary Shares Purchase Agreement with Aspire Capital".
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