SECURITIES PURCHASE AGREEMENT by and between NEXMED, INC., NEXMED (U.S.A.), INC. and METRONOME LPC 1, INC., dated as of November 30, 2006
by
and between
NEXMED,
INC.,
NEXMED
(U.S.A.), INC.
and
METRONOME
LPC 1, INC.,
dated
as of November 30, 2006
This
Securities Purchase Agreement (this “Agreement”)
is
made as of November 30, 2006 by and between NexMed, Inc., a Nevada corporation
(the “Company”),
NexMed (U.S.A.), Inc., a Delaware Corporation (the “Subsidiary”)
and
Metronome LPC 1, Inc., a Delaware corporation (the “Purchaser”).
ARTICLE
I
Definitions
Section
1.1 Definitions
“Action
or Proceeding” has the meaning set forth in Section
12.14.
“Affiliate”
of any Person means any Person that, directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common control with,
such Person, as such terms are used and construed under Rule 144 of the
Securities Act.
“Agreement”
has the meaning set forth in the Introduction.
“Closing”
has
the
meaning set forth in Section
2.2(a).
“Company”
means NexMed, Inc., a Nevada corporation.
“Common
Stock” has
the
meaning set forth in Section
2.1(a).
“Debt”
means, for any Person the sum of the following (without duplication): (i) all
obligations of such Person for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments (including principal, interest, fees and
charges); (ii) all obligations of such Person (whether contingent or otherwise)
in respect of bankers’ acceptances, letters of credit, surety or other bonds and
similar instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money); (iv)
all
obligations under leases which shall have been, or should have been, in
accordance with GAAP, recorded as capital leases in respect of which such Person
is liable (whether contingent or otherwise); (v) all obligations under operating
leases which require such Person or its Affiliate to make payments over the
term
of such lease, including payments at termination, based on the purchase price
or
appraisal value of the Property subject to such lease plus a marginal interest
rate, and used primarily as a financing vehicle for, or to monetize, such
Property; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all obligations
or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(ix) obligations to deliver goods or services; (x) obligations to pay for goods
or services whether or not such goods or services are actually received or
utilized by such Person; and (xi) any capital stock of such Person in which
such
Person has a mandatory obligation to redeem such stock.
“Direct
Claim” has
the
meaning set forth in Section
12.14.
“East
Windsor Property” means the real property located at 00 Xxxx Xxxxxx Xxxxx, Xxxx
Xxxxxxx, Xxx Xxxxxx 00000.
“Excepted
Liens” means: (i) Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained; (ii) Liens in
connection with workmen’s compensation, unemployment insurance or other social
security, old age pension or public liability obligations not yet due or which
are being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (iii) operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, workmen’s,
materialmen’s, construction or other like Liens arising by operation of law in
the ordinary course of business or statutory landlord’s liens, each of which is
in respect of obligations that have not been outstanding more than 90 days
or
which are being contested in good faith by appropriate proceedings and for
which
adequate reserves have been maintained in accordance with GAAP; (iv) any Liens
reserved in leases for rent and for compliance with the terms of the leases
in
the case of leasehold estates, to the extent that any such Lien referred to
in
this clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Company or
materially impair the value of such Property subject thereto; (v) encumbrances
(other than to secure the payment of borrowed money or the deferred purchase
price of Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way or other
Property of the Company for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal
or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights
of
way or other Property which in the aggregate do not materially impair the use
of
such rights of way or other Property for the purposes of which such rights
of
way and other Property are held by the Company or materially impair the value
of
such Property subject thereto; (vi) deposits of cash or securities to secure
the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens permitted by the Mortgage.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“GAAP”
means generally accepted accounting principles in the United States of America
in effect from time to time.
“Governmental
Authority” shall include the country, the state, county, city and political
subdivisions in which any Person or such Person’s Property is located or which
exercises valid jurisdiction over any such Person or such Person’s Property, and
any court, agency, department, commission, board, bureau or instrumentality
of
any of them including monetary authorities which exercises valid jurisdiction
over any such Person or such Person’s Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental Authority
having jurisdiction over, where applicable, the Company or any of its Property
or the Purchaser.
2
“Indebtedness”
means any and all amounts owing or to be owing by the Company to the Purchaser
in connection with the Senior Secured Note and all renewals, extensions and/or
rearrangements of any of the above.
“Indemnified
Persons” has the meaning set forth in Section
12.14.
“Lien”
means any interest in Property securing an obligation owed to, or a claim by,
a
Person other than the owner of the Property, whether such interest is based
on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (i) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For
the
purposes of this Agreement, the Company shall be deemed to be the owner of
any
Property which it has acquired or holds subject to a conditional sale agreement,
or leases under a financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person in a
transaction intended to create a financing.
“Losses”
has the meaning set forth in Section
12.14.
“Material
Adverse Effect” means any
material and adverse effect on (i) the assets, liabilities, financial condition,
business, operations or affairs of the Company from the facts represented or
warranted in this Agreement, taken as a whole, (ii) the ability of the Company
to carry out its business as at the Closing or as proposed as of the Closing
to
be conducted or meet its obligations under this Agreement or the Related
Agreements on a timely basis, or (iii) the Purchaser’s interests in the
collateral securing the Indebtedness, taken as a whole, or the Purchaser’s
ability to enforce its rights and remedies under this Agreement or the Related
Agreements, at law or in equity.
“Mortgage”
has the meaning set forth in Section
8.1.
“Permitted
Indebtedness” means (i) any Debt which is not secured by Property of the Company
(other than as set forth in the below proviso) and which is junior in ranking
to
the Senior Secured Note,
(ii)
obligations incurred as the deferred purchase price of property or services,
(iii) Debt incurred solely in connection with the purchase of equipment which
indebtedness is secured by a lien on such equipment, (iv) equipment financing
leases, (v) trade payables entered into in the ordinary course of business;
(vi)
Debt secured by Excepted Liens, or (vii) Debt up to an aggregate principal
amount of $3,000,000 plus applicable interest incurred in connection with a
refinancing of the Tailwind Debt; provided, that, if the Purchaser is granted
a
first lien security interest in the East Windsor Property, “Permitted
Indebtedness” shall also include Debt secured by a second lien security interest
on the East Windsor Property.
3
“Person”
means any individual, corporation, company, voluntary association, partnership,
joint venture, trust, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
“Property”
means any interest in any kind of property or asset, whether real, personal
or
mixed, or tangible or intangible.
“Purchase
Price” has the meaning set forth in Section
2.1(a).
“Purchaser”
means Metronome
LPC 1, Inc., a Delaware corporation.
“Related
Agreements” means the Senior Secured Note, the Warrant and the
Mortgage.
