--------------------------------------------------------------------------------
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
by and among
NexMed, Inc., as Issuer and Seller
and
the Purchasers named herein, as Purchasers
July 2, 2003
------------------------------------------------------------------------------
Table of Exhibits and Schedules
-------------------------------
Exhibit A Form of Warrant
Exhibit B Form of Investor Rights Agreement
Exhibit C Form of Opinion of Seller's Counsel
Exhibit D Form of Opinion of Nevada Counsel
Schedule 1 Purchasers and Shares of Common Stock and Warrants Purchased
Schedule 3.10 Litigation
Schedule 3.11 Absence of Certain Changes
Schedule 3.15 Intellectual Property
Schedule 3.19 Subsidiaries and Investments
Schedule 3.20 Capitalization
Schedule 3.21 Options, Warrants, Rights
Schedule 3.22 Employees, Employment Agreements and Employee Benefit Plans
Schedule 3.27 Brokers
COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as of
July 2, 2003, by and among NexMed, Inc., a Nevada corporation (the "Seller"),
and each of the persons listed on Schedule 1 hereto (each is individually
referred to as a "Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, each of the Purchasers is willing to purchase from the Seller, and
the Seller desires to sell to the Purchasers, shares of the Seller's common
stock, $0.001 par value (the "Common Stock"), and Common Stock Purchase Warrants
(the "Warrants") entitling the holders thereof to purchase additional shares of
Common Stock, for an aggregate purchase price between $5 million and $10.5
million, as more fully set forth herein.
NOW THEREFORE, in consideration of the mutual promises and representations,
warranties, covenants and agreements set forth herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 Purchase and Sale.
(a) On the terms and subject to the conditions set forth in this Agreement,
at the Closing (as defined in Section 2.2), the Seller will sell and each of the
Purchasers will purchase the number of shares of Common Stock set forth on
Schedule 1 hereto at a price per share equal to $3.60. In addition, the Seller
will sell and each Purchaser will purchase at the Closing Warrants to purchase
the number of shares of Common Stock equal to 35% of the number of Shares
purchased by such Purchaser at Closing hereunder as set forth on Schedule 1
hereto.
(b) The shares of Common Stock to be issued upon Closing hereunder are
referred to herein as the "Shares," and the shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares."
1.2 Terms of the Warrants. The terms and provisions of the Warrants are
more fully set forth in the form of Common Stock Purchase Warrant, attached
hereto as Exhibit A.
1.3 Transfers; Legends.
(a) Except as required by federal securities laws and the securities law of
any state or other jurisdiction within the United States, the Shares, Warrants
and Warrant Shares (collectively, the "Securities") may be transferred, in whole
or in part, by any of the Purchasers at any time. Any such transfer shall be
made by a Purchaser in accordance with applicable law. In connection with any
transfer of Securities other than pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or to the Seller, the Seller may require the transferor thereof to furnish to
the Seller an opinion of counsel selected by the transferor, such counsel and
the form and substance of which opinion shall be
reasonably satisfactory to the Seller and Seller's counsel, to the effect that
such transfer does not require registration under the Securities Act; provided,
that in the case of a transfer pursuant to Rule 144 under the Securities Act, no
opinion shall be required if the transferor provides the Company with a
customary seller's representation letter, and if such sale is not pursuant to
subsection (k) of Rule 144, a customary broker's representation letter and Form
144. Notwithstanding the foregoing, the Seller hereby consents to and agrees to
register on the books of the Seller and with any transfer agent for the
securities of the Seller, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Seller that it is an Affiliate of such Purchaser and
an "accredited investor" as defined in Rule 501(a) under the Securities Act and
that it is acquiring the Securities solely for investment purposes (subject to
the qualifications hereof) and not with a view to, or for, resale, distribution
or fractionalization thereof in whole or in part in violation of the Securities
Act. Any transferee shall agree to be bound by the terms of the Investor Rights
Agreement and this Agreement. The Seller shall reissue certificates evidencing
the Securities upon surrender of certificates evidencing the Securities being
transferred in accordance with this Section 1.3(a). In connection with any
transfer of Warrants after the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective under the Securities Act,
the transferor of such Warrants shall reimburse the Seller for its reasonable
out of pocket costs in connection with such transfer (including without
limitation the reasonable attorneys fees for preparing and filing a prospectus
supplement with the SEC and/or delivering an updated opinion letter to the
Seller's transfer agent). An "Affiliate" means any Person (as such term is
defined below) that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser. A "Person" means any individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.
(b) The certificates representing the Securities shall bear the following
legends:
"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON EXERCISE OF SECURITIES EVIDENCED
BY, THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED."
"THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS
AGREEMENT DATED AS OF JULY 2, 2003, AS AMENDED FROM
2
TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING
SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY."
ARTICLE II - PURCHASE PRICE AND CLOSING
2.1 Purchase Price. The aggregate purchase price (the "Purchase Price") to
be paid by the Purchasers to the Seller to acquire the Shares and the applicable
Warrants shall be the total amounts set forth on Schedule 1 hereto.
2.2 The Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") will take place as promptly as practicable, but no
later than five (5) business days following satisfaction or waiver of the
conditions set forth in Article 6.1(a) and 6.2(a) (other than those conditions
which by their terms are not to be satisfied or waived until the Closing), at
the offices of Seller's counsel. The date on which the Closing occurs is the
"Closing Date."
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power; Subsidiaries. The Seller and its
Subsidiaries are corporations duly incorporated, validly existing and in good
standing under the laws of the state in which they are incorporated, and have
all corporate powers required to carry on their business as now conducted. The
Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect on the Seller or any
of its Subsidiaries. For purposes of this Agreement, the term "Material Adverse
Effect" means, with respect to any person or entity, a material adverse effect
on its and its Subsidiaries' condition (financial or otherwise), business,
properties, assets, liabilities (including contingent liabilities), results of
operations or current prospects, taken as a whole. True and complete copies of
the Seller's Articles of Incorporation, as amended, and Bylaws, as amended, as
currently in effect and as will be in effect on the Closing Date (collectively,
the "Articles and Bylaws"), have previously been provided to the Purchasers. For
purposes of this Agreement, the term "Subsidiary" or "Subsidiaries" means, with
respect to any entity, any corporation or other organization of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are
directly or indirectly owned by such entity or of which such entity is a partner
or is, directly or indirectly, the beneficial owner of 50% or more of any class
of equity securities or equivalent profit participation interests. The Seller
has no Subsidiaries other than the following, each of which, unless otherwise
indicated, is wholly-owned by the Seller:
3
(a) NexMed Holdings, Inc., a Delaware corporation,
(b) NexMed (U.S.A.), Inc., a Delaware corporation,
(1) New Brunswick Medical Inc. a Delaware corporation and a wholly-
owned subsidiary of NexMed (U.S.A.), Inc.,
(c) NexMed International Limited, organized under British Virgin Islands
law,
(1) NexMed (Americas) Limited, organized under Nova Scotia law and a
wholly-owned subsidiary of NexMed International Limited, and
(2) NexMed International (Hong Kong) Ltd. organized under Hong Kong
law and a wholly-owned subsidiary of NexMed International
Limited, a wholly-owned subsidiary of NexMed International
Limited.
3.2 Corporate Authorization. The execution, delivery and performance by the
Seller of this Agreement, the Warrants and the Investor Rights Agreement, and
each of the other documents executed pursuant to and in connection with this
Agreement (collectively, the "Related Documents"), and the consummation of the
transactions contemplated hereby and thereby (including, but not limited to, the
sale and delivery of the Shares and the Warrants, and the subsequent issuance of
the Warrant Shares upon exercise of the Warrants) have been duly authorized, and
no additional corporate or stockholder action is required for the approval of
this Agreement. The Warrant Shares have been duly reserved for issuance by the
Seller. This Agreement and the Related Documents have been or, to the extent
contemplated hereby or by the Related Documents, will be duly executed and
delivered and constitute the legal, valid and binding agreement of the Seller,
enforceable against the Seller in accordance with their terms, except as may be
limited by bankruptcy, reorganization, insolvency, moratorium and similar laws
of general application relating to or affecting the enforcement of rights of
creditors, and except as enforceability of its obligations hereunder are subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.3 Charter, Bylaws and Corporate Records. The minute books of the Seller
and its Subsidiaries contain complete and accurate records of all meetings and
other corporate actions of the board of directors, committees of the board of
directors, incorporators and stockholders of the Seller and its Subsidiaries
from September 15, 1995 to the date hereof. All material corporate decisions and
actions have been validly made or taken. All corporate books, including without
limitation the share transfer register, comply with applicable laws and
regulations and have been regularly updated. Such books fully and correctly
reflect all the decisions of the stockholders.
