The purpose of the additional a/s (above & beyond settlement requirements) is on the proxy document:
Purpose of the Amendment
On August 9, 2011, the Company entered into a settlement agreement and mutual release with Midsummer Investment, Ltd. and Midsummer Small Cap Master Ltd. (collectively, “Midsummer”), pursuant to which the Company immediately issued 36,000,000 shares of common stock, with an additional 30,585,774 shares of our common stock to be issued upon approval of an increase in the authorized shares of our common stock. The Company also agreed to issue an additional 3,058,577 shares of our common stock for each calendar month after the date of the settlement agreement for which the Company does not issue the additional 30,585,774 shares. If the amendment to the certificate of incorporation is approved, the Company will issue the additional shares to Midsummer.
On October 14, 2011, the United States District Court for the Southern District of New York entered an order granting plaintiff Alpha Capital Anstalt’s (“Alpha Capital”) motion for a preliminary injunction and preliminary declaratory relief in the lawsuit entitled Alpha Capital Anstalt v. Advanced Cell Technology, Inc. , Case No. 11 CIV 6458 (S.D.N.Y. filed Sept. 16, 2011). The action filed by Alpha Capital alleges that it is or was a holder of various convertible notes and warrants issued by the Company, and that by reason of certain transactions between the Company and JMJ Financial, Inc. during 2010, the exercise and conversion prices in plaintiff’s convertible notes and warrants should have been reset. In its motion, Alpha Capital sought an order directing the Company to deliver to it at least 39,514,859 shares of its common stock in accordance with the terms of its warrants and convertible promissory notes. The court’s October 14, 2011 order directed the Company to hold in escrow 39,514,859 shares of its common stock pending the entry of a preliminary injunction, and directed Alpha Capital to submit a proposed form of order to the court by October 27, 2011. Since the entry of the court order relating to Alpha Capital, the Company has become aware of two additional lawsuits by different holders asserting substantially similar claims and allegations.
As of November 16, 2011, the Company has issued, under court order, a total of 57,514,859 shares of its common stock pursuant to the pending lawsuits currently filed against the Company.
Although not currently named as plaintiffs against the Company, in the event all other holders of convertible notes and warrants issued by the Company similarly situated to Alpha Capital were to file substantially similar actions based upon substantially similar claims and allegations, the Company estimates that the number of shares of common stock such holders of convertible notes could demand would be approximately 8 million, and the number of additional warrants convertible into shares of common stock such holders of warrants could demand would be approximately 380 million.
In order to quickly and efficiently resolve any future issues with the other holders of convertible notes and warrants, and in an effort to minimize the Company’s resources devoted to litigate any future matters, the Company has approved a form settlement agreement which has been delivered to all holders of convertible notes and warrants, other than those involved in the pending litigation. As of December 9, 2011, approximately ninety percent (90%) of the holders of convertible notes and warrants, other than those involved in the pending litigation, have entered into settlement agreements with the Company, and pursuant to such agreements, the Company has agreed to issue approximately 240.5 million shares of common stock, subject to the approval of the amendment to the certificate of incorporation.
The Company currently has 44,326,395 shares of common stock available for issuance, which amount is not sufficient to comply with the various court orders that have been issued against the Company and the terms of the settlement agreements, including the settlement agreement with Midsummer. The Company is therefore requesting its stockholders approve this proposal to amend its certificate of incorporation to increase the authorized shares of common stock.
The approval of the amendment to the certificate of incorporation to increase the authorized shares of common stock is important for the ongoing business of the Company. Without additional authorized shares of common stock, (i) the Company may not be able to raise additional financing which is needed to fund our ongoing clinical and research programs, (ii) the Company may not be able to settle the current ongoing litigation or comply with any future court ordered judgments that may require the Company to deliver additional shares, (iii) the Company may not be able to attract and retain key employees, officers and directors, and (iv) the Company may in the future be required to file for bankruptcy protection. Additionally, the proposed increase could save the Company the expense and delay of having to hold a special stockholders’ meeting when a specific need arises with respect to the issuance of additional shares of our common stock. The increase in the authorized shares of our common stock that are not subject to issuance pursuant to the settlement agreements with the various holders of convertible notes and warrants, including Midsummer, or any current, or future, court ordered judgments, may be available for our Board to issue in future financings, to provide equity incentive to employees, officers and directors and for other general corporate purposes. At this time, however, the Company does not have any current plans, agreements or understandings to issue shares of our common stock with respect to the increase in the authorized shares of our common stock other than to satisfy the Company’s obligations with respect to the settlement agreements and any current or future court ordered judgments in connection with the current ongoing litigation.
The Board of Directors strongly urges the stockholders to vote in favor of the amendment to the certificate of incorporation to increase the authorized shares of common stock.
News 
Market Data 
Discover 
AI
