PURCHASE AGREEMENT
Exhibit
10.1
THIS
PURCHASE AGREEMENT (“Agreement”) is made as of the 30th
day of
June, 2008 by and among NEXMED,
INC.,
a
Nevada corporation (the “Company”), and the Purchasers set forth on the
signature page affixed hereto (each a “Purchaser” and collectively the
“Purchasers”).
Recitals
A. The
Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) under the Securities Act of 1933, as amended;
B. The
Purchasers wish to purchase, and the Company wishes to sell and issue to the
Purchasers, upon the terms and subject to the conditions stated in this
Agreement an aggregate of $5.75 million in principal amount of the Company’s 7%
Convertible Notes due December 31, 2011 in the form attached hereto as
Exhibit
A
(the
“Notes”), which Notes shall be convertible into shares of common stock of the
Company, $0.001 par value per share (the “Common Stock”), in accordance with the
terms of the Notes, in such amounts as are set forth on the signature page
attached hereto and executed by each such Purchaser, for an aggregate purchase
price of $5.75 million; and
C. Contemporaneous
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit
B
(the
“Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, and applicable
state securities laws; and
In
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto agree as follows:
1. Definitions.
In
addition to those terms defined above and elsewhere in this Agreement, for
the
purposes of this Agreement, the following terms shall have the meanings here
set
forth:
1.1. “Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
controls, is controlled by, or is under common control with, such Person, where
“control”
means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
1.2. “Agreements”
means
this Agreement, the Registration Rights Agreement, the Subsidiary Guaranty,
the
Mortgage and the Notes.
1.3. The
“Company”
shall
refer to the Company (as defined in the first paragraph hereof) together with
its subsidiaries wherever applicable (including without limitation with respect
to all representations of the Company unless the context otherwise
requires).
1.4. “Closing”
means
the consummation of the transactions contemplated by this Agreement, and
“Closing Date” means the date of such Closing.
1.5. “Convertible
Securities”
means
any convertible securities, warrants, options or other rights to subscribe
for
or to purchase or exchange for, shares of Common Stock.
1.6. “Material
Adverse Effect”
means
a
material adverse effect on the (i) condition (financial or otherwise), business,
assets or results of operations of the Company; (ii) ability of the Company
to
perform any of its material obligations under the terms of the Agreements;
or
(iii) material rights and remedies of a Purchaser under the terms of the
Agreements.
1.7. “Mortgage”
means
the Mortgage, Security Agreement and Assignment of Leases and Rents, in the
form
attached hereto as Exhibit
C,
executed by the Operating Subsidiary in favor of the Purchasers, securing the
Company’s obligations under the Notes.
1.8. “Notes”
shall
have meaning set forth in the recitals to this Agreement.
1.9. “Operating
Subsidiary”
means
NexMed (U.S.A.), Inc., a Delaware corporation which is wholly-owned by the
Company.
1.10. “Participation
Percentage”
means
the product of (a) 20% multiplied by (b) a fraction, the numerator of which
equals the then aggregate outstanding principal amount of all Notes and the
denominator of which equals the original aggregate principal amount of all
Notes.
1.11. “Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed
herein.
1.12. “SEC”
means
the U.S. Securities and Exchange Commission.
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1.13. “SEC
Filings”
means
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2006 and all other reports filed by the Company pursuant to the 1934 Act since
December 31, 2006.
1.14. “Securities”
means
the Notes and Underlying Shares.
1.15. “Subsidiary
Guaranty”
means
the Subsidiary Guaranty, in the form attached hereto as Exhibit
D,
executed by the Operating Subsidiary in favor of the Purchasers, guaranteeing
the Company’s obligations under the Notes.
1.16. “Underlying
Shares”
means
the shares of Common Stock issued or issuable upon conversion of, as payment
for
interest or accreted amounts under, or otherwise pursuant to, the
Notes.
1.17. “Variable
Rate Transaction”
means
a
transaction in which the Company issues or sells, or agrees to issue or sell,
Common Stock or Convertible Securities in which the applicable sale, conversion,
exercise or exchange price or rate may directly or indirectly effectively be
reduced, reset or repriced based upon future events or occurrences, future
trading prices or quotations, or future issuances of Common Stock or Convertible
Securities (including such resets effected directly or indirectly by the
issuance of additional securities), including an “equity line” transaction but
excluding standard provisions for rights of first refusal on additional
financings and standard anti-dilution provisions including weighted-average
anti-dilution provisions substantially similar to those set forth in the Notes
which are contained in Convertible Securities.
1.18. “1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
1.19. “1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2.Purchase
and Sale of the Notes.
Subject
to the terms and conditions of this Agreement and on the basis of the
representations and warranties made herein, each of the Purchasers hereby
severally, and not jointly, agrees to purchase, and the Company hereby agrees
to
sell and issue to each of the Purchasers, the principal amount of Notes set
forth on such Purchaser’s signature page attached hereto and as indicated
herein. Each Purchaser’s aggregate purchase price (the “Purchase Price”) for the
Notes to be purchased hereunder is set forth on such Purchaser’s signature page
attached hereto.
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3.Closing.
3.1. Closing
Procedure.
The
Company shall promptly deliver to Purchasers’ counsel, Xxxxx X. Xxxxxxx, P.C.,
in trust, Notes registered in the names of the Purchasers as indicated on the
signature pages to this Agreement, representing all of the Notes, with
instructions that such Notes are to be held in escrow for release to the
Purchasers only upon payment of the Purchase Price to the Company and
confirmation of receipt by the Company or its counsel. Upon receipt by counsel
to the Purchasers of the Notes and the execution and/or delivery of such other
documents contemplated hereby to be executed and/or delivered on or prior to
the
Closing, each Purchaser shall promptly cause a wire transfer in same day funds
to be sent to the account of the Company as instructed in writing by the
Company, in an amount representing the Purchase Price. On the date the Company
receives such funds, the Notes shall be released to the Purchasers (and such
date shall be deemed the “Closing Date”).
3.2. Closing
Date Deliveries.
(a) On
the
Closing Date, the Company shall deliver to the Purchasers:
(i) Notes
in
the form attached as Exhibit A;
(ii) The
executed Registration Rights Agreement in the form attached as Exhibit
B;
(iii) The
executed Subsidiary Guaranty in the form attached as Exhibit D and the executed
and acknowledged Mortgage in the form attached as Exhibit C, in each case
executed by the Operating Subsidiary;
(iv) An
originally executed satisfaction and release, in proper form for recording
in
the applicable recording office in New Jersey, evidencing the satisfaction
of
all outstanding obligations which are secured by a mortgage and/or security
interest in the Mortgaged Property (as defined in the Mortgage) and the release
of all currently existing mortgages and security interests in the Mortgaged
Property;
(v) The
opinion(s) of counsel referred to in Section 7.5 below; and
(vi) An
officer’s certificate in form and substance reasonably satisfactory to the
Purchasers and the Purchasers’ counsel, executed by an officer of the Company
and the Operating Subsidiary, certifying as to satisfaction of applicable
closing conditions, incumbency of signing officers, the true, correct and
complete nature of the Certificate of Incorporation and By-laws, good standing
and authorizing resolutions, in each case of the Company and the Operating
Subsidiary.
