INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered into
as of December 17, 2004 among NexMed, Inc., a Nevada corporation (the
"Company"), and each of the purchasers executing this Agreement and listed on
Schedule 1 attached hereto (collectively, the "Purchasers").
This Agreement is being entered into pursuant to the Common Stock and
Warrant Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New Jersey generally are authorized or required by law or other government
actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $0.001 per
share.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Event" shall have the meaning set forth in Section 8(e).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the twentieth (20th) day following the Closing Date.
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"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities, including without limitation the
Purchasers and their assignees.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Nasdaq" shall mean The Nasdaq Stock Market.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Registrable Securities" means (a) the Shares and the Warrant Shares
(without regard to any limitations on beneficial ownership contained in the
Warrants) or other securities issued or issuable to each Purchaser or its
transferee or designee (i) upon exercise of the Warrants, or (ii) upon any
distribution with respect to, any exchange for or any replacement of such Shares
or Warrants or (iii) upon any conversion, exercise or exchange of any securities
issued in connection with any such distribution, exchange or replacement; (b)
securities issued or issuable upon any stock split, stock dividend,
recapitalization or similar event with respect to the foregoing; and (c) any
other security issued as a dividend or other distribution with respect to, in
exchange for, in replacement or redemption of, or in reduction of the
liquidation value of, any of the securities referred to in the preceding
clauses; provided, however, that such securities shall cease to be Registrable
Securities when such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
when such securities may be sold without any restriction pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company's transfer agent to such effect as described in
Section 2 of this Agreement.
"Registration Statement" means the registration statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement.
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"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the warrants issued or to be issued to the Purchasers or their
assignees or designees in connection with the offering consummated under the
Purchase Agreement.
2. Registration. As soon as possible following the Closing Date (but not
later than the Filing Date), the Company shall prepare and file with the
Commission a "shelf" Registration Statement covering all Registrable Securities
for a secondary or resale offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (or if such form is
not available to the Company on another form appropriate for such registration
in accordance herewith). The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act not
later than sixty (60) days after the Closing Date (including filing with the
Commission a request for acceleration of effectiveness in accordance with Rule
461 promulgated under the Securities Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
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by the Commission that a Registration Statement will not be "reviewed," or not
be subject to further review) and to keep such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which all Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period"). Upon the initial filing thereof, the Registration Statement shall
cover at least 100% of the Shares and 110% of the shares of Common Stock for
issuance upon the exercise of the Warrants. Such Registration Statement also
shall cover, to the extent allowable under the Securities Act and the Rules
promulgated thereunder (including Securities Act Rule 416), such indeterminate
number of additional shares of Common Stock resulting from stock splits, stock
dividends or similar transactions with respect to the Registrable Securities.
3. Registration Procedures.
In connection with the Company's registration obligations hereunder, the
Company shall:
(a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form S-3 (or if such form is not available to the
Company on another form appropriate for such registration in accordance
herewith) (which shall include a Plan of Distribution substantially in the form
of Exhibit A attached hereto), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Special Counsel, and (ii) at
the request of any Holder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to such Holders, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or the Special Counsel shall reasonably object in writing
within three (3) Business Days after their receipt thereof, unless counsel to
the Company determines in writing that such objection is without merit.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and to the extent any
Registrable Securities are not included in such Registration Statement for
reasons other than the failure of the Holder to comply with Section 3(m) hereof,
shall prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; (iii) respond as promptly as
possible, and in no event later than 10 Business Days, to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
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(c) Notify the Holders of Registrable Securities to be sold and the
Special Counsel as promptly as possible (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed (but in no event in the case of this subparagraph (A), less than
three (3) Business Days prior to date of such filing); (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement; and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective (which notice shall
be delivered to the Lead Investor and Special Counsel on the same day as such
effectiveness), and after the effectiveness thereof: (i) of any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to the Registration Statement or Prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (iv) if the financial
statements included in the Registration Statement become ineligible for
inclusion therein or of the occurrence of any event that makes any statement
made in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Without limitation to any remedies to which the
Holders may be entitled under this Agreement, if any of the events described in
Sections 3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii) or 3(c)(C)(iv) occur, the Company
shall use its best efforts to respond to and correct the event.