“Responsible
Officer” means, as to any Person, the Chief Executive Officer, the President,
any Vice President, member, or manager of such Person and, with respect to
financial matters, the term “Responsible Officer” shall include the Chief
Financial Officer or equivalent member of such Person. Unless otherwise
specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of the Company.
“Restricted
Payments” has the meaning set forth in Section
9.9.
“SEC”
means the Securities and Exchange Commission.
“SEC
Filings” means the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 and all other reports filed by the Company pursuant
to
the Securities Exchange Act of 1934 since December 31, 2003.
“Securities”
has the meaning set forth in Section
2.1(a).
“Securities
Act” means the Securities Act of 1933, as amended.
“Senior
Secured Note” has the meaning set forth in Section
2.1(a).
“Subsidiary”
means NexMed (U.S.A.), Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company.
“Tailwind
Debt” means the Company’s Debt obligations due May 31, 2007 pursuant to the
Convertible Notes in favor of The Tail Wind Fund Ltd. and Solomon Strategic
Holdings, Inc.
“Tailwind
Mortgage” means the Mortgage, Security Agreement and Assignment of Leases and
Rents by NexMed (U.S.A.), Inc., in favor of The Tail Wind Fund Ltd. and Solomon
Strategic Holdings, Inc. dated June 11, 2002, as amended.
“Warrant”
has the meaning set forth in Section
2.1(a).
“Warrant
Shares” have the meaning set forth in Section
2.1(a).
4
ARTICLE
II
Purchase
and Sale of Senior Secured Note,
Common
Stock Units and Redeemable Warrants
Section
2.1 Initial
Purchase and Sale.
(a) The
Company has authorized the sale and issuance to the Purchaser of (i) the
Senior
Secured Note due December 31, 2007, in an aggregate original principal amount
of
$2,000,000 (the “Senior
Secured Note”)
and
(ii) warrants (the “Warrant”)
to
purchase up to 500,000 shares (the “Warrant
Shares”)
of the
Company’s common stock, par value $.001 per share (the “Common
Stock”).
The
Senior Secured Note, the Warrants and the Warrant Shares are hereinafter
called,
collectively the “Securities.”
The
aggregate purchase price (the “Purchase
Price”)
for
the Securities shall be $2,000,000. The Senior Secured Note and the Warrant
shall be in the forms attached hereto, respectively as Exhibits
A
and
B.
(b) Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase
at the Closing (as defined below), and the Company agrees to sell and issue
to
the Purchaser at the Closing the Securities at the aggregate purchase price
equal to the Purchase Price. Each of the Company and the Purchaser shall
become
a party to this Agreement and shall have the respective rights and obligations
hereunder.
Section
2.2 Closing.
(a) The
closing of the purchase and sale of the Securities shall take place at the
offices of Xxxxxxx Xxxxx LLP, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx
Xxxx 00000, contemporaneously with the execution and delivery hereof by the
Company and Purchaser of the executed definitive documents and cash (which
time
and place are designated as the “Closing”).
(b) At
the
Closing, the Company shall deliver to the Purchaser the Senior Secured Note
and
the Warrant against payment of the Purchase Price therefor by wire transfer
of
immediately available funds to an account designated by the Company.
ARTICLE
III
Representations
and Warranties of the Company
In
order
to induce the Purchaser to enter into this Agreement and the Related Agreements
and to consummate the transactions contemplated hereby and thereby, the Company
hereby represents and warrants to the Purchaser as of date of the Closing
as
follows:
Section
3.1 Organization;
Good Standing; Qualification.
The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the State of Nevada. The Company is duly qualified
and is authorized to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to so qualify (either
singly or taken together) could reasonably be expected to have a Material
Adverse Effect on the Company’s business. The Company is the sole shareholder of
the Subsidiary.
5
Section
3.2 Corporate
Power.
The
Company has all requisite corporate power and authority (i) to own and operate
its properties and assets and to carry on its business as presently conducted
and as presently proposed to be conducted, (ii) to execute and deliver this
Agreement and each of the Related Agreements, (iii) to issue upon exercise
of
the Warrant, the Warrant Shares and (iv) to carry out and perform the provisions
of this Agreement and the Related Agreements.
Section
3.3 Authorization.
All
corporate action on the part of the Company necessary for the authorization
of
and its execution and delivery of this Agreement and the Related Agreements,
the
performance of all obligations of the Company hereunder and thereunder, and
the
authorization, issuance (or reservation for issuance), sale and delivery
of the
Senior Secured Note and the Warrant Shares has been taken or will be taken
prior
to the Closing. This Agreement and the Related Agreements, when executed
and
delivered by the Company, will constitute valid and binding obligations of
the
Company, enforceable in accordance with their respective terms, except only
(i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in this Agreement and the
Warrant may be limited by applicable securities laws and principles of public
policy.
Section
3.4 Conflicts.
The
execution and performance of the transactions contemplated by this Agreement
and
the Related Agreements by the Company and the compliance with their respective
provisions by the Company will not (a) conflict with or violate the certificate
of incorporation or by-laws of the Company or (b) require on the part of
the
Company any filing with, or any permit, authorization, consent or approval
of
any agency, bureau, commission, court, authority, department, official,
political subdivision, tribunal or other instrumentality of any Governmental
Authority except as would not have a Material Adverse Effect on the ability
of
the Company to complete the transactions contemplated by this Agreement or
(c)
result in any violation or be in conflict with or constitute, with or without
the passage of time or giving of notice, either a default under any mortgage,
indenture, agreement, instrument, judgment, order, writ, decree or contract
or
an event that would have a Material Adverse Effect on the ability of the
Company
to complete the transactions contemplated by this Agreement. The parties
acknowledge and agree that if any provision of this Agreement is interpreted
to
violate the Tailwind Mortgage, then such provision shall be interpreted in
a
manner favorable to the Tailwind Mortgage.
Section
3.5 Valid
Issuance of the Warrant Shares.
The
Warrant Shares have been duly authorized and validly reserved for issuance
and
upon issuance after payment of the exercise price in accordance with the
Warrants, will be validly issued, fully paid and non-assessable, and will
be
free of restrictions on transfer other than restrictions on transfer under
this
Agreement and under applicable state and federal securities laws.
6
Section
3.6 Capitalization
and Voting Rights.
(a) The
authorized capital stock of the Company consists of 120,000,000 shares of
common
stock, par value $.001 and 10,000,000 shares of preferred stock, par value
$.001. 66,919,589 shares of common stock are issued and outstanding as of
the
date of this Agreement and prior to giving effect to the transactions
contemplated hereby, and no shares of preferred stock are outstanding.
(b) Except
as
disclosed in Schedule
3.6,
there
are no subscriptions, warrants, options, convertible securities or other
rights
(contingent or otherwise) to purchase or acquire any shares of any class
of
stock of the Company. Except as set forth in Schedule
3.6,
there
is no future commitment by Company to issue any shares, warrants, options
or
other such rights or to distribute to holders of any class of its Common
Stock
any evidences of indebtedness or assets, nor is there any obligation on the
part
of the Company (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its Common Stock thereof.
