8-K: Current report filing
Published on March 28, 2008
UNITED
STATES
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: March 26, 2008
(Date
of earliest event reported)
NOVELOS
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its 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
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
Number)
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One
Gateway Center, Suite 504
Newton,
MA 02458
(Address
of principal executive offices)
(617)
244-1616
(Registrant's
telephone number, including area code)
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 (see General Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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| o |
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
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Securities
Purchase Agreement
On
March
26, 2008, we entered into a securities purchase agreement (the “Purchase
Agreement”) with accredited investors whereby we agreed to sell 100 shares of a
newly created series of our preferred stock, designated “Series D Convertible
Preferred Stock”, par value $0.00001 per share (the “Series D Preferred Stock”)
and agreed to issue warrants to purchase 3,846,151 shares of our common stock
for an aggregate purchase price of $5,000,000 (the “Series D Financing”).
Pursuant to the Purchase Agreement, from and after the closing, Xmark
Opportunity Fund, L.P. and Xmark Opportunity Fund, Ltd. (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 D Preferred Stock issued to them at closing.
In
addition, the Xmark Entities, Caduceus Master Fund Limited, Caduceus Capital
II,
L.P. and Summer Street Life Sciences Hedge Fund Investors, LLC (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 D Preferred Stock issued to them at
closing.
Upon
the
closing of the Series D Financing, the holders of our existing Series B
convertible preferred stock (the “Series B Preferred Stock”), will exchange
their shares of Series B Preferred Stock for shares of Series D Preferred Stock.
The rights and preferences of the Series D Preferred Stock are substantially
the
same as the Series B Preferred Stock, however the conversion price of the Series
D Preferred Stock is $0.65. In addition, upon closing of the Series D Financing,
the holders of Series B Preferred Stock have agreed to waive liquidated damages
that have accrued from September 7, 2007 through the closing date as a result
of
our failure to register for resale 100% of the shares of common stock underlying
the Series B Preferred Stock and warrants.
Series
D Preferred Stock
The
shares of Series D Preferred Stock to be issued upon the closing of the Series
D
Financing will be convertible into shares of our common stock any time after
issuance at the option of the holder at $0.65 per share of common stock. If
there is an effective registration statement covering the shares of common
stock
underlying the Series D Preferred Stock and the VWAP, as defined in the Series
D
Certificate of Designations, of our common stock exceeds $2.00 for 20
consecutive trading days, then the outstanding Series D 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 D Preferred Stock will have an annual dividend rate of 9%, payable
semi-annually on June 30 and December 31. Such dividends may be paid in cash
or
in registered shares of our common stock at our option, subject to certain
conditions.
For
as
long as any shares of Series D Preferred Stock remain outstanding, we will
be
prohibited from (i) paying dividends to our common stockholders, (ii) amending
our certificate of incorporation, (iii) issuing any equity security or any
security convertible into or exercisable for any equity security at a price
of
$0.65 or less or with rights senior to the Series D Preferred Stock (except
for
certain exempted issuances), (iv) increasing the number of shares of Series
D
Preferred Stock or issuing any additional shares of Series D 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 D Preferred Stock
remains outstanding and there are no changes to the rights and preferences
of
the Series D Preferred Stock, (vi) redeeming or repurchasing any capital stock
other than Series D Preferred Stock, (vii) incurring any new debt for borrowed
money in excess of $500,000 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 3,846,151 shares of our common stock at
an
exercise price of $.0.65. The warrants will expire five years from the date
of
issuance. If after the six-month 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
$2.50 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, we will enter into and execute a registration rights agreement with
the
investors which will require us to file with the Securities and Exchange
Commission no later than 5 business days following the six-month anniversary
of
the closing of the Series D Financing, a registration statement covering the
resale of (i) a number of shares of common stock equal to 100% of the shares
issuable upon conversion of the Series D Preferred Stock (excluding 12,000,000
shares of common stock issuable upon conversion of the Series D Preferred Stock
that were included on a prior registration statement), (ii) a number of shares
of common stock equal to100% of the shares issuable upon exercise of the
warrants issued in the Series D Financing and (iii) 7,500,000 shares of common
stock issuable upon exercise of warrants dated May 2, 2007 held by the
investors. We will be required to use our best efforts to have the registration
statement declared effective and 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 within the timeframe specified by the Registration Rights
Agreement, we will be required to pay to the investors liquidated damages equal
to 1.5% per month (pro-rated on a daily basis for any period of less than a
full
month) of the aggregate purchase price of the Series D Preferred Stock and
warrants until we file the delinquent registration statement. 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.
Placement
Agent Fee
Upon
the
closing of the preferred stock and warrant financing we are obligated to pay
Rodman & Renshaw LLC (“Rodman”) a cash fee equal to 2% of the gross proceeds
from the financing.
Amendments
to Prior Warrants and Registration Rights Agreement
At
the
closing, we will enter into an amendment to the registration rights agreement
dated May 2, 2007 with the holders of our Series B Preferred Stock to revise
the
definition of registrable securities under the agreement to only include the
12,000,000 shares of common stock that were included on a prior registration
statement and to extend our registration obligations under the agreement by
one
year. In addition, upon closing, we will amend the warrants to purchase common
stock issued in connection with the sale of Series B Preferred Stock to conform
the terms of those warrants to the terms of the warrants issued in the Series
D
Financing.
| ITEM 7.01 |
REGULATION
FD DISCLOSURE
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A
copy of
the press release issued by us on March 27, 2008 announcing the signing of
the
Securities 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 March 27, 2008 entitled “Novelos Therapeutics Announces $5
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.
| NOVELOS THERAPEUTICS, INC. | ||
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| Date: March 28, 2008 | By: | /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 March 27, 2008 entitled “Novelos Therapeutics Announces $5
Million Private Placement”
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