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PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
by and among
NexMed, Inc., as Issuer and Seller
and
the Purchasers named herein, as Purchasers
with respect to Seller's
Series C 6% Cumulative Convertible Preferred Stock
and Warrants to Purchase Common Stock
May 16, 2005
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Table of Exhibits and Schedules
Exhibit A Form of Certificate of Designation of the
Series C 6% Cumulative Convertible Preferred Stock
Exhibit B Form of Warrant
Exhibit C Form of Investor Rights Agreement
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E Form of Opinion of Nevada Counsel
Exhibit F Form of Closing Escrow Agreement
Schedule 1 Purchasers and Shares of Preferred Stock and Warrants Purchased
Schedule 3.10 Litigation
Schedule 3.11 Absence of Certain Changes
Schedule 3.15 Intellectual Property
Schedule 3.17 Preemptive Rights
Schedule 3.19 Subsidiaries and Investments
Schedule 3.20 Capitalization
Schedule 3.21 Options, Warrants, Rights
Schedule 3.22 Employees, Employment Agreements and Employee Benefit Plans
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PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as
of May 16, 2005, by and among NexMed, Inc., a Nevada corporation (the "Seller"),
and each of the persons listed on Schedule 1 hereto (each is individually
referred to as a "Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, each of the Purchasers is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers, up to an aggregate of 600
shares of its Series C 6% Cumulative Convertible Preferred Stock, $10,000
liquidation preference per share, par value $0.001 per share (the "Preferred
Stock"), and Common Stock Purchase Warrants (the "Warrants") entitling the
holders thereof to purchase shares of the Seller's common stock, $0.001 par
value (the "Common Stock") as more fully set forth herein.
NOW THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 Purchase and Sale.
(a) On the terms and subject to the conditions set forth in this
Agreement, at the Closing (as defined in Section 2.2), the Seller will sell and
each of the Purchasers will purchase the Preferred Stock in the amounts set
forth on Schedule 1 hereto. In addition, the Seller will sell and each Purchaser
will purchase at the Closing the number of Warrants set forth on Schedule 1
hereto.
(b) The shares of Common Stock issuable upon conversion of the Preferred
Stock or upon payment of dividends on the Preferred Stock are referred to herein
as the "Conversion Shares," and the shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares."
1.2 Terms of the Preferred Stock and Warrants. The terms and provisions of
the Preferred Stock are set forth in the form of Certificate of Designation of
Series C 6% Cumulative Convertible Preferred Stock, attached hereto as Exhibit A
(the "Certificate of Designation"). The terms and provisions of the Warrants are
more fully set forth in the form of Common Stock Purchase Warrant, attached
hereto as Exhibit B.
1.3 Transfers; Legends.
(a) Except as required by federal securities laws and the securities law
of any state or other jurisdiction within the United States, the Preferred
Stock, Conversion Shares, Warrants and Warrant Shares (collectively, the
"Securities") may be transferred, in whole or in part, by any of the Purchasers
at any time. In the case of Preferred Stock, such transfer may be effected by
delivering written transfer instructions to the Seller, and the Seller shall
reflect such transfer on its books and records and reissue certificates
evidencing the Preferred Stock upon surrender of certificates evidencing the
Preferred Stock being transferred. Any such transfer shall be made by a
Purchaser in accordance with applicable law. In connection with any transfer of
Securities other than pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), or to the Seller, the
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Seller may require the transferor thereof to furnish to the Seller an opinion of
counsel selected by the transferor, such counsel and the form and substance of
which opinion shall be reasonably satisfactory to the Seller and Seller's
counsel, to the effect that such transfer does not require registration under
the Securities Act; provided, that in the case of a transfer of Conversion
Shares and/or Warrant Shares pursuant to Rule 144 under the Securities Act, no
opinion shall be required if the transferor provides the Seller with a customary
seller's representation letter, and if such sale is not pursuant to subsection
(k) of Rule 144, a customary broker's representation letter and Form 144.
Notwithstanding the foregoing, the Seller hereby consents to and agrees to
register on the books of the Seller and with any transfer agent for the
securities of the Seller, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Seller that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes (subject to the qualifications hereof)
and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part in violation of the Securities Act. Any transferee
shall agree to be bound by the terms of the Investor Rights Agreement and this
Agreement. The Seller shall reissue certificates evidencing the Securities upon
surrender of certificates evidencing the Securities being transferred in
accordance with this Section 1.3(a). In connection with any transfer of
Preferred Stock or Warrants after the Registration Statement (as defined in the
Investor Rights Agreement) is declared effective under the Securities Act, the
transferor of such Preferred Stock or Warrants shall reimburse the Seller for
its reasonable out of pocket costs in connection with such transfer (including
without limitation the reasonable attorneys fees for preparing and filing a
prospectus supplement with the SEC and/or delivering an updated opinion letter
to the Seller's transfer agent). An "Affiliate" means any Person (as such term
is defined below) that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser. A
"Person" means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision of any thereof) or other
entity of any kind.
(b) The certificates representing the Securities, unless such Securities
are registered under the Securities Act or eligible for resale without
registration pursuant to Rule 144(k) under the Securities Act, shall bear the
following legends:
"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON CONVERSION OR EXERCISE OF
SECURITIES EVIDENCED BY, THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS
NOT REQUIRED."
"THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS
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AGREEMENT DATED AS OF MAY ___, 2005, AS AMENDED FROM TIME TO TIME, AMONG THE
COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY."
ARTICLE II - PURCHASE PRICE AND CLOSING
2.1 Purchase Price. The aggregate purchase price (the "Purchase Price") to
be paid by the Purchasers to the Seller to acquire the Preferred Stock and the
applicable Warrants shall be the total amounts set forth on Schedule 1 hereto.
2.2 The Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") will take place as promptly as practicable, but no
later than five (5) business days following satisfaction or waiver of the
conditions set forth in Article 6.1(a) and (b) and 6.2(a) (other than those
conditions which by their terms are not to be satisfied or waived until the
Closing), at the offices of Peter J. Weisman, P.C., 335 Madison Avenue, Suite
1702, New York, NY 10017. The date on which the Closing occurs is the "Closing
Date."
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power; Subsidiaries. The Seller and its
Subsidiaries are corporations duly incorporated, validly existing and in good
standing under the laws of the state in which they are incorporated, and have
all corporate powers required to carry on their business as now conducted. The
Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect on the Seller or any
of its Subsidiaries. For purposes of this Agreement, the term "Material Adverse
Effect" means, with respect to any person or entity, a material adverse effect
on its and its Subsidiaries' condition (financial or otherwise), business,
properties, assets, liabilities (including contingent liabilities), results of
operations or current prospects, taken as a whole, on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company
to perform its obligations hereunder or under the Related Documents. True and
complete copies of the Seller's Articles of Incorporation, as amended, and
Bylaws, as amended, as currently in effect and as will be in effect on the
Closing Date (collectively, the "Articles and Bylaws"), have previously been
provided to the Purchasers. For purposes of this Agreement, the term
"Subsidiary" or "Subsidiaries" means, with respect to any entity, any
corporation or other organization of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are directly or
indirectly owned by such entity or of which such entity is a partner or is,
directly or indirectly, the beneficial owner of 50% or more of any class of
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equity securities or equivalent profit participation interests. The Seller has
no Subsidiaries other than the following, each of which, unless otherwise
indicated, is wholly-owned by the Seller:
(a) NexMed Holdings, Inc., a Delaware corporation,
(b) NexMed (U.S.A.), Inc., a Delaware corporation,
(c) NexMed International Limited, organized under British Virgin Islands
law, and
(1) NexMed International (Hong Kong) Ltd. organized under Hong
Kong law and a wholly-owned subsidiary of NexMed International
Limited.
3.2 Corporate Authorization. The execution, delivery and performance by
the Seller of this Agreement, the Warrants, the Certificate of Designation, the
Investor Rights Agreement, the Closing Escrow Agreement (as defined below), and
each of the other documents executed pursuant to and in connection with this
Agreement (collectively, the "Related Documents"), and the consummation of the
transactions contemplated hereby and thereby (including, but not limited to, the
sale and delivery of the Preferred Stock and the Warrants, and the subsequent
issuance of the Conversion Shares upon conversion of the Preferred Stock and the
Warrant Shares upon exercise of the Warrants) have been duly authorized, and no
additional corporate or stockholder action is required for the approval of this
Agreement. The Conversion Shares and the Warrant Shares have been duly reserved
for issuance by the Seller. This Agreement and the Related Documents have been
or, to the extent contemplated hereby or by the Related Documents, will be duly
executed and delivered and constitute the legal, valid and binding agreement of
the Seller, enforceable against the Seller in accordance with their terms,
except as may be limited by bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting the enforcement
of rights of creditors, and except as enforceability of its obligations
hereunder are subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3.3 Charter, Bylaws and Corporate Records. The minute books of the Seller
and its Subsidiaries contain complete and accurate records of all meetings and
other corporate actions of the board of directors, committees of the board of
directors, incorporators and stockholders of the Seller and its Subsidiaries
from September 15, 1995 to the date hereof. All material corporate decisions and
actions have been validly made or taken. All corporate books, including without
limitation the share transfer register, comply with applicable laws and
regulations and have been regularly updated. Such books fully and correctly
reflect all the decisions of the stockholders.
