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PTX > SEC Filings for PTX > Form 8-K on 26-Feb-2014All Recent SEC Filings




Entry into a Material Definitive Agreement, Creation of a Dire

Item 1.01 Entry into a Material Definitive Agreement.

Indenture, Notes, Representation Agreements and Registration Rights Agreements

On February 21, 2014, Pernix Therapeutics Holdings, Inc. (the "Company") issued $65 million aggregate principal amount of the Company's 8.00% Convertible Senior Notes due 2019 (the "Notes") in accordance with each of the Securities Purchase Agreements (the "Securities Purchase Agreements"), dated February 4, 2014 by and between the Company and the investors party thereto (the "Investors"). The Notes were offered and sold only to institutional accredited investors and pursuant to Rule 4(a)(2) of the Securities Act of 1933, as amended. The Company anticipates using the net proceeds from the issuance of Notes for the acquisition of accretive specialty products, as well as for working capital and general corporate purposes.

Morgan Stanley & Co. LLC acted as placement agent in connection with the Note offering. Perella Weinberg Partners LP acted as financial advisor in connection with the Note offering.

The Notes are governed by the terms of an indenture (the "Indenture"), dated as of February 21, 2014, between the Company and Wilmington Trust, National Association, as trustee (the "Trustee"). The Notes are the senior unsecured obligations of the Company and bear interest at a rate of 8.00% per annum, payable quarterly in arrears on March 15, June 15, September 15 and December 15, beginning on June 15, 2014. The Notes will mature on February 15, 2019, unless earlier converted or repurchased. The Notes will be convertible into shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at an initial conversion rate of 277.7778 shares of Common Stock per $1,000 principal amount of the Notes, which corresponds to an initial conversion price of approximately $3.60 per share of Common Stock and represents a conversion premium of approximately 72% based on the last reported sale price of the Common Stock of $2.09 on February 4, 2014, the date upon which the Securities Purchase Agreements were entered.

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends, payment of cash dividends and the below-market-price issuance of Common Stock. At any time prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at their option. If, upon the occurrence of a change of control, as described in the Indenture, a holder elects to convert its Notes in connection with such change of control, such holder may be entitled to an increase in the conversion rate as described in the Indenture. To the extent such increase in the conversion rate would result in the conversion price of the Notes to be less than $2.3278 per share (subject to adjustment) and equal to or greater than $2.09 per share (subject to adjustment), the Company will be obligated to deliver cash in lieu of any share that was not delivered on account of such limitation.

The Company may not redeem the Notes prior to the maturity date and no "sinking fund" is provided for the Notes, which means that the Company is not required to periodically redeem or retire the Notes. Upon the occurrence of a change of control, as described in the Indenture, holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% plus a specified percentage (that is initially 40% and declines over the life of the notes) of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest.

The Indenture contains restrictive covenants that, among other things, restrict the ability of the Company and its subsidiaries to: (i) incur debt; (ii) pay dividends and make distributions on, or redeem or repurchase, their capital stock; (iii) make certain investments, purchase certain assets or other . . .

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

The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of List

As described in Item 5.02 of this Current Report on Form 8-K, as a result of the resignations of Messrs. Collins, Smith and Blanchard, the Company notified the Nasdaq Stock Market ("NASDAQ") on February 21, 2014, that it was not in compliance with the majority independent director and audit committee requirements under NASDAQ Listing Rule 5605. NASDAQ Listing Rule 5605(b)(1) requires that a majority of the board of directors be comprised of independent directors as defined in Rule 5605(a)(2). NASDAQ Listing Rule 5605(c)(2)(A) requires that a corporation's Audit Committee be comprised of at least three members, each of whom are independent directors. Currently, the Company's Board consists of one independent director and two non-independent directors and the Audit Committee is comprised of one member who is the current independent director. The Company is actively pursuing independent director candidates and expects to fill the vacancies created by these resignation as soon as practicable. The Company intends that these new independent directors will serve as members of the Audit Committee and the other applicable committees of the Board.

In accordance with NASDAQ Listing Rules 5605(b)(1)(A) and 5605(c)(4), the Company has a cure period during which it may regain compliance with the Listing Rules. In this case, the Company's cure period will expire upon its 2014 annual shareholders' meeting. The Company expects to regain compliance on a timely basis prior to its 2014 annual meeting of shareholders.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 is incorporated by reference into this Item 3.02.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officer

At the request of the Company, on February 21, 2014, each of Cooper C. Collins, James E. Smith, Jr. and Anthem Blanchard resigned as members of the Board of Directors of the Company. In addition, Mr. Collins also resigned as Chief Strategy Officer of the Company effective as of April 15, 2014. These resignations did not relate to any disagreements with the Board of Directors (the "Board") or management of the Company or disagreements with respect to matters related to the operations, policies or practices of the Company.

As a result of the Board resignations, the size of the Board was decreased to five directors, leaving two vacancies to be filled by the existing directors prior to the Company's 2014 annual meeting of shareholders. Funds managed by each of Athyrium Capital Management and Cetus Capital were given certain Board nomination rights pursuant to the terms and conditions of the Representation Agreements, the form of which is filed as Exhibit 10.3 hereto and is incorporated herein by reference.

Item 8.01 Other Events.

On February 21, 2014, the shareholders party to that certain Amended and Restated Merger Partner Stockholder Agreement dated as of May 31, 2011 (the "Stockholder Agreement"), were released by the Company from the restrictions on the transfer, sale or other disposition of shares of capital stock of the Company held by such shareholders and subject to such Stockholder Agreement.

On February 24, 2014, the Company issued a press release announcing the closing of the offering of the Notes, the amendments to the MidCap facility, and certain board changes. A copy of this press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

  4.1       Indenture, dated February 21, 2014, by and between Pernix
            Therapeutics Holdings, Inc. and Wilmington Trust, National
4.2         Form of 8.00% Convertible Senior Note due 2019 (included in Exhibit
  10.1      Amendment No. 1 to the Amended and Restated Credit Agreement, dated
            February 21, 2014, between Pernix Therapeutics Holdings, Inc. and
            MidCap Funding IV, LLC, as Agent and as a lender, and the other
            lenders from time to time parties thereto
  10.2      Amended and Restated Security and Pledge Agreement, dated February
            21, 2014, by and between Pernix Therapeutics Holdings, Inc. and
            MidCap Funding IV, LLC, as Agent.
  10.3      Form of Representation Agreement, dated February 21,2014, by and
            between Pernix Therapeutics Holdings, Inc. and the Investors party
  10.4      Form of Registration Rights Agreement, dated February 21,2014, by and
            between Pernix Therapeutics Holdings, Inc. and the Investors party
  99.1      Press Release of Pernix Therapeutics Holdings, Inc. dated February
            24, 2014.

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