UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
July 17, 2007
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(Date of Report)
ELITE PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-45241 22-3542636
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
165 Ludlow Avenue, Northvale, New Jersey 07647
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(Address of principal executive offices)
(201) 750-2646
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(Registrant's telephone number, including area code)
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES
On July 17, 2007, Elite Pharmaceuticals, Inc., a Delaware corporation
(the "REGISTRANT"), sold in a private placement through Oppenheimer & Company,
Inc., the placement agent ("PLACEMENT AGENT"), the remaining 5,000 shares of its
Series C 8% Convertible Preferred Stock, par value $0.01 per share (the "SERIES
C PREFERRED STOCK"), at a price of $1,000 per share, each share convertible (at
$2.32 per share) into 431.0345 shares of Common Stock, or an aggregate of
2,155,167 shares of Common Stock. Purchasers of the Series C Preferred Stock
(the "INVESTORS") also acquired warrants to purchase shares of Common Stock (the
"Warrants"), exercisable on or prior to July 17, 2012. The Warrants represent
the right to purchase shares of the Registrant's Common Stock in an amount equal
to 30% of the aggregate number of shares of Common Stock into which the Series C
Preferred Stock purchased by the Investors may be converted as of the date of
issuance, or an aggregate of 646,544 shares of Common Stock, at an exercise
price of $3.00 per share. If at any time after one year from the date of
issuance of the Warrants there is no effective registration statement
registering, or no current prospectus available for, the resale of the shares of
Common Stock underlying the Warrants by the holder of such Warrants, then the
Warrants may also be exercised at such time by means of a "cashless exercise".
The private placement of the Series C Preferred Stock and the Warrants was made
pursuant to a Securities Purchase Agreement, dated as of July 17, 2007 (the
"PURCHASE AGREEMENT"), between the Registrant and the Investors. For so long as
the Series C Preferred Stock is outstanding, if at any time the Registrant
issues Common Stock or securities convertible or exercisable for Common Stock,
the holders of the Series C Preferred Stock will have preemptive rights to
purchase their PRO RATA share of the Common Stock or securities convertible or
exercisable for Common Stock on the same terms, conditions and price provided
for in such issuance; provided, that this right is subject to exceptions as set
forth in the Purchase Agreement.
The gross proceeds of the private placement were $5,000,000 before
payment of $350,000 in commissions to the Placement Agent and its selected
dealers and $18,000 in expenses incurred by the Placement Agent and its selected
dealers. Pursuant to the placement agent agreement, the Registrant issued to the
Placement Agent and its designees warrants (the "PLACEMENT WARRANTS") to
purchase 64,655 shares of Common Stock. Such Placement Warrants are at an
exercise price of $3.00 per share, exercisable on or prior to July 17, 2012.
Pursuant to the Registration Rights Agreement, dated as of July 17,
2007 (the "REGISTRATION RIGHTS AGREEMENT"), holders of the Series C Preferred
Stock are provided demand and piggy-back registration rights at Registrant's
expense. Registrant has agreed to file a registration statement under the
Securities Act of 1933, as amended (the "ACT"), for resale the shares of Common
Stock ("REGISTRABLE SECURITIES") issuable upon conversion of the Series C
Preferred Stock, upon exercise of the Warrants and as payment of dividends on
the Series C Preferred Stock within 30 days of the closing of the private
placement (the "FILING DATE") as set forth in the Registration Rights Agreement.