Section
3.7 Compliance
with Other Instruments.
The
Company is not in violation or default (i) of any provision of its certificate
of incorporation or by-laws (both as amended to date) or (ii) of any provision
of any mortgage, indenture, agreement, instrument, judgment, order, writ,
decree
or contract to which it is a party or by which it is bound or (iii) of any
federal or state statute, rule or regulation applicable to the Company which,
with respect to clauses (ii) and (iii), could reasonably be expected to result
in a Material Adverse Effect. The execution, delivery and performance by
the
Company of this Agreement and the Related Agreements, the consummation of
the
transactions contemplated hereby and thereby, and the offer, sale and issuance
of the Senior Secured Note and the issuance of the Warrant Shares upon exercise
of the Warrant, will not result in any such violation or be in conflict with
or
constitute, with or without the passage of time or giving of notice, either
a
default under any mortgage, indenture, agreement, instrument, judgment, order,
writ, decree or contract or an event that results in the creation of any
material lien, charge or encumbrance upon any assets of the Company (other
than
pursuant to the Mortgage) or the suspension, revocation, impairment, forfeiture
or non-renewal of any material permit, license, authorization or approval
applicable to the Company, its business or operations or any of its assets
or
properties.
Section
3.8 Environmental
and Safety Laws.
The
Company is not currently in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety,
and
reasonably believes that no material expenditures are or will be required
in
order to comply with any such existing statute, law or regulation.
Section
3.9 Litigation.
Except
as set forth on Schedule
3.9,
there
is no action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against the Company that questions the validity
of this Agreement or the Related Agreements, or the right of the Company
to
enter into such agreements, or to consummate the transactions contemplated
hereby or thereby or that could be reasonably expected to have a Material
Adverse Effect.
7
Section
3.10 Permits.
The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as presently conducted by it, the
lack
of which would have a Material Adverse Effect, and the Company believes it
can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as presently proposed to be conducted. The Company is not
in
default under any of such franchises, permits, licenses or other similar
authority.
Section
3.11 Tax
Returns, Payments and Elections.
The
Company has no tax liabilities other than tax liabilities that have arisen
in
the ordinary course of business and which are not past due or
delinquent.
Section
3.12 Registration
Rights.
Except
as set forth in Schedule
3.12,
the
Company is presently not under any obligation and has not granted any rights
to
register under the Securities Act any of its presently outstanding securities
or
any of its securities that may hereafter be issued.
Section
3.13 Insurance.
The
Company carries insurance with respect to the East Windsor Property, and
the
Company has (i) not received notice from any insurer or agent of such insurer
that capital improvements or other expenditures are required or necessary
to be
made in order to continue such insurance or (ii) no reason to believe that
it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at reasonable cost from similar
insurers as may be necessary to continue its business.
Section
3.14 Sponsors,
Brokers or Finders; Other Offers.
The
Company has not incurred, and will not incur, directly or indirectly, as
a
result of any action taken by the Company, any liability for sponsor, brokerage
or finders’ fees or agents’ commissions or any similar charges in connection
with this Agreement.
Section
3.15 Absence
of certain changes; Action.
Except
as disclosed in the SEC Filings, since December 31, 2004, the Company has
not:
(1) declared or paid any dividends, or authorized or made any distribution
upon
or with respect to any class or series of its capital stock; (2) incurred
any
indebtedness for money borrowed or incurred any other material liabilities,
(3)
made any loans or advances to any person, other than ordinary advances for
travel expenses or deferred salary; or (4) sold, exchanged or otherwise disposed
of any of its material assets or rights, other than the sale of its inventory
in
the ordinary course of business. The Company is not a party to and is not
bound
by any contract, agreement or instrument, or subject to any restriction under
its certificate of incorporation or by-laws, that materially adversely affects
its business as now conducted or as proposed to be conducted, its properties
or
its financial condition.
Section
3.16 Disclosure.
Neither
this Agreement, the Related Agreements, nor any other written statements
or
certificates made or delivered by the Company herewith, when taken as a whole,
contains any untrue statement of a material fact relating to the Company
or
omits to state a material fact which is necessary to make the statements
relating to the Company contained herein or therein not misleading in light
of
the circumstances under which they were made.
8
ARTICLE
IV
Representations,
Warranties and Covenants of the Subsidiary
In
order
to induce the Purchaser to enter into this Agreement and the Related Agreements
and to consummate the transactions contemplated hereby and thereby, the
Subsidiary hereby represents and warrants to the Purchaser as of date of
the
Closing as follows:
Section
4.1 Organization;
Good Standing; Qualification.
The
Subsidiary is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware and is a wholly-owned
subsidiary of the Company. The Subsidiary is duly qualified and is authorized
to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify (either singly or taken
together) could reasonably be expected to have a Material Adverse Effect
on the
Subsidiary’s business.
Section
4.2 Corporate
Power.
The
Subsidiary has all requisite corporate power and authority (i) to own and
operate its properties and assets and to carry on its business as presently
conducted and as presently proposed to be conducted, (ii) to execute and
deliver
this Agreement and each of the Related Agreements and (iii) to carry out
and
perform the provisions of this Agreement and the Related
Agreements.
Section
4.3 Authorization.
All
corporate action on the part of the Subsidiary necessary for the authorization
of and its execution and delivery of this Agreement and the Related Agreements,
the performance of all obligations of the Company hereunder and thereunder
has
been taken or will be taken prior to the Closing. This Agreement and the
Related
Agreements, when executed and delivered by the Subsidiary, will constitute
valid
and binding obligations of the Subsidiary, enforceable in accordance with
their
respective terms, except only (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) to the extent the indemnification provisions
contained in this Agreement may be limited by applicable securities laws
and
principles of public policy.
Section
4.4 Conflicts.
The
execution and performance of the transactions contemplated by this Agreement
and
the Related Agreements by the Subsidiary and the compliance with their
respective provisions by the Subsidiary will not (a) conflict with or violate
the certificate of incorporation or by-laws of the Subsidiary or (b) require
on
the part of the Subsidiary any filing with, or any permit, authorization,
consent or approval of any agency, bureau, commission, court, authority,
department, official, political subdivision, tribunal or other instrumentality
of any Governmental Authority except as would not have a Material Adverse
Effect
on the ability of the Subsidiary to complete the transactions contemplated
by
this Agreement or (c) result in any violation or be in conflict with or
constitute, with or without the passage of time or giving of notice, either
a
default under any mortgage, indenture, agreement, instrument, judgment, order,
writ, decree or contract or an event that would have a Material Adverse Effect
on the ability of the Subsidiary to complete the transactions contemplated
by
this Agreement. The parties acknowledge and agree that if any provision of
this
Agreement is interpreted to violate the Tailwind Mortgage, then such provision
shall be interpreted in a manner favorable to the Tailwind
Mortgage.
