Exhibit 4.1
Execution
Copy
STANDBY EQUITY DISTRIBUTION
AGREEMENT
THIS AGREEMENT
dated as of the 29th day of
September 2008 (this “ Agreement ”) between
YA GLOBAL INVESTMENTS, L.P. , a Cayman Islands exempt
limited partnership (the “ Investor ”), and
ADVANCED LIFE SCIENCES HOLDINGS, INC. , a corporation
organized and existing under the laws of the State of Delaware (the
“ Company ”).
WHEREAS , the parties desire that, upon the terms and
subject to the conditions contained herein, the Company shall issue
and sell to the Investor, from time to time as provided herein, and
the Investor shall purchase from the Company up to $15,000,000 of
the Company’s common stock, par value $0.01 per share (the
“ Common Stock ”); and
WHEREAS , such investments will be made in reliance upon
the provisions of Regulation D (“ Regulation D
”) of the Securities Act of 1933, as amended, and the
regulations promulgated thereunder (the “ Securities
Act ”), and or upon such other exemption from the
registration requirements of the Securities Act as may be available
with respect to any or all of the investments to be made
hereunder.
NOW , THEREFORE , the parties hereto agree as
follows:
Article I. Certain
Definitions
Section 1.01
“ Advance ” shall mean the portion of the
Commitment Amount requested by the Company in the Advance
Notice.
Section 1.02
“ Advance Date ” shall mean the 1 st
Trading Day after expiration of the applicable Pricing Period for
each Advance.
Section 1.03
“ Advance Notice ” shall mean a written notice
in the form of Exhibit A attached hereto to the
Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the
Investor.
Section 1.04
“ Advance Notice Date ” shall mean each date the
Company delivers (in accordance with of this Agreement) to
the Investor an Advance Notice requiring the Investor to advance
funds to the Company, subject to the terms of this Agreement.
No Advance Notice Date shall be less than 5 Trading Days after the
prior Advance Notice Date.
Section 1.05
“ Bid Price ” shall mean, on any date, the
closing bid price (as reported by Bloomberg L.P.) of the Common
Stock on the Principal Market or if the Common Stock is not traded
on a Principal Market, the highest reported bid price for the
Common Stock, as furnished by the National Association of
Securities Dealers, Inc.
Section 1.06
“ Closing ” shall mean one of the closings of a
purchase and sale of Common Stock pursuant to .
Section 1.07
“ Commitment Amount ” shall mean the aggregate
amount of up to $15,000,000 which the Investor has agreed to
provide to the Company in order to purchase the Company’s
Common Stock pursuant to the terms and conditions of this Agreement
provided that, the Company shall not effect any sales under
this Agreement and the Investor shall not have the obligation to
purchase shares of Common Stock under this Agreement to the extent
that after giving effect to such purchase and sale the aggregate
number of shares of Common Stock issued under this Agreement would
exceed 7,700,000 shares of Common Stock (which is less than 20% of
the 38,521,987 outstanding shares of Common Stock as of the date of
this Agreement) except that such limitation shall not apply
in the event that the Company (i) obtains the approval of its
stockholders as required by the applicable rules of the
Principal Market for the Common Stock for issuances of Common Stock
in excess of such amount or (ii) obtains a written opinion
from outside counsel to the Company that such approval is not
required, which opinion shall be reasonably satisfactory to the
Investor.
Section 1.08
“ Commitment Period ” shall mean the period
commencing on the Effective Date, and expiring upon the termination
of this Agreement in accordance with .
Section 1.09
“ Common Stock ” shall mean the Company’s
common stock, par value $0.01 per share.
Section 1.10
“ Condition Satisfaction Date ” shall have the
meaning set forth in .
Section 1.11
“ Damages ” shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation,
reasonable attorney’s fees and disbursements and costs and
expenses of expert witnesses and investigation).
Section 1.12
“ Effective Date ” shall mean the date on which
the SEC first declares effective a Registration Statement
registering the resale of the Registrable Securities as set forth
in .
Section 1.13
“ Exchange Act ” shall mean the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Section 1.14
“ Material Adverse Effect ” shall mean any
condition, circumstance, or situation that has resulted in, or
would reasonably be expected to result in (i) a material
adverse effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise)
of the Company, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this
Agreement.
Section 1.15
“ Market Price ” shall mean the lowest daily
VWAP of the Common Stock during the Pricing Period.
Section 1.16
“ Maximum Advance Amount ” shall, per Advance
Notice, be the greater of (i) $400,000 or (ii) the
average daily trading volume for the 5 Trading Days prior to the
Advance Notice Date.
Section 1.17
“ Person ” shall mean an individual, a
corporation, a partnership, an association, a trust or other entity
or organization, including a government or political subdivision or
an agency or instrumentality thereof.
