THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
VOID AFTER 5:00 P.M. EASTERN TIME ON JUNE 11, 2007 ("EXPIRATION DATE").
NEXMED, INC.
WARRANT
WARRANT ("WARRANT") TO PURCHASE SHARES OF
COMMON STOCK, $0.001 PAR VALUE PER SHARE
This is to certify that, for VALUE RECEIVED, ____________________.
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from NexMed, Inc., a corporation organized under the laws of Nevada
("Company"), at any time after the issuance hereof, but not later than 5:00
P.M., Eastern time, on the fifth (5th) anniversary of such issuance date
("Expiration Date"), __________ shares ("Warrant Shares") of Common Stock,
$0.001 par value ("Common Stock"), of the Company, at an exercise price per
share equal to $4.08 (the exercise price in effect from time to time hereafter
being herein called the "Warrant Price"). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.
This Warrant has been issued pursuant to the terms of the Purchase
Agreement ("Purchase Agreement") dated on or about the date hereof between the
Company and the Warrantholder. Capitalized terms used herein and not defined
shall have the meaning specified in the Purchase Agreement.
Section 1. Registration. The Company shall maintain books for
the transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder. The Company shall for all purposes hereunder treat the person or
entity in whose name this Warrant is registered on the books of the Company as
the owner of this Warrant (absent manifest error).
Section 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer this
Warrant from time to time, upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied
by appropriate instructions for transfer upon any such transfer, and a new
Warrant shall be issued to the transferee and the surrendered Warrant shall be
canceled by the Company.
Section 3.
(a) Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part, at any time and
from time to time after the issuance hereof, upon delivery of the duly executed
Warrant exercise form attached hereto (the "Exercise Agreement") to the Company
during normal business hours on any business day at the Company's principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), and upon (i) payment to the Company
in cash, by certified or official bank check or by wire transfer for the account
of the Company of the Warrant Price for the Warrant Shares specified in the
Exercise Agreement or (ii) delivery to the Company of a written notice of an
election to effect a "Cashless Exercise" (as defined below) for the Warrant
Shares specified in the Exercise Agreement, provided that the Warrantholder may
only effect a "Cashless Exercise" if the Warrant Shares are not subject to
Effective Registration (as defined in the Notes). The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of business on the
date on which this Warrant (or evidence of loss, theft or destruction thereof)
shall have been surrendered (subject to book entry transfer) and the completed
Exercise Agreement shall have been delivered. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding three (3) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised (subject to book entry transfer set forth below).
In the event that the Warrant Shares are not subject to
Effective Registration (as defined in the Notes), the Holder shall have the
right to pay the aggregate Warrant Price by "Cashless Exercise". To effect a
Cashless Exercise, the holder shall submit to the Company with the Exercise
Agreement, written notice of the holder's intention to do so, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof. In the event of a Cashless
Exercise, in lieu of paying the Warrant Price in cash, the holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between the then
current Fair Market Value per share of the Common Stock and the Warrant Price,
and the denominator of which shall be the then current Fair Market Value per
share of the Common Stock. For this purpose, the "Fair Market Value" of the
Common Stock shall be the average of the closing sale prices of the Common Stock
as reported by the Nasdaq Stock Market for the ten (10) trading days immediately
preceding the date of the Exercise Agreement.
2
Notwithstanding anything contained herein, the Warrantholder
may not pay the Warrant Price by "Cashless Exercise" and must pay the Warrant
Price pursuant to clause 3(a)(i) above so long as the Warrant Shares are subject
to Effective Registration (as defined in the Notes). For clarification purposes,
notwithstanding anything contained herein, if the resale of all the Warrant
Shares are not covered by an effective registration statement and current and
deliverable prospectus, in each case in accordance with the terms of the
Registration Rights Agreement, which are not subject to any suspension, stop
order, blackout or similar circumstance, then the Warrantholder may pay the
Warrant Price by "Cashless Exercise" as provided above, it being understood that
the ability to tack the holding period of the Warrant Shares to the holding
period of the Warrants under Rule 144 promulgated under the Securities Act, and
thus permit the sale of the Warrant Shares without registration or restriction
under Rule 144(k) after two years following the issuance of the Warrants, will
exist only in the event of a Cashless Exercise.
Book-Entry. Notwithstanding anything to the contrary set forth
herein, upon exercise or redemption of any portion of this Warrant in accordance
with the terms hereof, the Warrantholder shall not be required to physically
surrender this Warrant to the Company unless such holder is purchasing the full
amount of Warrant Shares represented by this Warrant. The Warrantholder and the
Company shall maintain records showing the number of Warrant Shares so purchased
or redeemed hereunder and the dates of such purchases or shall use such other
method, reasonably satisfactory to the Warrantholder and the Company, so as not
to require physical surrender of this Warrant upon each such exercise or
redemption. The Warrantholder and any assignee, by acceptance of this Warrant or
a new Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following exercise of any portion of this Warrant, the number of
Warrant Shares which may be purchased upon exercise of this Warrant may be less
than the number of Warrant Shares set forth on the face hereof.