3.4 Governmental Authorization. Except as otherwise specifically
contemplated in this Agreement and the Related Documents, and except for: (i)
the filings referenced in Section 5.10; (ii) the filing of the Certificate of
Designation; (iii) the filing of a Form D with respect to the Preferred Stock
and Warrants under Regulation D under the Securities Act; (iv) the filing of the
Registration Statement with the Commission; (v) the application(s) to each
trading market for the listing of the Conversion Shares and the Warrant Shares
for trading thereon; and (vi) any filings required under state securities laws
that are permitted to be made after the date hereof, the execution, delivery and
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performance by the Seller of this Agreement and the Related Documents, and the
consummation of the transactions contemplated hereby and thereby (including, but
not limited to, the sale and delivery of the Preferred Stock and Warrants and
the subsequent issuance of the Conversion Shares and Warrant Shares upon
conversion of the Preferred Stock or otherwise or exercise of the Warrants, as
applicable) by the Seller require no action by or in respect of, or filing with,
any governmental body, agency, official or authority. The Seller has disclosed
the terms and conditions and other relevant facts of the transactions
contemplated hereby to Nasdaq and obtained from Nasdaq its assurance that such
transactions will not be integrated with any prior issuance or offering of the
Seller for purposes of the Nasdaq rules requiring shareholder approval of the
issuance of 20% or more of an issuer's outstanding common stock.
3.5 Non-Contravention. The execution, delivery and performance by the
Seller of this Agreement and the Related Documents, and the consummation by the
Seller of the transactions contemplated hereby and thereby (including the
issuance of the Conversion Shares and Warrant Shares) do not and will not (a)
contravene or conflict with the Articles (as amended by the Certificate of
Designation) and Bylaws of the Seller and its Subsidiaries or any material
agreement to which the Seller is a party or by which it is bound; (b) contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
the Seller or its Subsidiaries; (c) constitute a default (or would constitute a
default with notice or lapse of time or both) under or give rise to a right of
termination, cancellation or acceleration or loss of any benefit under any
material agreement, contract or other instrument binding upon the Seller or its
Subsidiaries or under any material license, franchise, permit or other similar
authorization held by the Seller or its Subsidiaries; or (d) result in the
creation or imposition of any Lien (as defined below) on any asset of the Seller
or its Subsidiaries. For purposes of this Agreement, the term "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest,
claim or encumbrance of any kind in respect of such asset.
3.6 SEC Documents. The Seller is obligated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") to file reports pursuant to
Sections 13 or 15(d) thereof (all such reports filed or required to be filed by
the Seller, including all exhibits thereto or incorporated therein by reference,
and all documents filed by the Seller under the Securities Act hereinafter
called the "SEC Documents"). The Seller has filed all reports or other documents
required to be filed under the Exchange Act. All SEC Documents filed by the
Seller as of or for any period beginning on or after January 1, 2003, (i) were
prepared in all material respects in accordance with the requirements of the
Exchange Act and (ii) did not at the time they were filed (or, if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Seller has previously delivered to the Purchaser a correct
and complete copy of each report (including, without limitation, the 2005 Proxy
Statement) which the Seller filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") under the Exchange Act for any period ending on
or after December 31, 2003 (the "Recent Reports") to the extent not available
via EDGAR. None of the information about the Seller or any of its Subsidiaries
which has been disclosed to the Purchasers herein or in the course of
discussions and negotiations with respect hereto which is not disclosed in the
Recent Reports is or was required to be so disclosed, and no material non-public
information has been disclosed to the Purchasers.
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3.7 Financial Statements. Each of the Seller's audited consolidated
balance sheet and related consolidated statements of income, cash flows and
changes in stockholders' equity (including the related notes) as of and for the
years ended December 31, 2004 and December 31, 2003, as contained in the Recent
Reports (collectively, the "Seller's Financial Statements" or the "Financial
Statements") (x) present fairly in all material respects the financial position
of the Seller and its Subsidiaries on a consolidated basis as of the dates
thereof and the results of operations, cash flows and stockholders' equity as of
and for each of the periods then ended, and (y) were prepared in accordance with
generally accepted accounting principals ("GAAP") applied on a consistent basis
throughout the periods involved, in each case, except as otherwise indicated in
the notes thereto.
3.8 Compliance with Law. The Seller and its Subsidiaries are in compliance
and have conducted their business so as to comply with all laws, rules and
regulations, judgments, decrees or orders of any court, administrative agency,
commission, regulatory authority or other governmental authority or
instrumentality, domestic or foreign, applicable to their operations, the
violation of which would cause a Material Adverse Affect. There are no judgments
or orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration), including any such actions
relating to affirmative action claims or claims of discrimination, against the
Seller or its Subsidiaries or against any of their properties or businesses.
3.9 No Defaults. The Seller and its Subsidiaries are not, nor have they
received notice that they would be with the passage of time, giving of notice,
or both, (i) in violation of any provision of their Articles and Bylaws (ii) in
default or violation of any term, condition or provision of (A) any judgment,
decree, order, injunction or stipulation applicable to the Seller or its
Subsidiaries or (B) any material agreement, note, mortgage, indenture, contract,
lease or instrument, permit, concession, franchise or license to which the
Seller or its Subsidiaries are a party or by which the Seller or its
Subsidiaries or their properties or assets may be bound, and no circumstances
exist which would entitle any party to any material agreement, note, mortgage,
indenture, contract, lease or instrument to which such Seller or its
Subsidiaries are a party, to terminate such as a result of such Seller or its
Subsidiaries, having failed to meet any material provision thereof including,
but not limited to, meeting any applicable milestone under any material
agreement or contract.
3.10 Litigation. Except as disclosed in the Recent Reports or on Schedule
3.10, there is no action, suit, proceeding, judgment, claim or investigation
pending or, to the best knowledge of the Seller, threatened against the Seller
and its Subsidiaries which could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Seller or its Subsidiaries
or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby, and there is no
basis for the assertion of any of the foregoing.
There are no claims or complaints existing or, to the knowledge of the
Seller or its Subsidiaries, threatened for product liability in respect of any
product of the Seller or its Subsidiaries, and the Seller and its Subsidiaries
are not aware of any basis for the assertion of any such claim.
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3.11 Absence of Certain Changes. Since December 31, 2004, the Seller has
conducted its business only in the ordinary course and there has not occurred,
except as set forth in the Recent Reports or any exhibit thereto or incorporated
by reference therein:
(a) Any event that could reasonably be expected to have a Material Adverse
Effect on the Seller or any of its Subsidiaries;
(b) Any amendments or changes in the Articles or Bylaws of the Seller and
its Subsidiaries, other than on account of the filing of the Certificate of
Designation;
(c) Any damage, destruction or loss, whether or not covered by insurance,
that would, individually or in the aggregate, have or would be reasonably likely
to have, a Material Adverse Effect on the Seller and its Subsidiaries;
(d) Except as set forth on Schedule 3.11(d), any
(i) incurrence, assumption or guarantee by the Seller or its
Subsidiaries of any debt for borrowed money other than for equipment
leases;
(ii) issuance or sale of any securities convertible into or
exchangeable for securities of the Seller other than to directors,
employees and consultants pursuant to existing equity compensation or
stock purchase plans of the Seller;
(iii) issuance or sale of options or other rights to acquire from
the Seller or its Subsidiaries, directly or indirectly, securities of the
Seller or any securities convertible into or exchangeable for any such
securities, other than options issued to directors, employees and
consultants in the ordinary course of business in accordance with past
practice;
(iv) issuance or sale of any stock, bond or other corporate
security;
(v) discharge or satisfaction of any material Lien, other than
current liabilities incurred since December 31, 2004 in the ordinary
course of business;
(vi) declaration or making any payment or distribution to
stockholders or purchase or redemption of any share of its capital stock
or other security;
(vii) sale, assignment or transfer any of its intangible assets
except in the ordinary course of business, or cancellation of any debt or
claim except in the ordinary course of business;
(viii) waiver of any right of substantial value whether or not in
the ordinary course of business;
(ix) material change in officer compensation except in the ordinary
course of business and consistent with past practices; or
(x) other commitment (contingent or otherwise) to do any of the
foregoing.