4
3.4 Governmental Authorization. Except as otherwise specifically
contemplated in this Agreement and the Related Documents, and except for: (i)
the filings referenced in Section 5.10; (ii) the filing of a Form D with respect
to the Shares and Warrants under Regulation D under the Securities Act; (iii)
the filing of the Registration Statement with the Commission; (iv) the
application(s) to each trading market for the listing of the Shares and the
Warrant Shares for trading thereon; and (v) any filings required under state
securities laws that are permitted to be made after the date hereof, the
execution, delivery and performance by the Seller of this Agreement and the
Related Documents, and the consummation of the transactions contemplated hereby
and thereby (including, but not limited to, the sale and delivery of the Shares
and Warrants and the subsequent issuance of the Warrant Shares upon exercise of
the Warrants, as applicable) by the Seller require no action by or in respect
of, or filing with, any governmental body, agency, official or authority.
Notwithstanding the foregoing, the Seller makes no representation or warranty
with respect to the compliance of the transactions contemplated by this
Agreement with Rule 4350(i) of the National Association of Securities Dealers,
Inc. ("NASD"), except that the Company has been advised by the NASD that
discussions with the Company and the review by the NASD of drafts of this
Agreement and the Related Documents should cause the NASD to conclude that the
transactions contemplated hereby should not be integrated with the Company's
April 21, 2003 offering of Series B 8% Cumulative Convertible Preferred Stock
and warrants to purchase shares of Common Stock.
3.5 Non-Contravention. The execution, delivery and performance by the
Seller of this Agreement and the Related Documents, and the consummation by the
Seller of the transactions contemplated hereby and thereby (including the
issuance of the Shares and Warrant Shares) do not and will not (a) contravene or
conflict with the Articles (as amended by the Certificate of Designation) and
Bylaws of the Seller and its Subsidiaries or any material agreement to which the
Seller is a party or by which it is bound; (b) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Seller or its
Subsidiaries; (c) constitute a default (or would constitute a default with
notice or lapse of time or both) under or give rise to a right of termination,
cancellation or acceleration or loss of any benefit under any material
agreement, contract or other instrument binding upon the Seller or its
Subsidiaries or under any material license, franchise, permit or other similar
authorization held by the Seller or its Subsidiaries; or (d) result in the
creation or imposition of any Lien (as defined below) on any asset of the Seller
or its Subsidiaries. For purposes of this Agreement, the term "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest,
claim or encumbrance of any kind in respect of such asset.
3.6 SEC Documents. The Seller is obligated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") to file reports pursuant to
Sections 13 or 15(d) thereof (all such reports filed or required to be filed by
the Seller, including all exhibits thereto or incorporated therein by reference,
and all documents filed by the Seller under the Securities Act hereinafter
called the "SEC Documents"). The Seller has filed all reports or other documents
5
required to be filed under the Exchange Act. All SEC Documents filed by the
Seller as of or for any period beginning on or after January 1, 2001, (i) were
prepared in all material respects in accordance with the requirements of the
Exchange Act and (ii) did not at the time they were filed (or, if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Seller has previously delivered to the Purchaser a correct
and complete copy of each report which the Seller filed with the Securities and
Exchange Commission (the "SEC" or the "Commission") under the Exchange Act for
any period ending on or after December 31, 2002 (the "Recent Reports"). None of
the information about the Seller or any of its Subsidiaries which has been
disclosed to the Purchasers herein or in the course of discussions and
negotiations with respect hereto which is not disclosed in the Recent Reports is
or was required to be so disclosed, and no material non-public information has
been disclosed to the Purchasers.
3.7 Financial Statements. Each of the Seller's audited consolidated balance
sheet and related consolidated statements of income, cash flows and changes in
stockholders' equity (including the related notes) as of and for the years ended
December 31, 2002 and December 31, 2001, as contained in the Recent Reports
(collectively, the "Seller's Financial Statements" or the "Financial
Statements") (x) present fairly in all material respects the financial position
of the Seller and its Subsidiaries on a consolidated basis as of the dates
thereof and the results of operations, cash flows and stockholders' equity as of
and for each of the periods then ended, and (y) were prepared in accordance with
generally accepted accounting principals ("GAAP") applied on a consistent basis
throughout the periods involved, in each case, except as otherwise indicated in
the notes thereto.
3.8 Compliance with Law. The Seller and its Subsidiaries are in compliance
and have conducted their business so as to comply with all laws, rules and
regulations, judgments, decrees or orders of any court, administrative agency,
commission, regulatory authority or other governmental authority or
instrumentality, domestic or foreign, applicable to their operations, the
violation of which would cause a Material Adverse Affect. There are no judgments
or orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration), including any such actions
relating to affirmative action claims or claims of discrimination, against the
Seller or its Subsidiaries or against any of their properties or businesses.
3.9 No Defaults. The Seller and its Subsidiaries are not, nor have they
received notice that they would be with the passage of time, giving of notice,
or both, (i) in violation of any provision of their Articles and Bylaws (ii) in
default or violation of any term, condition or provision of (A) any judgment,
decree, order, injunction or stipulation applicable to the Seller or its
Subsidiaries or (B) any material agreement, note, mortgage, indenture, contract,
lease or instrument, permit, concession, franchise or license to which the
Seller or its Subsidiaries are a
6
party or by which the Seller or its Subsidiaries or their properties or assets
may be bound, and no circumstances exist which would entitle any party to any
material agreement, note, mortgage, indenture, contract, lease or instrument to
which such Seller or its Subsidiaries are a party, to terminate such as a result
of such Seller or its Subsidiaries, having failed to meet any material provision
thereof including, but not limited to, meeting any applicable milestone under
any material agreement or contract.
3.10 Litigation. Except as disclosed in the Recent Reports or on Schedule
3.10, there is no action, suit, proceeding, judgment, claim or investigation
pending or, to the best knowledge of the Seller, threatened against the Seller
and its Subsidiaries which could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Seller or its Subsidiaries
or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby, and there is no
basis for the assertion of any of the foregoing.
There are no claims or complaints existing or, to the knowledge of the
Seller or its Subsidiaries, threatened for product liability in respect of any
product of the Seller or its Subsidiaries, and the Seller and its Subsidiaries
are not aware of any basis for the assertion of any such claim.
3.11 Absence of Certain Changes. Since December 31, 2002, the Seller has
conducted its business only in the ordinary course and there has not occurred,
except as set forth in the Recent Reports or any exhibit thereto or incorporated
by reference therein:
(a) Any event that could reasonably be expected to have a Material Adverse
Effect on the Seller or any of its Subsidiaries;
(b) Any amendments or changes in the Articles or Bylaws of the Seller and
its Subsidiaries, other than on account of the filing of the Certificate of
Designation for the Company's Series B 8% Cumulative Convertible Preferred
Stock;
(c) Any damage, destruction or loss, whether or not covered by insurance,
that would, individually or in the aggregate, have or would be reasonably likely
to have, a Material Adverse Effect on the Seller and its Subsidiaries;
(d) Except as set forth on Schedule 3.11(d), any
(i) incurrence, assumption or guarantee by the Seller or its
Subsidiaries of any debt for borrowed money other than for equipment
leases;
(ii) issuance or sale of any securities convertible into or
exchangeable for securities of the Seller other than to directors,
employees and consultants pursuant to existing equity compensation or stock
purchase plans of the Seller;
7
(iii) issuance or sale of options or other rights to acquire from the
Seller or its Subsidiaries, directly or indirectly, securities of the
Seller or any securities convertible into or exchangeable for any such
securities, other than options issued to directors, employees and
consultants in the ordinary course of business in accordance with past
practice;
(iv) issuance or sale of any stock, bond or other corporate security;
(v) discharge or satisfaction of any material Lien, other than current
liabilities incurred since December 31, 2001 in the ordinary course of
business;
(vi) declaration or making any payment or distribution to stockholders
or purchase or redemption of any share of its capital stock or other
security;
(vii) sale, assignment or transfer any of its intangible assets except
in the ordinary course of business, or cancellation of any debt or claim
except in the ordinary course of business;
(viii) waiver of any right of substantial value whether or not in the
ordinary course of business;
(ix) material change in officer compensation except in the ordinary
course of business and consistent with past practices; or
(x) other commitment (contingent or otherwise) to do any of the
foregoing.