9
Section
4.5 Title
to Properties and Assets; Liens.
The
Subsidiary owns the East Windsor Property free and clear of all Liens other
than
Excepted Liens and those created by the Tailwind Mortgage.
Section
4.6 Compliance
with Other Instruments.
The
Subsidiary is not in violation or default (i) of any provision of its
certificate of incorporation or by-laws (both as amended to date) or (ii) of any
provision of any mortgage, indenture, agreement, instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound or
(iii)
of any federal or state statute, rule or regulation applicable to the Subsidiary
which, with respect to clauses (ii) and (iii), could reasonably be expected
to
result in a Material Adverse Effect. The execution, delivery and performance
by
the Subsidiary of this Agreement and the Related Agreements, the consummation
of
the transactions contemplated hereby and thereby, will not result in any
such
violation or be in conflict with or constitute, with or without the passage
of
time or giving of notice, either a default under any mortgage, indenture,
agreement, instrument, judgment, order, writ, decree or contract or an event
that results in the creation of any material lien, charge or encumbrance
upon
any assets of the Subsidiary (other than pursuant to the Mortgage) or the
suspension, revocation, impairment, forfeiture or non-renewal of any material
permit, license, authorization or approval applicable to the Subsidiary,
its
business or operations or any of its assets or properties.
Section
4.7 Environmental
and Safety Laws.
The
Subsidiary is not currently in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety,
and
reasonably believes that no material expenditures are or will be required
in
order to comply with any such existing statute, law or regulation.
Section
4.8 Insurance.
The
Subsidiary carries insurance with respect to the East Windsor Property, and
the
Subsidiary has (i) not received notice from any insurer or agent of such
insurer
that capital improvements or other expenditures are required or necessary
to be
made in order to continue such insurance or (ii) no reason to believe that
it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at reasonable cost from similar
insurers as may be necessary to continue its business.
Section
4.9 Disclosure.
Neither
this Agreement, the Related Agreements, nor any other written statements
or
certificates made or delivered by the Subsidiary herewith, when taken as
a
whole, contains any untrue statement of a material fact relating to the
Subsidiary or omits to state a material fact which is necessary to make the
statements relating to the Subsidiary contained herein or therein not misleading
in light of the circumstances under which they were made.
ARTICLE
V
Representations,
Warranties and Covenants of the Purchaser
Purchaser
hereby represents, warrants and covenants to the Company as of the Closing
as
follows:
10
Section
5.1 Organization;
Good Standing; Power; Authorization.
The
Purchaser is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware. Purchaser has all requisite
power and authority (i) to execute and deliver this Agreement and the Related
Agreements to which it is a party, and (ii) carry out and perform the provisions
of this Agreement and the Related Agreements. This Agreement and the Related
Agreements to which Purchaser is a party, when executed and delivered by
Purchaser, will constitute valid and legally binding obligations of Purchaser,
enforceable in accordance with their respective terms, except only (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in this Agreement and the
Warrant may be limited by applicable securities laws and principles of public
policy.
Section
5.2 Conflicts.
The
execution and performance of the transactions contemplated by this Agreement
and
the Related Agreements by the Purchaser and the compliance with their respective
provisions by the Purchaser will not (a) conflict with or violate the
certificate of incorporation or by-laws of the Purchaser, or (b) require
on the
part of the Purchaser any filing with, or any permit, authorization, consent
or
approval of any agency, bureau, commission, court, authority, department,
official, political subdivision, tribunal or other instrumentality of any
government so as to not have a Material Adverse Effect on the ability of
the
Purchaser to complete the transactions contemplated by this Agreement, or
(c)
result in any violation or be in conflict with or constitute, with or without
the passage of time or giving of notice, either a default under any mortgage,
indenture, agreement, instrument, judgment, order, writ, decree or contract
or
an event that would have a Material Adverse Effect on the ability of the
Purchaser to complete the transactions contemplated by this
Agreement.
Section
5.3 Reliance
upon Purchaser’s Representations.
Purchaser understands that the Securities, at the time of issuance, may not
be
registered under the Securities Act on the ground that the sale provided
for in
this Agreement, and the issuance of such Securities hereunder, is exempt
from
registration under the Securities Act pursuant to Section 4(2) thereof and
Regulation D thereunder, and that the Company’s reliance on such exemption is
predicated on the Purchaser’s representations set forth herein.
Section
5.4 Disclosure
of Information.
Purchaser has had an opportunity to ask questions and receive answers from
the
Company regarding the terms and conditions of the offering of the Securities
and
the Company’s business, financial condition, properties and prospects. The
foregoing, however, does not limit or modify the representations and warranties
of the Company and the Subsidiary in Articles
III and IV
of this
Agreement or the right of such Purchaser to rely thereon.
Section
5.5 Investment
Experience; Economic Risk.
Purchaser understands that an investment in the Securities involves substantial
risks. Purchaser is experienced in evaluating and investing in private placement
transactions of securities of similar companies and acknowledges that Purchaser
is able to fend for itself. Purchaser has such knowledge and experience in
financial and business matters that Purchaser is capable of evaluating the
merits and risks of the investment in the Securities. Purchaser can bear
the
economic risk of Purchaser’s investment and is able, without impairing
Purchaser’s financial condition, to hold the Securities for an indefinite period
of time and to suffer a complete loss of Purchaser’s investment.
11
Section
5.6 Accredited
Investor.
Purchaser is an “accredited investor” as defined in Rule 501 (a) of Regulation D
promulgated under the Securities Act.
Section
5.7 Residence.
Purchaser represents and warrants that its principal place of business is
00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000.
Section
5.8 Restricted
Securities.
Purchaser understands and agrees that the Securities are characterized as
“restricted securities” under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such federal securities laws and applicable regulations such
Securities may be resold without registration under the Securities Act only
in
certain limited circumstances. In this connection, Purchaser represents that
it
is aware of the current provisions of Rule 144 promulgated under the Securities
Act which permit limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions, including, among other
things, the existence of a public market for the securities, the availability
of
certain current public information about the Company, the resale occurring
not
less than one year after a party has purchased and paid for the security
to be
sold, the sale being effected through a “broker’s transaction” or in
transactions directly with a “market maker” and the number of shares being sold
during any three month period not exceeding specified limitations. The Purchaser
understands that the Senior Secured Note, the Warrant and any Warrant Shares
or
securities issued in respect of or exchange for the Senior Secured Note or
Warrant Shares, may bear a legend substantially to the following
effect:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND
MAY
NOT BE SOLD OR TRANSFERRED UNLESS THE REGISTRATION PROVISIONS OF THE SAID
ACT
AND APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS
COMPLIANCE WITH SUCH PROVISIONS IS NOT REQUIRED”
The
Securities may not be transferred by Purchaser unless either (i) they have
been
registered under the Securities Act or (ii) registration is not required
under
the Securities Act for the transfer of such Securities.