(b) Redemption of Warrant.
(i) Subject to the Purchase Agreement and subject to
the terms set forth herein (including without limitation subsection (ii) below),
in the event that prior to the second anniversary of the original issuance of
this Warrant, the closing sale price of the Company's Common Stock (as reported
by the Nasdaq Stock Market) is greater than 250% of the then applicable Warrant
Price hereunder for a period ("Pricing Period") of fifteen (15) consecutive
Trading Days (as defined in the Notes), the Company shall have the right, upon
at least ten (10) Trading Days' prior written notice to the Warrantholder
("Redemption Notice"), to redeem any portion or all of the shares underlying
this Warrant (not previously exercised), at a redemption price equal to $.01 per
Warrant Share issuable hereunder for the portion hereof being redeemed. Any
redemption hereunder shall occur on the date specified in the Redemption Notice
("Redemption Date"), provided that such Redemption Date may not occur until at
least ten (10) Trading Days following the date on which the Warrantholder
receives the Redemption Notice (the "Redemption Notice Date"). The Company may
not deliver any Redemption Notice until after the completion of the Pricing
Period, and must deliver any Redemption Notice within five (5) Trading Days
following the last day of any Pricing Period. The period from the Redemption
Notice Date to the Redemption Date shall be referred to herein as the "Post-Call
Period". The Warrantholder may exercise this Warrant, including any portion
subject to a Redemption Notice, at any time and from time to time during the
period from the Redemption Notice Date through
3
the date on which the redemption price for such Warrants is paid by the Company
(and thereafter if such redemption price is not paid), and the Company shall
honor all tendered Exercise Agreements during such period. If the Company
intends to redeem less than all of the then outstanding Warrants issued to
Purchasers under the Purchase Agreement, it shall do so on a pro rata basis
among such holders in accordance with this Section.
(ii) Notwithstanding anything to the contrary herein,
the Company shall be prohibited from exercising its right to redeem this Warrant
pursuant to this Section if at any time during the Post-Call Period or during
the thirty (30) consecutive Trading Days immediately preceding such Post-Call
Period there fails to exist Effective Registration (as defined in the Notes) or
an Event of Default under the Notes exists or occurs.
Section 4. Compliance with the Securities Act of 1933. Neither
this Warrant nor the Common Stock issued upon exercise hereof nor any other
security issued or issuable upon exercise of this Warrant may be offered or sold
except as provided in this agreement and in conformity with the Securities Act
of 1933, as amended, and then only against receipt of an agreement of such
person to whom such offer of sale is made to comply with the provisions of this
Section 4 with respect to any resale or other disposition of such security. The
Company may cause the legend set forth on the first page of this Warrant to be
set forth on each Warrant or similar legend on any security issued or issuable
upon exercise of this Warrant until the Warrant Shares have been registered for
resale under the Registration Rights Agreement or until Rule 144 is available,
unless counsel for the Company is of the opinion as to any such security that
such legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of the Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder of this
Warrant in respect of which such shares are issued, and in such case, the
Company shall not be required to issue or deliver any certificate for Warrant
Shares or any Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company's satisfaction
that such tax has been paid and that the provisions of Section 4 above have been
complied with. The holder shall be responsible for income taxes due under
federal or state law, if any such tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant
shall be mutilated, lost, stolen, or destroyed, the Company shall issue in
exchange and substitution of and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep
4
reserved, out of the authorized and unissued Common Stock, a number of shares
sufficient to provide for the exercise of the rights of purchase represented by
the Warrant, and the transfer agent for the Common Stock ("Transfer Agent"), and
every subsequent transfer agent for the Common Stock or other shares of the
Company's capital stock issuable upon the exercise of any of the right of
purchase aforesaid, shall be irrevocably authorized and directed at all times to
reserve such number of authorized and unissued shares of Common Stock as shall
be requisite for such purpose. The Company agrees that all Warrant Shares issued
upon exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company. The Company will
keep a conformed copy of this Warrant on file with the Transfer Agent and with
every subsequent transfer agent for the Common Stock or other shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant. The Company will supply from time to time the
Transfer Agent with duly executed stock certificates required to honor the
outstanding Warrant.
Section 8. Warrant Price. The Warrant Price, subject to
adjustment as provided in Section 9, shall, if payment is made in cash or by
certified check, be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions
of this Section 9, the Warrant Price and number of Warrant Shares subject to
this Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time
while the Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
into a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event. Such adjustment shall be
made successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation, or sale, transfer or other disposition of all or
substantially all of the Company's assets to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for
a number of Warrant Shares equal to
5
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitations, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
hereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase and the other obligations under this Warrant.
The provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers or
other dispositions.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
9(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Fair Market Value per share of Common Stock (as defined above), less the
fair market value (as determined by the Company's Board of Directors in good
faith) of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such current Fair
Market Value per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed.
(d) In the event that the Company or any of its subsidiaries
(A) issues or sells any Common Stock or Convertible Securities (as defined in
the Notes) or (B) directly or indirectly effectively reduces the conversion,
exercise or exchange price for any Convertible Securities which are currently
outstanding, at or to an effective Per Share Selling Price (as defined in the
Notes) which is less than the greater of (I) the Fair Market Value, or (II) the
Warrant Price, then in each such case the Warrant Price in effect immediately
prior to such issue or sale or record date, as applicable, shall be
automatically reduced effective concurrently with such issue or sale to an
amount determined by multiplying the Warrant Price then in effect by a fraction,
(x) the numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale, plus (2) the
number of shares of Common Stock which the aggregate consideration received by
the Company for such additional shares would purchase at such Fair Market Price
or Warrant Price, as the case may be, and (y) the denominator of which shall be
the number of shares of Common
6
Stock of the Company outstanding immediately after such issue or sale. The
foregoing provision shall not apply to any issuances or sales of Common Stock or
Convertible Securities (i) pursuant to any Convertible Securities currently
outstanding on the date hereof in accordance with the terms of such Convertible
Securities in effect on the date hereof, (ii) pursuant to the Notes or Warrants,
(iii) pursuant to any capital raising which is not a Variable Rate Transaction
and which is consummated on or prior to September 30, 2002, or (iv) to any
officer, director, employee or Consultant (as defined below) of the Company
pursuant to a bona fide option or equity incentive plan duly adopted by the
Company, provided that any such issuances or sales to Consultants must be
reasonable consideration for the services rendered by such Consultants and shall
not exceed more than $1 million in market value to all Consultants in the
aggregate under any circumstances. "Consultant" shall mean any natural person
providing bona fide services to the Company which are not in connection with the
offer or sale of securities in a capital raising transaction and which do not
directly or indirectly promote or maintain a market for the Company's
securities. The Company shall give to the Warrantholder written notice of any
such sale of Common Stock within 24 hours of the closing of any such sale and
shall within such 24 hour period issue a press release announcing such sale if
such sale is a material event for, or otherwise material to, the Company.
(e) An adjustment shall become effective immediately after the
record date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made
pursuant to Section 9, the holder of this Warrant shall become entitled to
receive any shares of capital stock of the Company other than shares of Common
Stock, the number of such other shares so receivable upon exercise of this
Warrant shall be subject thereafter to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Warrant.
(g) In the event of any adjustment in the number of Warrant
Shares issuable hereunder upon exercise, the Warrant Price shall be inversely
proportionately increased or decreased, as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same. Similarly, in the event of any adjustment in the Warrant
Price, the number of Warrant Shares issuable hereunder upon exercise shall be
inversely proportionately increased or decreased, as the case may be, such that
the aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same.
Section 10. Fractional Interest. The Company shall not be
required to issue fractions of Warrant Shares upon the exercise of the Warrant.
If any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon the exercise of the Warrant (or specified portions
thereof), the Company shall round such calculation to the nearest whole number
and disregard the fraction.
Section 11. Benefits. Nothing in this Warrant shall be
construed to give any person, firm or corporation (other than the Company and
the Warrantholder) any legal or equitable right, remedy or claim, it being
agreed that this Warrant shall be for the sole and exclusive benefit of the
Company and the Warrantholder.
7
Section 12. Notices to Warrantholder. Upon the happening of
any event requiring an adjustment of the Warrant Price, the Company shall
forthwith give written notice thereof to the Warrantholder at the address
appearing in the records of the Company, stating the adjusted Warrant Price and
the adjusted number of Warrant Shares resulting from such event and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder's request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.
Section 13. Identity of Transfer Agent. The Transfer Agent for
the Common Stock is:
▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Shareowner Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-1139
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Forthwith upon the appointment of any subsequent transfer
agent for the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant,
the Company will fax to the Warrantholder a statement setting forth the name and
address of such transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or
made by the Warrantholder to or on the Company shall be sufficiently given or
made personally or if sent by an internationally recognized courier by next day
or two day delivery service, addressed as follows:
NexMed, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
8
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company
to or on the Warrantholder shall be sufficiently given or made if personally
delivered or if sent by an internationally recognized courier service by
overnight or two-day service, to the address set forth on the Warrantholder's
signature page to the Purchase Agreement or otherwise on the books of the
Company or, as to each of the Company and the Warrantholder, at such other
address as shall be designated by such party by written notice to the other
party complying as to delivery with the terms of this Section 14.