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(b) On
the
Closing Date, the Purchasers shall deliver to the Company:
(i) The
Purchase Price set forth on the Purchasers’ signature page hereto;
and
(ii) The
executed Registration Rights Agreement.
4.Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchasers that:
4.1. Organization,
Good Standing and Qualification.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and own its properties. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property makes such
qualification or licensing necessary unless the failure to so qualify would
not
be reasonably likely to result in a Material Adverse Effect. All of the
Company’s subsidiaries are listed by name and jurisdiction on Schedule
4.1
attached
hereto. All subsidiaries are wholly-owned by the Company. The Operating
Subsidiary is a wholly-owned subsidiary of the Company and owns all the
Mortgaged Property (as defined in the Mortgage).
4.2. Authorization.
The
Company has full power and authority and has taken all requisite action on
the
part of the Company, its officers, directors and stockholders necessary for
(i)
the authorization, execution and delivery of the Agreements, (ii) authorization
of the performance of all obligations of the Company hereunder and thereunder,
and (iii) the authorization, issuance (or reservation for issuance) and delivery
of the Securities. The Agreements constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.
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4.3. Capitalization.
Set
forth on Schedule
4.3
hereto
is (a) the authorized capital stock of the Company on the date hereof; (b)
the
number of shares of capital stock issued and outstanding on the date hereof;
(c)
the number of shares of capital stock issuable pursuant to the Company’s stock
plans; and (d) the number of shares of capital stock issuable and reserved
for
issuance pursuant to securities (other than the Notes) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company’s capital stock have been duly
authorized and validly issued and are fully paid and nonassessable, except
to
the extent that the failure of the foregoing to be true and correct would not
have a Material Adverse Effect. Except as set forth on Schedule
4.3,
no
Person is entitled to preemptive or similar statutory or contractual rights
with
respect to any securities of the Company. Except as set forth on Schedule
4.3,
there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or may
be
obligated to issue any equity securities of any kind, and except as contemplated
by this Agreement or set forth on Schedule 4.3, the Company is not currently
in
negotiations for the issuance of any equity securities of any kind. Except
as
set forth on Schedule
4.3,
the
Company has no knowledge of any voting agreements, buy-sell agreements, option
or right of first purchase agreements or other agreements of any kind among
any
of the securityholders of the Company relating to the securities of the Company
held by them. Except as set forth on Schedule
4.3,
the
Company has not granted any Person the right to require the Company to register
any securities of the Company under the 1933 Act, whether on a demand basis
or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person.
4.4. Valid
Issuance.
As of
the Closing, the Company has reserved a sufficient number of shares of Common
Stock for the issuance upon conversion of, as payment for interest on or
repayment of principal of, and otherwise pursuant to, the Notes. The Notes
and
Underlying Shares are duly authorized, and such Securities, when issued in
accordance herewith and, in respect of the Underlying Shares issued pursuant
to
the terms of the Notes, will be validly issued, fully paid, non-assessable
and
free and clear of all encumbrances and restrictions, except for restrictions
on
transfer imposed by applicable securities laws. The number of shares to be
reserved hereunder shall be determined without regard to any restrictions on
beneficial ownership contained in the Agreements.
4.5. Consents.
The
execution, delivery and performance by the Company of the Agreements and,
subject to the truth and accuracy of the representations made by the Purchasers
in Sections 5 of this Agreement, the offer, issuance and sale of the Securities,
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official, other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant
to
applicable state and federal securities laws and the requirements of the Nasdaq
Stock Market, which the Company undertakes to file within the applicable time
periods. The Company has been verbally advised by the FINRA that the discussions
with the Company and the review by the FINRA of the executed term sheet
describing the transactions contemplated hereby should cause the FINRA to
conclude that the transactions contemplated hereby should not be integrated
with
any prior offering or issuance of securities by the Company (subject to the
FINRA’s review of the final transaction documents for the transactions
contemplated hereby).
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4.6. Delivery
of SEC Filings; Business.
The SEC
Filings represent all filings required of the Company pursuant to the 1934
Act
since December 31, 2006. The SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company is engaged only in
the
business described in the SEC Filings and the SEC Filings contain a complete
and
accurate description of the business of the Company in all material respects.
The Company has not provided to any Purchaser (i) any information required
to be
filed under the 1934 Act that has not been so filed or (ii) any material
nonpublic information.
4.7. Use
of
Proceeds.
The
proceeds of the sale of the Securities hereunder shall be used by the Company
for working capital and general corporate purposes and to pay off in full the
approximately $3 million in debt outstanding to Twin Rivers Associates LLC
(“Twin Rivers Debt”) which is currently secured by the mortgage on the Mortgaged
Property (as defined in the Mortgage) which is to be released at
Closing.
4.8. No
Material Adverse Change.
Since
December 31, 2007, except as disclosed and described in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007 and the
Company’s Form 10-Q filed with the SEC for the fiscal quarter ending March 31,
2008, or any other reports filed by the Company subsequent to such Form 10-K
pursuant to the 1934 Act and filed at least ten (10) days prior to the date
hereof, there has not been:
(i) any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Company’s Form 10-K for the fiscal year ended December 31, 2007, except
changes in the ordinary course of business which have not had, in the aggregate,
a Material Adverse Effect;
(ii) any
declaration or payment of any dividend, or any authorization or payment of
any
distribution, on any of the capital stock of the Company, or any redemption
or
repurchase of any securities of the Company;
(iii) any
material damage, destruction or loss, whether or not covered by insurance,
to
any assets or properties of the Company or any of its subsidiaries;
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(iv) any
waiver by the Company of a material right or of a material debt owed to
it;
(v) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and which
is not material to the assets, properties, financial condition, operating
results or business of the Company taken as a whole (as such business is
presently conducted and as it is proposed to be conducted) and except for the
Twin Rivers Debt to be repaid upon Closing;
(vi) any
material change or amendment to a material contract or arrangement by which
the
Company or any of its assets or properties is bound or subject;
(vii) any
material labor difficulties or labor union organizing activities with respect
to
employees of the Company;
(viii) any
transaction entered into by the Company other than in the ordinary course of
business; or
(ix) any
other
event or condition of any character that may have a Material Adverse
Effect.