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(e) Any creation, sufferance or assumption by the Seller or any of its
Subsidiaries of any Lien on any asset (other than Liens existing on the date
hereof or in connection with equipment leases and working capital lines of
credit set forth on Schedule 3.11(e)) or any making of any loan, advance or
capital contribution to or investment in any Person in an aggregate amount which
exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment, termination or
non-renewal by the Seller or its Subsidiaries of any material contract, license,
lease, transaction, commitment or other right or obligation, other than in the
ordinary course of business; or
(g) Any transfer or grant of a right with respect to the trademarks, trade
names, service marks, trade secrets, copyrights or other intellectual property
rights owned or licensed by the Seller or its Subsidiaries, except as among the
Seller and its Subsidiaries.
3.12 No Undisclosed Liabilities. Except as set forth in the Recent
Reports, and except for liabilities and obligations incurred in the ordinary
course of business since December 31, 2004, as of the date hereof, (i) the
Seller and its Subsidiaries do not have any material liabilities or obligations
(absolute, accrued, contingent or otherwise) which, and (ii) there has not been
any aspect of the prior or current conduct of the business of the Seller or its
Subsidiaries which may form the basis for any material claim by any third party
which if asserted could result in any such material liabilities or obligations
which, are not fully reflected, reserved against or disclosed in the balance
sheet of the Seller as at December 31, 2004.
3.13 Taxes. All tax returns and tax reports required to be filed with
respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, will have
been fully collected and paid by such date if due by such date or provided for
by adequate reserves in the Financial Statements as of and for the periods ended
December 31, 2004 (other than taxes accruing after such date) and all similar
items due through the Closing Date will have been fully paid by that date or
provided for by adequate reserves, whether or not any such taxes were reported
or reflected in any tax returns or filings. No taxation authority has sought to
audit the records of the Seller or any of its Subsidiaries for the purpose of
verifying or disputing any tax returns, reports or related information and
disclosures provided to such taxation authority, or for the Seller's or any of
its Subsidiaries' alleged failure to provide any such tax returns, reports or
related information and disclosure. No material claims or deficiencies have been
asserted against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise satisfied, including claims that, or inquiries whether,
the Seller or any of its Subsidiaries has not filed a tax return that it was
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required to file, and, to the best of the Seller's knowledge, there exists no
reasonable basis for the making of any such claims or inquiries. Neither the
Seller nor any of its Subsidiaries has waived any restrictions on assessment or
collection of taxes or consented to the extension of any statute of limitations
relating to taxation.
3.14 Interests of Officers, Directors and Other Affiliates. The
description of any interest held, directly or indirectly, by any officer,
director or other Affiliate of Seller (other than the interests of the Seller
and its Subsidiaries in such assets) in any property, real or personal, tangible
or intangible, used in or pertaining to Seller's business, including any
interest in the Intellectual Property (as defined in Section 3.15 hereof), as
set forth in the Recent Reports, is true and complete, and no officer, director
or other Affiliate of the Seller has any interest in any property, real or
personal, tangible or intangible, used in or pertaining to the Seller's
business, including the Seller's Intellectual Property, other than as set forth
in the Recent Reports.
3.15 Intellectual Property. Other than as set forth in the Recent Reports:
(a) the Seller or a Subsidiary thereof has the right to use or is the sole
and exclusive owner of all right, title and interest in and to all foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, used or controlled by the Seller and its
Subsidiaries (collectively, the "Rights") and in and to each material invention,
software, trade secret, technology, product, composition, formula, method of
process used by the Seller or its Subsidiaries (the Rights and such other items,
the "Intellectual Property"), and, to the Seller's knowledge, has the right to
use the same, free and clear of any claim or conflict with the rights of others;
(b) no royalties or fees (license or otherwise) are payable by the Seller
or its Subsidiaries to any Person by reason of the ownership or use of any of
the Intellectual Property except as set forth on Schedule 3.15;
(c) there have been no claims made against the Seller or its Subsidiaries
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intellectual Property, and, to its knowledge, there are no reasonable grounds
for any such claims;
(d) neither the Seller nor its Subsidiaries have made any claim of any
violation or infringement by others of its rights in the Intellectual Property,
and to the best of the Seller's knowledge, no reasonable grounds for such claims
exist; and
(e) neither the Seller nor its Subsidiaries have received notice that it
is in conflict with or infringing upon the asserted rights of others in
connection with the Intellectual Property.
3.16 Restrictions on Business Activities. Other than as set forth in the
Recent Reports, there is no agreement, judgment, injunction, order or decree
binding upon the Seller or its Subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Seller or its Subsidiaries, any acquisition of property by the
Seller or its Subsidiaries or the conduct of business by the Seller or its
Subsidiaries as currently conducted or as currently proposed to be conducted by
the Seller.
3.17 Preemptive Rights. Except as set forth in Schedule 3.17, none of the
stockholders of the Seller possess any preemptive rights in respect of the
Shares or Warrant Shares to be issued to the Purchasers upon exercise of the
Warrants, as applicable.
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3.18 Insurance. The insurance policies providing insurance coverage to the
Seller or its Subsidiaries including for product liability are adequate for the
business conducted by the Seller and its Subsidiaries (currently limited to the
testing phase) and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such policies are in full force and effect and are valid and
enforceable in accordance with their terms, and the Seller and its Subsidiaries
have complied with all material terms and conditions of such policies, including
premium payments. None of the insurance carriers has indicated to the Seller or
its Subsidiaries an intention to cancel any such policy.
3.19 Subsidiaries and Investments. Except as set forth in the Recent
Reports or on Schedule 3.19, the Seller has no Subsidiaries or Investments. For
purposes of this Agreement, the term "Investments" shall mean, with respect to
any Person, all advances, loans or extensions of credit to any other Person, all
purchases or commitments to purchase any stock, bonds, notes, debentures or
other securities of any other Person, and any other investment in any other
Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.
3.20 Capitalization. The authorized capital stock of the Seller consists
of 80,000,000 shares of common stock, $0.001 par value per share, of which
51,830,835 shares are issued and outstanding as of the date hereof, and
10,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance other than 1,000,000
shares of Series A Junior Participating Preferred Stock, $0.001 par value per
share, none of which, immediately prior to the Closing, has been issued or is
outstanding, and other than the 800 shares of the Seller's Series B 8%
Cumulative Convertible Preferred Stock, 800 of which have been issued and none
of which, immediately prior to the Closing, are outstanding, and other than the
shares of the Seller's Series C 6% Cumulative Convertible Preferred Stock
contemplated hereby and none of which, immediately prior to the Closing, are
outstanding. All shares of the Seller's issued and outstanding capital stock
have been duly authorized, are validly issued and outstanding, and are fully
paid and nonassessable. No securities issued by the Seller from the date of its
incorporation to the date hereof were issued in violation of any statutory or
common law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Seller. All taxes required
to be paid by Seller in connection with the issuance and any transfers of the
Seller's capital stock have been paid. Except as set forth on Schedule 3.20, all
permits or authorizations required to be obtained from or registrations required
to be effected with any Person in connection with any and all issuances of
securities of the Seller from the date of the Seller's incorporation to the date
hereof have been obtained or effected, and all securities of the Seller have
been issued and are held in accordance with the provisions of all applicable
securities or other laws.
3.21 Options, Warrants, Rights. Except as set forth on Schedule 3.21,
there are no outstanding (a) securities, notes or instruments convertible into
or exercisable for any of the capital stock or other equity interests of the
Seller or its Subsidiaries; (b) options, warrants, subscriptions or other rights
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to acquire capital stock or other equity interests of the Seller or its
Subsidiaries; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of the Seller or its Subsidiaries, any such securities or instruments
convertible or exercisable for securities or any such options, warrants or
rights. Other than the rights of the Purchasers under the Preferred Stock and
the Warrants, and except as set forth on Schedule 3.21, neither the Seller nor
the Subsidiaries have granted anti-dilution rights to any person or entity in
connection with any outstanding option, warrant, subscription or any other
instrument convertible or exercisable for the securities of the Seller or any of
its Subsidiaries. Other than the rights granted to the Purchasers under the
Investor Rights Agreement, there are no outstanding rights which permit the
holder thereof to cause the Seller or the Subsidiaries to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration statement
filed by the Seller or any of its Subsidiaries under the Securities Act, and
there are no outstanding agreements or other commitments which otherwise relate
to the registration of any securities of the Seller or any of its Subsidiaries
for sale or distribution in any jurisdiction, except as set forth on Schedule
3.21.