All such notices, requests, demands, directions and other
communications shall, when sent by courier, be effective two (2) days after
delivery to such courier as provided and addressed as aforesaid.
Section 15. Registration Rights. The initial holder of this
Warrant is entitled to the benefit of certain registration rights in respect of
the Warrant Shares as provided in the Registration Rights Agreement.
Section 16. Successors. All the covenants and provisions
hereof by or for the benefit of the Warrantholder shall bind and inure to the
benefit of its respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be
a contract made under the laws of the State of New York, without giving effect
to its conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. 9.9% and 19.9% Limitations.
(a) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrant Shares) that have limitations on the holder's
right to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "affiliates" (as
defined in Rule 144 of the Securities Act) ("Aggregation Parties") that would be
aggregated for purposes of determining whether a group under Section 13(d) of
the Securities Exchange Act of 1934, as amended, exists, would exceed 9.9% of
the total issued and outstanding shares of the Common Stock (the "Restricted
Ownership Percentage"). Each holder shall have the right (x) at any time and
from time to time to reduce its percentage in the definition of Restricted
Ownership Percentage immediately upon notice to the Company and (y) (subject to
waiver) at any time and
9
from time to time, to increase its percentage in the definition of Restricted
Ownership Percentage immediately in the event of the announcement as pending or
planned, of a Change of Control Transaction (as defined in the Notes).
(b) Notwithstanding anything contained herein, in the event
that the Warrantholder has timely exercised this Warrant and the issuance of all
or a portion of the Warrant Shares to be issued pursuant to such exercise would
constitute a breach of the Company's obligations under the Cap Regulations (as
defined in the Purchase Agreement), then the Company shall not be obligated to
issue any such Warrant Shares to the extent such shares are in excess of the
maximum permissible amount under such Cap Regulations, and the provisions
contained in Section 7.1 of the Purchase Agreement shall govern.
Section 19. Replacement Warrants. The Company agrees that
within ten (10) business days after any request from time to time of the
Warrantholder, it shall deliver to such holder a new Warrant in substitution of
this Warrant which is identical in all respects except that the then Warrant
Price shall be appropriately specified in the Warrant, and the Warrant shall
specify the fixed number of Warrant Shares into which the Warrants are then
exercisable. Such changes are intended not as amendments to the Warrant but only
to provide a record of the foregoing provisions for convenience purposes, and
such changes shall not affect any provisions concerning adjustments to the
Warrant Price or number of Warrant Shares contained herein.
Section 20. Absolute Obligation to Issue Warrant Shares. The
Company's obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the holder hereof to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the holder hereof
or any other Person of any obligation to the Company or any violation or alleged
violation of law by the holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to
the holder hereof in connection with the issuance of Warrant Shares. The Company
will at no time close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.
Section 21. Assignment, Etc. The Warrantholder may assign or
transfer this Warrant to any transferee only with the prior written consent of
the Company, which may not be unreasonably withheld or delayed, provided that
(i) the Warrantholder may assign or transfer this Warrant to any of such
Warrantholder's Affiliates without the consent of the Company and (ii) upon any
Event of Default (as defined in the Notes), the Warrantholder may assign or
transfer this Warrant without the consent of the Company, subject in each case
to the provisions of Section 4 above. The Warrantholder shall notify the Company
of any such assignment or transfer promptly. This Warrant shall be binding upon
the Company and its successors and shall inure to the benefit of the
Warrantholder and its successors and permitted assigns.
[Signature Page Follows]
10
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of June 11, 2002.
NEXMED, INC.
By:
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Name: ▇. ▇▇▇▇▇▇ ▇▇, Ph.D.
Title: Chairman, President and CEO
Attest:
Sign:______________________________
Print Name:
11
NEXMED, INC.
WARRANT EXERCISE FORM
NexMed, Inc.
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▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant ("Warrant") for, and to purchase thereunder
payment by cash, wire transfer or certified check, or by cashless exercise,
_______________ shares of Common Stock* ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
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Name
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Address
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and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares (subject to book-entry).
In lieu of delivering physical certificates representing the Warrant
Shares purchasable upon exercise of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the Holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated: Signature:
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Name (please print)
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Address
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* NOTE: If exercise of the Warrant is made by surrender of the Warrant and the
number of shares indicated exceeds the maximum number of shares to which a
holder is entitled, the Company will issue such maximum number of shares
purchasable upon exercise of the Warrant registered in the name of the
undersigned Warrantholder or the undersigned's Assignee as below indicated
and deliver same to the address stated below.
