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Item 1.01
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Entry into a Material Definitive Agreement.
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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:
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the
lowest sale price of the Company’s ordinary shares on the purchase date; or
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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.
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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.
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.