Exhibit 4.1
STANDBY EQUITY DISTRIBUTION
AGREEMENT
THIS AGREEMENT
dated as of June 19, 2009 (this
“ Agreement ”) between YA GLOBAL MASTER SPV
LTD. , a Cayman Islands company (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 , the offer and sale of the shares of Common
Stock issuable hereunder have been registered on the
Company’s registration statement on Form S-3 (File
No. 333-158494) under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the
“ Securities Act ”).
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
“ Base
Prospectus ” shall mean the Company’s prospectus
accompanying the Registration Statement.
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.
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 have the meaning set forth in the recitals
of the Agreement.
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
hereof.
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
“
Initial Disclosure ” shall have the meaning set forth
in.
Section 1.15
“ Market
Price ” shall mean the lowest daily VWAP of the Common
Stock during the relevant Pricing Period.
Section 1.16
“
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 1.17
“
Maximum Advance Amount ” shall be the greater of
(i) $600,000 or (ii) the average of the Daily Value
Traded for each of the 5 Trading Days prior to the Advance Notice
Date where Daily Value Traded is the product obtained by
multiplying the daily trading volume for such day by the VWAP for
such day, or such other amount as may be agreed upon by the mutual
consent of the parties.
Section 1.18
“
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 1.19
“
Preferred Stock ” shall have the meaning set forth
in.
Section 1.20
“
Pricing Period ” shall mean the 5 consecutive Trading
Days after the Advance Notice Date.
Section 1.21
“
Principal Market ” shall mean the Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
NYSE Euronext, 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 1.22
“
Prospectus ” shall mean the Base Prospectus, as
supplemented by any Prospectus Supplement.
Section 1.23
“
Prospectus Supplement ” shall mean any prospectus
supplement to the Base Prospectus filed with the SEC pursuant to
Rule 424(b) under the Securities Act.
Section 1.24
“
Purchase Price ” shall be set at 95% of the Market
Price during the Pricing Period.
Section 1.25
“
Registration Statement ” shall mean the
Company’s shelf registration statement filed by the Company
with the SEC under the Securities Act on Form S-3
(Registration Number 333-158494), with respect to Common Stock,
Preferred Stock and warrants to be offered and sold by the Company,
as such Registration Statement may be amended and supplemented from
time to time and including any information deemed to be a part
thereof pursuant to Rule 430B under the Securities Act or
another registration statement on a form promulgated by the SEC for
which the Company then qualifies and which form shall be available
for the registration of the resale of Shares by the
Investor.
Section 1.26
“
SEC ” shall have the meaning set forth in the recitals
of this Agreement.
Section 1.27
“ SEC
Documents ” shall have the meaning set forth
in.
Section 1.28
“
Securities Act ” shall have the meaning set forth in
the recitals of this Agreement.
Section 1.29
“
Settlement Document ” shall have the meaning set forth
in.
Section 1.30
“
Shares ” shall mean the shares of Common Stock to be
issued from time to time hereunder pursuant to
Advances.
Section 1.31
“
Trading Day ” shall mean any day during which the
Principal Market shall be open for business.
Section 1.32
“
VWAP ” means, for any date, the daily volume weighted
average price of the Common Stock for such date on the Principal
Market as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:00 p.m. (New York
City time)).
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, that (i) the amount for each Advance as designated by
the Company in the applicable Advance Notice shall not be more than
the Maximum Advance Amount, (ii) the aggregate amount of the
Advances pursuant to this Agreement shall not exceed the Commitment
Amount and (iii) in no event shall the number of shares of
Common Stock issuable to the Investor pursuant to an Advance cause
the aggregate number of shares of Common Stock beneficially owned
(as calculated pursuant to Section 13(d) of the Exchange
Act) by the Investor and its affiliates to exceed 9.99% of the then
outstanding Common Stock (the “ Ownership Limitation
”). 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.
(c)
Ownership
Limitation . In connection with
each Advance Notice delivered by the Company, any portion of an
Advance that would cause the Investor to exceed the Ownership
Limitation shall automatically be withdrawn.
(d)
Registration
Limitation . In connection with
each Advance Notice, any portion of an Advance that would cause the
aggregate offering price or number of Shares, as the case may be,
to exceed the aggregate offering price or number of shares of
Common Stock available for issuance under the Registration
Statement shall automatically be deemed to be withdrawn by the
Company with no further action required by the Company.
