SUBSEQUENT EVENTS |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Mar. 31, 2011 |
Dec. 31, 2010 |
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| SUBSEQUENT EVENTS |
Merger Agreement
On
April 8, 2011, the Company entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with Cellectar, Inc.
(“Cellectar”) and Cell Acquisition Corp. (the
“Merger Subsidiary”), a wholly-owned subsidiary of
Novelos, pursuant to which Cellectar was merged into the Merger
Subsidiary (the “Acquisition”). As a result
of the Acquisition, the Merger Subsidiary, which has been renamed
Cellectar, Inc., owns all assets of and operates the business
previously owned and operated by Cellectar. Prior to the
Acquisition, Cellectar was in the business of developing drugs for
the treatment and diagnosis of cancer. The Company will
continue to develop Cellectar’s compounds following the
Acquisition.
As
consideration for the Acquisition, the former stockholders of
Cellectar received aggregate consideration consisting of a number
of shares of Novelos common stock constituting, after giving effect
to the Acquisition but before giving effect to the concurrent
private placement of the Company’s securities described
below, approximately 85% of the outstanding shares of Novelos
common stock. Prior to the Acquisition, the Company
amended and restated its certificate of incorporation and in
connection therewith, among other things, effected a 1-for-153
reverse split of its common stock (the “Reverse
Split”). Immediately following the effectiveness
of the Reverse Split, there were 2,959,871 shares of common stock
outstanding, and the Company issued 17,001,596 shares of its common
stock to the former stockholders of Cellectar upon the
effectiveness of the Acquisition.
Rodman
& Renshaw, LLC (“Rodman”), financial advisor to
Novelos in connection with the Acquisition, received a cash fee of
$250,000 upon the completion of the Acquisition in consideration
for their services. XMS Capital Partners, the financial
advisor to Cellectar in connection with the Acquisition, received a
cash fee of $200,000 upon the completion of the Acquisition in
consideration for their services.
Accounting
principles generally accepted in the United States require that a
company whose security holders retain the majority voting interest
in the combined business be treated as the acquirer for financial
reporting purposes. Accordingly, the Acquisition will be
accounted for as a reverse acquisition whereby Cellectar, Inc. will
be treated as the accounting acquirer.
Securities Purchase Agreement
Concurrently
with the execution of the Merger Agreement, the Company entered
into a Securities Purchase Agreement with certain accredited
investors under which the Company sold an aggregate of 6,846,537
units, each unit consisting of one share of its common stock and a
warrant to purchase one share of its common stock, at a price of
$0.75 per unit, for gross proceeds of approximately
$5,135,000. The warrants have an exercise price of $0.75
and expire on March 31, 2016. 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.
The
Securities Purchase Agreement includes a requirement that the
Company file with the SEC no later than October 5, 2011, a
registration statement covering the resale of the shares of common
stock, and the shares of common stock underlying the warrants,
issued pursuant to the Securities Purchase
Agreement. The Company is also required to use
commercially reasonable efforts to have the registration statement
declared effective by December 4, 2011, and to keep the
registration statement continuously effective under the Securities
Act of 1933, as amended (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 the Company fails to file the registration statement
within the timeframe specified by the Securities Purchase
Agreement, or if it fails to obtain effectiveness of this
registration on or prior to the December 4, 2011 (if there is no
review by the SEC) or by January 3, 2012 (if there is review by the
SEC) with respect to the maximum number of shares permitted to be
registered by the SEC, the Company will be required to pay to the
purchasers 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 units purchased until the
registration statement is filed or declared effective, as
applicable. The Company will be allowed to suspend the
use of the registration statement for not more than 30 consecutive
days, on not more than two occasions, in any 12 month
period. The Company has also granted piggy-back
registration rights with respect to any shares of common stock that
it is required to exclude from the registration statement as a
condition of its effectiveness, and has also agreed to file further
registration statements with respect to any such shares six months
after the effective date of the initial registration
statement.
The
Company paid to Rodman, the placement agent for the financing, a
cash fee equal to $200,000 and warrants to purchase 192,931 shares
of its common stock in consideration for their advisory services
with respect to the financing pursuant to the placement agency
agreement between Rodman and the Company. Rodman is
entitled to registration rights with respect to the shares of
common stock issuable upon exercise of these
warrants. The warrants have the same terms as those
issued to the investors in the private placement.
As
a result of the financing, warrants to purchase 105,042 shares of
common stock at $10.71 per share, giving effect to the Reverse
Split, became exercisable for $0.75 per share according to their
terms. On May 3, 2011, 18,153 shares of common stock were issued in
connection with the cashless exercise 27,311 of these
warrants.
