PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 11th day of June,
2002 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 the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") 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 (i) an aggregate of $5 million in principal amount of the
Company's 5% Convertible Notes due November 2005 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, and (ii) 5-year warrants ("Warrants") to
purchase an aggregate of up to such aggregate number of shares of Common Stock
as is equal to 25% of the Purchase Price divided by the average VWAP (as defined
in the Notes) for the twenty (20) consecutive Trading Days (as defined in the
Notes) immediately preceding the date hereof, in the form attached hereto as
EXHIBIT B, in each case as are set forth on the signature page attached hereto
and executed by each such Purchaser for an aggregate purchase price of $5
million;
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 C (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, the Notes and the
Warrants.
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. "Notes" shall have meaning set forth in the recitals to this
Agreement.
1.7. "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.
1.8. "Mortgage" means the Mortgage, Security Agreement and Assignment
of Leases and Rents, in the form attached hereto as EXHIBITS D, executed by
the Operating Subsidiary in favor of the Purchasers, securing the Company's
obligations under the Notes.
1.9. "Operating Subsidiary" means NexMed (U.S.A.), Inc., a Delaware
corporation which is wholly-owned by the Company.
1.10. "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.
1.11. "SEC" means the U.S. Securities and Exchange Commission.
2
1.12. "SEC Filings" means the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000 and all other reports filed by the
Company pursuant to the 1934 Act since December 31, 2000.
1.13. "Securities" means the Notes, Underlying Shares, Warrants and
Warrant Shares.
1.14. "Subsidiary Guaranty" means the Subsidiary Guaranty, in the form
attached hereto as EXHIBITS E, executed by the Operating Subsidiary in
favor of the Purchasers, guaranteeing the Company's obligations under the
Notes.
1.15. "Underlying Shares" means the shares of Common Stock issued or
issuable upon conversion of, as payment for interest or prepayment of
principal under, or otherwise pursuant to, the Notes.
1.16. "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 and Warrants which are contained in
Convertible Securities.
1.17. "Warrants" shall have meaning set forth in the recitals to this
Agreement.
1.18. "Warrant Shares" means the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants.
1.19. "1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.20. "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 and Warrants. 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 and Warrants to purchase
the number of shares of Common Stock set forth on such Purchaser's signature
page attached hereto and as indicated herein. Each
3
Purchaser's aggregate purchase price (the "Purchase Price") for the Notes and
Warrants to be purchased hereunder is set forth on such Purchaser's signature
page attached hereto.
3. Closing.
3.1. Closing Procedure. The Company shall promptly deliver to
Purchasers' counsel, in trust, Notes and Warrants, registered in the names
of the Purchasers as indicated on the signature pages to this Agreement,
representing all of the Notes and all of the Warrants, with instructions
that such Notes and Warrants 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, Warrants and the execution and/or
delivery of such other documents contemplated hereby to be executed and/or
delivered on or prior to the Closing, 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 and
the Warrants 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) Warrants in the form attached as Exhibit B;
(iii) The executed Registration Rights Agreement in the form
attached as Exhibit C;
(iv) The executed Subsidiary Guaranty in the form attached
as Exhibit E and the executed and acknowledged Mortgage
in the form attached as Exhibit D, in each case
executed by the Operating Subsidiary;
(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
4
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.
(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.
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 and the
Warrants) exercisable for, or convertible into or exchangeable for any
shares of
5
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, and upon exercise of or otherwise
pursuant to the Warrants. The Notes, Warrants, Underlying Shares and
Warrant Shares are duly authorized, and such Securities, when issued in
accordance herewith and, in respect of the Underlying Shares and Warrant
Shares pursuant to the terms of the Notes and Warrants, respectively, 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.
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,
2000. 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
6
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.
4.8. No Material Adverse Change. Since December 31, 2001, except as
disclosed and described in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 and the Company's Form 10-Q filed with
the SEC for the fiscal quarter ending March 31, 2001, 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, 2001, 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;
(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);
(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
7
(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.
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 Certificate 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.
8
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.
4.13. Title to Properties and Securities. Except as disclosed in the
SEC Filings, the Company has 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. 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 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 (a) 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"), (b) NexMed
(Americas) Limited, incorporated in Nova Scotia and wholly-owned by
International, or (c) NexMed International Limited, incorporated in Hong
Kong and wholly-owned by 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,
9
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. No material labor dispute with the employees
of the Company exists or, to the knowledge of the Company, is imminent.
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, 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. Environmental Matters. The representations and warranties
contained in Section 9 of 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
10
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.
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 National 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 National
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 National Market.