3.22 Employees, Employment Agreements and Employee Benefit Plans. Except
as set forth in the Recent Reports or on Schedule 3.22, there are no employment,
consulting, severance or indemnification arrangements, agreements, or
understandings between the Seller and any officer, director, consultant or
employee of the Seller or its Subsidiaries (the "Employment Agreements"). Except
as set forth in the Recent Reports or on Schedule 3.22, no Employment Agreement
provides for the acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, severance payments, or other
contingent obligations of any nature whatsoever of the Seller or its
Subsidiaries in favor of any such parties in connection with the transactions
contemplated by this Agreement. Except as disclosed in the Recent Reports or on
Schedule 3.22, the terms of employment or engagement of all directors, officers,
employees, agents, consultants and professional advisors of the Seller and its
Subsidiaries are such that their employment or engagement may be terminated upon
not more than two weeks' notice given at any time without liability for payment
of compensation or damages and the Seller and its Subsidiaries have not entered
into any agreement or arrangement for the management of their business or any
part thereof other than with their directors or employees.
3.23 Absence of Certain Business Practices. Neither the Seller, nor any
Affiliate of the Seller, nor to the knowledge of the Seller, any agent or
employee of the Seller, any other Person acting on behalf of or associated with
the Seller, or any individual related to any of the foregoing Persons, acting
alone or together, has: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier, trading
company, shipping company, governmental employee or other Person with whom the
Seller has done business directly or indirectly; or (b) directly or indirectly,
given or agreed to give any gift or similar benefit to any customer, supplier,
trading company, shipping company, governmental employee or other Person who is
or may be in a position to help or hinder the business of the Seller (or assist
the Seller in connection with any actual or proposed transaction) which (i) may
subject the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past, may have
had an adverse effect on the Seller or (iii) if not continued in the future, may
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adversely affect the assets, business, operations or prospects of the Seller or
subject the Seller to suit or penalty in any private or governmental litigation
or proceeding.
3.24 Products and Services. To the knowledge of the Seller and except as
disclosed in the Recent Reports, there exists no set of facts (i) which could
furnish a basis for the withdrawal, suspension or cancellation of any
registration, license, permit or other governmental approval or consent of any
governmental or regulatory agency with respect to any product or service
developed or provided by the Seller or its Subsidiaries, (ii) which could
furnish a basis for the withdrawal, suspension or cancellation by order of any
state, federal or foreign court of law of any product or service, or (iii) which
could have a Material Adverse Effect on the continued operation of any facility
of the Seller or its Subsidiaries or which could otherwise cause the Seller or
its Subsidiaries to withdraw, suspend or cancel any such product or service from
the market or to change the marketing classification of any such product or
service. Each product or service provided by Seller or its Subsidiaries has been
provided in accordance in all material respects with the specifications under
which such product or service normally is and has been provided and the
provisions of all applicable laws or regulations.
3.25 Environmental Matters. None of the premises or any properties owned,
occupied or leased by the Seller or its Subsidiaries (the "Premises") has been
used by the Seller or the Subsidiaries or, to the Seller's knowledge, by any
other Person, to manufacture, treat, store, or dispose of any substance that has
been designated to be a "hazardous substance" under applicable Environmental
Laws (hereinafter defined) ("Hazardous Substances") in violation of any
applicable Environmental Laws. To its knowledge, the Seller has not disposed of,
discharged, emitted or released any Hazardous Substances which would require,
under applicable Environmental Laws, remediation, investigation or similar
response activity. No Hazardous Substances are present as a result of the
actions of the Seller or, to the Seller's knowledge, any other Person, in, on or
under the Premises which would give rise to any liability or clean-up
obligations of the Seller under applicable Environmental Laws. The Seller and,
to the Seller's knowledge, any other Person for whose conduct it may be
responsible pursuant to an agreement or by operation of law, are in compliance
with all laws, regulations and other federal, state or local governmental
requirements, and all applicable judgments, orders, writs, notices, decrees,
permits, licenses, approvals, consents or injunctions in effect on the date of
this Agreement relating to the generation, management, handling, transportation,
treatment, disposal, storage, delivery, discharge, release or emission of any
Hazardous Substance (the "Environmental Laws"). Neither the Seller nor, to the
Seller's knowledge, any other Person for whose conduct it may be responsible
pursuant to an agreement or by operation of law has received any written
complaint, notice, order, or citation of any actual, threatened or alleged
noncompliance with any of the Environmental Laws, and there is no proceeding,
suit or investigation pending or, to the Seller's knowledge, threatened against
the Seller or, to the Seller's knowledge, any such Person with respect to any
violation or alleged violation of the Environmental Laws, and, to the knowledge
of the Seller, there is no basis for the institution of any such proceeding,
suit or investigation.
3.26 Licenses; Compliance With FDA and Other Regulatory Requirements.
(a) General. Except as disclosed in the Recent Reports, the Seller holds
all material authorizations, consents, approvals, franchises, licenses and
permits required under applicable law or regulation for the operation of the
business of the Seller and its Subsidiaries as presently operated (the
"Governmental Authorizations"). All the Governmental Authorizations have been
12
duly issued or obtained and are in full force and effect, and the Seller and its
Subsidiaries are in material compliance with the terms of all the Governmental
Authorizations. The Seller and its Subsidiaries have not engaged in any activity
that, to their knowledge, would cause revocation or suspension of any such
Governmental Authorizations. The Seller has no knowledge of any facts which
could reasonably be expected to cause the Seller to believe that the
Governmental Authorizations will not be renewed by the appropriate governmental
authorities in the ordinary course. Neither the execution, delivery nor
performance of this Agreement shall adversely affect the status of any of the
Governmental Authorizations.
(b) FDA. Without limiting the generality of the representations and
warranties made in paragraph (a) above, the Seller represents and warrants that
(i) the Seller and each of its Subsidiaries is in material compliance with all
applicable provisions of the United States Federal Food, Drug, and Cosmetic Act
(the "FDC Act"), (ii) its products and those of each of its Subsidiaries that
are in the Seller's control are not adulterated or misbranded and are in lawful
distribution, (iii) the United States Food and Drug Administration (the "FDA")
has not initiated legal action with respect to the manufacturing of the Seller's
products, such as seizures or FDA-required recalls, and Seller uses best efforts
to comply with applicable FDA good manufacturing practice regulations, (iv) all
adverse events that were known to and required to be reported by Seller to the
FDA have been reported to the FDA in a timely manner, (v) neither the Seller nor
any of its Subsidiaries is, to their knowledge, employing or utilizing the
services of any individual who has been debarred under the FDC Act, (vi) all
stability studies required to be performed for products distributed by the
Seller or any of its Subsidiaries have been completed or are ongoing in material
compliance with the applicable FDA requirements, and (vii) the Seller and its
Subsidiaries is in compliance in all material respects with all applicable
provisions of the Controlled Substances Act.
3.27 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon any arrangement made by
or on behalf of the Seller, which would make any Purchaser liable for any fees
or commissions.
3.28 Securities Laws. Neither the Seller nor its Subsidiaries nor any
agent acting on behalf of the Seller or its Subsidiaries has taken or will take
any action which might cause this Agreement or the Preferred Stock or Warrants
to violate the Securities Act or the Exchange Act or any rules or regulations
promulgated thereunder, as in effect on the Closing Date. Assuming that all of
the representations and warranties of the Purchasers set forth in Article IV are
true, all offers and sales of capital stock, securities and notes of the Seller
were conducted and completed in compliance with the Securities Act. All shares
of capital stock and other securities issued by the Seller and its Subsidiaries
prior to the date hereof have been issued in transactions that were either
registered offerings or were exempt from the registration requirements under the
Securities Act and all applicable state securities or "blue sky" laws and in
compliance with all applicable corporate laws.
3.29 Disclosure. No representation or warranty made by the Seller in this
Agreement, nor in any document, written information, financial statement,
certificate, schedule or exhibit prepared and furnished by the Seller or the
representatives of the Seller pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits to state a material fact necessary to make the
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statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, for itself only, hereby severally and not jointly,
represents and warrants to the Seller as follows:
4.1 Existence and Power. The Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of such Purchaser's
organization. The Purchaser has all powers required to carry on such Purchaser's
business as now conducted.