4.9. Registration
Statements; Material Contracts.
(a) During
the preceding two years, each registration statement and any amendment thereto
filed by the Company pursuant to the 1933 Act, as of the date such statement
or
amendment became effective, complied as to form in all material respects with
the 1933 Act and did not contain any untrue statement of a material fact or
omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading; and each prospectus filed pursuant to Rule
424(b) under the 1933 Act, as of its issue date and as of the closing of any
sale of securities pursuant thereto did not contain any untrue statement of
a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
(b) Except
as
set forth on Schedule
4.3
hereto,
there are no agreements or instruments currently in force and effect that
constitute a warrant, option, convertible security or other right, agreement
or
arrangement of any character under which the Company is or may be obligated
to
issue any material amounts of any equity security of any kind, or to transfer
any material amounts of any equity security of any kind.
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4.10. Form
S-3 Eligibility.
The
Company is currently eligible to register the resale of its Common Stock on
a
registration statement on Form S-3 under the 0000 Xxx.
4.11. No
Conflict, Breach, Violation or Default; Compliance with Law.
The
execution, delivery and performance of the Agreements by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company’s Articles of Incorporation (including any certificates of
designation) or the Company’s Bylaws, both as in effect on the date hereof
(copies of which have been provided to the Purchasers before the date hereof),
or (ii) except where it would not have a Material Adverse Effect, (A) any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any of
its
properties, or (B) any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company is subject. Except where it would not have a Material Adverse Effect,
the Company (i) is not in violation of any statute, rule or regulation
applicable to the Company or its assets, (ii) is not in violation of any
judgment, order or decree applicable to the Company or its assets, and (iii)
is
not in breach or violation of any agreement, note or instrument to which it
or
its assets are a party or are bound or subject. The Company has not received
notice from any Person of any claim or investigation that, if adversely
determined, would render the preceding sentence untrue or
incomplete
4.12. Tax
Matters.
The
Company has timely prepared and filed all tax returns required to have been
filed by the Company with all appropriate governmental agencies and timely
paid
all taxes owed by it, in each case taking into account permitted extensions.
The
charges, accruals and reserves on the books of the Company in respect of taxes
for all fiscal periods are adequate in all material respects, and there are
no
material unpaid assessments against the Company nor, to the knowledge of the
Company, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audits by any federal, state or local taxing
authority except such as which are not material. All material taxes and other
assessments and levies that the Company is required to withhold or to collect
for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or threatened against the Company or any of its respective assets or
property. There are no outstanding tax sharing agreements or other such
arrangements between the Company and any other corporation or
entity.
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4.13. Title
to Properties and Securities.
Except
as disclosed in the SEC Filings, the Company has, or will at or prior to Closing
have, good and marketable title to all real properties and all other properties
and assets owned by it, in each case free from liens, encumbrances and defects
that would materially affect the value thereof or materially interfere with
the
use made or currently planned to be made thereof by them; and except as
disclosed in the SEC Filings, the Company holds any leased real or personal
property under valid and enforceable leases with no exceptions that would
materially interfere with the use made or currently planned to be made thereof
by them. Except as disclosed in the SEC Filings, the Operating
Subsidiary owns all the Mortgaged Property (as defined in the Mortgage) free
and
clear of all liens, claims, encumbrances and defects except those that would
not
individually or in the aggregate materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof.
The Company (excluding its subsidiaries) does not own any assets other than
the
securities of each of its wholly-owned subsidiaries and does not engage in
any
operating activities other than acting as a holding company of the securities
of
such subsidiaries. All of the Company’s operating assets and properties
(including without limitation all Equipment, as defined in the Mortgage) are
owned or leased by the Operating Subsidiary, except for the Company’s
intellectual property rights which are entirely owned by NexMed Holdings, Inc.,
a Delaware corporation (“Holdings”), which is wholly-owned subsidiary of the
Company, and except for assets located outside the United States, which are
entirely owned by NexMed International Limited, a corporation which is organized
under the laws of the British Virgin Islands and which is wholly-owned
subsidiary of the Company (“International”). Holdings does not engage in any
activities except for holding the intellectual property rights of the Company,
and International and its two subsidiaries do not engage in any business or
activities in the United States.
4.14. Certificates,
Authorities and Permits.
The
Company possesses adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it and has not received any notice of proceedings relating
to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company, would individually or in the
aggregate have a Material Adverse Effect.
4.15. No
Labor Disputes.
Except
as disclosed in the SEC Filings, no material labor dispute with the employees
of
the Company exists or, to the knowledge of the Company, is
imminent.
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4.16. Intellectual
Property.
The
Company owns or possesses adequate rights or licenses to the inventions,
know-how, patents, patent rights, copyrights, trademarks, trade names, licenses,
approvals, governmental authorizations, trade secrets confidential information
and other intellectual property rights (collectively, “Intellectual Property
Rights”), free and clear of all liens, security interests, charges,
encumbrances, equities and other adverse claims, necessary to conduct the
business now operated by it, or presently employed by it, and presently
contemplated to be operated by it, and the Company has not received any notice
of infringement of or conflict with asserted rights of others with respect
to
any Intellectual Property Rights except as disclosed in the SEC Filings. Except
as set forth on Schedule 4.16 hereto or as disclosed in the SEC Filings, none
of
the Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within three years from the date of this
Agreement, except where such expirations or termination would not result, either
individually or in the aggregate, in a Material Adverse Effect. To the knowledge
of the Company, the Company’s patents and other Intellectual Property Rights and
the present activities of the Company do not infringe any patent, copyright,
trademark, trade name or other proprietary rights of any third party where
such
infringement may cause a Material Adverse Effect on the Company, and there
is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company regarding its Intellectual
Property Rights, and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company has no knowledge of the
material infringement of its Intellectual Property Rights by third parties
and
has no reason to believe that any of its Intellectual Property Rights is
unenforceable, and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company has taken commercially
reasonable security measures to protect the secrecy, confidentiality and value
of all of its intellectual properties.
4.17. Mortgage
Representations.
All of
the representations and warranties contained in the Mortgage are true and
correct as of the date hereof.
4.18. Litigation.
Except
as disclosed in the SEC Filings, there are no pending actions, suits or
proceedings against or affecting the Company or any of its properties that,
if
determined adversely to the Company, would individually or in the aggregate
have
a Material Adverse Effect or would materially and adversely affect the ability
of the Company to perform its obligations under the Agreements, or which are
otherwise material in the context of the sale of the Securities; and to the
Company’s knowledge, no such actions, suits or proceedings are threatened or
contemplated.
