8-K: Current report filing
Published on April 13, 2007
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED)
April
12, 2007
NOVELOS
THERAPEUTICS, INC.
(EXACT
NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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DELAWARE
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333-119366
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04-3321804
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(STATE
OR OTHER JURISDICTION
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(COMMISSION
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(IRS
EMPLOYER
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OF
INCORPORATION)
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FILE
NUMBER)
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IDENTIFICATION
NO.)
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One
Gateway Center, Suite 504, Newton, Massachusetts 02458
(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT’S
TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 244-1616
NOT
APPLICABLE
(FORMER
NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
CHECK
THE
APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY
SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING
PROVISIONS:
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WRITTEN
COMMUNICATIONS PURSUANT TO RULE 425 UNDER THE SECURITIES ACT (17
CFR
230.425)
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SOLICITING
MATERIAL PURSUANT TO RULE 14a-12 UNDER THE EXCHANGE ACT (17 CFR
240.14a-12)
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PRE-COMMENCEMENT
COMMUNICATIONS PURSUANT TO RULE 14d-2(b) UNDER THE EXCHANGE ACT (17
CFR
240.14d-2(b))
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PRE-COMMENCEMENT
COMMUNICATIONS PURSUANT TO RULE 13e-4(c) UNDER THE EXCHANGE ACT (17
CFR
240.13e-4(c))
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ITEM
1.01 ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT
Securities
Purchase Agreement
On
April
12, 2007, we entered into a securities purchase agreement (the “Purchase
Agreement”) with accredited investors whereby we agreed to sell 1,500 shares of
a newly created series of our preferred stock, designated “Series B Convertible
Preferred Stock”, par value $0.00001 per share (the “Series B Preferred Stock”)
and agreed to issue warrants to purchase 7,500,000 shares of our common stock
for an aggregate purchase price of $15,000,000. Pursuant to the purchase
agreement, from and after the closing, Xmark Opportunity Fund, L.P., Xmark
Opportunity Fund, Ltd. and Xmark JV Investment Partners LLC (collectively,
the
“Xmark Entities”), will have the right to designate one member to our Board of
Directors. This right shall last until such time as the Xmark Entities no
longer hold
at
least one-third of the Series B Preferred Stock issued to them at closing.
In
addition, the Xmark Entities, Caduceus Master Fund Limited, Caduceus Capital
II,
L.P., UBS Eucalyptus Fund, L.L.C., PW Eucalyptus Fund, Ltd. and HFR SHC
Aggressive Master Trust (collectively, the “Lead Investors”) will have the right
to designate one observer to attend all meetings of our Board of Directors,
committees thereof and access to all information made available to members
of
the Board. This right shall last until such time as the Lead Investors no
longer hold
at
least one-third of the Series B Preferred Stock issued to them at
closing.
As
a
condition to closing the preferred stock and warrant financing, the holders
of
our existing Series A preferred stock must exchange their shares of Series
A
preferred stock for shares of a new Series C convertible preferred stock, the
rights and preferences of which are junior to the Series B preferred stock.
As
an inducement for the holders of the Series A preferred stock to exchange their
shares, we expect to issue warrants to purchase shares of our common stock
and
pay a cash restructuring fee to holders of the Series A preferred
stock.
Series
B Preferred Stock
The
shares of Series B Preferred Stock to be issued upon the closing of the
preferred stock and warrant financing will be convertible into shares of our
common stock any time after issuance at the option of the holder at $1.00 per
share of common stock. If there is an effective registration statement covering
the shares of common stock underlying the Series B Preferred Stock and the
VWAP,
as defined in the Series B Certificate of Designations, of our common stock
exceeds $2.00 for 20 consecutive trading days, then the outstanding Series
B
Preferred Stock will automatically convert into common stock at the conversion
price then in effect. The conversion price will be subject to adjustment for
stock dividends, stock splits or similar capital reorganizations.
The
Series B Preferred Stock will have an annual dividend rate of 9%, payable
semi-annually on September 30 and March 31. Such dividends may be paid in cash
or in registered shares of the Company’s common stock at the Company’s option.