4.2 Authorization. The execution, delivery and performance by the
Purchaser of this Agreement, the Related Documents to which such Purchaser is a
party, and the consummation by the Purchaser of the transactions contemplated
hereby and thereby have been duly authorized, and no additional action is
required for the approval of this Agreement or the Related Documents. This
Agreement and the Related Documents to which the Purchaser is a party have been
or, to the extent contemplated hereby, will be duly executed and delivered and
constitute valid and binding agreements of the Purchaser, enforceable against
such Purchaser in accordance with their terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of their obligations thereunder are subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3 Investment. The Purchaser is acquiring the securities described herein
for its own account and not with a view to, or for sale in connection with, any
distribution thereof, nor with the intention of distributing or reselling the
same, provided, however, that by making the representation herein, the Purchaser
does not agree to hold any of the securities for any minimum or other specific
term and reserves the right to dispose of the securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The Purchaser is aware that none of the securities has been
registered under the Securities Act or under applicable state securities or blue
sky laws. The Purchaser is an "Accredited Investor" as such term is defined in
Rule 501 of Regulation D, as promulgated under the Securities Act (including
without limitation, if the Purchaser is an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 and a
self-directed plan, then investment decisions are made solely by persons that
are "Accredited Investors").
4.4 Reliance on Exemptions. The Purchaser understands that the Preferred
Stock and Warrants are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Seller is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the securities.
4.5 Experience of the Purchaser. The Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
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business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. The Purchaser is able to bear the economic
risk of an investment in the securities and, at the present time, is able to
afford a complete loss of such investment.
4.6 General Solicitation. The Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS
5.1 Insurance. The Seller and its Subsidiaries shall, from time to time
upon the written request of the Purchasers, promptly furnish or cause to be
furnished to the Purchasers evidence, in form and substance reasonably
satisfactory to the Purchasers, of the maintenance of all insurance maintained
by it for loss or damage by fire and other hazards, damage or injury to persons
and property, including from product liability, and under workmen's compensation
laws.
5.2 Reporting Obligations. So long as any of the Preferred Stock is
outstanding, and so long as any portion of the Warrants has not been exercised
and has not expired by its terms, the Seller shall furnish to the Purchasers, or
any other persons who hold any of the Preferred Stock or Warrants (provided that
such subsequent holders give notice to the Seller that they hold Preferred Stock
or Warrants and furnish their addresses) promptly upon their becoming available
one copy of (A) each report, notice or proxy statement sent by the Seller to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and (B) any registration statement, prospectus or written
communication pursuant to the Securities Act relating to the issuance or
registration of Conversion Shares and the Warrant Shares and filed by the Seller
with the Commission or any securities market or exchange on which shares of
Common Stock are listed; provided, however, that the Company shall have no
obligation to deliver reports or schedules (pursuant to the Exchange Act) under
this Section 5.2 to the extent such reports are publicly available via EDGAR.
The Purchasers are hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Seller which may have been furnished to the
Purchasers hereunder, to any regulatory body or agency having jurisdiction over
the Purchasers or to any Person which shall, or shall have right or obligation
to succeed to all or any part of the Purchasers' interest in the Seller or this
Agreement.
5.3 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this
Agreement), notwithstanding the exercise by the Purchasers or other holders of
the Preferred Stock of their rights hereunder to conduct an investigation shall
not in any way diminish any liability hereunder.
15
5.4 Further Assurances. The Seller shall, at its cost and expense, upon
written request of the Purchasers, duly execute and deliver, or cause to be duly
executed and delivered, to the Purchasers such further instruments and do and
cause to be done such further acts as may be necessary, advisable or proper, at
the reasonable request of the Purchasers, to carry out more effectually the
provisions and purposes of this Agreement. The parties shall use their best
efforts to timely satisfy each of the conditions described in Article VI of this
Agreement.
5.5 Use of Proceeds. The Seller covenants and agrees that the proceeds of
the Purchase Price shall be used by the Seller for working capital and general
corporate purposes; under no circumstances shall any portion of the proceeds be
applied to:
(i) accelerated repayment of debt existing on the date hereof;
(ii) the payment of dividends or other distributions on any capital
stock of the Seller other than the Preferred Stock;
(iii) increased executive compensation or loans to officers,
employees, stockholders or directors, unless approved by a disinterested
majority of the Board of Directors;
(iv) the purchase of debt or equity securities of any person,
including the Seller and its Subsidiaries, except in connection with
investment of excess cash in high quality (A1/P1 or better) money market
instruments having maturities of one year or less; or
(v) any expenditure not directly related to the business of the
Seller.
5.6 Corporate Existence. So long as a Purchaser owns Preferred Stock,
Warrants, Conversion Shares, or Warrant Shares, the Seller shall preserve and
maintain and cause its Subsidiaries to preserve and maintain their corporate
existence and good standing in the jurisdiction of their incorporation and the
rights, privileges and franchises of the Seller and its Subsidiaries (except, in
each case, in the event of a merger or consolidation in which the Seller or its
Subsidiaries, as applicable, is not the surviving entity) in each case where
failure to so preserve or maintain could have a Material Adverse Effect on the
financial condition, business or operations of the Seller and its Subsidiaries
taken as a whole.
5.7 Licenses. The Seller shall, and shall cause its Subsidiaries to,
maintain at all times all material licenses or permits necessary to the conduct
of its business and as required by any governmental agency or instrumentality
thereof, including without limitation all FDA clearances and approvals.
5.8 Taxes and Claims. The Seller and its Subsidiaries shall duly pay and
discharge (a) all material taxes, assessments and governmental charges upon or
against the Seller or its properties or assets prior to the date on which
penalties attach thereto, unless and to the extent that such taxes are being
diligently contested in good faith and by appropriate proceedings, and
appropriate reserves therefor have been established, and (b) all material lawful
claims, whether for labor, materials, supplies, services or anything else which
might or could, if unpaid, become a lien or charge upon the properties or assets
of the Seller or its Subsidiaries unless and to the extent only that the same
are being diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established.
16
5.9 Perform Covenants. The Seller shall (a) make full and timely payment
of any and all payments on the Preferred Stock, and all other obligations of the
Seller to the Purchasers in connection therewith, whether now existing or
hereafter arising, and (b) duly comply with all the terms and covenants
contained herein and in each of the instruments and documents given to the
Purchasers in connection with or pursuant to this Agreement, all at the times
and places and in the manner set forth herein or therein.
5.10 Additional Covenants.
(a) Except for transactions approved by a majority of the disinterested
directors of the Board of Directors, neither the Seller nor any of its
Subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of any class
or series of capital stock of the Seller or any of its Subsidiaries, member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or member of the family of any such person, is
a director, officer, trustee, partner or holder of more than 5% of the
outstanding capital stock thereof, with the exception of transactions which are
consummated upon terms that are no less favorable than would be available if
such transaction had been effected at arms-length, in the reasonable judgment of
the Board of Directors.
(b) The Seller shall timely prepare and file with the Securities and
Exchange Commission the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Preferred Stock and
Warrants under this Agreement.
(c) The Seller shall timely prepare and file such applications, consents
to service of process (but not including a general consent to service of
process) and similar documents and take such other steps and perform such
further acts as shall be required by the state securities law requirements of
each jurisdiction where a Purchaser resides as indicated on Schedule 1 with
respect to the sale of the Preferred Stock and Warrants under this Agreement.
(d) Neither the Seller nor any of its Affiliates, nor any Person acting on
its or their behalf, shall directly or indirectly make any offers or sales of
any securities or solicit any offers to buy any securities under circumstances
that would cause the loss of the 4(2) exemption under the Securities Act for the
transactions contemplated hereby. Subject to any consent or approval rights of
the Purchasers hereunder, in the event the Seller contemplates an offering of
its equity or debt securities within six months following the Closing Date, the
Seller agrees that it shall notify the Purchasers of such offering (without
providing any material non-public information to any Purchaser without its prior
approval), and upon the reasonable request of Purchasers purchasing at least 75%
of the Preferred Stock hereunder, the Seller shall first disclose the terms and
conditions and other relevant facts of such proposed transaction to Nasdaq and
obtain from Nasdaq its assurance that such transaction will not be integrated
with the offering which is the subject of this Agreement for purposes of the
Nasdaq rules requiring shareholder approval of the issuance of 20% or more of an
issuer's outstanding common stock. In the event the Seller fails to obtain such
assurance, then the Seller shall not issue or sell any such securities without
the prior written consent of Purchasers purchasing at least 75% of the Preferred
Stock hereunder, provided that the Seller may sell or issue securities without
such consent if (i) it obtains prior shareholder approval for such sale or
issuance in compliance with the Nasdaq stock market rules or (ii) such sale or
issuance is to a pharmaceutical company in connection with a strategic
17
transaction and not primarily as a capital raising transaction, so long as the
Seller has not affirmatively been notified (orally or in writing) by Nasdaq that
it is reasonably likely to treat such sale or issuance as being integrated with
the transactions contemplated under this Agreement. In the event that the
transactions contemplated under this Agreement are deemed integrated with any
other transaction(s) by the Nasdaq stock market, then the Seller shall as soon
as possible seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of Conversion Shares and Warrant
Shares (without regard to the 20% limitation) and the full amount of securities
issued and/or to be issued in such other transaction.
