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Exhibit 99.1
NETMED INC.
CONVERTIBLE DEBENTURE EXCHANGE AGREEMENT
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This Convertible Debenture Exchange Agreement (the "AGREEMENT") is made
by and between NetMed, Inc., an Ohio corporation ("NMD") and the undersigned
holders (individually a "HOLDER" and collectively, the "HOLDERS") of the
outstanding 6% Convertible Subordinated Debentures of NMD (the "CONVERTIBLE
DEBENTURES").
Recitals
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A. The Holders are currently the record owner of that principal amount
of Convertible Debentures as are set forth on Schedule A annexed hereto, issued
pursuant to the terms of a 6% Secured Convertible Debenture Purchase Agreement
among the parties dated August 12, 1997 (the "PURCHASE AGREEMENT").
B. NMD has created a new class of preferred stock, designated Series A,
6% Convertible Preferred Stock (the "PREFERRED STOCK") with all of the rights
and privileges set forth in the Certificate of Amendment annexed hereto as
Exhibit A (the "CERTIFICATE OF AMENDMENT").
C. The Preferred Stock shall have a Stated Value (as defined in the
Certificate of Amendment) of $15.02 per share.
D. By this Agreement, NMD desires to assign, convey, transfer and
deliver to each Holder of the Convertible Debentures that number of shares of
the Preferred Stock set forth beside such Holder's name on Schedule A hereto, in
exchange for the surrender of the principal amount of Convertible Debentures,
and accrued interest thereon, set forth on such Schedule.
Statement of Agreement
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EXCHANGE OF PREFERRED SHARES. NMD and the Holders agree that
upon the business day that the Holders receive each of the following: (A) the
original shares of Preferred Stock (the number of shares of Preferred Stock to
be issued for the principal amount of Convertible Debentures owned of record by
each Holder, plus accrued interest, as set forth on Schedule A) to be issued
upon the exchange, and (B) notice from NMD that each of the following conditions
(the "Conditions") have been satisfied, (i) written proof that the Registration
Statement (as defined in the Registration Rights Agreement annexed hereto as
Exhibit A) including the shares of Common Stock underlying the Preferred Stock
issuable hereunder has been declared effective by the Securities and Exchange
Commission (the "SEC"), (ii) written proof that the Certificate of Amendment
providing for all of the rights, privileges, and preferences of the Preferred
Stock has been filed and accepted by the Secretary of State for the State of
Ohio, and (iii) receipt of a certificate
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from an officer of NMD that the representations, warranties and covenants of
this Agreement (including all exhibits annexed hereto), are true and correct as
of the date thereof, that the Common Stock has not been delisted from the
American Stock Exchange, and that NMD has not received a final determination
that the Common Stock will be delisted from the American Stock Exchange, the
Holders shall forward to NMD the original Convertible Debentures being exchanged
with NMD in exchange for the number of shares of Preferred Stock for the
principal amount of Convertible Debentures owned of record by each Holder, plus
accrued interest, as set forth on Schedule A. The "EXCHANGE DATE" shall be
defined as the business day upon which the Holders receive the aforementioned
notice and payment. Upon the receipt by the Holders of such shares of Preferred
Stock along with the aforementioned notice, the Holders will cease to have any
right to receipt or payment of interest or principal, in whole or in part, on
the Convertible Debentures, but will begin the right to receipt or payment of
dividends on the Preferred Stock. In the event the Common Stock of NMD is not
listed on the American Stock Exchange, or NMD has received notice of a final
determination that its Common Stock will be delisted in the future, on the date
NMD serves the above referenced notice, or prior to the Exchange Date, the
Holders, shall have the exclusive option to forego the aforementioned exchange.
In the event the Registration Statement to be filed by the Company pursuant to
Section 3(a) above is not declared effective within sixty (60) calendar days
from the date of this Agreement the exchange described in the Exchange Agreement
will not occur. Notwithstanding the foregoing, in the event each of the
Conditions, other than the delisting of the Common Stock from the American Stock
Exchange or final determination, as provided above, is not satisfied as of the
Exchange Date the exchange shall not occur.
2. ACCEPTANCE BY HOLDER. NMD agrees that it will, simultaneously with
sending notice (as set forth in Section 1 above), send a certificate to each
Holder evidencing such Holder's ownership of that number of shares of Preferred
Stock set forth next to such Holders' name on Schedule A. Upon receipt of the
notice and the shares of Preferred Stock from NMD as set forth in herein
(provided the Holders do not choose to forego the exchange as provided above),
the Holders shall deliver to NMD the original Convertible Debenture(s)
evidencing ownership of the Convertible Debentures exchanged hereby.
