>>Section 8. Affirmative Covenant. The Company agrees that within 75 days of the Closing Date, it shall raise at least $3 million in common equity (i) without any registration rights, (ii) at discount of not greater than 25% to the then current market price and (iii) with warrant coverage not to exceed 50% and an exercise price of such warrants to be at least equal to the then current market price. >>
This definitely sounds like an upcoming placement to me.
As Tommyb mentioned, there are penalties and they have been enforced in transactions with other companies.
<< the Company shall fail to observe or perform any other covenant or agreement contained in this Note or any of the other Transaction Documents (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion which breach is addressed in clause (xii) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such default sent by the Holder or by any other Holder and (B) 10 Trading Days after the Company shall become or should have become aware of such failure;>>
The above is an affirmative covenant so there would be penalties if it is not done on a timely basis. Hedge funds are not run by nice guys.
It is possible that Abbott's milestone could entail their purchasing 3 million in stock from the company. In any case, another 3 million is going to happen or Smithline gets penalty money.
AI