5.11 Securities Laws Disclosure; Publicity. The Seller shall (i) on or
promptly after the Closing Date, issue a press release acceptable to The Tail
Wind Fund Ltd. disclosing the transactions contemplated hereby, and (ii) after
the Closing Date, file with the Commission a Report on Form 8-K disclosing the
transactions contemplated hereby. Except as provided in the preceding sentence,
neither the Seller nor the Purchasers shall make any press release or other
publicity about the terms of this Agreement or the transactions contemplated
hereby without the prior approval of the other unless otherwise required by law
or the rules of the Commission or Nasdaq.
5.12 Like Treatment of Purchasers and Holders. Neither the Seller 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 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 to any
terms or provisions of this Agreement or the Related Documents, unless such
consideration is required to be paid to all Purchasers or holders of Securities
bound by such consent, waiver or amendment. The Seller 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.
5.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under this Agreement or any Related Documents are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under any such agreement. Nothing contained herein or in
any Related Documents, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by such agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement or out of the other
Related Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose. Each Purchaser
represents that it has been represented by its own separate legal counsel in its
review and negotiation of this Agreement and the Related Documents. For reasons
of administrative convenience only, the Purchasers acknowledge and agree that
they and their respective counsel have chosen to communicate with the Seller
through Peter J. Weisman, P.C., but Peter J. Weisman, P.C. does not represent
any of the Purchasers in this transaction other than The Tail Wind Fund Ltd.
(the "Lead Investor").
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ARTICLE VI - CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Purchasers to Effect the Closing. The
obligations of a Purchaser to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing, of each of the following conditions, any of which may be waived,
in writing, by a Purchaser:
(a) The Seller shall deliver or cause to be delivered to each of the
Purchasers the following:
1. (i) (A) One or more certificates evidencing the aggregate number
of shares of the Preferred Stock, duly authorized, issued, fully paid and
non-assessable, as is indicated on Schedule 1 to be purchased at the
Closing by such Purchaser, registered in the name of such Purchaser, in
such denominations as is indicated on Schedule 1 for such Purchaser
("Share Certificates") or (B) a copy of irrevocable transfer agent
instructions that (I) have been delivered to the Seller's transfer agent
and (II) instruct the Seller's transfer agent to issue the Share
Certificates, (III) are acknowledged in writing by the Company's transfer
agent and (IV) are in form and substance satisfactory to The Tail Wind
Fund Ltd.; provided that, in any case, the Company shall deliver or cause
to be delivered the original Share Certificates as soon as practicable
following the Closing; and
(ii) One or more certificates evidencing the Warrants, registered in
the name of such Purchaser, in such denominations as is indicated on
Schedule 1 for such Purchaser, pursuant to which such Purchaser shall be
initially entitled to purchase that number of shares of Common Stock as is
indicated on Schedule 1, or a facsimile copy of such Warrant certificates,
provided that, in any case, the Company shall deliver or cause to be
delivered the original Warrant Certificates as soon as practicable
following the Closing.
2. The Investor Rights Agreement, in the form attached hereto as
Exhibit C (the "Investor Rights Agreement"), duly executed by the Seller.
3. A legal opinion of Katten Muchin Zavis Rosenman ("Seller's
Counsel"), counsel to the Seller, in the form attached hereto as Exhibit
D.
4. A legal opinion of Schreck Brignone ("Nevada Counsel"), Nevada
counsel to the Seller, in the form attached hereto as Exhibit E.
5. A certificate of the Secretary of the Seller (the "Secretary's
Certificate"), in form and substance satisfactory to the Purchasers,
certifying as follows:
(i) that the Certificate of Designation authorizing the
Preferred Stock has been duly filed in the office of the Nevada
Secretary of State, and that attached to the Secretary's Certificate
is true and complete copy of the Articles of Incorporation of the
Seller, as amended, including the Certificate of Designation;
(ii) that a true copy of the Bylaws of the Seller, as amended
to the Closing Date, is attached to the Secretary's Certificate;
19
(iii) that attached thereto are true and complete copies of
the resolutions of the Board of Directors of the Seller authorizing
the execution, delivery and performance of this Agreement and the
Related Documents, instruments and certificates required to be
executed by it in connection herewith and approving the consummation
of the transactions in the manner contemplated hereby including, but
not limited to, the authorization and issuance of the Preferred
Stock and Warrants;
(iv) the names and true signatures of the officers of the
Seller signing this Agreement and all other documents to be
delivered in connection with this Agreement;
(v) such other matters as required by this Agreement; and
(vi) such other matters as the Purchasers may reasonably
request.
6. A wire transfer representing the amounts due for reasonable legal
fees and other expenses as described in Section 8.2 hereof; such amounts
may, at the election of the Purchasers, be paid out of the funds due from
the Purchasers at the Closing.
7. Proof of due filing with the Secretary of State of the State of
Nevada of the Certificate of Designation authorizing the Preferred Stock.
8. Seller shall have applied to each U.S. securities exchange,
interdealer quotation system and other trading market where its Common
Stock is currently listed or qualified for trading or quotation for the
listing or qualification of the Conversion Shares and the Warrant Shares
for trading or quotation thereon in the time and manner required thereby.
9. Such other documents as the Purchasers shall reasonably request.
(b) The Seller shall have entered into a Closing Escrow Agreement
with Peter J. Weisman, P.C. (the "Escrow Agent") in the form attached hereto as
Exhibit F (the "Closing Escrow Agreement") pursuant to which the Escrow Agent
shall hold certain funds and documents described therein. Each of the Purchasers
authorizes the Lead Investor to enter into the Closing Escrow Agreement and to
act in the capacity described therein.
6.2 Conditions to Obligations of the Seller to Effect the Closing. The
obligations of the Seller to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Seller:
(a) Each of the Purchasers shall deliver or cause to be delivered to the
Seller (i) upon receipt of the Seller's items described in Section 6.1 above,
payment of the portion of the Purchase Price set forth opposite each Purchaser's
name on Schedule 1, in cash by wire transfer of immediately available funds to
an account designated in writing by Seller prior to the date hereof; (ii) an
executed copy of this Agreement; (iii) an executed copy of the Investor Rights
Agreement; and (iv) such other documents as the Seller shall reasonably request.
20
ARTICLE VII - INDEMNIFICATION, TERMINATION AND DAMAGES
7.1 Survival of Representations. Except as otherwise provided herein, the
representations and warranties of the Seller and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date and shall continue in full force and effect for a
period of three (3) years from the Closing Date; provided, however, that the
Seller's warranties and representations under Sections 3.13 (Taxes), 3.19
(Subsidiaries and Investments), 3.20 (Capitalization), and 3.21 (Options,
Warrants, Rights), shall survive the Closing Date and continue in full force and
effect until the expiration of all applicable statutes of limitation; and
further provided that the Seller's warranties and representations under Section
3.25 (Environmental Matters) shall survive the Closing Date and continue in full
force and effect for a period of six (6) years from the Closing Date. The
Seller's and the Purchasers' warranties and representations shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Seller or the Purchasers.
7.2 Indemnification.
(a) The Seller agrees to indemnify and hold harmless the Purchasers, their
Affiliates, each of their officers, directors, employees and agents and their
respective successors and assigns, from and against any losses, damages, or
expenses which are caused by or arise out of (i) any breach or default in the
performance by the Seller of any covenant or agreement made by the Seller in
this Agreement or in any of the Related Documents; (ii) any breach of warranty
or representation made by the Seller in this Agreement or in any of the Related
Documents (iii) any and all third party actions, suits, proceedings, claims,
demands, judgments, costs and expenses (including reasonable legal fees and
expenses) incident to any of the foregoing.