Section 1.18
“ Pricing Period ” shall mean the 5 consecutive
Trading Days after the Advance Notice Date.
Section 1.19
“ Principal Market ” shall mean the Nasdaq
Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the American Stock Exchange, the OTC Bulletin Board or the
New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.20
“ Purchase Price ” shall be set at 95% of the
Market Price during the Pricing Period.
Section 1.21
“ Registrable Securities ” shall mean the shares
of Common Stock to be issued hereunder (i) in respect of which
the Registration Statement has not been declared effective by the
SEC, (ii) which have not been sold under circumstances meeting
all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act (“
Rule 144 ”) or (iii) which have not been
otherwise transferred to a holder who may trade such shares without
restriction under the Securities Act, and the Company has delivered
a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend.
Section 1.22
“ Registration Rights Agreement ” shall mean the
Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company and the
Investor.
Section 1.23
“ Registration Statement ” shall mean a
registration statement on Form S-3 (if use of such form is
then available to the Company pursuant to the rules of the SEC
and, if not, Form S-1 or on such other form promulgated by the
SEC for which the Company then qualifies and which counsel for the
Company shall deem appropriate, and which form shall be available
for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and
the Registration Rights Agreement, and in accordance with the
intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable
Securities under the Securities Act.
Section 1.24
“ Regulation D ” shall have the meaning set
forth in the recitals of this Agreement.
Section 1.25
“ SEC ” shall mean the United States Securities
and Exchange Commission.
Section 1.26
“ Securities Act ” shall have the meaning set
forth in the recitals of this Agreement.
Section 1.27
“ Trading Day ” shall mean any day during which
the New York Stock Exchange shall be open for business.
Section 1.28
“ VWAP ” means, as of any date, the daily dollar
volume-weighted average price for such security as reported by
Bloomberg, LP through its “Historical Price Table Screen
(HP)”
with Market:
Weighted Ave function selected, or, if no dollar volume-weighted
average price is reported for such security, then the average of
the highest closing bid price and the lowest closing ask price of
any of the market makers for such security.
Article II.
Advances
Section 2.01
Advances . Subject to the terms and conditions of this
Agreement (including, without limitation, the provisions of
Article VII hereof), the Company, at its sole and exclusive
option, may issue and sell to the Investor, and the Investor shall
purchase from the Company, shares of the Company’s Common
Stock by the delivery, in the Company’s sole discretion, of
Advance Notices. The number of shares of Common Stock that
the Investor shall purchase pursuant to each Advance shall be
determined by dividing the amount of the Advance by the Purchase
Price. No fractional shares shall be issued. Fractional
shares shall be rounded to the next higher whole number of
shares. The aggregate maximum amount of all Advances that the
Investor shall be obligated to make under this Agreement shall not
exceed the Commitment Amount.
Section 2.02
Mechanics .
(a)
Advance
Notice . At any time during
the Commitment Period, the Company may require the Investor to
purchase shares of Common Stock by delivering an Advance Notice to
the Investor, subject to the conditions set forth in ; provided,
however, the amount for each Advance as designated by the Company
in the applicable Advance Notice shall not be more than the Maximum
Advance Amount and the aggregate amount of the Advances pursuant to
this Agreement shall not exceed the Commitment Amount. The
Company acknowledges that the Investor may sell shares of the
Company’s Common Stock corresponding with a particular
Advance Notice after the Advance Notice is received by the
Investor. There shall be a minimum of 5 Trading Days between
each Advance Notice Date.
(b)
Date of
Delivery of Advance Notice . Advance Notices shall
be delivered in accordance with the instructions set forth on the
bottom of Exhibit A. An Advance Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile
or otherwise by the Investor if such notice is received prior to
5:00 pm Eastern Time, or (ii) the immediately succeeding
Trading Day if it is received by facsimile or otherwise after 5:00
pm Eastern Time on a Trading Day or at any time on a day which is
not a Trading Day. No Advance Notice may be deemed delivered
on a day that is not a Trading Day.
Section 2.03
Closings . On each Advance Date (i) the Company
shall deliver to the Investor such number of shares of the Common
Stock registered in the name of the Investor as shall equal
(x) the amount of the Advance specified in such Advance Notice
pursuant to herein, divided by (y) the Purchase Price
and (ii) upon receipt of such shares, the Investor shall
deliver to the Company the amount of the Advance specified in the
Advance Notice by wire transfer of immediately available
funds. In addition, on or prior to the Advance Date, each of
the Company and the Investor shall deliver to the other all
documents, instruments and writings required to be delivered by
either of them pursuant to this Agreement in order to implement and
effect the
transactions
contemplated herein. To the extent the Company has not paid
the fees, expenses, and disbursements of the Investor in accordance
with , the amount of such fees, expenses, and disbursements may be
deducted by the Investor (and shall be paid to the relevant party)
directly out of the proceeds of the Advance with no reduction in
the amount of shares of the Company’s Common Stock to be
delivered on such Advance Date.
