Attached files
| file | filename |
|---|---|
| 10-K - SEELOS THERAPEUTICS, INC. | v178249_10k.htm |
| EX-21 - SEELOS THERAPEUTICS, INC. | v178249_ex21.htm |
| EX-3.7 - SEELOS THERAPEUTICS, INC. | v178249_ex3-7.htm |
| EX-3.6 - SEELOS THERAPEUTICS, INC. | v178249_ex3-6.htm |
| EX-32.2 - SEELOS THERAPEUTICS, INC. | v178249_ex32-2.htm |
| EX-23.1 - SEELOS THERAPEUTICS, INC. | v178249_ex23-1.htm |
| EX-32.1 - SEELOS THERAPEUTICS, INC. | v178249_ex32-1.htm |
| EX-31.1 - SEELOS THERAPEUTICS, INC. | v178249_ex31-1.htm |
| EX-31.2 - SEELOS THERAPEUTICS, INC. | v178249_ex31-2.htm |
| EX-10.48 - SEELOS THERAPEUTICS, INC. | v178249_ex10-48.htm |
| EX-10.43 - SEELOS THERAPEUTICS, INC. | v178249_ex10-43.htm |
| EX-10.46 - SEELOS THERAPEUTICS, INC. | v178249_ex10-46.htm |
| EX-10.42 - SEELOS THERAPEUTICS, INC. | v178249_ex10-42.htm |
| EX-10.47 - SEELOS THERAPEUTICS, INC. | v178249_ex10-47.htm |
| EX-10.45 - SEELOS THERAPEUTICS, INC. | v178249_ex10-45.htm |
EXHIBIT
10.44
PURCHASE
AGREEMENT
THIS
PURCHASE AGREEMENT (“Agreement”) is made as of the 15th day of
March, 2010 by and among NEXMED, INC., a Nevada corporation (the “Company”), and
the Purchasers set forth on the signature page affixed hereto (each a
“Purchaser” and collectively the “Purchasers”).
Recitals
A. The
Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) under the Securities Act of 1933, as amended; and
B. The
Purchasers wish to purchase, and the Company wishes to sell and issue to the
Purchasers, upon the terms and subject to the conditions stated in this
Agreement an aggregate of $4,000,000.00 in principal amount of the Company’s 7%
Convertible Notes due December 31, 2012 in the form attached hereto as Exhibit A (the “Notes”), which
Notes may be converted into shares of common stock of the Company, $0.001 par
value per share (the “Common Stock”), in accordance with the terms of the Notes,
in such amounts as are set forth on the signature page attached hereto and
executed by each such Purchaser, for an aggregate purchase price of
$4,000,000.00.
C.
Contemporaneous with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement, in the form
attached hereto as Exhibit
B (the “Registration Rights Agreement”), pursuant to which the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder, and
applicable state securities laws; and
In
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings here set
forth:
1.1. “Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
controls, is controlled by, or is under common control with, such Person, where
“control” means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
1.2. “Agreements” means
this Agreement, the Registration Rights Agreement, the Subsidiary Guaranty, the
Mortgage and the Notes.
1.3. The
“Company” shall
refer to the Company (as defined in the first paragraph hereof) together with
its subsidiaries wherever applicable (including without limitation with respect
to all representations of the Company unless the context otherwise
requires).
1.4. “Closing” means the
consummation of the transactions contemplated by this Agreement, and “Closing
Date” means the date of such Closing.
1.5. “Convertible
Securities” means any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of Common
Stock.
1.6. “Material Adverse
Effect” means a material adverse effect on the (i) condition (financial
or otherwise), business, assets or results of operations of the Company; (ii)
ability of the Company to perform any of its material obligations under the
terms of the Agreements; or (iii) material rights and remedies of a Purchaser
under the terms of the Agreements.
1.7. “Mortgage” means the
Mortgage, Security Agreement and Assignment of Leases and Rents, in the form
attached hereto as Exhibit
C, executed by the Operating Subsidiary in favor of the Purchasers dated
on or about the date hereof, securing the Company’s obligations under the
Notes.
1.8. “Notes” shall have
meaning set forth in the recitals to this Agreement.
1.9. “Operating Subsidiary”
means NexMed (U.S.A.), Inc., a Delaware corporation which is wholly-owned by the
Company.
1.10. “Participation
Percentage” means the product of (a) 25% multiplied by (b) a fraction,
the numerator of which equals the then aggregate outstanding principal amount of
all Notes and the denominator of which equals the original aggregate principal
amount of all Notes.
1.11. “Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
1.12. “SEC” means the U.S.
Securities and Exchange Commission.
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1.13. “SEC Filings” means
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2008 and all other reports filed by the Company pursuant to the 1934 Act since
December 31, 2008.
1.14. “Securities” means the
Notes and Underlying Shares.
1.15. “Subsidiary
Guaranties” means the Subsidiary Guaranties, in the form attached hereto
as Exhibit D, executed
by each of the Operating Subsidiary and Bio-Quant Inc. in favor of the
Purchasers, guaranteeing the Company’s obligations under the Notes.
1.16. “Underlying Shares”
means the shares of Common Stock issued or issuable upon conversion of, as
payment for interest or accreted amounts under, or otherwise pursuant to, the
Notes.
1.17. “Variable Rate
Transaction” means a transaction in which the Company issues or sells, or
agrees to issue or sell, Common Stock or Convertible Securities in which the
applicable sale, conversion, exercise or exchange price or rate may directly or
indirectly effectively be reduced, reset or repriced based upon future events or
occurrences, future trading prices or quotations, or future issuances of Common
Stock or Convertible Securities (including such resets effected directly or
indirectly by the issuance of additional securities), including an “equity line”
transaction but excluding standard provisions for rights of first refusal on
additional financings and standard anti-dilution provisions including
weighted-average anti-dilution provisions substantially similar to those set
forth in the Notes which are contained in Convertible Securities.
1.18. “1933 Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
1.19. “1934 Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
1.20. “2008 Notes” means the
Company’s 7% Convertible Notes due December 31, 2011 issued to the Purchasers on
June 30, 2008.
1.21. “2009 Notes” means the
Company’s 7% Convertible Notes due December 31, 2011 issued to the Purchasers on
or about November 10, 2009.
2. Purchase and Sale of the
Notes. Subject to the terms and conditions of this Agreement
and on the basis of the representations and warranties made herein, each of the
Purchasers hereby severally, and not jointly, agrees to purchase, and the
Company hereby agrees to sell and issue to each of the Purchasers, the principal
amount of Notes set forth on such Purchaser’s signature page attached hereto and
as indicated on the Schedule of Investors attached hereto. Each
Purchaser’s aggregate purchase price (the “Purchase Price”) for
the Notes to be purchased hereunder is set forth on such Purchaser’s signature
page attached hereto and on such Schedule of Investors.
3
3. Closing.
3.1. Closing
Procedure. The Company shall promptly deliver to Purchasers’
counsel, Peter J. Weisman, P.C., in trust, Notes registered in the names of the
Purchasers as indicated on the signature pages to this Agreement, representing
all of the Notes, with instructions that such Notes are to be held in escrow for
release to the Purchasers only upon payment of the Purchase Price to the Company
and confirmation of receipt by the Company or its counsel. Upon
receipt by counsel to the Purchasers of the Notes and the execution and/or
delivery of such other documents contemplated hereby to be executed and/or
delivered on or prior to the Closing, each Purchaser shall promptly cause a wire
transfer in same day funds to be sent to the account of the Company as
instructed in writing by the Company, in an amount representing the Purchase
Price, provided that the Purchasers may deliver all or a portion of such
Purchase Price equal to the outstanding amount under the 2008 Notes and 2009
Notes by surrendering such Notes to the Company. On the date the
Company receives such funds and 2008 Notes and 2009 Notes, the Notes shall be
released to the Purchasers (and such date shall be deemed the “Closing
Date”).