If (i) the Initial Registration Statement (as defined in the Registration Rights
Agreement) is not filed on or prior to its Filing Date; (ii) as to 7,000,000 of
the Registrable Securities, subject to certain adjustments (collectively, the
"INITIAL SHARES"), a registration statement registering for resale all of the
Initial Shares is not declared effective by the United States Securities and
Exchange Commission (the "COMMISSION") by November 13, 2007 (or December 13,
2007 in the case of a "full review" by the Commission of the Initial
Registration Statement); or (iii) all of the Registrable Securities, other than
the Initial Shares, are not registered for resale pursuant to one or more
effective Registration Statements on or before February 28, 2008, (any such
failure or breach being referred to as an "EVENT", and the date on which such
Event occurs, the "EVENT DATE"), then, in addition to any other rights the
holders of Registrable Securities may have under the Registration Statement or
under applicable law, on each such Event Date and on each monthly anniversary of
each such Event
Date (if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Registrant agreed to pay to each holder of
Registrable Securities an amount in cash, as partial liquidated damages and not
as a penalty, equal to 1.5% of the aggregate purchase price paid by such holder
pursuant to the Purchase Agreement for any unregistered Registrable Securities
then held by such holder (calculated as if all convertible securities had been
fully converted). In no event will the Registrant be liable for liquidated
damages under the Registration Rights Agreement (1) with respect to any Warrants
or shares of Common Stock issuable upon exercise of the Warrants; and (2) in
excess of 1.5% of the Subscription Amount (as defined in the Purchase Agreement)
in any 30-day period. In addition, the maximum aggregate liquidated damages
payable to a holder of Registrable Securities under the Registration Rights
Agreement shall be 15% of the aggregate Subscription Amount paid by such holder.
Each of the purchasers of the Series C Preferred Stock has represented
that such purchaser is an "accredited investor" and has agreed that the
securities issued in the private placement are to bear a restrictive legend
against resale without registration under the Act. The Series C Preferred Stock
and Warrants were sold by Registrant pursuant to the exemption from registration
afforded by Section 4(2) of the Act and Regulation D thereunder.
The rights and preferences of the Series C Preferred Stock are governed
by the Certificate of Designations, Preferences and Rights of Series C Preferred
Stock filed with the Secretary of State of the State of Delaware on April 24,
2007, as amended by the Certificate of Correction of the Certificate of
Designations, Preferences and Rights of Series C Preferred Stock filed with the
Secretary of State of the State of Delaware on April 25, 2007 (the "PREFERRED
CERTIFICATE"). Pursuant to the Purchase Agreement, the Series C Preferred Stock
purchased by the Investors in the private placement are to accrue dividends,
commencing on July 17, 2007, at the rate of 8% per annum on their purchase price
of $1,000 per share (increasing to 15% per annum after April 24, 2009) payable
quarterly on January 1, April 1, July 1 and October 1, payable in cash or shares
of Common Stock, which will be valued solely for such purpose at 95% of the
average VWAP (as defined in the Preferred Certificate) for the 20 consecutive
trading days ending on the trading day that is immediately prior to the dividend
payment date, in accordance with the terms of the Preferred Certificate. Any
dividends, whether paid in cash or shares of Common Stock, that are not paid
within 5 trading days, following a dividend payment date, shall continue to
accrue and shall entail a late fee, which must be paid in cash, at the rate of
18% per annum or the lesser rate permitted by applicable law (such fees to
accrue daily, from the dividend payment date through and including the date of
payment). No payment or dividends may be payable on Common Stock or any other
capital stock ranked junior to the Series C Preferred Stock prior to the
satisfaction of the dividend obligation on the Series C Preferred Stock.
Each share of Series C Preferred Stock will be entitled to a preference
equal to the per share purchase price ($1,000 subject to adjustment) plus any
accrued but unpaid dividends thereon and any other fees or liquidated damages
owing thereon upon the liquidation, dissolution or winding-up of the Registrant,
whether voluntary or involuntary ("LIQUIDATION"), which preference ranks PARI
PASSU with the Registrant's Series B 8% Convertible Preferred Stock, par value
$0.01 per share (the "SERIES B PREFERRED STOCK" and together with the Series C
Preferred Stock, the "PREFERRED STOCK") and senior to any other capital stock
ranked junior to the Series C Preferred Stock. A Fundamental Transaction (as
defined in the Preferred Certificate) or Change of Control Transaction (as
defined in the Preferred Certificate) will not be deemed a Liquidation under the
Preferred Certificate.
