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: February 11, 2009
(
Date of earliest event
reported
)
NOVELOS
THERAPEUTICS, INC.
(
Exact name of registrant as
specified in its charter
)
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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):
¨
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting material pursuant
to Rule 14a-12 under
the Exchange Act (17 CFR
240.14a-12)
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¨
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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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¨
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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
Collaboration
Agreement
On
February 11, 2009 Novelos Therapeutics, Inc. (“Novelos or we”) entered into a
collaboration agreement (the “Collaboration Agreement”) with
Mundipharma International Corporation Limited (“Mundipharma”) to develop and
commercialize Licensed Products (as defined in the Collaboration Agreement),
which includes Novelos’ lead compound, NOV-002, in Europe and Asia/Pacific
(excluding China) (the “Territory”).
Under the
Collaboration Agreement, Mundipharma received an exclusive license to develop,
manufacture, market, sell or otherwise distribute the Licensed Products and
improvements thereon in the Territory. Mundipharma will pay Novelos $2.5 million
upon the launch of NOV-002 in each country, up to a maximum of $25 million. In
addition, Mundipharma will make fixed sales-based payments up to an aggregate of
$60 million upon the achievement of certain annual sales levels payable once the
annual net sales exceed the specified thresholds.
Mundipharma
will also pay as royalties to Novelos, during the term of the Collaboration
Agreement, a double-digit percentage on net sales of Licensed Products in
countries within the Territory where, as of the effective date thereof, Novelos
holds patents on the licensed technology based upon a four-tier royalty
schedule. Royalties in countries in the Territory where Novelos does
not hold patents as of the effective date will be paid at 50% of the royalty
rates in countries where patents are held. The royalties will be calculated
based on the incremental net sales in the respective royalty tiers and shall be
due on net sales in each country in the Territory where patents are held until
the last patent expires in the respective country. In countries in
the Territory where Novelos does not hold patents as of the effective date of
the Collaboration Agreement, royalties will be due until the earlier of 15 years
from the date of Agreement or the introduction of a generic in the respective
country resulting in a 20% drop in Mundipharma’s market share in such
country.
The
launch of Licensed Products, including initiation of regulatory and pricing
approvals, and subsequent commercial efforts to market and sell Licensed
Products in each country in the Territory will be determined by Mundipharma
based on its assessment of the commercial viability of the Licensed Products,
the regulatory environment and other factors. Novelos has no assurance that it
will receive any amount of launch payments, fixed sales-based payments or
royalties.
Under the
Collaboration Agreement, Novelos is responsible for the cost and execution of
development, regulatory submissions and commercialization of NOV-002 outside the
Territory and Mundipharma is responsible for the cost and execution of certain
development activities, all regulatory submissions and all commercialization
within the Territory. In the unlikely event that Mundipharma is
required to conduct an additional Phase 3 clinical trial in first-line advanced
stage NSCLC in order to gain regulatory approval in Europe, Mundipharma will be
entitled to recover the full cost of such trial by reducing milestone, fixed
sales-based payments and royalty payments to Novelos by up to 50% of the
payments owed until Mundipharma recovers the full costs of such
trial. In order for Mundipharma or Novelos to access data or
intellectual property related to Independent Trials (as defined in the
Collaboration Agreement), they must pay the sponsoring party 50% of the cost of
such trial.
For
countries in which patents are held, the Collaboration Agreement expires on a
country-by-country basis within the Territory on the earlier of (1) expiration
of the last applicable Novelos patent within the country or (2) the
determination that any patents within the country are invalid, obvious or
otherwise unenforceable. For countries in which no patents are held,
the Agreement expires 15 years from effective date or upon generic product
competition in the country that results in a 20% drop in Mundipharma’s market
share. Novelos may terminate the Collaboration Agreement upon breach or default
by Mundipharma. Mundipharma may terminate the Collaboration Agreement
upon breach or default, filing of voluntary or involuntary bankruptcy by
Novelos, the termination of certain agreements with companies associated with
the originators of the licensed technology, or 30-day notice for no
reason. If any regulatory approval within the Territory is suspended
as a result of issues related to the safety of the Licensed Products, then
Mundipharma’s obligations under the Collaboration Agreement will be suspended
until the regulatory approval is reinstated. If that reinstatement
does not occur within twelve months of the suspension, then Mundipharma may
terminate the Collaboration Agreement.
The
foregoing summary descriptions of the Collaboration Agreement do not purport to
be complete and are qualified in their entirety by reference to the
Collaboration Agreement.
Securities
Purchase Agreement
Concurrently
with the execution of the Collaboration Agreement, we sold to Purdue Pharma,
L.P. (“Purdue”) an independent associated company of Mundipharma, 200 shares of
a newly created series of our preferred stock, designated “Series E Convertible
Preferred Stock”, par value $0.00001 per share (the “Series E Preferred Stock”)
and a warrant to purchase 9,230,769 shares of our common stock for an aggregate
purchase price of $10,000,000 (the “Series E Financing”). Pursuant to
the related securities purchase agreement with Purdue (the “Purchase
Agreement”), Purdue 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 Purdue no longer
holds at least one-half of
the Series E Preferred Stock issued to them at closing.
Series
E Preferred Stock
The
shares of Series E Preferred Stock have a stated value of $50,000 per share and
are 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 for an aggregate of
15,384,615 shares of common stock. If there is an effective
registration statement covering the shares of common stock underlying the Series
E Preferred Stock and the VWAP, as defined in the Series E Certificate of
Designations, of our common stock exceeds $2.00 for 20 consecutive trading days,
then the outstanding Series E 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 E 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, in shares of Series E Preferred Stock or in registered shares of our
common stock at our option, subject to certain conditions.
For as
long as any shares of Series E 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 E Preferred Stock (except for
certain exempted issuances), (iv) increasing the number of shares of Series E
Preferred Stock or issuing any additional shares of Series E 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 E Preferred Stock
remains outstanding and there are no changes to the rights and preferences of
the Series E Preferred Stock, (vi) redeeming or repurchasing any capital stock
other than the Series E 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 Warrant
The
common stock purchase warrant is exercisable for an aggregate of 9,230,769
shares of our common stock at an exercise price of $0.65. The warrant expires on
December 31, 2015. The warrant exercise price and/or the common stock
issuable pursuant to such warrant 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.
Registration
Rights Agreement
Simultaneous
with the execution of the Securities Purchase Agreement, we entered into a
registration rights agreement (the “Registration Rights Agreement”) with Purdue
and the holders (the “Series D Investors) of our existing Series D convertible
preferred stock (the “Series D Preferred Stock”). The Registration
Rights Agreement requires us to file with the Securities and Exchange Commission
no later than 5 business days following the six-month anniversary of the
execution of the Securities Purchase Agreement, 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 E Preferred Stock (excluding
12,000,000 shares of common stock issuable upon conversion of the Series E
Preferred Stock issued in exchange for shares of outstanding Series D Preferred
Stock as described below that were included on a prior registration statement),
(ii) 9,230,769 shares of common stock issuable upon exercise of the warrants
issued to Purdue and (iii) 11,865,381 shares of common stock issuable upon
exercise of warrants held by the Series D 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 Purdue and the Series D 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 E 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. The Registration Rights Agreement replaces a prior agreement
dated April 11, 2008 between Novelos and the Series D Investors.
Agreement
to Exchange and Consent and Amendments to Prior Agreements with Series D
Investors
We also
entered into a Consent and Agreement to Exchange (the “Exchange Agreement”) with
the Series D Investors. Pursuant to the Exchange Agreement, the
Series D Investors exchanged all 413.5 outstanding shares of Series D Preferred
Stock and accumulated but unpaid dividends thereon for 445.442875 shares of
Series E Preferred Stock. The rights and preferences of the Series E
Preferred Stock are substantially the same as the Series D Preferred Stock. In
addition, the Series D Investors waived liquidated damages that had accrued
through date of the Exchange Agreement as a result of our failure to file a
registration statement covering the shares of common stock underlying the Series
D Preferred Stock and warrants not covered by an existing registration
statement. In connection with the execution of the Exchange
Agreement, the warrants held by the Series D Investors were amended to extend
the expiration of the warrants to December 31, 2015 and to remove the forced
exercise provision. Also, we entered into an amendment to the registration
rights agreement dated May 2, 2007 with the Series D Investors to revise the
definition of registrable securities under the agreement refer to Series E
Preferred Stock.
Advisor
Fees
Ferghana
Partners, Inc. received a cash fee equal to seven percent (7%) of the gross
proceeds from the sale of Series E Preferred Stock and Common Stock Purchase
Warrants to Purdue. Ferghana will also receive cash fees equal to six
percent (6%) of all payments to Novelos by Mundipharma under the Collaboration
Agreement other than royalties on net sales.
ITEM
3.02 UNREGISTERED
SALES OF EQUITY SECURITIES
As
described in Item 1.01 above, on February 11, 2009 we sold 200 shares of Series
E Preferred Stock, receiving aggregate gross proceeds of $10
million.
This sale
was exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended.
ITEM
5.03 AMENDMENTS
TO ARTICLES OF INCORPORATION OR BYLAWS
Effective
February 11, 2009 our certificate of incorporation was amended to eliminate the
Certificate of Designations, Preferences and Rights of Series B Convertible
Preferred Stock. There had not been any shares of Series B preferred
stock outstanding since April 2008.
Effective
February 11, 2009 our certificate of incorporation was amended to include the
Certificate of Designations, Preferences and Rights of Series E Convertible
Preferred Stock. A summary of the terms of Series E Convertible Preferred Stock
is included in Item 1.01 of this filing and is incorporated by
reference.
In
connection with the Series E Financing and Exchange Agreement, the holders of
our Series C preferred stock consented and agreed that the Series E preferred
stock would be senior to the Series C Preferred Stock with respect to the
payment of dividends and liquidation preference.
Effective
February 12, 2009 our certificate of incorporation was amended to eliminate the
Certificate of Designations, Preferences and Rights of Series D Convertible
Preferred Stock. All outstanding shares of Series D preferred stock
were exchanged effective upon the closing of the Series E
Financing.
ITEM
7.01 REGULATION
FD DISCLOSURE
A copy of
the press release issued by us on February 11, 2009 announcing the transactions
described in Item 1.01 is filed as Exhibit 99.1 and is incorporated by
reference.
ITEM
9.01 FINANCIAL
STATEMENTS AND EXHIBITS
(c) Exhibits
Number
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Title
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4.1
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Certificate
of Designations, Preferences and Rights of Series E Convertible Preferred
Stock of Novelos Therapeutics, Inc.
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4.2
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Common
Stock Purchase Warrant
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4.3
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Certificate
of Elimination of Series B Convertible Preferred Stock
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4.4
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Certificate
of Elimination of Series D Convertible Preferred Stock
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10.1
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Securities
Purchase Agreement dated February 11, 2009
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10.2
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Registration
Rights Agreement dated February 11, 2009
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10.3
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Series
D Preferred Stock Consent and Agreement to Exchange dated February 10,
2009
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10.4
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Warrant
Amendment Agreements dated February 11, 2009
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10.5
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Amendment
No. 2 to Registration Rights Agreement dated February 11,
2009
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99.1
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Press
Release dated February 11, 2009 entitled “Novelos Therapeutics and
Mundipharma Sign Exclusive Collaboration in Europe and
Japan”
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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.
Dated:
February 18, 2009
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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
Number
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Title
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4.1
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Certificate
of Designations, Preferences and Rights of Series E Convertible Preferred
Stock of Novelos Therapeutics, Inc.
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4.2
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Common
Stock Purchase Warrant
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4.3
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Certificate
of Elimination of Series B Convertible Preferred Stock
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4.4
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Certificate
of Elimination of Series D Convertible Preferred Stock
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10.1
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Securities
Purchase Agreement dated February 11, 2009
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10.2
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Registration
Rights Agreement dated February 11, 2009
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10.3
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Series
D Preferred Stock Consent and Agreement to Exchange dated February 10,
2009
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10.4
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Warrant
Amendment Agreements dated February 11, 2009
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10.5
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Amendment
No. 2 to Registration Rights Agreement dated February 11,
2009
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99.1
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Press
Release dated February 11, 2009 entitled “Novelos Therapeutics and
Mundipharma Sign Exclusive Collaboration in Europe and
Japan”
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CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES E
CONVERTIBLE PREFERRED STOCK
OF
NOVELOS
THERAPEUTICS, INC.
(Pursuant
to Section 151 of the
Delaware
General Corporation Law)
Novelos
Therapeutics, Inc. (the “
Corporation
”),
a corporation organized and existing under the laws of the State of Delaware,
hereby certifies that, pursuant to authority conferred on its Board of Directors
(the “
Board
”)
by the Certificate of Incorporation of the Corporation, the following resolution
was adopted by the Board at a meeting of the Board duly held on January 26,
2009, which resolution remains in full force and effect on the date
hereof:
RESOLVED
, that there is hereby
established a series of the Corporation’s authorized Preferred Stock (the “
Preferred
Stock
”) having a par value of $0.00001 per share, which series shall be
designated as “Series E Convertible Preferred Stock” (the “
Series E
Preferred Stock
”) and shall consist of Seven Hundred Thirty Five (735)
shares. The shares of Series E Preferred Stock shall have the voting
powers, designations, preferences and other special rights, and qualifications,
limitations and restrictions thereof set forth below:
1.
Certain
Definitions
.
As used herein,
the following terms shall have the following meanings:
(a) “
Affiliate
”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, “
control
,”
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “
controlling
”
and “
controlled
”
have meanings correlative to the foregoing.
(b) “
Associated
Company
” means, as to Purdue, any person, firm, trust, partnership,
corporation, company or other entity or combination thereof, which directly or
indirectly (i) controls (ii) is controlled by or (iii) is under
common control with Purdue. The terms “control” and “controlled” mean
ownership of 50% or more, including ownership by trusts with substantially the
same beneficial interests, of the voting and equity rights of such person, firm,
trust, partnership, corporation, company or other entity or combination thereof
or the power to direct the management of such person, firm, trust, partnership,
corporation, company or other entity or combination thereof.
(c) “
Business
Day
” shall mean a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
(d) “
Fair
Market Value
” shall mean, with respect to any listed security, its Market
Price, and with respect to any property or assets other than cash or listed
securities, the fair value thereof determined in good faith by the Board and the
Requisite Holders.
(e) “
Initial
Issue Date
” shall mean the date that shares of Series E Preferred Stock
are first issued by the Corporation.
(f)
“
Investors
”
shall mean, collectively, the Lead Series E Preferred Investors (as defined
below) and Knoll Special Opportunities Fund II Master Fund, Ltd., a Cayman
Islands investment company, Europa International, Inc., a Delaware corporation,
and Hunt-BioVentures, L.P., a Delaware limited partnership.
(g) “
Lead
Series E Preferred Investors
” shall mean,
collectively, Xmark Opportunity Fund, L.P., a Delaware limited
partnership (“
Xmark
LP
”), Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company
(“
Xmark
Ltd
”), Xmark JV Investment Partners, LLC, a Delaware limited liability
company (“
Xmark
LLC
”), Caduceus Master Fund Limited, a Bermuda corporation
(“
Caduceus
Master
”), Caduceus Capital II, L.P., a Delaware limited partnership
(“
Caduceus
Capital
”), Summer Street Life Sciences Hedge Fund Investors, LLC a
Delaware limited liability company (“
Summer
Street
”), UBS Eucalyptus Fund, L.L.C., a Delaware registered investment
company (“
UBS
Eucalyptus
”), PW Eucalyptus Fund, Ltd., a Cayman Islands investment
company (“
PW
Eucalyptus
”)
and
Purdue Pharma L.P., a Delaware limited partnership (or any of its successors or
assigns) (“
Purdue
”)
.
(h) “
Market
Price
”, as of a particular date (the “
Valuation
Date
”), shall mean the following with respect to any class of listed
securities: (A) if such security is then listed on a national stock exchange,
the Market Price shall be the closing sale price of one share of such security
on such exchange on the last trading day prior to the Valuation Date, provided
that if such security has not traded in the prior ten (10) trading sessions, the
Market Price shall be the average closing price of such security in the most
recent ten (10) trading sessions during which such security has traded; (B) if
such security is then included in the OTC Bulletin Board, the Market Price shall
be the closing sale price of one share of such security on the OTC Bulletin
Board on the last trading day prior to the Valuation Date or, if no such closing
sale price is available, the average of the high bid and the low ask price
quoted on the OTC Bulletin Board as of the end of the last trading day prior to
the Valuation Date, provided that if such stock has not traded in the prior ten
(10) trading sessions, the Market Price shall be the average closing price of
one share of such security in the most recent ten (10) trading sessions during
which such security has traded; or (C) if such security is then included in the
“pink sheets,” the Market Price shall be the closing sale price of one share of
such security on the “pink sheets” on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low ask price quoted on the “pink sheets” as of the end of
the last trading day prior to the Valuation Date, provided that if such stock
has not traded in the prior ten (10) trading sessions, the Market Price shall be
the average closing price of one share of such security in the most recent ten
(10) trading sessions during which such security has traded.
(i)
“
OrbiMed
Entities
” shall mean, collectively Caduceus Master, Caduceus Capital,
Summer Street, UBS Eucalyptus and PW Eucalyptus or any of their respective
successors or assigns.
(j)
“
Person
”
shall mean any individual, partnership, company, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or agency or political subdivision thereof, or other
entity.
(k) “
Principal
Market
” means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading, which, as of the Initial Issue Date means the
OTC Bulletin Board (“
OTCBB
”).
(l)
“
Requisite
Holders
” shall mean the holders of at least a majority of the then
outstanding shares of Preferred Stock which majority must include (i) the Xmark
Entities, provided such collectively Xmark Entities hold at least one-third of
the Series E Preferred Stock issued to the Xmark Entities (appropriately
adjusted for any stock dividend, stock split, reverse stock split,
reclassification, stock combination or other recapitalization occurring after
the date hereof), (ii) the OrbiMed Entities, provided such OrbiMed Entities
collectively hold at least one-third of the Series E Preferred Stock issued to
the OrbiMed Entities (appropriately adjusted for any stock dividend, stock
split, reverse stock split, reclassification, stock combination or other
recapitalization occurring after the date hereof) , (iii) Purdue, provided that
Purdue or its Associated Companies holds at least one-half of the Series E
Preferred Stock issued to Purdue ( appropriately adjusted for any stock
dividend, stock split, reverse stock split, reclassification, stock combination
or other recapitalization occurring after the date hereof).
(m) “
SEC
”
shall mean the U.S. Securities and Exchange Commission.
(n) “
Series E
Stated Value
” shall mean, with respect to each share of Series E
Preferred Stock, Fifty Thousand Dollars ($50,000), which Series E Stated Value
shall be subject to appropriate adjustment from time to time in the event of any
stock dividend, stock split, reverse stock split, reclassification, stock
combination or other recapitalization affecting the Series E Preferred
Stock.
(o) “
Trading
Day
” means any day on which the Common Stock is purchased and sold on the
Principal Market.
(p) “
VWAP
”
on a Trading Day means the volume weighted average price of the Common Stock for
such Trading Day on the Principal Market as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices, by
a comparable reporting service of national reputation selected by the Requisite
Holders and reasonably satisfactory to the Corporation. If VWAP cannot be
calculated for the Common Stock on such Trading Day on any of the foregoing
bases, then the Corporation shall submit such calculation to an independent
investment banking firm of national reputation reasonably acceptable to the
Requisite Holders, and shall cause such investment banking firm to perform such
determination and notify the Corporation and the Requisite Holders of the
results of determination no later than two (2) Business Days from the time such
calculation was submitted to it by the Corporation. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split or other similar transaction during such period.
(q) “
Xmark
Entities
” shall mean, collectively, Xmark LP, Xmark Ltd. and Xmark LLC or
any of their respective successors or assigns.
2.
Designation;
Preference and Ranking
.
The Series E
Preferred Stock shall consist of Seven Hundred Thirty Five (735)
shares. The preferences of each share of Series E Preferred Stock
with respect to dividend payments and distributions of the Corporation's assets
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation shall be equal to the preferences of every other share of Series E
Preferred Stock from time to time outstanding in every
respect. Notwithstanding the terms and conditions of any series of
Preferred Stock now or hereafter existing providing that the Series E Preferred
Stock shall rank junior or senior thereto, the Series E Preferred Stock shall
rank senior to all other outstanding series of Preferred Stock and senior to the
Common Stock, par value $0.00001 per share (the “
Common
Stock
”), of the Corporation as to the payment of dividends and the
distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding up of the Corporation. No other equity or equity-linked
securities shall be permitted to rank pari passu with the Series E Preferred
Stock without express written approval of the Requisite Holders.
3.
Dividend
Rights
. (a) Each holder of Series E Preferred Stock, in
preference and priority to the holders of all other classes of stock, shall be
entitled to receive, with respect to each share of Series E Preferred Stock then
outstanding and held by such holder of Series E Preferred Stock, dividends,
commencing from the date of issuance of such share of Series E Preferred Stock,
at the rate of nine percent (9%) per annum of the Series E Stated Value (the
“
Series E
Preferred Dividends
”). The Series E Preferred Dividends shall
be cumulative, whether or not earned or declared, and shall be paid
semi-annually in arrears beginning on June 30, 2009 and then on the last day of
June and December in each year. The Series E Preferred Dividends
shall be paid to each holder of Series E Preferred Stock in (1) cash, out of
legally available funds; (2) at the Corporation’s election, in Common Stock, but
only if the Common Stock underlying such dividends are, on the payment date,
subject to an effective Registration Statement (as defined in the Registration
Rights Agreement), based on the lesser of (x) the Conversion Price (as defined
below) then in effect, and (y) the Fair Market Value of the Common Stock on the
Business Day preceding the payment date or (3) at the Corporation’s election, in
Series E Preferred Stock, based on the Series E Stated Value. If shares of
Series E Preferred Stock are transferred in between the scheduled Series E
Preferred Stock dividend payment dates, each of the transferor and transferee of
the Series E Preferred Stock are entitled to their respective pro rata portion
of such Series E Preferred Dividends as of the date of transfer. Any
election by the Corporation to pay dividends in cash or shares of Common Stock
shall be made uniformly with respect to all outstanding shares of Series E
Preferred Stock for a given dividend period.
(b) No
dividends shall be paid on any Common Stock of the Corporation or any other
capital stock of the Corporation during any fiscal year of the Corporation until
all Series E Preferred Dividends (with respect to the current fiscal year and
all prior fiscal years) shall have been paid, or declared and set apart for
payment, when due to the holders of Series E Preferred Stock.
(c) In
the event that the Corporation shall at any time pay a dividend on the Common
Stock (other than a dividend payable solely in shares of Common Stock) or any
other class or series of capital stock of the Corporation (except for Series C
Preferred Stock), the Corporation shall, at the same time, pay to each holder of
Series E Preferred Stock a dividend equal to the dividend that would have been
payable to such holder if the shares of Series E Preferred Stock held by such
holder had been converted into Common Stock on the date of determination of
holders of Common Stock entitled to receive such dividends.
4.
Liquidation
Rights
. (a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Series E Preferred Stock shall be entitled to receive, on a pro rata basis,
prior and in preference to any distribution of any of the assets or surplus
funds of the Corporation to the holders of the Common Stock, or any other class
of capital stock of the Corporation, an amount equal to the Series E Stated
Value for each share of Series E Preferred Stock then held by such holder, plus
an amount equal to all declared but unpaid dividends, and all accrued but unpaid
dividends set forth in Section 3(a) above, on each such share of Series E
Preferred Stock (the “
Liquidation
Preference Payment
”). If, upon the occurrence of any such
liquidation, dissolution or winding up of the Corporation, the assets and funds
to be distributed among the holders of Series E Preferred Stock shall be
insufficient to permit the payment to such holders of the full Liquidation
Preference Payment, then
the entire assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of Series E Preferred Stock in proportion to the
Liquidation Preference Payment each such holder is entitled to receive, and no
assets of the Corporation shall be distributed to the holders of the Common
Stock or any other class or series of capital stock of the Corporation in
respect of such Common Stock or such other stock unless and until the
Liquidation Preference Payment payable to all holders of the Series E Preferred
Stock has been paid in full.
(b) After
payment of the full Liquidation Preference Payment to the holders of the Series
E Preferred Stock as set forth in Section 4(a) above and subject to any other
distribution that may be required with respect to any future series of Preferred
Stock that may from time to time come into existence, the remaining assets and
funds of the Corporation, if any, available for distribution to stockholders
shall be distributed (i) in connection with a Liquidation Event pursuant to
Section 4(c)(1)
below, ratably among the holders of the Series E Preferred Stock, any other
class or series of capital stock that participates with the Common Stock in the
distribution of assets upon such Liquidation Event and the Common Stock, with
the holders of the Series E Preferred Stock deemed to hold that number of shares
of Common Stock into which such shares of Series E Preferred Stock are then
convertible and (ii) in connection with a Liquidation Event pursuant to
Sections
4(c)(2)
-
(5)
below, ratably
among the holders of Common Stock.
(c) The
Requisite Holders, by written notice to the Corporation at least two (2)
Business Days prior to the effective date thereof,
may elect to treat any
of the following transactions as a dissolution or winding up of the Corporation
(each a “
Liquidation
Event
”) for the purposes of this Section 4: (1) any
dissolution, winding up or liquidation of the Corporation; (2) any sale, lease
or other transfer of substantially all of the Corporation’s assets, in one or a
series of transactions; (3) any merger, consolidation or similar business
combination transaction, in which the Corporation is not the survivor or, if the
Corporation is the survivor, then only if the holders of a majority of the
Common Stock outstanding immediately before such transaction cease to own a
majority of the Common Stock immediately after the transaction; (4) in one or a
series of events, any change in the majority of the members of the Corporation’s
Board of Directors (the “
Board
”),
unless the replacement directors were nominated by the majority of the Board
immediately preceding such change; and (5) if any person or entity (other than
the holders of Series E Preferred Stock) shall acquire or become the “beneficial
owner” (as that term is defined in Rule 13d-3 of the Exchange Act) of more than
50% of the Corporation’s outstanding stock.
(d)
Distributions Other than
Cash
. Whenever the distributions provided for in this Section
4 shall be payable in property other than cash, the value of such distribution
shall be the
Fair
Market Value thereof. All distributions (including distributions
other than cash) made hereunder shall be made
pro
rata
to the holders
of Series E Preferred Stock, based on the number of shares of Series E Preferred
Stock held by each such holder.
(e)
Right to
Convert
. Nothing in this Section 4 shall affect in any way the
right of each holder of Series E Preferred Stock to convert such shares at any
time and from time to time into Common Stock in accordance with Section 6 hereof
prior to the Liquidation Event.
5.
Voting
Rights; Protective Provisions; Covenants
.
(a) Except
as otherwise provided herein or as required by applicable law, the holders of
Series E Preferred Stock shall be entitled to vote on all matters on which the
holders of Common Stock shall be entitled to vote, in the same manner and with
the same effect as the holders of Common Stock, voting together with the holders
of Common Stock as a single class. For this purpose, the holders of
Series E Preferred Stock shall be given notice of any meeting of stockholders as
to which the holders of Common Stock are given notice in accordance with the
by-laws of the Corporation. As to any matter on which the holders of
Series E Preferred Stock shall be entitled to vote, each holder of Series E
Preferred Stock shall have a number of votes per share of Series E Preferred
Stock held of record by such holder on the record date for the meeting of
stockholders, if such matter is subject to a vote at a meeting of stockholders,
or on the effective date of any written consent, if such matter is subject to a
written consent of the stockholders without a meeting of stockholders, equal to
the number of shares of Common Stock into which such share of Series E Preferred
Stock is then convertible on such record date or effective date, as the case may
be, in accordance with Section 6 hereof (subject to the limitations on
conversion set forth in Sections 6(l) below).
(b) So
long as all or any portion of the Series E Preferred Stock remain outstanding,
without the prior written consent of the Requisite Holders, the Corporation
shall not, directly or indirectly, take any of the following actions or agree to
take any of the following actions:
(1) amend,
alter or repeal (whether by merger, consolidation or otherwise) any provision of
the Corporation’s certificate of incorporation or the bylaws;
(2) create
or authorize the creation of or issue any equity security, or any security
convertible into or exercisable for any equity security, unless the per share
price of such securities is equal to or exceeds $0.65 in cash and such
securities rank junior to the Series E Preferred Stock; provided that the
Company may issue shares of Common Stock or options to employees, consultants,
officers or directors of the Company pursuant to any stock or option plan duly
adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose;
(3) increase
the number of authorized shares of Series E Preferred Stock or authorize the
issuance of or issue any shares of Series E Preferred Stock (other than in
connection with the payment of Series E Preferred Dividends in accordance with
Section 3 hereof);
(4) sell,
lease, convey, license or otherwise grant any rights with respect to, all or
substantially all of its assets (and in the case of licensing, any material
intellectual property) or business of the Corporation and shall not effect any
merger or consolidation with any other company unless as a result thereof and
after giving effect thereto (a) the Corporation shall be the surviving
corporation, (b) the Series E Preferred Stock shall continue to be outstanding,
(c) there shall be no change in the preference, privileges or other rights and
restrictions with respect to the Series E Preferred Stock and (d) there shall
not be created or thereafter exist as a result of thereof any new class of
shares having preference over the Series E Preferred Stock with respect to
dividends, distribution of assets or rights upon liquidation;
(5) except
for a declaration or payment of dividends on the Series E Preferred
Stock and the Series C Preferred Stock (at such time as all accrued and unpaid
dividends on shares of Series E Preferred Stock then due have been paid), the
Corporation shall not declare or pay any dividends on any common stock,
preferred stock or other capital stock of the Corporation;
(6) except
for a redemption or repurchase of the Series E Preferred Stock or of the
Warrants issued pursuant to a Securities Purchase Agreement dated April 12, 2007
as amended May 2, 2007, issued pursuant to a Securities Purchase Agreement dated
March 26, 2008, as amended April 9, 2008 and issued pursuant to a Securities
Purchase Agreement dated February 11, 2009, the Corporation shall not redeem or
repurchase any of its capital stock (or security exercisable, convertible or
exchangeable for any of its capital stock), except relating to settlement with
departing employees pursuant to written employment agreements in effect on the
Initial Issue Date;
(7) incur
any debt for borrowed money in excess of $500,000; and
(8) change
the number of directors which constitutes the Board of Directors.
6.
Conversion
.
The holders of
shares of Series E Preferred Stock shall have the following conversion
rights:
(a)
Optional Conversion
.
Subject to the terms and conditions of this Section 6, the holder of any share
or shares of Series E Preferred Stock shall have the right, at its option at any
time, to convert any such shares of Series E Preferred Stock into such number of
fully paid and nonassessable shares of Common Stock as is obtained by: (i)
multiplying the number of shares of Series E Preferred Stock to be converted by
the Series E Stated Value and adding to such product the amount of any accrued
but unpaid dividends with respect to such shares of Series E Preferred Stock to
be converted; and (ii) dividing the result obtained pursuant to clause (i) above
by the Series E Conversion Price then in effect.