For
as
long as any shares of Series B Preferred Stock remain outstanding, we will
be
prohibited from (i) paying dividends to our common stockholders, (ii) amending
our certificate of incorporation (except to increase the number of shares of
authorized common stock to 150,000,000), (iii) issuing any equity security
or
any security convertible into or exercisable for any equity security at a price
of $1.00 or less or with rights senior to the Series B Preferred Stock (except
for certain exempted issuances), (iv) increasing the number of shares of Series
B Preferred Stock or issuing any additional shares of Series B Preferred Stock,
(v) selling or otherwise disposing of all or substantially all our assets or
intellectual property or entering into a merger or consolidation with another
company unless we are the surviving corporation, the Series B Preferred Stock
remains outstanding and there are no changes to the rights and preferences
of
the Series B Preferred Stock, (vi) redeeming or repurchasing any capital stock
other than Series B Preferred Stock, (vii) incurring any new debt for borrowed
money and (viii) changing the number of our directors.
Common
Stock Purchase Warrants
The
common stock purchase warrants to be issued to the investors upon closing will
be exercisable for an aggregate of 7,500,000 shares of our common stock at
an
exercise price of $1.25. The warrants will expire five years from the date
of
issuance. If after the first anniversary of the date of issuance of the warrant
there is no effective registration statement registering, or no current
prospectus available for, the resale of the shares issuable upon the exercise
of
the warrants, the holder may conduct a cashless exercise whereby the holder
may
elect to pay the exercise price by having us withhold, upon exercise, shares
having a fair market value equal to the applicable aggregate exercise price.
In
the event of a cashless exercise, we would receive no proceeds from the sale
of
our common stock in connection with such exercise.
The
warrant exercise price and/or number of warrants will be subject to adjustment
for stock dividends, stock splits or similar capital reorganizations so that
the
rights of the warrant holders after such event will be equivalent to the rights
of warrant holders prior to such event.
If
there
is an effective registration statement covering the shares underlying the
warrants and the VWAP, as defined in the warrant, of our common stock exceeds
$2.25 for 20 consecutive trading days, then on the 31st
day
following the end of such period any remaining warrants for which a notice
of
exercise was not delivered shall no longer be exercisable and shall be converted
into a right to receive $.01 per share.
Registration
Rights Agreement
At
the
closing, the Company and the investors will execute a registration rights
agreement which will require 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 preferred stock
and
exercise of the warrants as of the date of filing of the registration statement.
The registration statement covering these shares must be declared effective
by
the Securities and Exchange Commission no later than 90 days following the
closing (or in the event there is a review, no later than 120 days from the
closing). We will be required to use our best efforts to keep the registration
statement continuously effective under the Securities Act until the earlier
of
the date when all the registrable securities covered by the registration
statement have been sold or the second anniversary of the closing. In the event
we fail to file the registration statement or it is not declared effective
within the timeframes specified by the Registration Rights Agreement, we will
be
required to pay to the Investors liquidated damages equal to 1.5% per month
(but
pro-rated on a daily basis for any period of less than a full month) 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. We will be allowed to suspend the use of the
registration statement for not more than 15 consecutive days or for a total
of
not more than 30 days in any 12 month period without incurring liability for
the
liquidated damages in certain circumstances.
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 and issue Rodman warrants to
purchase a total of 900,000 shares of our common stock with the same terms
as
the warrants issued to the investors.
We
have
agreed to indemnify Rodman from claims arising in relation to the services
it
provides to us in connection with this agreement.
ITEM
7.01 REGULATION
FD DISCLOSURE
A
copy of
the press release issued by us on April 13, 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
(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 April 13, 2007 entitled “Novelos Therapeutics Announces $15
Million Private Placement”
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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.
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Dated:
April 13, 2007
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NOVELOS
THERAPEUTICS, INC.
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By:
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/s/
Harry S. Palmin
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Harry
S. Palmin
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President
and Chief Executive Officer
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EXHIBIT
INDEX
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Number
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Title
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99.1
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Press
Release dated April 13, 2007 entitled “Novelos Therapeutics Announces $15
Million Private Placement”
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