(d) Use its best efforts to avoid the issuance of, or, if issued, use best
efforts to obtain the withdrawal of, (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by any Holder of Registrable Securities, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the written opinion of counsel for the Company (addressed to the
Special Counsel), violate applicable law.
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(f) Furnish to each Holder and the Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and all exhibits to the
extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to each Holder and the Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders and the
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement, which certificates shall be free, to the extent
permitted by applicable law and the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request at least two (2) Business
Days prior to any sale of Registrable Securities. In connection therewith, the
Company shall promptly after the effectiveness of the Registration Statement
(but no later than one day thereafter) cause an opinion of counsel to be
delivered to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,
which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the Holder of such shares of Registrable
Securities under the Registration Statement.
(j) Upon the occurrence of any event contemplated by Section 3(c)(C)(iv),
as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
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(k) Cause all Registrable Securities relating to such Registration
Statement to be listed on NASDAQ and any other United States securities
exchange, quotation system, market or over-the-counter bulletin board, if any,
on which similar securities issued by the Company are then listed.
(l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 3-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) Request each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is
required by law or the Commission to be disclosed in the Registration Statement
by sending to each selling Holder a Selling Shareholder Questionnaire, the form
of which is attached as Exhibit B, and the Company may exclude from such
registration the Registrable Securities of any such Holder who fails (i) to
furnish such information or (ii) to agree to furnish, upon request, such
additional information regarding such Holder as may later be required by law to
be disclosed, in each case, within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.
If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or
3(n), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
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(n) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably determines not
to be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose and which the Company would be required to disclose under
the Registration Statement, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 30
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period (each, a "Blackout Period").
4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with Nasdaq
and each other securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the Commission, and
(C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of Special Counsel in connection with Blue
Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance, (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including, in
the case of an underwritten offering, the expenses of any comfort letters or
costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters) and legal counsel, and (vi) fees and expenses
of the Special Counsel in connection with any Registration Statement hereunder.
In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
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5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained or incorporated by reference in
the Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or amendment or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to (x) such Holder and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus or in any amendment or supplement thereto
or (y) such Holder's proposed method of distribution of Registrable Securities
as set forth in Exhibit A (or as such Holder otherwise informs the Company in
writing); or (ii) in the case of an occurrence of an event of the type described
in Section 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder
of an outdated or defective Prospectus after the delivery to the Holder of
written notice from the Company that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 3(m).
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 5(c) to this Agreement) and shall
survive the transfer of the Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that (i) such untrue statement or omission is contained in
or omitted from any information so furnished in writing by such Holder to the
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Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus, or in any amendment or
supplement thereto, or to the extent that such information relates to (x) such
Holder and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus, or such form
of prospectus or in any amendment or supplement thereto or (y) such Holder's
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing) or (ii)
in the case of an occurrence of an event of the type described in Section
3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder of an
outdated or defective Prospectus after the delivery to the Holder of written
notice from the Company that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 3(m);
provided, however, that the indemnity agreement contained in this Section 5(b)
shall not apply to amounts paid in settlement of any Losses if such settlement
is effected without the prior written consent of the Holder, which consent shall
not be unreasonably withheld. Notwithstanding anything to the contrary contained
herein, the Holder shall be liable under this Section 5(b) for only that amount
as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel in writing (with a copy to the Indemnifying
Party) that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
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Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not impose any monetary
or other obligation or restriction on the Indemnified Party.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
required to contribute under this Section 5(d) for only that amount as does not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
11
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. The indemnity and contribution agreements herein are in
addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.