(b)
Mandatory Conversion
.
Subject to the terms and conditions of this Section 6, if the Registration
Statement covering the resale of the shares of Common Stock underlying all of
the Series E Preferred Stock is declared effective by the SEC, and is then
effective and the daily VWAP of the Common Stock for twenty (20) consecutive
trading days exceeds $2.00 per share (subject to appropriate adjustment from
time to time in the event of any stock dividend, stock split, reverse stock
split, reclassification, stock combination or other recapitalization affecting
the Common Stock), then the outstanding Series E Preferred Stock shall
automatically convert, together with accrued dividends, into Common Stock at the
Conversion Price then in effect.
(c) The
“
Series E
Conversion Price
” shall initially be $0.65, and shall be subject to
adjustment from time to time in accordance with the provisions of this Section
6.
(d)
Conversion
Procedures
:
(1)
Optional
. The rights
of conversion set forth in this Section 6 shall be exercised by any holder of
Series E Preferred Stock by giving written notice to the Corporation that such
holder elects to convert a stated number of shares of Series E Preferred Stock
into Common Stock (the “
Optional
Conversion Notice
”) and by surrender of a certificate or certificates for
the shares of Series E Preferred Stock so to be converted (or, in lieu thereof,
by delivery of an appropriate lost stock affidavit in the event such certificate
or certificates have been lost or destroyed) to the Corporation at its principal
office (or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of Series E Preferred Stock) at
any time on the date set forth in such notice (which date shall not be earlier
than the Corporation’s receipt of such notice), together with a statement of the
name or names (with address) in which the certificate or certificates for shares
of Common Stock shall be issued.
(2)
Mandatory
. Upon
the occurrence of the events described in Section 6(b), the Corporation shall
promptly, but not later than five (5) Business Days thereof notify the
Corporation’s transfer agent of such events (“
Mandatory
Conversion Notice
”) which notice shall identify the Conversion Price then
in effect and direct the Corporation’s transfer agent to send certificates
representing shares of Common Stock issued upon conversion to the holders of
Series E Preferred Stock upon surrender of the certificates for shares of Series
E Preferred Stock. The Corporation shall promptly provide a copy of such
Mandatory Conversion Notice to each holder of Series E Preferred Stock within
one Business Day of the occurrence of the events described in Section
6(b). The Mandatory Conversion Notice shall state the Conversion
Price then in effect and the address for the Corporation’s transfer agent to
send the new Common Stock upon surrender of the Series E Preferred Stock
certificates to the Corporation’s transfer agent and the address of the
Company’s transfer agent for the holder to send its Series E Preferred Stock
certificate(s). Immediately upon the issuance of the Mandatory
Conversion Notice to the Corporation’s transfer agent as described in this
Section 6(d)(2), all shares of Series E Preferred Stock shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
immediately cease and terminate, except only the right of the holders thereof,
upon surrender of their certificate or certificates therefor, to receive
certificates representing the number of shares of Common Stock into which such
Series E Preferred Stock has been converted.
(e) Promptly
after receipt of the written notices referred to in Section 6(d)(I) above or the
issuance of the Mandatory Conversion Notice, as applicable, and surrender of the
certificate or certificates for the share or shares of Series E Preferred Stock
to be converted (or, in lieu thereof, by delivery of an appropriate lost stock
affidavit in the event such certificate or certificates have been lost or
destroyed), but in no event more than three (3) Business Days thereafter, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder of Series E Preferred Stock, registered in such name or names as such
holder may direct in writing, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Series E Preferred Stock. To the extent permitted by law, such
optional conversion shall be deemed to have been effected, and the Series E
Conversion Price shall be determined, as of the close of business on the date on
which such Optional Conversion Notice shall have been received by the
Corporation and the certificate or certificates for such share or shares of
Series E Preferred Stock shall have been surrendered as aforesaid (or, in lieu
thereof, an appropriate lost stock affidavit has been delivered to the
Corporation). Upon a mandatory conversion, such conversion shall be deemed to
have been effected, and the Series E Conversion Price shall be determined, as of
the close of business on the date on which the conditions in Section 6(b) have
been satisfied. At such time of conversions, the rights of the holder of such
share or shares of Series E Preferred Stock shall cease with respect to the
shares of Series E Preferred Stock being converted, and the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
(f)
If the Company shall fail for any reason or for no reason to
issue to a holder the applicable certificate or certificates within three (3)
Business Days of receipt of documents necessary for the conversions set forth
above (the “
Deadline
Date
”), then, in addition to all other remedies available to such holder,
if on or after the Business Day immediately following such three (3) Business
Day period, such holder or holder’s broker, acting on behalf of such holder,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the holder of shares of Common Stock that
such holder anticipated receiving from the Company upon a
conversion of holder’s Series E Preferred tock (a “
Buy-In
”),
then the Company shall, within three (3) Business Days after such holder’s
request and in such holder’s sole discretion, either (i) pay cash to the holder
in an amount equal to such holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “
Buy-In
Price
”), at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to such holder a certificate or
certificates representing such shares of Common Stock and pay cash to the holder
in an amount equal to the excess (if any) of the Buy-In Price over the product
of (a) such number of shares of Common Stock, times (b) the closing bid price on
the Deadline Date.
(g) No
fractional shares shall be issued upon any conversion of shares of Series E
Preferred Stock into Common Stock. If any fractional share of Common
Stock would, except for the provisions of the first sentence of this Section
6(g), be delivered upon such conversion, the Corporation, in lieu of delivering
such fractional share, shall pay to the holder surrendering the shares of Series
E Preferred Stock for conversion an amount in cash equal to the Market Price of
such fractional share of Common Stock. In case the number of shares
of Series E Preferred Stock represented by the certificate or certificates
surrendered pursuant to Section 6(d) above exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series E Preferred Stock represented by the
certificate or certificates surrendered which are not to be
converted.
(h) If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split-up of shares of Common Stock, then, following the
record date for the determination of holders of Common Stock entitled to receive
such stock dividend, or to be affected by such subdivision or split-up, the
Series E Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of Series E Preferred Stock shall
be increased in proportion to such increase in outstanding shares.
(i) If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then, following the
record date to determine shares affected by such combination, the Series E
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of each share of Series E Preferred Stock
shall be decreased in proportion to such decrease in outstanding
shares.
(j) If
the Common Stock issuable upon the conversion of the Series E Preferred Stock
shall be changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination or shares of stock dividend
provided for elsewhere in this Section 6, or the sale of all or substantially
all of the Corporation’s properties and assets to any other Person), then and in
each such event the holder of each share of Series E Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series E Preferred Stock might have been
converted, as the case may be, immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.
(k) If
at any time or from time to time there shall be a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation’s properties and assets to any other
Person, then, as a part of such merger, or consolidation or sale, provision
shall be made so that holders of Series E Preferred Stock, as the case may be,
shall thereafter be entitled to receive upon conversion of the Series E
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation, or of the successor corporation resulting from such merger,
consolidation or sale, to which such holder would have been entitled if such
holder had converted its shares of Series E Preferred Stock immediately prior to
such merger, consolidation or sale, without regard to any conversion limitation
specified in Section 6(j). In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 6 with
respect to the rights of the holders of the Series E Preferred Stock after the
merger, consolidation or sale to the end that the provisions of this Section 6,
including adjustment of the Series E Conversion Price then in effect for the
Series E Preferred Stock and the number of shares issuable upon conversion of
the Series E Preferred Stock) shall be applicable after that event in as nearly
equivalent a manner as may be practicable.
(l) (I)
Except as to a mandatory conversion contemplated by Section 6(b) above,
notwithstanding anything herein to the contrary, in no event shall a holder of
Series E Preferred Stock be entitled to convert any portion of the Series E
Preferred Stock so held by such holder in excess of that portion upon conversion
of which the sum of (1) the number of shares of Common Stock beneficially owned
by such holder and its Affiliates or Associated Companies (other than shares of
Common Stock which may be deemed beneficially owned through ownership of the
unconverted shares of Series E Preferred Stock or the unexercised or unconverted
portion of any other security of the holder subject to a limitation on
conversion analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of that portion of the
Series E Preferred Stock with respect to which the determination of this proviso
is being made, would result in beneficial ownership by such holder and its
Affiliates or Associated Companies of any amount greater than 4.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Holder and its Affiliates or Associated Companies beneficially
own more than 4.99% of the then outstanding shares of Common
Stock). The waiver by a holder of Series E Preferred Stock of any
limitation contained in an option or convertible security now or hereafter held
by such holder that is similar or analogous to the limitations set forth in this
Section 6(l) shall not be deemed a waiver or otherwise effect the limitation set
forth in this Section 6(l), unless such waiver expressly states it is a waiver
of the provisions of this Section 6(l). For purposes of this Section
6(l), beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso. Any holder of Series E Preferred Stock may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Corporation or immediately preceding a Change of Control of the
Corporation. For purposes of this Sections 6(l)(I) and (II), the term
“Change of Control” means (1) any sale, lease or other transfer of substantially
all of the Corporation’s assets, in one or a series of transactions; (2) any
merger, consolidation or similar business combination transaction, in which the
Corporation is not the survivor or, if the Corporation is the survivor, then
only if the holders of a majority of the Common Stock outstanding immediately
before such transaction cease to own a majority of the Common Stock immediately
after the transaction; (3) in or a series of events, any change in the majority
of the members of the Board, unless the replacement directors were nominated by
the majority of the Board immediately preceding such change; and (4) if any
person or entity (other than the holders of the Series E Preferred Stock) shall
acquire or become the “beneficial owner” (as that term is defined in Rule 13d-3
of the Exchange Act) of more than 50% of the Corporation’s outstanding
stock.
(II) Except as to a
mandatory conversion contemplated by Section 6(b) above, notwithstanding
anything herein to the contrary, in no event shall a holder of Series E
Preferred Stock be entitled to convert any portion of the Series E Preferred
Stock so held by such holder in excess of that portion upon conversion of which
the sum of (1) the number of shares of Common Stock beneficially owned by such
holder and its Affiliates or Associated Companies (other than shares of Common
Stock which may be deemed beneficially owned through ownership of the
unconverted shares of Series E Preferred Stock or the unexercised or unconverted
portion of any other security of the holder subject to a limitation on
conversion analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of that portion of the
Series E Preferred Stock with respect to which the determination of this proviso
is being made, would result in beneficial ownership by such holder and its
Affiliates or Associated Companies of any amount greater than 9.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Holder and its Affiliates or Associated Companies beneficially
own more than 9.99% of the then outstanding shares of Common
Stock). The waiver by a holder of Series E Preferred Stock of any
limitation contained in an option or convertible security now or hereafter held
by such holder that is similar or analogous to the limitations set forth in this
Section 6(l) shall not be deemed a waiver or otherwise effect the limitation set
forth in this Section 6(l), unless such waiver expressly states it is a waiver
of the provisions of this Section 6(l). For purposes of this Section
6(l), beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso. Any holder of Series E Preferred Stock may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Corporation or immediately preceding a Change of Control of the
Corporation.
(m)
Notices of Record
Date
. In case at any time:
(1) the
Corporation shall declare any dividend upon its Common Stock or any other class
or series of capital stock of the Corporation payable in cash or stock or make
any other distribution to the holders of its Common Stock or any such other
class or series of capital stock;
(2) the
Corporation shall offer for subscription
pro
rata
to the holders
of its Common Stock or any other class or series of capital stock of the
Corporation any additional shares of stock of any class or other rights;
or
(3) there
shall be any capital reorganization or reclassification of the capital stock of
the Corporation, any Acquisition or a liquidation, dissolution or winding up of
the Corporation;
then, in
any one or more of said cases, the Corporation shall give, by delivery in person
or by certified or registered mail, return receipt requested, addressed to each
holder of any shares of Series E Preferred Stock at the address of such holder
as shown on the books of the Corporation, (a) at least 20 Business Days’ prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any event set forth in clause
(3) of this Section 6(m) and (b) in the case of any event set forth in clause
(3) of this Section 6(m), at least 20 Business Days’ prior written notice of the
date when the same shall take place. Such notice in accordance with
the foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock or such other class or series of capital stock shall be entitled thereto
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock and such other series or class of
capital stock shall be entitled to exchange their Common Stock and other stock
for securities or other property deliverable upon consummation of the applicable
event set forth in clause (3) of this Section 6(m).
(n) Upon
any adjustment of the Series E Conversion Price, then and in each such case the
Corporation shall give prompt written notice thereof, by delivery in person or
by certified or registered mail, return receipt requested, addressed to each
holder of shares of Series E Preferred Stock at the address of such holder as
shown on the books of the Corporation, which notice shall state the Series E
Conversion Price resulting from such adjustment and setting forth in reasonable
detail the method upon which such calculation is based.
(o) The
Corporation will at all times reserve and keep available out of its authorized
Common Stock, solely for the purpose of issuance upon conversion of the Series E
Preferred Stock as herein provided, 100% of such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding shares of
Series E Preferred Stock without regard to the limitation set forth in Section
6(l). The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series E Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed and are subject to an
effective Registration Statement (as defined in the Registration Rights
Agreement). The Corporation will not take any action which results in
any adjustment of the Series E Conversion Price if the total number of shares of
Common Stock issued and issuable after such action upon conversion of the Series
E Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Corporation’s Amended and Restated Certificate of
Incorporation.
(p) The
issuance of certificates for shares of Common Stock upon conversion of Series E
Preferred Stock shall be made without charge to the holders thereof for any
issuance tax in respect thereof, provided that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
holder of the Series E Preferred Stock which is being converted.
(q) The
Corporation will at no time close its transfer books against the transfer of any
Series E Preferred Stock or of any shares of Common Stock issued or issuable
upon the conversion of any shares of Series E Preferred Stock in any manner
which interferes with the timely conversion of such Series E Preferred Stock,
except as may otherwise be required to comply with applicable securities
laws.
7.
Amendment
. This
Certificate of Designations may only be amended with the prior written consent
of the Requisite Holders and, in the event that any such amendment materially
adversely affects a holder of Series E Preferred Stock in a manner
disproportionate to the other holders of Series E Preferred Stock, without the
prior written consent of such holder. The Corporation may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Corporation shall have obtained the written consent
to such action or omission to act, of the Requisite Holders and, in the event
that any such action or omission to act materially adversely affects a holder of
Series E Preferred Stock in a manner disproportionate to the other holders of
Series E Preferred Stock, without the prior written consent of such
holder.
IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Designations to be duly executed as of the 11th day
of February, 2009.
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NOVELOS THERAPEUTICS,
INC.
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/s/ Harry
S. Palmin
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Name: Harry
S. Palmin
Title: President
and CEO
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EXECUTION
COPY
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (II) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS.
Warrant
No. P1
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Original
Issue Date: February 11, 2009
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NOVELOS
THERAPEUTICS, INC.
WARRANT
TO PURCHASE 9,230,769 SHARES OF
COMMON
STOCK, PAR VALUE $0.00001 PER SHARE
FOR VALUE
RECEIVED, Purdue Pharma L.P., a Delaware limited partnership (“
Warrantholder
”),
is entitled to purchase, subject to the provisions of this Warrant, from NOVELOS
THERAPEUTICS, INC. a Delaware corporation (“
Corporation
”),
at any time not later than 5:00 P.M., Eastern time, on December 31, 2015 (the
“
Expiration
Date
”), at an exercise price per share equal to $
0.65
(the exercise price in
effect being herein called the “
Warrant
Price
”), 9,230,769 shares (“
Warrant
Shares
”) of the Corporation’s Common Stock, par value $0.00001
per share (“
Common
Stock
”). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein. This Warrant has been issued
pursuant to a certain Securities Purchase Agreement, dated as of February 11,
2009, by and among the Corporation and Warrantholder, (the “
Purchase
Agreement
”). All capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
Section 1.
Registration
. The
Corporation shall maintain books for the transfer and registration of the
Warrant. Upon the initial issuance of this Warrant, the Corporation
shall issue and register the Warrant in the name of the
Warrantholder.
Section 2.
Transfers
. As
provided herein, this Warrant may be transferred only pursuant to a registration
statement filed under the Securities Act, or an exemption from such
registration. Notwithstanding the foregoing, the Warrantholder may
sell, transfer, assign, pledge or otherwise dispose of the Warrant, in whole or
in part, to any of its Associated Companies or any third party subject to, (i)
compliance with all applicable securities laws and (ii) the delivery to the
Corporation of such documentation to establish that such transfer is being made
in accordance with the terms hereof, and as may be reasonably requested by the
Corporation and necessary for the Corporation to obtain a legal opinion that
such disposition may lawfully be made without registration under the Securities
Act. Subject to the foregoing, the Corporation shall transfer this
Warrant from time to time upon the books to be maintained by the Corporation for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer, and a new Warrant shall be
issued to the transferee and the surrendered Warrant shall be canceled by the
Corporation.
Section 3.
Exercise of
Warrant
. Subject to the provisions hereof, the Warrantholder
may exercise this Warrant in whole or in part at any time prior to its
expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as
Appendix A
(the
“
Exercise
Agreement
”) and payment by cash, certified check or wire transfer of
funds for the aggregate Warrant Price for that number of Warrant Shares then
being purchased, to the Corporation during normal business hours on any Business
Day at the Corporation’s principal executive offices (or such other office or
agency of the Corporation as it may designate by notice to the holder
hereof). The Warrant Shares so purchased shall be deemed to be issued
to the holder hereof or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant shall have
been surrendered (or evidence of loss, theft or destruction thereof and security
or indemnity satisfactory to the Corporation), the Warrant Price shall have been
paid and the completed Exercise Agreement shall have been
delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
three (3) Business Days, after this Warrant shall have been so
exercised. When the Corporation is required to deliver certificates
upon exercise, if certificates are not delivered to the Warrantholder within
such three (3) Business Days, the Corporation shall be liable to the
Warrantholder for liquidated damages equal to 1.5% of the aggregate Warrant
Price for each 30-day period (or portion thereof) beyond such three (3) Business
Day-period that the certificates have not been so delivered. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant
shall have been exercised only in part, then, unless this Warrant has expired,
the Corporation shall, at its expense, at the time of delivery of such
certificates, deliver to the holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been
exercised.
Section 4.
Compliance with the
Securities Act of 1933
. The Corporation may cause the legend set forth on
the first page of this Warrant to be set forth on each Warrant or similar legend
on any security issued or issuable upon exercise of this Warrant, unless counsel
for the Corporation is of the opinion as to any such security that such legend
is unnecessary.
Section 5.
Payment of
Taxes
. The Corporation will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant;
provided
,
however
, that the
Corporation shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of the registered
holder of this Warrant in respect of which such shares are issued, and in such
case, the Corporation shall not be required to issue or deliver any certificate
for Warrant Shares or any Warrant until the person requesting the same has paid
to the Corporation the amount of such tax or has established to the
Corporation’s reasonable satisfaction that such tax has been
paid. The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.
Section 6.
Mutilated or Missing
Warrants
. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Corporation shall issue in exchange and substitution
of and upon cancellation of the mutilated Warrant, or in lieu of and
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and for the purchase of a like number of Warrant Shares, but only upon
receipt of evidence reasonably satisfactory to the Corporation of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Corporation.
Section 7.
Reservation of Common
Stock
. The Corporation hereby represents and warrants that
there have been reserved, and the Corporation shall at all applicable times keep
reserved until issued (if necessary) as contemplated by this Section 7, out of
the authorized and unissued shares of Common Stock, 100% of the number of shares
issuable upon exercise of the rights of purchase represented by this
Warrant. The Corporation agrees that all Warrant Shares issued upon
due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Corporation.
Section 8.
Adjustments
. Subject
and pursuant to the provisions of this Section 8, the Warrant Price and number
of Warrant Shares subject to this Warrant shall be subject to adjustment from
time to time as set forth hereinafter.
(a) If
the Corporation shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock into a greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Corporation so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been fully exercised immediately prior to such event upon
payment of a Warrant Price that has been adjusted to reflect a fair allocation
of the economics of such event to the Warrantholder. Such adjustments
shall be made successively whenever any event listed above shall
occur.
(b) If
any capital reorganization, reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with another corporation
in which the Corporation is not the survivor, or sale, transfer or other
disposition of all or substantially all of the Corporation’s assets to another
corporation shall be effected, then, the Corporation shall use its best efforts
to ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise
thereof. The Corporation shall not effect any such consolidation,
merger, sale, transfer or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume the obligation to deliver to the holder of the Warrant,
at the last address of such holder appearing on the books of the Corporation,
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase, and the other obligations
under this Warrant. The provisions of this Section 8(b) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
(c) In
case the Corporation shall fix a payment date for the making of a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Company shall provide notice to the
Warrantholder at least 10 days in advance of the fixing of such payment date and
the Warrantholder may elect to exercise this Warrant in whole or in part prior
to such payment date in accordance with Section 3 hereof.
(d) For
the term of this Warrant, in addition to the provisions contained above, the
Warrant Price shall be subject to adjustment as provided below. An adjustment to
the Warrant Price shall become effective immediately after the payment date in
the case of each dividend or distribution and immediately after the effective
date of each other event which requires an adjustment.
(e) In
the event that, as a result of an adjustment made pursuant to this Section 8,
the holder of this Warrant shall become entitled to receive any shares of
capital stock of the Corporation other than shares of Common Stock, the number
of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
Section 9.
Fractional
Interest
. The Corporation shall not be required to issue
fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Corporation,
in lieu of delivering such fractional share, shall pay to the exercising holder
of this Warrant an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.
Section
10.
Benefits
. Nothing
in this Warrant shall be construed to give any person, firm or corporation
(other than the Corporation and the Warrantholder) any legal or equitable right,
remedy or claim, it being agreed that this Warrant shall be for the sole and
exclusive benefit of the Corporation and the Warrantholder.
Section
11.
Notices to
Warrantholder
. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Corporation shall promptly give written
notice thereof to the Warrantholder at the address appearing in the records of
the Corporation, stating the adjusted Warrant Price and the adjusted number of
Warrant Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based. Failure to give such notice to the Warrantholder or any defect
therein shall not affect the legality or validity of the subject
adjustment.
Section
12.
Identity of Transfer
Agent
. The Transfer Agent for the Common Stock is American
Stock Transfer & Trust Company. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the
Corporation’s capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant, the Corporation will mail to the Warrantholder a
statement setting forth the name and address of such transfer
agent.
Section
13.
Notices
. Unless
otherwise provided, any notice required or permitted under this Warrant shall be
given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon
such delivery, (ii) if given by telex or facsimile, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) three days after such notice is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one day after delivery to such carrier. All notices
shall be addressed as follows: if to the Warrantholder, at its address as set
forth in the Corporation’s books and records and, if to the Corporation, at the
address as follows, or at such other address as the Warrantholder or the
Corporation may designate by ten days’ advance written notice to the
other:
If to the Corporation:
Novelos Therapeutics,
Inc.
One Gateway Center, Suite
504
Newton, MA 02458
Attention: Chief Executive
Officer
Fax: (617)
964-6331
With a copy to:
Foley Hoag LLP
Seaport World Trade Center
West
155 Seaport Boulevard
Boston, MA 02210
Attn: Paul
Bork
Fax: (617)
832-7000
Section
14.
Registration
Rights
. The Warrantholder is entitled to the benefit of
certain registration rights with respect to the shares of Common Stock issuable
upon the exercise of this Warrant as provided in the Registration Rights
Agreement dated February 11, 2009, by and among the Corporation and certain
other parties, including the Warrantholder, and any subsequent holder hereof
shall be entitled to such rights to the extent provided in the Registration
Rights Agreement.
Section
15.
Successors
. All
the covenants and provisions hereof by or for the benefit of the Warrantholder
shall bind and inure to the benefit of its respective successors and assigns
hereunder.
Section
16.
Governing
Law
. This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without reference
to the choice of law provisions thereof. The Corporation and, by
accepting this Warrant, the Warrantholder, each irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Warrant and the transactions contemplated
hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this
Warrant. The Corporation and, by accepting this Warrant, the
Warrantholder, each irrevocably consents to the jurisdiction of any such court
in any such suit, action or proceeding and to the laying of venue in such
court. The Corporation and, by accepting this Warrant, the
Warrantholder, each irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
THE CORPORATION AND THE
WARRANTHOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section
17.
No Rights as
Shareholder
. Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a shareholder of the
Corporation by virtue of its ownership of this Warrant.
Section
18.
Restrictions on Exercise of
Warrant
.
(a) Notwithstanding anything herein to
the contrary, in no event shall the Warrantholder be entitled to exercise any
portion of the Warrant per Section 3 so held by such Warrantholder in excess of
that portion upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by such Warrantholder and its Associated
Companies (other than shares of Common Stock which may be deemed beneficially
owned through ownership of the unexercised Warrant or portion thereof or the
unexercised or unconverted portion of any other security of the Warrantholder
subject to a limitation on exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the exercise
of that portion of the Warrant with respect to which the determination of this
proviso is being made, would result in beneficial ownership by such
Warrantholder and its Associated Companies of any amount greater than 4.99% of
the then outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Warrantholder and its Associated Companies beneficially own more
than 4.99% of the then outstanding shares of Common Stock). The
waiver by the Warrantholder of any limitation contained in an option or
convertible security now or hereafter held by such holder that is similar or
analogous to the limitations set forth in this Section 18(a) shall not be deemed
a waiver or otherwise effect the limitation set forth in this Section 18(a),
unless such waiver expressly states it is a waiver of the provisions of this
Section 18(a). For purposes of this Section 18(a), beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso. The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation. For purposes of Sections 18(a) and 18(b), the term
“Change of Control” shall mean (1) any sale, lease or other transfer of
substantially all of the Corporation’s assets, in one or a series of
transactions; (2) any merger, consolidation or similar business combination
transaction, in which the Corporation is not the survivor or, if the Corporation
is the survivor, then only if the holders of a majority of the Common Stock
outstanding immediately before such transaction cease to own a majority of the
Common Stock immediately after the transaction; (3) if one or a series of
events, any change in the majority of the members of the Corporation’s Board of
Directors (the
“
Board
”
), unless the replacement
directors were nominated by the majority of the Board immediately preceding such
change; and (4) if any person or entity (other than Purdue) shall acquire or
become the “beneficial owner” (as that term is defined in Rule 13d-3 of the
Exchange Act) of more than 50% of the Corporation’s outstanding
stock.
(b) Notwithstanding anything
herein to the contrary, in no event shall the Warrantholder be entitled to
exercise any portion of the Warrant per Section 3 so held by such Warrantholder
in excess of that portion upon exercise of which the sum of (1) the number of
shares of Common Stock beneficially owned by such Warrantholder and its
Associated Companies (other than shares of Common Stock which may be deemed
beneficially owned through ownership of the unexercised Warrant or portion
thereof or the unexercised or unconverted portion of any other security of the
Warrantholder subject to a limitation on exercise analogous to the limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the
exercise of that portion of the Warrant with respect to which the determination
of this proviso is being made, would result in beneficial ownership by such
Warrantholder and its Associated Companies of any amount greater than 9.99% of
the then outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Warrantholder and its Associated Companies beneficially own more
than 9.99% of the then outstanding shares of Common Stock). The
waiver by the Warrantholder of any limitation contained in an option or
convertible security now or hereafter held by such holder that is similar or
analogous to the limitations set forth in this Section 18(b) shall not be deemed
a waiver or otherwise effect the limitation set forth in this Section 18(b),
unless such waiver expressly states it is a waiver of the provisions of this
Section 18(b). For purposes of this Section 18(b), beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso. The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation.
Section
19.
Amendments
. This
Warrant shall not be amended without the prior written consent of the
Corporation and the Warrantholder.
Section
20.
Section
Headings
. The section headings in this Warrant are for the
convenience of the Corporation and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
IN WITNESS WHEREOF, the Corporation has
caused this Warrant to be duly executed, as of the 11th day of February,
2009.
NOVELOS
THERAPEUTICS, INC.
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By:
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/s/
Harry S. Palmin
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Name:
Harry S. Palmin
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Title:
President and
CEO
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APPENDIX
A
NOVELOS
THERAPEUTICS, INC.
WARRANT
EXERCISE FORM
To:
NOVELOS THERAPEUTICS, INC.
The undersigned hereby irrevocably
elects to exercise the right of purchase represented by the within Warrant
(“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price
and surrender of the Warrant, _______________ shares of Common Stock (“Warrant
Shares”) provided for therein, and requests that certificates for the Warrant
Shares be issued as follows:
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Name
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Address
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Federal
Tax ID or Social Security
No.
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and delivered by
¨
certified
mail to the above address, or
¨
electronically
(provide DWAC Instructions:___________________), or
¨
other
(specify: __________________________________________).
and, if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned’s Assignee as below indicated
and delivered to the address stated below.
Dated:
___________________, ____
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the
name of the registered holder as written
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Signature:
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on
the first page of the Warrant in every
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particular,
without alteration or enlargement
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Name
(please print)
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or
any change whatever, unless the Warrant
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has
been assigned.
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Address
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Federal
Identification or
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Social
Security No.
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Assignee:
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CERTIFICATE
OF ELIMINATION
OF
SERIES
B CONVERTIBLE PREFERRED STOCK
OF
NOVELOS
THERAPEUTICS, INC.
(Pursuant
to Section 151(g) of the General
Corporation
Law of the State of Delaware)
Novelos
Therapeutics, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Corporation”) does hereby certify
as follows:
FIRST
: The Certificate of
Designations filed on May 2, 2007 and constituting part of the Corporation’s
Certificate of Incorporation (the “Certificate of Designations”) authorizes the
issuance of 400 shares of a series of Preferred Stock designated Series B
Convertible Preferred Stock, par value $0.00001 per share (the “Series B
Preferred Stock”).
SECOND
: Pursuant to the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation adopted the following
resolutions:
RESOLVED
, that no shares of
the Corporation’s Series B Preferred Stock are outstanding and that no shares of
the Series B Preferred Stock will be issued subject to the Certificate of
Designations; and
RESOLVED FURTHER
, that all
matters set forth in the Certificate of Designations with respect to the Series
B Preferred Stock be eliminated from the Corporation’s Certificate of
Incorporation, as heretofore amended; and
RESOLVED FURTHER
, that the
officers of the Corporation are directed to file with the Secretary of State of
the State of Delaware a Certificate of Elimination pursuant to Section 151(g) of
the General Corporation Law of the State of Delaware setting forth these
resolutions in order to eliminate from the Corporation’s Certificate of
Incorporation all matters set forth in the Certificate of Designations with
respect to the Series B Preferred Stock.
THIRD
: Pursuant to the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, all references to the Series B Preferred Stock in the Certificate of
Incorporation of the Corporation hereby are eliminated, and the shares that were
designated to such series hereby are returned to the status of authorized but
unissued shares of the Preferred Stock of the Corporation, without designation
as to series.
[Signature
on next page]
IN WITNESS WHEREOF
, the
Corporation has caused this Certificate to be signed by its duly authorized
officer this 11
th
day of
February, 2009.
NOVELOS
THERAPEUTICS, INC.