Changes in Directors and Executive Officers
Effective
April 8, 2011, prior to the completion of the Acquisition, Michael
J. Doyle, Sim Fass and David B. McWilliams resigned from the
Company’s board of directors and their respective committee
appointments.
Effective
April 8, 2011, as a condition to the completion of the Acquisition,
Jamey P. Weichert, Thomas Rockwell Mackie, John Neis, John E.
Niederhuber and Michael F. Tweedle were appointed to the
Company’s board of directors. Jamey P. Weichert,
Thomas Rockwell Mackie and John Neis previously served on the board
of directors of Cellectar.
On
April 25, 2011, the Company’s board of directors appointed
the following individuals to serve on the following committees of
the board of directors.
Howard
M. Schneider, John Neis and John E. Niederhuber were appointed to
the audit committee of the board of directors. Mr.
Schneider was appointed as the chairman of that committee, a
position that he held prior to the Acquisition.
Thomas
Rockwell Mackie, James S. Manuso, John Neis and Michael F. Tweedle
were appointed to the compensation committee of the board of
directors. Dr. Mackie was appointed as the chairman of that
committee.
Stephen
A. Hill, John E. Niederhuber and James S. Manuso were appointed to
the nominating and corporate governance committee of the board of
directors. Dr. Hill was appointed as the chairman of
that committee.
Amendment of Certificate of Incorporation
Effective
April 7, 2011 the Company’s certificate of incorporation was
amended to eliminate the Certificate to Set Forth Designations,
Voting Powers, Preferences, Restrictions and Relative Rights of
Series C 8% Cumulative Convertible Preferred
Stock. There had not been any shares of Series C
preferred stock outstanding since December 2010.
Effective
April 7, 2011 the Company’s certificate of incorporation was
amended to eliminate the Certificate of Designations, Preferences
and Rights of Series E Convertible Preferred
Stock. There had not been any shares of Series E
preferred stock outstanding since December 2010.
Prior to the closing of the Acquisition on April 8, 2011, the
Company amended and restated its certificate of incorporation in
order to (a) effect the reverse split; (b) reduce the number of
shares of authorized common stock from 750,000,000 to 150,000,000;
(c) eliminate the right of the stockholders to act by written
consent; and (d) classify the board of directors into three
classes. Class I directors will stand for re-election at
the Company’s next annual meeting of stockholders, Class II
directors will stand for re-election at the 2012 annual meeting of
stockholders, and Class III directors will stand for re-election at
the 2013 annual meeting of stockholders. Thomas Rockwell
Mackie, James S. Manuso and John Niederhuber serve as Class I
directors, Stephen A. Hill, Michael F. Tweedle and John Neis serve
as Class II directors, and Harry S. Palmin, Jamey P. Weichert and
Howard M. Schneider serve as Class III
directors.
|
Merger Agreement
On
April 8, 2011, the Company entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with Cellectar, Inc.
(“Cellectar”) and Cell Acquisition Corp. (the
“Merger Subsidiary”), a wholly owned subsidiary of
Novelos, pursuant to which Cellectar was merged into the Merger
Subsidiary (the “Acquisition”). As a result
of the Acquisition, the Merger Subsidiary, which has been renamed
Cellectar, Inc., owns all assets and operates the business
previously owned and operated by Cellectar. Prior to the
Acquisition, Cellectar was in the business of developing drugs for
the treatment and diagnosis of cancer. The Company will
continue to develop Cellectar’s compounds following the
Acquisition.
As
consideration for the Acquisition, the former stockholders of
Cellectar received aggregate consideration consisting of
a number of shares of Novelos common stock constituting, after
giving effect to the Acquisition but before giving effect to the
concurrent private placement of our securities described below,
approximately 85% of the outstanding shares of Novelos common
stock. Prior to the Acquisition, the Company amended and
restated its certificate of incorporation and in connection
therewith, among other things, effected a 1-for-153 reverse split
of its common stock (the “Reverse
Split”). Immediately following the effectiveness
of the Reverse Split, there were approximately 2,959,871 shares of
our common stock outstanding, and the Company issued 17,001,596
shares of our common stock to the former stockholders of Cellectar
upon the effectiveness of the Acquisition.