4.19. Financial
Statements.
The
financial statements included in each SEC Filing present fairly and accurately
in all material respects the consolidated financial position of the Company
as
of the dates shown and its consolidated results of operations and cash flows
for
the periods shown, and such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis. Except as set forth in the financial statements of the Company included
in the SEC Filings filed prior to the date hereof, the Company has no
liabilities, contingent or otherwise, except those which individually or in
the
aggregate are not material to the financial condition or operating results
of
the Company.
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4.20. Insurance
Coverage.
The
Company maintains in full force and effect insurance coverage that the Company
reasonably believes to be adequate against all liabilities, claims and risks
against which it is customary for comparably situated companies to
insure.
4.21. Compliance
with Nasdaq Continued Listing Requirements.
The
Company is in compliance with all applicable Nasdaq Capital Market continued
listing requirements. There are no proceedings pending or to the Company’s
knowledge threatened against the Company relating to the continued listing
of
the Company’s Common Stock on the Nasdaq Capital Market and the Company has not
received any notice of, nor to the knowledge of the Company is there any basis
for, the delisting of the Common Stock from the Nasdaq Capital
Market.
4.22. Brokers
and Finders.
Neither
the Purchasers nor the Company shall have any liability or responsibility for
the payment of any commission or any finder, agent, broker or consultant fee
to
any third party in connection with or resulting from this agreement or the
transactions contemplated by this Agreement by reason of any agreement of or
action taken by the Company, and the Company shall not pay any such commission
or fee.
4.23. No
General Solicitation.
Neither
the Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation
D
promulgated under the 0000 Xxx) in connection with the offer or sale of any
of
the Securities.
4.24. No
Integrated Offering.
Neither
the Company nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, under circumstances that would
adversely affect reliance by the Company on Section 4(2) of the 1933 Act for
the
exemption from registration for the transactions contemplated hereby or would
require registration of the Securities under the 1933 Act. After consultation
with FINRA and/or the Nasdaq Stock Market, the Company does not believe that
the
offer and sale of the Securities and the transactions contemplated hereby
requires any stockholder approval by the Company, including without limitation
pursuant to the rules of the Nasdaq Stock Market.
4.25. Disclosures.
No
representation or warranty made by the Company under any section hereof and
no
written information furnished by the Company to the Purchasers or any authorized
representative of the Purchasers, pursuant to the Agreements or in connection
therewith, contains any untrue statement of a material fact or omits to state
a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which the statements were made,
not
misleading.
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5. Representations
and Warranties of the Purchaser.
Each of
the Purchasers hereby severally, and not jointly, represents and warrants to
the
Company as to itself only that:
5.1. Organization
and Existence.
The
Purchaser is a validly existing corporation, partnership or limited liability
company and has all requisite corporate, partnership or limited liability
company power and authority to invest in the Securities pursuant to this
Agreement.
5.2. Authorization.
The
execution, delivery and performance by the Purchaser of this Agreement and
the
Registration Rights Agreement have been duly authorized and this Agreement
and
the Registration Rights Agreement will each constitute the valid and legally
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.
5.3. Purchase
Entirely for Own Account.
The
Securities to be received by the Purchaser hereunder will be acquired for the
Purchaser’s own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of securities laws,
and
the Purchaser has no present intention of selling, granting any participation
in, or otherwise distributing the same in violation of securities laws. The
Purchaser is not a registered broker dealer or an entity engaged in the business
of being a broker dealer.
5.4. Investment
Experience.
The
Purchaser acknowledges that it can bear the economic risk and complete loss
of
its investment in the Securities and has such knowledge and experience in
financial or business matters and in private placement transactions of companies
similar to the Company so that it is capable of evaluating the merits and risks
of the purchase contemplated hereby.
5.5. Disclosure
of Information.
The
Purchaser has had an opportunity to receive documents related to the Company
and
to ask questions of and receive answers from the Company regarding the Company,
its business and the terms and conditions of the offering of the Securities
and
has received and read the SEC Filings filed via XXXXX at least five days prior
to the date hereof. Neither such inquiries nor any other due diligence
investigation conducted by the Purchaser shall modify, amend or affect the
Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or made pursuant to this Agreement.
5.6. Restricted
Securities.
The
Purchaser understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering
and
that under such laws, applicable state laws and applicable regulations such
securities may be resold without registration under the 1933 Act only in certain
limited circumstances.
13
5.7. Legends.
(a) It
is
understood that, until such time as certificates evidencing the Underlying
Shares are required to be issued without legends pursuant paragraph (b) below,
certificates evidencing the Securities may bear one or all of the following
legends or legends substantially similar thereto:
(i) “The
shares represented by this certificate may not be transferred without (i) the
opinion of counsel reasonably satisfactory to the corporation that such transfer
may lawfully be made without registration under the Securities Act of 1933
or
qualification under applicable state securities laws; or (ii) such registration
or qualification.”
(ii) If
required by the authorities of any state in connection with the issuance of
sale
of the Securities, the legend required by such state authority.
(b) Upon
registration for resale pursuant to the Registration Rights Agreement or upon
the first anniversary of the Closing Date (and the holder thereof confirming
that it is not an affiliate of the Company), the Company shall promptly cause
certificates evidencing the Underlying Shares previously issued to be replaced
with certificates (or issue original certificates if not previously issued)
which do not bear such restrictive legends, and all Underlying Shares
subsequently issued shall not bear such restrictive legends. In addition, in
the
event of any sales of Underlying Shares by the holder thereof pursuant to Rule
144(b)(1)(i) under the 1933 Act prior to the first anniversary of the Closing
Date, the Company shall promptly cause certificates evidencing such Underlying
Shares previously issued to be replaced with certificates (or issue original
certificates if not previously issued) which do not bear such restrictive
legends. In the event that the Company does not issue new, unlegended
certificates in replacement of the legended certificates as required under
this
Section 5.7 within 10 business days of a written request to do so, or if any
subsequently issued Underlying Shares are issued with restrictive legends when
unlegended certificates are required under this Section 5.7, the Company shall
be liable to the Purchaser (or subsequent holder thereof) for damages in an
amount of $500 cash for each such day beyond the replacement date (or issuance
date, in the case of newly converted Notes) that such unlegended certificates
are not issued and delivered to the Purchaser or subsequent holder.
5.8. Accredited
Investor.
The
Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D,
as amended, under the 1933 Act.
14
5.9. No
General Solicitation.
The
Purchaser did not learn of the investment in the Securities as a result of
any
public advertising or general solicitation.
6. Closing
Documents.