(e) Any creation, sufferance or assumption by the Seller or any of its
Subsidiaries of any Lien on any asset (other than Liens existing on the date
hereof or in connection with equipment leases and working capital lines of
credit set forth on Schedule 3.11(e)) or any making of any loan, advance or
capital contribution to or investment in any Person in an aggregate amount which
exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment, termination or
non-renewal by the Seller or its Subsidiaries of any material contract, license,
lease, transaction, commitment or other right or obligation, other than in the
ordinary course of business; or
(g) Any transfer or grant of a right with respect to the trademarks, trade
names, service marks, trade secrets, copyrights or other intellectual property
rights owned or licensed by the Seller or its Subsidiaries, except as among the
Seller and its Subsidiaries.
3.12 No Undisclosed Liabilities. Except as set forth in the Recent Reports,
and except for liabilities and obligations incurred in the ordinary course of
business since December 31, 2002, as of the date hereof, (i) the Seller and its
Subsidiaries do not have any material liabilities
8
or obligations (absolute, accrued, contingent or otherwise) which, and (ii)
there has not been any aspect of the prior or current conduct of the business of
the Seller or its Subsidiaries which may form the basis for any material claim
by any third party which if asserted could result in any such material
liabilities or obligations which, are not fully reflected, reserved against or
disclosed in the balance sheet of the Seller as at December 31, 2002.
3.13 Taxes. All tax returns and tax reports required to be filed with
respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, were fully
collected and paid by such date if due by such date or provided for by adequate
reserves in the Financial Statements as of and for the periods ended December
31, 2002 (other than taxes accruing after such date) and all similar items due
through the Closing Date will have been fully paid by that date or provided for
by adequate reserves, whether or not any such taxes were reported or reflected
in any tax returns or filings. No taxation authority has sought to audit the
records of the Seller or any of its Subsidiaries for the purpose of verifying or
disputing any tax returns, reports or related information and disclosures
provided to such taxation authority, or for the Seller's or any of its
Subsidiaries' alleged failure to provide any such tax returns, reports or
related information and disclosure. No material claims or deficiencies have been
asserted against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise satisfied, including claims that, or inquiries whether,
the Seller or any of its Subsidiaries has not filed a tax return that it was
required to file, and, to the best of the Seller's knowledge, there exists no
reasonable basis for the making of any such claims or inquiries. Neither the
Seller nor any of its Subsidiaries has waived any restrictions on assessment or
collection of taxes or consented to the extension of any statute of limitations
relating to taxation.
3.14 Interests of Officers, Directors and Other Affiliates. The description
of any interest held, directly or indirectly, by any officer, director or other
Affiliate of Seller (other than the interests of the Seller and its Subsidiaries
in such assets) in any property, real or personal, tangible or intangible, used
in or pertaining to Seller's business, including any interest in the
Intellectual Property (as defined in Section 3.15 hereof), as set forth in the
Recent Reports, is true and complete, and no officer, director or other
Affiliate of the Seller has any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Seller's business,
including the Seller's Intellectual Property, other than as set forth in the
Recent Reports.
9
3.15 Intellectual Property. Other than as set forth in the Recent Reports:
(a) the Seller or a Subsidiary thereof has the right to use or is the sole
and exclusive owner of all right, title and interest in and to all foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, used or controlled by the Seller and its
Subsidiaries (collectively, the "Rights") and in and to each material invention,
software, trade secret, technology, product, composition, formula, method of
process used by the Seller or its Subsidiaries (the Rights and such other items,
the "Intellectual Property"), and, to the Seller's knowledge, has the right to
use the same, free and clear of any claim or conflict with the rights of others;
(b) no royalties or fees (license or otherwise) are payable by the Seller
or its Subsidiaries to any Person by reason of the ownership or use of any of
the Intellectual Property except as set forth on Schedule 3.15;
(c) there have been no claims made against the Seller or its Subsidiaries
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intellectual Property, and, to its knowledge, there are no reasonable grounds
for any such claims;
(d) neither the Seller nor its Subsidiaries have made any claim of any
violation or infringement by others of its rights in the Intellectual Property,
and to the best of the Seller's knowledge, no reasonable grounds for such claims
exist; and
(e) neither the Seller nor its Subsidiaries have received notice that it is
in conflict with or infringing upon the asserted rights of others in connection
with the Intellectual Property.
3.16 Restrictions on Business Activities. Other than as set forth in the
Recent Reports, there is no agreement, judgment, injunction, order or decree
binding upon the Seller or its Subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Seller or its Subsidiaries, any acquisition of property by the
Seller or its Subsidiaries or the conduct of business by the Seller or its
Subsidiaries as currently conducted or as currently proposed to be conducted by
the Seller.
3.17 Preemptive Rights. Except as set forth in Schedule 3.17, none of the
stockholders of the Seller possess any preemptive rights in respect of the
Shares or Warrant Shares to be issued to the Purchasers upon exercise of the
Warrants, as applicable.
3.18 Insurance. The insurance policies providing insurance coverage to the
Seller or its Subsidiaries including for product liability are adequate for the
business conducted by the Seller and its Subsidiaries (currently limited to the
testing phase) and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such
10
policies are in full force and effect and are valid and enforceable in
accordance with their terms, and the Seller and its Subsidiaries have complied
with all material terms and conditions of such policies, including premium
payments. None of the insurance carriers has indicated to the Seller or its
Subsidiaries an intention to cancel any such policy.
3.19 Subsidiaries and Investments. Except as set forth in the Recent
Reports or on Schedule 3.19, the Seller has no Subsidiaries or Investments. For
purposes of this Agreement, the term "Investments" shall mean, with respect to
any Person, all advances, loans or extensions of credit to any other Person, all
purchases or commitments to purchase any stock, bonds, notes, debentures or
other securities of any other Person, and any other investment in any other
Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.
3.20 Capitalization. The authorized capital stock of the Seller consists of
80,000,000 shares of common stock, $0.001 par value per share, of which
30,059,364 shares are issued and outstanding as of the date hereof, and
10,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance other than 1,000,000
shares of Series A Junior Participating Preferred Stock, $0.001 par value per
share, none of which, immediately prior to the Closing, has been issued or is
outstanding, and other than the 800 shares of the Company's Series B 8%
Cumulative Convertible Preferred Stock, 800 of which have been issued and 775 of
which, immediately prior to the Closing, are outstanding. All shares of the
Seller's issued and outstanding capital stock have been duly authorized, are
validly issued and outstanding, and are fully paid and nonassessable. No
securities issued by the Seller from the date of its incorporation to the date
hereof were issued in violation of any statutory or common law preemptive
rights. There are no dividends which have accrued or been declared but are
unpaid on the capital stock of the Seller. All taxes required to be paid by
Seller in connection with the issuance and any transfers of the Seller's capital
stock have been paid. Except as set forth on Schedule 3.20, all permits or
authorizations required to be obtained from or registrations required to be
effected with any Person in connection with any and all issuances of securities
of the Seller from the date of the Seller's incorporation to the date hereof
have been obtained or effected, and all securities of the Seller have been
issued and are held in accordance with the provisions of all applicable
securities or other laws.