3.2. Closing Date
Deliveries.
(a) On
the Closing Date, the Company shall deliver to the Purchasers:
(i) Notes
in the form attached as Exhibit A;
(ii) The
executed Registration Rights Agreement in the form attached as Exhibit
B;
(iii) The
Subsidiary Guaranty in the form attached as Exhibit D and the Mortgage in the
form attached as Exhibit C, in each case executed and acknowledged by the
Operating Subsidiary, and the Subsidiary Guaranty executed by Bio-Quant,
Inc.;
(iv) A
Subordination, Non-Disturbance and Attornment Agreement, in the form attached as
Exhibit E, executed and delivered by the Operating Subsidiary and the tenant
under that certain lease dated as of December 16, 2009 pursuant to which the
Premises (as defined in the Mortgage) were leased to such tenant (“SNDA”);
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(v) The
opinion(s) of counsel referred to in Section 7.5 below;
(vi) An
officer’s certificate in form and substance reasonably satisfactory to the
Purchasers and the Purchasers’ counsel, executed by an officer of the Company
and the Operating Subsidiary, certifying as to satisfaction of applicable
closing conditions, incumbency of signing officers, the true, correct and
complete nature of the Certificate of Incorporation and By-laws, good standing
and authorizing resolutions, in each case of the Company and the Operating
Subsidiary; and
(vii) Cash
for all accrued but unpaid interest on the 2008 Notes and 2009 Notes through the
Closing Date, which amount may be deducted by the Purchasers from the cash
amount payable pursuant to subsection (b)(i) below; and
(viii) A
stamped copy of the amendment to the Company’s Articles of Incorporation to
effect an increase of the number of authorized shares of Common Stock to at
least 200 million shares.
(b) On
the Closing Date, the Purchasers shall deliver to the Company:
(i) The
Purchase Price set forth on the Purchasers’ signature page hereto, which shall
consist of the surrender of the 2008 Notes and 2009 Notes and the additional
cash (if any), all as designated on the Schedule of Investors attached hereto;
and
(ii) The
executed Registration Rights Agreement.
(iii) A
copy of the SNDA executed by the collateral agent under the Mortgage on behalf
of the Purchasers.
(c) Effective
as of the Closing, the Company shall repay to Solomon Strategic Holdings, Inc.
the remaining outstanding balance under the 2008 Notes and 2009 Notes held by
such Purchaser and surrendered at Closing as indicated on the Schedule of
Investors, which payment shall be made within three (3) business days following
the Closing Date (the failure of which shall constitute an Event of Default
under the Notes).
5
4. Representations and
Warranties of the Company. The Company hereby represents and
warrants to the Purchasers that:
4.1. Organization, Good Standing
and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and own its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
licensing necessary unless the failure to so qualify would not be reasonably
likely to result in a Material Adverse Effect. All of the Company’s
subsidiaries are listed by name and jurisdiction on Schedule 4.1 attached
hereto. All subsidiaries are wholly-owned by the
Company. The Operating Subsidiary is a wholly-owned subsidiary of the
Company and owns all the Mortgaged Property (as defined in the
Mortgage).
4.2. Authorization. The
Company has full power and authority and has taken all requisite action on the
part of the Company, its officers, directors and stockholders necessary for (i)
the authorization, execution and delivery of the Agreements, (ii) authorization
of the performance of all obligations of the Company hereunder and thereunder,
and (iii) the authorization, issuance (or reservation for issuance) and delivery
of the Securities. The Agreements constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally and except to the extent
the indemnification provisions contained in the Registration Rights Agreement
may be limited by applicable federal or state securities laws.
4.3. Capitalization. Set
forth on Schedule
4.3 hereto is (a) the authorized capital stock of the Company on the date
hereof; (b) the number of shares of capital stock issued and outstanding on the
date hereof; (c) the number of shares of capital stock issuable pursuant to the
Company’s stock plans; and (d) the number of shares of capital stock issuable
and reserved for issuance pursuant to securities (other than the Notes)
exercisable for, or convertible into or exchangeable for any shares of capital
stock. All of the issued and outstanding shares of the Company’s
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable, except to the extent that the failure of the foregoing to be
true and correct would not have a Material Adverse Effect. Except as
set forth on Schedule
4.3, no Person is entitled to preemptive or similar statutory or
contractual rights with respect to any securities of the
Company. Except as set forth on Schedule 4.3, there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or may be
obligated to issue any equity securities of any kind, and except as contemplated
by this Agreement or set forth on Schedule 4.3, the Company is not currently in
negotiations for the issuance of any equity securities of any
kind. Except as set forth on Schedule 4.3, the
Company has no knowledge of any voting agreements, buy-sell agreements, option
or right of first purchase agreements or other agreements of any kind among any
of the securityholders of the Company relating to the securities of the Company
held by them. Except as set forth on Schedule 4.3, the
Company has not granted any Person the right to require the Company to register
any securities of the Company under the 1933 Act, whether on a demand basis or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person.
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4.4. Valid
Issuance. As of the Closing, the Company has reserved a
sufficient number of shares of Common Stock for the issuance upon conversion of,
as payment for interest on or repayment of principal of, and otherwise pursuant
to, the Notes. The Notes are duly authorized, and the Underlying
Shares, when issued in accordance herewith and, in respect of the Underlying
Shares issued pursuant to the terms of the Notes, will be validly issued, fully
paid, non-assessable and free and clear of all encumbrances and restrictions,
except for restrictions on transfer imposed by applicable securities
laws. The number of shares to be reserved hereunder shall be
determined without regard to any restrictions on beneficial ownership or
issuance contained in the Agreements.
4.5. Consents. The
execution, delivery and performance by the Company of the Agreements and,
subject to the truth and accuracy of the representations made by the Purchasers
in Section 5 of this Agreement, the offer, issuance and sale of the Securities,
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official, other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws and the requirements of the Nasdaq
Stock Market, which the Company undertakes to file within the applicable time
periods. The Company has been orally advised by NASDAQ that the
transactions contemplated hereby, when integrated with the Company’s February
2010 offering of convertible promissory notes due August 4, 2010 (the “2010
Offering”), should not violate NASDAQ Marketplace Rules (subject to the NASDAQ’s
review of the final transaction documents for the transactions contemplated
hereby). The Company does not believe that the transactions
contemplated hereby will be integrated with any prior offering or issuance of
securities by the Company, including without limitation the offering and sale of
the 2008 Notes and 2009 Notes and the 2010 Offering, for purposes of the 1933
Act such that the Company would not be able to rely on the registration
exemption provided in Section 4(2) of the 1933 Act with respect to the
transactions contemplated hereby. Other than the 2010 Offering, the Company does
not believe that the transactions contemplated hereby will be integrated with
any prior offering or issuance of securities by the Company, including without
limitation the offering and sale of the 2008 Notes and 2009 Notes, for purposes
of the Nasdaq Stock Market rules and regulations (including those requiring
stockholder approval in certain circumstances) such that stockholder approval
would be required in connection with the transactions contemplated
hereby.