(a)
Company’s Obligations
Upon Closing .
(i)
The Company shall
deliver to the Investor the shares of Common Stock applicable to
the Advance in accordance with . The certificates evidencing
such shares shall be free of restrictive legends.
(ii)
The Registration
Statement shall be effective and available for the resale of all
applicable shares of Common Stock to be issued in connection with
the Advance and certificates evidencing such shares shall be free
of restrictive legends.
(iii)
The Company shall
have obtained all material permits and qualifications required by
any applicable state for the offer and sale of the Registrable
Securities, or shall have the availability of exemptions
therefrom. The sale and issuance of the Registrable
Securities shall be legally permitted by all laws and regulations
to which the Company is subject.
(iv)
The Company shall
have filed with the SEC in a timely manner all reports, notices and
other documents required of a “reporting company” under
the Exchange Act and applicable Commission regulations.
(v)
The Company shall
pay any unpaid fees as set forth in or withhold such amounts
as provided in .
(vi)
The
Company’s transfer agent shall be DWAC eligible.
(b)
Investor’s Obligations
Upon Closing . Upon receipt of the
shares referenced in Section 2.03(a)(i) above and
provided the Company is in compliance with its obligations in , the
Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately
available funds.
Section 2.04
Hardship . In the event the Investor sells shares of
the Company’s Common Stock after receipt of an Advance Notice
and the Company fails to perform its obligations as mandated in ,
and specifically the Company fails to deliver to the Investor on
the Advance Date the shares of Common Stock corresponding to the
applicable Advance pursuant to Section 2.03(a)(i), the Company
acknowledges that the Investor shall suffer financial hardship and
therefore shall be liable for any and all losses, commissions,
fees, or financial hardship caused to the Investor.
Article III. Representations
and Warranties of Investor
Investor hereby represents and
warrants to, and agrees with, the Company that the following are
true and correct as of the date hereof and as of each Advance
Date:
Section 3.01
Organization and Authorization . The Investor is duly
incorporated or organized and validly existing in the jurisdiction
of its incorporation or organization and has all requisite power
and authority to purchase and hold the securities issuable
hereunder. The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by
such Investor of its obligations hereunder and the consummation by
such Investor of the transactions contemplated hereby have been
duly authorized and requires no other proceedings on the part of
the Investor. The undersigned has the right, power and
authority to execute and deliver this Agreement and all other
instruments (including, without limitations, the Registration
Rights Agreement), on behalf of the Investor. This Agreement
has been duly executed and delivered by the Investor and, assuming
the execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations
of the Investor, enforceable against the Investor in accordance
with its terms.
Section 3.02
Evaluation of Risks . The Investor has such knowledge
and experience in financial, tax and business matters as to be
capable of evaluating the merits and risks of, and bearing the
economic risks entailed by, an investment in the Company and of
protecting its interests in connection with this transaction.
It recognizes that its investment in the Company involves a high
degree of risk.
Section 3.03
No Legal Advice From the Company . The Investor
acknowledges that it had the opportunity to review this Agreement
and the transactions contemplated by this Agreement with his or its
own legal counsel and investment and tax advisors. The
Investor is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
Section 3.04
Investment Purpose . The securities are being purchased by
the Investor for its own account, and for investment
purposes. The Investor agrees not to assign or in any way
transfer the Investor’s rights to the securities or any
interest therein and acknowledges that the Company will not
recognize any purported assignment or transfer except in accordance
with applicable Federal and state securities laws. No other
person has or will have a direct or indirect beneficial interest in
the securities. The Investor agrees not to sell, hypothecate
or otherwise transfer the Investor’s securities unless the
securities are registered under Federal and applicable state
securities laws or unless, in the opinion of counsel satisfactory
to the Company, an exemption from such laws is
available.
Section 3.05
Accredited Investor . The Investor is an “
Accredited Investor ” as that term is defined in
Rule 501(a)(3) of Regulation D of the Securities
Act.
Section 3.06
Information . The Investor and its advisors (and its
counsel), if any, have been furnished with all materials relating
to the business, finances and operations of the Company and
information it deemed material to making an informed investment
decision. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due
diligence investigations conducted by such Investor or its
advisors, if any, or its representatives shall modify, amend or
affect the Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.
The Investor understands that its investment involves a high degree
of risk. The
Investor is in a
position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and
enables such Investor to obtain information from the Company in
order to evaluate the merits and risks of this investment.
The Investor has sought such accounting, legal and tax advice, as
it has considered necessary to make an informed investment decision
with respect to this transaction.
