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ADMP > SEC Filings for ADMP > Form 8-K on 8-Apr-2013All Recent SEC Filings

Show all filings for ADAMIS PHARMACEUTICALS CORP | Request a Trial to NEW EDGAR Online Pro



Entry into a Material Definitive Agreement, Creation of a Direct Fina

Item 1.01 Entry Into a Material Definitive Agreement.

Issuance of 12% Convertible Debentures

On April 5, 2013, Adamis Pharmaceuticals Corporation (the "Company") completed the closing of a private placement financing transaction (the "Transaction") with two accredited investors (the "Investors"), pursuant to a Securities Purchase Agreement (the "Purchase Agreement"). Pursuant to the Purchase Agreement, the Company issued 12% Convertible Debentures (the "Debentures" and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $575,000, and received gross proceeds of $575,000, excluding transaction costs, fees and expenses.

Interest on the Debentures is payable in the amount of 12% of the principal amount, regardless of how long the Debentures remain outstanding. Principal and interest is due and payable October 5, 2013, six months after the date of the Debentures. The Debentures are convertible into shares of the Company's common stock at any time at the discretion of the Investor at an initial conversion price per share of $0.50, subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Debentures.

The conversion price of the Debentures is subject to standard proportional adjustments for events such as stock splits, reverse stock splits, stock dividends, recapitalizations and other similar transactions. The conversion price is also subject to full-ratchet anti-dilution protection providing that in the event that any shares of common stock, or options, warrants, rights or other securities convertible into or exercisable for common stock ("Common Stock Equivalents"), are issued, or Common Stock Equivalents are repriced, at an effective price per share less than the conversion price of the Debentures (and other than pursuant to stock splits, stock dividends, combinations, capital reorganizations and similar events resulting in a proportionate adjustment to the conversion price of the Debentures), the conversion price of the Debentures will be adjusted downward to equal the per share price of the securities issued in such transaction. Certain issuances of common stock or Common Stock Equivalents are excluded and exempted, including: (a) shares of common stock or options issued to employees, officers, directors or consultants of the Company pursuant to any stock or option plan or agreement approved by the Board of Directors; (b) securities issued upon the exercise or exchange of or conversion of any securities issued pursuant to the Transaction Documents or other securities, options, warrants, convertible securities or other rights to acquire, exercisable or exchangeable for or convertible into, shares of common stock, in each case that are issued and outstanding on the date of the Debentures, provided that such securities have not been amended since the date of the Debentures to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities; (c) securities issued to an operating company or a university or other non-financial institution pursuant to acquisitions of companies, assets or intellectual property (or licensing of assets or intellectual property) or strategic transactions approved by a majority of the disinterested directors of the Company, and in which the Company receives benefits in addition to the investment of funds; and (d) securities issued or issuable in exchange for other than cash in connection with any other transaction that is not for the primary purpose of financing the Company's business, but not including a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

The Company may redeem the Debentures, subject to prior notice to the Investors, by paying an amount equal to 120% of the principal and interest payable under the Debentures. In addition, if the Company receives net proceeds in excess of $7.5 million from equity or debt financing transactions after the date of the Debentures, the Investors may elect to require the Company to repay the Debentures.

As long as the Debentures are outstanding, the Investors have a right of first refusal, exercisable for two business days after notice to the Investors, to purchase to purchase securities proposed to be offered and sold in the future by the Company in a transaction primarily for purposes of financing the operations or business of the Company. Securities proposed to be offered in exempt transactions, as described above, are excluded from the right of first refusal.

The Transaction Documents include restrictions on the Company's ability to engage in certain kinds of transactions while the Debentures are outstanding without the consent of the Investors, including without limitation (a) incurring, paying or repaying certain kinds of indebtedness (other than indebtedness outstanding on the date of the Debentures, incurred in the ordinary course of business, or incurred in connection with certain kinds of transactions); (b) other than certain permitted liens, creating or incurring any liens or encumbrances on the Company's property or assets; (c) amending its charter documents (with certain exceptions) in any manner that materially and adversely affects the Investors' rights; (d) repurchasing shares of common stock, or repurchasing or reacquiring shares of common stock (with certain exceptions); (e) paying cash dividends; (f) selling, leasing or otherwise disposing of any significant portion of the Company's assets outside the ordinary course of business, unless the Company offers to prepay the full amount owed under the Debentures in connection with the closing of any such transaction; (g) lending money or making advances to any person (with certain exceptions); (h) entering into transactions with any affiliate of the Company (with certain exceptions) unless made on an arm's length basis; or (i) selling all or substantially all of its assets outside of the ordinary course of business

Events of default under the Debentures include the following: (a) failure to make payments required under the Debentures when due and payable within three business days after delivery of a notice of demand from the Investor; (b) the Company fails to timely issue shares upon conversion of the Debentures pursuant to the procedures described in the Transaction Documents and fails to cure the default within three business days after a notice of conversion is delivered;
(c) the Company breaches any material covenant or other material term or condition contained in the Debentures, the Purchase Agreement or other agreements or instruments delivered in connection with the Transaction (collectively, the "collateral documents") and the breach is not cured within 10 days after notice; (d) any representation or warranty of the Company made in the . . .

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 2.03.

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. The securities were issued in a private placement under Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. Each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Number    Description
 10.1       Securities Purchase Agreement dated as of April 5, 2013  .

 10.2       Form of 12% Convertible Debenture dated April 5, 2013.

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