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4.6. Delivery of SEC Filings;
Business. The SEC Filings represent all filings required of
the Company pursuant to the 1934 Act since December 31, 2008. The SEC
Filings complied as to form in all material respects with the requirements of
the 1934 Act and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The Company is engaged only in the business described in
the SEC Filings, and the SEC Filings contain a complete and accurate description
of the business of the Company in all material respects. The Company
has not provided to any Purchaser (i) any information required to be filed under
the 1934 Act that has not been so filed or (ii) any material nonpublic
information.
4.7. Use of
Proceeds. The proceeds of the sale of the Securities hereunder
shall be used by the Company for working capital and general corporate
purposes.
4.8. No Material Adverse
Change. Since December 31, 2008, except as disclosed and
described in the SEC Filings, there has not been:
(i)
any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the Company’s Form 10-K for the fiscal year
ended December 31, 2008, except changes in the ordinary course of business which
have not had, in the aggregate, a Material Adverse Effect;
(ii)
any declaration or payment of any dividend, or any authorization or
payment of any distribution, on any of the capital stock of the Company, or any
redemption or repurchase of any securities of the Company;
(iii) any
material damage, destruction or loss, whether or not covered by insurance, to
any assets or properties of the Company or any of its subsidiaries;
(iv) any
waiver by the Company of a material right or of a material debt owed to
it;
(v) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and which
is not material to the assets, properties, financial condition, operating
results or business of the Company taken as a whole (as such business is
presently conducted and as it is proposed to be conducted);
8
(vi) any
material change or amendment to a material contract or arrangement by which the
Company or any of its assets or properties is bound or subject;
(vii) any
material labor difficulties or labor union organizing activities with respect to
employees of the Company;
(viii) any
transaction entered into by the Company other than in the ordinary course of
business; or
(ix) any
other event or condition of any character that may have a Material Adverse
Effect.
4.9. Registration Statements;
Material Contracts.
(a) During
the preceding two years, each registration statement and any amendment thereto
filed by the Company pursuant to the 1933 Act, as of the date such statement or
amendment became effective, complied as to form in all material respects with
the 1933 Act and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading; and each prospectus filed pursuant to Rule
424(b) under the 1933 Act, as of its issue date and as of the closing of any
sale of securities pursuant thereto did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Except
as set forth in the SEC Filings or on Schedule 4.3 hereto,
there are no agreements or instruments currently in force and effect that
constitute a warrant, option, convertible security or other right, agreement or
arrangement of any character under which the Company is or may be obligated to
issue any material amounts of any equity security of any kind, or to transfer
any material amounts of any equity security of any kind.
4.10. Form S-3
Eligibility. The Company is currently eligible to register the
resale of its Common Stock on a registration statement on Form S-3 under the
1933 Act, subject to offering size limitations that may be imposed by the
Commission under Rule 415 under the 1933 Act.
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4.11. No Conflict, Breach,
Violation or Default; Compliance with Law. The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company’s Articles of Incorporation (including any certificates of designation)
or the Company’s Bylaws, both as in effect on the date hereof (copies of which
have been provided to the Purchasers before the date hereof), or (ii) except
where it would not have a Material Adverse Effect, (A) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any of its properties, or (B)
any agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the properties of the Company is
subject. Except where it would not have a Material Adverse Effect and
except as set forth on Schedule 4.11, the
Company (i) is not in violation of any statute, rule or regulation applicable to
the Company or its assets, (ii) is not in violation of any judgment, order or
decree applicable to the Company or its assets, and (iii) is not in breach or
violation of any agreement, note or instrument to which it or its assets are a
party or are bound or subject. The Company has not received notice
from any Person of any claim or investigation that, if adversely determined,
would render the preceding sentence untrue or incomplete.
4.12. Tax
Matters. The Company has timely prepared and filed all tax
returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes owed by it, in each case taking
into account permitted extensions. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are
adequate in all material respects, and there are no material unpaid assessments
against the Company nor, to the knowledge of the Company, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except such as which
are not material. All material taxes and other assessments and levies
that the Company is required to withhold or to collect for payment have been
duly withheld and collected and paid to the proper governmental entity or third
party when due. There are no tax liens or claims pending or
threatened against the Company or any of its respective assets or
property. There are no outstanding tax sharing agreements or other
such arrangements between the Company and any other corporation or
entity.
4.13. Title to Properties and
Securities. Except as disclosed in the SEC Filings, the
Company has, or will at or prior to Closing have, good and marketable title to
all real properties and all other properties and assets owned by it, in each
case free from liens, encumbrances and defects (other than the Mortgage) that
would materially affect the value thereof or materially interfere with the use
made or currently planned to be made thereof by them; and except as disclosed in
the SEC Filings, the Company holds any leased real or personal property under
valid and enforceable leases with no exceptions that would materially interfere
with the use made or currently planned to be made thereof by
them. Except as disclosed in the SEC Filings, the Operating Subsidiary
owns all the Mortgaged Property (as defined in the Mortgage) free and clear of
all liens, claims, encumbrances and defects (other than the Mortgage) except
those that would not individually or in the aggregate materially affect the
value thereof or materially interfere with the use made or currently planned to
be made thereof. The Company (excluding its subsidiaries) does not
own any assets other than the securities of each of its wholly-owned
subsidiaries and does not engage in any operating activities other than acting
as a holding company of the securities of such subsidiaries. All of
the Company’s operating assets and properties (including without limitation all
Equipment, as defined in the Mortgage) are owned or leased by the Operating
Subsidiary and/or Bio-Quant Inc., a wholly-owned subsidiary of the Company,
except for the Company’s intellectual property rights which are entirely owned
by NexMed Holdings, Inc., a Delaware corporation (“Holdings”), which is
wholly-owned subsidiary of the Company, and except for assets located outside
the United States, which are entirely owned by NexMed International Limited, a
corporation which is organized under the laws of the British Virgin Islands and
which is wholly-owned subsidiary of the Company
(“International”). Holdings does not engage in any activities except
for holding the intellectual property rights of the Company, and International
and its two subsidiaries do not engage in any business or activities in the
United States.
10
4.14. Certificates, Authorities
and Permits. The Company possesses adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it and has not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse
Effect.
4.15. No Labor
Disputes. Except as disclosed in the SEC Filings, no material
labor dispute with the employees of the Company exists or, to the knowledge of
the Company, is imminent.
4.16. Intellectual
Property. The Company owns or possesses adequate rights or
licenses to the inventions, know-how, patents, patent rights, copyrights,
trademarks, trade names, licenses, approvals, governmental authorizations, trade
secrets confidential information and other intellectual property rights
(collectively, “Intellectual Property Rights”), free and clear of all liens,
security interests, charges, encumbrances, equities and other adverse claims,
necessary to conduct the business now operated by it, or presently employed by
it, and presently contemplated to be operated by it, and the Company has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property Rights except as disclosed in
the SEC Filings. Except as set forth on Schedule 4.16 hereto or as
disclosed in the SEC Filings, none of the Company's Intellectual Property Rights
have expired or terminated, or are expected to expire or terminate within three
years from the date of this Agreement, except where such expirations or
termination would not result, either individually or in the aggregate, in a
Material Adverse Effect. To the knowledge of the Company, the Company’s patents
and other Intellectual Property Rights and the present activities of the Company
do not infringe any patent, copyright, trademark, trade name or other
proprietary rights of any third party where such infringement may cause a
Material Adverse Effect on the Company, and there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company regarding its Intellectual Property Rights, and
the Company is unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company has no knowledge of the material
infringement of its Intellectual Property Rights by third parties and has no
reason to believe that any of its Intellectual Property Rights is unenforceable,
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company has taken commercially
reasonable security measures to protect the secrecy, confidentiality and value
of all of its intellectual properties.