4.22. Acknowledgment of Dilution. The number of shares of Common Stock
issuable pursuant to the Notes and Warrants may increase. The Company's
executive officers and directors have studied and fully understand the
nature of the transactions being contemplated hereunder and recognize that
they have a potential dilutive effect. The board of directors of the
Company has concluded in its good faith business judgment that such
issuance is in the best interests of the Company. The Company acknowledges
that its obligations to issue shares of Common Stock pursuant to this
Agreement (and the terms of the Notes and Warrants) are binding on it and
enforceable regardless of the dilution that such issuance may have on the
ownership interest of the other stockholders of the Company.
4.23. Brokers and Finders. The Purchasers shall have no liability or
responsibility for the payment of any commission or finder's 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. Upon Closing, the Company shall pay to any
finder in connection with the transactions contemplated hereby any finder's
fee(s) owing to such finder pursuant to a separate agreement or
arrangement.
4.24. 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) in connection with
the offer or sale of any of the Securities.
11
4.25. 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, or would require the
integration of this offering with any other offering of securities for
purposes of determining the need to obtain stockholder approval of the
transactions contemplated hereby under the rules of the Nasdaq Stock
Market.
4.26. 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.
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
12
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.
5.7. Legends. It is understood that, until registration for resale
pursuant to the Registration Rights Agreement or until sales under Rule 144
are permitted, certificates evidencing the Securities may bear one or all
of the following legends or legends substantially similar thereto:
(a) "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."
(b) 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.
Upon registration for resale pursuant to the Registration Rights
Agreement or upon Rule 144(k) under the 1933 Act becoming available, the
Company shall promptly cause certificates evidencing the Underlying Shares
and Warrant Shares previously issued to be replaced with certificates which
do not bear such restrictive legends, and all Underlying Shares and Warrant
Shares subsequently issued shall 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 and Warrant 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
13
Notes or newly exercised Warrants) 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.
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, Subsidiary Guarantee and the Mortgage will be
duly executed and delivered by the parties thereto.
7. Covenants and Agreements of the Company.
7.1. 19.9% Cap; Rule 144.
(a) 19.9% Cap. In the event that at any time the Company would be
obligated to issue an amount of shares upon conversion of, or in
payment of interest or repayment of principal on, the Notes, or upon
exercise of the Warrants, which, when aggregated with all shares of
Common Stock issued to the Purchasers hereunder (including under the
Notes and Warrants), would constitute a breach of the Company's
obligations under the rules or regulations of the Nasdaq Stock Market
as they apply to the Company, or any other principal securities
exchange or market ("Principal Market") upon which the Common Stock is
or becomes traded (the "Cap Regulations"), the Company shall not be
obligated to issue any such shares of Common Stock to the extent such
shares are in excess of the maximum permissible amount ("Maximum
Common Stock Issuance") under such Cap Regulations ("Excess Shares").
Each holder of Notes shall be entitled to receive the number of
Underlying Shares, together with its Warrant Shares under the Warrant
held by it, equal to such holder's pro rata share of the Maximum
Common Stock Issuance (based upon its aggregate Purchase Price under
the Purchase Agreement). Once a holder has received its total pro rata
share upon conversion of its Notes and exercise of its Warrants, and
if the Company shall not have complied with its obligations to obtain
the stockholder approval described below by the date set forth below,
it shall have the right to compel the Company to redeem its remaining
Notes and Warrants as set forth below. If a holder has converted and
exercised all of its Notes and Warrants, but has not depleted the
total number of pro rata shares of the Maximum Common Stock Issuance
allocated to it hereunder, its remaining pro rata shares shall be
reallocated amongst the other holders still holding Notes and Warrants
on a pro rata basis. If at any point in time and from time to time
(each a "Trigger Date") the number of Common Shares issued pursuant to
conversion of the Notes and exercise of the Warrants, together with
the number of Common Shares that would then be issuable by the Company
14
upon conversion of all the Notes and exercise of all the Warrants then
outstanding, would exceed the Maximum Common Stock Issuance but for
this Section, then the Company shall, at the Company's election,
either (A) promptly call a shareholders meeting to obtain shareholder
approval for the issuance of Common Shares hereunder in excess of the
Maximum Common Stock Issuance, which such shareholder approval shall
be obtained within 60 days (or 90 days in the event the SEC reviews
the applicable proxy statement) following the Trigger Date, or (B)
purchase from the holders of Notes and Warrants on a pro rata basis
such Principal Amount of Notes and number of Warrants which cannot be
converted or exercised due to such Maximum Common Stock Issuance
limitation at a redemption price equal to (x) for the Notes, 100% of
such Principal Amount, and (y) for the Warrants, the number of Excess
Shares underlying the Warrant multiplied by the positive difference,
if any, of the Market Price (as defined in the Notes) as of the
Trigger Date minus the Per Share Warrant Price (as defined in the
Warrants). Such redemption price shall be paid within five (5) trading
days after a Trigger Date if this clause (B) is elected. The Company
shall make such election with three (3) days following the Trigger
Date by giving written notice to all holders of Notes and Warrants. If
the Company fails to timely make such election, or elects clause (A)
but then fails to obtain such shareholder approval within 60 days (or
90 days in the event the SEC reviews the applicable proxy statement)
following the Trigger Date, then the Company shall purchase such Notes
and Warrants which cannot be converted or exercised within five (5)
trading days following any such failure. Only shares of Common Stock
acquired pursuant to this Agreement (including Underlying Shares and
Warrant Shares) will be included in determining whether the limitation
contained herein would be exceeded for purposes of this Section
7.1(a).