Section
5.9 Brokers
or Finders.
The
Purchaser has not, and will not, incur, directly or indirectly, as a result
of
any action taken by Purchaser, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this
Agreement.
ARTICLE
VI
Conditions
to Closing of Purchaser
The
obligations of the Purchaser under Section
1.1(b)
of this
Agreement are subject to the fulfillment or waiver on or before the Closing
of
each of the following conditions:
Section
6.1 Representations,
Warranties and Covenants.
All
representations, warranties, covenants, agreements and conditions contained
in
this Agreement to be true and correct, or to be performed by the Company
and/or
the Subsidiary, on or prior to the Closing, shall be true and correct, or
shall
have been performed by the Company and/or the Subsidiary prior to Closing,
in
all material respects.
12
Section
6.2 Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to counsel for the Purchaser, which shall
have received all such counterpart original and certified or other copies
of
such documents as it may reasonably request.
Section
6.3 Senior
Secured Note.
The
Company shall have executed and delivered to Purchaser the Senior Secured
Note.
Section
6.4 Warrant.
The
Company shall have executed and delivered to Purchaser signature pages to
the
Warrant.
Section
6.5 Other
Closing Deliverables.
(a) The
Company shall have delivered to Purchaser the following:
(i) a
certificate executed by the Company’s Chief Financial Officer or President on
behalf of the Company certifying that the conditions specified in Section
6.1
have
been satisfied; and
(ii) a
certificate of the Secretary of State of Nevada with respect to the good
standing of the Company.
(b) The
Subsidiary shall have delivered to Purchaser a certificate executed by the
Company’s Chief Financial Officer or President on behalf of the Company
certifying that the conditions specified in Section
6.1
have
been satisfied.
ARTICLE
VII
Conditions
to Closing of
Company
The
obligations of the Company to Purchaser under this Agreement are subject
to
fulfillment or waiver on or before the closing of each of the following
conditions by Purchaser:
Section
7.1 Representations,
Warranties and Covenants.
All
representations and warranties of Purchaser contained in this Agreement shall
be
true and correct as of the Closing.
Section
7.2 Payment
of Purchase Price.
The
Company shall have received payment of the Purchase Price from the Purchaser,
less any fees pursuant to Section
12.9.
13
ARTICLE
VIII
Affirmative
Covenants
The
Company covenants and agrees that:
Section
8.1 Mortgage. The
Company shall cause the Subsidiary, concurrently with its full satisfaction
of
its obligations pursuant to the Tailwind Mortgage, to enter into a mortgage
with
Purchaser, on commercially reasonably terms and in form and substance reasonably
satisfactory to Purchaser (the “Mortgage”),
which
Mortgage shall grant to Purchaser the security interest described in
Section
10.1
of this
Agreement.
Section
8.2 Reporting
Requirements.
The
Company shall deliver, or shall cause to be delivered, to the Purchaser,
in each
case to the extent not publicly disclosed by the Company in a report or filing
available via the SEC’s XXXXX system:
(a) Notice
of Default, Etc.
Promptly after the Company knows that any Event of Default or any Material
Adverse Effect has occurred, a notice of such Event of Default or Material
Adverse Effect, describing the same in reasonable detail and the action the
Company proposes to take with respect thereto; and
(b) SEC
Filings, Etc.
If the
Company is required by law to make such reports or filings, promptly upon
its
becoming available, each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and each regular or periodic
report and any registration statement, prospectus or written communication
(other than transmittal letters) in respect thereof filed by the Company
with or
received by the Company in connection therewith from any securities exchange
or
the SEC or any successor agency.
Section
8.3 Litigation.
To the
extent not publicly disclosed by the Company in a filing available via the
SEC’s
XXXXX system, the Company shall promptly give to the Purchaser notice of
any
material litigation or proceeding against or adversely affecting the Company.
The Company will promptly notify the Purchaser of any claim, judgment, Lien
or
other encumbrance affecting any Property of the Company if the value of the
claim, judgment, Lien, or other encumbrance affecting such Property shall
exceed
$50,000.
Section
8.4 Maintenance,
Etc. The
Company shall preserve and maintain its existence and all of its material
rights, privileges and franchises; keep books of record and account in which
full, true and correct entries will be made of all dealings or transactions
in
relation to its business and activities; comply with all Governmental
Requirements if failure to comply with such requirements will have a Material
Adverse Effect; pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its
Property prior to the date on which penalties attach thereto, except for
any
such tax, assessment, charge or levy the payment of which is being contested
in
good faith and by proper proceedings and against which adequate reserves
are
being maintained; upon reasonable notice, permit representatives of the
Purchaser, during normal business hours, to examine, copy and make extracts
from
its books and records, to inspect its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by
the
Purchaser; and keep, or cause to be kept, insured by financially sound and
reputable insurers all Property of a character usually insured by Persons
engaged in the same or similar business against loss or damage of the kinds
and
in the amounts customarily insured against by such Persons and carry such
other
insurance as is usually carried by such Persons including, without limitation,
environmental risk insurance to the extent reasonably available.
14
Section
8.5 Performance
of Obligations.
The
Company will pay the Senior Secured Note according to the reading, tenor
and
effect thereof; and the Company will do and perform every act and discharge
all
of the obligations provided to be performed and discharged by them under
the
this Agreement and the Related Agreements, at the time or times and in the
manner specified.
Section
8.6 Use
of Proceeds.
The
Company shall use the proceeds of this Agreement to fund the Company’s
obligations pursuant to the Tailwind Mortgage.
ARTICLE
IX
Negative
Covenants
The
Company covenants and agrees that:
Section
9.1 For
so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
will not incur, create, assume or permit to exist any Debt, except the
following:
(a) the
Indebtedness;
(b) Debt
secured by the Tailwind Mortgage up to an aggregate principal amount of
$3,000,000 plus applicable interest;
(c) Permitted
Indebtedness; and
(d) Debt
of
the Company existing on the Closing which is disclosed in Schedule
9.1.
Section
9.2 Liens.
For so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
will not create, incur, assume or permit to exist any Lien on the East Windsor
Property, except:
(a) Liens
securing the Tailwind Mortgage;
(b) Liens
securing the payment of the Indebtedness;
(c) Excepted
Liens;
(d) Liens
with respect to a first lien security interest in connection the incurrence
of
Debt related to a refinancing of the Tailwind Debt as contemplated by Section
9.1 below; and
(e) A
security interest subordinated to any first lien security interest granted
to
Purchaser in the East Windsor Property.