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By:
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/s/
Harry S. Palmin
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Name:
|
Harry
S. Palmin
|
Title:
|
President
and Chief Executive
Officer
|
CERTIFICATE
OF ELIMINATION
OF
SERIES
D CONVERTIBLE PREFERRED STOCK
OF
NOVELOS
THERAPEUTICS, INC.
(Pursuant
to Section 151(g) of the General
Corporation
Law of the State of Delaware)
Novelos
Therapeutics, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Corporation”) does hereby certify
as follows:
FIRST
: The Certificate of
Designations filed on April 11, 2008 and constituting part of the Corporation’s
Certificate of Incorporation (the “Certificate of Designations”) authorizes the
issuance of 420 shares of a series of Preferred Stock designated Series D
Convertible Preferred Stock, par value $0.00001 per share (the “Series D
Preferred Stock”).
SECOND
: Pursuant to the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation adopted the following
resolutions:
RESOLVED
, that no shares of
the Corporation’s Series D Preferred Stock are outstanding and that no shares of
the Series D Preferred Stock will be issued subject to the Certificate of
Designations; and
RESOLVED FURTHER
, that all
matters set forth in the Certificate of Designations with respect to the Series
D Preferred Stock be eliminated from the Corporation’s Certificate of
Incorporation, as heretofore amended; and
RESOLVED FURTHER
, that
the officers of the Corporation are directed to file with the Secretary of State
of the State of Delaware a Certificate of Elimination pursuant to Section 151(g)
of the General Corporation Law of the State of Delaware setting forth these
resolutions in order to eliminate from the Corporation’s Certificate of
Incorporation all matters set forth in the Certificate of Designations with
respect to the Series D Preferred Stock.
THIRD
: Pursuant to the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, all references to the Series D Preferred Stock in the Certificate of
Incorporation of the Corporation hereby are eliminated, and the shares that were
designated to such series hereby are returned to the status of authorized but
unissued shares of the Preferred Stock of the Corporation, without designation
as to series.
[Signature
on next page]
IN WITNESS WHEREOF
, the
Corporation has caused this Certificate to be signed by its duly authorized
officer this 12
th
day of
February, 2009.
|
|
|
By:
|
/s/ Harry S. Palmin
|
|
Title: President
and Chief Executive
Officer
|
EXECUTION
COPY
SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT
(“
Agreement
”)
is made as of this 11th day of February, 2009 by and among Novelos Therapeutics,
Inc., a Delaware corporation (the “
Company
”)
and Purdue Pharma L.P., a Delaware limited partnership (“
Purdue
”).
Recitals:
A. The
Company desires, pursuant to this Agreement, to raise the Investment Amount (as
defined below) through the issuance and sale of the following to Purdue (the
“
Private
Placement
”): (i) 200 shares (the “
Preferred
Shares
”) of a newly created series of the Company’s Preferred Stock,
designated “Series E Convertible Preferred Stock”, par value $0.00001 per share
(the “
Preferred
Stock
”), which Preferred Stock shall have the rights, preferences and
privileges set forth in the Certificate of Designations, Preferences and Rights,
in the form of Exhibit A annexed hereto and made a part hereof (the “
Certificate
of Designations
”), and each share of Preferred Stock shall have a stated
value of $50,000 and shall initially be convertible into shares of the Company's
Common Stock, par value $0.00001 per share (the “
Common
Stock
”), at a price of $0.65 per share (the “
Conversion
Price
”), for an aggregate of 15,384,615 shares of Common Stock; and (ii)
a warrant to acquire up to 9,230,769 shares of Common Stock, equal to 60% of the
number of shares of Common Stock underlying the Preferred Shares on the date of
issue, with an exercise price of $0.65 per share, in the form of Exhibit B
annexed hereto and made a part hereof (the “
Warrant
”);
B.
Purdue desires to purchase from the Company, and the
Company desires to issue and sell to Purdue, upon the terms and conditions
stated in this Agreement, the Preferred Shares and the Warrant;
C.
Subject to the conditions hereinafter set forth, on the
Closing Date, Purdue will purchase the Preferred Shares and Warrant in the
Private Placement for an aggregate purchase price equal to the Investment
Amount;
D.
The Company and Purdue are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation D (“
Regulation
D
”), as promulgated by the U.S. Securities and Exchange Commission (the
“
SEC
”)
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “
1933
Act
”);
E.
Contemporaneous with the sale of the
Preferred Shares and the Warrant at the Closing, the Company and Purdue along
with the Series D Investors (as defined below) and holders of Series B Warrants
(as defined below) will enter into a Registration Rights Agreement, in the form
attached hereto as Exhibit H (the “
Registration
Rights Agreement
”), pursuant to which, among other things, the Company
will provide certain registration rights to Purdue, the Series D Investors and
the holders of the Series B Warrants with respect to the shares of Common Stock
issuable upon conversion or exercise, as the case may be, of the Preferred
Stock, the Warrant, the Series B Warrants and the Series D Warrants (as defined
below); and
F.
Contemporaneous with the sale of the Preferred Shares
and the Warrant at the Closing, the Company and Mundipharma International
Corporation Limited will enter into a Collaboration Agreement, in the form
attached hereto as Exhibit F (the “
Collaboration
Agreement
”);
NOW, THEREFORE,
in
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1.
Definitions
. In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth in this
Section
1
:
“
1933
Act
” has the meaning set forth in the Recitals.
“
1934
Act
” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“
Affiliate
”
means, with respect to any Person, any other Person which directly or indirectly
Controls, is Controlled by, or is under common Control with, such
Person.
“
Agreement
”
has the meaning set forth in the Recitals.
“
Associated
Company
” means, as to Purdue, any person, firm, trust, partnership,
corporation, company or other entity or combination thereof, which directly or
indirectly (i) controls (ii) is controlled by or (iii) is under
common control with Purdue. The terms “control” and “controlled” mean
ownership of 50% or more, including ownership by trusts with substantially the
same beneficial interests, of the voting and equity rights of such person, firm,
trust, partnership, corporation, company or other entity or combination thereof
or the power to direct the management of such person, firm, trust, partnership,
corporation, company or other entity or combination thereof.
“
Business
Day
” means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of business.
“
Buy-In
Price
” has the meaning set forth in
Section
8.12
.
“
Certificate
of Designations
” has the meaning set forth in the Recitals.
“
Closing
”
has the meaning set forth in
Section
4.1
.
“
Closing
Date
” has the meaning set forth in
Section
4.2
.
“
Collaboration
Agreement
” has the meaning set forth in the Recitals.
“
Common
Stock
” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may be reclassified.
“
Common
Stock Equivalents
” means any securities of the Company or the
Subsidiaries which entitle the holder thereof to acquire Common Stock at any
time, including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“
Company
”
has the meaning set forth in the Recitals.
“
Company
Counsel
” means Foley Hoag LLP, counsel to the Company.
“
Company’s
Knowledge,
” “
Knowledge
of the Company
” or any like expression with respect to the Company means
the actual knowledge of the officers of the Company and the knowledge that would
be reasonably expected to be known by such individuals in the ordinary and usual
course of the performance of their professional responsibilities to the
Company.
“
Company
Counsel Opinion
” means a legal opinion from the Company Counsel, dated as
of the Closing Date, in the form attached hereto as Exhibit E.
“
Confidential
Information
” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).
“
Control
”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“
Conversion
Price
” has the meaning set forth in the Recitals.
“
Conversion
Shares
” means the shares of Common Stock issuable upon conversion of the
Preferred Shares.
“
Deadline
Date
” has the meaning set forth in
Section
8.12
.
“
Disclosure
Schedules
” has the meaning set forth in
Section
5
.
“
Environmental
Laws
” has the meaning set forth in
Section
5.15
.
“
Exempt
Issuance
” means the issuance of (a) shares of Common Stock or options to
employees, officers, directors or consultants of the Company pursuant to (i) any
existing stock or option plan, or (ii) any stock or option plan duly adopted by
a majority of the non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee directors
established for such purpose, (b) options issued to new employees, (c)
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement,
provided
that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities, and (d) securities issued pursuant
to acquisitions or strategic transactions or in connection with a strategic
alliance collaboration, joint venture, partnership, manufacturing, marketing,
distributing or similar arrangement of the Company with another Person which
strategic alliance, collaboration, joint venture, partnership manufacturing,
marketing, distributing or similar arrangement relates to the Company’s business
as conducted immediately prior thereto and which Person is engaged in a business
similar or related to the business of the Company,
provided
any such
issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and in which the Company receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.
“
Indebtedness
”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with United States generally accepted
accounting principles.
“
Indemnified
Person
” has the meaning set forth in
Section
9.3
.
“
Intellectual
Property
” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; (v) trade secrets, Confidential Information and know-how
(including, but not limited to, ideas, formulae, compositions, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, business and marketing plans, and customer
and supplier lists and related information); and (vi) computer software
(including, but not limited to, data, data bases and
documentation).
“
Investment
Amount
” means an amount equal to $10,000,000.
“
License
Agreements
” has the meaning set forth in
Section
5.14(b)
.
“
Losses
”
has the meaning set forth in
Section
9.2
.
“
Material
Adverse Effect
” means a material adverse effect on (i) the assets and
liabilities, prospects, results of operations, condition (financial or
otherwise) or business of the Company, or (ii) the ability of the Company to
issue and sell the Securities and to perform its obligations under the
Transaction Documents;
provided, however
, that: (A)
any adverse effect that results from general economic, business or industry
conditions, the taking by the Company of any action permitted or required by the
Agreement, or the announcement or pendency of transactions contemplated
hereunder, shall not, in and of itself, constitute a "Material Adverse Effect"
on the Company, and shall not be considered in determining whether there has
been or would be a "Material Adverse Effect" on the Company and (B) a decline in
the Company's stock price shall not, in and of itself, constitute a "Material
Adverse Effect" on the Company and shall not be considered in determining
whether there has been or would be a "Material Adverse Effect" on the
Company.
“
Material
Contract
” means any contract of the Company (i) that was required to be
filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item
601(b)(10) of, in the case of SEC Filings relating to periods prior to January
1, 2007, Regulation S-B of the 1933 Act, or otherwise, Regulation S-K of the
1933 Act, or (ii) the loss of which could reasonably be expected to have a
Material Adverse Effect.
“
OTCBB
” shall
mean the OTC Bulletin Board.
“
Person
”
means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
“
Preferred
Shares
” has the meaning set forth in the Recitals.
“
Preferred
Stock
” has the meaning set forth in the Recitals.
“
Press
Release
” has the meaning set forth in
Section
8.10
.
“
Private
Placement
” has the meaning set forth in the Recitals.
“
Pro Rata
Share
” means with respect to each capital raising transaction to which
Section 10.1 applies an amount equal to the product obtained by multiplying (a)
an amount equal to the securities being issued in such capital raising
transaction
times
(b) a fraction
of which the numerator is the number of outstanding Conversion Shares
beneficially owned by Purdue and its Associated Companies at the time the Pro
Rata Share is being determined, and the denominator is all of the Conversion
Shares issued under this Agreement, subject to adjustment of the Conversion
Shares for stock splits, stock dividends and similar capital changes affecting
the Common Stock that occur on or after the Closing Date and on or prior to the
date Pro Rata Share is being determined.
“
Purdue
Observer
” has the meaning set forth in
Section
8.7
.
“
Registration
Rights Agreement
” has the meaning set forth in the Recitals.
“
Regulation
D
” has the meaning set forth in the Recitals.
“
Requisite
Holder
” shall mean that Purdue has purchased an aggregate of $10,000,000
of Preferred Stock pursuant to this Agreement and Purdue and its Associated
Companies hold at least one-half of the Preferred Stock issued to Purdue at
Closing as of the date of determination (appropriately adjusted for any stock
dividend, stock split, reverse stock split, reclassification, stock combination
or other recapitalization occurring after the date hereof).
“
Rule
144
” has the meaning set forth in
Section
8.11
.
“
SEC
”
has the meaning set forth in the Recitals.
“
SEC
Filings
” has the meaning set forth in
Section
5.6
.
“
Securities
”
means the Preferred Shares, the Conversion Shares, the shares of Common Stock or
Preferred Stock issuable as payment-in-kind dividends on the Preferred Stock in
accordance with the terms thereof, the Warrant and the Warrant
Shares.
“
Series B
Warrants
” shall mean the warrants to purchase up to 7,500,000 shares of
Common Stock dated May 2, 2007, as amended, issued pursuant to that certain
Securities Purchase Agreement dated as of April 12, 2007, as amended on May 2,
2007.
“
Series D
Investors
” shall mean the holders of the Series D Preferred
Stock.
“
Series D
Preferred Stock
” shall mean the 113.5 shares of Series D Convertible
Preferred Stock, par value $.00001, issued pursuant to that certain Securities
Purchase Agreement dated as of March 26, 2008, as amended on April 9,
2008.
“
Series D
Warrants
” shall mean the warrants dated April 11, 2008 and issued
pursuant to pursuant to that certain Securities Purchase Agreement dated as of
March 26, 2008, as amended on April 9, 2008.
“
Transaction
Documents
” means this Agreement, the Warrant and the Registration Rights
Agreement.
“
Warrant
Shares
” means the shares of Common Stock issuable upon exercise of the
Warrant.
“
Warrant
”
has the meaning set forth in the Recitals.
2.
Purchase and Sale of
Securities
.
Subject to the terms and conditions of
this Agreement, including without limitation, the conditions set forth in
Section 7
, there
shall be a closing at which the Company shall issue and sell, and Purdue agrees
to purchase Preferred Shares in the Private Placement by executing a counterpart
to this Agreement, shall purchase, the Preferred Shares and the Warrant in
exchange for the cash consideration set forth as the “Investment
Amount.”
3. [Reserved.]
4.
Closing
.
4.1
Place
. The
closings of the transactions contemplated by this Agreement (the “
Closing
”)
shall take place simultaneously with the execution hereof at the offices of
Company Counsel, Seaport World Trade Center West, 155 Seaport Boulevard, Boston,
MA 02210, or at such other location and on such other date as the Company and
Purdue shall mutually agree (or remotely via the electronic exchange of
documents and signatures).
4.2
Closing
. Simultaneously
with the execution hereof, the Company shall hold the Closing. At the Closing,
the Company will deliver to Purdue via e-mail an electronic copy of the signed
stock certificate(s) representing the Preferred Shares registered in Purdue’s
name and a photocopy of the signed Warrant. Following such delivery,
Purdue shall promptly initiate a wire transfer of immediately available funds
(U.S. dollars) equal to the Investment Amount to be delivered to the account of
the Company, account details of which are as set forth on
Schedule
4.2
affixed hereto.
4.3
Delivery of Original
Preferred Shares and Warrant
. As soon as possible after the
Closing, but no later than 5 Business Days following the Closing, the Company
will deliver by overnight mail, original certificate(s) representing the
Preferred Shares and the original Warrant.
5.
Representations and
Warranties of the Company
. The Company hereby represents and
warrants to Purdue on and as of the Closing Date, knowing and intending their
reliance hereon, that, except as set forth in the schedules delivered herewith
(collectively, the “
Disclosure
Schedules
”):
5.1.
Organization, Good Standing
and Qualification
. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or its leasing of property makes such
qualification or licensing necessary, unless the failure to so qualify would not
have a Material Adverse Effect. The Company has no
subsidiaries.
5.2.
Authorization
. The
Company has full power and authority and has taken all requisite action on the
part of the Company, its officers, directors and stockholders necessary for (i)
the authorization, execution and delivery of the Transaction Documents and the
Certificate of Designations, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the
Securities. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.
5.3.
Capitalization
.
(a)
Schedule 5.3
sets
forth (i) the authorized capital stock of the Company on the date hereof, (ii)
the number of shares of capital stock issued and outstanding, (iii) the number
of shares of capital stock issuable pursuant to the Company’s stock plans, and
(iv) the number of shares of capital stock issuable and reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or
convertible into or exchangeable for any shares of capital stock of the
Company. All of the issued and outstanding shares of the Company’s
capital stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in full compliance
with applicable law and any rights of third parties. No Person is
entitled to pre-emptive or similar statutory or contractual rights with respect
to any securities of the Company. Except as described on
Schedule 5.3
, there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or may be
obligated to issue any equity securities of any kind and, except as contemplated
by this Agreement, the Company is not currently in negotiations for the issuance
of any equity securities of any kind. Except as described on
Schedule 5.3
and
except for the Registration Rights Agreement, there are no voting agreements,
buy-sell agreements, option or right of first purchase agreements or other
agreements of any kind among the Company and any of its security holders
relating to the securities of the Company. Except as described on
Schedule 5.3,
the Company has not granted any Person the right to require the Company to
register any of its securities under the 1933 Act, whether on a demand basis or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person.
(b)
Schedule 5.3
sets
forth a true and complete table setting forth the pro forma capitalization of
the Company on a fully diluted basis giving effect to (i) the issuance of the
Preferred Shares and the Warrant at the time of the Closing, (ii) any
adjustments in other securities resulting from the issuance of the Preferred
Shares and the Warrant at the time of the Closing, and (iii) the exercise or
conversion of all outstanding securities. Except as described on
Schedule
5.3
, the issuance and sale of the Securities hereunder will
not obligate the Company to issue shares of Common Stock or other securities to
any other Person (other than Purdue) and will not result in the adjustment of
the exercise, conversion, exchange or reset price of any outstanding
security.
(c) Except
as set forth on
Schedule 5.3
, the
Company does not have outstanding stockholder purchase rights or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.
(d) Except
as set forth on
Schedule 5.3
, there
are no stockholder rights plans, or similar plan or arrangement in effect,
including those under which Purdue would be considered an “acquiring person” or
under which Purdue would be deemed to trigger provisions by virtue of Purdue’s
receipt of Securities under the Transaction Documents.
5.4.
Valid
Issuance
. The Preferred Shares have been duly and validly
authorized and, when issued to Purdue in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, shall have the
rights, preferences and limitations set forth in the Certificate of Designations
and shall be free and clear of all liens, claims, encumbrances and restrictions,
except for restrictions on transfer set forth in the Transaction Documents and
the Certificate of Designations or imposed by applicable securities
laws. Upon the due conversion of the Preferred Shares, the Conversion
Shares will be validly issued, fully paid and nonassessable, and shall be free
and clear of all liens, claims, encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents and the
Certificate of Designations or imposed by applicable securities laws. The
Warrant has been duly and validly authorized and, upon the due exercise of the
Warrant, the Warrant Shares will be validly issued, fully paid and
non-assessable, and shall be free and clear of all liens, claims, encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents and the Certificate of Designations or imposed by
applicable securities laws. The Company has reserved a sufficient
number of shares of Common Stock for issuance upon conversion of the Preferred
Shares and exercise of the Warrant.
5.5.
Consents
. The
execution, delivery and performance by the Company of the Transaction Documents
and the Certificate of Designations and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than those consents set
forth on
Schedule
5.5
and filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the applicable time
periods. The Company has taken all action necessary to exempt (i) the
issuance and sale of the Securities, (ii) the issuance of the Conversion Shares
upon due conversion of the Preferred Shares, (iii) the issuance of the Warrant
Shares upon due exercise of the Warrant, and (iv) the other transactions
contemplated by the Transaction Documents from the provisions of any
anti-takeover, business combination or control share law or statute binding on
the Company or to which the Company or any of its assets and properties may be
subject or any provision of the Company’s Certificate of Incorporation, Bylaws
or any stockholder rights agreement that is or could become applicable to
Purdue, as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Securities and the ownership, disposition or
voting of the Securities by Purdue or the exercise of any right granted to
Purdue pursuant to this Agreement, the Certificate of Designations or the other
Transaction Documents.
5.6.
Delivery of SEC Filings;
Business
. Copies of the Company’s most recent Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007, the
Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2008,
June 30, 2008, and September 30, 2008, reports on Form 8-K filed by the Company
from January 1, 2008 through the Closing Date (collectively, the “
SEC
Filings
”) are available on EDGAR. The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such
period. The Company is engaged only in the business described in the
SEC Filings and the SEC Filings contain a complete and accurate description in
all material respects of the business of the Company.
5.7
No Material Adverse
Change
. Except as contemplated herein or identified and
described on
Schedule
5.7(a)
, since October 1, 2008, there has not been:
(i)
any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the SEC Filings, except for changes in the
ordinary course of business which have not and could not reasonably be expected
to have a Material Adverse Effect, individually or in the
aggregate;
(ii)
any declaration or payment of any dividend,
or any authorization or payment of any distribution, on any of the capital stock
of the Company, or any redemption or repurchase of any securities of the
Company;
(iii)
any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company or its
Subsidiaries;
(iv)
any waiver, not in the ordinary course of
business, by the Company of a material right or of a material debt owed to
it;
(v)
any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results, prospects or business of the
Company;
(vi)
any change or amendment to the Company's
Certificate of Incorporation or Bylaws, or material change to any Material
Contract or arrangement by which the Company is bound or to which any of its
assets or properties is subject;
(vii)
any material labor difficulties or labor union organizing activities with
respect to employees of the Company;
(viii)
any transaction entered into by the Company other than in the
ordinary course of business;
(ix)
the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the
Company;
(x)
the loss or threatened loss of any customer which has
had or could reasonably be expected to have a Material Adverse Effect;
or
(xi) any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.
5.8.
SEC
Filings
. At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The Company is not (with or without the lapse of time or
the giving of notice, or both) in breach or default of any Material Contract
and, to the Company’s Knowledge, no other party to any Material Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default of any Material Contract. The Company has not received any
notice of the intention of any party to terminate any Material
Contract.
5.9.
No Conflict, Breach,
Violation or Default
. The execution, delivery and performance
of the Transaction Documents and the Certificate of Designations by the Company
and the issuance and sale of the Securities will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Company’s Certificate of Incorporation or Bylaws, both as
in effect on the date hereof (true and accurate copies of which have been
provided to Purdue before the date hereof), or (ii)(a) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Companyor any of its respective assets or
properties, or (b) except as set forth on
Schedule 5.9,
any
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its assets or properties is subject.
5.10.
Tax
Matters
. The Company has timely prepared and filed all tax
returns required to have been filed by it with all appropriate governmental
agencies and timely paid all taxes shown thereon or otherwise owed by
it. The charges, accruals and reserves on the books of the Company in
respect of taxes for all fiscal periods are adequate in all material respects,
and there are no material unpaid assessments against the Company nor, to the
Company’s Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company. All taxes and other assessments and levies that the Company
is required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when
due. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any of its assets or
properties. Except as described on
Schedule 5.10
, there
are no outstanding tax sharing agreements or other such arrangements between the
Company and any other corporation or entity. The Company is not
presently undergoing any audit by a taxing authority, nor has it waived or
extended any statute of limitations at the request of any taxing
authority.
5.11.
Title to
Properties
. Except as disclosed in the SEC Filings or as set
forth on
Schedule
5.11
, the Company has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by the Company; and except as disclosed in the SEC Filings, the Company holds
any leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or currently
planned to be made thereof by the Company.
5.12.
Certificates, Authorities
and Permits
. The Company possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, and the Company has not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
5.13.
No Labor
Disputes
. No material labor dispute with the employees of the
Company exists or, to the Company’s Knowledge, is imminent.
5.14.
Intellectual
Property
.
(a) All
Intellectual Property of the Company is currently in compliance with all legal
requirements (including timely filings, proofs and payments of fees) and is
valid and enforceable. Except as listed on
Schedule 5.14(a)
, no
Intellectual Property of the Company which is necessary for the conduct of
Company’s businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute or
litigation, and, to the Company’s Knowledge, no such action is
threatened. Except as listed on
Schedule 5.14(a)
, no
patent of the Company has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.
(b) All
of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s business as currently conducted or as currently proposed to be
conducted to which the Company is a party or by which any of its assets are
bound (other than generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $25,000 per license) (collectively, “
License
Agreements
”) are valid and binding obligations of the Company and, to the
Company’s Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company under any such License Agreement.
(c) The
Company owns or has the valid right to use all of the Intellectual Property that
is necessary for the conduct of the Company’s business as currently conducted or
as currently proposed to be conducted, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property and Confidential Information, other than licenses entered
into in the ordinary course of the Company’s business. The Company
has a valid and enforceable right to use all third-party Intellectual Property
and Confidential Information used or held for use in the respective business of
the Company as currently conducted or as currently proposed to be
conducted.
(d) To
the Company’s Knowledge, the conduct of the Company’s business as currently
conducted and as currently proposed to be conducted does not and will not
infringe any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party. To the Company’s Knowledge,
the Intellectual Property and Confidential Information of the Company which are
necessary for the conduct of Company’s business as currently conducted or as
currently proposed to be conducted are not being infringed by any third
party. Except as set forth on
Schedule 5.14(d)
,
there is no litigation or order pending or outstanding or, to the Company’s
Knowledge, threatened or imminent, that seeks to limit or challenge or that
concerns the ownership, use, validity or enforceability of any Intellectual
Property or Confidential Information of the Company and the Company’s use of any
Intellectual Property or Confidential Information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the same.
(e) The
consummation of the transactions contemplated hereby will not result in the
alteration, loss, impairment of or restriction on the Company’s ownership or
right to use any of the Intellectual Property or Confidential Information which
is necessary for the conduct of the Company’s respective business as currently
conducted or as currently proposed to be conducted.
(f) To
the Company’s Knowledge, all software owned by the Company, and, to the
Company’s Knowledge, all software licensed from third parties by the Company,
(i) is free from any material defect, bug, virus, or programming, design or
documentation error; (ii) operates and runs in a reasonable and efficient
business manner; and (iii) conforms in all material respects to the
specifications and purposes thereof.
(g) The
Company has taken reasonable steps to protect its rights in its Intellectual
Property and Confidential Information. Each employee, consultant and
contractor who has had access to Confidential Information which is necessary for
the conduct of Company’s business as currently conducted or as currently
proposed to be conducted has executed an agreement to maintain the
confidentiality of such Confidential Information and has executed appropriate
agreements that are substantially consistent with the Company’s standard forms
therefor. To the Company’s Knowledge, there has been no material
disclosure of any of the Company’s Confidential Information to any third party
without the Company’s consent.
5.15.
Environmental
Matters
. The Company (i) is not in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “
Environmental
Laws
”), (ii) neither owns nor operates any real property contaminated
with any substance that is subject to any Environmental Laws, (iii) is not
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, and (iv) is not subject to any claim relating to any Environmental Laws;
which violation, contamination, liability or claim has had or could reasonably
be expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company’s Knowledge, threatened investigation
that might lead to such a claim.
5.16.
Litigation
. Except
as set forth in Schedule 5.16, there are no pending actions, suits or
proceedings against or affecting the Company or any of its properties; and to
the Company’s Knowledge, no such actions, suits or proceedings are threatened or
contemplated.
5.17.
Financial
Statements
. The financial statements of the Company included
in the SEC Filings fairly present the consolidated financial position of the
Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis. Except as set forth in the
financial statements of the Company included in the SEC Filings filed prior to
the date hereof, the Company has not incurred any liabilities, contingent or
otherwise, except those which, individually or in the aggregate, have not had or
could not reasonably be expected to have a Material Adverse Effect.
5.18.
Insurance
Coverage
. The Company maintains in full force and effect
insurance coverage and the Company reasonably believes such insurance coverage
is adequate. The Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business on terms consistent with market for the Company’s lines of
business.
5.19.
Brokers and
Finders
. Except as disclosed in
Schedule 5.19
, no
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
Purdue for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the
Company.
5.20.
No Directed Selling Efforts
or General Solicitation
. Neither the Company nor any
Affiliate, nor any Person acting on its behalf has conducted any “general
solicitation” or “general advertising” (as those terms are used in Regulation D)
in connection with the offer or sale of any of the Securities.
5.21.
No Integrated
Offering
. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of the 1933
Act, which would require the registration of any such securities under the 1933
Act or under the rules and regulations of the OTCBB on which any of the
securities of the company are listed or designated, including circumstances that
would adversely affect reliance by the Company on Section 4(2) of the 1933 Act
for the exemption from the registration requirements imposed under Section 5 of
the 1933 Act for the transactions contemplated hereby or would require such
registration the 1933 Act.
5.22.
Private
Placement
. Subject to the accuracy of the representations and
warranties of Purdue contained in
Section 6
hereof, the
offer and sale of the Securities to Purdue as contemplated hereby is exempt from
the registration requirements of the 1933 Act.
5.23.
Questionable
Payments
.
Neither
the Company nor, to the Company’s Knowledge, any of its current or former
stockholders, directors, officers, employees, agents or other Persons acting on
its behalf, has on behalf of the Company or in connection with the Company’s
business: (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (b)
made any direct or indirect unlawful payments to any governmental officials or
employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company; (e) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of any nature; or (f) violated in any material respect any provision of
the Foreign Corrupt Practices Act of 1977, as amended.
5.24.
Transactions with
Affiliates
. Except as set forth on Schedule 5.24, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction, or
presently contemplated transaction, with the Company (other than for services as
employees, officers and directors) that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated under the 1933
Act.
5.25.
Trading
Compliance
. The Common Stock is traded on the OTCBB and the
Company has taken no action designed to, or which to the Company’s Knowledge is
likely to have the effect of, causing the Common Stock not to continue to be
traded on the OTCBB. No order ceasing or suspending trading in any
securities of the Company or prohibiting the issuance and/or sale of the
Securities is in effect and no proceedings for such purpose are pending or
threatened.
5.26.
Acknowledgment Regarding
Purdue’s Purchase of Securities
. The Company acknowledges that Purdue is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by Purdue or any of their respective representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Purdue’s purchase of the Securities.
5.27.
Sarbanes-Oxley; Internal
Accounting Controls
. The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States general
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s most recently
filed periodic report under the 1934 Act, as the case may be, is being
prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the date prior to
the filing date of the most recently filed periodic report under the 1934 Act
(such date, the “
Evaluation
Date
”). The Company presented in its most recently filed
periodic report under the 1934 Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no significant changes in the Company’s internal controls (as
such term is defined in Item 307(b) of Regulation S-K under the 1934 Act) or, to
the Knowledge of the Company, in other factors that could significantly affect
the Company’s internal controls.
5.28.
Solvency
. Based
on the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder, the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability
thereof. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). Except
as set forth and explained on
Schedule 5.28
, the
Company has no present intention to, nor does it have a present belief that it
will need to, file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction.
Schedule 5.28
sets
forth all outstanding secured and unsecured Indebtedness of the Company, or for
which the Company has commitments. The Company is not in default with
respect to any Indebtedness.
5.29.
Investment
Company
. The Company is not, and immediately after receipt of
payment for the Securities will not be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
6.
Representations and
Warranties of Purdue.
Purdue hereby represents and warrants to
the Company on and as of the Closing Date, knowing and intending that the
Company rely thereon, that:
6.1.
Authorization
. The
execution, delivery and performance by Purdue of the Transaction Documents to
which Purdue is a party have been duly authorized and will each constitute the
valid and legally binding obligation of Purdue, enforceable against Purdue in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.
6.2.