3.21 Options, Warrants, Rights. Except as set forth on Schedule 3.21, there
are no outstanding (a) securities, notes or instruments convertible into or
exercisable for any of the capital stock or other equity interests of the Seller
or its Subsidiaries; (b) options, warrants, subscriptions or other rights to
acquire capital stock or other equity interests of the Seller or its
11
Subsidiaries; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of the Seller or its Subsidiaries, any such securities or instruments
convertible or exercisable for securities or any such options, warrants or
rights. Other than the rights granted under the Series B 8% Cumulative
Convertible Preferred Stock and the Warrants issued in connection therewith, and
except as set forth on Schedule 3.21, neither the Seller nor the Subsidiaries
have granted anti-dilution rights to any person or entity in connection with any
outstanding option, warrant, subscription or any other instrument convertible or
exercisable for the securities of the Seller or any of its Subsidiaries. Other
than the rights granted to the Purchasers under the Investor Rights Agreement,
there are no outstanding rights which permit the holder thereof to cause the
Seller or the Subsidiaries to file a registration statement under the Securities
Act or which permit the holder thereof to include securities of the Seller or
any of its Subsidiaries in a registration statement filed by the Seller or any
of its Subsidiaries under the Securities Act, and there are no outstanding
agreements or other commitments which otherwise relate to the registration of
any securities of the Seller or any of its Subsidiaries for sale or distribution
in any jurisdiction, except as set forth on Schedule 3.21.
3.22 Employees, Employment Agreements and Employee Benefit Plans. Except as
set forth in the Recent Reports or on Schedule 3.22, there are no employment,
consulting, severance or indemnification arrangements, agreements, or
understandings between the Seller and any officer, director, consultant or
employee of the Seller or its Subsidiaries (the "Employment Agreements"). No
Employment Agreement provides for the acceleration or change in the award,
grant, vesting or determination of options, warrants, rights, severance
payments, or other contingent obligations of any nature whatsoever of the Seller
or its Subsidiaries in favor of any such parties in connection with the
transactions contemplated by this Agreement. Except as disclosed in the Recent
Reports or on Schedule 3.22, the terms of employment or engagement of all
directors, officers, employees, agents, consultants and professional advisors of
the Seller and its Subsidiaries are such that their employment or engagement may
be terminated upon not more than two weeks' notice given at any time without
liability for payment of compensation or damages and the Seller and its
Subsidiaries have not entered into any agreement or arrangement for the
management of their business or any part thereof other than with their directors
or employees.
3.23 Absence of Certain Business Practices. Neither the Seller, nor any
Affiliate of the Seller, nor to the knowledge of the Seller, any agent or
employee of the Seller, any other Person acting on behalf of or associated with
the Seller, or any individual related to any of the foregoing Persons, acting
alone or together, has: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier, trading
company, shipping company, governmental employee or other Person with whom the
Seller has done business directly or indirectly; or (b) directly or indirectly,
given or agreed to give any gift or similar benefit to any customer, supplier,
trading company, shipping company, governmental employee or other Person who is
or
12
may be in a position to help or hinder the business of the Seller (or assist the
Seller in connection with any actual or proposed transaction) which (i) may
subject the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past, may have
had an adverse effect on the Seller or (iii) if not continued in the future, may
adversely affect the assets, business, operations or prospects of the Seller or
subject the Seller to suit or penalty in any private or governmental litigation
or proceeding.
3.24 Products and Services. To the knowledge of the Seller and except as
disclosed in the Recent Reports, there exists no set of facts (i) which could
furnish a basis for the withdrawal, suspension or cancellation of any
registration, license, permit or other governmental approval or consent of any
governmental or regulatory agency with respect to any product or service
developed or provided by the Seller or its Subsidiaries, (ii) which could
furnish a basis for the withdrawal, suspension or cancellation by order of any
state, federal or foreign court of law of any product or service, or (iii) which
could have a Material Adverse Effect on the continued operation of any facility
of the Seller or its Subsidiaries or which could otherwise cause the Seller or
its Subsidiaries to withdraw, suspend or cancel any such product or service from
the market or to change the marketing classification of any such product or
service. Each product or service provided by Seller or its Subsidiaries has been
provided in accordance in all material respects with the specifications under
which such product or service normally is and has been provided and the
provisions of all applicable laws or regulations.
3.25 Environmental Matters. None of the premises or any properties owned,
occupied or leased by the Seller or its Subsidiaries (the "Premises") has been
used by the Seller or the Subsidiaries or, to the Seller's knowledge, by any
other Person, to manufacture, treat, store, or dispose of any substance that has
been designated to be a "hazardous substance" under applicable Environmental
Laws (hereinafter defined) ("Hazardous Substances") in violation of any
applicable Environmental Laws. To its knowledge, the Seller has not disposed of,
discharged, emitted or released any Hazardous Substances which would require,
under applicable Environmental Laws, remediation, investigation or similar
response activity. No Hazardous Substances are present as a result of the
actions of the Seller or, to the Seller's knowledge, any other Person, in, on or
under the Premises which would give rise to any liability or clean-up
obligations of the Seller under applicable Environmental Laws. The Seller and,
to the Seller's knowledge, any other Person for whose conduct it may be
responsible pursuant to an agreement or by operation of law, are in compliance
with all laws, regulations and other federal, state or local governmental
requirements, and all applicable judgments, orders, writs, notices, decrees,
permits, licenses, approvals, consents or injunctions in effect on the date of
this Agreement relating to the generation, management, handling, transportation,
treatment, disposal, storage, delivery, discharge, release or emission of any
Hazardous Substance (the "Environmental Laws"). Neither the Seller nor, to the
Seller's knowledge, any other Person for whose conduct it may be responsible
pursuant to an agreement or by operation of law has received any written
complaint, notice, order, or citation of any actual, threatened or alleged
noncompliance with any of the Environmental Laws, and there is no proceeding,
suit or
13
investigation pending or, to the Seller's knowledge, threatened against the
Seller or, to the Seller's knowledge, any such Person with respect to any
violation or alleged violation of the Environmental Laws, and, to the knowledge
of the Seller, there is no basis for the institution of any such proceeding,
suit or investigation.
3.26 Licenses; Compliance With FDA and Other Regulatory Requirements.
(a) General. Except as disclosed in the Recent Reports, the Seller holds
all material authorizations, consents, approvals, franchises, licenses and
permits required under applicable law or regulation for the operation of the
business of the Seller and its Subsidiaries as presently operated (the
"Governmental Authorizations"). All the Governmental Authorizations have been
duly issued or obtained and are in full force and effect, and the Seller and its
Subsidiaries are in material compliance with the terms of all the Governmental
Authorizations. The Seller and its Subsidiaries have not engaged in any activity
that, to their knowledge, would cause revocation or suspension of any such
Governmental Authorizations. The Seller has no knowledge of any facts which
could reasonably be expected to cause the Seller to believe that the
Governmental Authorizations will not be renewed by the appropriate governmental
authorities in the ordinary course. Neither the execution, delivery nor
performance of this Agreement shall adversely affect the status of any of the
Governmental Authorizations.
(b) FDA. Without limiting the generality of the representations and
warranties made in paragraph (a) above, the Seller represents and warrants that
(i) the Seller and each of its Subsidiaries is in material compliance with all
applicable provisions of the United States Federal Food, Drug, and Cosmetic Act
(the "FDC Act"), (ii) its products and those of each of its Subsidiaries that
are in the Seller's control are not adulterated or misbranded and are in lawful
distribution, (iii) the United States Food and Drug Administration (the "FDA")
has not initiated legal action with respect to the manufacturing of the Seller's
products, such as seizures or FDA-required recalls, and Seller uses best efforts
to comply with applicable FDA good manufacturing practice regulations, (iv) all
adverse events that were known to and required to be reported by Seller to the
FDA have been reported to the FDA in a timely manner, (v) neither the Seller nor
any of its Subsidiaries is, to their knowledge, employing or utilizing the
services of any individual who has been debarred under the FDC Act, (vi) all
stability studies required to be performed for products distributed by the
Seller or any of its Subsidiaries have been completed or are ongoing in material
compliance with the applicable FDA requirements, and (vii) the Seller and its
Subsidiaries is in compliance in all material respects with all applicable
provisions of the Controlled Substances Act.