11
4.17. Mortgage
Representations. All of the representations and warranties
contained in the Mortgage are true and correct as of the date
hereof.
4.18. Litigation. Except
as disclosed in the SEC Filings, there are no pending actions, suits or
proceedings against or affecting the Company or any of its properties that, if
determined adversely to the Company, would individually or in the aggregate have
a Material Adverse Effect or would materially and adversely affect the ability
of the Company to perform its obligations under the Agreements, or which are
otherwise material in the context of the sale of the Securities; and to the
Company’s knowledge, no such actions, suits or proceedings are threatened or
contemplated.
4.19. Financial
Statements. The financial statements included in each SEC
Filing present fairly and accurately in all material respects the consolidated
financial position of the Company as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis. Except as set forth in the
financial statements of the Company included in the SEC Filings filed prior to
the date hereof, the Company has no liabilities, contingent or otherwise, except
those which individually or in the aggregate are not material to the financial
condition or operating results of the Company.
4.20. Insurance
Coverage. The Company maintains in full force and effect
insurance coverage that the Company reasonably believes to be adequate against
all liabilities, claims and risks against which it is customary for comparably
situated companies to insure.
4.21. Compliance with Nasdaq
Continued Listing Requirements. Except as set forth in the SEC
Filings or on Schedule 4.21, the Company is, or will upon the Closing be, in
compliance with all applicable Nasdaq Capital Market continued listing
requirements. Except as set forth in the SEC Filings or on Schedule
4.21, there are no proceedings pending or to the Company’s knowledge threatened
against the Company relating to the continued listing of the Company’s Common
Stock on the Nasdaq Capital Market and the Company has not received any notice
of, nor to the knowledge of the Company is there any basis for, the delisting of
the Common Stock from the Nasdaq Capital Market.
12
4.22. Brokers and
Finders. Neither the Purchasers nor the Company shall have any
liability or responsibility for the payment of any commission or any finder,
agent, broker or consultant fee to any third party in connection with or
resulting from this agreement or the transactions contemplated by this Agreement
by reason of any agreement of or action taken by the Company, and the Company
shall not pay any such commission or fee.
4.23. No General
Solicitation. Neither the Company nor any Person acting on its
behalf has conducted any general solicitation or general advertising (as those
terms are used in Regulation D promulgated under the 1933 Act) in connection
with the offer or sale of any of the Securities.
4.24. No Integrated
Offering. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would adversely affect reliance by the Company on
Section 4(2) of the 1933 Act for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities
under the 1933 Act. The offer and sale of the Securities and the
transactions contemplated hereby does not require any stockholder approval by
the Company, including without limitation pursuant to the rules of the Nasdaq
Stock Market.
4.25. Disclosures. No
representation or warranty made by the Company under any section hereof and no
written information furnished by the Company to the Purchasers or any authorized
representative of the Purchasers, pursuant to the Agreements or in connection
therewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which the statements were made, not
misleading.
4.26 Share
Increase. On March 2, 2010, the Company’s shareholders
approved the increase of the number of authorized shares of Common Stock to at
least 200 million shares, and the Company has duly filed an amendment to its
Articles of Incorporation to effect such increase.
5. Representations and
Warranties of the Purchaser. Each of the Purchasers hereby
severally, and not jointly, represents and warrants to the Company as to itself
only that:
5.1. Organization and
Existence. The Purchaser is a validly existing corporation,
partnership or limited liability company and has all requisite corporate,
partnership or limited liability company power and authority to invest in the
Securities pursuant to this Agreement.
13
5.2. Authorization. The
execution, delivery and performance by the Purchaser of this Agreement and the
Registration Rights Agreement have been duly authorized and this Agreement and
the Registration Rights Agreement will each constitute the valid and legally
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.
5.3. Purchase Entirely for Own
Account. The Securities to be received by the Purchaser
hereunder will be acquired for the Purchaser’s own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of securities laws, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of securities laws. The Purchaser is not a registered
broker dealer or an entity engaged in the business of being a broker
dealer.
5.4. Investment
Experience. The Purchaser acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters and in private
placement transactions of companies similar to the Company so that it is capable
of evaluating the merits and risks of the purchase contemplated
hereby.
5.5. Disclosure of
Information. The Purchaser has had an opportunity to receive
documents related to the Company and to ask questions of and receive answers
from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities and has received and read the SEC
Filings filed via EDGAR at least five days prior to the date
hereof. Neither such inquiries nor any other due diligence
investigation conducted by the Purchaser shall modify, amend or affect the
Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or made pursuant to this Agreement.
5.6. Restricted
Securities. The Purchaser understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws, applicable state laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7. Legends.
(a)
It is understood that, until such time
as certificates evidencing the Underlying Shares are required to be issued
without legends pursuant paragraph (b) below, certificates evidencing the
Securities may bear one or all of the following legends or legends substantially
similar thereto:
(i)
“The shares represented by this certificate may not be transferred without
(i) the opinion of counsel reasonably satisfactory to the corporation that such
transfer may lawfully be made without registration under the Securities Act of
1933 or qualification under applicable state securities laws; or (ii) such
registration or qualification.”
14
(ii)
If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.
(b) Upon
registration for resale pursuant to the Registration Rights Agreement or upon
the first anniversary of the Closing Date (and the holder thereof confirming
that it is not an affiliate of the Company), the Company shall promptly cause
certificates evidencing the Underlying Shares previously issued to be replaced
with certificates (or cause to be issued original certificates if not previously
issued) which do not bear such restrictive legends, and all Underlying Shares
subsequently issued shall not bear such restrictive legends. In
addition, in the event of any sales of Underlying Shares by the holder thereof
pursuant to Rule 144(b)(1)(i) under the 1933 Act prior to the first anniversary
of the Closing Date, the Company shall promptly cause certificates evidencing
such Underlying Shares previously issued to be replaced with certificates (or
cause to be issued original certificates if not previously issued) which do not
bear such restrictive legends. In the event that the Company does not
issue new, unlegended certificates in replacement of the legended certificates
as required under this Section 5.7 within 10 business days of a written request
to do so, or if any subsequently issued Underlying Shares are issued with
restrictive legends when unlegended certificates are required under this Section
5.7, the Company shall be liable to the Purchaser (or subsequent holder thereof)
for damages in an amount of $500 cash for each such day beyond the replacement
date (or issuance date, in the case of newly converted Notes) that such
unlegended certificates are not issued and delivered to the Purchaser or
subsequent holder.
5.8. Accredited
Investor. The Purchaser is an “accredited investor” as defined
in Rule 501(a) of Regulation D, as amended, under the 1933 Act.
5.9. No General
Solicitation. The Purchaser did not learn of the investment in
the Securities as a result of any public advertising or general
solicitation.
6. Closing
Documents. The parties acknowledge and agree that part of the
inducement for the Purchasers to enter into this Agreement is the Company’s
execution and delivery of the Registration Rights Agreement and the execution
and delivery of the Subsidiary Guaranty and the Mortgage by the Operating
Subsidiary. The parties acknowledge and agree that on or prior to the
Closing, the Registration Rights Agreement, the Subsidiary Guaranty and the
Mortgage will be duly executed and delivered by the parties
thereto.
15
7. Covenants and Agreements of
the Company.