Purchase Entirely for Own
Account
. The Securities to be received by Purdue hereunder
will be acquired for Purdue’s own account, not as nominee or agent, and not with
a view to the resale or distribution of any part thereof in violation of the
1933 Act, and Purdue has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the 1933
Act. Purdue is not a registered broker dealer or an entity engaged in
the business of being a broker dealer.
6.3.
Investment
Experience
. Purdue acknowledges that it can bear the economic
risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby. Purdue has significant experience in making private
investments, similar to the purchase of the Securities
hereunder.
6.4.
Disclosure of
Information
. Purdue has had an opportunity to receive all
additional information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the
Securities. Purdue acknowledges receipt of copies of and its
satisfactory review of the SEC Filings. Neither such inquiries nor
any other due diligence investigation conducted by Purdue shall modify, amend or
affect Purdue’s right to rely on the Company’s representations and warranties
contained in this Agreement.
6.5.
Restricted
Securities
. Purdue understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.
6.6.
Legends
.
(a) It
is understood that, except as provided below, certificates evidencing such
Securities may bear the following or any similar legend:
“THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS.”
(b) If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.
(c) From
and after the first anniversary of the Closing Date in the case of the
Conversion Shares and the first anniversary of the date of exercise of a Warrant
in the case of the Warrant Shares, provided, in each case, that Purdue is not an
Affiliate of the Company and has not been an Affiliate for a period of ninety
days, the Company shall, upon Purdue's written request, promptly cause
certificates evidencing such Securities to be replaced with certificates which
do not bear such restrictive legends. When the Company is required to
cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an Investor within
three (3) Business Days of submission by Purdue of legended certificate(s) to
the Company’s transfer agent together with a representation letter in customary
form, the Company shall be liable to Purdue for liquidated damages equal to 1.5%
of the aggregate purchase price of the Securities evidenced by such
certificate(s) for each 30-day period (or portion thereof) beyond such three (3)
Business Day-period that the unlegended certificates have not been so
delivered.
(d)
Purdue agrees that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 6.6 is predicated upon the warranty of Purdue to sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom.
(e)
Notwithstanding any restrictions on transfer set
forth in this Section 6.6, Purdue may sell, transfer, assign, pledge or
otherwise dispose of the Securities, in whole or in part, to any of its
Associated Companies or any third party subject to (i) compliance with all
applicable securities laws and the conditions set forth in this Section 6.6 and
(ii) the delivery to the Company of such documentation as may be reasonably
requested by the Company and reasonably necessary for the Company to obtain a
legal opinion that such disposition may lawfully be made without registration
under the Securities Act.
6.7.
Accredited
Investor
. Purdue is an “accredited investor” as defined in
Rule 501(a) of Regulation D.
6.8.
No General
Solicitation
. Purdue did not learn of the investment in the
Securities as a result of any “general advertising” or “general solicitation” as
those terms are contemplated in Regulation D.
6.9.
Brokers and
Finders
. Other than as disclosed on
Schedule 5.19
, no
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
Purdue for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of
Purdue.
7
Conditions to Closing.
7.1.
Conditions to Purdue’s
Obligations
. The obligation of Purdue to purchase the Securities at
Closing is subject to the fulfillment to Purdue’s satisfaction, on or prior to
the Closing Date, of the following conditions, any of which may be waived in
writing by Purdue:
(a) The
representations and warranties made by the Company in
Section 5
hereof that
are qualified as to materiality shall be true and correct in all respects, and
those not so qualified shall be true and correct in all material respects, at
all times prior to and on the Closing Date. The Company shall have
performed in all material respects all obligations herein required to be
performed or observed by it on or prior to the Closing Date;
(b) The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities then being issued and sold, and all
of which shall be and remain so long as necessary in full force and
effect;
(c)
The Company shall have executed, obtained and
delivered an otherwise fully executed counterpart to the Registration Rights
Agreement to Purdue;
(d)
No judgment, writ, order, injunction, award or decree of or by
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, or self-regulatory organization enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents;
(e)
The Company shall have delivered a Certificate, executed on behalf
of the Company by its Chief Executive Officer or its Chief Financial Officer,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (d), (f), (g) and (h) of this
Section
7.1
;
(f)
The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
other Transaction Documents and the issuance and sale of the Securities,
certifying the current versions of the Certificate of Incorporation and Bylaws
of the Company and certifying as to the signatures and authority of persons
signing the Transaction Documents and all related documents on behalf of the
Company;
(g) The
Company shall have entered into and delivered to Purdue an exchange and consent
agreement with the holders of the Series D Preferred Stock, dated on or before
the Closing Date, whereby such holders consent to the issuance of the Preferred
Shares and Warrants, the filing of the Certificate of Designations, agree to
exchange all of their shares of Series D Preferred Stock, plus accumulated but
unpaid dividends for shares of the Preferred Stock, and agree to waive any all
liquidated damages such holders are due as of the Closing Date as a result of
the Company’s failure register shares of common stock issuable upon exercise of
the Series D Warrants and common stock issuable upon conversion of the Series D
Preferred Stock. Such consent and exchange agreement shall be
substantially in the form attached hereto as Exhibit C;
(h)
The Company shall have obtained and delivered to
Purdue a duly executed consent from the holders of the Company’s Series C
Convertible Preferred Stock, dated on or before the Closing Date, whereby such
holders consent to issuance of the Preferred Stock, the filing of the
Certificate of Designations, such consent to be substantially in the form
attached hereto as Exhibit D;
(i)
Purdue shall have received the applicable
Company Counsel Opinion;
(j)
No stop order or suspension of trading shall have
been imposed by any Person with respect to public trading in the Common
Stock;
(k)
The Company shall have delivered evidence satisfactory
to Purdue of the filing of the Certificate of Designations with the Secretary of
State of the State of Delaware; and
(l)
The Company shall have delivered to Purdue a
duly executed Collaboration Agreement, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit F.
7.2.
Conditions to Obligations of
the Company
. The Company's obligation to sell and issue the Securities at
Closing is subject to the fulfillment to the satisfaction by the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived in writing by the Company:
(a)
The representations and warranties made by Purdue in
Section 6
hereof that are qualified as to materiality shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, at all times prior to and on the Closing Date. Purdue shall
have performed in all material respects all obligations herein required to be
performed or observed by it on or prior to the relevant Closing;
(b)
Purdue shall have delivered to the
Company a duly executed Collaboration Agreement, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit F;
(c)
Purdue shall have executed and delivered the
Registration Rights Agreement to the Company;
(d)
Purdue shall have delivered the Investment Amount
to the Company as described in Section 4.2;
(e)
No judgment, writ, order, injunction, award or decree of
or by any court, or judge, justice or magistrate, including any bankruptcy court
or judge, or any order of or by any governmental authority, shall have been
issued, and no action or proceeding shall have been instituted by any
governmental authority, or self-regulatory organization enjoining or preventing
the consummation of the transactions contemplated hereby or in the other
Transaction Documents; and
(f) Purdue
shall have delivered to the Company a completed Purchaser Questionnaire in the
form attached hereto as Exhibit G.
8.
Covenants and
Agreements of the Compan
y
.
8.1.
Reservation of Common
Stock
. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the conversion of the Preferred Shares and the
exercise of the Warrant, such number of shares of Common Stock as shall from
time to time equal 100% of the number of shares sufficient to permit the
conversion of the Preferred Shares and the exercise of the Warrant issued
pursuant to this Agreement in accordance with their respective terms, without
regard to any exercise limitations contained therein.
8.2. [Reserved.]
8.3.
No Conflicting
Agreements
. The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to Purdue under the Transaction
Documents.
8.4.
Insurance
. The
Company shall not materially reduce the insurance coverages described in
Section
5.18
.
8.5.
Compliance with
Laws
. The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance would not have a Material
Adverse Effect.
8.6.
Termination of Certain
Covenants
. The provisions of
Sections 8.3
through
8.5
shall
terminate and be of no further force and effect upon the date on which the
Company’s obligations under the Registration Rights Agreement to register and
maintain the effectiveness of any registration statement covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate. The provisions of
Sections 8.7
through
8.18
shall
survive indefinitely.
8.7
Board Observer
Rights
. From and after the Closing until such time as Purdue
or its Associated Companies are no longer a Requisite Holder Purdue shall have
the right to designate one (1) observer to attend all meetings of the Company’s
Board of Directors, committees thereof and access to all information made
available to members of the Board (the “
Purdue
Observer
”).
The Purdue Observer
shall have the same rights as those who customarily attend such
position. Notwithstanding the foregoing, the Company reserves the
right to exclude the Purdue Observer from access to any material, meeting or
portion thereof if the Company reasonably believes, that such access could
result in a conflict of interest due to the actions of Purdue or its Associated
Companies that trigger the right of the Company to terminate the Collaboration
Agreement pursuant to Section 13.2.1 thereof, or believe, on advice of its
counsel, that such exclusion is necessary to preserve attorney-client, work
product or similar privilege. The Purdue Observer shall hold in
confidence and trust and not use or disclose any confidential information
provided to or learned by him or her in connection with the Purdue Observer’s
rights hereunder for any purpose other than the monitoring and administration of
the transactions contemplated hereby, unless otherwise required by law, so long
as such information is not in the public domain. If requested by the
Company, the Purdue Observer shall execute a standard confidentiality agreement
prior to attending any meetings. The initial Purdue Observer shall be
Jim Dolan.
8.8.
Trading
. The
Company shall promptly following the Closing Date take all actions necessary and
continue to take all actions necessary as contemplated in this Agreement or
otherwise to ensure that the Conversion Shares and the Warrant Shares are
authorized to be traded on the OTCBB, including the timely filing of all SEC
Filings as required under Section 8.15.
8.9.
Use of
Proceeds
. The Company will use the proceeds from the sale of
the Securities to fund its operating activities pursuant to the budget set forth
in
Schedule
8.9
. The Company shall not use the proceeds from the sale of
the Securities for (i) the repayment of any outstanding indebtedness for
borrowed money of the Company, (ii) redemption or repurchase of any of the
Company’s equity securities. Furthermore, until the Company submits
the New Drug Application concerning the use of NOV-002 for non-small cell lung
cancer to the U.S. Food and Drug Administration, the Company shall not use its
current assets or the proceeds from the sale of the Securities for (A) clinical
activities other than those (x) relating to the Novelos Trials (as defined in
the Collaboration Agreement attached as Exhibit F), (y) approved by the JCC (as
defined in the Collaboration Agreement) and (z) relating to the New Drug
Application concerning the use of NOV-002 for non-small cell lung cancer or (B)
the payment of salaries, bonuses or other compensation other than those amounts
set forth in
Schedule
8.9
.
8.10.
Form 8-K
Filing
. The Company will file a Current Report on Form 8-K
(the “
8-K
”)
with the SEC describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the material Transaction Documents
(including, without limitation, this Agreement and the form of
Warrant)). The 8-K will be filed within four (4) Business Days of
signing of this Agreement.
8.11.
Furnishing of
Information
. As long as Purdue own Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the 1934 Act. As long as
Purdue owns Preferred Shares, the Warrant or the Warrant Shares, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Investors and make publicly available in accordance with Rule
144(c) promulgated by the SEC pursuant to the 1933 Act, as such Rule may be
amended from time to time, such information as is required for the Investors to
sell the Preferred Shares and Warrant Shares under Rule 144 promulgated by the
SEC pursuant to the 1933 Act, as such Rule may be amended from time to time
(“
Rule
144
”). The Company further covenants that it will take such further
action as Purdue may reasonably request, all to the extent required from time to
time to enable Purdue to sell the Preferred Shares and Warrant Shares without
registration under the 1933 Act and without the volume restrictions imposed by
Rule 144.
8.12.
Buy-In
. If
the Company shall fail for any reason or for no reason to issue to Purdue
unlegended certificates within three (3) Business Days of receipt of documents
necessary for the removal of the legend set forth above (the “
Deadline
Date
”), then, in addition to all other remedies available to Purdue, if
on or after the Business Day immediately following such three (3) Business Day
period, Purdue or Purdue’s broker, acting on behalf of Purdue, purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the holder of shares of Common Stock that Purdue
anticipated receiving from the Company without any restrictive legend, then the
Company shall, within three (3) Business Days after Purdue’s request and in
Purdue’s sole discretion, either (i) pay cash to Purdue in an amount equal to
Purdue’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “
Buy-In
Price
”), at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to Purdue a certificate or certificates
representing such shares of Common Stock and pay cash to Purdue in an amount
equal to the excess (if any) of the Buy-In Price over the product of (a) such
number of shares of Common Stock, times (b) the closing bid price on the
Deadline Date.
8.13.
No
Integration
. Neither the Company nor any of its Affiliates,
nor any Person acting on its or their behalf shall, directly or indirectly, make
any offers or sales of any Company security or solicit any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) of the 1933 Act for the exemption from the registration
requirements imposed under Section 5 of the 1933 Act for the transactions
contemplated hereby or would require such registration the 1933
Act.
8.14.
SEC
Filings
. The Company shall timely file all SEC Filings and
ensure that they comply as to form in all material respects with the
requirements of the 1934 Act and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading.
8.15.
Financial
Statements
. The financial statements of the Company included
in each SEC Filing shall fairly present the consolidated financial position of
the Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements shall be
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis. Except as set forth in the
financial statements of the Company included in the SEC Filings, the Company has
not incurred any liabilities, contingent or otherwise, except those which,
individually or in the aggregate, have not had, or could not reasonably be
expected to have a Material Adverse Effect.
8.16.
Compliance with Applicable
Law
. The Company shall use its best efforts (i) to comply in
all material respects with all statutes, laws, regulations, rules, judgments,
orders and decrees of all governmental entities applicable to it that relate to
its business, (ii) to maintain all permits that are required in order
to permit it to carry on its business as it is presently conducted and (iii) to
comply in all material respects with all applicable provisions of the
Sarbanes-Oxley Act of 2002.
8.17.
Warrant Expiration
Notice
. The Company will use best efforts to send Purdue a
notice 30 days in advance of the expiration of the Warrant.
8.18.
Cooperation
. The
Company agrees to use commercially reasonable efforts to cooperate with Purdue
in selling its Securities pursuant to Rule 144.
8.19.
Exemption from Investment
Company Act of 1940
. The Company shall conduct its business in
a manner so that it will not become subject to the Investment Company Act of
1940.
.
9.
Survival and
Indemnification
.
9.1.
Survival
. Subject
to
Section 9.6
,
all representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements as of the date hereof and shall survive the Closing Date until the
third anniversary thereof;
provided
,
however
, that the
provisions contained in: (a)
Sections 5.4
,
9.1
,
9.2
and
9.3
hereof shall
survive indefinitely; and (b)
Sections 5.10
and
5.15
shall
survive until 90 days after the applicable statute of limitations.
9.2.
Indemnification
. The
Company agrees to indemnify and hold harmless, Purdue and its Associated
Companies and the directors, officers, employees and agents of Purdue and its
Associated Companies, from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement hereof) (collectively, “
Losses
”)
to which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by, or to be performed on
the part of, the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such
Person.
9.3.
Conduct of Indemnification
Proceedings
.
Promptly
after receipt by any Person (the
“
Indemnified
Person
”) of notice of any demand, claim or circumstances which would or
might give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to
Section 9.2
, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses;
provided
,
however
,
that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is actually and
materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) in the reasonable
judgment of counsel to such Indemnified Person (A) representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (B) the Company shall have failed to
promptly assume the defense of such proceeding. The Company shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned, but if settled with such consent, or if there be a final judgment
for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any Losses by reason of such settlement or
judgment. Without the prior written consent of the Indemnified
Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such
proceeding.
10.
Miscellaneous
.
10.1.
Right of Purdue to
Participate in Future Transactions
. Purdue will have a right
to participate, on the terms and conditions set forth in this Section 10.1, in
all sales by the Company of any of Common Stock or Common Stock Equivalents in
each capital raising transaction, if any, that occurs at any time when the
Preferred Stock, Warrant or any instrument issued upon transfer or split up
thereof, remains outstanding (in whole or in part), other than any such sale
that is a public offering underwritten on a firm commitment basis and registered
with the SEC under the 1933 Act with proceeds to the Company of at least twenty
(20) million U.S. Dollars, other than a Exempt Issuance. For any such
transaction during such period, the Company shall give at least ten (10)
Business Days advance written notice to Purdue prior to any offer or sale of any
of the Company’s securities in such transaction by providing to Purdue a term
sheet which (i) contains all significant business terms of such proposed
transaction, (ii) is sufficiently detailed so as to reasonably permit Purdue the
opportunity to determine whether or not to exercise its rights under this
Section 10.1 and (iii) is at least as detailed as the term sheet or summary of
such transaction as the Company shall furnish to any offeree or broker in such
transaction. Purdue shall have the right to participate in such
proposed transaction and to purchase its and its Associated Companies’ Pro Rata
Share
of such
securities which are the subject of such proposed transaction for the same
consideration and on the same terms and conditions as contemplated for sales to
third parties in such transaction (or such lesser portion thereof as specified
by Purdue). If Purdue elects to exercise its rights hereunder for a
particular transaction, it shall deliver written notice to the Company within
ten (10) Business Days following receipt from the Company of the notice and term
sheet meeting the requirements of this Section 10.1, which notice from Purdue
shall be conditional upon (i) Purdue’s receipt of satisfactory definitive
documents for such transaction from the Company if the Company has not furnished
final, definitive documents for such transaction to Purdue at or before the time
the Company gives such notice of such transaction to Purdue, and (ii) the
satisfaction of the other conditions precedent to the obligations of purchasers
generally in such transaction to complete such transaction. If,
subsequent to the Company giving notice to Purdue hereunder but prior to any of
(a) Purdue exercising its right to participate, (b) the expiration of the four
Business Day period without response from Purdue or (c) the rejection of such
offer for such financing by Purdue, the terms and conditions of the proposed
sale to third parties in such transaction are changed from those disclosed in
the term sheet provided to Purdue, the Company shall be required to provide a
new notice and term sheet meeting the requirements of this Section 10.1,
reflecting such revised terms, to Purdue hereunder and Purdue shall have the
right, which must be exercised within ten (10) Business Days of the date Purdue
receives such new notice and such revised term sheet, to exercise its rights to
purchase the securities on such changed terms and conditions and otherwise as
provided hereunder. If Purdue does not exercise its rights hereunder
with respect to a proposed transaction within the period or periods provided, or
affirmatively declines to engage in such proposed transaction with the Company,
then the Company may proceed with such proposed transaction on the same terms
and conditions as noticed to Purdue (assuming Purdue has consented to the
transaction, if required, pursuant to this Agreement and such transaction does
not violate any other term or provision of the Transaction Documents),
provided
that if such
proposed transaction is not consummated within 180 days following the Company’s
notice hereunder or the terms and conditions of the proposed sale to third
parties are changed from those disclosed in the term sheet, then the rights
hereunder shall again be afforded to Purdue for such proposed
transaction. The rights and obligations of this Section 10.1 shall in
no way limit or restrict the other rights of Purdue pursuant to this
Agreement. Notwithstanding anything herein to the contrary, failure
of Purdue to affirmatively elect in writing to participate in any proposed
transaction within the required time frames shall be deemed to be the equivalent
of Purdue’s decision not to participate in such proposed
transaction. Notwithstanding the foregoing, this Section 10.1 shall
not apply in respect of an Exempt Issuance. The rights of Purdue
under this Section 10.1 shall apply to all capital raising transactions
described in Section 10.1 that occur during the period specified in this Section
10.1.
10.2.
Successors and
Assigns
. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company and Purdue;
provided
,
however
, that Purdue
may assign its rights and delegate its duties hereunder in whole or in part to a
third party acquiring some or all of its Securities in a private transaction
with the prior written consent of the Company, after notice duly given by Purdue
to the Company, such consent not to be reasonably withheld by the Company and
that no such assignment or obligation shall affect the obligations of Purdue
hereunder; and
provided
further
that Purdue
may assign its rights and delegate its duties hereunder in whole or in part to
an Associated Company acquiring some or all of its Securities in a private
transaction without the prior written consent of the Company, after notice duly
given by Purdue to the Company and that no such assignment or obligation shall
affect the obligations of Purdue hereunder. The provisions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Except for
provisions of this Agreement expressly to the contrary, nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this
Agreement.
10.3.
Counterparts;
Faxes
. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
may also be executed via facsimile, which shall be deemed an
original.
10.4.
Titles and
Subtitles
. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
10.5.
Notices
. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier. All notices shall be addressed to the party to be notified
at the address as follows, or at such other address as such party may designate
by ten (10) days’ advance written notice to the other party:
If to the
Company:
Novelos
Therapeutics, Inc.
One
Gateway Center, Suite 504
Newton,
MA 02458
USA
Attention: Chief
Executive Officer
Fax: (617)
964-6331
With a
copy to:
Foley
Hoag LLP
Seaport
World Trade Center West
155
Seaport Boulevard
Boston,
MA 02210
USA
Attn: Paul
Bork
Fax: (617)
832-7000
If to
Purdue:
Purdue
Pharma L.P.
One
Stamford Forum
201
Tresser Blvd.
Stamford,
CT 06901-3431
USA
Attention: Edward
B. Mahony, Chief Financial Officer
With a
copy to:
Chadbourne
& Parke LLP
30
Rockefeller Plaza
New York,
New York 10112
USA
Telefacsimile:
(212) 541-5369
Attention: Stuart
D. Baker
10.6.
Consent
. Purdue
hereby consents to the filing with the Secretary of State of the State of
Delaware, following the issuance of the Series E Preferred Stock pursuant to
this Agreement, of a Certificate of Elimination, pursuant to which all matters
set forth in the Certificate of Designations, Preferences and Rights of Series D
Convertible Preferred Stock of Novelos Therapeutics, Inc. with respect to the
Series D Preferred Stock will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series D Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as Exhibit I.
10.7.
Amendments and
Waivers
. This Agreement shall not be amended and the
observance of any term of this Agreement shall not be waived (either generally
or in a particular instance and either retroactively or prospectively) without
the prior written consent of the Company and Purdue
.
Any amendment or waiver
effected in accordance with this
Section 10.7
shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such Securities, and the
Company.
10.8.
Publicity
. Except
as provided in
Section
10.8
, no public release or announcement concerning the transactions
contemplated hereby shall be issued by the Company or Purdue without the prior
consent of the Company (in the case of a release or announcement by Purdue) or
Purdue (in the case of a release or announcement by the Company) (which consents
shall not be unreasonably delayed or withheld), except as such release or
announcement may be required by law or the applicable rules or regulations of
any securities exchange or securities market on which the Securities are then
listed and trading, in which case the Company or Purdue, as the case may be,
shall allow the other, to the extent reasonably practicable in the
circumstances, reasonable time to comment on such release or announcement in
advance of such issuance.
10.9.
Severability
. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.
10.10.
Entire
Agreement
. This Agreement, including the Exhibits and
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof. Prior drafts or versions of this Agreement shall not be used
to interpret this Agreement.
10.11.
Further
Assurances
. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
10.12.
Governing Law; Consent to
Jurisdiction
. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
regard to the choice of law principles thereof. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection
with any such suit, action or proceeding may be served on each party hereto
anywhere in the world by the same methods as are specified for the giving of
notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
THE COMPANY AND PURDUE
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.
[Signature
Page Follows]
Signature
Page
IN WITNESS WHEREOF, each of the
undersigned has executed this Securities Purchase Agreement or caused its duly
authorized officers to execute this Securities Purchase Agreement as of the date
first above written.
NOVELOS
THERAPEUTICS, INC.
|
|
|
By:
|
/s/ Harry S. Palmin
|
Name: Harry
S. Palmin
|
Title: President
and
CEO
|
PURDUE
PHARMA L.P.
|
|
|
By: Purdue
Pharma Inc.,
|
its
general partner
|
|
|
By:
|
/s/ Edward B. Mahony
|
Name: Edward
B. Mahony
|
Title:
Executive Vice President,
|
Chief Financial
Officer
|
Exhibits
Exhibit
A
|
Form
of Certificate of Designations
|
Exhibit
B
|
Form
of Warrant
|
Exhibit
C
|
Form
of Agreement to Exchange and Consent
|
Exhibit
D
|
Form
of Consent of Series C Holders
|
Exhibit
E
|
Form
of Company Counsel Opinion
|
Exhibit
F
|
Form
of Collaboration Agreement
|
Exhibit
G
|
Form
of Purchaser Questionnaire
|
Exhibit
H
|
Form
of Registration Rights Agreement
|
Exhibit
I
|
Form
of Series D Certificate of
Elimination
|
Schedules
Schedule
4.2
|
Company
Wire Instructions
|
Schedule
5.3
|
Capitalization
|
Schedule
5.5
|
Consents
|
Schedule
5.7(a)
|
Material
Adverse Changes
|
Schedule
5.9
|
Conflicts
|
Schedule
5.10
|
Taxes
|
Schedule
5.11
|
Title
to Properties
|
Schedule
5.14(a)
|
Intellectual
Property
|
Schedule
5.14(d)
|
IP
Litigation
|
Schedule
5.16
|
Litigation
|
Schedule
5.19
|
Brokers
and Finders
|
Schedule
5.24
|
Affiliate
Transactions
|
Schedule
5.28
|
Indebtedness
|
Schedule
8.9
|
Novelos
Budget
|
Exhibit
A
Form
of Certificate of Designations
[See
Exhibit 4.1 to this filing]
Exhibit
B
Form
of Warrant
[See
Exhibit 4.2 to this filing]
Exhibit
C
Form
of Agreement to Exchange and Consent
[See
Exhibit 10.3 to this filing]
Exhibit
D
Form
of Consent of Series C Holders
NOVELOS
THERAPEUTICS, INC.
CONSENT
AND AGREEMENT OF HOLDERS OF SERIES C PREFERRED STOCK
This
Consent and Agreement (the “
Agreement
”), dated as
of February 10, 2009, is entered into by and among Novelos Therapeutics, Inc., a
Delaware corporation (the “
Company
”), and each
of the signatories hereto (collectively, the “
Series C Investors
”)
(the Company and Series C Investors are sometimes referred to herein
individually as “Party” and collectively as the “Parties”).
WHEREAS,
each of the Series C Investors is the holder of shares of the Company’s Series C
8% Cumulative Convertible Preferred Stock, $.00001 par value per share (the
“
Series C Preferred
Stock
”);
WHEREAS,
the Series C Preferred Stock’s Certificate of Designations (“
Series C
Certificate of
Designations
”) provides that it is senior with respect to the payment of
dividends and liquidation preference to all shares of the Company’s capital
stock other than the Company’s Series B Convertible Preferred Stock, $.00001 par
value per share (the “
Series B Preferred
Stock
”), entitled to seniority as to the payment of dividends or
liquidation preference in relation to the Series C Preferred Stock;
WHEREAS,
the Company previously exchanged all of the issued and outstanding shares of
Series B Preferred Stock for shares of the Company’s Series D Convertible
Preferred Stock, par value $0.00001 per share (the “
Series D Preferred
Stock
”);
WHEREAS,
the Series C Investors have previously consented and agreed that the Series D
Preferred Stock would be senior to the Series C Preferred Stock with respect to
the payment of dividends and liquidation preferences;
WHEREAS,
pursuant to a securities purchase agreement (the “
Purdue Securities Purchase
Agreement
”) substantially in the form attached hereto as
Exhibit A
, the
Company expects to issue and sell 200 shares of a newly created series of the
Company’s preferred stock, designated Series E Convertible Preferred Stock, par
value $0.00001 per share (the “
Series E Preferred
Stock
”) to Purdue Pharma L.P., (“
Purdue
”), which
Series E Preferred Stock shall have the relative rights, privileges and
preferences set forth in the Certificate of Designations, Rights and Preferences
of the Series E Convertible Preferred Stock of Novelos Therapeutics, Inc., in
the form attached hereto as
Exhibit B
(the “
Series E Certificate of
Designations
”) and this Agreement is a condition to closing as stated in
the Purdue Securities Purchase Agreement; and
WHEREAS,
as a condition to closing the Purdue Securities Purchase Agreement, the Company
and the holders of Series D Preferred Stock (the “
Series D Investors
”)
are entering into a Series D Preferred Stock Consent and Agreement to Exchange
pursuant to which each outstanding share of Series D Preferred Stock and
accumulated dividends thereon will be exchanged (the “
Series D Exchange
”)
for no more than 1.083 shares of Series E Preferred Stock and as a condition of
consummating the Series D Exchange, the Series D Investors have required that
the Company enter into this Agreement;
NOW, THEREFORE, in consideration of the
promises referred to below, the Series C Investors, hereby agree with the
Company, severally and not jointly, as follows:
1.
Consent and Acknowledgement.
(a) Each
of the Series C Investors hereby consents to the filing of the Series E
Certificate of Designations, the execution of the Series D Preferred Stock
Consent Exchange Agreement substantially in the form attached hereto as
Exhibit C
(the “
Series D Exchange
Agreement
”), the execution of the Purdue Securities Purchase Agreement
and the consummation of the Series D Exchange.
(b) Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, of a Certificate of Elimination pursuant to
which all matters set forth in the Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock of Novelos Therapeutics, Inc.
with respect to the Company’s Series B Convertible Preferred Stock, $0.00001
(the “
Series B
Preferred Stock
”) will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series B Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as
Exhibit
D
(the “
Series
B Certificate of Elimination
”).
(c) Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, following consummation of the Series D Exchange,
of a Certificate of Elimination pursuant to which all matters set forth in the
Series D Certificate of Designations with respect to the Series D Preferred
Stock will be eliminated from the Company’s Certificate of Incorporation and the
shares that were designated as Series D Preferred Stock will be returned to the
status of authorized but unissued shares of preferred stock of the Company,
without designation as to series, in the form attached hereto as
Exhibit E
(the “
Series D Certificate of
Elimination
”).
(e) Each
of the Series C Investors hereby acknowledges and agrees that it will not be
entitled to an adjustment to either the conversion price of the shares of Series
C Preferred Stock or an adjustment to the exercise price of warrants issued to
it in connection with the sale of Series A Preferred Stock, as a result of the
Series D Exchange or the sale of Series E Preferred Stock to
Purdue. For the avoidance of doubt, this acknowledgement is limited
to the transactions contemplated hereby and does not affect the rights,
privileges and preferences of the Series C Preferred Stock, except as expressly
provided herein.
2.
Seniority of Series E
Preferred Stock
. Each of the Series C Investors hereby agree
that the Series E Preferred Stock will be entitled to seniority as to the
payment of dividends and liquidation preference in relation to the Series C
Preferred Stock and that all references to Series B Preferred Stock in the
Series C Certificate of Designations shall be deemed to be references to the
Series E Preferred Stock.
3.
Transferees
. Each
of the Series C Investors hereby agree that any transferees of any Series C
Preferred Stock, other than a transferee who is already a Party, shall be
required as a condition of such transfer to agree in writing that they will
receive and hold such shares of Series C Preferred Stock subject to the
provisions of this Agreement.
4.
