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ADMP > SEC Filings for ADMP > Form 8-K on 29-Mar-2016All Recent SEC Filings




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

Item 1.01 Entry into a Material Definitive Agreement

Merger Transaction

On March 28, 2016, Adamis Pharmaceuticals Corporation (the "Company" or "Adamis") entered into an Agreement and Plan of Merger, dated as of March 28, 2016 (the "Merger Agreement"), with US Compounding, Inc., an Arkansas corporation ("USC"), and Ursula MergerSub Corp., an Arkansas corporation and a wholly owned subsidiary of the Company ("Merger Sub"). The Merger Agreement provides for the acquisition of USC by Adamis. USC is a privately-held company registered as a drug compounding outsourcing facility under Section 503B of the U.S. Food, Drug & Cosmetic Act ("FD&C Act") that provides prescription medications to patients, physician clinics, hospitals and surgery centers throughout most of the United States. USC manufactures customized medications based on physicians' orders and individual patient needs. USC's differentiated offerings broadly include, among others, corticosteroids, hormone replacement therapies, and men's and women's health products.

The Merger Agreement provides for Merger Sub to merge with and into USC (the "Merger"), with USC surviving as a wholly owned subsidiary of the Company. The Boards of Directors of each of USC and the Company have unanimously approved the Merger.

The Merger Agreement provides that a total of 1,618,544 shares of Adamis common stock are issuable to the USC stockholders pursuant to the Merger. Under the Merger Agreement, at the effective time of the Merger, each outstanding share of USC common stock (other than shares held by the Company, Merger Sub or USC, which will be cancelled), will be converted into the right to receive shares of Adamis common stock equal to 1,618,544 divided by the total number of shares of USC common stock outstanding. USC does not have and will not have any outstanding options, warrants or other rights to acquire its securities. No fractional shares of Company common stock will be issued in the Merger.

The Merger Agreement includes a number of customary covenants and agreements of USC concerning operation of its business and actions to be taken by USC between the date of the Merger Agreement and the closing date. The Merger is subject to the approval by the stockholders of USC and other customary conditions including, among other things,: (i) absence of a material adverse effect on USC's business; (ii) entry into employment agreements with certain key employees; (iii) completion of certain ancillary transactions, including acquisition by the Company of the building and property on which USC's offices are located and the acquisition of certain other tangible property; (iv) entry into non-competition agreements with certain USC stockholders; and (v) none of the USC stockholders have exercised their dissenters' rights. For each of USC and the Company, the obligation to close the Merger is also subject to the accuracy in all material respects of representations and warranties of, and compliance with covenants by, the other party as set forth in the Merger Agreement. Subject to the satisfaction of these conditions, the Company anticipates that the Merger will close in the second quarter of 2016.

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The Merger Agreement also includes customary indemnification provisions providing that a portion of the Company shares constituting the merger consideration will be held in escrow for a period of three (3) years after the closing date in order to satisfy the indemnification obligations of the principal USC stockholders under the Merger Agreement for breaches of USC's representations, covenants and warranties, and certain other matters. In addition, the principal stockholders of USC who are also employees of USC have entered into agreements pursuant to which a portion of the merger consideration shares issued to such stockholders will be withheld, with such shares to be released over a period of three (3) years after the closing date, provided that such stockholder continues to be employed by USC or the Company (with certain exceptions) as of the applicable vesting date.

The Merger Agreement provides that USC and the Company may mutually agree to terminate the Merger Agreement before completing the Merger. The Company may terminate the Merger Agreement if an event or condition occurs that has or is reasonably likely to have a material adverse effect on USC. In addition, either USC or the Company may terminate the Merger Agreement if: (i) the Merger is not consummated by May 15, 2016; (ii) a court or other governmental entity issues a final order prohibiting the Merger; or (iii) the other party breaches the Merger Agreement, the breach is not cured within the applicable cure period, and such breach would entitle the party seeking to terminate the agreement not to consummate the Merger.

In connection with the Merger, and subject to obtaining all required consents and approvals, the Company has agreed to acquire from certain third party entities the building and property on which USC's principal offices and facilities are located, and certain laboratory equipment used in connection with USC's operations, in consideration of the assumption by the Company of the loan obligations and loan documents relating to such assets, as well as to assume certain loan obligations and loan documents of USC, in an aggregate principal amount of approximately $5,722,500. Further, it is expected that most or all of the current USC employees will continue and remain employed by USC after the closing of the transaction.

A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and . . .

Item 2.02 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant

The information disclosed in Item 1.01 above under the heading "Loan Agreement" is incorporated herein by reference.

Item 3.02 Unregistered Sale of Equity Securities.

As described above, as part of the consideration for Bear State entering into the Loan Agreement and in addition to the collateral securing our obligations under the Loan Documents, the Company issued to Bear State a Warrant to purchase up to 1,000,000 shares of the Company's common stock. The issuance of the Warrant is a private placement to an "accredited investor" (as that term is defined under Rule 501 of Regulation D), and was issued in reliance on the exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon Section 4(a)(2) of the Securities Act, and/or Rule 506 of Regulation D promulgated thereunder. No underwriting discounts or commissions are or will be payable as a result of the offer, sale and issuance by the Company of the Warrant.

Item 8.01 Other Events

The Company has issued a press release announcing the execution of the Merger Agreement. The press release is filed as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

2.1                  Agreement and Plan of Merger, dated as of March 28, 2016,
                   by and among the Company, US Compounding, Inc., Ursula
                   MergerSub Corp., and Eddie Glover, as Stockholders'
2.2                  Form of Joinder Agreement, dated as of March 28, 2016, by
                   and between the Company and certain stockholders of U.S.
                   Compounding, Inc.
10.1                 Loan and Security Agreement by and between Adamis
                   Pharmaceuticals Corporation and Bear State Bank, N.A.
10.2                 Warrant dated March 28, 2016
99.1               Press Release of the Company, dated March 28, 2016

* Schedules, annexes and similar supporting attachments or agreements to the Merger Agreement are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or similar attachment to the Commission upon request.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits.


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