3.27 Brokers. Except as set forth on Schedule 3.27, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement,
based upon any arrangement made by or on behalf of the Seller, which would make
any Purchaser liable for any fees or commissions.
14
3.28 Securities Laws. Neither the Seller nor its Subsidiaries nor any agent
acting on behalf of the Seller or its Subsidiaries has taken or will take any
action which might cause this Agreement or the Warrants to violate the
Securities Act or the Exchange Act or any rules or regulations promulgated
thereunder, as in effect on the Closing Date. Assuming that all of the
representations and warranties of the Purchasers set forth in Article IV are
true, all offers and sales of capital stock, securities and notes of the Seller
were conducted and completed in compliance with the Securities Act. All shares
of capital stock and other securities issued by the Seller and its Subsidiaries
prior to the date hereof have been issued in transactions that were either
registered offerings or were exempt from the registration requirements under the
Securities Act and all applicable state securities or "blue sky" laws and in
compliance with all applicable corporate laws.
3.29 Disclosure. No representation or warranty made by the Seller in this
Agreement, nor in any document, written information, financial statement,
certificate, schedule or exhibit prepared and furnished by the Seller or the
representatives of the Seller pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, for itself only, hereby severally and not jointly,
represents and warrants to the Seller as follows:
4.1 Existence and Power. The Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of such Purchaser's
organization. The Purchaser has all powers required to carry on such Purchaser's
business as now conducted.
4.2 Authorization. The execution, delivery and performance by the Purchaser
of this Agreement, the Related Documents to which such Purchaser is a party, and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly authorized, and no additional action is required for the
approval of this Agreement or the Related Documents. This Agreement and the
Related Documents to which the Purchaser is a party have been or, to the extent
contemplated hereby, will be duly executed and delivered and constitute valid
and binding agreements of the Purchaser, enforceable against such Purchaser in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of their obligations thereunder are subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.3 Investment. The Purchaser is acquiring the securities described herein
for its own
15
account and not with a view to, or for sale in connection with, any distribution
thereof, nor with the intention of distributing or reselling the same, provided,
however, that by making the representation herein, the Purchaser does not agree
to hold any of the securities for any minimum or other specific term and
reserves the right to dispose of the securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. The Purchaser is aware that none of the securities has been registered
under the Securities Act or under applicable state securities or blue sky laws.
The Purchaser is an "Accredited Investor" as such term is defined in Rule 501 of
Regulation D, as promulgated under the Securities Act.
4.4 Reliance on Exemptions. The Purchaser understands that the Shares and
Warrants are being offered and sold to such Purchaser in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Seller is relying upon the truth and accuracy of,
and such Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the securities.
4.5 Experience of the Purchaser. The Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. The Purchaser is able to bear the economic
risk of an investment in the securities and, at the present time, is able to
afford a complete loss of such investment.
4.6 General Solicitation. The Purchaser is not purchasing the securities as
a result of any advertisement, article, notice or other communication regarding
the securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
4.7 Independence. The Purchaser is neither an Affiliate of any other
Purchaser nor is a member of any "group" in which any other Purchaser is a
member. For purposes hereof, "group" has the meaning set forth in Section 13(d)
of the Exchange Act and applicable regulations of the Securities and Exchange
Commission.
ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS
5.1 Insurance. The Seller and its Subsidiaries shall, from time to time
upon the written request of the Purchasers, promptly furnish or cause to be
furnished to the Seller evidence, in form and substance reasonably satisfactory
to the Purchasers, of the maintenance of all insurance maintained by it for loss
or damage by fire and other hazards, damage or injury to persons and property,
including from product liability, and under workmen's compensation laws.
16
5.2 Reporting Obligations. So long as any portion of the Warrants has not
been exercised and has not expired by its terms, the Seller shall furnish to the
Purchasers, or any other persons who hold any of the Warrants (provided that
such subsequent holders give notice to the Seller that they hold Warrants and
furnish their addresses) promptly upon their becoming available one copy of (A)
each report, notice or proxy statement sent by the Seller to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and (B) any registration statement, prospectus or written communication pursuant
to the Securities Act relating to the issuance or registration of the Shares and
the Warrant Shares and filed by the Seller with the Commission or any securities
market or exchange on which shares of Common Stock are listed; provided,
however, that the Company shall have no obligation to deliver periodic reports
(pursuant to the Exchange Act) under this Section 5.2 to the extent such reports
are publicly available.
The Purchasers are hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Seller which may have been furnished to the
Purchasers hereunder, to any regulatory body or agency having jurisdiction over
the Purchasers or to any Person which shall, or shall have right or obligation
to succeed to all or any part of the Purchasers' interest in the Seller or this
Agreement.
5.3 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this
Agreement), notwithstanding the exercise by the Purchasers or other holders of
the Shares of their rights hereunder to conduct an investigation shall not in
any way diminish any liability hereunder.
5.4 Further Assurances. The Seller shall, at its cost and expense, upon
written request of the Purchasers, duly execute and deliver, or cause to be duly
executed and delivered, to the Purchasers such further instruments and do and
cause to be done such further acts as may be necessary, advisable or proper, in
the absolute discretion of the Purchasers, to carry out more effectually the
provisions and purposes of this Agreement. The parties shall use their best
efforts to timely satisfy each of the conditions described in Article VI of this
Agreement.
5.5 Use of Proceeds. The Seller covenants and agrees that the proceeds of
the Purchase Price shall be used by the Seller for working capital and general
corporate purposes; under no circumstances shall any portion of the proceeds be
applied to:
(i) accelerated repayment of debt existing on the date hereof;
(ii) the payment of dividends or other distributions on any capital
stock of the
17
Seller other than the Series B 8% Cumulative Convertible Preferred Stock;
(iii) increased executive compensation or loans to officers, employees,
stockholders or directors, unless approved by a disinterested majority of
the Board of Directors;
(iv) the purchase of debt or equity securities of any person, including
the Seller and its Subsidiaries, except in connection with investment of
excess cash in high quality (A1/P1 or better) money market instruments
having maturities of one year or less; or
(v) any expenditure not directly related to the business of the Seller.
5.6 Corporate Existence. So long as a Purchaser owns Shares, Warrants or
Warrant Shares, the Seller shall preserve and maintain and cause its
Subsidiaries to preserve and maintain their corporate existence and good
standing in the jurisdiction of their incorporation and the rights, privileges
and franchises of the Seller and its Subsidiaries (except, in each case, in the
event of a merger or consolidation in which the Seller or its Subsidiaries, as
applicable, is not the surviving entity) in each case where failure to so
preserve or maintain could have a Material Adverse Effect on the financial
condition, business or operations of the Seller and its Subsidiaries taken as a
whole.
5.7 Licenses. The Seller shall, and shall cause its Subsidiaries to,
maintain at all times all material licenses or permits necessary to the conduct
of its business and as required by any governmental agency or instrumentality
thereof, including without limitation all FDA clearances and approvals.
5.8 Taxes and Claims. The Seller and its Subsidiaries shall duly pay and
discharge (a) all material taxes, assessments and governmental charges upon or
against the Seller or its properties or assets prior to the date on which
penalties attach thereto, unless and to the extent that such taxes are being
diligently contested in good faith and by appropriate proceedings, and
appropriate reserves therefor have been established, and (b) all material lawful
claims, whether for labor, materials, supplies, services or anything else which
might or could, if unpaid, become a lien or charge upon the properties or assets
of the Seller or its Subsidiaries unless and to the extent only that the same
are being diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established.
