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ADMP > SEC Filings for ADMP > Form 8-K on 2-Jul-2013All Recent SEC Filings




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

Item 1.01 Entry Into a Material Definitive Agreement.

On June 26, 2013, Adamis Pharmaceuticals Corporation (the "Company") completed the closing of a private placement financing transaction (the "Transaction") with a small number of accredited institutional investors. Pursuant to a Subscription Agreement (the "Purchase Agreement") and other transaction documents, we issued Secured Convertible Promissory Notes (the "Notes"), and common stock purchase warrants ("Warrants") to purchase up to 13,004,316 shares of common stock, and received gross cash proceeds of $5,300,000, excluding transactions costs, fees and expenses. The Notes have an aggregate principal amount of $6,502,158, including a $613,271 principal amount Note issued to Gemini Master Fund Ltd. in exchange for its previously outstanding June 2012 convertible note, which is no longer outstanding. The maturity date of the Notes is December 26, 2013. Our obligations under the Notes and the other transaction documents are guaranteed by our principal subsidiaries and, pursuant to a Security Agreement entered into with the investors, are secured by a security interest in substantially all of our assets and those of the subsidiaries. The Notes are convertible into shares of common stock at any time at the discretion of the investor at an initial conversion price per share of $0.50. The exercise price of the Warrants is $0.715 per share, subject to adjustment as described below.

Under the transaction documents, we have agreed to file a registration statement with the Securities and Exchange Commission (the "SEC") within 60 days following the closing to register the resale of the shares issuable upon conversion of the Notes and exercise of the Warrants, and to have the registration statement declared effective within 120 days of the closing date. The transaction documents provide for a variety of monetary penalties, which could be material, if the registration statement is not filed or declared effective by the times contemplated in the transaction documents, or does not continue to be effective thereafter. Each of the Company and the investors has agreed to indemnify the other party and certain affiliates against certain liabilities related to the registration statement.

The transaction documents include restrictions on our ability to engage in certain kinds of transactions while the Notes are outstanding without the consent of the investors, including without limitation: (a) incurring, paying or repaying certain kinds of indebtedness; (b) other than certain permitted liens, creating or incurring any liens, security interests or encumbrances on our property or assets; (c) amending our 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) entering into certain kinds of related party transactions with our officers, directors, employees or affiliates; (f) paying or redeeming any financing related debt or securities, with certain permitted exceptions; (g) entering into any equity line of credit arrangements or issuing any variable priced equity linked instruments; (h) filing any registration statements relating to the offer and sale of shares until the registration statement contemplated by the transaction documents is declared effective; (i) selling, leasing or otherwise disposing of any significant portion of our assets outside the ordinary course of business; or
(i) entering into transactions with any of our affiliates (with certain exceptions).

In connection with the closing of a registered underwritten public offering or a registered direct public offering resulting in at least $10 million of gross proceeds to us, the investors must elect to either have the Notes redeemed at a price equal to 115% of the outstanding principal amount and interest, if any, or convert the Notes effective at the closing of the offering, at a conversion price of 85% of the lowest sales, conversion, exercise or purchase price of any common stock or common stock equivalent issued in connection with the offering if such price is lower than the then-current conversion price. Except in connection with a qualified offering, we may not redeem or prepay the Notes.

The occurrence of any of the following events of default will, at the option of the holder, make all principal, interest and other amounts due on the Note immediately due and payable: (a) the Company (i) fails to pay any installment of principal or interest when due or (ii) fails to pay any interest or other sums due under the Note when due; (b) the Company breaches any material covenant or other term or condition of the transaction documents or the Note, except for a breach of payment, in any material respect and if susceptible to cure, the Company has failed to cure such breach within five days after delivery of a notice of such breach; (c) any material representation or warranty of the Company made in the transaction documents is false or misleading in any material respect; (d) any dissolution, liquidation or winding up by the Company or a material subsidiary of a substantial portion of their business; (e) cessation of operations by the Company or a material subsidiary; (f) the failure by the Company or any material subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and which failure could reasonably be expected to result in a material adverse effect on the Company, and such breach is not cured with 20 days after written notice to the Company from the holder; (g) the Company or any material subsidiary makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed; (h) any money judgment, writ or similar final process is entered or made in a non-appealable adjudication against the Company or any material subsidiary or any of its property or other assets for more than $100,000 in excess of the Company's or such material subsidiary's insurance coverage, unless stayed vacated or satisfied within 30 days; (i) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors is instituted by or against the Company or any subsidiary; (j) an event resulting in the Common Stock no longer being quoted on the OTCQB, failure to comply with the requirements for continued quotation on the OTCQB for a period of 20 consecutive trading days, or notification from the OTCQB that the Company is not in compliance with the conditions for such continued quotation and such non-compliance continues for 20 days following such . . .

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       Subscription Agreement dated as of June 26, 2013.
 10.2       Form of Secured Convertible Notes dated June 26, 2013.
 10.3       Escrow Agreement dated June 26, 2013.
 10.4       Security Agreement dated June 26, 2013.
 10.5       Intercreditor Agreement dated June 26, 2013.
  99.1      Press Release dated July 1, 2013.

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