(b) Rule 144. 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.
(b) So long as any Notes remain outstanding, the Company shall
not directly or indirectly, create, incur, assume or permit or suffer
to exist any lien,
15
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.
7.3. Right of the Purchasers to Participate in Future Transactions.
After September 30, 2002, 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. 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 37% of the amount purchased by such
other investors (i.e., up to 27% 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.
7.4. [Intentionally Deleted.]
16
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 attached hereto as Exhibit F.
7.6. Reservation of Common Stock issuable upon Conversion of Notes and
Exercise of Warrants. 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) and the
exercise of the Warrants, 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) and to permit the full exercise of the Warrants in
accordance with the terms of the Warrants. 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
or Warrants, 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.
(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.
17
(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.
(e) Rule 144. The Company agrees to make publicly available on a
timely basis the information necessary to enable Rule 144 under the
1933 Act to be available for resale.
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.
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 and the Warrant Shares to be listed on the Nasdaq National Market as
promptly as possible 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 Warrant 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
18
listing and trading of its Common Stock on the Nasdaq National Market or on
the Nasdaq Small-Cap 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 and the
Warrant Shares thereon.
7.13. Corporate Existence. So long as any Notes or Warrants 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)
and exercise in full of all Notes and Warrants 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 and exercise of the Notes and
Warrants 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 and as-exercised basis based on the closing
price immediately preceding such transaction or the redemption date,
whichever is greater.
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 or Warrants
in accordance with the terms of the Notes and Warrants, 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
19
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.
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 upon delivery to each party to be notified by
(i) personal delivery, (ii) telex or telecopier, upon receipt of
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:
If to the Company:
NexMed, Inc.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
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.
9.5. Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay to Tail
Wind Advisory and Management Ltd. a non-refundable sum equal to $40,000 as
and for legal and due diligence expenses incurred in connection herewith,
all of which amount has been previously paid. The Company shall pay all
fees and expenses of any placement agents or
20
finders in connection with the transactions contemplated by this Agreement
pursuant to a separate agreement between such parties.
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
Warrants 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.
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
21
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.
9.14. Actions of Purchasers. 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 0000 Xxx.
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
22
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]
23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY: NEXMED, INC.
By: /s/
-------------------------------
Name: X. Xxxxxx Mo, Ph.D.
Title: Chairman, President and CEO
24
THE PURCHASERS:
THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., as
investment manager
By: /s/
----------------------------
Name: Xxxxx Xxxxx
Title: CEO
Aggregate Purchase Price: $4,000,000
Principal Amount of Notes: $4,000,000
No. of Warrants: 311,526
Initial Conversion Price of Notes: $4.08
Resident: BVI
Address for Notices: The Tail Wind Fund Ltd.
c/o Tail Wind Advisory and Management Ltd.
Attn: Xxxxx Xxxxx
1st Floor, No. 0 Xxxxxx Xxxxxx
Xxxxxx, XX0X 0XX XX
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, P.C.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
25
SOLOMON STRATEGIC HOLDINGS, INC.
By: /s/
---------------------------
Name: Xxxx X. XxxXxxxxx
Title: Director
Aggregate Purchase Price: $1,000,000
Principal Amount of Notes: $1,000,000
No. of Warrants: 79,882
Initial Conversion Price of Notes: $4.08
Resident: BVI
Address for Notices: Solomon Strategic Holdings, Inc.
c/o Xxxx X. XxxXxxxxx (Director)
Greenlands
The Red Gap
Xxxxxxxxxx
XX0 0XX
Xxxxxxx Xxxxx
Telephone: 00-000-000-0000
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: 000-000-0000
26