The
parties acknowledge and agree that part of the inducement for the Purchasers
to
enter into this Agreement is the Company’s execution and delivery of the
Registration Rights Agreement and the execution and delivery of the Subsidiary
Guarantee and the Mortgage by the Operating Subsidiary. The parties acknowledge
and agree that on or prior to the Closing, the Registration Rights Agreement,
the Subsidiary Guarantee and the Mortgage will be duly executed and delivered
by
the parties thereto.
7. Covenants
and Agreements of the Company.
7.1. Rule
144.
Until
such time that the Purchasers no longer own any Notes, the Company covenants
to
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the 1934 Act even if the Company is not then subject to
the
reporting requirements of the 1934 Act. As long as any Purchaser owns Notes,
if
the Company is not required to file reports pursuant to the 1934 Act, it will
prepare and furnish to such Purchaser and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchaser to sell
the
Securities under Rule 144. The Company further covenants that it will take
such
further action as any holder of Notes may reasonably request, to the extent
required from time to time to enable such Person to sell the Underlying Shares
without registration under the Securities Act within the requirements of the
exemption provided by Rule 144. So long as any Notes are outstanding, the
Company shall cause itself to be subject to the reporting requirements of
Section 13 or 15(d) of the 1934 Act and file all reports required to be filed
thereunder. The Company agrees that, for purposes of determining the holding
period under Rule 144 of the 1933 Act for Underlying Shares issued upon
conversion of the Notes, the holding period of such Underlying Shares shall
be
tacked to the holding period of the Notes.
7.2. Limitation
on Transactions.
(a) So
long
as any of the Notes remain outstanding, without the prior written consent of
the
holders of a majority-in-interest of the Notes (which consent may be withheld
in
such holders’ discretion), the Company shall not issue or sell or agree to issue
or sell any securities in a Variable Rate Transaction, provided,
however,
that
without such consent, the Company may issue or sell for cash any securities
in a
Variable Rate Transaction so long as the total number of shares of Common Stock
issued and/or agreed to be issued in the aggregate for all such transactions
(determined as if all such securities as of their issuance are deemed fully
converted, exercised and exchanged into Common Stock without regard to
limitations or restrictions contained therein) represents less than seven
percent (7%) of the total number of the Company’s issued and outstanding shares
of Common Stock as of the closing date of any such transaction.
15
(b)
So long
as any Notes remain outstanding, the Company and the Operating Subsidiary shall
not directly or indirectly, create, incur, assume or permit or suffer to exist
any lien, mortgage, security interest or encumbrance (other than statutory
liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made
in respect thereof) upon any of the Mortgaged Property (as defined in the
Mortgage) except for those created by the Mortgage and shall not directly or
indirectly sell, transfer or lease any of the Mortgaged Property, subject to
Section 7.2(c) below.
(c) Notwithstanding
anything contained herein or the other Agreements, the Company or the Operating
Subsidiary may sell the Mortgaged Property in its entirety at any time after
December 31, 2009, provided
that
(i) upon
or prior to such sale, the Company shall deposit into escrow for the benefit
of
the Purchasers an amount of cash equal to (x) the aggregate then outstanding
principal amount of all Notes, plus (y) all Accreted Amounts (as defined in
the
Notes) accrued to date thereon, plus (z) all Accreted Amounts scheduled to
accrue under the Notes from such date through the Maturity Date (as defined
in
the Notes) (“Escrow Funds”), which Escrow Funds shall secure all obligations
under the Notes, and (ii) thereafter the Purchasers may at any time and from
time to time demand immediate repayment of all or part of the amounts (including
principal and Accreted Amounts) then outstanding and accrued under the Notes,
which repayment shall be made from the Escrow Funds. In the event that the
Company shall be required to deposit Escrow Funds in escrow pursuant to this
Section 7.2(c), an independent escrow agent (the “Escrow Agent”) mutually
acceptable to the Company and the Purchasers shall be appointed to hold such
Escrow Funds in escrow pursuant to an escrow agreement on terms mutually
acceptable to the Company and the Purchasers (the “Escrow Agreement”). The
Escrow Agreement shall provide that each Purchaser may make any demand of
repayment as contemplated in clause 7.2(c)(ii) above directly to the Escrow
Agent, whereupon such repayment shall be made to such Purchaser from such Escrow
Funds. Upon deposit of the Escrow Funds into escrow, the Company shall, and
shall cause the Operating Subsidiary to, execute and deliver in favor of the
Purchasers a control agreement in form and substance reasonably acceptable
to
the Purchasers and such other agreements and documents to ensure that (1) the
Purchasers have a first priority security interest in and lien on such Escrow
Funds, (2) to the extent possible such Escrow Funds may not be released except
as set forth in such Escrow Agreement, and (3) to the extent possible such
Escrow Funds will not be subject to any claims by any of the Company’s or
Operating Subsidiary’s creditors. The deposit of the Escrow Funds into escrow
and the creation of a security interest therein in accordance with the terms
of
this Section 7.2(c) shall be a condition precedent to any sale of the Mortgaged
Property and neither the Company nor the Operating Subsidiary shall effectuate
any such sale unless and until such condition has been satisfied. To the extent
any principal amount of Notes and/or Accreted Amounts is converted into shares
of Common Stock pursuant to the terms of the Notes, an amount of cash equal
to
such principal amount and/or Accreted Amounts may be released to the Company.
For clarification purposes (1) following any such sale of the Mortgaged Property
the Notes shall remain outstanding and in full force and effect in accordance
with the terms set forth therein, except for the Purchasers right to repayment
upon demand as set forth above, (2) the Company (and the Operating Subsidiary
pursuant to the Subsidiary Guarantee) shall remain liable under the Notes in
accordance with the terms thereof notwithstanding the escrow contemplated
hereby, and (3) Escrow Funds remaining in escrow after no Notes remain
outstanding shall be returned to the Company.
16
7.3. Right
of the Purchasers to Participate in Future Transactions.
So long
as any Notes remain outstanding, the Purchasers will have a right to participate
in any sales of any of the Company’s securities in a capital raising transaction
on the terms and conditions set forth in this Section 7.3, provided
that
this Section 7.3 shall not apply with respect to any capital raising transaction
with an effective Per Share Selling Price per share of Common Stock in excess
of
$1.00 occurring after February 28, 2010. During such period, the Company shall
give ten (10) business days advance written notice to the Purchasers prior
to
any non-public offer or sale of any of the Company's equity securities or any
securities convertible into or exchangeable or exercisable for such securities
in a capital raising transaction by providing to the Purchasers a comprehensive
term sheet containing all significant business terms of such a proposed
transaction. The Purchasers shall have the right (pro rata in accordance with
the Purchasers’ participation in this offering) to participate in such
transaction by purchasing in such transaction an amount of the identical
securities issued in such transaction equal to up to the Participation
Percentage of the aggregate amount of such securities issued to the Purchasers
and such other investors together for the same consideration and on the same
terms and conditions as such third-party sale. If, subsequent to the Company
giving notice to a Purchaser hereunder but prior to the Purchaser exercising
its
rights hereunder, the terms and conditions of the third-party sale are changed
from that disclosed in the comprehensive term sheet provided to such Purchaser,
the Company shall be required to provide a new notice to the Purchaser hereunder
and the Purchasers shall have the right to exercise their rights to purchase
the
identical securities in such transaction on such changed terms and conditions
as
provided hereunder. The rights and obligations of this Section 7.3 shall in
no
way diminish the other rights of the Purchaser pursuant to this Section 7.