7.1. Rule
144. Until such time that the Purchasers no longer own any
Notes, the Company covenants to file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the 1934 Act even if the Company
is not then subject to the reporting requirements of the 1934 Act. As
long as any Purchaser owns Notes, if the Company is not required to file reports
pursuant to the 1934 Act, it will prepare and furnish to such Purchaser and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchaser to sell the Securities under Rule 144. The
Company further covenants that it will take such further action as any holder of
Notes may reasonably request, to the extent required from time to time to enable
such Person to sell the Underlying Shares without registration under the
Securities Act within the requirements of the exemption provided by Rule
144. So long as any Notes are outstanding, the Company shall cause
itself to be subject to the reporting requirements of Section 13 or 15(d) of the
1934 Act and file all reports required to be filed thereunder. The Company
agrees that, for purposes of determining the holding period under Rule 144 of
the 1933 Act for Underlying Shares issued upon conversion of the Notes, the
holding period of such Underlying Shares shall be tacked to the holding period
of the Notes.
7.2. Limitation on
Transactions.
(a)
So long as any of the Notes remain outstanding, without
the prior written consent of the holders of a majority-in-interest of the Notes
(which consent may be withheld in such holders’ discretion), the Company shall
not issue or sell or agree to issue or sell any securities in a Variable Rate
Transaction, provided,
however, that without such consent, the Company may issue or sell for
cash any securities in a Variable Rate Transaction so long as the total number
of shares of Common Stock issued and/or agreed to be issued in the aggregate for
all such transactions (determined as if all such securities as of their issuance
are deemed fully converted, exercised and exchanged into Common Stock without
regard to limitations or restrictions contained therein) represents less than
seven percent (7%) of the total number of the Company’s issued and outstanding
shares of Common Stock as of the closing date of any such
transaction.
(b)
So long as any Notes remain outstanding, the Company and the Operating
Subsidiary shall not directly or indirectly, create, incur, assume or permit or
suffer to exist any lien, mortgage, security interest or encumbrance (other than
statutory liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof) upon any of the Mortgaged Property (as defined in
the Mortgage) except for those created by the Mortgage and shall not directly or
indirectly sell, transfer or lease any of the Mortgaged Property, subject to
Section 7.2(c) below and except for any Lease (as defined in the Mortgage) which
may be entered into in compliance with the terms of the Mortgage.
16
(c)
Notwithstanding anything contained herein or the other
Agreements, the Company or the Operating Subsidiary may sell the Mortgaged
Property in its entirety, provided that (i) upon or
prior to such sale, the Company shall deposit into escrow for the benefit of the
Purchasers an amount of cash equal to (x) the aggregate then outstanding
principal amount of all Notes, plus (y) all Accreted Amounts (as defined in the
Notes) accrued to date thereon, plus (z) all Accreted Amounts scheduled to
accrue under the Notes from such date through the Maturity Date (as defined in
the Notes) (“Escrow
Funds”), which Escrow Funds shall secure all obligations under the Notes,
and (ii) thereafter the Purchasers may at any time and from time to time demand
immediate repayment of all or part of the amounts (including principal and
Accreted Amounts) then outstanding and accrued under the Notes, which repayment
shall be made from the Escrow Funds. In the event that the Company
shall be required to deposit Escrow Funds in escrow pursuant to this Section
7.2(c), an independent escrow agent (the “Escrow Agent”)
mutually acceptable to the Company and the Purchasers shall be appointed to hold
such Escrow Funds in escrow pursuant to an escrow agreement on terms mutually
acceptable to the Company and the Purchasers (the “Escrow
Agreement”). The Escrow Agreement shall provide that each
Purchaser may make any demand of repayment as contemplated in clause 7.2(c)(ii)
above directly to the Escrow Agent, whereupon such repayment shall be made to
such Purchaser from such Escrow Funds. Upon deposit of the Escrow
Funds into escrow, the Company shall, and shall cause the Operating Subsidiary
to, execute and deliver in favor of the Purchasers a control agreement in form
and substance reasonably acceptable to the Purchasers and such other agreements
and documents to ensure that (1) the Purchasers have a first priority security
interest in and lien on such Escrow Funds, (2) to the extent possible
such Escrow Funds may not be released except as set forth in such Escrow
Agreement, and (3) to the extent possible such Escrow Funds will not be subject
to any claims by any of the Company’s or Operating Subsidiary’s
creditors. The deposit of the Escrow Funds into escrow and the
creation of a security interest therein in accordance with the terms of this
Section 7.2(c) shall be a condition precedent to any sale of the Mortgaged
Property and neither the Company nor the Operating Subsidiary shall effectuate
any such sale unless and until such condition has been satisfied. To
the extent any principal amount of Notes and/or Accreted Amounts is converted
into shares of Common Stock pursuant to the terms of the Notes, an amount of
cash equal to such principal amount and/or Accreted Amounts may be released to
the Company. For clarification purposes (1) following any such sale of the
Mortgaged Property the Notes shall remain outstanding and in full force and
effect in accordance with the terms set forth therein, except for the Purchasers
right to repayment upon demand as set forth above, (2) the Company (and the
Operating Subsidiary pursuant to the Subsidiary Guaranty) shall remain liable
under the Notes in accordance with the terms thereof notwithstanding the escrow
contemplated hereby, and (3) Escrow Funds remaining in escrow after no Notes
remain outstanding shall be returned to the Company.
17
7.3. Right of the Purchasers to
Participate in Future Transactions. So long as any Notes
remain outstanding, the Purchasers will have a right to participate in any sales
of any of the Company’s securities in a capital raising transaction on the terms
and conditions set forth in this Section 7.3, provided that this Section
7.3 shall not apply with respect to any capital raising transaction with an
effective Per Share Selling Price per share of Common Stock in excess of $1.00
occurring after March 31, 2010 (the securities issued in such transaction being
the “New Securities”). Within five (5) business days following each
closing of any non-public offer or sale of any of the Company's equity
securities or any securities convertible into or exchangeable or exercisable for
such securities in a capital raising transaction, the Company shall give written
notice to the Purchasers of such transaction together with a comprehensive term
sheet containing all significant business terms of such transaction and all
transaction documents in connection with such transaction. The
Purchasers shall have the right (pro rata in accordance with the Purchasers’
participation in this offering), exercisable at any time within the 15-day
period following the Purchasers’ receipt of such notice and
documents, to participate in such transaction by purchasing in such transaction
an amount of the identical securities issued in such transaction equal to up to
the Participation Percentage of the aggregate amount of such securities issued
to the Purchasers and such other investors together for the same consideration
and on the same terms and conditions as such third-party sale. If,
subsequent to the Company giving notice to a Purchaser hereunder but prior to
the Purchaser exercising its rights hereunder, the terms and conditions of the
third-party sale are substantively changed from that disclosed in the
comprehensive term sheet provided to such Purchaser, the Company shall be
required to provide a new notice to the Purchaser hereunder and the Purchasers
shall have the right to exercise their rights to purchase the identical
securities in such transaction on such changed terms and conditions as provided
hereunder. The rights and obligations of this Section 7.3 shall in no
way diminish the other rights of the Purchaser pursuant to this Section
7. Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by any Purchaser pursuant
to any capital raising transaction as described in this Section 7.3 shall not
exceed a number that, when added to the total number of shares of Common Stock
deemed beneficially owned by such Purchaser (other than by virtue of the
ownership of securities or rights to acquire securities that have limitations on
the Purchaser’s right to convert, exercise or purchase similar to the limitation
set forth herein), together with all shares of Common Stock deemed beneficially
owned by the Purchaser’s “affiliates” (as defined in Rule 144 of the 1933 Act)
that would be aggregated for purposes of determining whether a group under
Section 13(d) of the 1934 Act, exists, would exceed 9.9% of the total issued and
outstanding shares of the Common Stock.