Representations and
Warranties of Company
. The Company represents and warrants to
and agrees with each Series C Investor that:
(a) after
the issuance of the Series E Preferred Stock and the filing of the Series E
Certificate of Designations, the Series C Preferred Stock shall rank junior to
the Series E Preferred Stock but shall rank senior to any and all other
outstanding preferred stock or equity securities of the
Company;
(b) Following
the Series D Exchange, the Company will not reissue any shares of Series B
Preferred Stock or Series D Preferred Stock.
5.
Further
Assurances
. Each Party hereto shall do and perform or cause to
be done and performed all such further acts and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
Party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby and thereby.
6.
Choice of
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either Party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in New
York County. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF
THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL
BY JURY. The prevailing Party shall be entitled to recover from the other Party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
7.
Notices
. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier. All notices shall be addressed to the Party to be notified
at the address as follows, or at such other address as such Party may designate
by ten (10) days’ advance written notice to the other Party:
If to the
Company:
Novelos
Therapeutics, Inc.
One
Gateway Center, Suite 504
Newton,
MA 02458
Attention: Chief
Executive Officer
Fax: (617)
964-6331
With a
copy to:
Foley
Hoag LLP
Seaport
World Trade Center West
155
Seaport Boulevard
Boston,
MA 02210
Attn: Paul
Bork
Fax: (617)
832-7000
If to any
of the Series C Investors:
To the
addresses set forth on the signature page hereto.
With a
copy to:
Grushko
& Mittman, P.C.
551 Fifth
Avenue, Suite 1601
New York,
NY 10176
Attn: Edward
Grushko, Esq.
Fax: (212)
697-3575
8.
Counterparts
. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same Agreement. Counterpart signature pages to this Agreement
transmitted by facsimile transmission, by electronic mail in “portable document
format” (“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing an original
signature.
9.
This Agreement shall be null and
void and of no further force and effect if the filing of the Series E
Certificate of Designations, the execution of the Series D Exchange Agreement,
the execution of the Purdue Securities Purchase Agreement and the consummation
of the Series D Exchange do not occur on or before 5:00 p.m., New York time, on
February 27, 2009.
IN
WITNESS WHEREOF, each of the Parties has executed this Agreement as of the date
first written above.
NOVELOS
THERAPEUTICS, INC.
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By:
|
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Name:
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Harry
S. Palmin
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Title:
President and Chief Executive
Officer
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LONGVIEW
FUND, LP
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LONGVIEW
EQUITY FUND, LP
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Address:
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|
Address:
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SUNRISE
EQUITY PARTNERS, LP
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LONGVIEW
INTERNATIONAL EQUITY FUND, LP
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Address:
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Address:
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Exhibit
E
Form
of Company Counsel Opinion
February
___, 2009
Purdue
Pharma L.P.
One
Stamford Forum
201
Tresser Blvd.
Stamford,
CT 06901-3431
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Re:
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Securities
Purchase Agreement
|
Ladies
and Gentlemen:
We have acted as counsel for Novelos
Therapeutics, Inc., a Delaware corporation (the “
Company
”), in
connection with the negotiation of (i) the Securities Purchase Agreement by and
between Purdue Pharma, L.P. (the “
Purchaser
”) and the
Company dated as of the date hereof (the “
Purchase Agreement
”)
and (ii) the Registration Rights Agreement between the Purchaser, the Company
and certain other parties thereto dated as of the date hereof (the “
Registration Rights
Agreement
” and, together with the Purchase Agreement, the “
Transaction
Documents
”). The Purchase Agreement provides for the issuance and sale by
the Company of (i) 200 shares of a newly created series of the Company’s
Preferred Stock, designated “Series E Convertible Preferred Stock,” par value
$0.00001 per share (the “
Preferred Stock
”),
which Preferred Stock shall have the rights, preferences and privileges set
forth in the Certificate of Designations, Preferences and Rights of such
Preferred Stock (the “
Certificate of
Designations
”), shall have a stated value of $50,000.00 per share and
shall initially be convertible into shares of the Company's Common Stock, par
value $0.00001 per share (the “
Common Stock
”), at a
price of $0.65 per share for an aggregate of 15,384,615 shares of Common Stock,
and (ii) a warrant to purchase up to 9,230,769 shares of Common Stock of the
Company (the “
Warrant
”). The
shares of Common Stock issuable upon conversion of the Preferred Stock are
referred to herein as the “
Conversion Shares
”
and the shares of Common Stock issuable upon exercise of the Warrant are
referred to herein as the “
Warrant
Shares
”. All terms used herein have the meanings defined for
them in the Purchase Agreement unless otherwise defined herein.
This opinion is furnished to you
pursuant to the Purchase Agreement. In rendering the opinions
expressed below, we have examined originals or copies of: (i) the Transaction
Documents, (ii) the Warrant, (iii) the Certificate of Designations, (iv) the
Company’s Certificate of Incorporation, as amended through the date hereof
(“
Certificate of
Incorporation
”), (v) the Company’s By-laws, as in effect on the date
hereof (the “
By-laws
”), (vi) a
Secretary’s Certificate from the Company, dated as of the date hereof, issued
pursuant to Section 7.1(f) of the Purchase Agreement and (vii) a Certificate
executed by the Company’s Chief Executive Officer or its Chief Financial
Officer, dated as of the date hereof, and issued pursuant to Section 7.1 of the
Purchase Agreement, and we have examined and considered such corporate records,
certificates and matters of law as we have deemed appropriate as a basis for our
opinions set forth below. In rendering the opinions expressed below,
we have relied, as to factual matters, upon the representations and warranties
of the Company contained in the Transaction Documents.
Based upon and subject to the
foregoing, we are of the opinion that:
1.
The Company is a corporation validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as it is currently being
conducted, to own, lease and operate its properties and assets, and to enter
into and perform its obligations under the Transaction Documents and the
Warrant. The Company is qualified as a foreign corporation to do
business and is in good standing in the Commonwealth of
Massachusetts.
2.
The authorized capital stock of
the Company consists of 150,000,000 shares of Common Stock and 7,000 shares of
preferred stock, $.00001 par value per share.
3.
The execution, delivery and
performance by the Company of the Transaction Documents, the issuance of the
Preferred Stock and the Warrant, the issuance of the Conversion Shares upon due
conversion of the Preferred Stock and the issuance of the Warrant Shares upon
due exercise of the Warrant have been duly authorized or reserved for issuance
by all requisite corporate action on the part of the Company and do not require
any further approval of its directors or stockholders.
4.
Each of the Transaction Documents and the
Warrant has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
5.
The Certificate of Designations
has been duly executed on behalf of the Company and filed with the Secretary of
State of the State of Delaware.
6.
The execution and delivery by the
Company of each of the Transaction Documents, the issuance of the Preferred
Stock and Warrant, the issuance of the Conversion Shares upon due conversion of
the Preferred Stock and the issuance of the Warrant Shares upon due exercise of
the Warrant and the performance by the Company of the Transaction Documents will
not violate or contravene or be in conflict with (a) any provision of the
Certificate of Incorporation or By-laws; (b) any provision of the General
Corporation Law of the State of Delaware and any provision of any federal or
Massachusetts law, rule or regulation applicable to the Company in transactions
of the nature contemplated by the Transaction Documents and the Warrant;
(c) any order, judgment or decree of any court or other governmental agency
which is known to us and which is binding on the Company or any of its property;
or (d) any agreement, indenture or other written agreement or understanding to
which the Company is a party which has been identified as a material agreement
in the certificate of the Chief Executive Officer of the Company attached hereto
(collectively, “
Material Agreements
”)
or cause any acceleration under, or cause the creation of any lien, charge or
encumbrance upon the property or assets of the Company pursuant to any of the
Material Agreements.
7.
No further consents, approvals, authorizations, registrations,
declarations or filings are required to be obtained or made by the Company from
or with any federal or Massachusetts governmental authority or pursuant to the
General Corporation Law of the State of Delaware or from any other Person under
any Material Agreement in order for it to execute and deliver each of the
Transaction Documents, to issue the Preferred Stock and Warrant, to issue the
Conversion Shares upon due conversion of the Preferred Stock, to issue the
Warrant Shares upon due exercise of the Warrant and to perform its obligations
under the Transaction Documents, other than those consents, approvals,
authorizations, registrations, declarations or filings that have already been
obtained and remain in full force and effect and except for (a) the filing
of a Form D (the “
Form D
”) with
the Securities and Exchange Commission pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended (the “
Securities Act
”) and
(b) the filing of the Form D with requisite state
jurisdictions.
8.
The shares of Preferred Stock, upon payment
as provided in the Purchase Agreement, will be validly issued, fully paid and
non-assessable. The Conversion Shares and the Warrant Shares have been duly
authorized and, upon issuance and delivery upon conversion or exercise, as the
case may be, will be validly issued, fully paid and nonassessable.
9.
Assuming the accuracy of the representations and
warranties of the Purchaser set forth in Section 6 of the Purchase Agreement,
the offer, issuance and sale to the Purchaser pursuant to the Purchase Agreement
of (i) the Preferred Stock and Warrant, (ii) the Conversion Shares if the
Preferred Stock were converted by the Purchaser on the date hereof and (iii) the
Warrant Shares issuable upon exercise of the Warrant if the Warrant were
exercised by the Purchaser on the date hereof, are exempt from the registration
requirements of the Securities Act.
10. The
issuance of the Preferred Stock, Warrant, Conversion Shares upon due conversion
of the Preferred Stock and Warrant Shares upon due exercise of the Warrant are
not subject to any preemptive or similar statutory rights under the General
Corporation Law of the State of Delaware, the Certificate of Incorporation or
the By-laws, or similar contractual rights granted by the Company (except for
any such contractual rights as have been waived) pursuant to any Material
Agreement.
11. The
Company is not, and as a result of and immediately upon consummation of the
transactions contemplated herein will not be an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
The
opinions expressed herein are subject to the following assumptions, limitations,
qualifications and exceptions:
(a) We
have made such legal and factual examinations and inquiries as we have deemed
advisable or necessary for the purpose of rendering this opinion.
(b) We
have examined, among other things, originals or copies of such corporate records
of the Company, certificates of public officials and such other documents and
questions of law that we consider necessary or advisable for the purpose of
rendering this opinion. In such examination we have assumed the
genuineness of all signatures or original documents, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all copies submitted to us as copies thereof, the legal
capacity of natural persons, and the due execution and delivery of all documents
(except as to due execution and delivery by the Company) where due execution and
delivery are a prerequisite to the effectiveness thereof.
(c) For
purposes of this opinion, we have assumed that you have all requisite power and
authority, and have taken any and all necessary corporate action, to execute and
deliver the Transaction Documents, and we are assuming that the representations
and warranties made by the Purchaser in the Transaction Documents and pursuant
thereto are true and correct.
(d) Our
opinion is based upon our knowledge of the facts as of the date hereof and
assumes no event will take place in the future which would affect the opinions
set forth herein other than future events contemplated by the Transaction
Documents. We assume no duty to communicate with you with respect to
any change in law or facts which comes to our attention hereafter.
(e) In
rendering the opinion in paragraph 1 with respect to legal existence and good
standing of the Company in the State of Delaware, we have relied solely upon a
certificate of the Secretary of State of Delaware and we express such opinion as
of the date of such certificate. In rendering the opinion in
paragraph 1 with respect to the qualification and good standing of the Company
in The Commonwealth of Massachusetts, we have relied solely upon a certificate
of the Secretary of State of Massachusetts and we express such opinion as of the
date of such certificate. We express no opinion as to the tax good
standing of the Company.
We have
made such examination of Massachusetts law, federal law, and the Delaware
General Corporation Law as we have deemed necessary for the purpose of this
opinion. In rendering opinions concerning the Delaware General
Corporation Law, we have, with your consent, relied exclusively upon a review of
published statutes. We express no opinion herein as to the laws of
any jurisdiction other than The Commonwealth of Massachusetts, the federal laws
of the United States of America and the Delaware General Corporation
Law. We note that the Transaction Documents and the Warrant purport
to be governed by the laws of the State of New York. To the extent
that any of the opinions expressed above relate to or may require application of
any law of the State of New York, we have assumed, with your permission, that
the applicable New York law is equivalent to Massachusetts law.
The
opinions expressed herein are qualified to the extent that (1) the
enforceability of any provisions of the Transaction Documents or any instrument
or of any right granted thereunder may be subject to or affected by any
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
other similar law of general application relating to or affecting the rights or
remedies of creditors generally, which law may be in effect from time to time;
(2) the remedy of specific performance or any other equitable remedy may be
unavailable or may be withheld as a matter of judicial discretion; (3) equitable
principles and principles of public policy may be applied in construing or
enforcing the provisions of the Transaction Documents or of any other agreement,
instrument or document; and (4) the enforceability, validity or binding effect
of any remedial provision of the Transaction Documents may be limited by
applicable law which may limit particular rights and remedies. In
addition, the opinions expressed herein are subject to the qualification that
the enforcement of any of your rights are in all cases subject to your implied
duty of good faith and fair dealing.
We
express no opinion herein as to the validity or enforceability of any provision
of the Transaction Documents or any other instrument or document to the extent
that such provision purports to (1) constitute a waiver by the Company of any
statutory right except where advance waiver is expressly permitted by the
relevant statute; (2) require the Company to indemnify or to hold harmless you
or any other person or entity from the consequences of any negligent or other
wrongful act or omission of you or such other person or entity; (3) provide for
indemnification or contribution by the Company in connection with the
Transaction Documents, the transactions contemplated thereby or otherwise to the
extent such indemnification or contribution may be limited by applicable laws or
as a matter of public policy; or (4) constitute a waiver of any right to a
hearing on or adjudication of any issue or the right to trial by
jury.
This
opinion shall be interpreted in accordance with the Legal Opinions Principles
issued by the Committee on Legal Opinions of the American Bar Association’s
Business Law Section as published in 53 Business Lawyer 831 (May
1998).
This
opinion is furnished to the Purchaser solely for its benefit in connection with
the transactions described above and, except as otherwise expressly set forth
herein, may not be relied upon by any other person or for any other purpose
without our prior written consent.
Very
truly yours,
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FOLEY
HOAG LLP
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By:
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A
Partner
|
Exhibit
F
Form
of Collaboration Agreement
[To
be filed]
Exhibit
G
Novelos
Therapeutics, Inc.
Confidential
Purchaser Questionnaire
Before
any sale of Securities by Novelos Therapeutics, Inc. can be made to you, this
Questionnaire must be completed and returned to Novelos Therapeutics, One
Gateway Center, Suite 504, Newton, MA 02458; Attention: Joanne
Protano.
1.
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IF
YOU ARE AN INDIVIDUAL PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN (A)
IF YOU ARE AN ENTITY PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN
(B)
|
A. INDIVIDUAL
IDENTIFICATION QUESTIONS
Name
(Exact
name as it should appear on stock certificate)
Residence
Address
Home
Telephone Number
Fax
Number
Date of Birth
Social Security Number
B.
IDENTIFICATION QUESTIONS FOR ENTITIES
Name
(Exact name as it will appear on stock certificate)
Address
of Principal Place of Business
State (or
Country) of Formation or Incorporation
Contact
Person
Telephone
Number
( )
Type of
Entity
(corporation,
partnership, trust, etc.)
Was
entity formed for the purpose of this investment? Yes:
____ No: ____
2.
DESCRIPTION
OF INVESTOR
The
following information is required to ascertain whether you would be deemed an
“accredited investor” as defined in Rule 501 of Regulation D under the
Securities Act. Please check whether you are any of the
following:
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¨
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a
corporation or partnership with total assets in excess of $5,000,000, not
organized for the purpose of this particular
investment
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¨
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private
business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940, a U.S. venture capital fund which invests
primarily through private placements in non-publicly traded securities and
makes available (either directly or through co-investors) to the portfolio
companies significant guidance concerning management, operations or
business objectives
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¨
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a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958
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¨
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an
investment company registered under the Investment Company Act of 1940 or
a business development company as defined in Section 2(a)(48) of that
Act
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¨
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a
trust not organized to make this particular investment, with total assets
in excess of $5,000,000 whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of the Securities Act of
1933 and who completed item 4 below of this
questionnaire
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¨
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a
bank as defined in Section 3(a)(2) or a savings and loan association
or other institution defined in Section 3(a)(5)(A) of the Securities
Act of 1933 acting in either an individual or fiduciary
capacity
|
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¨
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an
insurance company as defined in Section 2(13) of the Securities Act
of 1933
|
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¨
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an
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 (i) whose investment decision
is made by a fiduciary which is either a bank, savings and loan
association, insurance company, or registered investment advisor,
or
(ii) whose total assets exceed $5,000,000, or (iii) if a
self-directed plan, whose investment decisions are made solely by a person
who is an accredited investor and who completed Part I of this
questionnaire;
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¨
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a
charitable, religious, educational or other organization described in
Section 501(c)(3) of the Internal Revenue Code, not formed for the
purpose of this investment, with total assets in excess of
$5,000,000
|
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¨
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an
entity not located in the U.S. none of whose equity owners are U.S.
citizens or U.S. residents
|
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¨
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a
broker or dealer registered under Section 15 of the Securities
Exchange Act of 1934
|
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¨
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a
plan having assets exceeding $5,000,000 established and maintained by a
government agency for its employees
|
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¨
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an
individual who had individual income from all sources during each of the
last two years in excess of $200,000
or
the joint
income of you and your spouse (if married) from all sources during each of
such years in excess of $300,000 and who reasonably excepts that
either
your own
income from all sources during the current year will exceed $200,000
or
the joint
income of you and your spouse (if married) from all sources during the
current year will exceed $300,000
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¨
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an
individual whose net worth as of the date you purchase the securities
offered, together with the net worth of your spouse, be in excess of
$1,000,000
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¨
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an
entity in which all of the equity owners are accredited
investors
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3.
BUSINESS,
INVESTMENT AND EDUCATIONAL EXPERIENCE
Occupation
Number of Years
Present Employer
Position/Title
Educational
Background
Frequency
of prior investment (check one in each column):
|
|
Stocks
& Bonds
|
|
Venture
Capital Investments
|
Frequently
|
|
|
|
|
Occasionally
|
|
|
|
|
Never
|
|
|
|
|
4.
SIGNATURE
The above
information is true and correct. The undersigned recognizes that the
Company and its counsel are relying on the truth and accuracy of such
information in reliance on the exemption contained in Subsection 4(2) of
the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The undersigned agrees to notify the Company promptly of
any changes in the foregoing information which may occur prior to the
investment.
Executed at ___________________, on ____________,
2009
Exhibit
H
Form
of Registration Rights Agreement
[See
Exhibit 10.2 to this filing]
Exhibit
I
Form
of Series D Certificate of Elimination
[See
Exhibit 4.1 to this filing]
Schedule
4.2
Company
Wire Instructions
Bank:
|
Citizens
Bank RI
|
Bank
Address:
|
1
Citizens Drive, Riverside, RI 02915, USA
|
|
617-527-8059
|
Account
Name:
|
Novelos
Therapeutics, Inc.
|
Account
Address:
|
One
Gateway Center, Suite 504
|
|
Newton,
MA 02458, USA
|
ABA
(Routing) #:
|
011500120
|
Swift
Code:
|
CTZIUS33
|
Account
#:
|
1132895348
|
Schedule
5.3
Capitalization
5.3(a)(i) At
the date hereof authorized capital stock of the Company consists of 150,000,000
shares of $.00001 par value common stock and 7,000 shares of preferred
stock.
5.3(a)(ii)
At the date hereof there are 43,975,656 shares of common stock outstanding and
685.5 shares of preferred stock outstanding.
5.3(a)(iii)
At the date hereof there are 7,279,825 shares of common stock issuable pursuant
to the Company’s stock plans.
5.3(a)(iv)
At the date hereof, the following shares are reserved for future issuance upon
exercise of stock options or warrants or conversion of preferred
stock:
Stock
Options
|
|
|
7,279,825
|
|
Warrants
|
|
|
28,102,033
|
|
Preferred
stock
|
|
|
36,829,192
|
|
|
|
|
|
|
Total
shares reserved for future issuance
|
|
|
72,211,050
|
|
5.3(a)
As of the
date hereof, the Company has the following outstanding warrants:
Offering
|
|
Outstanding
|
|
|
Exercise
Price
|
|
Expiration Date
|
|
|
|
|
|
|
|
|
2005
Bridge Loans
|
|
|
720,000
|
|
|
$
|
0.625
|
|
April
1, 2010
|
2005
PIPE - Placement agents and finders
|
|
|
1,046,143
|
|
|
$
|
0.65
|
|
August
9, 2010
|
Series
A Preferred (1):
|
|
|
|
|
|
|
|
|
|
Investors
– September 30, 2005 closing
|
|
|
909,090
|
|
|
$
|
0.65
|
|
September
30, 2010
|
Investors
– October 3, 2005 closing
|
|
|
60,606
|
|
|
$
|
0.65
|
|
October
3, 2010
|
2006
PIPE – Investors and placement agents
|
|
|
11,267,480
|
|
|
$
|
2.00
|
|
March
7, 2011
|
Series
B Preferred:
|
|
|
|
|
|
|
|
|
|
Investors
|
|
|
7,500,000
|
|
|
$
|
0.65
|
|
April
11, 2013
|
Placement
agents
|
|
|
900,000
|
|
|
$
|
1.25
|
|
May
2, 2012
|
Series
C Exchange
|
|
|
1,333,333
|
|
|
$
|
1.25
|
|
May
2, 2012
|
Series
D Preferred
|
|
|
4,365,381
|
|
|
$
|
0.65
|
|
April
11, 2013
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28,102,033
|
|
|
|
|
|
|
As of the
date hereof, the Company has the following outstanding stock
options:
Issued
pursuant to the 2000 Option Plan
|
|
|
56,047
|
|
Issued
during 2004 and 2005 pursuant to no formalized plan
|
|
|
2,453,778
|
|
Issued
pursuant to the 2006 Option Plan
|
|
|
4,770,000
|
|
Total
outstanding options
|
|
|
7,279,825
|
|
As of the
date hereof, the Company has the following convertible preferred stock
outstanding:
272 shares of Series C Preferred
Stock
- The shares of Series C preferred stock are convertible
into a total of 5,021,537 shares of common stock. The Series C
Preferred Stock has an annual dividend rate of 8% until October 1, 2008 and
thereafter has an annual dividend rate of 20%. The dividends are
payable quarterly after all outstanding dividends on the Series D Preferred
Stock have been paid. Additional details regarding the Series C
preferred stock may be found in the Certificate of Designations of Series
C Cumulative Convertible Preferred Stock and the Agreement to
Exchange and Consent dated May 1, 2007.
413.5
shares of Series D Preferred Stock
-
The shares of Series D Preferred Stock are convertible any time after
issuance at the option of the holder at $0.65 per share of common stock into a
total of 31,807,655 shares 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 the Company’s 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 holders of Series D Preferred Stock are
entitled to vote on all matters on which the holders of common stock are
entitled to vote. The Series D Preferred Stock has 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 the Company’s common
stock at the Company’s option, subject to certain conditions. The Series D
Preferred Stock ranks senior to all other outstanding series of preferred stock
and common stock as to the payment of dividends and the distribution of assets
upon voluntary or involuntary liquidation, dissolution or winding up of the
Company’s affairs. The holders of the Series D Preferred Stock have
certain registration rights that are described in the Registration Rights
Agreement dated April 11, 2008, the Registration Rights Agreement dated May 2,
2007 and the Amendment to Registration Rights Agreement dated April 11, 2008.
Additional details regarding the Series D Preferred Stock and the rights of the
Series D stockholders may be found in Certificate of Designations of Series D
Convertible Preferred Stock and the Securities Purchase Agreement dated March
26, 2008.
As of the
date hereof, the following rights existed with respect to shares of common stock
issued in connection with the Securities Purchase Agreement dated August 14,
2008:
On August
15, 2008, the Company sold 4,615,384 shares of its common stock to two related
accredited investors for gross proceeds of approximately $3 million, pursuant to
a securities purchase agreement (the “Common Stock Purchase Agreement”) dated
August 14, 2008. The Common Stock Purchase Agreement provides that on and after
six months following the closing, if there is not an available exemption from
Rule 144 under the Securities Act to permit the sale of the common stock by the
purchasers, then the Company will use its best efforts to file a registration
statement (the “Registration Statement”) under the Securities Act with the SEC
covering the resale of the common stock. It further provides that the
Company will use its best efforts to maintain the effectiveness of the
Registration Statement until one year from closing or until all the common stock
has been sold or transferred, whichever occurs first. The Common
Stock Purchase Agreement also provides that if, prior to the public announcement
of the conclusion of the Company’s NOV-002 Phase III clinical trial in non-small
cell lung cancer (the “Announcement Date”), the Company completes a Subsequent
Equity Financing (as defined therein) and the holders of shares of our Series D
Preferred Stock (the “Series D Shares”) receive a reduction in the effective
conversion price or exercise price, as applicable, of the Series D Shares or
common stock purchase warrants issued in connection with the issuance of the
Series D Shares or receive additional shares of common stock, as consideration
in connection with any consent given by the holders of the Series D Shares, then
the purchasers shall be entitled to receive substantially equivalent
consideration, on a proportional basis, in the form of additional shares of
common stock based on the formula detailed in the Common Stock Purchase
Agreement
.
The
following is a listing of the Company’s documents relating to the rights of
stockholders, or holders of securities convertible into or exercisable for the
Company’s common stock as related to the Company’s warrants, stock options,
convertible preferred stock and common stock described above.
|
|
EDGAR
Reference
|
|
|
Description
|
|
Form
|
|
Filing Date
|
|
Exhibit
No.
|
|
|
|
|
|
|
|
Agreement
and plan of merger among Common Horizons, Inc., Nove Acquisition, Inc. and
Novelos Therapeutics, Inc. dated May 26, 2005
|
|
8-K
|
|
June
2, 2005
|
|
99.2
|
|
|
|
|
|
|
|
Agreement
and plan of merger between Common Horizons and Novelos Therapeutics, Inc.
dated June 7, 2005
|
|
10-QSB
|
|
August
15, 2005
|
|
2.2
|
|
|
|
|
|
|
|
Amended
and Restated Certificate of Incorporation filed as Exhibit A to the
Certificate of Merger merging Nove Acquisition, Inc. with and into Novelos
Therapeutics, Inc. dated May 26, 2005
|
|
10-QSB
|
|
August
10, 2007
|
|
3.1
|
|
|
EDGAR
Reference
|
|
|
Description
|
|
Form
|
|
Filing Date
|
|
Exhibit
No.
|
|
|
|
|
|
|
|
Certificate
of Merger merging Common Horizons, Inc. with and into Novelos
Therapeutics, Inc. dated June 13, 2005
|
|
10-QSB
|
|
August
10, 2007
|
|
3.2
|
|
|
|
|
|
|
|
Certificate
of Correction dated March 3, 2006
|
|
10-QSB
|
|
August
10, 2007
|
|
3.3
|
|
|
|
|
|
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation dated
July 16, 2007
|
|
10-QSB
|
|
August
10, 2007
|
|
3.4
|
|
|
|
|
|
|
|
Certificate
of Designations of Series B convertible preferred
stock
|
|
10-QSB
|
|
August
10, 2007
|
|
3.5
|
|
|
|
|
|
|
|
Certificate
of Designations of Series C cumulative convertible preferred
stock
|
|
10-QSB
|
|
August
10, 2007
|
|
3.6
|
|
|
|
|
|
|
|
Certificate
of Designations of Series D convertible preferred stock
|
|
8-K
|
|
April
14, 2008
|
|
4.1
|
|
|
|
|
|
|
|
Certificate
of Elimination Series A 8% Cumulative Convertible Preferred Stock of
Novelos Therapeutics, Inc.
|
|
8-K
|
|
April
14, 2008
|
|
4.2
|
|
|
|
|
|
|
|
By-Laws
|
|
8-K
|
|
June
17, 2005
|
|
2
|
|
|
|
|
|
|
|
2000
Stock Option and Incentive Plan
|
|
SB-2
|
|
November
16, 2005
|
|
10.2
|
|
|
|
|
|
|
|
Form
of 2004 non-plan non-qualified stock option
|
|
SB-2
|
|
November
16, 2005
|
|
10.3
|
|
|
|
|
|
|
|
Form
of non-plan non-qualified stock option used from February to May
2005
|
|
SB-2
|
|
November
16, 2005
|
|
10.4
|
|
|
|
|
|
|
|
Form
of non-plan non-qualified stock option used after May 2005
|
|
SB-2
|
|
November
16, 2005
|
|
10.5
|
|
|
|
|
|
|
|
Form
of common stock purchase warrant issued in March 2005
|
|
SB-2
|
|
November
16, 2005
|
|
10.6
|
|
|
EDGAR
Reference
|
|
|
|
|
|
|
|
|
|
Description
|
|
Form
|
|
Filing Date
|
|
Exhibit
No.
|
|
|
|
|
|
|
|
Form
of securities purchase agreement dated May 2005
|
|
8-K
|
|
June
2, 2005
|
|
99.1
|
|
|
|
|
|
|
|
Form
of subscription agreement dated September 30, 2005
|
|
8-K
|
|
October
3, 2005
|
|
99.1
|
|
|
|
|
|
|
|
Form
of Class A common stock purchase warrant dated September 30,
2005
|
|
8-K
|
|
October
3, 2005
|
|
99.3
|
|
|
|
|
|
|
|
Form
of securities purchase agreement dated March 2, 2006
|
|
8-K
|
|
March
3, 2006
|
|
99.2
|
|
|
|
|
|
|
|
Form
of common stock purchase warrant dated March 2006
|
|
8-K
|
|
March
3, 2006
|
|
99.3
|
|
|
|
|
|
|
|
2006
Stock Incentive Plan
|
|
10-QSB
|
|
November
6, 2006
|
|
10.1
|
|
|
|
|
|
|
|
Form
of Incentive Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock
Incentive Plan
|
|
8-K
|
|
December
15, 2006
|
|
10.1
|
|
|
|
|
|
|
|
Form
of Non-Statutory Stock Option under Novelos Therapeutics, Inc.’s 2006
Stock Incentive Plan
|
|
8-K
|
|
December
15, 2006
|
|
10.2
|
|
|
|
|
|
|
|
Form
of Non-Statutory Director Stock Option under Novelos Therapeutics, Inc.’s
2006 Stock Incentive Plan
|
|
8-K
|
|
December
15, 2006
|
|
10.3
|
|
|
|
|
|
|
|
Securities
Purchase Agreement dated April 12, 2007
|
|
10-QSB
|
|
May
8, 2007
|
|
10.1
|
|
|
|
|
|
|
|
Letter
Amendment dated May 2, 2007 to the Securities Purchase
Agreement
|
|
10-QSB
|
|
May
8, 2007
|
|
10.2
|
|
|
|
|
|
|
|
Registration
Rights Agreement dated May 2, 2007
|
|
10-QSB
|
|
May
8, 2007
|
|
10.3
|
|
|
|
|
|
|
|
Agreement
to Exchange and Consent dated May 1, 2007
|
|
10-QSB
|
|
May
8, 2007
|
|
10.5
|
|
|
EDGAR
Reference
|
|
|
|
|
|
|
|
|
|
Description
|
|
Form
|
|
Filing Date
|
|
Exhibit
No.