Notwithstanding anything to the contrary contained herein, the number of shares
of Common Stock that may be acquired by any Purchaser pursuant to any capital
raising transaction as described in this Section 7.3 shall not exceed a number
that, when added to the total number of shares of Common Stock deemed
beneficially owned by such Purchaser (other than by virtue of the ownership
of
securities or rights to acquire securities that have limitations on the
Purchaser’s right to convert, exercise or purchase similar to the limitation set
forth herein), together with all shares of Common Stock deemed beneficially
owned by the Purchaser’s “affiliates” (as defined in Rule 144 of the 0000 Xxx)
that would be aggregated for purposes of determining whether a group under
Section 13(d) of the 1934 Act, exists, would exceed 9.9% of the total issued
and
outstanding shares of the Common Stock.
17
7.4. No
Integration.
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% in
principal amount of the Notes 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 verbal advice (subject to the FINRA’s review
of the executed transaction documents for such transaction) that such
transaction should 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 advise, then the Company shall not issue
or sell any such securities without the prior written consent of Purchasers
purchasing at least 75% in principal amount of the Notes 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
the NASD Manual 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 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 Notes 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 FINRA, 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 Underlying Shares and the full amount of
securities issued and/or to be issued in such other transaction.
18
7.5. Opinion
of Counsel.
On or
prior to the Closing Date, the Company will deliver to the Purchasers the
opinions of legal counsel to the Company substantially in the form and substance
reasonably acceptable to the Purchasers.
7.6. Reservation
of Common Stock issuable upon Conversion of Notes.
The
Company hereby agrees at all times to reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
providing for the full conversion of Notes (including payment and repayment
of
interest and principal thereon), such number of shares of Common Stock as shall
from time to time equal the number of shares sufficient to permit the full
conversion of Notes (including payment and repayment of interest and principal
thereon) in accordance with the terms of the Notes. All calculations pursuant
to
this paragraph shall be made without regard to restrictions on beneficial
ownership.
7.7. Reports.
For so
long as the Purchasers beneficially own the Notes, the Company will furnish
to
the Purchasers the following reports, each of which shall be provided to the
Purchasers by air mail or reputable international courier (within one week
of
filing with the SEC, in the case of SEC filings), to the extent not filed on
and
available at that time via XXXXX:
(a) Quarterly
Reports.
As soon
as available and in any event within 45 days after the end of each fiscal
quarter of the Company, the Company’s quarterly report on Form 10-Q or, in the
absence of such report, consolidated balance sheets of the Company as at the
end
of such period and the related consolidated statements of operations,
stockholders’ equity and cash flows for such period and for the portion of the
Company’s fiscal year ended on the last day of such quarter, all in reasonable
detail and certified by the Company to have been prepared in accordance with
generally accepted accounting principles, subject to year-end and audit
adjustments.
(b) Annual
Reports.
As soon
as available and in any event within 90 days after the end of each fiscal year
of the Company, the Company’s Form 10-K or, in the absence of a Form 10-K,
consolidated balance sheets of the Company as at the end of such fiscal year
and
the related consolidated statements of earnings, stockholders’ equity and cash
flows for such year, all in reasonable detail and accompanied by the report
on
such consolidated financial statements of an independent certified public
accountant selected by the Company and reasonably satisfactory to the
Purchaser.
19
(c) Securities
Filings.
As
promptly as practicable and in any event within five days after the same are
issued or filed, copies of (i) all notices, proxy statements, financial
statements, reports and documents as the Company shall send or make available
generally to its stockholders or to financial analysts, and (ii) all periodic
and special reports, documents and registration statements (other than on Form
S-8) which the Company furnishes or files, or, to the extent also delivered
to
the Company, any officer or director of the Company (in such person’s capacity
as such) furnishes or files with the SEC.
(d) Other
Information.
Such
other information relating to the Company as from time to time may reasonably
be
requested by any Purchaser provided the Company produces such information in
its
ordinary course of business, and further provided that the Company, solely
in
its own discretion, determines that such information is not confidential in
nature and disclosure to the Purchaser would not be harmful to the Company
or
violate any rules or regulations of the SEC or the Nasdaq Stock
Market.
7.8. Press
Releases.
Any
press release or other publicity concerning this Agreement or the transactions
contemplated by this Agreement shall be submitted to the Purchasers for comment
at least two (2) business days prior to issuance, unless the release is required
to be issued within a shorter period of time by law or pursuant to the rules
of
the NASDAQ Stock Market or a national securities exchange. The Company shall
issue a press release concerning the fact and material terms of this Agreement
within one business day of the Closing.
7.9. No
Conflicting Agreements.
The
Company will not take any action, enter into any agreement or make any
commitment that would conflict or interfere in any material respect with the
obligations to the Purchasers under the Agreements.
7.10. Insurance.
For so
long as any Purchaser beneficially owns any of the Securities, the Company
shall
have in full force and effect (a) insurance reasonably believed by the Company
to be adequate on all assets and activities, covering property damage and loss
of income by fire or other casualty, and (b) insurance reasonably believed
to be
adequate protection against all liabilities, claims and risks against which
it
is customary for companies similarly situated as the Company to
insure.
7.11. Compliance
with Laws.
So long
as the Purchasers beneficially own any Securities, the Company will use
reasonable efforts to comply with all applicable laws, rules, regulations,
orders and decrees of all governmental authorities, except to the extent
non-compliance (in one instance or in the aggregate) would not have a Material
Adverse Effect.
20
7.12. Listing
of Underlying Shares and Related Matters.