18
7.4. No
Integration. Neither the Company nor any of its Affiliates,
nor any Person acting on its or their behalf, shall directly or indirectly make
any offers or sales of any securities or solicit any offers to buy any
securities under circumstances that would cause the loss of the 4(2) exemption
under the Securities Act for the transactions contemplated
hereby. Subject to any consent or approval rights of the Purchasers
hereunder, in the event the Company contemplates an offering of its equity or
debt securities within six months following the Closing Date, the Company agrees
that it shall notify the Purchasers of such offering (without providing any
material non-public information to any Purchaser without its prior approval),
and upon the reasonable request of Purchasers purchasing at least 75% in
principal amount of the Notes hereunder, the Company shall first disclose the
terms and conditions and other relevant facts of such proposed transaction to
Nasdaq and obtain from Nasdaq its verbal advice (subject to the its review of
the executed transaction documents for such transaction) that such
transaction should not be integrated with the offering which is the subject of
this Agreement for purposes of the Nasdaq rules requiring shareholder approval
of the issuance of 20% or more of an issuer’s outstanding common
stock. In the event the Company fails to obtain such advice, then the
Company shall not issue or sell any such securities without the prior written
consent of Purchasers purchasing at least 75% in principal amount of the Notes
hereunder, provided that the Company may sell or issue securities without such
consent if (i) it obtains prior shareholder approval for such sale or issuance
in compliance with the Nasdaq Stock Market Manual rules, (ii) such sale or
issuance is to a pharmaceutical company or contract medical research
organization in connection with a strategic transaction and not primarily as a
capital raising transaction, so long as the Company has not affirmatively been
notified (orally or in writing) by the staff of the Nasdaq Stock Market that it
is reasonably likely to treat such sale or issuance as being integrated with the
transactions contemplated under this Agreement, or (iii) none of the Notes are
then outstanding, so long as the Company has not affirmatively been notified
(orally or in writing) by the staff of the Nasdaq Stock Market 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 staff of the Nasdaq Stock Market, then the Company
shall as soon as possible seek the approval of its stockholders and take such
other action to authorize the issuance of the full number of Underlying Shares
and the full amount of securities issued and/or to be issued in such other
transaction.
7.5. Opinions of
Counsel. On or prior to the Closing Date, the Company will
deliver to the Purchasers the opinions of legal counsel to the Company
substantially in the form and substance reasonably acceptable to the
Purchasers.
19
7.6. Reservation of Common Stock
issuable upon Conversion of Notes. The Company hereby agrees
at all times to reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of providing for the full
conversion of Notes (including payment and repayment of interest and principal
thereon), such number of shares of Common Stock as shall from time to time equal
the number of shares sufficient to permit the full conversion of Notes
(including payment and repayment of interest, accreted amounts and principal
thereon) in accordance with the terms of the Notes. All calculations
pursuant to this paragraph shall be made without regard to restrictions on
beneficial ownership.
7.7. Reports. For
so long as the Purchasers beneficially own the Notes, the Company will furnish
to the Purchasers the following reports, each of which shall be provided to the
Purchasers by air mail or reputable international courier (within one week of
filing with the SEC, in the case of SEC filings), to the extent not filed on and
available at that time via EDGAR:
(a)
Quarterly
Reports. As soon as available and in any event within 45 days
after the end of each fiscal quarter of the Company, the Company’s quarterly
report on Form 10-Q or, in the absence of such report, consolidated balance
sheets of the Company as at the end of such period and the related consolidated
statements of operations, stockholders’ equity and cash flows for such period
and for the portion of the Company’s fiscal year ended on the last day of such
quarter, all in reasonable detail and certified by the Company to have been
prepared in accordance with generally accepted accounting principles, subject to
year-end and audit adjustments.
(b) Annual
Reports. As soon as available and in any event within 90 days
after the end of each fiscal year of the Company, the Company’s Form 10-K or, in
the absence of a Form 10-K, consolidated balance sheets of the Company as at the
end of such fiscal year and the related consolidated statements of earnings,
stockholders’ equity and cash flows for such year, all in reasonable detail and
accompanied by the report on such consolidated financial statements of an
independent certified public accountant selected by the Company and reasonably
satisfactory to the Purchaser.
(c)
Securities
Filings. As promptly as practicable and in any event within
five days after the same are issued or filed, copies of (i) all notices, proxy
statements, financial statements, reports and documents as the Company shall
send or make available generally to its stockholders or to financial analysts,
and (ii) all periodic and special reports, documents and registration statements
(other than on Form S-8) which the Company furnishes or files, or, to the extent
also delivered to the Company, any officer or director of the Company (in such
person’s capacity as such) furnishes or files with the SEC.
20
(d)
Other
Information. Such other information relating to the Company as
from time to time may reasonably be requested by any Purchaser provided the
Company produces such information in its ordinary course of business, and
further provided that the Company, solely in its own discretion, determines that
such information is not confidential in nature and disclosure to the Purchaser
would not be harmful to the Company or violate any rules or regulations of the
SEC or the Nasdaq Stock Market.
7.8. Press
Releases. Any press release or other publicity concerning this
Agreement or the transactions contemplated by this Agreement shall be submitted
to the Purchasers for comment at least two (2) business days prior to issuance,
unless the release is required to be issued within a shorter period of time by
law or pursuant to the rules of the NASDAQ Stock Market or a national securities
exchange. The Company shall issue a press release concerning the fact and
material terms of this Agreement within one business day of the
Closing.
7.9. No Conflicting
Agreements. The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the obligations to the Purchasers under the
Agreements.
7.10. Insurance. For
so long as any Purchaser beneficially owns any of the Securities, the Company
shall have in full force and effect (a) insurance reasonably believed by the
Company to be adequate on all assets and activities, covering property damage
and loss of income by fire or other casualty, and (b) insurance reasonably
believed to be adequate protection against all liabilities, claims and risks
against which it is customary for companies similarly situated as the Company to
insure.
7.11. Compliance with
Laws. So long as the Purchasers beneficially own any
Securities, the Company will use reasonable efforts to comply with all
applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance (in one instance or in the
aggregate) would not have a Material Adverse Effect.
7.12. Listing of Underlying Shares
and Related Matters. The Company hereby agrees, promptly
following the Closing of the transactions contemplated by this Agreement, to
take such action to cause the Underlying Shares to be listed on the Nasdaq
Capital Market as promptly as possible following the Closing but no later than
the effective date of the registration contemplated by the Registration Rights
Agreement. The Company further agrees that if the Company applies to
have its Common Stock or other securities traded on any other principal stock
exchange or market, it will include in such application the Underlying Shares
and will take such other action as is necessary to cause such Common Stock to be
so listed. For so long as any Notes remain outstanding, the Company
will take all action necessary to continue the listing and trading of its Common
Stock on the Nasdaq Stock Market, the New York Stock Exchange or the NYSE Amex
(collectively, “Approved Markets”),
and the Company will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of such exchange or market, as
applicable, to ensure the continued eligibility for trading of the Underlying
Shares thereon.