|
|
|
|
|
|
|
|
Form
of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the
Securities Purchase Agreement dated April 12, 2007
|
|
10-QSB
|
|
May
8, 2007
|
|
4.1
|
|
|
|
|
|
|
|
Form
of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the
Agreement to Exchange and Consent dated May 2, 2007
|
|
10-QSB
|
|
May
8, 2007
|
|
4.2
|
|
|
|
|
|
|
|
Securities
Purchase Agreement dated March 26, 2008
|
|
8-K
|
|
April
14, 2008
|
|
10.1
|
|
|
|
|
|
|
|
Amendment
to Securities Purchase Agreement dated April 9, 2008
|
|
8-K
|
|
April
14, 2008
|
|
10.2
|
|
|
|
|
|
|
|
Registration
Rights Agreement dated April 11, 2008
|
|
8-K
|
|
April
14, 2008
|
|
10.3
|
|
|
|
|
|
|
|
Form
of Common Stock Purchase Warrant dated April 11, 2008 issued pursuant to
the Securities Purchase Agreement dated March 26, 2008
|
|
8-K
|
|
April
14, 2008
|
|
4.3
|
|
|
|
|
|
|
|
Warrant
Amendment Agreement dated April 11, 2008
|
|
8-K
|
|
April
14, 2008
|
|
10.5
|
|
|
|
|
|
|
|
Amendment
to Registration Rights Agreement dated April 11, 2008
|
|
8-K
|
|
April
14, 2008
|
|
10.4
|
|
|
|
|
|
|
|
Securities
Purchase Agreement dated August 14, 2008
|
|
8-K
|
|
August
18, 2008
|
|
10.1
|
Schedule 5.3
(continued)
5.3(b)
Adjustments
The
following table sets forth the pro forma capitalization of the Company on a
fully diluted basis giving effect to (i) the issuance of Preferred Shares and
the Warrant at the time of Closing, (ii) any adjustments in other securities
resulting from the issuance of the Preferred Shares and the Warrant at the time
of Closing, and (iii) the exercise or conversion of all outstanding
securities:
NVLT
- Capital Structure - Pro forma for Purdue Transaction
|
|
Common Stock Equivalents
|
|
|
|
|
|
|
|
|
|
|
Prior to Transaction
|
|
|
|
|
|
Exer./Conv.
|
|
|
|
|
Warrant
|
|
|
|
|
|
Pro Forma
|
|
|
Price
|
|
|
Total cash
|
|
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents
1
|
|
|
|
|
|
|
|
|
|
|
$
|
1,262,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock outstanding
|
|
|
43,975,656
|
|
|
|
43,975,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
C
|
|
|
5,021,537
|
|
|
|
5,021,537
|
|
|
$
|
0.65
|
|
|
|
|
|
|
Series
E (prior D holders)
2
|
|
|
31,807,655
|
|
|
|
34,264,799
|
|
|
$
|
0.65
|
|
|
|
|
|
|
Series
E (Purdue)
3
|
|
|
|
|
|
|
15,384,615
|
|
|
$
|
0.65
|
|
|
$
|
9,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
PIPE Placement Agent
|
|
|
1,046,143
|
|
|
|
1,046,143
|
|
|
$
|
0.65
|
|
|
$
|
679,993
|
|
August 2010
|
Series
C
|
|
|
969,696
|
|
|
|
969,696
|
|
|
$
|
0.65
|
|
|
$
|
630,302
|
|
October 2010
|
2006
PIPE
4
|
|
|
11,267,480
|
|
|
|
12,379,880
|
|
|
$
|
1.82
|
|
|
$
|
22,531,382
|
|
March 2011
|
2005
Bridge Financing (Pre-IPO)
|
|
|
720,000
|
|
|
|
720,000
|
|
|
$
|
0.625
|
|
|
cashless
|
|
April
2010
|
Series
C
|
|
|
1,333,333
|
|
|
|
1,333,333
|
|
|
$
|
1.25
|
|
|
cashless
|
|
May
2012
|
Series
D
5
|
|
|
12,765,381
|
|
|
|
12,765,381
|
|
|
$
|
0.65
|
|
|
$
|
8,297,498
|
|
12/31/2015
|
Series
E (Purdue)
6
|
|
|
|
|
|
|
9,230,769
|
|
|
$
|
0.65
|
|
|
$
|
6,000,000
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options outstanding
|
|
|
7,279,825
|
|
|
|
7,279,825
|
|
|
$
|
0.5987
|
|
|
$
|
4,358,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
52,860,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
diluted shares
|
|
|
116,186,706
|
|
|
|
144,371,634
|
|
|
|
|
|
|
|
|
|
|
1
|
Represents
cash at 12/31/08.
|
2
|
Pro
forma includes 2,457,144 shares of common stock issuable upon conversion
of 31.9428750 shares of Series E preferred stock to be issued in exchange
for dividends accrued from
4/1/08
through 2/9/09.
|
3
|
Pro
forma represents common stock issuable upon the conversion of 200 shares
of Series E preferred stock to be issued to Purdue in the proposed
transaction. Estimated proceeds are net of
estimated
transaction costs.
|
4
|
Pro
forma includes additional 1,112,400 warrants to be issued pursuant to
anti-dilution provisions; decrease in warrant strike price from $2.00 to
$1.82.
|
5
|
Change
in expiration and removal of forced exercise provision in connection with
proposed transaction.
|
6
|
Pro
forma includes warrants to be issued in connection with proposed
transaction.
|
5.3(c) Arrangements
that provide rights for any Person to purchase an equity interest in the Company
consist of the stock options and warrants, previously disclosed in schedule
5.3(a).
5.3(d)
None.
Schedule
5.5
Consents
In
connection with the closing of the preferred stock and warrant financing, we
have received consents from the holders of the Company’s Series C Convertible
Preferred Stock and holders of the Company’s Series D Preferred
Stock.
Schedule
5.7(a)
Material
Adverse Changes
None.
Schedule
5.9
Conflicts
The
Series C Preferred Stock’s Certificate of Designations contains certain
prohibitions on amendments to the Company’s Certificate of Incorporation which
would create a series of capital stock entitled to seniority as to the payment
of dividends or liquidation preference in relation to the Series C Preferred
Stock other than the Series B Preferred Stock.
We have
received a consent from the holders of the Company’s Series C Convertible
Preferred Stock whereby each holder has consented to the issuance of the Series
D Preferred Stock and the filing of the Certificate of Designations setting
forth the relative rights, privileges and preferences of the Series E
Preferred.
The
Series D Preferred Stock’s Certificate of Designations contains certain
prohibitions on the issuance of a security that is senior as to the rights and
preferences of the Series D.
We have
received an executed consent and exchange agreement from the holders of the
Company’s Series D Convertible Preferred Stock whereby each holder has consented
to the issuance of the Series E Preferred Stock and Warrants and the filing of
the Certificate of Designations setting forth the relative rights, privileges
and preferences of the Series E Preferred and will exchange all shares of Series
D Preferred Stock for shares of Series E Preferred Stock effective upon
Closing.
Schedule
5.10
Taxes
None.
Schedule
5.11
Title
to Properties
None.
Schedule 5.14
(a)
Intellectual
Property
None.
Schedule 5.14
(d)
IP
Litigation
None.
Schedule
5.16
Litigation
None.
Schedule
5.19
Brokers
and Finders
Ferghana
Partners, Inc. will be entitled to receive a cash payment of 7% of the proceeds
received by the Company in connection with the sale of Preferred Stock and
Warrants.
Schedule
5.24
Affiliate
Transactions
None.
Schedule
5.28
Indebtedness
None.
Schedule
8.9
Novelos
Budget
|
|
2009
|
|
|
2010
|
|
Compound
/ Indication
|
|
|
Q1
|
|
|
|
Q2
|
|
|
|
Q3
|
|
|
|
Q4
|
|
|
|
Q1
|
|
|
|
Q2
|
|
|
|
Q3
|
|
|
|
Q4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOV-002
/ Lung Cancer
|
|
--------------------Ph3:
SPA+Fast Track-------------------
|
|
|
|
|
|
|
NDA
|
|
|
-------FDA
App-------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOV-002
/ Breast Cancer
|
|
------------------------------------------------------------Phase
2-----------------------------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOV-002 /
Cancers
1
|
|
----------------------------------------------------Additional
Phase
2s--------------------------------------------------------------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOV-002 / Anemia
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
---------------------------------------
--------------Phase
2-------------------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOV-205 / Hepatitis
C
1
|
|
--------------------------Next
trial-----------------------------------------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burn estimate
2
|
|
|
4.3
|
|
|
|
3.2
|
|
|
|
2.8
|
|
|
|
3.5
|
|
|
|
1.1
|
|
|
|
1.2
|
|
|
|
0.9
|
|
|
|
0.9
|
|
cumulative
|
|
|
|
|
|
|
7.5
|
|
|
|
10.3
|
|
|
|
13.8
|
|
|
|
15.0
|
|
|
|
16.1
|
|
|
|
17.0
|
|
|
|
17.9
|
|
funding
requirement
|
|
|
3.1
|
|
|
|
6.3
|
|
|
|
9.1
|
|
|
|
12.6
|
|
|
|
13.8
|
|
|
|
14.9
|
|
|
|
15.8
|
|
|
|
16.7
|
|
Cash –
12/31/08
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
1
Not
included in budget; initiation subject to additional funding
2
Estimated
cash burn in 2009 assumes vendor obligations are paid in full by year-end.
Quarterly burn in 2009 may shift between quarters depending on the timing of
vendor payments.
|
|
Total
|
|
The
above 2009 annual budget includes:
|
|
(millions)
|
|
|
|
|
|
General
& administrative costs (excluding rent, utilities and overhead)
3
|
|
|
1.3
|
|
Research
& development - administrative
4
|
|
|
1.8
|
|
|
|
|
3.1
|
|
3
Administrative
costs include $1.9 million in employee salaries and bonuses.
4
Research
& development administrative costs include approximately $250,000 in
consultant costs
EXECUTION
COPY
REGISTRATION RIGHTS
AGREEMENT
This
Registration Rights Agreement (the “
Agreement”
)
is made and entered into as of this 11th day of February, 2009 by and among
Novelos Therapeutics, Inc.,
a Delaware corporation
(the “
Company
”),
Purdue Pharma L.P., a Delaware limited partnership (“
Purdue
”),
the “
Series D
Investors
” named in that certain Securities Purchase Agreement, dated
March 26, 2008, as amended on April 9, 2008, by and among the Company and the
Series D Investors (the “
Series
D
Securities
Purchase Agreement
”), and the holders of the Series B Warrants (as
defined below) (the Company, Purdue, the Series D Investors and the holders of
the Series B Warrants are sometimes referred to herein individually as “Party”
and collectively as the “Parties”). Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Series E
Securities Purchase Agreement.
WHEREAS
, pursuant to a
Securities Purchase Agreement dated herewith (the “
Series E
Securities Purchase Agreement
”) the Company has agreed to issue and sell
to Purdue, and Purdue has agreed to purchase from the Company, 200 shares of
Preferred Stock and warrants (the “
Series E
Warrants
”) to purchase up to 15,384,615 shares of the Company’s common
stock, $.00001 par value per share (the “
Common
Stock
”), upon the terms and conditions set forth in the Series E
Securities Purchase Agreement;
WHEREAS
, pursuant to a Consent
and Agreement to Exchange dated herewith (“the
Exchange
Agreement
”) the Series D Investors have agreed to exchange all
outstanding shares of Series D Preferred Stock, plus accrued but unpaid
dividends, for shares of Series E Preferred Stock upon the terms and conditions
set forth in the Exchange Agreement;
WHEREAS
, the Series D
Investors and the holders of the Series B Warrants are parties to a Registration
Rights Agreement dated April 11, 2008 (the “
Series D
Registration Agreement
”) and the Company, the Series D Investors and the
holders of the Series B Warrants desire to terminate the Series D Registration
Agreement in its entirety;
WHEREAS
, the Company has
agreed to register the shares of Common Stock issuable upon conversion of the
Preferred Stock and the shares of Common Stock issuable upon exercise of the
Series B Warrants, the Series D Warrants (as defined below) and the
Series E Warrants in accordance with the terms of this Agreement;
The
Parties hereby agree as follows:
1.
Certain
Definitions
.
As used in this Agreement, the
following terms shall have the following meanings:
“
FINRA
”
shall mean the Financial Industry Regulatory Authority.
“
Holders
”
shall mean Purdue, the Series D Investors
and the holders of the
Series B Warrants and any Affiliate or permitted transferee thereof who is a
subsequent holder of any Registrable Securities.
“
Preferred
Stock
” means the Series E Convertible Preferred Stock, par value $0.00001
per share.
“
Prospectus
”
shall mean the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
“
Register
,”
“
registered
”
and “
registration
”
refer to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such Registration Statement or
document.
“
Registrable
Securities
” shall mean the shares of Common Stock issuable (i) upon the
conversion of the Preferred Stock (excluding 12,000,000 shares of Common Stock
issuable upon conversion of the Preferred Stock which are registered pursuant to
a prior Registration Statement (File No. 143263 as amended and supplemented)),
(ii) upon the exercise of the Series E Warrants, (iii) upon the exercise of the
Series D Warrants; (iv) upon the exercise of the Series B Warrants, including
any shares of Common Stock that become issuable upon conversion or exercise of
the Preferred Stock or Warrants, as the case may be, as a result of stock
splits, stock dividends or similar transactions with respect to the Common Stock
(other than shares of Common Stock registered pursuant to the aforesaid prior
Registration Statement) and any Common Stock issued as stock dividends on the
Preferred Stock;
provided
,
that
, a security
shall cease to be a Registrable Security upon a sale pursuant to a Registration
Statement.
“
Registration
Statement
” shall mean any registration statement of the Company filed
under the 1933 Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement, amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration
Statement.
“
Series B
Warrants
” shall mean the warrants to purchase up to 7,500,000 shares of
Common Stock dated May 2, 2007, as amended, issued pursuant to that certain
Securities Purchase Agreement dated as of April 12, 2007, as amended on May 2,
2007.
“
Series D
Warrants
” shall mean the warrants to purchase up to 4,365,381 shares of
Common Stock dated April 11, 2008 issued pursuant to the Series D Securities
Purchase Agreement.
“
Warrants
”
shall mean collectively the Series B Warrants, Series D Warrants and Series E
Warrants.
2.
Termination of Series D
Registration Rights Agreement
.
The
Series D Investors and holders of the Series B Warrants by their execution of
this Agreement hereby agree and acknowledge that the Series D Registration
Agreement has been superseded and replaced in its entirety by this Agreement and
that the Series D Investors and the holders of the Series B Warrants shall have
no further rights under the Series D Registration Agreement.
3.
Registration.
(a)
Registration
Statement
. Promptly following the six month anniversary of the
Closing Date of the purchase and sale of the Preferred Stock and Series E
Warrants contemplated by the Series E Securities Purchase Agreement, but in no
event after five (5) business days after the six month anniversary of the
Closing Date (the “
Filing
Deadline
”), the Company shall prepare and file with the SEC one
Registration Statement on Form S-1 covering the resale of all of the Registrable
Securities without regard to any limitation on exercise of the
Warrants. Such Registration Statement shall include the plan of
distribution attached hereto as
Exhibit
A
. Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common Stock
resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with
Section 4(c)
to the
Holders and their respective counsel prior to its filing or other submission. If
a Registration Statement covering the Registrable Securities is not filed with
the SEC on or prior to the Filing Deadline, the Company will make pro rata
payments to each Holder, as liquidated damages and not as a penalty, in an
amount equal to 1.5% of the aggregate amount invested by such Holder for each
30-day period or pro rata for any portion thereof following the date by which
such Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Registrable Securities. Such
payments shall be in partial compensation to the Holders, and shall not
constitute the Holders’ exclusive remedy for such events. Such
payments shall be made to each Holder in cash. The amounts payable as
liquidated damages pursuant to this paragraph shall be payable in lawful money
of the United States, and amounts payable as liquidated damages shall be paid
within two (2) Business Days of the last day of each such 30-day period during
which the Registration Statement should have been filed for which no
Registration Statement was filed with respect to the Registrable
Securities.
(b)
Expenses
. The
Company will pay all expenses associated with each registration, including
filing and printing fees, counsel and accounting fees and expenses, costs
associated with clearing the Registrable Securities for sale under applicable
state securities laws and listing fees, but excluding the fees and disbursements
of more than one law firm serving as counsel to the Holders, and discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.
(c)
Effectiveness
.
(i)
The Company
shall use its best efforts to have the Registration Statement declared effective
not later than the earlier to occur of (x) the 60th day immediately following
the Filing Deadline, (y) five (5) Business Days following the Company’s receipt
of a no-review letter from the SEC relating to the Registration Statement, or
(z) the 90th day following the Filing Deadline if the Company’s receives a
review from the SEC relating to the Registration Statement;
provided
,
however
, if the
Registration Statement is not declared effective within the time period set
forth above, the Company shall continue to use its best efforts to have the
Registration Statement declared effective as soon as possible
thereafter.
(ii)
For not more
than fifteen (15) consecutive days or for a total of not more than thirty (30)
days in any twelve (12) month period, the Company may delay the disclosure of
material non-public information concerning the Company, by terminating or
suspending effectiveness of any registration contemplated by this
Section 3
, if the
disclosure of such material non-public information at the time is not, in the
good faith opinion of the Company, in the best interests of the Company (an
“
Allowed
Delay
”);
provided
, that the
Company shall promptly (a) notify the Holders in writing of the existence of
(but in no event, without the prior written consent of a Holder, shall the
Company disclose to such Holder any of the facts or circumstances regarding)
material non-public information giving rise to an Allowed Delay, and (b) advise
the Holders in writing to cease all sales under the Registration Statement until
the end of the Allowed Delay.
(d)
Underwritten
Offering
. If any offering pursuant to a Registration Statement
filed pursuant to
Section 3(a)
hereof
involves an underwritten offering, the Company shall have the right to select an
investment banker and manager to administer the offering, subject to the
reasonable satisfaction of the Requisite Holders.
4.
Company
Obligations
. The Company will use its best efforts to effect
the registration of the Registrable Securities in accordance with the terms
hereof, and pursuant thereto the Company will, as expeditiously as
possible:
(a)
use its best
efforts to cause such Registration Statement to become effective and to remain
continuously effective for a period that will terminate upon the earlier of (i)
the date on which all Registrable Securities covered by such Registration
Statement, as amended from time to time, have been sold and (ii) two years from
the Closing Date;
(b)
prepare and
file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 4(a) and to
comply with the provisions of the 1933 Act and the 1934 Act with respect to the
distribution of all Registrable Securities;
(c)
provide
copies to and permit counsel to Purdue, the Series D Investors and the holders
of the Series B Warrants to review each Registration Statement and all
amendments thereto no fewer than three (3) days prior to their filing with the
SEC and not file any document to which such counsel reasonably objects within
three (3) days following receipt by such counsel of such Registration Statement
and/or amendments thereto;
(d)
furnish to
the Holders and their legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company (but not
later than two (2) Business Days after the filing date, receipt date or sending
date, as the case may be), an electronic copy of any Registration Statement and
any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on behalf of the
Company to the SEC or the staff of the SEC, and each item of correspondence from
the SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion thereof which contains information for which
the Company has sought confidential treatment), and (ii) such number of copies
of a Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as each Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder, which in any event, shall not exceed ten (10)
Prospectuses;
(e)
in the event
the Company selects an underwriter for the offering, the Company shall enter
into and perform its reasonable obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriter of such
offering;
(f)
if required
by the underwriter, the Company shall furnish, on the effective date of the
Registration Statement (i) an opinion, dated as of such date, from independent
legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the underwriter and (ii) a letter,
dated such date, from the Company’s independent certified public accountants in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriter and the Holders;
(g)
use its
reasonable best efforts to prevent the issuance of any stop order or other
suspension of effectiveness and, if such order is issued, obtain the withdrawal
of any such order at the earliest possible moment;
(h)
prior to any
public offering of Registrable Securities, use its reasonable best efforts to
register or qualify or cooperate with the Holders and their counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
reasonably requested by the Holders and do any and all other reasonable acts or
things necessary or advisable to enable the distribution in such jurisdictions
of the Registrable Securities covered by the Registration
Statement;
(i) cause
all Registrable Securities covered by a Registration Statement to be listed or
traded on each securities exchange, interdealer quotation system or other market
on which similar securities issued by the Company are then listed or
traded;
(j) immediately
notify the Holders, at any time when a Prospectus relating to the Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and at the request of any such Holder, promptly
prepare and furnish to such Holder a reasonable number of copies of a supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
and
(k)
otherwise use
its best efforts to comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable
Securities hereunder; and make available to its security holders, as soon as
reasonably practicable, but not later than the Availability Date (as defined
below), an earnings statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act
(for the purpose of this
subsection 4(k)
,
“
Availability
Date
” means the 45th day following the end of the fourth fiscal quarter
that includes the effective date of such Registration Statement, except that, if
such fourth fiscal quarter is the last quarter of the Company’s fiscal year,
“
Availability
Date
” means the 90th day after the end of such fourth fiscal
quarter).
5.
Due Diligence Review;
Information
. Upon receipt of an appropriate confidentiality
agreement, the Company shall make available, during normal business hours, for
inspection and review by the Holders, advisors to and representatives of the
Holders (who may or may not be affiliated with the Holders), and any underwriter
participating in any disposition of Common Stock on behalf of the Holders
pursuant to a Registration Statement or amendments or supplements thereto or any
blue sky, FINRA or other filing, all financial and other records, all filings
with the SEC, and all other corporate documents and properties of the Company as
may be reasonably necessary for the purpose of such review, and cause the
Company’s officers, directors and employees, within a reasonable time period, to
supply all such information reasonably requested by the Holders or any such
representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of the Registration Statement for the
sole purpose of enabling the Holders and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of such
Registration Statement.
Notwithstanding
the foregoing, the Company shall not disclose material nonpublic information to
the Holders, or to advisors to or representatives of the Holders, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Holders, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review.
6.
Obligations of the
Holders
.
(a)
Each Holder
agrees to furnish to the Company a completed Questionnaire in the form attached
to this Agreement as
Exhibit B
(a “
Selling Shareholder
Questionnaire
”) not prior to 120 days after the Closing Date and not more
than 150 days after the Closing Date. A Holder who fails to
furnish a Selling Stockholder Questionnaire within 150 days after the Closing
Date may have its Registrable Securities excluded from the Registration
Statement, provided that the Company has provided such Holder with notice at
least 20 days prior (but no more than 60 days prior) to the expiration of such
150 day period.
(b)
Each Holder,
by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such Holder
has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement.
(c)
In the event
the Company, at the request of the Holders, determines to engage the services of
an underwriter, each such Holder agrees to enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
dispositions of the Registrable Securities.
(d)
Each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event rendering a Registration Statement no longer effective, such Holder will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the Holder’s
receipt of copies of the supplemented or amended Prospectus filed with the SEC
and declared effective and, if so directed by the Company, the Holder shall
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in the Holder’s
possession of the Prospectus covering the Registrable Securities current at the
time of receipt of such notice.
(e)
No Holder may
participate in any third party underwritten registration hereunder unless it (i)
agrees to sell the Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the
Company, (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay its
pro rata share of all underwriting discounts and
commissions. Notwithstanding the foregoing, no Holder shall be
required to make any representations to such underwriter, other than those with
respect to itself and the Registrable Securities owned by it, including its
right to sell the Registrable Securities, and any indemnification in favor of
the underwriter by the Holders shall be several and not joint and limited in the
case of any Holder, to the net proceeds received by such Holder from the sale of
its Registrable Securities. The scope of any such indemnification in
favor of an underwriter shall be limited to the same extent as the indemnity
provided in
Section
7(b)
hereof.
7.
Indemnification
.
(a)
Indemnification by the
Company
. The Company will indemnify and hold harmless each
Holder and any controlling person (as defined in Section 15 of the 1933 Act) and
their respective officers, directors, members, employees and agents, successors
and assigns (the “Indemnified Persons”), against any losses, claims, damages or
liabilities, joint or several, to which such Indemnified Person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof; (ii) any
blue sky application or other document executed by the Company specifically for
blue sky compliance or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information herein called a
“
Blue Sky
Application
”
);
(iii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
(iv) any violation by the Company, or its directors, officers, employees or
agents of any rule or regulation promulgated under the 1933 Act applicable to
the Company or its directors, officers, employees or agents and relating to
action or inaction required of the Company or any of them in connection with
such registration; or (v) any failure to register or qualify the Registrable
Securities included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in writing that the
Company will undertake such registration or qualification on a Holder’s behalf
(the undertaking of any underwriter chosen by the Company being attributed to
the Company) and will reimburse such Holder, and each such officer, director or
member and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action;
provided
,
however
, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
conformity with information furnished in writing by such Holder or any such
controlling person specifically for use in such Registration Statement or
Prospectus.
(b)
Indemnification by the
Holders
. In connection with any Registration Statement
pursuant to the terms of this Agreement, each Holder will furnish to the Company
in writing such information as the Company reasonably requests concerning such
Holder or the proposed manner of such Holder’s distribution for use in
connection with any Registration Statement or Prospectus and agrees, severally
but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its Subsidiaries and its and their respective directors,
officers, employees, shareholders and each person who controls the Company
(within the meaning of the 1933 Act) against any losses, claims, damages,
liabilities and expenses (including reasonable attorney fees) resulting from any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or Prospectus or preliminary
prospectus or amendment or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent that
such untrue statement or omission is contained in any information furnished in
writing by such Holder to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of a Holder be greater in
amount than the aggregate dollar amount of the proceeds (net of all expenses
paid by such Holder and the amount of any damages such Holder has otherwise been
required to pay by reason of such untrue statement or omission) received by such
Holder upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification
Proceedings
. Any person entitled to indemnification hereunder
shall (i) give prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party;
provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless (a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon advice of its counsel, a conflict of
interest exists between such person and the indemnifying party with respect to
such claims (in which case, if the person notifies the indemnifying party in
writing that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person); and
provided
,
further
, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It
is understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.
(d)
Contribution
. If
for any reason the indemnification provided for in the preceding paragraphs (a)
and (b) is unavailable to an indemnified party or insufficient to hold it
completely harmless, other than as expressly specified therein, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a
Holder be greater in amount than the aggregate dollar amount of the proceeds
(net of all expenses paid by such holder and the amount of any damages such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities giving rise to such contribution
obligation.
8.
Miscellaneous
.
(a)
Amendments and
Waivers
. This Agreement shall not be amended except by a
writing signed by (i) the Company and (ii) the Requisite Holders (as defined in
the Certificate of Designations). The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the Requisite Holders (as defined in
the Certificate of Designations).
(b)
Notices
. All
notices and other communications provided for or permitted hereunder shall be
made (i) for Purdue, as set forth in the Series E Securities Purchase Agreement;
(ii) for the Series D Investors, as set forth in the Series D Securities
Purchase Agreement and (iii) for the holders of the Series B Warrants as stated
therein, as applicable.
(c)
Assignments and Transfers by
Holders
. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Holders and their respective successors and
assigns. A Holder may transfer or assign, in whole or in part, to one
or more persons and Associated Companies its rights hereunder in connection with
the transfer of Registrable Securities by such Holder to such person,
provided
,
that
, such Holder
complies with all applicable laws thereto and provides written notice of
assignment to the Company promptly after such assignment is
effected.
(d)
Assignments and Transfers by
the Company
. This Agreement shall not be assigned by the
Company without the prior written consent of each Holder, except that without
the prior written consent of the Holders, but after notice duly given, the
Company shall assign its rights and delegate its duties hereunder to any
successor-in-interest corporation, and such successor-in-interest shall assume
such rights and duties, in the event of a merger or consolidation of the Company
with or into another corporation or the sale of all or substantially all of the
Company’s assets.
(e)
Benefits of the
Agreement
. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the Parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(f)
Counterparts;
Faxes
. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
may also be executed via facsimile, which shall be deemed an
original.
(g)
Titles and
Subtitles
. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
(h)
Severability
. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the Parties hereby waive any provision of
law which renders any provisions hereof prohibited or unenforceable in any
respect.
(i)
Further
Assurances
. The Parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j)
Entire
Agreement
. This Agreement is intended by the Parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the Parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the Parties with respect to such
subject matter.
(k)
Governing Law; Consent to
Jurisdiction
. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
regard to the choice of law principles thereof. Each of the Parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection
with any such suit, action or proceeding may be served on each Party hereto
anywhere in the world by the same methods as are specified for the giving of
notices under this Agreement. Each of the Parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each Party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
THE COMPANY AND EACH OF THE HOLDERS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.
Company
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the Company has
executed this Agreement or caused its duly authorized officer to execute this
Agreement as of the date first above written.
|
NOVELOS
THERAPEUTICS, INC.
|
|
|
|
By:
|
/s/ Harry S. Palmin
|
|
|
Name:
Harry S. Palmin
|
|
Title: President
and CEO
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Purdue Pharma, L.P.
|
Name
of entity
|
|
By:
Purdue Pharma, Inc. ,
its
general partner
|
|
By:
|
/s/ Edward B. Mahony
|
|
|
Name: Edward
B. Mahony
|
Title: Chief
Financial Officer
|
|
New York
|
Jurisdiction
of organization of entity
|
Address:
One
Stamford Forum
Stamford,
CT
06901
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Xmark Opportunity Fund,
Ltd.
|
Name
of entity
|
|
By:
|
Xmark Opportunity Manager,
LLC,
|
|
its
Investment Manager
|
|
By:
|
Xmark Opportunity Partners,
LLC,
|
|
its
Sole Member
|
|
By:
|
Xmark Capital Partners,
LLC,
|
|
its
Managing Member
|
|
By:
|
/s/ Mitchell D. Kaye
|
|
|
Name: Mitchell
D. Kaye
|
Title: Chief
Executive Officer
|
|
Cayman
Islands
|
|
Jurisdiction
of organization of entity
|
|
Address:
|
|
90
Grove Street
|
Ridgefield,
CT 06877
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Xmark Opportunity Fund,
L.P.
|
Name
of entity
|
|
By:
|
Xmark Opportunity GP, LLC
|
|
its
General Partner
|
|
By:
|
Xmark Opportunity Partners,
LLC,
|
|
its
Sole Member
|
|
By:
|
Xmark Capital Partners,
LLC,
|
|
its
Managing Member
|
|
By:
|
/s/ Mitchell D. Kaye
|
|
|
Name: Mitchell
D. Kaye
|
Title: Chief
Executive Officer
|
|
Delaware
|
Jurisdiction
of organization of entity
|
|
Address:
|
|
90
Grove Street
|
Ridgefield,
CT 06877
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Xmark JV Investment Partners,
LLC
|
Name
of entity
|
|
By:
|
Xmark Opportunity Partners,
LLC
|
|
its
Investment Manager
|
|
By:
|
Xmark Capital Partners,
LLC,
|
|
its
Managing Member
|
|
By:
|
/s/ Mitchell D. Kaye
|
|
Name: Mitchell
D. Kaye
|
Title: Chief
Executive Officer
|
|
Delaware
|
Jurisdiction
of organization of entity
|
|
Address:
|
|
90
Grove Street
|
Ridgefield,
CT 06877
|
[This
page has been intentionally left blank.]