3. REPRESENTATIONS AND WARRANTIES OF NMD AND HOLDERS.
3.1 NMD REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION AND GOOD STANDING. NMD is a corporation duly formed,
validly existing and in good standing under the laws of the State of Ohio, with
the full authority to issue and exchange the Preferred Stock and to carry out
the provisions hereof.
(b) PREFERRED STOCK/CERTIFICATE OF AMENDMENT. The Preferred Stock, when
issued pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable. The Certificate of Amendment shall be
filed with the Secretary of State of the State of Ohio, and it shall remain in
full force and effect when the Preferred Stock is issued pursuant to the terms
of this Agreement. The Preferred Stock shall be convertible into shares of
Common Stock of NMD pursuant to the terms and conditions set forth in such
Certificate of Amendment, upon delivery
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of a Notice of Conversion as provided therein, in the form attached hereto as
Exhibit C.
(c) CAPITAL STOCK. The authorized capital stock of NMD consists of
20,000,000 shares of common stock and 500,000 shares of preferred stock.
(d) REGISTRATION RIGHTS. The terms and conditions of the Registration
Rights Agreement between NMD and the Holders, substantially in the form annexed
hereto as Exhibit D, shall be executed by the parties herein, and remain in full
force and effect when the Preferred Stock is issued pursuant to the terms of
this Agreement.
(e) EXECUTION OF THIS AGREEMENT. NMD has the full right, power and
authority to enter into and to perform this Agreement and all other agreements,
certificates and documents executed and delivered, or to be executed and
delivered, by NMD in connection herewith (collectively, with this Agreement, the
"NMD DOCUMENTS"). This Agreement has been duly authorized, executed and
delivered by NMD, and the NMD Documents are (or when executed and delivered will
be) legal, valid and binding obligations of NMD, enforceable in accordance with
their respective terms.
(f) INFORMATION TRUE AND CORRECT. All the information that is set forth
in this Agreement with respect to the NMD is correct and complete as of the date
of this Agreement.
(g) PURCHASE AGREEMENT. Except as modified by this Section 3.1, the
covenants, representations and warranties of NMD contained in Section 3 of the
Purchase Agreement are incorporated herein by reference and are made as of the
date of this Agreement.
3.2 HOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) TITLE. Each of the Holders is the owner, beneficially and of
record, of all the Convertible Debentures set forth beside its name on Schedule
A, exchanged hereby, free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges and restrictions. Each of the
Holders have full power to transfer the Convertible Debentures exchanged hereby
with NMD without obtaining the consent or approval of any other person, entity
or governmental authority. The Convertible Debentures being exchanged hereby
constitute all of the Convertible Debentures owned by each of the Holders.
(b) INFORMATION TRUE AND CORRECT. All the information that is set forth
in this Agreement with respect to each of the Holders is correct and complete as
of the date of this Agreement.
(c) KNOWLEDGE AND EXPERIENCE. Each of the Holders has such knowledge
and experience in financial and business matters that each Holder, together with
its representatives and advisors, if any, is capable of evaluating the merits
and risks of an investment in the Preferred Stock.
(d) HOLDER'S LIQUIDITY. Each of the Holders has adequate means of
providing for its current needs and contingencies and has no need for liquidity
in connection with the investment
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contemplated herein. Each of the Holders acknowledge that it must bear the
economic risk of investment in the Preferred Stock for an indefinite period of
time, and that it could bear a loss of its entire investment in the Preferred
Stock, without materially impairing its financial wherewithal.
(e) SECURITIES RESTRICTIONS ON TRANSFER. Each of the Holders
acknowledges and understands that the Preferred Stock has not been registered
under the Securities Act of 1933, as amended (the " 1933 ACT") or under any
state securities laws and agrees that the Preferred Stock cannot be resold
unless it is subsequently registered under the 1933 Act or pertinent state
securities laws unless an exemption from such registration is available.
(f) RELIANCE ONLY ON PUBLISHED DOCUMENTS. Each of the Holders
acknowledges and represents that it has made the decision to invest in the
Preferred Stock solely on the basis of the publicly available information
previously provided to the Holders by NMD in its Form 10-K for the fiscal year
ended December 31, 1997 and its Forms 10-Q for the fiscal quarter ended June 30,
1998, and that no officer, director or other person affiliated with NMD has
given any information or made any representation, oral or written, other than as
provided in such documents, on which the Holders have relied in deciding to
invest in the Preferred Stock, including, without limitation, any information or
representations with respect to the future operations of NMD or to the economic
returns which may accrue to the Holders as a result of the exchange of the
Convertible Debentures for the Preferred Stock.