Section
9.3 Investments,
Loans and Advances.
For so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
will not make or permit to remain outstanding any loans or advances to any
Person, except that the foregoing restriction shall not apply to accounts
receivable arising in the ordinary course of business.
15
Section
9.4 Dividends,
Distributions and Redemptions.
For so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
shall not purchase, redeem or otherwise acquire for value any of its equity
interests now or hereafter outstanding, nor pay any dividends, return any
capital or make any distribution of its assets (including cash) to its
shareholders or other equity interest holders or (ii) repay, prepay, purchase,
repurchase, or redeem any other subordinate Debt other than payments in
accordance with the terms of the Debt obligations permitted per Section
9.1.
The
foregoing sentence shall not be interpreted as permitting any Debt not otherwise
expressly permitted by the terms of this Agreement or as consented to in
writing
by the Purchaser.
Section
9.5 Sale
of Interests in Subsidiary. For
so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
shall not sell, dispose, assign or grant any interest in the Subsidiary.
For
purposes of clarification, the Subsidiary shall remain wholly-owned by the
Company.
Section
9.6 Mergers,
Etc.
For so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
may enter into certain joint ventures and mergers, and may form new affiliated
entities, but the Company will not merge into or with or consolidate with
any
other Person, or sell, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its Property
in
existence at the time of Closing or assets to any other Person unless this
Agreement and the Related Agreements are assumed by the surviving entity
or
purchaser.
Section
9.7 Senior
Secured Note.
The
Company will not permit the proceeds of the Senior Secured Note to be used
for
any purpose other than those permitted by this Agreement. Neither the Company
nor any Person acting on behalf of the Company has taken or will take any
action
which might cause the Senior Secured Note to violate Regulation T, U or X
or any
other regulation of the Board of Governors of the Federal Reserve System
or to
violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the
same.
Section
9.8 Transactions
with Affiliates.
For so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
will not enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under
this
Agreement, and are upon fair and reasonable terms no less favorable to it
than
it would obtain in a comparable arm’s length transaction with a Person not an
Affiliate.
Section
9.9 Restricted
Payments. For
so
long as any amount of Indebtedness remains unpaid and outstanding, the Company
shall not: (i) declare or pay any dividend on, or make any payment on account
of, or set apart assets for a sinking or another analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of common
stock of the Company or any of its subsidiaries, whether now or hereafter
outstanding; or (ii) make any other distribution in respect of its common
stock,
either directly or indirectly, whether in cash or property or in obligations
of
the Company or any of its subsidiaries (collectively, the “Restricted
Payments”).
16
Section
9.10 Negative
Pledge Agreements.
Except
as set forth on Schedule
9.10
or as
otherwise permitted by this Agreement, for so long as the Senior Secured
Note,
together with accrued interest and any other amounts payable in respect thereof,
remains unpaid, the Company will not create, incur, assume or permit to exist
any contract, agreement or understanding (other than pursuant to this Agreement
and the Related Agreements) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on the East Windsor
Property.
ARTICLE
X
Section
10.1 Security
Interest.
Subject
to the terms of the Tailwind Mortgage and only after the Company’s satisfaction
of its obligations thereunder, as security for the payment and performance
under
the Senior Secured Note, the Company shall cause the Subsidiary to grant
the
Purchaser a first lien security interest in the East Windsor Property pursuant
to the terms of the Mortgage, it being understood by Purchaser that the
Subsidiary cannot enter into the Mortgage with the Purchaser until the Tailwind
Mortgage is fully satisfied, at which time the first lien security interest
can
be perfected by the Purchaser; provided; however, that if the Company incurs
Debt in a refinancing of the Tailwind Debt, the Company shall instead cause
the
Subsidiary to grant the Purchaser a second lien security interest in the
East
Windsor Property which security interest shall be subordinated to a first
lien
security interest of such other third party lender(s) up to an aggregate
principal amount of $3,000,000 plus applicable interest.
Section
10.2 Ranking.
The
Senior Secured Note will rank senior to all existing and future Debt of the
Company; provided, however, the Senior Secured Note shall rank junior to
(i) the
Tailwind Mortgage and (ii) a first lien security interest granted to third
party
lender(s) as contemplated by Section
10.1
above,
in either case up to an aggregate principal amount of $3,000,000 plus applicable
interest.
Section
10.3 Optional
Prepayments.
The
Senior Secured Note shall be subject to prepayment in whole or in part at
any
time or from time to time, at the option of the Company, at the unpaid principal
amount thereof plus accrued interest thereon through the date fixed for
prepayment, without penalty or premium.
Section
10.4 Notice
of Prepayments.
Any
call for prepayment of the Senior Secured Note pursuant to Section
10.3
shall be
made by giving written notice to the holder of such Senior Secured Note not
less
than five (5) nor more than twenty (20) days prior to the date fixed for
prepayment, which notice shall specify the principal amount to be prepaid.
If
all of the outstanding Senior Secured Note is to be prepaid, the notice of
prepayment shall so state. In case the Senior Secured Note is to be prepaid
in
part only, the same notice of prepayment shall state the portion of the
principal amount thereof to be prepaid and refer to the option available
under
Section
10.5
hereof
to the holder of the Senior Secured Note. If notice of call for prepayment
has
been given as aforesaid, the principal amount to be prepaid, together with
interest thereon to the date of prepayment, shall on the date designated
in such
notice become due and payable. From and after the date fixed for prepayment,
unless the Company shall default in payment of such principal amount when
so due
and payable, together with interest as aforesaid, interest on such principal
amount shall cease to accrue.
17
Section
10.5 Notation
of Partial Payments.
Upon
any partial prepayment of the Senior Secured Note, the Senior Secured Note
shall
be, at the option of the holder, either (i) surrendered to the Company in
exchange for a new Senior Secured Note in a principal amount equal to the
principal amount remaining unpaid on the Senior Secured Note surrendered
and
otherwise having the same terms and provisions as the Senior Secured Note
surrendered or (ii) made available to the Company at its office designated
as
herein provided, for notation thereon of the portion of the principal so
prepaid.
ARTICLE
XI
Events
of Default
Section
11.1 Events
of Default.
If any
of the following events (herein called “Events
of Default”)
shall
occur:
(a) the
Company shall default in the payment of any installment of interest or any
other
amount payable on or under the Senior Secured Note for more than five (5)
business days after the same shall become due and payable and is
continuing;
(b) the
Company shall default in any material respect in the performance of or
compliance with any provision of Article
VIII
hereof
and such default shall not have been cured within ten (10) business days
after
written notice thereof by the holder of the Senior Secured Note;
(c) the
Company shall default in any material respect in the performance of or
compliance with any provision of Article
IX
hereof
and such default shall not have been cured within ten (10) business days
after
written notice thereof by the holder of the Senior Secured Note;
(d) the
Company shall default in any material respect the performance of or compliance
with any other agreement, condition or term contained herein (other than
those
referred to above) or in any of the Related Agreements, and such default
shall
not have been cured within twenty (20) days after written notice thereof
by the
holder of the Senior Secured Note;
(e) any
representation or warranty made to the Purchaser by or on behalf of the Company
and/or the Subsidiary in or pursuant to this Agreement or the Mortgage shall
prove to have been false or incorrect in any material respect on the date
on
which it was made;
(f) the
Company shall default in the performance of or compliance with any other
agreement or document evidencing indebtedness of greater than
$150,000.