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Caduceus Capital Master Fund
Limited
|
Name
of entity
|
|
By:
|
/s/ Samuel D. Isaly
|
|
|
Name: Samuel
D. Isaly
|
Title: Managing
Partner, OrbiMed Advisors LLC
|
|
Print
jurisdiction of organization of entity: Bermuda
|
|
Address:
|
c/o
OrbiMed Advisors LLC
|
767
Third Avenue, 30
th
Floor
|
New
York,
NY 10017
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement of the date first above
written.
Caduceus Capital II,
L.P.
|
Name
of entity
|
|
By:
|
/s/ Samuel D. Isaly
|
|
Name: Samuel
D. Isaly
|
Title: Managing
Partner, OrbiMed Advisors LLC
|
|
Print
jurisdiction of organization of
entity: Delaware
|
|
Address:
|
c/o
OrbiMed Advisors LLC
|
767
Third Avenue, 30
th
Floor
|
New
York,
NY 10017
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Summer Street Life Sciences Hedge Fund Investors
LLC
|
Name
of entity
|
|
By:
|
/s/ Samuel D. Isaly
|
|
Name: Samuel
D. Isaly
|
Title: Managing
Partner, OrbiMed Advisors LLC
|
|
Print
jurisdiction of organization of entity: Delaware
|
|
Address:
|
c/o
OrbiMed Advisors LLC
|
767
Third Avenue, 30
th
Floor
|
New
York,
NY 10017
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written
UBS Eucalyptus Fund,
L.L.C.
|
Name
of entity
|
|
By:
|
/s/ Samuel D. Isaly
|
|
Name: Samuel
D. Isaly
|
Title: Managing
Partner, OrbiMed Advisors LLC
|
|
Print
jurisdiction of organization of entity: Delaware
|
|
Address:
c/o
OrbiMed Advisors LLC
767
Third Avenue, 30
th
Floor
New
York,
NY 10017
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
PW Eucalyptus Fund, Ltd.
|
Name
of entity
|
|
By:
|
/s/ Samuel D. Isaly
|
|
Name: Samuel
D. Isaly
|
Title: Managing
Partner, OrbiMed Advisors LLC
|
|
Print
jurisdiction of organization of entity: Cayman Islands
|
|
Address:
c/o
OrbiMed Advisors LLC
767
Third Avenue, 30
th
Floor
New
York,
NY 10017
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Knoll Special Opportunities Fund II Master Fund
Ltd. (formerly Knoll Capital Fund II
Master Fund Ltd.)
|
Name
of entity
|
|
By:
|
/s/ Fred Knoll
|
|
Name: Fred
Knoll
|
Title: KOM
Capital Management
|
Investment Manager
|
|
Print
jurisdiction of organization of entity:
|
|
Address:
c/o
KOM Capital Management
666
Fifth Avenue, Suite 3702,
New
York,
NY 10103
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Europa International,
Inc.
|
Name
of entity
|
|
By:
|
/s/ Fred Knoll
|
|
Name: Fred
Knoll
|
Title: Knoll
Capital Management
|
Investment
Manager for
Europa
International, Inc.
|
|
Print
jurisdiction of organization of entity
|
|
Address:
c/o
Knoll Capital Management
666
Fifth Avenue, Suite 3702,
New
York,
NY 10103
|
Holder
Signature Page to Registration Rights Agreement
IN WITNESS WHEREOF, the undersigned has
executed this Registration Rights Agreement or caused its duly authorized
officers to execute this Registration Rights Agreement as of the date first
above written.
Hunt BioVenures, L.P.
|
Name
of entity
|
|
By :
HBV GP, L.L.C, its General Partner
|
|
By:
|
/s/ J. Fulton Murray, III
|
|
Name: J.
Fulton Murray, III, Manager
|
|
Jurisdiction
of organization of entity: Delaware
|
|
Address:
Hunt
Investments
1900
N. Akard
Dallas, TX 75201
Attn:
Michael T. Bierman, J. Fulton Murray, III and Benjamin D.
Nelson
|
Exhibit
A
Plan
of Distribution
The selling stockholders, which as used
herein includes donees, pledgees, transferees or other successors-in-interest
selling shares of common stock or interests in shares of common stock received
after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their shares of common stock or
interests in shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any
one or more of the following methods when disposing of shares or interests
therein:
- ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;
- block trades in which the
broker-dealer will attempt to sell the shares as agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
- purchases by a broker-dealer as
principal and resale by the broker-dealer for its account;
- an exchange distribution in
accordance with the rules of the applicable exchange;
- privately negotiated
transactions;
- short sales;
- through the writing or settlement of
options or other hedging transactions, whether through an options exchange or
otherwise;
- broker-dealers may agree with the
selling stockholders to sell a specified number of such shares at a stipulated
price per share;
- a combination of any such methods of
sale; and
- any other method permitted pursuant
to applicable law.
The selling stockholders may, from time
to time, pledge or grant a security interest in some or all of the shares of
common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of common stock, from time to time, under this prospectus, or under an
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling stockholders to include the
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer the
shares of common stock in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
In connection with the sale of our
common stock or interests therein, the selling stockholders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the common stock in the course of hedging
the positions they assume. The selling stockholders may also sell
shares of our common stock short and deliver these securities to close out their
short positions, or loan or pledge the common stock to broker-dealers that in
turn may sell these securities. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The aggregate proceeds to the selling
stockholders from the sale of the common stock offered by them will be the
purchase price of the common stock less discounts or commissions, if
any. Each of the selling stockholders reserves the right to accept
and, together with their agents from time to time, to reject, in whole or in
part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Upon any exercise of the warrants by payment of cash, however, we will receive
the exercise price of the warrants.
The selling stockholders also may
resell all or a portion of the shares in open market transactions in reliance
upon Rule 144 under the Securities Act of 1933, provided that they meet the
criteria and conform to the requirements of that rule.
The selling stockholders and any
underwriters, broker-dealers or agents that participate in the sale of the
common stock or interests therein may be "underwriters" within the meaning of
Section 2(11) of the Securities Act. Any discounts, commissions,
concessions or profit they earn on any resale of the shares may be underwriting
discounts and commissions under the Securities Act. Selling
stockholders who are "underwriters" within the meaning of Section 2(11) of the
Securities Act will be subject to the prospectus delivery requirements of the
Securities Act.
To the extent required, the shares of
our common stock to be sold, the names of the selling stockholders, the
respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.
In order to comply with the securities
laws of some states, if applicable, the common stock may be sold in these
jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the common stock may not be sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
We have advised the selling
stockholders that the anti-manipulation rules of Regulation M under the Exchange
Act may apply to sales of shares in the market and to the activities of the
selling stockholders and their affiliates. In addition, we will make
copies of this prospectus (as it may be supplemented or amended from time to
time) available to the selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling
stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act.
We have agreed to indemnify the selling
stockholders against liabilities, including liabilities under the Securities Act
and state securities laws, relating to the registration of the shares offered by
this prospectus.
We have agreed with the selling
stockholders to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of (1) such time as all of the
shares covered by this prospectus have been disposed of pursuant to and in
accordance with the registration statement or (2) two years from the Closing
Date.
Exhibit
B
Selling
Stockholder Questionnaire
To:
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Novelos
Therapeutics, Inc.
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Attention: Matthew
Eckert, Esq.
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Facsimile:
(617) 832-1000
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Reference
is made to the Registration Rights Agreement (the “Agreement”), made between
Novelos Therapeutics, Inc., a Delaware corporation (the “Company”), and the
Holders noted therein.
Pursuant
to Section 6(a) of the Agreement, the undersigned hereby furnishes to the
Company the following information for use by the Company in connection with the
preparation of the Registration Statement.
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(1)
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Name
and Contact Information:
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Full
legal name of record holder:
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Address
of record holder:
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Social
Security Number or Taxpayer identification number of record
holder:
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Identity
of beneficial owner (if
different
than record holder):
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Name
of contact person:
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Telephone
number of contact person:
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Fax
number of contact person:
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E-mail
address of contact person:
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(2)
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Beneficial Ownership of
Registrable Securities
:
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(a)
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Number
of Registrable Securities owned by Selling
Stockholder:
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(b)
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Number
of Registrable Securities requested to be
registered:
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(3)
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Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Stockholder:
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Except as
set forth below in this Item (3), the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item (2)(a).
Type and
amount of other securities beneficially owned by the Selling
Stockholder:
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(4)
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Relationships
with the Company:
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Except as
set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (5% or more) has held any position or
office or has had any other material relationship with the Company (or its
predecessors or affiliates) during the past three years.
State any
exceptions here:
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(5)
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Plan
of Distribution:
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Except as
set forth below, the undersigned intends to distribute pursuant to the
Registration Statement the Registrable Securities listed above in Item (2) in
accordance with the “Plan of Distribution” section set forth
therein:
State any
exceptions here:
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(6)
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Selling
Stockholder Affiliations:
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(a) Is
the Selling Stockholder a registered broker-dealer?
(b) Is
the Selling Stockholder an affiliate of a registered
broker-dealer(s)? (For purposes of this response, an “affiliate” of,
or person “affiliated” with, a specified person, is a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.)
(c) If
the answer to Item (6)(b) is yes, identify the registered broker-dealer(s) and
describe the nature of the affiliation(s):
(d) If
the answer to Item (6)(b) is yes, did the Selling Stockholder acquire the
Registrable Securities in the ordinary course of business (if not, please
explain)?
(e) If
the answer to Item (6)(b) is yes, did the Selling Stockholder, at the time of
purchase of the Registrable Securities, have any agreements, plans or
understandings, directly or indirectly, with any person to distribute the
Registrable Securities (if yes, please explain)?
(7) Voting
or Investment Control over the Registrable Securities:
If the
Selling Stockholder is not a natural person, please identify the natural person
or persons who have voting or investment control over the Registrable Securities
listed in Item (2) above:
Pursuant
to Section 3(c) of the Agreement, the undersigned acknowledges that the Company
may, by notice to the Holder at its last known address, suspend or withdraw the
Registration Statement and require that the undersigned immediately cease sales
of Registrable Securities pursuant to the Registration Statement under certain
circumstances described in the Agreement. At any time that such
notice has been given, the undersigned may not sell Registrable Securities
pursuant to the Registration Statement.
The
undersigned hereby agrees to sell such shares only pursuant to and in the manner
contemplated by the Registration Statement, including the Plan of Distribution
section contained therein (in substantially the form attached hereto as Exhibit
A), or pursuant to an exemption from the registration requirements under the
Securities Act. The undersigned hereby further acknowledges that
pursuant to Section 7(b) of the Agreement, the undersigned shall indemnify the
Company and each of its directors and officers against, and hold the Company and
each of its directors and officers harmless from, any losses, claims, damages,
expenses or liabilities (including reasonable attorneys fees) to which the
Company or its directors and officers may become subject by reason of any
statement or omission in the Registration Statement made in reliance upon, or in
conformity with, a written statement by the undersigned, including the
information furnished in this Questionnaire by the undersigned.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Registration Statement, any amendments thereto and
the related prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
The
undersigned has reviewed the answers to the above questions and affirms that the
same are true, complete and accurate. THE UNDERSIGNED AGREES TO
NOTIFY THE COMPANY IMMEDIATELY OF ANY MATERIAL CHANGES IN THE FOREGOING
INFORMATION.
Dated:_____________,
2009
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Signature
of Record Holder
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(Please
sign your name in exactly the same manner as the certificate(s) for the shares
being registered)
NOVELOS
THERAPEUTICS, INC.
SERIES
D PREFERRED STOCK
CONSENT
AND AGREEMENT TO EXCHANGE
This
CONSENT AND AGREEMENT TO EXCHANGE (the “
Agreement
”) dated as
of February 10, 2009, is entered into by and among Novelos Therapeutics, Inc., a
Delaware corporation (the “
Company
”) and the
entities listed on the signature pages hereto (collectively, the “
Series D Investors
”)
(the Company and Series D Investors are sometimes referred to herein
individually as a “
Party
” and
collectively as the “
Parties
”).
WHEREAS,
the Series D Investors hold an aggregate of 413.5 shares of the Company’s Series
D Convertible Preferred Stock, $0.00001 par value per share (the “
Series D Preferred
Stock
”);
WHEREAS,
the Certificate of Designations, Preferences and Rights of Series D Convertible
Preferred Stock of Novelos Therapeutics, Inc. (the “
Series D Certificate of
Designations
”) contains certain prohibitions on amendments to the
Company’s Certificate of Incorporation, the creation or issuance of any equity
security unless the per share price of such securities exceeds $0.65 in cash and
said securities rank junior to the Series D Preferred Stock, and the sale,
lease, conveyance or licensing of any material intellectual property by the
Company without the prior written consent of the Series D
Investors;
WHEREAS, effective immediately
following the execution of this Agreement, the Company is executing and
delivering a securities purchase agreement (the “
Purdue Securities Purchase
Agreement
”) in the form attached hereto as
Exhibit A
, pursuant
to which the Company is issuing and selling 200 shares of a newly created series
of the Company’s preferred stock, designated Series E Convertible Preferred
Stock, par value $0.00001 per share (the “
Series E Preferred
Stock
”) and a warrant to acquire up to 9,230,769 shares of Common Stock
(as defined below) with an exercise price of $0.65 per share (the “
Series E Warrant
”) to
Purdue Pharma L.P., a Delaware limited partnership (“
Purdue
”), which
Series E Preferred Stock shall have the relative rights, privileges and
preferences set forth in the Certificate of Designations, Rights and Preferences
of the Series E Convertible Preferred Stock of Novelos Therapeutics, Inc., in
the form attached hereto as
Exhibit B
(the “
Series E Certificate of
Designations
”) (collectively, the “
Purdue Financing
”)
and this Agreement is a condition to closing as stated in the Purdue Securities
Purchase Agreement;
WHEREAS, simultaneously with the
completion of the Purdue Financing, the Company is entering into a Collaboration
Agreement with Mundipharma International Corporation Limited (the “
Mundi Collaboration
Agreement
”) in the form attached hereto as
Exhibit C
(collectively with the Purdue Financing, the “
Transactions
”);
WHEREAS, the Company and the Series D
Investors desire to exchange each outstanding share (and any fraction thereof)
of Series D Preferred Stock, together with all accrued but unpaid dividends
thereon, for 1.07725 shares of Series E Preferred Stock (or a pro
rata portion thereof for any fraction of a share of Series D Preferred Stock),
as set forth on
Schedule A
hereto
effective as of the consummation of the Transactions (the “
Series D
Exchange
”);
WHEREAS, simultaneously with the
execution of this Agreement, the holders of the Company’s Series C Convertible
Preferred Stock, $0.00001 par value per share (the “
Series C Preferred
Stock
”) are executing a Consent and Agreement of Holders of Series C
Preferred Stock in the form attached hereto as
Exhibit D
(the “
Series C Consent
”)
pursuant to which such holders will consent to the Transactions and the
consummation of the Series D Exchange;
WHEREAS, the Series D Preferred Stock
was senior with respect to the payment of a liquidation preference to all shares
of the Company’s capital stock, including, without limitation the Series C
Preferred Stock and accordingly, pursuant to the Series E Certificate of
Designations, the Series E Preferred Stock shall be entitled to seniority with
respect to the payment of any liquidation preference in relation to the Series C
Preferred Stock;
WHEREAS, in connection with the
transactions contemplated by the Series D Exchange, in order to make certain
conforming changes therein the Company desires to amend the (i) Registration
Rights Agreement, dated May 2, 2007, as amended by that certain Amendment to
Registration Rights Agreement, dated April 11, 2008, by entering into that
certain Amendment No. 2 to Registration Rights Agreement, in the form attached
as
Exhibit E
hereto (the “
2007 Reg
Rights Amendment
”) and (ii) desires to terminate the Registration Rights
Agreement, dated April 11, 2008, and enter into a new Registration
Rights Agreement, in the form attached as
Exhibit F
hereto (the
“
2009 Reg Rights
Agreement
”); and
WHEREAS, the Series D Investors hold
7,500,000 warrants to purchase the Company’s common stock issued on May 2, 2007,
amended on April 11, 2008 (the “
Series B Warrants
”)
and hold 4,365,381 warrants to purchase the Company’s common stock issued on
April 11, 2008 (the “
Series D Warrants
”);
and in order to conform certain of the terms of the Series B Warrants and the
Series D Warrants to the terms of the warrants to be issued to Purdue in
connection with the Purdue Securities Purchase Agreement the Series D Investors
and the Company desire to amend (i) the Series B Warrants by entering into a
Warrant Amendment Agreement, in the form attached as
Exhibit G
hereto (the
“
Series B Warrant
Amendment
”) and (ii) the Series D Warrants by entering into a Warrant
Amendment Agreement, in the form attached as
Exhibit H
hereto (the
“
Series D Warrant
Amendment
”) (collectively, the “
Warrant
Amendments
”);
NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained, the Parties hereto agree as
follows:
1.
Consent
.
(a) Each
of the Series D Investors hereby consents (i) to the filing of the Series E
Certificate of Designations and (ii) to the Transactions.
(b) Each
of the Series D Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, of a Certificate of Elimination pursuant to
which all matters set forth in the Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock of Novelos Therapeutics, Inc.
with respect to the Company’s Series B Convertible Preferred Stock, $0.00001
(the “
Series B
Preferred Stock
”) will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series B Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as
Exhibit
I
(the “
Series
B Certificate of Elimination
”).
(c) Each
of the Series D Investors hereby consents to the filing with the Secretary of
State of the State of Delaware, following the issuance of the Series E Preferred
Stock pursuant to this Agreement, of a Certificate of Elimination, pursuant to
which all matters set forth in the Series D Certificate of Designations with
respect to the Series D Preferred Stock will be eliminated from the Company’s
Certificate of Incorporation and the shares that were designated as Series D
Preferred Stock will be returned to the status of authorized but unissued shares
of preferred stock of the Company, without designation as to series, in the form
attached hereto as
Exhibit J
(the “
Series D Certificate of
Elimination
”).
2.
Exchange
.
(a) Subject
to the terms and conditions set forth herein, each of the Series D Investors
hereby, severally and not jointly, agrees to exchange all shares of Series D
Preferred Stock owned by such Series D Investor, and all rights, preferences and
privileges associated therewith (including but not limited to any accrued but
unpaid dividends thereon) for the number of shares of Series E Preferred Stock
set forth on
Schedule
A
hereto as of the Effective Time. The Series D Exchange shall
be automatically effective, without any further action on the part of any Series
D Investor, immediately upon the satisfaction (or waiver) of the conditions set
forth in
Section
7
hereof (the “
Effective
Time
”). Promptly following the Effective Time, the Company
will provide written notice to each Series D Investor confirming that the
Effective Time has occurred.
(b) No
later than three business days after the Effective Time, each Series D Investor
shall surrender to the Company certificates that formerly represented all of the
issued and outstanding shares of Series D Preferred Stock held by such Series D
Investor (or provide to the Company such evidence as is reasonably satisfactory
to the Company that such certificate representing shares of Series D Preferred
Stock is lost or destroyed) and upon receipt thereof, the Company shall within
three business days issue new stock certificates for shares of Series E
Preferred Stock as set forth in
Schedule A
hereto and
deliver such stock certificates for shares of Series E Preferred Stock to the
applicable Series D Investors at the address set forth on the signature page
hereto.
3.
Waiver of Liquidated
Damages
. Each of the Series D Investors is a party to a
Registration Rights Agreement dated April 11, 2008 (the “
2008 Registration
Agreement
”) which provides for registration rights with respect to the
shares of Common Stock issuable (i) upon the conversion of Series D Preferred
Stock (excluding 12,000,000 shares of Common Stock issuable upon conversion of
the Preferred Stock which are registered pursuant to the Prior Registration
Statement as defined in the 2008 Registration Agreement). Pursuant to
Section 8(a) of the 2008 Registration Agreement, each of the Series D Investors
hereby waives, effective as of the Effective Time, any and all liquidated
damages arising under Section 3 of the 2008 Registration Agreement during the
period from October 1, 2008 through the Effective Time as a result of the
Company’s failure to file the registration statement by the Filing Deadline (as
defined in the 2008 Registration Agreement).
4.
Representations of the
Company
. The Company represents and warrants to and agrees
with each Series D Investor that:
(a) After
the Series D Exchange, the holding period of the Series E Preferred Stock and
the Company’s common stock, $0.00001 par value per share (“
Common Stock
”)
issuable upon conversion of the Series E Preferred Stock (the “
Conversion Shares
”)
for purposes of Rule 144 under the Securities Act of 1933, as amended (the
“
1933 Act
”)
shall have commenced on the same date as the holding period of the Series D
Preferred Stock. In addition, no holder of the Series B Warrants or
the Series D Warrants will be required to re-start a holding period for purposes
of Rule 144 under the 1933 Act as a result of the Warrant Amendments and the
other transactions contemplated hereby.
(b) The
registration statement filed with the Securities Exchange Commission (the “
SEC
”) under
Registration No. 333-143263, as amended (the “
Registration
Statement
”), will be supplemented by the Company on or prior to the
fourth business day following the Series D Exchange, to reflect the transactions
described in this Agreement (the “
Prospectus
Supplement
”), the issuance of the Series E Preferred Stock and all other
matters so that upon the filing of such Prospectus Supplement with the SEC, the
Registration Statement will be current and effective with regard to the public
resale of the securities covered by the Registration Statement. A
copy of the Prospectus Supplement shall be provided to each of the Lead Series E
Preferred Investors (as defined in the Series E Certificate of Designations) at
least two business days prior to its filing with the SEC.
(c) Each
of this Agreement, the Series C Consent, the 2007 Reg Rights Amendment, the 2009
Reg Rights Agreement and the Warrant Amendments (collectively, the “
Transaction
Documents
”), and the Series B Certificate of Elimination and the Series D
Certificate of Elimination has been duly authorized, executed and delivered by
the Company and is a valid and binding document enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally, principles of equity and
principles of public policy. The Company has full corporate power and
authority necessary to enter into and deliver each of the Transaction Documents,
the Series B Certificate of Elimination and the Series D Certificate of
Elimination and to perform its obligations hereunder and
thereunder.
(d) No
consent, approval, authorization or order of any court or governmental authority
having jurisdiction over the Company nor the Company's shareholders is required
for the execution, delivery and performance by the Company of the Transaction
Documents, the Purdue Securities Purchase Agreement, the Mundi Collaboration
Agreement, the Warrant Amendments and the filing of the Series E Certificate of
Designations, including, without limitation, the issuance of the Series E
Preferred Stock or the issuance of the Conversion Shares, collectively referred
to as the “
Securities
”.
(e) Assuming
the representations and warranties of the Series D Investors in
Section 4
are true
and correct, neither the issuance of the Securities nor the performance of the
Company's obligations under the Transaction Documents, the Purdue Securities
Purchase Agreement, the Mundi Collaboration Agreement, the Warrant Amendments or
the Series E Certificate of Designations by the Company will:
(i) violate, conflict with,
result in a breach of, or constitute a default of a material nature under (A)
the certificate of incorporation or bylaws of the Company as in effect on the
date hereof, (B) any decree, judgment, order, law, treaty, rule or regulation
applicable to the Company or any of the Company’s properties or assets of any
court or governmental authority having jurisdiction over the Company or over the
properties or assets of the Company, or (C) the terms of any bond, debenture,
note or any other evidence of indebtedness for borrowed money, or any material
agreement, stock option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which the Company is a party, or by which it is
bound, or to which any of the properties or assets of the Company is
subject;
(ii) result in the creation
or imposition of any lien, charge or encumbrance upon the Securities or any of
the properties or assets of the Company; or
(iii) result in the activation of any
anti-dilution rights or a reset or repricing of any debt or security instrument
of any other creditor or equity holder of the Company, nor result in the
acceleration of the due date of any obligation of the Company, except for the
issuance of additional warrants to purchase approximately 1,112,400 shares of
Common Stock at approximately $1.82 to certain investors and a reduction in the
exercise price of 11,267,480 warrants to purchase shares of Common Stock from
$2.00 to approximately $1.82.
(f) Upon
issuance, the Series E Preferred Stock or the Conversion Shares:
(i) are, or will be, free and clear of
any security interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the1933 Act and any applicable state securities
laws;
(ii) have been, or will be,
duly and validly authorized and on the date of issuance of the Conversion Shares
will be duly and validly issued, fully paid and nonassessable;
(iii) will not have been issued or sold
in violation of any preemptive, right of first refusal or other similar rights
of the holders of any securities of the Company; and
(iv) will not result
in a violation of Section 5 under the 1933 Act.
5.
Representations of the
Series D Investors
. Each Series D Investor hereby, severally
and not jointly, represents and warrants to and agrees with the Company only as
to each Series D Investor that:
(a) The Series D Investor is, and will
be at the time of the issuance of the Conversion Shares, an "accredited
investor", as such term is defined in Regulation D promulgated by the SEC under
the 1933 Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Series D Investor to utilize the information
made available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed transaction, which
represents a speculative investment.
(b) The
Series D Investor owns the Series D Preferred Stock set forth on
Schedule A
free and
clear of any liens and encumbrances of third parties.
(c) The
Series D Investor understands and agrees that the shares of Series E Preferred
Stock have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of Series D Investors contained herein), and that
such Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.
(d) The shares of Series E
Preferred Stock and any Conversion Shares issuable in respect thereof shall bear
the following or similar legend:
“THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS.”
6.
Securities Purchase
Agreements
(a) Each
of the Parties hereby acknowledges and agrees that for purposes of the
Securities Purchase Agreement, dated March 26, 2008, among the Company and the
investors set forth on Schedule I thereto (the “
2008 Purchase
Agreement
”), that following the consummation of the Series D Exchange,
(i) the term “Preferred Stock” as defined therein shall include shares of Series
E Preferred Stock and (ii) the Series D Exchange shall constitute a
reclassification or other recapitalization as contemplated in the definition of
“Requisite Holders” as contained therein.
(b) Each
of the Parties hereby acknowledges and agrees that for purposes of the
Securities Purchase Agreement, dated April 12, 2007, as amended, among the
Company and the investors set forth on Schedule I thereto (the “
2007 Purchase
Agreement
”), that following the consummation of the Series D Exchange,
(i) the term “Preferred Stock” as defined therein shall include shares of Series
E Preferred Stock and (ii) the Series D Exchange shall constitute a
reclassification or other recapitalization as contemplated in the definition of
“Requisite Holders” as contained therein.
7.
Conditions to Effectiveness
of Series D Exchange
. The Effective Time shall occur only upon
the satisfaction (or waiver by the holders of a majority of the then outstanding
shares of Series D Preferred Stock, but only if such majority shall include
Xmark LP, Xmark Ltd., Xmark LLC, Caduceus Master, Caduceus Capital, Summer
Street, UBS Eucalyptus and PW Eucalyptus (such majority collectively, the “
Requisite Holders
”))
of each of the following conditions:
(i) This
Agreement shall have been duly executed and delivered by each of the holders of
outstanding shares of Series D Preferred Stock;
(ii) The
Company and the Requisite Holders shall have received evidence of the acceptance
of the filing of the Series E Certificate of Designations from the Secretary of
State of the State of Delaware;
(iii) The
2007 Reg Rights Amendment shall have been duly executed by and delivered to the
Company and the Requisite Holders (as defined therein);
(iv) The
2009 Reg Rights Agreement shall have been duly executed by and delivered to the
Company and the Holders (as defined therein);
(v) The
Series C Consent shall have been duly executed and delivered by the Company to
the Requisite Holders;
(vi) The
Purdue Securities Purchase Agreement and the Mundi Collaboration Agreement shall
have been duly executed and delivered to Novelos; and
(vii) The
Series B Warrant Amendment and the Series D Warrant Amendment shall have been
duly executed by and delivered to the Company and the Requisite Holders (as
defined in the Series B Warrant and Series D Warrant,
respectively).
8.
Expiration
. This
Agreement shall be null and void and of no further force and effect if the
Effective Time does not occur on or before 5:00 p.m., New York time, on February
13, 2009.
9.
Further
Assurances
. Each Party hereto shall do and perform or cause to
be done and performed all such further acts and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
Party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement, the other Transaction Documents, the
Series D Exchange and the consummation of the transactions contemplated hereby
and thereby.
10.
Independent Nature of Series
D Investors Obligations and Rights
. The obligations of each
Series D Investor under this Agreement and the other Transaction Documents, to
the extent a party thereto, are several and not joint with the obligations of
any other Series D Investor, and no Series D Investor shall be responsible in
any way for the performance of the obligations of any other Series D Investor
under any Transaction Document. The decision of each Series D
Investor to consummate the Series D Exchange pursuant to the Transaction
Documents has been made by such Series D Investor independently of any other
Series D Investor and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries which may have been made or
given by any other Series D Investor by any agent or employee of any other
Series D Investor, and no Series D Investor and any of its agents or employees
shall have any liability to any other Series D Investor (or any other individual
or entity) relating to or arising from any such information, materials,
statement or opinions. Nothing contained herein or in any Transaction
Document, and no action taken by any Series D Investor pursuant thereto, shall
be deemed to constitute the Series D Investors as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Series D Investors are in any way acting in concert or as a group with respect
to such obligations or the transactions contemplated by the Transaction
Documents. Each Series D Investor acknowledges that no other Series D
Investor has acted as agent for such Series D Investor in connection with it
entering into this Agreement and that no Series D Investor will be acting as
agent of such Series D Investor in connection with monitoring its investment in
the Securities or enforcing its rights under the Transaction
Documents. Each Series D Investor shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Series D Investor to be joined as an additional
party in any proceeding for such purpose. The Company acknowledges
that each of the Series D Investors has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Series D
Investors and not because it was required or requested to do so by any Series D
Investor. The Company’s obligations to each Series D Investor under this
Agreement are identical to its obligations to each other Series D Investor other
than such differences resulting solely from the number of shares of Series D
Preferred Stock exchanged for Series E Preferred Stock by such Series D
Investor, but regardless of whether such obligations are memorialized herein or
in another agreement between the Company and a Series D Investor.
11.
Counsel
. Lowenstein
Sandler PC has acted solely as legal counsel to each of Xmark LP, Xmark Ltd.,
Xmark LLC, in connection with this Agreement and the other
Transaction Documents. Each of the Company and the other Series D
Investors has consulted with its own counsel to the extent they deemed
necessary, and has entered into this Agreement, the Transaction Documents and
any other documents contemplated hereunder to which it is a party after being
satisfied with such advice.
12.
Choice of
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either Party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in New
York County. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF
THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL
BY JURY. The prevailing Party shall be entitled to recover from the other Party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
13.
Notices
. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three (3) business days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) business day after delivery to such
carrier. All notices shall be addressed to the Party to be notified
at the address as follows, or at such other address as such Party may designate
by ten (10) days’ advance written notice to the other Party:
If to the Company:
Novelos Therapeutics,
Inc.
