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. ____
|
|
Original
Issue Date: May 2, 2007
|
NOVELOS
THERAPEUTICS, INC.
WARRANT
TO PURCHASE [_____________] SHARES OF
COMMON
STOCK, PAR VALUE $0.00001 PER SHARE
FOR
VALUE
RECEIVED, [_________________]
(“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 May 2, 2012 (the
“Expiration
Date”),
at an
exercise price per share equal to $1.25 (the exercise price in effect being
herein called the “Warrant
Price”),
[______________]
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 Agreement to Exchange
and Consent, dated as of May 2, 2007, by and among the Corporation, Longview
Fund, LP, Longview Equity Fund LP, Longview International Equity Fund LP and
Sunrise Equity Partners, LP.
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. Subject to such restrictions, 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 such other documents
as
may be reasonably required by the Corporation, including, if required by the
Corporation, an opinion of its counsel to the effect that such transfer is
exempt from the registration requirements of the Securities Act, to establish
that such transfer is being made in accordance with the terms hereof, 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.
(a) Subject
to the provisions hereof, the Warrantholder may exercise this Warrant in whole
or in part by means of a cashless exercise at any time prior to its expiration
upon surrender of the Warrant (or such portion of this Warrant being so
exercised) together with the Net Issue Election Notice annexed hereto as
Appendix
A
duly
executed, at the office of the Corporation. Thereupon, and in no event later
than three (3) Business Days after the Corporation’s receipt of the Net Issue
Election Notice, the Corporation shall issue to the Warrantholder certificate(s)
for such number of fully paid, validly issued and nonassessable shares of Common
Stock as is computed using the formula immediately below. 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.
X
=
Y
(A -
B)
A
where
X
= the
number of shares of Common Stock to be issued to the Warrantholder upon exercise
of this Warrant pursuant to this Section 18;
Y
= the
total
number of shares of Common Stock covered by this Warrant which the Warrantholder
has surrendered at such time for cashless exercise (including both shares to
be
issued to the Warrantholder and shares to be canceled as payment
therefor);
A
= the
Market Price of one share of Common Stock as at the time the net issue election
is made; and
B
= the
Warrant Price in effect under this Warrant at the time the net issue election
is
made.
The
Warrant Shares issued pursuant to this Section 18 shall be deemed to be issued
to the exercising holder or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which the Net Issue Election
Notice shall have been surrendered (or evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Corporation) to the
Corporation.
“Market
Price”
as
of a
particular date (the “Valuation
Date”)
shall
mean the following: (a)
if
the Common Stock is then listed on a national stock exchange, the Market Price
shall be the closing sale price of one share of Common Stock on such exchange
on
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 Common Stock in the most recent ten
(10) trading sessions during which the Common Stock has traded; (b) if the
Common Stock is then included in the OTC Bulletin Board (the “OTCBB”),
the
Market Price shall be the closing sale price of one share of Common Stock on
the
OTCBB 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 OTCBB 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
Common Stock in the most recent ten (10) trading sessions during which the
Common Stock has traded, (c) if the Common Stock is then included in the “pink
sheets,” the Market Price shall be the closing sale price of one share of Common
Stock 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 Common Stock in the most recent ten (10) trading
sessions during which the Common Stock has traded. The
Board
of Directors of the Corporation shall respond promptly, in writing, to an
inquiry by the Warrantholder prior to the exercise hereunder as to the Market
Price of a share of Common Stock as determined by the Board of Directors of
the
Corporation.
(b) (I)
In no
event shall the Warrantholder be entitled to exercise any portion of this
Warrant in excess of that portion of this Warrant upon exercise of which the
sum
of (1) the number of shares of Common Stock beneficially owned by the
Warrantholder and its Affiliates (other than shares of Common Stock which may
be
deemed beneficially owned through the ownership of the unexercised portion
of
the Warrant or the unexercised or unconverted portion of any other security
of
the Warrantholder subject to a limitation on conversion analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the exercise of the portion of this Warrant with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Warrantholder and its Affiliates of more than 4.99% of the
then
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, 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.
(II)
In
no event shall the Warrantholder be entitled to exercise any portion of this
Warrant in excess of that portion of this Warrant upon exercise of which the
sum
of (1) the number of shares of Common Stock beneficially owned by the
Warrantholder and its Affiliates (other than shares of Common Stock which may
be
deemed beneficially owned through the ownership of the unexercised portion
of
the Warrant or the unexercised or unconverted portion of any other security
of
the Warrantholder subject to a limitation on conversion analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the exercise of the portion of this Warrant with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Warrantholder and its Affiliates of more than 9.99% of the
then
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. The Warrantholder may waive the limitations set forth herein by
sixty-one (61) days written notice to the Corporation.
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. 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
15. 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
16. 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
17. Amendments.
This
Warrant shall not be amended without the prior written consent of the
Corporation and the Warrantholder.
Section
18. 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.
Section
19. Certain
Definitions.
When used herein, the following terms shall have the respective meanings
indicated:
“Affiliate”
means
any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act.
“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.
“Principal
Market”
means,
as of the Original Issuance Date the OTCBB.
“Trading
Day”
means
any day on which the Common Stock is purchased and sold on the Principal
Market.
IN
WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed,
as
of the 2nd
day of
May, 2007.
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NOVELOS
THERAPEUTICS, INC. |
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By: |
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Name:
Title:
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APPENDIX
A
NOVELOS
THERAPEUTICS, INC.
NET
ISSUE
ELECTION NOTICE
To:
NOVELOS THERAPEUTICS, INC.
Date:
_________________________
The
undersigned hereby elects under Section 3(a) of the Warrant to surrender the
right to purchase ____________ shares of Common Stock pursuant to this Warrant
and hereby requests the issuance of _____________ shares of Common Stock. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated
below.
_________________________________________
Signature
_________________________________________
Name
for
Registration
_________________________________________
Mailing
Address