Rodman
& Renshaw, LLC (“Rodman”), financial advisor to
Novelos in connection with the Acquisition, received a cash fee of
$250,000 upon the completion of the Acquisition in consideration of
their services. XMS Capital Partners, the financial
advisor to Cellectar in connection with the Acquisition, received a
cash fee of $200,000 upon the completion of the Acquisition in
consideration of their services.
Securities Purchase Agreement
Concurrently
with the execution of the Merger Agreement, the Company entered
into a Securities Purchase Agreement with certain accredited
investors under which the Company sold an aggregate of 6,846,537
units, each unit consisting of one share of its common stock and a
warrant to purchase one share of its common stock, at a price of
$0.75 per unit, for gross proceeds of approximately
$5,135,000. The warrants have an exercise price of $0.75
and expire on March 31, 2016. 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.
The
Securities Purchase Agreement includes a requirement that the
Company file with the Securities and Exchange Commission
(“SEC”) no later than October 5, 2011, a registration
statement covering the resale of the shares of common stock, and
the shares of common stock underlying the warrants, issued pursuant
to the Securities Purchase Agreement. The Company is
also required to use our commercially reasonable efforts to have
the registration statement declared effective by December 4, 2011,
and to keep the registration statement continuously effective under
the Securities Act of 1933, as amended (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 the Company fails to file the registration statement
within the timeframe specified by the Securities Purchase
Agreement, or if it fails to obtain effectiveness of this
registration on or prior to the December 4, 2011 (if there is no
review by the SEC) or by January 3, 2012 (if there is review by the
SEC) with respect to the maximum number of shares permitted to be
registered by the SEC, the Company will be required to pay to the
purchasers 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 units purchased until the
registration statement is filed or declared effective, as
applicable. The Company will be allowed to suspend the
use of the registration statement for not more than 30 consecutive
days, on not more than two occasions, in any 12 month
period. The Company has also granted piggy-back
registration rights with respect to any shares of common stock that
it is required to exclude from the registration statement as a
condition of its effectiveness, and has also agreed to file further
registration statements with respect to any such shares six months
after the effective date of the initial registration
statement.
The
Company paid to Rodman, the placement agent for the financing, a
cash fee equal to $200,000 and warrants to purchase 192,931 shares
of its common stock in consideration for their advisory services
with respect to the financing pursuant to the placement agency
agreement between Rodman and the Company. Rodman is
entitled to registration rights with respect to the shares of
common stock issuable upon exercise of these
warrants. The warrants have the same terms as those
issued to the investors in the private placement.
Changes in Directors and Executive Officers
Effective
April 8, 2011, prior to the completion of the Acquisition, Michael
J. Doyle, Sim Fass and David B. McWilliams resigned from the
Company’s board of directors and their respective committee
appointments.
Effective
April 8, 2011, as a condition to the completion of the Acquisition,
Jamey P. Weichert, Thomas Rockwell Mackie, John Neis, John E.
Niederhuber and Michael F. Tweedle were appointed to the
Company’s board of directors. Committee
assignments have not yet been determined. Jamey P.
Weichert, Thomas Rockwell Mackie and John Neis, previously served
on the board of directors of Cellectar.
Amendment of Certificate of Incorporation
Effective
April 7, 2011 the Company’s certificate of incorporation was
amended to eliminate the Certificate to Set Forth Designations,
Voting Powers, Preferences, Restrictions and Relative Rights of
Series C 8% Cumulative Convertible Preferred
Stock. There had not been any shares of Series C
preferred stock outstanding since December 2010.
Effective
April 7, 2011 the Company’s certificate of incorporation was
amended to eliminate the Certificate of Designations, Preferences
and Rights of Series E Convertible Preferred
Stock. There had not been any shares of Series E
preferred stock outstanding since December 2010.
Prior
to the closing of the Acquisition on April 8, 2011, the Company
amended and restated its certificate of incorporation in order (a)
to effect the reverse split; (b) to reduce the number of shares of
our authorized common stock from 750,000,000 to 150,000,000; (c) to
eliminate the right of the stockholders to act by written consent;
and (d) to classify the board of directors into three
classes. Class I directors will stand for re-election at
the Company’s next annual meeting of stockholders, Class II
directors will stand for re-election at the 2012 annual meeting of
stockholders, and Class III directors will stand for re-election at
the 2013 annual meeting of stockholders. Thomas Rockwell
Mackie, James S. Manuso and John Niederhuber serve as Class I
directors, Stephen A. Hill, Michael F. Tweedle and John Neis serve
as Class II directors, and Harry S. Palmin, Jamey P. Weichert and
Howard M. Schneider serve as Class III directors.
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