One Gateway Center, Suite
504
Newton, MA 02458
Attention: Chief Executive
Officer
Fax: (617)
964-6331
With a copy to:
Foley Hoag LLP
Seaport World Trade Center
West
155 Seaport Boulevard
Boston, MA 02210
Attn: Paul
Bork
Fax: (617)
832-7000
If to any of the Series D
Investors:
To the addresses set forth on the
signature page hereto.
With a copy to:
Lowenstein Sandler PC
1251 Avenue of the
Americas
New York, NY 10020
Attn: Steven E. Siesser,
Esq.
Fax: (973)
597-2507
14.
Counterparts
. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same Agreement. Counterpart signature pages to this Agreement
transmitted by facsimile transmission, by electronic mail in “portable document
format” (“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing an original
signature.
15.
Amendments and
Waivers
. This Agreement shall not be amended and the observance of any
term of this Agreement shall not be waived (either generally or in a particular
instance and either retroactively or prospectively) without the prior written
consent of the Company and the Requisite Holders. Any amendment or
waiver effected in accordance with this
Section 15
shall be
binding upon each Series D Investor and the Company.
IN
WITNESS WHEREOF the undersigned have executed this Consent and Agreement to
Exchange as of the date first above written.
NOVELOS
THERAPEUTICS, INC.
|
|
|
|
By:
|
/s/ Harry S. Palmin
|
|
Name:
Harry S. Palmin
|
Title:
President and
CEO
|
SERIES
D INVESTORS:
|
|
|
|
|
|
|
|
|
Xmark
Opportunity Fund, Ltd.
|
|
Caduceus
Capital Master Fund Limited
|
Xmark
Opportunity Fund, L.P.
|
|
Caduceus
Capital II, L.P.
|
Xmark
JV Investment Partners, LLC
|
|
UBS
Eucalyptus Fund, L.L.C.
|
|
|
|
PW
Eucalyptus Fund, Ltd.
|
|
|
|
Summer
Street Life Sciences Hedge Fund Investors LLC
|
|
|
|
|
|
By:
|
/s/ Mitchell D. Kaye
|
|
By:
|
/s/ Samuel D. Isaly
|
Name:
Mitchell D. Kaye
|
|
Name:
Samuel D.
Isaly
|
Title:
Authorized
Signatory
|
|
Title:
Managing Partner, Orbimed
Advisors
|
Address:
90 Grove Street
|
|
Address:
c/o OrbiMed Advisors LLC
|
Ridgefield,
CT 06877
|
|
767
Third Avenue, 30th Floor
|
Attn:
Mitchell D. Kaye
|
|
New
York, NY 10017
|
|
|
|
|
|
Knoll
Special Opportunities Fund II Master
|
|
|
|
Fund
Ltd. (1)
|
|
Hunt-BioVentures,
L.P.
|
Europa
International, Inc.
|
|
By
: HBV GP, L.L.C, its General Partner
|
|
|
|
|
|
By:
|
/s/ Fred Knoll
|
|
By:
|
/s/ J. Fulton Murray,
III
|
Name:
Fred Knoll
|
|
Name:
J. Fulton Murray,
III
|
Title:
Portfolio
Manager
|
|
Title:
Manager
|
Address:
c/o Knoll Capital Management
|
|
Address:
Hunt Investments
|
666
Fifth Avenue, Suite 3702,
|
|
1900
N. Akard
|
New
York, NY 10103
|
|
Dallas, TX 75201
|
|
|
|
III
and Benjamin D. Nelson
|
|
|
|
Attn:
Michael T. Bierman, J. Fulton
Murray,
|
(1) Formerly Knoll Capital Fund II
Master Fund Ltd
.
Exhibit
A
Form of
Securities Purchase Agreement between the Company and Purdue Pharma,
L.P.
[See
Exhibit 10.1 to this filing]
Exhibit
B
Form of
Certificate of Designations, Rights and Preferences of Series E Convertible
Preferred Stock of Novelos Therapeutics, Inc.
[See
Exhibit 4.1 to this filing]
Exhibit
C
Form of
Collaboration Agreement between the Company and Mundipharma International
Corporation Limited
[To be filed]
Exhibit
D
Form of
Consent and Agreement of Holders of Series C Preferred Stock
NOVELOS
THERAPEUTICS, INC.
CONSENT
AND AGREEMENT OF HOLDERS OF SERIES C PREFERRED STOCK
This
Consent and Agreement (the “
Agreement
”), dated as
of February 10, 2009, is entered into by and among Novelos Therapeutics, Inc., a
Delaware corporation (the “
Company
”), and each
of the signatories hereto (collectively, the “
Series C Investors
”)
(the Company and Series C Investors are sometimes referred to herein
individually as “Party” and collectively as the “Parties”).
WHEREAS,
each of the Series C Investors is the holder of shares of the Company’s Series C
8% Cumulative Convertible Preferred Stock, $.00001 par value per share (the
“
Series C Preferred
Stock
”);
WHEREAS,
the Series C Preferred Stock’s Certificate of Designations (“
Series C
Certificate of
Designations
”) provides that it is senior with respect to the payment of
dividends and liquidation preference to all shares of the Company’s capital
stock other than the Company’s Series B Convertible Preferred Stock, $.00001 par
value per share (the “
Series B Preferred
Stock
”), entitled to seniority as to the payment of dividends or
liquidation preference in relation to the Series C Preferred Stock;
WHEREAS,
the Company previously exchanged all of the issued and outstanding shares of
Series B Preferred Stock for shares of the Company’s Series D Convertible
Preferred Stock, par value $0.00001 per share (the “
Series D Preferred
Stock
”);
WHEREAS,
the Series C Investors have previously consented and agreed that the Series D
Preferred Stock would be senior to the Series C Preferred Stock with respect to
the payment of dividends and liquidation preferences;
WHEREAS,
pursuant to a securities purchase agreement (the “
Purdue Securities Purchase
Agreement
”) substantially in the form attached hereto as
Exhibit A
, the
Company expects to issue and sell 200 shares of a newly created series of the
Company’s preferred stock, designated Series E Convertible Preferred Stock, par
value $0.00001 per share (the “
Series E Preferred
Stock
”) to Purdue Pharma L.P., (“
Purdue
”), which
Series E Preferred Stock shall have the relative rights, privileges and
preferences set forth in the Certificate of Designations, Rights and Preferences
of the Series E Convertible Preferred Stock of Novelos Therapeutics, Inc., in
the form attached hereto as
Exhibit B
(the “
Series E Certificate of
Designations
”) and this Agreement is a condition to closing as stated in
the Purdue Securities Purchase Agreement; and
WHEREAS,
as a condition to closing the Purdue Securities Purchase Agreement, the Company
and the holders of Series D Preferred Stock (the “
Series D Investors
”)
are entering into a Series D Preferred Stock Consent and Agreement to Exchange
pursuant to which each outstanding share of Series D Preferred Stock and
accumulated dividends thereon will be exchanged (the “
Series D Exchange
”)
for no more than 1.083 shares of Series E Preferred Stock and as a condition of
consummating the Series D Exchange, the Series D Investors have required that
the Company enter into this Agreement;
NOW, THEREFORE, in consideration of the
promises referred to below, the Series C Investors, hereby agree with the
Company, severally and not jointly, as follows:
1. Consent
and Acknowledgement.
(a) Each
of the Series C Investors hereby consents to the filing of the Series E
Certificate of Designations, the execution of the Series D Preferred Stock
Consent Exchange Agreement substantially in the form attached hereto as
Exhibit C
(the “
Series D Exchange
Agreement
”), the execution of the Purdue Securities Purchase Agreement
and the consummation of the Series D Exchange.
(b) Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, of a Certificate of Elimination pursuant to
which all matters set forth in the Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock of Novelos Therapeutics, Inc.
with respect to the Company’s Series B Convertible Preferred Stock, $0.00001
(the “
Series B
Preferred Stock
”) will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series B Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as
Exhibit
D
(the “
Series
B Certificate of Elimination
”).
(c) Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, following consummation of the Series D Exchange,
of a Certificate of Elimination pursuant to which all matters set forth in the
Series D Certificate of Designations with respect to the Series D Preferred
Stock will be eliminated from the Company’s Certificate of Incorporation and the
shares that were designated as Series D Preferred Stock will be returned to the
status of authorized but unissued shares of preferred stock of the Company,
without designation as to series, in the form attached hereto as
Exhibit E
(the “
Series D Certificate of
Elimination
”).
(e) Each
of the Series C Investors hereby acknowledges and agrees that it will not be
entitled to an adjustment to either the conversion price of the shares of Series
C Preferred Stock or an adjustment to the exercise price of warrants issued to
it in connection with the sale of Series A Preferred Stock, as a result of the
Series D Exchange or the sale of Series E Preferred Stock to
Purdue. For the avoidance of doubt, this acknowledgement is limited
to the transactions contemplated hereby and does not affect the rights,
privileges and preferences of the Series C Preferred Stock, except as expressly
provided herein.
2.
Seniority of Series E
Preferred Stock
. Each of the Series C Investors hereby agree
that the Series E Preferred Stock will be entitled to seniority as to the
payment of dividends and liquidation preference in relation to the Series C
Preferred Stock and that all references to Series B Preferred Stock in the
Series C Certificate of Designations shall be deemed to be references to the
Series E Preferred Stock.
3.
Transferees
. Each
of the Series C Investors hereby agree that any transferees of any Series C
Preferred Stock, other than a transferee who is already a Party, shall be
required as a condition of such transfer to agree in writing that they will
receive and hold such shares of Series C Preferred Stock subject to the
provisions of this Agreement.
4.
Representations and
Warranties of Company
. The Company represents and warrants to
and agrees with each Series C Investor that:
(a) after
the issuance of the Series E Preferred Stock and the filing of the Series E
Certificate of Designations, the Series C Preferred Stock shall rank junior to
the Series E Preferred Stock but shall rank senior to any and all other
outstanding preferred stock or equity securities of the Company;
(b) Following
the Series D Exchange, the Company will not reissue any shares of Series B
Preferred Stock or Series D Preferred Stock.
5.
Further
Assurances
. Each Party hereto shall do and perform or cause to
be done and performed all such further acts and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
Party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby and thereby.
6.
Choice of
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either Party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in New
York County. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF
THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL
BY JURY. The prevailing Party shall be entitled to recover from the other Party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
7.
Notices
. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier. All notices shall be addressed to the Party to be notified
at the address as follows, or at such other address as such Party may designate
by ten (10) days’ advance written notice to the other Party:
If to the Company:
Novelos Therapeutics,
Inc.
One Gateway Center, Suite
504
Newton, MA 02458
Attention: Chief Executive
Officer
Fax: (617)
964-6331
With a copy to:
Foley Hoag LLP
Seaport World Trade Center
West
155 Seaport Boulevard
Boston, MA 02210
Attn: Paul
Bork
Fax: (617)
832-7000
If to any of the Series C
Investors:
To the addresses set forth on the
signature page hereto.
With a copy to:
Grushko & Mittman,
P.C.
551 Fifth Avenue, Suite
1601
New York, NY 10176
Attn: Edward Grushko,
Esq.
Fax: (212)
697-3575
8.
Counterparts
. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same Agreement. Counterpart signature pages to this Agreement
transmitted by facsimile transmission, by electronic mail in “portable document
format” (“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing an original
signature.
9. This
Agreement shall be null and void and of no further force and effect if the
filing of the Series E Certificate of Designations, the execution of the Series
D Exchange Agreement, the execution of the Purdue Securities Purchase Agreement
and the consummation of the Series D Exchange do not occur on or before 5:00
p.m., New York time, on February 27, 2009.
IN
WITNESS WHEREOF, each of the Parties has executed this Agreement as of the date
first written above.
NOVELOS
THERAPEUTICS, INC.
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
President and Chief Executive
Officer
|
|
|
LONGVIEW
EQUITY FUND, LP
|
|
|
|
|
|
By:
|
|
|
By:
|
|
Name:
|
|
|
Name:
|
|
Title:
|
|
|
Title:
|
|
Address:
|
|
Address:
|
|
|
|
|
|
SUNRISE
EQUITY PARTNERS, LP
|
|
LONGVIEW
INTERNATIONAL EQUITY
FUND,
LP
|
|
|
|
|
|
By:
|
|
|
By:
|
|
Name:
|
|
|
Name:
|
|
|
|
|
Title:
|
|
Address:
|
|
Address:
|
Exhibit
E
Form of
2007 Reg Rights Amendment
[See
Exhibit 10.5 to this filing]
Exhibit
F
Form of
2009 Reg Rights Agreement
[See
Exhibit 10.2 to this filing]
Exhibit
G
Form of
Series B Warrant Amendment
[See
Exhibit 10.4 to this filing]
Exhibit
H
Form of
Series D Warrant Amendment
[See
Exhibit 10.4 to this filing]
Exhibit
I
Form of
Certificate of Elimination of Series B Convertible Preferred Stock
[See
Exhibit 4.3 to this filing]
Exhibit
J
Form of
Certificate of Elimination of Series D Convertible Preferred Stock
[See
Exhibit 4.4 to this filing]
Schedule
A
Series D
Preferred Stock Exchanged for Series E Preferred Stock
|
|
Series D
|
|
|
|
|
|
Series E
|
|
|
|
Shares
|
|
|
Dividend
|
|
|
Shares
|
|
|
|
Before
|
|
|
Accrued
|
|
|
After
|
|
Investor group
|
|
Exchange
|
|
|
4/1/08-2/9/09
|
|
|
Exchange
|
|
|
|
|
|
|
|
|
|
|
|
Xmark
Opportunity Fund, Ltd.
|
|
|
54.80
|
|
|
|
211,665.00
|
|
|
|
59.033300
|
|
Xmark
Opportunity Fund, L.P.
|
|
|
27.40
|
|
|
|
105,832.50
|
|
|
|
29.516650
|
|
Xmark
JV Investment Partners, LLC
|
|
|
27.40
|
|
|
|
105,832.50
|
|
|
|
29.516650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Xmark
|
|
|
109.60
|
|
|
|
423,330.00
|
|
|
|
118.066600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caduceus
Capital Master Fund Limited
|
|
|
51.80
|
|
|
|
200,077.50
|
|
|
|
55.801550
|
|
Caduceus
Capital II, L.P.
|
|
|
39.17
|
|
|
|
151,294.13
|
|
|
|
42.19588250
|
|
Summer
Street Life Sciences Investors
|
|
|
10.00
|
|
|
|
38,625.00
|
|
|
|
10.772500
|
|
UBS
Eucalyptus Fund, L.L.C.
|
|
|
27.170
|
|
|
|
104,944.13
|
|
|
|
29.26888250
|
|
PW
Eucalyptus Fund, Ltd.
|
|
|
3.1350
|
|
|
|
12,108.94
|
|
|
|
3.377178750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Orbimed
|
|
|
131.2750
|
|
|
|
507,049.69
|
|
|
|
141.415994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Knoll
Special Opportunities Fund II Master Fund, Ltd.
|
|
|
49.80
|
|
|
|
192,352.50
|
|
|
|
53.647050
|
|
Europa
International, Inc.
|
|
|
61.80
|
|
|
|
238,702.50
|
|
|
|
66.574050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Knoll
|
|
|
111.60
|
|
|
|
431,055.00
|
|
|
|
120.221100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hunt
BioVentures LP
|
|
|
61.03
|
|
|
|
235,709.06
|
|
|
|
65.739181250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
413.50
|
|
|
$
|
1,597,143.75
|
|
|
|
445.442875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D/E Exchange
Ratio
|
|
|
|
1.0772500
|
|
WARRANT
AMENDMENT AGREEMENT
THIS WARRANT AMENDMENT AGREEMENT
(“
Amendment
”)
is made as of this 11th day of February, 2009 by and among Novelos Therapeutics,
Inc., a Delaware corporation (the “
Company
”)
and the undersigned holders of warrants to purchase 7,500,000 shares of the
Company’s common stock dated May 2, 2007 (the “
Series B
Warrants
”) issued pursuant a certain Securities Purchase Agreement, dated
as of April 12, 2007, by and among the Corporation and the Investors signatory
thereto (as amended on May 2, 2007, the “
Series
B
Purchase
Agreement
”). All capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Series B Warrants.
WHEREAS,
pursuant to Section
21 of the Series B Warrants, the Series B Warrants may amended with the written
consent of the Company and the Requisite Holders (as such term is defined in the
Series B Purchase Agreement) and any such amendment shall apply to all of the
Series B Warrants; and
WHEREAS
, the Company and the
undersigned holders of Series B Warrants, which holders include the Requisite
Holders, desire to amend the Series B Warrants;
NOW, THEREFORE,
for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree that the Series B Warrants are hereby
amended as follows:
1) The
Expiration Date, as defined in Paragraph 1, is hereby changed to December 31,
2015 from April 11, 2013.
6) Section
20 is hereby deleted in its entirety.
[The
remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the undersigned
have executed this Warrant Amendment Agreement or caused its duly authorized
officers to execute this Warrant Amendment Agreement as of the date
first above written.
NOVELOS
THERAPEUTICS, INC.
|
|
|
By:
|
/s/ Harry S.Palmin
|
Name:
Harry S.
Palmin
|
Title:
President and
CEO
|
WARRANTHOLDERS
Xmark
Opportunity Fund, Ltd.
|
|
Caduceus
Capital Master Fund Limited
|
Xmark
Opportunity Fund, L.P.
|
|
Caduceus
Capital II, L.P.
|
Xmark
JV Investment Partners, LLC
|
|
UBS
Eucalyptus Fund, L.L.C.
|
|
|
PW
Eucalyptus Fund, Ltd.
|
By:
|
/s/
Mitchell D. Kaye
|
|
By:
|
/s/ Samuel D. Isaly
|
Name:
Mitchell D. Kaye
|
|
Name:
Samuel D.
Isaly
|
Title:
Authorized
Signatory
|
|
Title:
Managing Partner, Orbimed
Advisors
|
Knoll
Special Opportunities Fund II Master
|
|
Hunt-BioVentures,
L.P.
|
Fund,
Ltd. (1)
|
|
By : HBV
GP, L.L.C, its General Partner
|
Europa
International, Inc.
|
|
|
By:
|
/s/ Fred Knoll
|
|
By:
|
/s/ J.Fulton Murray,
III
|
Name:
Fred Knoll
|
|
Name:
J. Fulton Murray,
III
|
Title:
Portfolio
Manager
|
|
Title:
Manager
|
(1)
Formerly Knoll Capital Fund II Master Fund, Ltd.
WARRANT
AMENDMENT AGREEMENT
THIS WARRANT AMENDMENT AGREEMENT
(“
Amendment
”)
is made as of this 11th day of February, 2009 by and among Novelos Therapeutics,
Inc., a Delaware corporation (the “
Company
”)
and the undersigned holders of warrants to purchase 4,365,381 shares of the
Company’s common stock dated April 11, 2008 (the “
Series D
Warrants
”) issued pursuant a certain Securities Purchase Agreement, dated
as of March 26, 2008, by and among the Corporation and the Investors signatory
thereto (as amended on April 9, 2008, the “
Series
D
Purchase
Agreement
”). All capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Series D Warrants.
WHEREAS,
pursuant to Section
21 of the Series D Warrants, the Series D Warrants may amended with the written
consent of the Company and the Requisite Holders (as such term is defined in the
Series D Purchase Agreement) and any such amendment shall apply to all of the
Series D Warrants; and
WHEREAS
, the Company and the
undersigned holders of Series D Warrants, which holders include the Requisite
Holders, desire to amend the Series D Warrants;
NOW, THEREFORE,
for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree that the Series D Warrants are hereby
amended as follows:
1) The
Expiration Date, as defined in Paragraph 1, is hereby changed to December 31,
2015 from April 11, 2013.
6) Section
20 is hereby deleted in its entirety.
[The
remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the undersigned
have executed this Warrant Amendment Agreement or caused its duly authorized
officers to execute this Warrant Amendment Agreement as of the date
first above written.
NOVELOS
THERAPEUTICS, INC.
|
|
|
By:
|
/s/ Harry S. Palmin
|
Name:
Harry S.
Palmin
|
Title:
President and
CEO
|
WARRANTHOLDERS
Xmark
Opportunity Fund, Ltd.
|
|
Caduceus
Capital Master Fund Limited
|
Xmark
Opportunity Fund, L.P.
|
|
Caduceus
Capital II, L.P.
|
Xmark
JV Investment Partners, LLC
|
|
UBS
Eucalyptus Fund, L.L.C.
|
|
|
PW
Eucalyptus Fund, Ltd.
|
|
|
Summer
Street Life Sciences Hedge Fund
|
|
|
Investors,
LLC
|
By:
|
/s/ Mitchell D.
Kaye
|
|
By:
|
/s/ Samuel D. Isaly
|
Name:
Mitchell D. Kaye
|
|
Name:
Samuel D.
Isaly
|
Title:
Authorized
Signatory
|
|
Title:
Managing Partner, Orbimed
Advisors
|
Knoll
Special Opportunities Fund II Master
|
|
Hunt-BioVentures,
L.P.
|
Fund,
Ltd. (1)
|
|
By : HBV
GP, L.L.C, its General Partner
|
Europa
International, Inc.
|
|
|
|
/s/ Fred Knoll
|
|
By:
|
/s/ J. Fulton Murray,
III
|
|
|
Name:
J. Fulton Murray,
III
|
Title:
Portfolio
Manager
|
|
Title:
Manager
|
(1)
Formerly Knoll Capital Fund II Master Fund, Ltd.
AMENDMENT
NO. 2
TO
REGISTRATION
RIGHTS AGREEMENT
This
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (the “
Amendment
”) dated as
of February 11, 2009, is entered into by and between Novelos Therapeutics, Inc.,
a Delaware Corporation (the “
Company
”) and the
entities listed on the signature pages hereto (collectively, the “
Series D
Holders
”).
WHEREAS,
the Company and the Series D Holders have entered into that certain Registration
Rights Agreement, dated as of May 2, 2007, as amended on April 11, 2008 (as so
amended, the “
Registration
Agreement
”);
WHEREAS,
pursuant to Section 7(a) of the Registration Agreement, the Registration
Agreement may be amended with the written consent of the Company and the
Requisite Holders (as defined in the Registration Agreement);
WHEREAS,
the Company and the Series D Holders, which holders include the Requisite
Holders, desire to amend the Registration Agreement as hereinafter set
forth.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
1.
Amendment
. The
Registration Agreement is hereby amended by deleting the definition of
“Registrable Securities” therein and replacing it with the following
definition:
“
Registrable
Securities
” shall mean 12,000,000 shares of Common Stock (subject to
adjustment in the event of stock splits, stock dividends or similar transactions
with respect to the Common Stock) issuable upon conversion of the Company’s
Series E Convertible Preferred Stock, $.00001 par value per share (the “Series E
Preferred Stock”), which Series E Preferred Stock was issued in exchange for
shares of the Company’s Series D Convertible Preferred Stock, $.00001 par value
per share, pursuant to that certain Consent and Exchange Agreement dated as of
the date hereof by and among the Company and the other parties thereto, the
offer and sale of which shares of Common Stock are currently registered under
the Securities Act pursuant a Registration Statement on Form S-1 (Registration
No. 333-143263);
provided
,
that
, a security
shall cease to be a Registrable Security upon sale pursuant to a Registration
Statement.
2.
Applicable Law
. This
Amendment shall be governed by, and construed and enforced in accordance with,
the substantive laws of the State of New York, without regard to its principles
of conflicts of laws.
3.
Effect on Registration
Agreement
. Except as modified hereby, the Registration Agreement shall
remain in full force and effect.
4.
Counterparts
. This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall be deemed to constitute one
instrument.
IN
WITNESS WHEREOF the undersigned have executed this Amendment to the Registration
Rights Agreement as of the date first above written.
NOVELOS
THERAPEUTICS, INC.
|
|
|
By:
|
/s/
Harry S. Palmin
|
|
Name: Harry
S. Palmin
|
Title: President
and CEO
|
SERIES
D HOLDERS:
|
|
|
|
|
|
Xmark
Opportunity Fund, Ltd.
|
|
Caduceus
Capital Master Fund Limited
|
Xmark
Opportunity Fund, L.P.
|
|
Caduceus
Capital II, L.P.
|
Xmark
JV Investment Partners, LLC
|
|
UBS
Eucalyptus Fund, L.L.C.
|
|
|
PW
Eucalyptus Fund, Ltd.
|
|
|
|
By:
|
/s/
Mitchell D. Kaye
|
|
|
By:
|
/s/
Samuel D. Isaly
|
Name:
|
Mitchell
D. Kaye
|
|
|
Name:
|
Samuel D. Isaly
|
Title:
|
Authorized
Signatory
|
|
|
Title:
|
Managing Partner, Orbimed
Advisors
|
Knoll
Special Opportunities Fund II Master
Fund,
Ltd.
|
|
Hunt-BioVentures,
L.P.
|
Europa
International, Inc. (1)
|
|
By :
HBV GP, L.L.C, its General Partner
|
|
|
|
|
|
|
|
By:
|
/s/
Fred Knoll
|
|
|
By:
|
/s/
J. Fulton Murray, III
|
|
Name:
|
Fred
Knoll
|
|
|
Name:
|
J.
Fulton Murray, III
|
|
Title:
|
Portfolio
Manager
|
|
|
Title:
|
Manager
|
|
(1)
Formerly Knoll Capital Fund II Master Fund Ltd.
FOR IMMEDIATE
RELEASE
NOVELOS
THERAPEUTICS AND MUNDIPHARMA SIGN EXCLUSIVE
COLLABORATION
AGREEMENT IN EUROPE AND JAPAN
-
- -
$95mil
for Cancer Compound through
Equity
Investment, Milestones and Fixed Sales-Based Payments, Plus
Royalties
NEWTON, Mass., February 11,
2009
–
Novelos
Therapeutics, Inc. (OTCBB: NVLT)
, a biopharmaceutical company focused on
the development of therapeutics to treat cancer and hepatitis, announced today
that Novelos signed an exclusive collaboration agreement with Mundipharma
International Corporation Limited to commercialize in Europe and Asia / Pacific
(excluding China) Novelos’ lead compound, NOV-002, which is in a pivotal Phase 3
trial for non-small cell lung cancer under a Special Protocol Assessment (SPA)
and Fast Track.
NOV-002 has also
demonstrated positive results in Phase 2 trials for other cancer
indications.
In
parallel, Novelos has also closed a private placement with Purdue Pharma L.P.
resulting in $10 million in gross proceeds through the sale of convertible
preferred stock and warrants to purchase its common stock. Novelos
sold 200 shares of Series E convertible preferred stock, having a stated value
equal to $50,000 per share, a cumulative annual dividend of 9% of stated value
and a conversion price of $0.65 per share of common stock. Purdue
also received warrants expiring on December 31, 2015 to purchase an aggregate of
9,230,769 shares of common stock at an exercise price of $0.65 per
share.
Under the
terms of the collaboration agreement, Novelos may receive up to $25 million of
launch milestones and $60 million of fixed sales-based
payments. Novelos will receive a double-digit royalty, which
increases as the annual sales increase in the licensed
territories. Mundipharma will be responsible for certain development
activities, regulatory submissions and commercialization of NOV-002 in the
licensed territories. Novelos retains all rights and responsibilities
in the U.S.A. and the rest of the Americas.
“I am
very pleased to be collaborating with Mundipharma and Purdue, which are
innovative independent associated pharmaceutical companies with ample resources
and a proven track record of developmental and commercialization expertise,”
said Harry Palmin, President and CEO of Novelos. “This transaction
will provide the remaining capital to complete our pivotal, fully-enrolled,
840-patient Phase 3 lung cancer trial, which is currently expected to conclude
in late 2009.”
According
to Åke Wikström, Mundipharma’s Regional Director – Europe, “NOV-002 is an
important addition to our oncology pipeline and reinforces our commitment to
increasing the treatment options available for cancer patients and improving
their quality of life through the development and commercialization of novel
therapeutics.”
Ferghana
Partners (New York, London and Boston) served as financial and strategic
transaction advisor to Novelos. The preferred stock and warrants were
issued in a private placement transaction under Regulation D of the Securities
of Act of 1933 and have not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and may not be offered or sold in the
United States absent registration with the Securities and Exchange Commission
(the “SEC”) or an applicable exemption from the registration
requirements. Novelos has agreed to file a registration statement
with the SEC covering resales of the common stock issuable upon conversion of
the newly issued shares of preferred stock and upon exercise of the
warrants.
About
Mundipharma International Corporation Limited and Purdue Pharma
L.P.
The
Purdue/Mundipharma/Napp independent associated companies are privately owned
companies and joint ventures covering the world's pharmaceutical markets. The
companies have particular expertise in drug delivery systems and these are
applied to a range of analgesics, respiratory treatments, and cardiovascular
drugs. The companies also have a growing presence in the oncology market, and
products in the areas of attention deficit hyperactivity disorder, antiseptics
and laxatives. For more information:
www.mundipharma.co.uk
About
Novelos Therapeutics, Inc.
Novelos
Therapeutics, Inc. is a biopharmaceutical company commercializing oxidized
glutathione-based compounds for the treatment of cancer and
hepatitis. NOV-002, the lead compound currently in Phase 3
development for lung cancer under SPA and Fast Track, acts together with
chemotherapy as a chemoprotectant and a chemopotentiator. NOV-002 is
also in Phase 2 development for early-stage breast cancer and
chemotherapy-resistant ovarian cancer. Novelos has a partnership with
Mundipharma to develop and commercialize NOV-002 in Europe and
Japan. Novelos’ second compound, NOV-205, acts as a hepatoprotective
agent with immunomodulating and anti-inflammatory properties. NOV-205
is in Phase 1b development for chronic hepatitis C
non-responders. Both compounds have been partnered with Lee’s Pharm
in China. For additional information about Novelos please visit
www.novelos.com
# #
#
COMPANY
|
|
INVESTOR
RELATIONS
|
Harry
S. Palmin, President and CEO
|
|
Stephen
Lichaw
|
Ph:
617-244-1616 x11
|
|
Ph:
201-240-3200
|
Email:
hpalmin@novelos.com
|
|
Email:
slichaw@novelos.com
|
Novelos
Therapeutics, Inc.
One
Gateway Center, Suite 504
Newton,
MA 02458
This
news release contains forward-looking statements. Such statements are
valid only as of today, and we disclaim any obligation to update this
information. These statements are subject to known and unknown risks
and uncertainties that may cause actual future experience and results to differ
materially from the statements made. These statements are based on
our current beliefs and expectations as to such future outcomes. Drug
discovery and development involve a high degree of risk. Factors that
might cause such a material difference include, among others, uncertainties
related to the ability to attract and retain partners for our technologies, the
identification of lead compounds, the successful preclinical development
thereof, the completion of clinical trials, the FDA review process and other
government regulation, our pharmaceutical collaborators’ ability to
successfully develop and commercialize drug candidates, competition from other
pharmaceutical companies, product pricing and third-party
reimbursement.