The holders of Series C Preferred Stock will not have any voting rights
except as specifically provided in the Preferred Certificate or as required by
law. However, as long as any shares of Series C Preferred Stock are
outstanding, the Registrant will not without the prior affirmative vote of
holders of at least 70% of the then outstanding shares of the Series C Preferred
Stock and the Registrant's Series B Preferred Stock collectively, (i) alter or
change adversely the powers, preferences or rights given to the Preferred Stock
or alter or amend the Preferred Certificate; (ii) authorize or create any class
of stock ranking as to dividends, redemption or distribution of assets upon a
Liquidation senior to or otherwise PARI PASSU with the Preferred Stock; (iii)
amend its certificate of incorporation, by-laws or other charter documents in
any manner that adversely affects any rights of the holders of the Preferred
Stock; (iv) increase the authorized number of shares of Preferred Stock; (v)
other than Permitted Indebtedness (as defined in the Preferred Certificate),
until April 24, 2010, incur any indebtedness for borrowed money of any kind;
(vi) other than Permitted Liens (as defined in the Preferred Certificate), until
April 24, 2010, incur any liens of any kind; (vii) repay or repurchase other
than more than a DE MINIMIS number of shares of Common Stock or securities
convertible or exchangeable into Common Stock, other than as permitted by the
Preferred Certificate; (viii) pay cash dividends or distributions on any
securities of the Registrant junior to the Preferred Stock; or (ix) enter into
any agreement or understanding with respect to the foregoing. Notwithstanding
the above, the Registrant may issue any security issued in connection with a
Strategic Transaction (as defined in the Preferred Certificate) that ranks as to
dividends, redemption or distribution of assets upon a Liquidation PARI PASSU
with or junior to the Preferred Stock without the prior affirmative vote of
holders of at least 70% of the then outstanding shares of Preferred Stock.
Each share of Series C Preferred Stock is initially convertible into
431.0345 shares of Common Stock. The conversion price for the Series C Preferred
Stock is equal to $2.32, subject to adjustment for certain events, including
dividends, stock splits, combinations and the sale of Common Stock or securities
convertible into or exercisable for Common Stock at a price less than the then
applicable conversion price. If the Registrant does not meet its share delivery
requirements set forth in the Preferred Certificate, the holders of Preferred
Stock shall be entitled to (i) liquidated damages, payable in cash; and (ii)
cash equal to the amount by which the cost of the shares of Common Stock such
holder is required by its brokerage firm to purchase (in an open market
transaction or otherwise) for delivery in satisfaction of a sale by such holder
of the shares of Common Stock issuable upon conversion of such holder's Series C
Preferred Stock which such holder was entitled to receive upon the conversion at
issue exceeds the product of (1) the aggregate number of shares of Common Stock
that such holder was entitled to receive from the conversion at issue multiplied
by (2) the actual sale price at which the sell order giving rise to such
purchase obligation was executed.
The Registrant may force conversion of the Series C Preferred Stock in
the event the Registrant provides written notice to the holders of the Series C
Preferred Stock that the VWAP for each 20 consecutive trading day period during
a Threshold Period (as defined in the Preferred Certificate) of Common Stock
exceeded $5.38 (subject to adjustment) and the average volume the trading days
during such Threshold Period exceed 50,000 shares of Common Stock (subject to
adjustment for forward and reverse stock splits, recapitalizations, stock
dividends and the like).