(b) Each Purchaser, severally and not jointly and as to itself only,
agrees to indemnify and hold harmless the Seller, its Affiliates, each of their
officers, directors, employees and agents and their respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (A) any breach or default in the performance by such Purchaser
of any covenant or agreement made by such Purchaser in this Agreement or in any
of the Related Documents; (B) any breach of warranty or representation made by
such Purchaser in this Agreement or in any of the Related Documents; and (C) any
and all third party actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees and expenses) incident to
any of the foregoing; provided, however, that such Purchaser's liability under
this Section 7.2(b) shall not exceed the Purchase Price paid by such Purchaser
hereunder.
7.3 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party". An Indemnified
Party under this Agreement shall, with respect to claims asserted against such
party by any third party, give written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity under this Agreement
within sixty (60) business days of the receipt of any written claim from any
such third party, but not later than twenty (20) days prior to the date any
answer or responsive pleading is due, and with respect to other matters for
which the Indemnified Party may seek indemnification, give prompt written notice
to the Indemnifying Party of any liability which might give rise to a claim for
21
indemnity; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.
The Indemnifying Party shall have the right, at its election, to take over
the defense or settlement of such claim by giving written notice to the
Indemnified Party at least fifteen (15) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties or
representation of both parties by the same counsel would be inappropriate due to
conflicts of interest or otherwise. If the Indemnifying Party does not make such
election, or having made such election does not, in the reasonable opinion of
the Indemnified Party proceed diligently to defend such claim, then the
Indemnified Party may (after written notice to the Indemnifying Party), at the
expense of the Indemnifying Party, elect to take over the defense of and proceed
to handle such claim in its discretion and the Indemnifying Party shall be bound
by any defense or settlement that the Indemnified Party may make in good faith
with respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim. The parties agree to cooperate in
defending such third party claims and the Indemnified Party shall provide such
cooperation and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any matter for which
indemnification is sought hereunder; and the parties hereto agree to cooperate
with each other in order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying Party
upon demand by the Indemnified Party.
7.4 Liquidated Damages. The Seller and the Purchasers agree that the
Purchasers will suffer damages if a Breach Event (as defined below) occurs or is
ongoing. The Seller and the Purchasers further agree that it may not be feasible
to ascertain the extent of such damages with precision. If a Breach Event (as
defined below) occurs, then the Purchasers may elect, as liquidated damages, and
22
in addition to any other remedies legally available to such Purchasers, to
require that the Seller shall pay to the Purchasers liquidated damages at a rate
of 17% per annum of the aggregate Liquidation Amount of such Purchasers'
outstanding Preferred Stock payable monthly in cash at the end of each month (or
part thereof) in which the Breach Event is outstanding, provided, however, that
with respect to any particular Breach Event such 17% figure shall be reduced to
the extent necessary such that the rate of liquidated damages under this Section
7.4, combined with (a) any Periodic Amounts (as defined in the Investor Rights
Agreement) pursuant to Section 8(e) of the Investor Rights Agreement payable for
such Breach Event and (b) the 8% increase in the Dividend Rate (as defined in
and pursuant to the Certificate of Designation) due such Breach Event), shall
not exceed 20% per annum.
"Breach Event" means either:
(i) Any breach of any warranty or representation of the Seller as of
the date made in this Agreement, any Related Agreement or any other
agreement delivered herewith, which breach, or the facts and circumstances
concerning such breach, has or is reasonably likely to have a Material
Adverse Effect; or
(ii) Any breach by the Seller of any material covenant or obligation
under this Agreement, any Related Agreement or any other agreement
delivered herewith, and which breach, if capable of being cured, has not
been cured within ten (10) days after notice of such breach has been given
by the holders of a majority of Preferred Stock to the Seller.
The Seller and the Purchasers have expressly negotiated this Section 7.4,
and have agreed that in light of the circumstances existing at the time of
execution of this Agreement, the liquidated damages expressed herein represent a
reasonable estimate of the harm likely to be suffered by the Purchasers upon the
occurrence of a Breach Event.
ARTICLE VIII - MISCELLANEOUS
8.1 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement, and further agrees to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable law to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings, and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
8.2 Fees and 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 $60,000 as and for
legal and due diligence expenses incurred in connection herewith, $20,000 of
which amount has been previously paid. The Company shall pay all fees and
expenses of any placement agents, finders and escrow agents in connection with
23
the transactions contemplated by this Agreement pursuant to a separate agreement
between such parties.
8.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York City time) on any business day, (c) the business day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service such as
Federal Express, or (d) actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
If to the Purchasers at each Purchaser's address set forth under its name
on Schedule 1 attached hereto, or with respect to the Seller, addressed to:
NexMed, Inc.
350 Corporate Boulevard
Robbinsville, NJ 08691
Attention: Chief Financial Officer
Facsimile No.: 609-208-1621
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Seller shall be sent to Katten Muchin
Rosenman LLP, 575 Madison Avenue, New York, NY 10022, Attn: Robert Kohl, Esq.,
Facsimile No. (212) 940-8776. Copies of notices to any Purchaser shall be sent
to the addresses, if any, listed on Schedule 1 attached hereto.
Unless otherwise stated above, such communications shall be effective when
they are received by the addressee thereof in conformity with this Section. Any
party may change its address for such communications by giving notice thereof to
the other parties in conformity with this Section.
8.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
enforced in accordance with the laws of the State of New York without reference
to the conflicts of laws principles thereof.
8.5 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the Federal District Court, Southern District of New
York and if such court does not have proper jurisdiction, the State Courts of
New York County, New York. The parties to this Agreement agree that any breach
of any term or condition of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York and irrevocably and expressly
agree to submit to the jurisdiction of the Federal District Court, Southern
District of New York and if such court does not have proper jurisdiction, the
State Courts of New York County, New York for the purpose of resolving any
disputes among the parties relating to this Agreement or the transactions
24
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any court in respect hereof brought
in New York County, New York, and further irrevocably waive any claim that any
suit, action or proceeding brought in Federal District Court, Southern District
of New York and if such court does not have proper jurisdiction, the State
Courts of New York County, New York has been brought in an inconvenient forum.
Each of the parties hereto consents to process being served in any such suit,
action or proceeding, by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 8.5 shall affect or limit any right to serve process in any other
manner permitted by law.
8.6 Successors and Assigns. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign this Agreement to any Person to whom it assigns or transfers securities
issued or issuable pursuant to this Agreement. Any assignee must be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.
8.7 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated.
8.8 Entire Agreement. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
8.9 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law, or in equity
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
8.10 Amendment and Waivers. Subject to Section 5.12, any term or provision
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 by a writing signed by the Seller and the
holders of at least 75% of the Preferred Stock then outstanding, and such waiver
or amendment, as the case may be, shall be binding upon all Purchasers. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default. This Agreement may not be amended or supplemented
by any party hereto except pursuant to a written amendment executed by the
Seller and the holders of at least 75% of the Preferred Stock then outstanding.
No amendment shall be effected to impact a holder of Preferred Stock in a
disproportionately adverse fashion without the consent of such individual holder
of Preferred Stock.
8.11 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
25
8.12 Construction of Agreement; Knowledge. For purposes of this Agreement,
the term "knowledge," when used in reference to a corporation means the
knowledge of the directors and executive officers of such corporation
(including, if applicable, any person designated as a chief scientific, medical
or technical officer) assuming such persons shall have made inquiry that is
customary and appropriate under the circumstances to which reference is made,
and when used in reference to an individual means the knowledge of such
individual assuming the individual shall have made inquiry that is customary and
appropriate under the circumstances to which reference is made.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
8.14 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
8.15 Waiver of Trial by Jury. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL
BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
NEXMED, INC.
By: /s/ Y. Joseph Mo, Ph.D.
-----------------------
Name: Y. Joseph Mo, Ph.D.
Title: President & C.E.O.
PURCHASERS:
Print Exact Name: THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY & MANAGEMENT LTD., as investment manager
By:
-------------------------------------------------------
Name: David Crook
Title: CEO
Address: c/o Tail Wind Advisory & Management Ltd.
1 Regent Street, 1st Floor
London SW1Y 4NS
England
Telephone: 011-44-207-468-7660
Facsimile: 011-44-207-468-7657
Email: dcrook@tailwindam.com
Amount of Investment: $400,000
Print Exact Name: SOLOMON STRATEGIC HOLDINGS, INC.