5.9 Perform Covenants. The Seller shall duly comply with all the terms and
covenants contained herein and in each of the instruments and documents given to
the Purchasers in connection with or pursuant to this Agreement, all at the
times and places and in the manner set forth herein or therein.
18
5.10 Additional Covenants.
(a) Except for transactions approved by a majority of the disinterested
directors of the Board of Directors, neither the Seller nor any of its
Subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of any class
or series of capital stock of the Seller or any of its Subsidiaries, member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or member of the family of any such person, is
a director, officer, trustee, partner or holder of more than 5% of the
outstanding capital stock thereof, with the exception of transactions which are
consummated upon terms that are no less favorable than would be available if
such transaction had been effected at arms-length, in the reasonable judgment of
the Board of Directors.
(b) The Seller shall timely prepare and file with the Securities and
Exchange Commission the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Shares and Warrants under
this Agreement.
(c) The Seller shall timely prepare and file such applications, consents to
service of process (but not including a general consent to service of process)
and similar documents and take such other steps and perform such further acts as
shall be required by the state securities law requirements of each jurisdiction
where a Purchaser resides as indicated on Schedule 1 with respect to the sale of
the Shares and Warrants under this Agreement.
(d) 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 securities or solicit any offers to buy any securities under circumstances
that would cause the loss of the 4(2) exemption under the Securities Act for the
transactions contemplated hereby. Subject to any consent or approval rights of
the Purchasers hereunder, in the event the Company contemplates an offering of
its equity or debt securities within six months following the Closing Date, the
Company agrees that it shall notify the Purchasers of such offering (without
providing any material non-public information to any Purchaser without its prior
approval), and upon the reasonable request of Purchasers purchasing at least 75%
of the Shares hereunder, the Company shall first disclose the terms and
conditions and other relevant facts of such proposed transaction to Nasdaq and
obtain from Nasdaq its assurance that such transaction will not be integrated
with the offering which is the subject of this Agreement for purposes of the
Nasdaq rules requiring shareholder approval of the issuance of 20% or more of an
issuer's outstanding common stock. In the event the Company fails to obtain such
assurance, then the Company shall not issue or sell any such securities without
the prior written consent of Purchasers purchasing at least 75% of the Shares
hereunder, provided that the Company may sell or issue securities without such
consent if (i) it obtains prior shareholder approval for such sale or issuance
in compliance with NASD rules, (ii) such sale or issuance is to a pharmaceutical
company in connection with a strategic transaction and not primarily as a
capital raising transaction, so long as the Company has not affirmatively
19
been notified (orally or in writing) by Nasdaq that it is reasonably likely to
treat such sale or issuance as being integrated with the transactions
contemplated under this Agreement, or (iii) none of the shares of Series B 8%
Cumulative Convertible Preferred Stock are then outstanding, so long as the
Company has not affirmatively been notified (orally or in writing) by Nasdaq
that it is reasonably likely to treat such sale or issuance as being integrated
with the transactions contemplated under this Agreement. In the event that the
transactions contemplated under this Agreement are deemed integrated with any
other transaction(s) by the NASD, then the Company shall as soon as possible
seek the approval of its stockholders and take such other action to authorize
the issuance of the full number of Shares and Warrant Shares and the full amount
of securities issued and/or to be issued in such other transaction.
5.11 Securities Laws Disclosure; Publicity. The Seller may (i) on or
promptly after the Closing Date, issue a press release acceptable to The Tail
Wind Fund Ltd. disclosing the transactions contemplated hereby, and (ii) after
the Closing Date, file with the Commission a Report on Form 8-K disclosing the
transactions contemplated hereby. Except as provided in the preceding sentence,
neither the Company nor the Purchasers shall make any press release or other
publicity about the terms of this Agreement or the transactions contemplated
hereby without the prior approval of the other unless otherwise required by law
or the rules of the Commission or Nasdaq.
5.12 Like Treatment of Purchasers and Holders. Neither the Seller nor any
of its affiliates shall, directly or indirectly, pay or cause to be paid any
consideration (immediate or contingent), whether by way of interest, fee,
payment for redemption, conversion or exercise of the Securities, or otherwise,
to any Purchaser or holder of Securities, for or as an inducement to, or in
connection with the solicitation of, any consent, waiver or amendment to any
terms or provisions of this Agreement or the Related Documents, unless such
consideration is required to be paid to all Purchasers or holders of Securities
bound by such consent, waiver or amendment. The Seller shall not, directly or
indirectly, redeem any Securities unless such offer of redemption is made pro
rata to all Purchasers or holders of Securities, as the case may be, on
identical terms.
5.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder and under the documents contemplated
hereby are several and not joint with the obligations of each other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any such document. Nothing contained
herein or in any other document contemplated hereby, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute any of the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby or thereby. Each Purchaser confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Purchaser shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or
20
out of any other document contemplated hereby, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any proceeding for
such purpose.
ARTICLE VI - CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Purchasers to Effect the Closing. The
obligations of a Purchaser to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing, of each of the following conditions, any of which may be waived,
in writing, by a Purchaser:
(a) The Seller shall deliver or cause to be delivered to each of the
Purchasers the following:
1. (i) One or more certificates evidencing the aggregate number of
Shares of the Common Stock, duly authorized, issued, fully paid and
non-assessable, as is indicated on Schedule 1 to be purchased at the
Closing by such Purchaser, registered in the name of such Purchaser, in
such denominations as is indicated on Schedule 1 for such Purchaser;
(ii) One or more certificates evidencing the Warrants, registered in
the name of such Purchaser, in such denominations as is indicated on
Schedule 1 for such Purchaser, pursuant to which such Purchaser shall be
initially entitled to purchase that number of shares of Common Stock as is
indicated on Schedule 1.
2. The Investor Rights Agreement, in the form attached hereto as
Exhibit B (the "Investor Rights Agreement"), duly executed by the Seller.
3. A legal opinion of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx ("Seller's
Counsel"), counsel to the Seller, in the form attached hereto as Exhibit C.
4. A legal opinion of Xxxxxxx Brignone ("Nevada Counsel"), Nevada
counsel to the Seller, in the form attached hereto as Exhibit D.
5. A certificate of the Secretary of the Seller (the "Secretary's
Certificate"), in form and substance satisfactory to the Purchasers,
certifying as follows:
(i) that attached to the Secretary's Certificate is a true and
complete copy of the Articles of Incorporation of the Seller, as
amended, including any and all certificates of designation;
21
(ii) that a true copy of the Bylaws of the Seller, as amended to the
Closing Date, is attached to the Secretary's Certificate;
(iii) that attached thereto are true and complete copies of the
resolutions of the Board of Directors of the Seller authorizing the
execution, delivery and performance of this Agreement and the Related
Documents, instruments and certificates required to be executed by it
in connection herewith and approving the consummation of the
transactions in the manner contemplated hereby including, but not
limited to, the authorization and issuance of the Shares and Warrants;
(iv) the names and true signatures of the officers of the Seller
signing this Agreement and all other documents to be delivered in
connection with this Agreement;
(v) such other matters as required by this Agreement; and
(vi) such other matters as the Purchasers may reasonably request.
6. A wire transfer representing the amounts due for reasonable legal
fees and other expenses as described in Section 8.2 hereof.
7. Seller shall have applied to each U.S. securities exchange,
interdealer quotation system and other trading market where its Common
Stock is currently listed or qualified for trading or quotation for the
listing or qualification of the Shares and the Warrant Shares for trading
or quotation thereon in the time and manner required thereby.
8. Such other documents as the Purchasers shall reasonably request.
6.2 Conditions to Obligations of the Seller to Effect the Closing. The
obligations of the Seller to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Seller:
(a) Each of the Purchasers shall deliver or cause to be delivered to the
Seller (i) payment of the portion of the Purchase Price set forth opposite each
Purchaser's name on Schedule 1, in cash by either (x) wire transfer of
immediately available funds to an account designated in writing by Seller prior
to the date hereof, or (y) certified or cashier's check; (ii) an executed copy
of this Agreement; (iii) an executed copy of the Investor Rights Agreement; and
(iv) such other documents as the Seller shall reasonably request.
