gives a ruling on what? After months of trying to settle this on their own it is just now going into the courts with a Judge. The first scheduled meeting is April 3. Yesterday Camofi's attorney
asked the judge if they could file an amended complaint because of things they have discovered which they claim results in asking for more...
March 20, 2012
Dear Justice Oing:
We are counsel to plaintiffs CAMOFI Master LDC and CAMZHN Master LDC (the
"Funds") in the above-referenced matter. By this letter, the Funds request permission to move
for leave to amend their Complaint.
This case concerns the failure and continuing refusal of defendant Advanced Cell
Technology, Inc. to honor its agreements with the Funds concerning the price per share at which
the Funds acquired or may acquire from defendant shares of defendant's common stock.
Pursuant to transactions with defendant dated as of August 31, 2007 and March 31, 2008, the
Funds each acquired debentures convertible into common stock of the defendant and warrants
exercisable to purchase shares of defendant's common stock. To protect the interests of the Funds
from being diluted, each of the warrants and convertible debentures provided that if defendant
issued, inter alia, any common stock or common stock equivalents at an effective price per share
that was below their then applicable conversion price (in the case of the debentures) or their then
applicable exercise price (in the case of the warrants), then defendant would, inter alia (a) inform
the Funds in writing of the issuance and (b) reduce the conversion price or exercise price, as
applicable, to the effective price per share of the security that was issued by defendant.
Defendant flagrantly disregarded the foregoing contractual obligations. On several
occasions, defendant issued shares of common stock at an effective price per share lower than
the applicable conversion and exercise prices but neither notified the Funds of the issuances nor
reduced such conversion and exercise price prices. As a result, when the Funds converted their
debentures into common stock and exercised certain of their warrants to purchase common stock,
the number of shares of common stock issued by defendant to the Funds was too low in each
instance. Further, defendant has improperly refused to lower the exercise prices of unexercised
warrants still owned by the Funds. Defendant's misconduct has caused the Funds to suffer tens
of millions of dollars in damages.
Since the inception of this case, three different federal judges have mled that defendant
issued common stock at below the applicable conversion/exercise prices and ordered defendant
to issue millions of shares of defendant's common stock to each of the three plaintiffs that
brought suit based on securities held by them that are nearly identical to those held by the Funds.
These federal rulings are consistent with a prior ruling issued by Justice Bransten of this Court.
Through, inter alia, documents first obtained in discovery in this case, the Funds have
uncovered information reflecting issuances of common stock by defendant at prices even lower
than the dilutive issuances that led to the rulings in the foregoing court proceedings and that were
described in the Funds' original Complaint. Defendant never alerted the Funds that such dilutive
issuances had occurred, notwithstanding defendant's clear and unambiguous contractual
obligation to provide the Funds with written notice of their occurrence. Based on the
information now available to the Funds, the damages suffered by the Funds are significantly
greater than the damages claimed in the original Complaint.
The Funds now wish to amend their Complaint to include allegations and claims based on
the additional dilutive issuances. The Amended Complaint would include significant
information that could not have been included in the original Complaint, all of which defendant
has known since before the commencement of this litigation. Moreover, absent the opportunity
to amend, the Funds arguably would not have the opportunity to recover in this proceeding to the
full extent of their losses. Thus, it would be fair and just if the Funds are permitted to amend.
Further, if the Funds are allowed to amend, defendant would not suffer any prejudice or
unfair surprise. This lawsuit is still at its initial stages. A preliminary conference has not even
been held yet; defendant has not propounded any written discovery requests; and no depositions
have taken place. There is no danger that any work that has been done to date will need to be
repeated. Also, defendant has been on notice of the possibility that the Funds might amend since
the inception of this lawsuit. Paragraph 27 of the original Complaint explicitly cautioned
defendant that, as a result of defendant's misconduct, the Funds had been "prevented . . . from
knowing for certain whether additional dilutive issuances [beyond those described in the
Complaint had] occurred and, to the extent that they did occur, whether they required reductions
in the applicable conversion and exercise prices ... " Thus, defendant cannot be surprised that,
having received additional, previously concealed information about dilutive issuances, the
Funds seek to amend their Complaint.
Counsel for the Funds contacted defense counsel via email and requested that the
defendant consent to the amendment of the Complaint. Defendant did not respond to the request.
Thank you for your consideration of this matter.
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