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STANDBY EQUITY DISTRIBUTION AGREEMENT

Distribution Agreement

STANDBY EQUITY DISTRIBUTION AGREEMENT | Document Parties: ADVANCED LIFE SCIENCES HOLDINGS, INC | YA GLOBAL MASTER SPV LTD | Yorkville Advisors, LLC You are currently viewing:
This Distribution Agreement involves

ADVANCED LIFE SCIENCES HOLDINGS, INC | YA GLOBAL MASTER SPV LTD | Yorkville Advisors, LLC

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Title: STANDBY EQUITY DISTRIBUTION AGREEMENT
Governing Law: New Jersey     Date: 6/19/2009
Industry: Biotechnology and Drugs     Law Firm: Winston Strawn     Sector: Healthcare

STANDBY EQUITY DISTRIBUTION AGREEMENT, Parties: advanced life sciences holdings  inc , ya global master spv ltd , yorkville advisors  llc
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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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