(g) the
Company pursuant to or within the meaning of any Bankruptcy Law: (i) commences
a
voluntary case; (ii) consents to the entry of an order for relief against
it in
an involuntary case; (iii) consents to the appointment of a Receiver of it
or
for any substantial part of its property; (iv) makes a general assignment
for
the benefit of its creditors; or (v) or takes any comparable action under
any
foreign laws relating to insolvency and fails to file a bankruptcy plan of
reorganization within 180 days;
18
(h) a
court
of competent jurisdiction enters an order or decree under any bankruptcy
law
that: (i) is for relief against the Company in an involuntary case; (ii)
appoints a receiver or administrator of the Company or for any substantial
part
of its property or any subsidiary; or (iii) orders the winding up or liquidation
of the Company; or any similar relief is granted under any foreign laws and
the
order or decree remains unstayed and in effect for sixty (60) days;
(i) any
final
judgment for the payment of money shall be rendered against the Company and
the
same shall remain undischarged for a period of thirty (30) consecutive days
during which (A) execution shall not be stayed or (B) such liability shall
not
be bonded and the aggregate amount of such final judgment for the payment
of
money shall exceed $150,000;
then
and
in any such event the holder of the Senior Secured Note may at any time (unless
all defaults theretofore or thereupon shall have been remedied) at its option,
by written notice to the Company, declare the Senior Secured Notes to be
due and
payable, whereupon the same shall forthwith mature and become due and payable
without presentment, demand, protest or other notice, all of which are hereby
waived. In the case of an Event of Default under Section
11.1(g)
or
11.1(h),
no
written notice is required and the Senior Secured Note shall become
automatically due and payable.
Section
11.2 Remedies
on and Notices of Default.
In case
any one or more Events of Default shall occur, the holder of the Senior Secured
Note at the time outstanding may proceed to protect and enforce the rights
of
such holder by a suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or
in
such Senior Secured Note, or for an injunction against a violation of any
of the
terms or provisions hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law. In case of a default under this Agreement
or the Mortgage, the Company shall pay to the holder of the Senior Secured
Note
such further amount as shall be sufficient to cover the reasonable cost and
expense of enforcement, including, without limitation, reasonable attorneys
fees. If the holder of the Senior Secured Note shall give any notice or take
any
other action in respect of a claimed default, the Company shall forthwith
give
written notice thereof to all other holders of the Senior Secured Note at
the
time outstanding, describing the notice or action and the nature of the claimed
default. No course of dealing and no delay on the part of any holder of the
Senior Secured Note in exercising any right shall operate as a waiver thereof
or
otherwise prejudice such holder’s rights or the rights of the holder of the
Senior Secured Note. No remedy conferred hereby or by the Senior Secured
Note
upon any holder thereof shall be exclusive of any other remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute
or
otherwise.
19
ARTICLE
XII
Miscellaneous
Section
12.1 Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE
OF
NEW YORK. THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION AND VENUE FOR RESOLUTION
OF ANY DISPUTES ARISING PURSUANT TO OR RELATING TO THIS AGREEMENT SHALL BE
IN
THE UNITED STATES FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK.
Section
12.2 Survival
of Warranties.
The
representations, warranties and covenants of the Company and the Purchaser
contained herein or made pursuant to this Agreement shall survive the execution
and delivery of this Agreement and the Closing.
Section
12.3 Successors
and Assigns.
Except
as otherwise provided herein, the provisions of this Agreement shall inure
to
the benefit of, and be binding upon, the respective successors, assigns,
heirs,
executors and administrators of the parties to this Agreement. Purchaser
may,
subject to the provisions of Section 4.8, sell participations in the Senior
Secured Note and sell the Senior Secured Note and/or the Securities in whole
or
in part; provided that no such participation shall be in an amount less than
$100,000. If the Purchaser sells or transfers all or any portion of the Senior
Secured Note or Warrant, the Company shall promptly issue a new Senior Secured
Note or Warrant at the Company’s sole cost and expense, provided that the new
purchaser represents in writing the representations contained in Sections
5.5,
5.6,
and
5.8
of this
Agreement to the extent applicable. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties to this
Agreement or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Company cannot assign or delegate
its
rights or duties under this Agreement.
Section
12.4 Conflicts.
In the
event of any substantive conflict between this Agreement and the schedules
appended hereto, the terms of the Agreement shall govern.
Section
12.5 Entire
Agreement.
This
Agreement, including the exhibits and schedules attached to this Agreement,
the
Related Agreements and any other documents delivered pursuant to this Agreement
constitute the full and entire understanding and agreement among the parties
with regard to the subject matter hereof and thereof, and no party shall
be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.
Section
12.6 Amendment.
Except
as expressly provided herein, neither this Agreement nor any term of this
Agreement may be amended, waived, discharged or terminated. Any amendment
to
this Agreement must be accomplished by a written instrument and signed by
holders of a majority in principal amount of the outstanding Senior Secured
Notes outstanding at the time of such Amendment. Amendments made in accordance
with this Section
12.6
shall be
binding upon each holder of any securities purchased under this Agreement
at the
time outstanding (including securities into which such securities have been
converted or exchanged or for which such securities have been exercised),
and
each future holder of all such securities and the Company.
20
Section
12.7 Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be delivered personally by hand or by courier,
mailed by United States first-class mail, postage prepaid, or sent by facsimile
directed (a) if to the Purchaser, c/o Xxxxxxxx Xxxxxx, Esq., Xxxxxxx Xxxxx
LLP,
000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, facsimile: (000) 000-0000 (b) if to the Company
or
Subsidiary, to its address or facsimile number set forth on its signature
page
to this Agreement and directed to the attention of the Chief Executive Officer,
or at such other address or facsimile number as the Company or the Subsidiary
may designate by ten days’ advance written notice to Purchaser, with a required
copy to be delivered to Xxxxxx Xxxxxx Xxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, Attn: Xxxxxx X. Xxxx, Esq. All such notices and other
communications shall be effective or deemed given upon personal delivery,
on the
date of mailing or upon confirmation of facsimile transfer.
Section
12.8 Delays
or Omissions.
