Item 1.01. Entry Into a Material Definitive Agreement.
Overview
On January 9, 2020, Wize Pharma, Inc. (the "Company"), entered into the Bonus
Agreements and the Series B Purchase Agreement (as such terms are defined
below), whereby, subject to the closing of both transactions, (i) the Company
will sell 37% of future revenues (if any) from its L02A-based products (the
"LO2A Proceeds") to Bonus BioGroup Ltd. ("Bonus"), an Israeli company whose
ordinary shares are traded on the Tel Aviv Stock Exchange ("TASE"), and invest
$7.4 million in Bonus and (ii) in consideration therefor, Bonus will issue to
Wize new ordinary shares of Bonus in a number equal to $16.4 million divided by
a purchase price per share of NIS 0.50.
The Bonus/LO2A Transaction
On January 9, 2020, the Company entered into (i) an Exchange Agreement (the
"Bonus Exchange Agreement"), with Bonus and (ii) a Share Purchase Agreement (the
"Bonus Purchase Agreement" and, together with the Bonus Exchange Agreement, the
"Bonus Agreements") with Bonus.
Pursuant to the Bonus Agreements, the Company agreed to grant Bonus, in
consideration for the issuance of 62,370,000 ordinary shares of Bonus (the "LO2A
Shares"), the right to receive 37% of future LO2A Proceeds (if any), which, as
more fully defined in the Bonus Exchange Agreement, includes proceeds generated
by the Company, Wize Pharma Ltd., a wholly owned subsidiary of the Company
("Wize Israel"), and OcuWize Ltd., a wholly owned subsidiary of Wize Israel, as
a result of (i) the sale, license or other disposal of products or other rights
underlying the LO2A technology licensed to OcuWize under that certain Exclusive
Distribution and Licensing Agreement between Wize Israel (including OcuWize) and
Resdevco Ltd., dated as of May 1, 2015, as amended; and (ii) a Sale Transaction,
which, as more fully defined in the Bonus Exchange Agreement, includes the sale
of shares or assets of Wize Israel and/or OcuWize. In addition, if the Sale
Transaction involves a change of control of the Company, Bonus will be entitled
to elect, to either remain with its right to 37% of the LO2A Proceeds or receive
a one-time payment equal to 37% of the value attributed to Wize Israel out of
the total proceeds payable for the Company in such transaction.
Pursuant to the Bonus Purchase Agreement, the Company agreed to purchase
51,282,000 ordinary shares of Bonus (the "PIPE Shares," and together with the
LO2A Shares, the "Bonus Shares"), for an aggregate purchase price of $7.4
million, which funds will be deposited into an escrow account (the "Bonus Escrow
Account"), of which (i) $500,000 will be paid to Bonus as an advance (the
"Advance") promptly following execution of the Bonus Purchase Agreement, (ii)
$3.2 million will be released to Bonus concurrently with the closing of the
transactions contemplated by the Bonus Agreements in exchange for 50% of the
PIPE Shares (the "Initial PIPE Shares") and (iii) $3.7 million will be released
to Bonus upon the Milestone Closing (as defined in the Bonus Purchase
Agreement), in exchange for 50% of the PIPE Shares (the "Milestone Shares") that
will be issued by Bonus and deposited into the escrow at the closing. The
Company's obligation to consummate the Milestone Closing is conditioned upon the
satisfaction by Bonus of certain conditions, including the listing of its
ordinary shares (or, if an ADR Program is to be implemented by Bonus, the
American Depositary Shares representing such ordinary shares) on the Nasdaq
Capital Market (or another superior tier of the Nasdaq market) (the "Nasdaq
Listing").
The Bonus Agreements contain customary covenants, representations and warranties
of the parties thereto, including, among others, (i) a covenant by the Company
to use its reasonable commercial efforts to commercialize the LO2A technology or
otherwise generate the LO2A Proceeds; (ii) a covenant by Bonus to issue
additional shares to the Company upon certain events, including if Bonus
conducts a private placement of its ordinary shares during the nine-month period
following the closing at a price per share that is below NIS 0.30 per share;
(iii) a covenant by Bonus to use its reasonable commercial efforts to conduct
the Nasdaq Listing as soon as practicable, and in any event within 180 days
following the closing (the "Initial Deadline") and, if the Nasdaq Listing does
not occur by the Initial Deadline, the Company will be entitled to liquidated
damages for each 30 days of delay. The liquidated damages, which range between
$20,500 to $164,000 depending on the length of the delay, may be paid, at Bonus'
election, in either cash or ordinary shares of Bonus; (iv) a post-closing
covenant by the Company to create, and cause Wize Israel and OcuWize to create,
certain first priority liens in favor of Bonus to secure the Company's
obligations under the Bonus Exchange Agreement, including certain related
negative covenants; and (v) an undertaking by Bonus to cover nearly 50% of the
Company's fees and expenses payable to H.C. Wainwright & Co., LLC in connection
with the transactions contemplated by the Bonus Agreements and the Series B
Purchase Agreement.
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According to the Bonus Agreements, the total number of Bonus Shares issuable to
the Company (including the shares to be released at the Milestone Closing) is
computed as the number of ordinary shares of Bonus equal to the quotient
obtained by dividing (A) $16.4 million expressed in NIS (based on the exchange
rate between NIS and the dollar as of January 8, 2020) by (B) NIS 0.50. As of
January 9, 2020, such total number of Bonus Shares represents (on a
post-issuance basis) approximately 12% of the outstanding share capital of
Bonus.
The closing of the transactions contemplated by the Bonus Agreements is subject
to several customary conditions, including (i) approval of the TASE to list the
Bonus Shares, and (ii) the execution by Bonus and the Company of a Registration
Rights Agreement (the "Bonus Registration Rights Agreement"), pursuant to which
Bonus will be required to file a resale registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") to register the Bonus Shares for resale, within 30 days following the
Nasdaq Listing, and to have such Registration Statement declared effective
within 45 days after the Nasdaq Listing in the event the Registration Statement
is not reviewed by the SEC, or 120 days after the Nasdaq Listing in the event
the Registration Statement is reviewed by the SEC.
The Bonus Agreements may be terminated under certain circumstances, including if
(i) the closing thereof is not consummated on or before 5:00 p.m., Israel time,
within 30 days following the signing date thereof (the "Outside Date") or (ii)
the Company shall have not provided evidence to Bonus that it has received $7.4
million on or before 5:00 p.m., Israel time, on January 20, 2020.
The Series B Investment
In order to finance the transactions contemplated by the Bonus Purchase
Agreement, on January 9, 2020, the Company entered into a Securities Purchase
Agreement (the "Series B Purchase Agreement") with certain accredited investors.
Pursuant to the Series B Purchase Agreement, the Company agreed to sell to the
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in response to Item 1.01 of this report is incorporated
by reference into this Item 3.02.
Item 5.03 Amendments to Articles of Incorporation or Bylaws.
The information provided in response to Item 1.01 of this report is incorporated
by reference into this Item 5.03.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
3.1 Form of Series B Certificate of Designations
10.1 Exchange Agreement by and between Bonus BioGroup Ltd. and Wize Pharma
Inc., dated January 9, 2020
10.2 Share Purchase Agreement by and between Bonus BioGroup Ltd. and Wize
Pharma Inc., dated January 9, 2020
10.3 Form of Registration Rights Agreement
10.4 Series B Purchase Agreement by and between Wize Pharma Inc. and
various investors, dated January 9, 2020
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