The
Company hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action to cause the Underlying
Shares to be listed on the Nasdaq Capital Market as promptly as possible
following the Closing but no later than the effective date of the registration
contemplated by the Registration Rights Agreement. The Company further agrees
that if the Company applies to have its Common Stock or other securities traded
on any other principal stock exchange or market, it will include in such
application the Underlying Shares and will take such other action as is
necessary to cause such Common Stock to be so listed. For so long as any Notes
remain outstanding, the Company will take all action necessary to continue
the
listing and trading of its Common Stock on the Nasdaq Stock Market, the New
York
Stock Exchange or the American Stock Exchange (collectively, “Approved
Markets”), and will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of such exchange or market,
as
applicable, to ensure the continued eligibility for trading of the Underlying
Shares thereon.
7.13. Corporate
Existence.
So long
as any Notes remain outstanding, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company’s assets, as long as the surviving or successor
entity in such transaction (a) assumes the Company’s obligations hereunder and
under the agreements and instruments entered into in connection herewith,
regardless of whether or not the Company would have had a sufficient number
of
shares of Common Stock authorized and available for issuance in order to fulfill
its obligations hereunder and effect the conversion (including payment on)
in
full of all Notes outstanding as of the date of such transaction; (b) has no
legal, contractual or other restrictions on its ability to perform the
obligations of the Company hereunder and under the agreements and instruments
entered into in connection herewith; and (c)(i) is a publicly traded corporation
whose common stock and the shares of capital stock issuable upon conversion
of
the Notes are (or would be upon issuance thereof) listed for trading on an
Approved Market or (ii) if not such a publicly traded corporation, then the
buyer agrees that it will, at the election of the Purchasers, purchase such
Purchasers’ Securities at a price equal to the greater of (a) 110% of the
Purchase Price of such Securities or (b) the fair market value of such
Securities on an as-converted basis based on the closing price immediately
preceding such transaction or the redemption date, whichever is
greater.
7.14. Insurance
Endorsement.
The
Company agrees that on or prior to August 31, 2008, it shall deliver to the
Purchasers (or their counsel) each of (a) an original endorsement to the
Company’s Commercial General Liability Insurance Policy/Umbrella Liability
Insurance Policy naming the Purchasers as additional insureds, and (b) an
original Standard New Jersey Mortgagee Non-Contribution Clause endorsement
to
the Company’s “all risk” property insurance policy for the Mortgaged Property in
favor of the Purchasers.
21
8. Survival.
All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements as of the date hereof and shall survive the execution and delivery
of
this Agreement and terminate upon expiration of the applicable statute of
limitations.
9. Miscellaneous.
9.1. Successors
and Assigns.
This
Agreement may not be assigned by a party hereto without the prior written
consent of the other parties hereto which consent may not be unreasonably
withheld or delayed, except that without the prior written consent of the
Company, but after notice duly given, a Purchaser may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to any
Person to which such Purchaser has transferred or assigned all or part of its
Notes in accordance with the terms of the Notes, provided in each case that
such
Affiliate, transferee or assignee acknowledges in writing to the Company that
the representations and warranties contained in Section 5 hereof shall apply
to
such Affiliate, transferee or assignee. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto 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.
9.2. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may be executed by facsimile.
9.3. Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
9.4. Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given only by delivery
to
each party to be notified by (i) personal delivery, (ii) telex or telecopier,
provided it is sent with electronic confirmation of complete transmittal, or
(iii) an internationally recognized overnight air courier, addressed to the
party to be notified at the address as follows, or at such other address as
such
party may designate by ten days’ advance written notice to the other
party:
22
If
to the
Company:
NexMed,
Inc.
00
Xxxx
Xxxxxx Xxxxx
Xxxx
Xxxxxxx, XX 00000
Fax:
(000) 000-0000
Attention:
Chief Financial Officer
With
a
copy to:
Xxxxxx
Xxxxxx Xxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxxxx Xxxx, Esq.
If
to the
Purchasers, to the addresses set forth on the signature
pages hereto.
Any
notice or other communication or deliveries hereunder shall be deemed delivered
(i) upon receipt, if delivered personally, (ii) if sent by facsimile, upon
receipt if received on a Business Day prior to 5:00 p.m. (Eastern Time), or
on
the first Business Day following such receipt if received on a Business Day
after 5:00 p.m. (Eastern Time) or (iii) two (2) Business Days following deposit
with an internationally recognized overnight courier service.
9.5. Expenses.
(a) 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.
(“TWAM”) a non-refundable sum equal to $45,000 as and for legal and due
diligence expenses incurred in connection herewith, $25,000 of which has been
previously paid and the balance of which shall be paid upon
Closing.
(b) The
Company shall pay the costs of all title, UCC, judgment, lien and similar
searches in connection with the Mortgage, and shall pay all title insurance
premiums on the Mortgaged Property in connection with Purchasers’ title
insurance policy (updated through the Closing Date). The Company shall also
pay
all costs and expenses hereafter incurred in amending, implementing, perfecting,
collecting, defending, declaring and enforcing and otherwise relating to the
Purchasers’ rights and security interests in the Mortgaged Property hereunder or
under the Notes or any other instrument or agreement delivered in connection
herewith or therewith, including, but not limited to, searches and filings
after
the date hereof (provided that the Company shall not be responsible for any
costs and expenses incurred by the Purchasers in connection with the
negotiation, execution and delivery of the Mortgage or any other Agreements,
except as may be provided above or elsewhere herein or therein). For
clarification, the costs payable by the Company pursuant to this Section 9.5(b)
are in addition to the sum payable to TWAM pursuant to Section 9.5(a) above.
23
9.6. Amendments
and Waivers.
Any
term 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 with the written consent of the Company
and 75% in interest of the Purchasers, provided, however, that any such
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such securities, and the
Company.
9.7. Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
9.8. Entire
Agreement.
This
Agreement, including the Exhibits and Schedules hereto, and the Registration
Rights Agreement, the Notes and other documents contemplated hereby constitute
the entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.
9.9. Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
9.10. Applicable
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York without regard to principles of conflicts of
laws.
9.11. Remedies.
(a) The
Purchasers shall be entitled to specific performance of the Company’s
obligations under the Agreements.
(b) The
Company on the one hand, and each Purchaser severally and not jointly on the
other hand, shall indemnify the other and hold it harmless from any loss, cost,
expense or fees (including attorneys’ fees and expenses) arising out of any
breach of any representation, warranty, covenant or agreement in any of the
Agreements, or arising out of the enforcement of this Section 9.11.
24
9.12. Jurisdiction.
The
parties hereby agree that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement or the other Agreements
shall be litigated only in the Supreme Court of the State of New York or the
United States District Court for the Southern District of New York located
in
New York County, New York, except for actions or proceedings arising directly
or
indirectly from or in connection with the Mortgage, which may be litigated
in
the applicable court(s) in New Jersey. The parties consent to the jurisdiction
and venue of the foregoing courts and consent that any process or notice of
motion or other application to either of said courts or a judge thereof may
be
served inside or outside the State of New York or the Southern District of
New
York by registered mail, return receipt requested, directed to the party being
served at its address set forth in this Agreement (and service so made shall
be
deemed complete three (3) days after the same has been posted as aforesaid)
or
by personal service or in such other manner as may be permissible under the
rules of said courts. The Company and the Purchasers hereby waive any right
to a
jury trial in connection with any litigation pursuant to this Agreement or
the
other Agreements.
