Epicept does not have enough shares to cover the warrants?
TARRYTOWN, N.Y. (June 19, 2009) — EpiCept Corporation (Nasdaq and OMX Nordic Exchange: EPCT) announced today that it entered into definitive agreements for the purchase of approximately 12.0 million shares of its common stock at $.80 per share and two-and-one-half-year >>>> warrants to purchase up to approximately 4.2 million shares <<<< of common stock at an exercise price of $.90 per share exercisable beginning December 19, 2009.
(f) Issuance of the Securities; Registration . The Shares are duly authorized and, ... free and clear of all Liens imposed by the Company other than any restrictions on transfer provided herein. >>>> The Company currently has reserved 500,000 shares of Common Stock for issuance of the Warrant Shares (“ Reserved Shares ”).... <<<<<
4.16 Authorized Share Approval . The Company included a proposal to approve the Amendment in its proxy statement for its 2009 Annual Meeting held on June 2, 2009, and at such meeting adjourned the vote on such proposal until July 2, 2009. If the Amendment is not approved by the Company’s stockholders on such date or if the adjournment is further adjourned, the Company shall recirculate proxies and hold a further meeting of stockholders to consider the approving the Amendment no later than September 1 2009, with a recommendation of the Board of Directors that the Amendment be approved, and the Company shall solicit proxies from its stockholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain approval of the Amendment at the first meeting, the Company shall call a meeting every 4 months thereafter or shall solicit written consent every 1 month thereafter until the date that the Amendment is approved. >>>> Each Purchaser hereby agrees with the Company that it shall vote its shares of Common Stock which are eligible to vote at any such stockholder meeting or in connection with any consent solicitation in favor of the Amendment. <<<<
(i) Authorization of Warrant Shares . 500,000 Warrant Shares are currently reserved for issuance, which Warrant Shares shall be allocated pro-rata among the Holders of all Warrants issued pursuant to the Purchase Agreement ... >>>> After the date of Authorized Shareholder Approval, the Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will be reserved for issuance <<<< hereunder and, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
“ Amendment ” means an amendment to the Company’s articles of incorporation that increases the number of authorized shares of Common Stock from 175,000,000 to 225,000,000.
“ Authorized Share Approval ” means (i) the vote by the stockholders of the company to approve the Amendment and (ii) the filing by the Company of the Amendment with the Secretary of State of the State of Delaware and the acceptance of the Amendment by the Secretary of State of the State of Delaware.
I can't recall a company diluting their stock IN ORDER TO raise the votes needed to do more dilutions!
I also cannot recall a share issuance being CONDITIONAL on a particular vote. In essence, they are saying, 'if you buy our shares, you must agree to give us immediate authorization to dilute those shares.'
In other words: 'buy these shares and you MUST agree for us to make them worth less!'
Thanks knospam, Your question on the part 4.16, "Am I understanding this correctly?" is understandable. It needs some time for grasping that kind of incredible audacity.
What I see is, that the Savage board sold a private placement with specific conditions as a "public" offering, They construed their own version of a shareholder majority.
They implement conditions in a commercial private agreement that shall make the majority vote of a regular stockholder meeting invalid, even implement in that their own rules for the next stockholder meetings. IMO that's already a criminal energy to deceive shareholders.
BTW: They also do not care that a vote of the new shares in the adjournment meeting is not possible, since all shares at the regular stockholder meeting in Stockholm had to be registered prior to that meeting.