Upon the occurrence of certain Triggering Events (as defined in the
Preferred Certificate) each holder of the Series C Preferred Stock shall have
the right, exercisable at the sole option of such holder, to require the
Registrant to redeem each share of such holder's Series C Preferred Stock for
cash in an amount equal to 130% of the stated value, all accrued but unpaid
dividends thereon and all liquidated damages and other costs, expenses or
amounts due in respect of the Series C Preferred Stock (the "TRIGGERING
REDEMPTION AMOUNT"); provided, however, that each Investor has waived its right,
pursuant to the Preferred Certificate, to require the Registrant to redeem any
or all shares of Series C Preferred Stock purchased under the Purchase Agreement
upon the Registrant's failure to cause the Conversion Shares Registration
Statement (as defined in the Preferred
Certificate) to be declared effective by the Commission on or prior to January
23, 2008; provided further, that if the Conversion Shares Registration Statement
is not declared effective by the Commission on or prior to April 16, 2008, each
Investor shall have the right to require redemption as provided under the
Preferred Certificate. Upon certain Triggering Events, each holder of Series C
Preferred Stock shall have the right, exercisable at the sole option of such
holder, to require the Registrant to redeem each share of Series C Preferred
Stock for shares of Common Stock equal to the number of shares of Common Stock
equal to the Triggering Redemption Amount divided by 85% of the average of the
VWAP for the 10 consecutive trading days immediately prior to the date of the
redemption. If at any time the Commission, the Registrant's auditors, American
Stock Exchange (or similar trading exchange) or any other governmental or
regulatory authority having jurisdiction over the Registrant determines that a
Triggering Event for which a holder shall be entitled to a cash redemption
constitutes a condition for redemption which is not solely within the control of
the Registrant (as set forth in Item 28 of Rule 5-02 of Regulation S-X of the
Securities Exchange Act of 1934, as amended), or that as a result of any such
Triggering Event, the Series C Preferred Stock shall not be included in the
Registrant's balance sheet under the heading "stockholder equity", then the
holders of Series C Preferred Stock shall not be entitled to receive a cash
payment, but instead shall be entitled to receive shares of Common Stock.
The Registrant may redeem all of the Series C Preferred Stock
outstanding, at any time after April 24, 2009 for a redemption price, payable in
cash, for each share of Series C Preferred Stock equal to (i) 150% of the stated
value; (ii) accrued but unpaid dividends thereon; and (iii) all liquidated
damages and other amounts due in respect of the Series C Preferred Stock.
ITEM 7.01 REGULATION FD DISCLOSURE
ITEM 8.01 OTHER EVENTS
The Registrant received written guidance from the FDA regarding its
clinical programs for its two lead pain management products, ELI-154 and
ELI-216.
As to ELI-154, Elite's once-daily oxycodone hydrochloride product that
uses the Registrant's proprietary controlled release technology, Registrant
received guidance from the FDA on the proposed clinical plan submitted earlier
this year. The Registrant intends to incorporate such guidance into the clinical
program for ELI-154 and will submit a Phase III protocol to the FDA for a
special protocol assessment (SPA) for ELI-154.
As to ELI-216, Elite's oxycodone hydrochloride product that uses its
patent-pending opioid abuse deterrent technology which combines a narcotic
agonist, oxycodone hydrochloride, and an antagonist, naltrexone hydrochloride,
to deter abuse of the drug, the Registrant received guidance from the FDA on the
special protocol assessment submitted for the Phase III protocol for ELI-216.
The Registrant intends to incorporate such guidance into its protocol and
resubmit such protocol to the FDA for agreement.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
a) Not applicable.
b) Not applicable.
c) Exhibits
Exhibit 3.1 Certificate of Designations of Preferences, Rights
and Limitations of Series C 8% Convertible
Preferred Stock as filed with the Secretary of
State of the State of Delaware, incorporated by
reference as Exhibit 3.2 to the Form 8-K filed
with the Commission on April 25, 2007.
Exhibit 4.1 Form of Series C Preferred Stock Certificate,
incorporated by reference as Exhibit 4.1 to the
Form 8-K filed with the Commission on April 25,
2007.
Exhibit 4.2 Form of Warrant issued to the Investors,
incorporated by reference as Exhibit 4.2 to the
Form 8-K filed with the Commission on April 25,
2007.
Exhibit 4.3 Form of Warrant issued to Placement Agent,
incorporated by reference as Exhibit 4.3 to the
Form 8-K filed with the Commission on April 25,
2007.
Exhibit 10.1 Form of Securities Purchase Agreement.
Exhibit 10.2 Form of Registration Rights Agreement.
Exhibit 10.3 Form of Placement Agent Agreement, between
Registrant and Oppenheimer & Company, Inc.,
incorporated by reference as Exhibit 10.3 to the
Form 8-K filed with the Commission on April 25,
2007.
99.1 Press Release dated July 18, 2007
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELITE PHARMACEUTICALS, INC.
Date: July 23, 2007 By: /s/ Bernard J. Berk
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Bernard J. Berk
Chief Executive Officer