21
7.13. Corporate
Existence. So long as any Notes remain outstanding, the
Company shall maintain its corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the Company’s assets, as
long as the surviving or successor entity in such transaction (a) assumes the
Company’s obligations hereunder and under the agreements and instruments entered
into in connection herewith, regardless of whether or not the Company would have
had a sufficient number of shares of Common Stock authorized and available for
issuance in order to fulfill its obligations hereunder and effect the conversion
(including payment on) in full of all Notes outstanding as of the date of such
transaction; (b) has no legal, contractual or other restrictions on its ability
to perform the obligations of the Company hereunder and under the agreements and
instruments entered into in connection herewith; and (c)(i) is a publicly traded
corporation whose common stock and the shares of capital stock issuable upon
conversion of the Notes are (or would be upon issuance thereof) listed for
trading on an Approved Market or (ii) if not such a publicly traded corporation,
then the buyer agrees that it will, at the election of the Purchasers, purchase
such Purchasers’ Securities at a price equal to the greater of (a) 110% of
the Purchase Price of such Securities or (b) the fair market value of such
Securities on an as-converted basis based on the closing price immediately
preceding such transaction or the redemption date, whichever is
greater.
7.14. [Intentionally
Omitted.]
7.15. Overall Limit on Common
Stock Issuable. Notwithstanding anything herein or in the
Notes to the contrary, the Company may not issue, upon conversion of the Notes,
more than 14,524,000 shares of Common Stock (the “Issuable Maximum”) in the
aggregate (such figure to be appropriately and equitably adjusted for any stock
splits and similar events). Each Holder of Notes shall be entitled to
a portion of the Issuable Maximum equal to the quotient obtained by dividing (x)
the aggregate principal amount of the Notes issued and sold to such Holder by
(y) the aggregate principal amount of all Notes issued and sold by the
Company. If any Holder shall no longer hold any Notes, then such
Holder’s remaining portion of the Issuable Maximum, if any, shall be reallocated
pro-rata among the remaining Holders.
8. Survival. All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements as of the date hereof and shall survive the execution and delivery of
this Agreement and terminate upon expiration of the applicable statute of
limitations.
22
9. Miscellaneous.
9.1. Successors and
Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the other parties hereto which consent may
not be unreasonably withheld or delayed, except that without the prior written
consent of the Company, but after notice duly given, a Purchaser may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to any Person to which such Purchaser has transferred or assigned all or part of
its Notes in accordance with the terms of the Notes, provided in each case that
such Affiliate, transferee or assignee acknowledges in writing to the Company
that the representations and warranties contained in Section 5 hereof shall
apply to such Affiliate, transferee or assignee. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement.
9.2. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may be executed by facsimile.
9.3. Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.4. Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given only by delivery to
each party to be notified by (i) personal delivery, (ii) facsimile, provided it
is sent with electronic confirmation of complete transmittal, or (iii) an
internationally recognized overnight air courier, addressed to the party to be
notified at the address as follows, or at such other address as such party may
designate by ten days’ advance written notice to the other party:
If to the
Company:
NexMed,
Inc.
6330
Nancy Ridge Drive
San
Diego, CA 92121
Fax: (858)
866-0482
Attention: Chief
Financial Officer
23
With a
copy to:
Goodwin
Procter LLP
Three
Embarcadero Center, 24th Floor
San
Francisco CA 94111
Fax: 415.677.9041
Attention: Ryan
A. Murr, Esq.
If to the
Purchasers, to the addresses set forth on the
signature
pages hereto, with a copy to:
Peter J.
Weisman, P.C.
767 Third
Avenue, 6th Floor
New York,
NY 10017
Telephone: 212-676-5667
Facsimile: 212-676-5665
Email: pweisman@pweisman.com
Any
notice or other communication or deliveries hereunder shall be deemed delivered
(i) upon receipt, if delivered personally, (ii) if sent by facsimile, upon
receipt if received on a Business Day prior to 5:00 p.m. (Eastern Time), or on
the first Business Day following such receipt if received on a Business Day
after 5:00 p.m. (Eastern Time) or (iii) two (2) Business Days following deposit
with an internationally recognized overnight courier service.
9.5. Expenses.
(a) The
parties hereto shall pay their own costs and expenses in connection herewith,
except that the Company shall pay to Tail Wind Advisory and Management Ltd.
(“TWAM”) a non-refundable sum equal to $10,000 as and for legal and due
diligence expenses incurred in connection herewith, which shall be paid upon
Closing.
(b) The
Company shall pay the costs of all title, UCC, judgment, lien and similar
searches in connection with the Mortgage, and shall pay all title insurance
premiums on the Mortgaged Property in connection with Purchasers’ title
insurance policy (updated through the Closing Date). The Company
shall also pay all costs and expenses hereafter incurred in amending,
implementing, perfecting, collecting, defending, declaring and enforcing and
otherwise relating to the Purchasers’ rights and security interests in the
Mortgaged Property hereunder or under the Notes or any other instrument or
agreement delivered in connection herewith or therewith, including, but not
limited to, searches and filings after the date hereof (provided that the
Company shall not be responsible for any costs and expenses incurred by the
Purchasers in connection with the negotiation, execution and delivery of the
Mortgage or any other Agreements, except as may be provided above or elsewhere
herein or therein). For clarification, the costs payable by the
Company pursuant to this Section 9.5(b) are in addition to the sum payable to
TWAM pursuant to Section 9.5(a) above.
24
9.6. Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and 75% in interest of the Purchasers, provided,
however, that any such amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all such
securities, and the Company.
9.7. Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
9.8. Entire
Agreement. This Agreement, including the Exhibits and
Schedules hereto, and the Registration Rights Agreement, the Notes, the Mortgage
and other documents contemplated hereby constitute the entire agreement among
the parties hereof with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and
thereof.
9.9. Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
9.10. Applicable
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
9.11. Remedies.
(a) The
Purchasers shall be entitled to specific performance of the Company’s
obligations under the Agreements.
(b) The
Company on the one hand, and each Purchaser severally and not jointly on the
other hand, shall indemnify the other and hold it harmless from any loss, cost,
expense or fees (including attorneys’ fees and expenses) arising out of any
breach of any representation, warranty, covenant or agreement in any of the
Agreements, or arising out of the enforcement of this Section 9.11.
25
9.12. Jurisdiction. The
parties hereby agree that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement or the other Agreements
shall be litigated only in the Supreme Court of the State of New York or the
United States District Court for the Southern District of New York located in
New York County, New York, except for actions or proceedings arising directly or
indirectly from or in connection with the Mortgage, which may be
litigated in the applicable court(s) in New Jersey. The parties
consent to the jurisdiction and venue of the foregoing courts and consent that
any process or notice of motion or other application to either of said courts or
a judge thereof may be served inside or outside the State of New York or the
Southern District of New York by registered mail, return receipt requested,
directed to the party being served at its address set forth in this Agreement
(and service so made shall be deemed complete three (3) days after the same has
been posted as aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The Company and the
Purchasers hereby waive any right to a jury trial in connection with any
litigation pursuant to this Agreement or the other Agreements.
9.13. Like Treatment of Purchasers
and Holders. Neither the Company nor any of its affiliates
shall, directly or indirectly, pay or cause to be paid any consideration
(immediate or contingent), whether by way of interest, fee, payment for the
redemption, conversion or exercise of the Securities, or otherwise, to any
Purchaser or holder of Securities, for or as an inducement to, or in connection
with the solicitation of, any consent, waiver or amendment of any terms or
provisions of the Agreements, unless such consideration is required to be paid
to all Purchasers or holders of Securities bound by such consent, waiver or
amendment. The Company shall not, directly or indirectly, redeem any
Securities unless such offer of redemption is made pro rata to all Purchasers or
holders of Securities, as the case may be, on identical terms. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
shall not in any way be construed as the Purchasers acting in concert or as a
group with respect to the purchase, disposition or voting of Securities or
otherwise.