Except
as expressly provided herein, no delay or omission to exercise any right,
power
or remedy accruing to Purchaser, upon any breach or default of the Company
under
this Agreement, shall impair any such right, power or remedy of Purchaser
nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of
any
other breach or default theretofore or thereafter occurring. Any waiver,
permit,
consent or approval of any kind or character on the part of Purchaser of
any
breach or default under this Agreement, or any waiver on the part of Purchaser
of any provisions or conditions of this Agreement, must be in writing and
shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to
any
Purchaser, shall be cumulative and not alternative.
Section
12.9 Expenses.
The
Company shall pay, at the Closing, the reasonable fees and expenses of
Purchaser’s counsel related to the transactions contemplated herein and in the
Related Agreements. Such fees and expenses shall be paid from the Purchase
Price
at Closing and shall not exceed $25,000.
Section
12.10 Attorneys’
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms
of
this Agreement or the Related Agreements, the prevailing party shall be entitled
to reasonable attorney’s fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
Section
12.11 Severability.
If any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, portions of such provision,
or such provision in its entirety, to the extent necessary, shall be severed
from this Agreement, and such court will replace such illegal, void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the same economic, business and
other
purposes of the illegal, void or unenforceable provision. The balance of
this
Agreement shall be enforceable in accordance with its terms.
21
Section
12.12 Interpretation.
The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.” The titles and
subtitles used in this Agreement are used for convenience only and are not
considered in construing or interpreting this Agreement.
Section
12.13 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable, and all of which together shall constitute one
instrument.
Section
12.14 Indemnification.
(a) The
Company, without limitation as to time, assumes liability for and agrees
to
indemnify, defend and hold harmless the Purchaser, or any other holder of
the
Senior Secured Note, and its officers, directors, stockholders, partners,
employees, agents and affiliates (collectively, “Indemnified
Persons”)
from
and against, all losses, claims, damages, liabilities, obligations, fines,
penalties, judgments, settlements, costs, expenses and disbursements (including
attorneys’ fees and expenses) (collectively, “Losses”)
(i)
arising out of or related to any breach or inaccuracy of any representation
or
warranty of the Company contained in this Agreement, which shall survive
for the
applicable statute of limitations; (ii) any non-fulfillment or breach of
any
covenant or agreement of the Company contained in this Agreement or the Related
Agreements; or (iii) incurred in connection with any suit, action, proceeding,
claim, investigation, liability or obligation (an “Action
or Proceeding”)
against any Indemnified Person arising out of or in connection with this
Agreement or the Related Agreements (or any other document or instrument
executed pursuant hereto or thereto), or the transactions contemplated herein
or
therein, other than (a) Losses that are finally determined in such Action
or
Proceeding to be primarily and directly a result of (1) the gross negligence
or
willful misconduct of such Indemnified Person, (2) a breach of a fiduciary
duty,
if any, owed by such Indemnified Person to the Company, (3) the knowing
violation of applicable law by such Indemnified Person, or (4) a transaction
from which such Indemnified Person received an improper personal benefit,
or (b)
Losses arising from or relating to any claim by the Company against the
Purchaser for breach of any representation or covenant of Purchaser contained
in
this Agreement or any Related Agreement to which the Purchaser is a party
(a
“Direct
Claim”).
The
Company agrees to reimburse each Indemnified Person promptly for all such
Losses, other than Losses by Purchaser arising from or relating to a Direct
Claim, which shall be reimbursed to such Indemnified Person as they are incurred
by such Indemnified Person after the Company receives a written undertaking
by
or on behalf of such Indemnified Person to reimburse the Company for any
payments made by the Company to such Indemnified Person if it is finally
determined in such Action or Proceeding that such Indemnified Person is not
entitled to indemnification pursuant to clause (iii) above. The obligations
of
the Company to each Indemnified Person under this Section
12.14
will be
separate and distinct obligations and will survive any transfer of securities
by
Purchaser and the expiration or termination of this Agreement or the Related
Agreements.
22
(b) Promptly
after receipt by an Indemnified Person under this Section
12.14
of
notice of the threat or commencement of any Action or Proceeding, such
Indemnified Person will, if a claim in respect thereof is to be made against
the
Company or other indemnifying party under this Section
12.14,
notify
the indemnifying party in writing of the claim; but the omission to so notify
the indemnifying party will not relieve it from any liability which it may
have
to any Indemnified Person under the indemnity provisions contained in this
Section
12.14
except
to the extent it is materially prejudiced as a result of such failure. In
case
any such Action or Proceeding is brought against any Indemnified Person and
such
Indemnified Person seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to
the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory
to
such Indemnified Person; provided, however, if the defendants in any such
Action
or Proceeding include both the Indemnified Person and the indemnifying party
and
the Indemnified Person shall have reasonably concluded based on the advice
of
counsel that a conflict exists between the positions of the indemnifying
party
and the Indemnified Person in conducting the defense of any such Action or
Proceeding, or that there may be legal defenses available to it or other
indemnified parties that are different from or additional to those available
to
the indemnifying party, in either case such that a single counsel would be
prohibited by applicable principles of legal ethics from representing both
the
indemnifying party and the Indemnified Person, the Indemnified Person or
parties
subject to such conflict shall have the right to select separate one separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Person or parties. Upon
receipt of notice from the indemnifying party to such Indemnified Person
of its
election so to assume the defense of such action and approval by the Indemnified
Person of counsel, which approval shall not be unreasonably withheld, the
indemnifying party will not be liable to such Indemnified Person under this
Section
12.14
for any
legal or other expenses subsequently incurred by such Indemnified Person
in
connection with the defense thereof unless: (i) the Indemnified Person shall
have employed such counsel pursuant to the existence of a legal conflict
of
interest in accordance with the proviso to the preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the
expenses of more than one separate counsel representing all of the similarly
situated indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to
the Indemnified Person to represent the Indemnified Person within a reasonable
time after notice of commencement of action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
Section
12.15 Telecopy
Execution and Delivery.
A
facsimile, telecopy or other reproduction of this Agreement may be executed
by
one or more parties to this Agreement, and an executed copy of this Agreement
may be delivered by one or more parties to this Agreement by facsimile or
similar electronic transmission device pursuant to which the signature of
or on
behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request
of any
party to this Agreement, all parties to this Agreement agree to execute an
original of this Agreement as well as any facsimile, telecopy or other
reproduction of this Agreement.
23
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day, month
and
year first set forth above.
|
NEXMED,
INC.
By:/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Vice President and Chief Financial Officer
00
Xxxx Xxxxx Xxxxx
Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
NEXMED
(U.S.A.), INC.
By:/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Vice President and Chief Financial Officer
00
Xxxx Xxxxx Xxxxx
Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
METRONOME
LPC 1, INC.
By:/s/
Name:
Title:
|
24
EXHIBIT
A
Form
of
Senior Secured Note
EXHIBIT
B
Form
of
Warrant