ARTICLE VII - INDEMNIFICATION, TERMINATION AND DAMAGES
7.1 Survival of Representations. Except as otherwise provided herein, the
22
representations and warranties of the Seller and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date and shall continue in full force and effect for a
period of three (3) years from the Closing Date; provided, however, that the
Seller's warranties and representations under Sections 3.13 (Taxes), 3.19
(Subsidiaries and Investments), 3.20 (Capitalization), and 3.21 (Options,
Warrants, Rights), shall survive the Closing Date and continue in full force and
effect until the expiration of all applicable statutes of limitation; and
further provided that the Seller's warranties and representations under Section
3.25 (Environmental Matters) shall survive the Closing Date and continue in full
force and effect for a period of six (6) years from the Closing Date. The
Seller's and the Purchasers' warranties and representations shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Seller or the Purchasers.
7.2 Indemnification.
(a) The Seller agrees to indemnify and hold harmless the Purchasers, their
Affiliates, each of their officers, directors, employees and agents and their
respective successors and assigns, from and against any losses, damages, or
expenses which are caused by or arise out of (i) any breach or default in the
performance by the Seller of any covenant or agreement made by the Seller in
this Agreement or in any of the Related Documents; (ii) any breach of warranty
or representation made by the Seller in this Agreement or in any of the Related
Documents (iii) any and all third party actions, suits, proceedings, claims,
demands, judgments, costs and expenses (including reasonable legal fees and
expenses) incident to any of the foregoing.
(b) The Purchasers, severally and not jointly, agree to indemnify and hold
harmless the Seller, its Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses which are caused by or arise out of (A)
any breach or default in the performance by the Purchasers of any covenant or
agreement made by the Purchasers in this Agreement or in any of the Related
Documents; (B) any breach of warranty or representation made by the Purchasers
in this Agreement or in any of the Related Documents; and (C) any and all third
party actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing; provided, however, that a Purchaser's liability under this Section
7.2(b) shall not exceed the Purchase Price paid by such Purchaser hereunder.
7.3 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party". An Indemnified
Party under this Agreement shall, with respect to claims asserted against such
party by any third party, give written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity under this Agreement
within sixty (60) business days of the receipt of any written claim from any
such third party, but not later than twenty (20) days prior to the date any
answer or responsive pleading is due, and with respect to
23
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
The Indemnifying Party shall have the right, at its election, to take over
the defense or settlement of such claim by giving written notice to the
Indemnified Party at least fifteen (15) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties or
representation of both parties by the same counsel would be inappropriate due to
conflicts of interest or otherwise. If the Indemnifying Party does not make such
election, or having made such election does not, in the reasonable opinion of
the Indemnified Party proceed diligently to defend such claim, then the
Indemnified Party may (after written notice to the Indemnifying Party), at the
expense of the Indemnifying Party, elect to take over the defense of and proceed
to handle such claim in its discretion and the Indemnifying Party shall be bound
by any defense or settlement that the Indemnified Party may make in good faith
with respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim. The parties agree to cooperate in
defending such third party claims and the Indemnified Party shall provide such
cooperation and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any matter for which
indemnification is sought hereunder; and the parties hereto agree to cooperate
with each other in order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon the
earlier to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five (5) days
prior to the date that the judgment creditor has the right to execute the
judgment; (ii) the entry of an unappealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim.
Notwithstanding the foregoing,
24
the reasonable expenses of counsel to the Indemnified Party shall be reimbursed
on a current basis by the Indemnifying Party. With regard to other claims for
which indemnification is payable hereunder, such indemnification shall be paid
promptly by the Indemnifying Party upon demand by the Indemnified Party.
7.4 Liquidated Damages. The Seller and the Purchasers agree that the
Purchasers will suffer damages if a Breach Event (as defined below) occurs or is
ongoing. The Seller and the Purchasers further agree that it may not be feasible
to ascertain the extent of such damages with precision. If a Breach Event (as
defined below) occurs, then the Purchasers may elect, as liquidated damages, and
in addition to any other remedies legally available to such Purchasers, to
require that the Seller shall pay to each Purchaser liquidated damages at a rate
of 20% per annum of the aggregate Purchase Price of such Purchaser's Shares
still held by such Purchaser payable monthly in cash at the end of each month in
which the Breach Event is outstanding. Notwithstanding the foregoing, the amount
of liquidated damages payable by the Seller pursuant to this Section 7.4 in
respect of any Breach Event shall be limited to a total of $500,000 and such
limitation amount shall be allocated to the Purchasers on a pro rata basis.
"Breach Event" means either:
(i) Any breach of any material warranty or representation of the
Seller as of the date made in this Agreement or any agreement delivered
herewith which breach, if capable of being cured, has not been cured within
ten (10) days after notice of such breach has been given by the holders of
a majority of the Shares to the Seller (the "Breach Cure Period"); or
(ii) Any breach by the Seller of any material covenant or other
provision of this Agreement or any agreement delivered herewith which is
within the control of the Seller, and which breach, if capable of being
cured, has not been cured within the Breach Cure Period.
The Seller and the Purchasers have expressly negotiated this Section 7.4,
and have agreed that in light of the circumstances existing at the time of
execution of this Agreement, the liquidated damages expressed herein represent a
reasonable estimate of the harm likely to be suffered by the Purchasers upon the
occurrence of a Breach Event.
25
ARTICLE VIII - MISCELLANEOUS
8.1 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances as may be reasonably requested by any other
party to better evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement, and further agrees to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable law to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings, and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
8.2 Fees and Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay to Tail Wind
Advisory and Management Ltd. a non-refundable sum equal to $40,000 as and for
legal and due diligence expenses incurred in connection herewith, half of which
amount has been previously paid and half of which amount shall be paid upon
execution hereof.
8.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York City time) on any business day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express. The address for such notices and communications shall be as
follows:
If to the Purchasers at each Purchaser's address set forth under its name
on Schedule 1 attached hereto, or with respect to the Seller, addressed to:
NexMed, Inc.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of
26
notices to the Seller shall be sent to Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxx Xxxx, Esq., Facsimile No. (212)
940-8776. Copies of notices to any Purchaser shall be sent to the addresses, if
any, listed on Schedule 1 attached hereto.
Unless otherwise stated above, such communications shall be effective when
they are received by the addressee thereof in conformity with this Section. Any
party may change its address for such communications by giving notice thereof to
the other parties in conformity with this Section.
8.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
enforced in accordance with the laws of the State of New York without reference
to the conflicts of laws principles thereof.
8.5 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx of New
York and if such court does not have proper jurisdiction, the State Courts of
New York County, New York. The parties to this Agreement agree that any breach
of any term or condition of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York and irrevocably and expressly
agree to submit to the jurisdiction of the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx
Xxxxxxxx of New York and if such court does not have proper jurisdiction, the
State Courts of New York County, New York for the purpose of resolving any
disputes among the parties relating to this Agreement or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any court in respect hereof brought
in New York County, New York, and further irrevocably waive any claim that any
suit, action or proceeding brought in Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx
of New York and if such court does not have proper jurisdiction, the State
Courts of New York County, New York has been brought in an inconvenient forum.
Each of the parties hereto consents to process being served in any such suit,
action or proceeding, by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 8.5 shall affect or limit any right to serve process in any other
manner permitted by law.
8.6 Successors and Assigns. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign this Agreement to any Person to whom it assigns or transfers securities
issued or issuable pursuant to this Agreement. Any assignee must be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.
8.7 Severability. If any provision of this Agreement, or the application
thereof, shall
27
for any reason or to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances shall continue in full force and effect and in no way be affected,
impaired or invalidated.