Section 2.03
Closings
. Each
Closing shall take place as soon as practicable after each Advance
Date in accordance with the procedures set forth below. In
connection with each Closing the Company and the Investor shall
fulfill each of its obligations as set forth below:
(a)
Within 1 Trading
Day after each Advance Date, the Investor shall deliver to the
Company a written document (each a “ Settlement
Document ”) setting forth the amount of the Advance
(taking into account any adjustments pursuant to or , the
Purchase Price, the number of shares of Common Stock to be issued
and subscribed for (which in no event will be greater than the
Ownership Limitation)), and a report by Bloomberg, LP indicating
the VWAP for each of the Trading Days during the Pricing Period, in
each case taking into account the terms and conditions of this
Agreement. The Settlement Document shall be in the form
attached hereto as Exhibit B .
(b)
Upon receipt of
the Settlement Document with respect to each Advance, the Company
shall confirm that it has obtained all material permits and
qualifications required for the issuance and transfer of the shares
of Common Stock applicable to such Advance, or shall have the
availability of exemptions therefrom and that the sale and issuance
of such shares of Common Stock shall be legally permitted by all
laws and regulations to which the Company is subject.
(c)
Promptly after
receipt of the Settlement Document with respect to each Advance
(and, in any event, not later than three Trading Days after each
Advance Date), the Company will, or will cause its transfer agent
to, electronically transfer such number of shares of Common Stock
registered in the name of the Investor as shall equal (x) the
amount of the Advance specified in such Advance Notice (as may be
reduced according to the terms of this Agreement), divided by
(y) the Purchase Price by crediting the Investor’s
account or its designee’s account at the Depository Trust
Company through its Deposit Withdrawal Agent Commission System or
by such other means of delivery as may be mutually agreed upon by
the parties hereto (which in all cases shall be freely tradable,
registered shares in good deliverable form) against payment of the
Purchase Price in same day funds to an account designated by the
Company. No fractional shares shall be issued, and any
fractional amounts shall be rounded to the next higher whole number
of shares. Any certificates evidencing shares of Common Stock
delivered pursuant hereto shall be free of restrictive
legends.
(d)
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.
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 , the Company agrees that in
addition to and in no way limiting the rights and obligations set
forth in hereto and in addition to any other remedy to which
the Investor is entitled at law or in equity, including, without
limitation, specific performance, it will hold the Investor
harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company and acknowledges
that irreparable damage would occur in the event of any such
default. It is accordingly agreed that the Investor shall be
entitled to an injunction or injunctions to prevent such breaches
of this Agreement and to specifically enforce, without the posting
of a bond or other security, the terms and provisions of this
Agreement.
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 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, 2008,
Form 10-Q for the period ended March 31, 2009 and Forms
8-K filed on January 9, 2009, February 11, 2009 (as
amended on February 12, 2009), February 27, 2009,
March 30, 2009, April 10, 2009, May 4, 2009 and
June 8, 2009; 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
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 3.09
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 and any related
agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this 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
and any related agreements have been duly executed and delivered by
the Company, (iv) this Agreement and assuming the execution
and delivery thereof and acceptance by the Investor, 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 120,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, no
par value per share (“ Preferred Stock ”), of
which 50,698,926 shares 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, 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 Registration Statements on Form S-8,
Registration Statements No. 333-158494 filed on Form S-3,
No. 333-148483 filed on Form S-3 and No. 333-132900
filed on Form S-3 and (iv) 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. 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.
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 that would cause a Material Adverse
Effect. The business of the Company and its subsidiaries is
not being conducted in violation of any material law, ordinance,
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 in accordance
with the terms hereof or thereof except as such consent,
authorization or order has been obtained 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
SEC Documents;
Financial Statements . The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act
and the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC under
the Securities Exchange Act for the two years preceding the date
hereof (or such shorter period as the Company was required by law
or regulation to file such material) (all of the foregoing filed
prior to the date hereof or amended after the date hereof and all
exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being
hereinafter referred to as the “ SEC Documents
”) on timely basis or has received a valid extension of such
time of filing and has filed any such SEC Document prior to the
expiration of any such extension. The Company has delivered
to the Investors or their representatives, or made available
through the SEC’s website at http://www.sec.gov, true and
complete copies of the SEC Documents. As of their respective
dates, the SEC Docu
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