9.14. Actions of
Purchasers. The obligations of each Purchaser hereunder and
under the documents contemplated hereby are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall in any way be
responsible for the performance of the obligations of any other Purchaser under
any such document. Nothing contained herein or in any other document
contemplated hereby, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute any of the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby or
thereby. Each Purchaser confirms that it has independently
participated in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Purchaser shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other
document contemplated hereby, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Notwithstanding anything herein to the contrary, the actions
and obligations of the Purchasers hereunder shall at all times be considered
several and not
joint, and the Purchasers are not, under any circumstances, agreeing to act
jointly with respect to the Securities or any of their actions or obligations
under the Agreements, and shall not constitute a “group” under the 1934
Act. Each Purchaser acknowledges that no other Purchaser has acted as
agent for such Purchaser in connection with making its investment hereunder and
that no other Purchaser will be acting as agent of such Purchaser in connection
with monitoring its investment hereunder. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Agreements, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. The Company has elected to
provide all Purchasers with the same terms and Agreements for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.
26
9.15. Collateral
Agent. The Purchasers hereby appoint (or confirm the continued
appointment of) The Tail Wind Fund Ltd. as “Collateral Agent” under the
Mortgage. The Collateral Agent may be removed, and a successor
Collateral Agent may be appointed, by a majority-in-interest of holders of the
Notes, and any Collateral Agent may resign from such position upon thirty days
prior notice to the Company (which shall constitute notice to the Operating
Subsidiary) and the holders of Notes. If a successor Collateral Agent
does not take such position within 30 days after the retiring Collateral Agent
resigns or is removed, the retiring Collateral Agent or a majority-in-interest
of the holders of the Notes may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent. The Collateral Agent
will act or refrain from acting based on the direction of a majority-in-interest
of holders of the Notes, and may take any action or refrain from taking any
action as provided in the Mortgage as it shall determine in its reasonable
judgment and discretion. With respect to any monies or property held
by, or expended by, the Collateral Agent on behalf of the holders of the Notes,
such amounts shall be allocated pro rata based on the principal amount of Notes
outstanding. The Collateral Agent shall be reimbursed by the holders
of Notes for all reasonable expenses incurred in connection with acting as
Collateral Agent under the Mortgage (provided that this shall in no way affect
any liability of the Operating Subsidiary or the Company under the
Mortgage). The Collateral Agent may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it
against any loss, liability or expense. No implied covenants or
obligations shall be read into this Agreement or the Mortgage against Collateral
Agent. Except for Collateral Agent's own willful misconduct, bad
faith or gross negligence, the Collateral Agent (i) may rely and/or act upon any
written instrument, document or request believed by the Collateral Agent in good
faith to be genuine and to be executed and delivered by the proper person(s),
and may assume in good faith the authenticity, validity and effectiveness
thereof and shall not be obligated to make any investigation or determination as
to the truth and accuracy of any information contained therein, and (ii) shall
not be responsible for the acts or omissions of the other parties hereto or
holders of Notes. In consideration of its acceptance of the
appointment as the Collateral Agent, each of the Purchasers (and any subsequent
holder of the Notes) jointly and severally agree to indemnify the Collateral
Agent against, and hold the Collateral Agent harmless from, all costs, damages,
expenses (including reasonable attorney's fees and disbursements) and
liabilities that the Collateral Agent may incur or sustain in connection with
serving as Collateral Agent under the Mortgage, unless such costs, damages,
expenses and liabilities are caused by the Collateral Agent's own willful
misconduct, bad faith or gross negligence.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
27
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.
|
The
Company:
|
NEXMED,
INC.
|
|
|
By:
|
/s/ Vivian Liu
|
|
|
Name:
|
Vivian
Liu
|
|
|
Title:
|
Executive
Vice
President
|
|
28
|
The Purchasers:
|
||
|
THE
TAIL WIND FUND LTD.
|
||
|
By:
|
TAIL
WIND ADVISORY AND
|
|
|
MANAGEMENT
LTD., as
|
||
|
investment
manager
|
||
|
By:
|
/s/ David Crook
|
|
|
Name:
|
David
Crook
|
|
|
Title:
|
CEO
|
|
Principal
Amount of Notes/ Aggregate Purchase
Price: $3,400,000
|
Resident:
|
BVI
|
|
Address
for Notices:
|
The
Tail Wind Fund Ltd.
|
|
c/o
Tail Wind Advisory and Management Ltd.
|
|
|
Attn: David
Crook
|
|
|
77
Long Acre
|
|
|
London
WC2E 9LB UK
|
|
|
Facsimile:
44-207- 420 3819
|
|
|
Email: dcrook@tailwindam.com
|
|
|
with
a copy to:
|
|
|
Peter
J. Weisman, P.C.
|
|
|
767
Third Avenue, 6th
Floor
|
|
|
New
York, NY 10017
|
|
|
Telephone: 212-676-5667
|
|
|
Facsimile:
212-676-5665
|
|
|
Email: pweisman@pweisman.com
|
29
|
SOLOMON
STRATEGIC HOLDINGS, INC.
|
||
|
By:
|
/s/ Andrew P. MacKellar
|
|
|
Name:
|
Andrew
P. MacKellar
|
|
|
Title:
|
Director
|
|
Principal
Amount of Notes/ Aggregate Purchase
Price: $300,000
|
Resident:
|
BVI
|
|
Address
for Notices:
|
Solomon
Strategic Holdings, Inc.
|
|
c/o
Andrew P. MacKellar (Director)
|
|
|
Greenlands
|
|
|
The
Red Gap
|
|
|
Castletown
|
|
|
IM9
1HB
|
|
|
British
Isles
|
|
|
Telephone: +011
(44) 1624 824171
|
|
|
Facsimile:
+011 (44) 1624 824191
|
|
|
with
a copy to:
|
|
|
Peter
J. Weisman, P.C.
|
|
|
767
Third Avenue, 6th
Floor
|
|
|
New
York, NY 10017
|
|
|
Telephone: 212-676-5667
|
|
|
Facsimile:
212-676-5665
|
|
|
Email: pweisman@pweisman.com
|
|
TAIL
WIND ADVISORY AND MANAGEMENT LTD.
|
|
|
By:
|
/s/ David Crook
|
|
Name:
|
David
Crook
|
|
Title:
|
CEO
|
Principal
Amount of Notes/ Aggregate Purchase
Price: $300,000
|
Resident:
|
UK
|
|
Address
for Notices:
|
Tail
Wind Advisory and Management Ltd.
|
|
Attn: David
Crook
|
|
|
77
Long Acre
|
|
|
London
WC2E 9LB UK
|
|
|
Facsimile:
44-207- 420 3819
|
|
|
Email: dcrook@tailwindam.com
|
|
|
with
a copy to:
|
|
|
Peter
J. Weisman, P.C.
|
|
|
767
Third Avenue, 6th
Floor
|
|
|
New
York, NY 10017
|
|
|
Telephone: 212-676-5667
|
|
|
Facsimile:
212-676-5665
|
|
|
Email: pweisman@pweisman.com
|
|
SCHEDULE
OF INVESTORS
|
||||||||||||||||||||||||
|
Purchase
|
||||
|
Price
|
||||
|
The
Tail Wind Fund Ltd.
|
$ | 3,400,000.00 | ||
|
Solomon
Strategic Holdings, Inc.
|
$ | 300,000.00 | ||
|
Tail
Wind Advisory & Management Ltd.
|
$ | 300,000.00 | ||
|
Total
|
$ | 4,000,000.00 | ||