Section 3.07
Receipt of Documents . The Investor and its counsel have
received and read in their entirety: (i) this Agreement
and the Exhibits annexed hereto; (ii) all due diligence and
other information necessary to verify the accuracy and completeness
of such representations, warranties and covenants; (iii) the
Company’s Form 10-K for the year ended December 31,
2007, Forms 10-Q for the periods ended March 31, 2008 and
June 30, 2008 and Forms 8K filed on February 5, 2008,
February 19, 2008, March 7, 2008, April 18, 2008,
May 7, 2008 and August 14, 2008; and (iv) answers to
all questions the Investor submitted to the Company regarding an
investment in the Company; and the Investor has relied on the
information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
Section 3.08
No General Solicitation . Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of the shares
of Common Stock offered hereby.
Section 3.09
Not an Affiliate . The Investor is not an officer,
director or a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under
common control with the Company or any “ Affiliate
” of the Company (as that term is defined in Rule 405 of
the Securities Act).
Section 3.10
Trading Activities. The Investor’s trading activities
with respect to the Company’s Common Stock shall be in
compliance with all applicable federal and state securities laws,
rules and regulations and the rules and regulations of
the Principal Market on which the Company’s Common Stock is
listed or traded. Neither the Investor nor its affiliates has an
open short position in the Common Stock of the Company, the
Investor agrees that it shall not, and that it will cause its
affiliates not to, engage in any short sales of or hedging
transactions with respect to the Common Stock, provided that
the Company acknowledges and agrees that upon receipt of an Advance
Notice the Investor has the right to sell the shares to be issued
to the Investor pursuant to the Advance Notice during the
applicable Pricing Period.
Article IV. Representations and
Warranties of the Company
Except as stated below, on the
disclosure schedules attached hereto or in the SEC Documents (as
defined herein), the Company hereby represents and warrants to, and
covenants with, the Investor that the following are true and
correct as of the date hereof:
Section 4.01
Organization and Qualification . The Company is duly
incorporated or organized and validly existing in the jurisdiction
of its incorporation or organization and has all requisite
corporate power to own its properties and to carry on its business
as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do
business and
is in good
standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
Section 4.02
Authorization, Enforcement, Compliance with Other
Instruments . (i) The Company has the requisite
corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement and any related
agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the
Registration Rights Agreement and any related agreements by the
Company and the consummation by it of the transactions contemplated
hereby and thereby, have been duly authorized by the
Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or
its stockholders, (iii) this Agreement, the Registration
Rights Agreement and any related agreements have been duly executed
and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement and assuming the execution and
delivery thereof and acceptance by the Investor and any related
agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’
rights and remedies.
Section 4.03
Capitalization . The authorized capital stock of the
Company consists of 60,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, no par value per share (“
Preferred Stock ”), of which 38,521,987 shares (as may
be increased as set forth in the last sentence of this
Section 4.03) of Common Stock and 0 shares of Preferred Stock
are issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents and
the last sentence of this Section 4.03, no shares of Common
Stock are subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in the SEC Documents, as of the
date hereof, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any
of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt
securities (iii)
there are no
outstanding registration statements other than on Form S-8 and
Registration Statements No. 333-148483 filed on Form S-3
and No. 333-132900 filed on Form S-3 and (iv) other
than the Stock Purchase Agreements dated as of February 24,
2006 and December 13, 2007 between the Company and various
investors, there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement). There are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by this Agreement or any related
agreement or the consummation of the transactions described herein
or therein. The Company has furnished to the Investor true
and correct copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the
“ Certificate of Incorporation ”), and the
Company’s By-laws, as in effect on the
date hereof (the
“ By-laws ”), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto. On or about
the date hereof, the Company expects to (i) enter into that
certain Stock Purchase Agreement with a private investor, pursuant
to which such investor shall purchase a number of shares equal to
less than 5.0% of the Company’s outstanding Common Stock and
such investor shall receive certain “piggyback”
registration rights in connection therewith and (ii) enter
into a commitment letter with the Company’s bank lender
obligating the Company to issue warrants for a number of shares of
Common Stock not exceeding 100,000.
Section 4.04
No Conflict . The execution, delivery and performance
of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby will not
(i) result in a violation of the Certificate of Incorporation,
any certificate of designations of any outstanding series of
preferred stock of the Company or By-laws or (ii) conflict
with or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and
the rules and regulations of the Principal Market on which the
Common Stock is quoted) applicable to the Company or any of its
subsidiaries or by which any material property or asset of the
Company or any of its subsidiaries is bound or affected and which
would cause a Material Adverse Effect. Except as disclosed in
the SEC Documents, neither the Company nor its subsidiaries is in
violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the
Company or its subsidiaries. The business of the Company and
its subsidiaries is not being conducted in violation of any
material law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by
this Agreement or the Registration Rights Agreement in accordance
with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The
Company and its subsidiaries are unaware of any fact or
circumstance which might give rise to any of the
foregoing.
Section 4.05
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