8.8 Entire Agreement. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
8.9 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law, or in equity
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
8.10 Amendment and Waivers. Subject to Section 5.12, any term or provision
of this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a writing signed by the Seller and the
Purchasers purchasing at least 75% of the Shares hereunder, and such waiver or
amendment, as the case may be, shall be binding upon all Purchasers. The waiver
by a party of any breach hereof or default in the performance hereof shall not
be deemed to constitute a waiver of any other default or any succeeding breach
or default. This Agreement may not be amended or supplemented by any party
hereto except pursuant to a written amendment executed by the Seller and the
Purchasers purchasing at least 75% of the Shares hereunder. No amendment shall
be effected to impact a holder of Securities in a disproportionately adverse
fashion without the consent of such individual holder.
8.11 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
8.12 Construction of Agreement; Knowledge. For purposes of this Agreement,
the term "knowledge," when used in reference to a corporation means the
knowledge of the directors and executive officers of such corporation
(including, if applicable, any person designated as a chief scientific, medical
or technical officer) assuming such persons shall have made inquiry that is
customary and appropriate under the circumstances to which reference is made,
and when used in reference to an individual means the knowledge of such
individual assuming the individual shall have made inquiry that is customary and
appropriate under the circumstances to which reference is made.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of
28
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile signature page were an original
thereof.
8.14 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
8.15 Waiver of Trial by Jury. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
NEXMED, INC.
By: Xxxxxx Xxx
----------
Name: Xxxxxx Xxx
Title: Vice President & Secretary
PURCHASERS:
ROYAL BANK OF CANADA
By: Its agent, RBC Dominion Securities Corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY AND MANAGEMENT LTD.,
as investment manager
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
SOLOMON STRATEGIC HOLDINGS, INC.
By: /s/ Xxxxxx X. XxxXxxxxx
-----------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Director
MIDSUMMER INVESTMENT, LTD.
By: MIDSUMMER CAPITAL, LLC,
as investment advisor
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
OMICRON MASTER TRUST
By: Omicron Capital L.P., as subadvisor
By: Omicron Capital Inc., its general partner
By: /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx, President
PROVIDENT MASTER FUND, LTD.
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member, Provident Advisors LLC
CHULA PARTNERS, LP
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: General Partner
DYNAMIC EQUITY HEDGE FUND
By: /s/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
Title: Investment Manager
XXXXXX X. XXXXX TTEE FBO THE
XXXXXX X. XXXXX REVOCABLE LIVING TRUST
By: /s/ Xxxxxx X. Xxxxx
---------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
VIKING GLOBAL EQUITIES LP
By: Viking Global Performance LLC, the general partner
By: Xxxxx Xxxxx
-----------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
VGE III PORTFOLIO LTD.
By: Viking Global Performance LLC, the Investment Manager
By: Xxxxx Xxxxx
-----------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
ISLANDIA, L.P.
By: Xxxx Xxxx, Inc., its general partner
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: General Partner
SCHEDULE 1 TO COMMON STOCK AND WARRANT PURCHASE AGREEMENT
---------------------------------------------------------
PURCHASERS AND SHARES OF COMMON STOCK AND WARRANTS
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
------------
NAME, ADDRESS AND FAX SHARES OF COMMON UNDERLYING
--------------------- ---------------- ----------
NUMBER OF PURCHASER COPIES OF NOTICES TO STOCK PURCHASED WARRANTS PURCHASE PRICE
------------------- -------------------- --------------- -------- --------------
------------------------------------------------------------------------------------------------------------------------------------
XXXXX XXXX XX XXXXXX XXXXX XXXX XX XXXXXX
c/o RBC Dominion Securities c/o RBC Dominion Securities
Corporation Corporation
Xxx Xxxxxxx Xxxxx Xxx Xxxxxxx Xxxxx 1,388,889 486,111 $5,000,000
000 Xxxxxxxx, 0xx Xxxxx 000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000 Xxx Xxxx, XX 00000-0000
Fax: 000-000-0000 Fax: 000-000-0000
Attn: Xxxxx Xxx Attn: Xxx Xxxxxxxx
------------------------------------------------------------------------------------------------------------------------------------
THE TAIL WIND FUND LTD.
c/o Tail Wind Advisory & Xxxxx X. Xxxxxxx, P.C.
Management Ltd. 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Attn: Xxxxx Xxxxx Xxx Xxxx, XX 00000 333,333 116,667 $1,200,000
0xx Xxxxx, Xx. 0 Xxxxxx Xxxxxx Telephone: 000-000-0000
Xxxxxx, XX0X 0XX XX Facsimile: 000-000-0000
Fax: 00-000-000-0000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
------------
NAME, ADDRESS AND FAX SHARES OF COMMON UNDERLYING
--------------------- ---------------- ----------
NUMBER OF PURCHASER COPIES OF NOTICES TO STOCK PURCHASED WARRANTS PURCHASE PRICE
------------------- -------------------- --------------- -------- --------------
------------------------------------------------------------------------------------------------------------------------------------
SOLOMON STRATEGIC HOLDINGS, INC.
c/o Xxxxxx X. XxxXxxxxx (Director) Xxxxx X. Xxxxxxx, P.C.
Greenlands, The Red Gap 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx XX0 0XX Xxx Xxxx, XX 00000 55,556 19,445 $200,000
British Isles Telephone: 000-000-0000
Fax: 000 (00) 0000 000000 Facsimile: 000-000-0000
------------------------------------------------------------------------------------------------------------------------------------
MIDSUMMER INVESTMENT, LTD. Xxx Xxxxxxx, Esq.
c/o Midsummer Capital, LLC Xxxxxxx Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Floor 000 Xxxxxxxxx Xxxxxx, Xxx 0000
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000 277,778 97,222 $1,000,000
Tel: 000-000-0000 Tel: (000) 000-0000
Attn: Xxxxx Xxxxxxx Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
OMICRON MASTER TRUST Xxxxx Xxxxx, Esq.
c/o Omicron Capital L.P. Law Offices of Xxxxx Xxxxx
000 Xxxxxxx Xxxxxx, 00xx Floor 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000 138,889 48,611 $500,000
Fax: 000-000-0000 Tel: (000) 000-0000
Attn: Xxxxx Xxxx Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
PROVIDENT MASTER FUND, LTD.
000 Xxxxx Xxxx Xxxx, #000 69,444 24,305 $250,000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxxxxx
Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
------------
NAME, ADDRESS AND FAX SHARES OF COMMON UNDERLYING
--------------------- ---------------- ----------
NUMBER OF PURCHASER COPIES OF NOTICES TO STOCK PURCHASED WARRANTS PURCHASE PRICE
------------------- -------------------- --------------- -------- --------------
------------------------------------------------------------------------------------------------------------------------------------
CHULA PARTNERS, LP
000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000 41,667 14,583 $150,000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
DYNAMIC EQUITY HEDGE FUND
Xxxxxx Xxxxx, 00xx Xxxxx
00 Xxxx Xxxxxx West 27,778 9,722 $100,000
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
XXXXXX X. XXXXX TTEE FBO
THE XXXXXX X. XXXXX REVOCABLE
LIVING TRUST
0000 Xxxx Xxxxx Xxxxxx, # 0000 27,778 9,722 $100,000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx or Xxx Xxxxxxx
Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
VIKING GLOBAL EQUITIES LP
000 Xxxx Xxxxxx 152,778 53,472 $550,000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
------------
NAME, ADDRESS AND FAX SHARES OF COMMON UNDERLYING
--------------------- ---------------- ----------
NUMBER OF PURCHASER COPIES OF NOTICES TO STOCK PURCHASED WARRANTS PURCHASE PRICE
------------------- -------------------- --------------- -------- --------------
------------------------------------------------------------------------------------------------------------------------------------
VGE III PORTFOLIO LTD.
000 Xxxx Xxxxxx 125,000 43,750 $450,000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
------------------------------------------------------------------------------------------------------------------------------------
ISLANDIA, L.P.
c/o Xxxx Xxxx, Inc.
000 Xxxxxxx Xxxxxx, 00xx Floor 277,778 97,222 $1,000,000
Xxx Xxxx, XX 00000
Attn: Fund Manager
Fax: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
TOTALS: 2,916,668 1,020,832 $10,500,000
------------------------------------------------------------------------------------------------------------------------------------