9.13. Like
Treatment of Purchasers and Holders.
Neither
the Company 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 the 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 of any terms or provisions of the Agreements, unless such
consideration is required to be paid to all Purchasers or holders of Securities
bound by such consent, waiver or amendment. The Company 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. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
25
9.14. Actions
of Purchasers.
The
obligations of each Purchaser hereunder and under the documents contemplated
hereby are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall in any way be responsible 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 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. Notwithstanding anything herein to the contrary, the actions and
obligations of the Purchasers hereunder shall at all times be considered several
and not
joint,
and the Purchasers are not, under any circumstances, agreeing to act jointly
with respect to the Securities or any of their actions or obligations under
the
Agreements, and shall not constitute a “group” under the 1934 Act. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no other
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment hereunder. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation,
the
rights arising out of this Agreement or out of the other Agreements, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. The Company has elected to provide
all
Purchasers with the same terms and Agreements for the convenience of the Company
and not because it was required or requested to do so by the
Purchasers.
26
9.15. Collateral
Agent.
The
Purchasers hereby appoint The Tail Wind Fund Ltd. as “Collateral Agent” under
the Mortgage. The Collateral Agent may be removed, and a successor Collateral
Agent may be appointed, by a majority-in-interest of holders of the Notes,
and
any Collateral Agent may resign from such position upon thirty days prior notice
to the Company (which shall constitute notice to the Operating Subsidiary)
and
the holders of Notes. If a successor Collateral Agent does not take such
position within 30 days after the retiring Collateral Agent resigns or is
removed, the retiring Collateral Agent or a majority-in-interest of the holders
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent will act
or
refrain from acting based on the direction of a majority-in-interest of holders
of the Notes, and may take any action or refrain from taking any action as
provided in the Mortgage as it shall determine in its reasonable judgment and
discretion. With respect to any monies or property held by, or expended by,
the
Collateral Agent on behalf of the holders of the Notes, such amounts shall
be
allocated pro rata based on the principal amount of Notes outstanding. The
Collateral Agent shall be reimbursed by the holders of Notes for all reasonable
expenses incurred in connection with acting as Collateral Agent under the
Mortgage (provided that this shall in no way affect any liability of the
Operating Subsidiary or the Company under the Mortgage). The Collateral Agent
may refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense. No implied
covenants or obligations shall be read into this Agreement or the Mortgage
against Collateral Agent. Except for Collateral Agent's own willful misconduct,
bad faith or gross negligence, the Collateral Agent (i) may rely and/or act
upon
any written instrument, document or request believed by the Collateral Agent
in
good faith to be genuine and to be executed and delivered by the proper
person(s), and may assume in good faith the authenticity, validity and
effectiveness thereof and shall not be obligated to make any investigation
or
determination as to the truth and accuracy of any information contained therein,
and (ii) shall not be responsible for the acts or omissions of the other parties
hereto or holders of Notes. In consideration of its acceptance of the
appointment as the Collateral Agent, each of the Purchasers (and any subsequent
holder of the Notes) jointly and severally agree to indemnify the Collateral
Agent against, and hold the Collateral Agent harmless from, all costs, damages,
expenses (including reasonable attorney's fees and disbursements) and
liabilities that the Collateral Agent may incur or sustain in connection with
serving as Collateral Agent under the Mortgage, unless such costs, damages,
expenses and liabilities are caused by the Collateral Agent's own willful
misconduct, bad faith or gross negligence.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
27
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
|
The
Company:
|
NEXMED,
INC.
|
|
By:
/s/ Xxxxxx
Xxx
|
|
|
Name:
Xxxxxx Xxx
|
|
|
Title:
Chief Executive Officer
|
28
|
|
The
Purchasers:
|
|
THE
TAIL WIND FUND LTD.
|
|
|
By:
TAIL WIND ADVISORY AND
|
|
|
MANAGEMENT LTD., as
|
|
|
investment manager
|
|
By:/s/
Xxxxx
Xxxxx
|
|
|
Name: Xxxxx Xxxxx
|
|
|
Title: CEO
|
|
Aggregate
Purchase Price:
|
$4,750,000
|
|
Principal
Amount of Notes:
|
$4,750,000
|
|
Resident:
|
BVI
|
|
Address
for Notices:
|
The
Tail Wind Fund Ltd.
|
|
c/o
Tail Wind Advisory and Management Ltd.
|
|
|
Attn:
Xxxxx Xxxxx
|
|
|
00
Xxxx Xxxx
|
|
|
Xxxxxx
XX0X 0XX XX
|
|
|
Facsimile:
44-207- 420 3819
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|
|
Email:
xxxxxx@xxxxxxxxxx.xxx
|
|
|
with
a copy to:
|
|
|
Xxxxx
X. Xxxxxxx, P.C.
|
|
|
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
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|
|
Xxx
Xxxx, XX 00000
|
|
|
Telephone:
000-000-0000
|
|
|
Facsimile:
212-433-1361
|
|
|
Email:
xxxxxxxx@xxxxxxxx.xxx
|
29
|
SOLOMON
STRATEGIC HOLDINGS, INC.
|
|
|
By:/s/
Xxxxxx X.
XxxXxxxxx
|
|
|
Name: Xxxxxx X. XxxXxxxxx
|
|
|
Title: Director
|
|
|
Aggregate
Purchase Price:
|
$1,000,000
|
|
Principal
Amount of Notes:
|
$1,000,000
|
|
Resident:
|
BVI
|
|
Address
for Notices:
|
Solomon
Strategic Holdings, Inc.
|
|
c/o
Xxxxxx X. XxxXxxxxx (Director)
|
|
|
Greenlands
|
|
|
The
Red Gap
|
|
|
Xxxxxxxxxx
|
|
|
XX0
0XX
|
|
|
Xxxxxxx
Xxxxx
|
|
|
Telephone:
x000 (00) 0000 000000
|
|
|
Facsimile:
x000 (00) 0000 000000
|
|
|
with
a copy to:
|
|
|
Xxxxx
X. Xxxxxxx, P.C.
|
|
|
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Telephone:
000-000-0000
|
|
|
Facsimile:
212-433-1361
|
|
|
Email:
xxxxxxxx@xxxxxxxx.xxx
|
30