(g) EXECUTION OF THIS AGREEMENT. Each of the Holders has the full
right, power and authority to enter into and to perform this Agreement and all
other agreements, certificates and documents executed and delivered, or to be
executed and delivered, by each of the Holders in connection herewith
(collectively, with this Agreement, the "HOLDER DOCUMENTS"). This Agreement has
been duly authorized, executed and delivered by each of the Holders, and the
Holder Documents are (or when executed and delivered will be) legal, valid and
binding obligations of each of the Holders, enforceable in accordance with their
respective terms.
(h) PURCHASE AGREEMENT. Except as modified by this Section 3.2, the
covenants, representations and warranties of each of the Holders contained in
Section 4 of the Purchase Agreement are incorporated herein by reference and are
made as of the date of this Agreement.
4. SHARE CERTIFICATES
4.1 LEGEND. Each certificate representing shares of Preferred Stock
issued pursuant to the provisions hereof shall bear
the following legend:
"THESE SHARES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
NEITHER THE SHARES REPRESENTED BY THIS CERTIFICATE NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD PLEDGED OR TRANSFERRED IN THE ABSENCE
OF REGISTRATION OR
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QUALIFICATION OR EXEMPTION THEREFROM UNDER SAID ACT OR STATE
SECURITIES LAWS OR THE RULES AND REGULATIONS PROMULGATED
THEREUNDER, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH LAWS."
4.21 REMOVAL OF LEGEND. The transfer restrictions imposed by the legend
set forth in Section 4.1 hereof shall terminate as to some or all of the
Preferred Stock when:
(a) Such Preferred Stock shall have been effectively registered under
the Securities Act of 1933 and any applicable state law and sold by the holder
thereof in accordance with such registration; or
(b) Written opinions to the effect that such registration is no longer
required or necessary under any federal or state law or regulation or
governmental authority shall have been received from counsel for NMD.
Whenever the restrictions imposed by Section 4.1 hereof shall
terminate, as provided above, any holder of such Preferred Stock as to which
such requirements shall have terminated shall be entitled to receive from NMD,
without expenses to such holder, a new stock certificate evidencing such
Preferred Stock without the restrictive legend set forth in Section 4.1.
5. NOTICES. All notices or other communications in connection with this
Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent via commercial courier or telecopier,
directed as follows:
If to NMD:
NetMed, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention:Xxxxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Holders to the address opposite such Holder's name on
Schedule A hereof.
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx, Xxxxxxxxx & Xxxx,
LLP
00 Xxxxxxxx Xxx
Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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6. CHOICE OF LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of Ohio without regard to principles of
conflicts of laws. Each party consents to the jurisdiction of the federal courts
of the Southern District of the State of Ohio in connection with any dispute
arising under this Agreement and hereby waive, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions.
7. SURVIVAL OF REPRESENTATIONS. All statements contained in any
certificate or instrument or conveyance delivered by or on behalf of the parties
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed to be additional representations and warranties of the
parties making such disclosure. All representations and warranties shall survive
the exchange of the Convertible Debentures for the Preferred Stock as
contemplated herein.
8. ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party without the prior written
consent of the other party hereto. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation hereunder.
9. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, along with
the portions of the Purchase Agreement incorporated herein by reference,
together with all exhibits, attachments and schedules hereto, constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, amendment, modification
or waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
10. INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein shall
for any reason be held invalid, illegal or unenforceable in any respect, then
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other instrument.
11. FURTHER ASSURANCES. The parties shall cooperate and take such
actions, and execute such other documents, in connection with the transactions
contemplated herein, as either may reasonably request in order to carry out the
provisions or purpose of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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13. COMPLIANCE WITH SECURITIES ACT. THE PROVISIONS OF SECTIONS 7.1
THROUGH 7.8 OF THE PURCHASE AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned has duly executed this Exchange
Agreement on the 27 day of October, 1998.
NETMED, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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CPR (USA) INC.
By: /s/ Xxxxxx X. Xxxxxx
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LIBERTYVIEW FUND, LLC
By: /s/ Xxxxxx X. Xxxxxx
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LIBERTYVIEW PLUS FUND
By: /s/ Xxxxxx X. Xxxxxx
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SCHEDULE A
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PRINCIPAL AMOUNT OF ACCRUED NO. SHARES OF
HOLDER CONVERTIBLE DEBENTURES INTEREST PREFERRED STOCK
1. CPR (USA) INC. $ 1,025,175.00 $74,992.25 73,227
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
2. LIBERTYVIEW FUND, LLC $ 93,825.00 $ 6,863.36 6,702
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
3. LIBERTYVIEW PLUS FUND $ 281,000.00 $20,555.34 20,071
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
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