By:
-------------------------------------------------------
Name: Andrew P. MacKellar
Title: Director
Address: c/o Andrew P. MacKellar
Greenlands
The Red Gap
Castletown
IM9 1HB
British Isles
Telephone: +011 (44) 1624 824171
Facsimile: +011 (44) 1624 824191
Email: mackellar_twi@manx.net
Amount of Investment: $100,000
Print Exact Name: Regions Bank as Custodian for Arkansas Knee Clinic, Profit
Sharing Plan acct# 91-0445-02-2
By:
-------------------------------------------------------
Name: C.E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Regions Bank
417 North 20th St., 14th Floor
Birmingham, AL 35203
Telephone: 205-290-5533
Facsimile: 205-290-5563
Email: bettye.grant@regions.com
Amount of Investment: $100,000
Print Exact Name: Union Bank of California fbo Eva B. Buck Charitable Trust
"B"
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Union Bank of California
475 Sansome Street, 15th Floor
San Francisco, CA 94111
Telephone: 415-296-6971
Facsimile: 415-296-6551
Email: ben.long@uboc.com
Amount of Investment: $100,000
PURCHASERS:
Print Exact Name: Caeser's Riverboat Casino Foundation
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Wachovia Securities
3800 National City Tower
Louisville, KY 40202
Telephone: 800-998-7686
Facsimile: 502-561-5097
Email: otto.g.feddern@wachoviasec.com
Amount of Investment: $100,000
Print Exact Name: Compass Bank, Custodian fbo Ray C. Fish Foundation
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Compass Bank
15 South 20th Street
Birmingham, AL 35233
Attn: Danny McHale
WMG Operations
Telephone: 205-297-6620
Facsimile: 205-297-6754
Email: danny.mchale@compassbnk.com
Amount of Investment: $100,000
Print Exact Name: Fiserv as Custodian for Hill Family Partnership acct #529
39008
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Montauk Securities
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, NJ 07701
Attn: Norma Doxey
Telephone: 800-876-3672
Facsimile: 732-842-5097
Email: ndoxey@montaukfinancial.com
Amount of Investment: $100,000
Print Exact Name: Fiserv as Cutodian for Hytrol Conveyor Company Pension Plan
acct # 529 40988
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Montauk Securities
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, NJ 07701
Attn: Norma Doxey
Telephone: 800-876-3672
Facsimile: 732-842-5097
Email: ndoxey@montaukfinancial.com
Amount of Investment: $100,000
PURCHASERS:
Print Exact Name: Fiserv as Custodian for George D. Nagrodsky acct# 529 57752
By:
-------------------------------------------------------
Name: C. E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Montauk Securities
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, NJ 07701
Attn: Norma Doxey
Telephone: 800-876-3672
Facsimile: 732-842-5097
Email: ndoxey@montaukfinancial.com
Amount of Investment: $100,000
Print Exact Name: M & I Trust Company, N.A. as trustee of the Thrift and
Profit Sharing Retirement Plan of Latham & Watkins, LLP for
J. Thomas Bosch
By:
-------------------------------------------------------
Name: Stephanie Napier/Lori Harding (subject to the
attached addendum)
Title: Vice President/Officer
Address: 4717 Grand Avenue
Suite 400
Kansas City, MO 64112
Telephone: 816-360-3798
Facsimile: 816-360-3731
Email: Melissa.Dutcher@micorp.com (trustee contact)
Amount of Investment: $100,000
Print Exact Name: Poterbaugh Foundation dated 10/31/49
By:
-------------------------------------------------------
Name: C.E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: Morgan Stanley
6305 Waterford Blvd., Suite 240
Oklahoma City, OK 73175
Telephone: 800-735-7677
Facsimile: 405-843-9142
Email: Paul.malloy@morganstanley.com
Amount of Investment: $200,000
Print Exact Name: Cherrytrust & Co.
By:
-------------------------------------------------------
Name: C.E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: American National Bank
Attn: Trust Dept., (fbo Mary Hugh Scott PC 1282-01)
3033 East First Avenue
Denver, CO 80206
Telephone: 303-394-5107
Facsimile: 303-394-5114
Email: cbatchler@anbbank.com
Amount of Investment: $100,000
PURCHASERS:
Print Exact Name: Tax Equity Partners I, Inc.
a Partnership
By:
-------------------------------------------------------
Name: C.E. Lanphier, Lanphier Capital Management, Inc.
Title: President
Address: c/o Charles Schwab, Attn Vanessa Lau
106 West Portal Avenue
San Francisco, CA 94127
Telephone: 415-242-2306
Facsimile: 415-242-2300
Email: Vanessa.lau@Schwab.com
Amount of Investment: 100,000
Print Exact Name: Charles W. Edwards, Jr.
By:
-------------------------------------------------------
Name: Charles W. Edwards, Jr.
Title:
Address: 570 Bennett Way
Florence, Alabama 35634
Telephone: 256-757-1336
Facsimile: -
Email: cwedwardsjr@earthlink.net
Amount of Investment: $100,000
Print Exact Name: The Leonard J. Sojka, Jr. Revocable Trust
(Trust Date: 2 Feb. 2001)
By:
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Name: Leonard J. Sojka
Title: Trustee
Address: 1460 Spring Valley Road
Golden Valley, MN 55422
Telephone: W: 612-253-6191 H: 763-529-5234
Facsimile: 612-253-6151
Email: lsojka@Bloomberg.net
Amount of Investment: $100,000
Print Exact Name: Andrew S. Troob Revocable Trust
UAD 6/26/92
By:
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Name: Andrew S. Troob
Title: Trustee
Address: 725 Greeenleaf
Glencoe, IL 60022
Telephone: 847-835-3192 312-260-5830
Facsimile: 312-260-5830
Email: AndyTroob@yahoo.com
Amount of Investment: $100,000
PURCHASERS:
Print Exact Name: FAN Associates LLC
By:
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Name: Wen Ling Lee Fan
Title: Manager
Address: 7 Lockhern Drive
Livingston, NJ 07039
Telephone: 973-533-1612
Facsimile: 973-716-9274
Email: FCFAN@comcast.net
Amount of Investment: $600,000
Print Exact Name: John R. and Tristen M. Green
By:
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Name: Tristen M. Green
Title:
Address: P.O. Box 223726
Princeville, HI 96722-3726
Telephone: 808-826-1415
Facsimile: SAME
Email: alohabrun@earthlink.net
Amount of Investment: $100,000
Print Exact Name: Akros Capital Fund, L.P.
By:
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Name: Brady T. Lipp
Title: Managing Member of Akros Capital, LLC
(management company)
Address: 230 Park Avenue, 7th Floor
New York, NY 10169
Telephone: 212-499-2590 (work) or 914-557-4677
Facsimile: 212-499-2589
Email: brady@akroscapital.com
Amount of Investment: $50,000
Print Exact Name: Brady T. Lipp
By:
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Name: Brady T. Lipp
Title:
Address: 16 Catherine Place
Katonah, NY 10536
Telephone: 914-557-4677
Facsimile: 914-232-5077
Email: shadesmn@aol.com
Amount of Investment: $50,000
Print Exact Name: Mark S. Ain
By:
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Name: Mark S. Ain
Title:
Address: 8 Dana Road
Lexington, MA 02421
Telephone: 978-947-4900
Facsimile: 978-367-5955
Email: main@kronos.com
Amount of Investment: $50,000
PURCHASERS:
Print Exact Name: Omicron Master Trust
By:
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Name: Bruce Bernstein
Title: Managing Partner
Address: 650 5th Avenue, 24th Flr.
New York, NY 10019
Telephone: 212-258-2302
Facsimile: 212-258-2315
Email: bd@omicroncapital.com
Amount of Investment: $750,000
Print Exact Name: Robert C. Ciricillo
By:
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Name: Robert C. Ciricillo
Title:
Address: 335 East 51st Street - Apt. 11A
New York, NY 10022
Telephone: 212-980-5409; 941-714-0527
Facsimile: 212-758-4496
Email: ciricillo@aol.com
Amount of Investment: $150,000
Print Exact Name: Iroquois Master Fund Ltd.
By:
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Name: Joshua Silverman
Title: Authorized Signatory
Address: 641 Lexington Avenue, 26th Flr.
New York, NY 10022
Telephone: 212-974-3070
Facsimile: 212-207-3453
Email: JSilverman@Icfund.com
Amount of Investment: $200,000
Print Exact Name: SDS Capital Group SPC, Ltd.
By:
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Name: Scott E. Derby
Title: General Counsel
Address: c/o SDS Management, LLC
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
Telephone: 203-967-5850
Facsimile: 203-967-5851
Email: Steve@sdscapital.com /scott@sdscapital.com
Amount of Investment: $500,000