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STOCKHOLDERS’ EQUITY
 6 Months Ended
Jun. 30, 2011
STOCKHOLDERS’ EQUITY

(11) STOCKHOLDERS’ EQUITY

Amendments to Articles of Incorporation

In June 2011, we amended our certificate of incorporation to increase the number of shares of authorized common stock to 1,500,000,000, par value $0.01 per share. Prior to the amendment, the number of shares of authorized common stock was 100,000,000, par value $0.01 per share. The certificate of amendment was approved by a majority of our stockholders on June 29, 2011.

Stock Plans

At our annual meeting in June 2011, our stockholders approved an amendment to our 2007 Equity Incentive Plan to increase the maximum number of shares of common stock available for grant by 90,000,000 shares of common stock, resulting in an aggregate of 95,000,000 shares of common stock authorized for issuance pursuant to awards granted under our 2007 Equity Incentive Plan. The stockholders also approved an amendment to our 1997 Employee Stock Purchase Plan to increase by 500,000 the number of shares of common stock reserved for issuance under the plan, for a total of 1,000,000 shares reserved as of June 30, 2011.

 

Private Placement

In June 2011, the Company entered into a Securities Purchase Agreement with certain purchasers (the "Securities Purchase Agreement"), pursuant to which the Company agreed to sell for an aggregate price of $24.0 million 160,000,006 shares of its common stock (the "Shares") and warrants to purchase 80,000,005 shares of its common stock (the "Warrants") with an exercise price of $0.18 per share (the "Private Placement"). The Private Placement closed on July 1, 2011. For each Share purchased, the investors received one Warrant to purchase 0.5 shares of common stock (together, a "Unit"), at a purchase price of $0.15 per Unit. The Warrants became exercisable on the July 1, 2011, the date of issuance, and expire on the fifth anniversary of that date. The Warrants may be exercised only for cash or, if a registration statement is not then effective and available for the resale of the shares of common stock issuable upon exercise of the Warrants, by surrender of such Warrant, or a portion of such Warrant, by way of cashless exercise. There is no right to exercise the Warrants to the extent that after giving effect to such exercise the holder would beneficially own in excess of 9.99% of the outstanding shares of common stock following such exercise (or such other limit as may be designated by any particular purchaser). Each holder of the Warrants can amend or waive the foregoing limitation by written notice to the Company, with such waiver taking effect only upon the expiration of a 61-day notice period.

Under the terms of the Securities Purchase Agreement, the Company filed on July 29, 2011 a registration statement with the Securities and Exchange Commission (the "Commission") to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants (collectively, the "Registrable Securities"). The Company agreed to use commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement (or 120 days in the event the registration statement is reviewed by the Commission, but in any event, no later than two business days from the Commission indicating that it has no further comments on the registration statement). If the Company fails to meet certain filing or effectiveness deadlines with respect to the registration statement or fails to keep the registration statement continuously effective for a designated time (with limited exceptions), the Company may be obligated to pay to the holders of the Registrable Securities liquidated damages in an amount equal to 1.0% per month of such holder's pro rata interest in the total purchase price of the Private Placement.

The Company received approximately $20.3 million of proceeds in advance of the closing which was recorded as Advances in Stockholders’ Equity. Issuance costs accrued of approximately $1.2 million are shown net of the advances as of June 30, 2011. The remaining $3.7 million of proceeds were received in July 2011.