Item
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Item
3.02 UNREGISTERED SALES OF EQUITY SECURITES
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On
November 7, 2007, we entered into securities purchase agreements (the “Purchase
Agreements”) with accredited investors whereby we agreed to sell 954.0001 shares
of a newly created series of our preferred stock, designated “Series A
Cumulative Convertible Preferred Stock”, par value $0.01 per share, for an issue
price of $10,000 per share, (the “Series A Preferred Stock”) and agreed to issue
warrants to purchase 1,589,999 shares of our common stock at an exercise
price
of $3.50 per share, for an aggregate purchase price of $9,540,001.
As
a
condition to closing, SCO Capital Partners, LLC and affiliates, along with
the
other holders of an aggregate of $6,000,000 Secured Convertible Notes, also
exchanged their notes and accrued interest for an additional 1836.0512 shares
of
Series A Preferred Stock and were issued warrants to purchase 1,122,031 shares
of our common stock at an exercise price of $3.50 per share, and Oracle Partners
LP and affiliates, along with the other holders of an aggregate of $4,015,000
Convertible Notes also exchanged their notes and accrued interest for 437.3104
shares of the Series A Preferred Stock and were issued warrants to purchase
728,850 shares of our common stock at an exercise price of $3.50 per
share. SCO Capital Partners, LLC currently has two designees serving
on our Board of Directors. In connection with the exchange of the
notes, all security interests and liens relating thereto were
terminated.
In
connection with the closing, we amended our shareholders rights plan to
accommodate the issuance of the Series A Preferred Stock.
Series
A Preferred Stock
The
shares of Series A Preferred Stock issued upon closing are convertible at
the
option of the holder into shares of our common stock at a conversion price
of
$3.00 per share of common stock (the “Conversion Price”).
The
Series A Preferred Stock is entitled to a liquidation preference equal to
$10,000 per share and is entitled to a dividend of 6% per annum, payable
semi-annually in cash or common stock, at the option of the Company at time
of
payment. Notwithstanding
the foregoing, the Company’s ability to pay dividends in shares of its common
stock is limited by certain provisions included in the Purchase
Agreements. These provisions include among other things a requirement
that (i) there is an effective registration statement on the shares of common
stock, issuable to the holders of Series A Preferred Stock, in the 20 day
period
immediately prior to such dividend or (ii) that such shares of common stock
referred to in (i) may be sold without restriction pursuant to Rule 144(k)
during the 20 day period immediately prior to such
dividend.
The
Company has the right, but not the obligation, to force conversion (“Mandatory
Conversion”) of all, and not less than all, of the outstanding Series A
Preferred Stock into common stock (i) as long as the closing price of our
common
stock exceeds $7.00 for at least 20 of the 30 consecutive trading days
immediately prior to the conversion and the average daily trading volume
is
greater than 100,000 shares per day for at least 20 of the 30 consecutive
trading days immediately prior to such conversion, in each case, immediately
prior to the date on which the Company gives notice of such conversion or
(ii)
if we close a sale of common stock in which the aggregate proceeds are equal
to
or greater than $10,000,000. The Company’s ability to cause a
Mandatory Conversion is subject to certain other conditions, including that
a
registration statement covering the common stock issuable upon such Mandatory
Conversion is in effect and able to be used.
The
conversion price of the Series A Preferred Stock is subject to full ratchet
price adjustment upon the issuance of additional shares of common stock for
a
price below $3.00 per share and equitable adjustment for stock splits,
dividends, combinations, reorganizations and the like.
The
Series A Preferred Stock will vote together with the common stock on an
as-if-converted basis.
Holders
of Series A Preferred Stock are entitled to purchase their pro rata share
of
additional stock issuances in certain future financings.
Common
Stock Purchase Warrants
The
common stock purchase warrants issued upon closing will be exercisable for
an
aggregate of 3,440,880 shares of our common stock at an exercise price of
$3.50.
The warrants can also be exercised on a cashless basis. The warrants will
expire
six years from the date of issuance.
The
warrant exercise price is subject to full ratchet price adjustment, under
certain cirecumstances, should additional shares of common stock be issued
for a
price less than $3.50 and equitable adjustment for stock splits, dividends,
combinations, reorganizations and the like.
Investor
Rights Agreement
At
the
closing, the Company and the investors executed an Investor Rights Agreement
which requires us to file with the Securities and Exchange Commission no
later
than 30 days following the closing of the transaction, a registration statement
covering the resale of a number of shares of common stock equal to 100% of
the
shares issuable upon conversion of the Series A Preferred Stock and exercise
of
the warrants as of the date of filing of the registration statement. The
Company
will use its best efforts to cause the registration statement covering these
shares to be declared effective by the Securities and Exchange Commission
within
90 days following the closing. In the event we fail to file the registration
statement or it is not declared effective within the timeframes specified
by the
Investor Rights Agreement, we will be required to pay to the Investors
liquidated damages equal to 1.0% per month (or pro rated for periods less
than
30 days) of the aggregate purchase price of the preferred stock and warrants
until we file the delinquent registration statement or the registration
statement is declared effective, as applicable, up to a cap of 10%. We will
be
allowed to suspend the use of the registration statement for not more than
30
consecutive days or for a total of not more than 60 days in any 12 month
period.
Placement
Agent Agreement
Upon
the
closing of the preferred stock and warrant financing we are obligated to
pay
Rodman & Renshaw LLC (“Rodman”) a cash fee of $482,800 as well as
warrants to purchase 109,000 shares of common stock at an exercise price
of 3.50 per share.
ITEM
7.01 REGULATION FD DISCLOSURE
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A
copy of
the press release issued by us on November 8, 2007 announcing the signing
of the
Purchase Agreement is filed as Exhibit 99.1 and is incorporated by
reference.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS
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(c)
Exhibits
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Number
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Title
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99.1
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|
Press
Release dated November 8, 2007 entitled “Access Pharmaceuticals Announces
$19.5 Million Recapitalization”
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.