6. Rule 144.
As long as any Holder owns any Shares, Warrants or Warrant Shares, the
Company covenants to timely 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 Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns any Shares, Warrants or Warrant Shares, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Shares and Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including compliance with the provisions of the Purchase
Agreement relating to the transfer of the Shares and Warrant Shares. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
7. Covenants of Purchasers.
In connection with the Registration Statement, each of the Purchasers
covenants as follows:
(a) Unless and until such Purchaser has provided written notice to the
Company to the contrary, all sales of Registrable Securities by such Purchaser
shall be made without payment of underwriting discounts or commissions except
for the usual and customary commission paid to brokers or dealers.
(b) Such Purchaser shall advise the Company of any arrangement with a
broker or dealer for the sale of such Purchaser's Registrable Securities through
a block trade, special offering, exchange or secondary distribution or a
principal purchase by a broker or dealer, and the details of such transaction.
12
(c) Such Purchaser shall comply with all prospectus delivery requirements
with respect to sales of the Registrable Securities to the extent required by
the Securities Act and other applicable law.
(d) Such Purchaser shall report to the Company, upon written request of
the Company, whether all Registrable Securities held by such Purchaser have been
sold or otherwise transferred.
8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. Except as otherwise disclosed in the
Purchase Agreement, neither the Company nor any of its subsidiaries is a party
to an agreement currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.
(c) Notice of Effectiveness. Within two (2) Business Days after the
Registration Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that the Registration Statement has
been declared effective by the Commission in the form attached hereto as Exhibit
C. On the day that such Registration Statement is declared effective, the
Company shall furnish to the Investors for completion the investor
representation letter attached as Annex I to Exhibit C.
13
(d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering all of the Registrable Securities, the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or its then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within seven (7) Business Days after receipt of such
notice, any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Holder), the
Company will cause the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to
the extent required to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 8(d) for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 8(d) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the managing underwriter should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).
14
(e) Failure to File Registration Statement and Other Events. The Company
and the Holders agree that the Holders will suffer damages if the Registration
Statement is not filed on or prior to the thirty-fifth (35th) day following the
Closing Date and maintained in the manner contemplated herein during the
Effectiveness Period. The Company and the Holders further agree that it would
not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or prior to the
thirty-fifth (35th) day following the Closing Date, or (ii) the Company fails to
file with the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or not subject
to further review, or (iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded promptly by a subsequent
Registration Statement filed with the Commission, except as otherwise permitted
by this Agreement, including pursuant to Section 3(n), or (iv) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from Nasdaq
or any other securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed (each an "Exchange"), without immediately being listed on any other
Exchange, for any reason for more than one (1) Business Day, other than pursuant
to Section 3(n), or (v) the exercise rights of the Holders under the Warrants
are suspended for any reason without the consent of the particular Holder, or
(vi) the Company has breached Section 3(n) of this Agreement (any such failure
or breach being referred to as an "Event"), the Company shall pay in cash as
liquidated damages for such failure and not as a penalty to each Holder an
amount equal to two percent (2%) of such Holder's pro rata share of the purchase
price paid by all Holders for the Shares purchased and then outstanding pursuant
to the Purchase Agreement for the initial thirty (30) day period until the
applicable Event has been cured, which shall be pro rated for such periods less
than thirty (30) days and two percent (2%) of such Holder's pro rata share of
the purchase price paid by all Holders for Shares purchased and then outstanding
pursuant to the Purchase Agreement for each subsequent thirty (30) day period
until the applicable Event has been cured which shall be pro rated for such
periods less than thirty days (the "Periodic Amount"). Payments to be made
pursuant to this Section 8(e) shall be due and payable immediately upon demand
in immediately available cash funds. The parties agree that the Periodic Amount
represents a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of damages that may be incurred by the Holders if
the Registration Statement is not filed on or prior to the thirty-fifth (35th)
day following the Closing Date and maintained in the manner contemplated herein
during the Effectiveness Period or if any other Event as described herein has
occurred. Notwithstanding the foregoing, the Company shall remain obligated to
cure the breach or correct the condition that caused the Event, and the Holder
shall have the right to take any action necessary or desirable to enforce such
obligation.
(f) Specific Enforcement, Consent to Jurisdiction.
(i) The Company and the Holders acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
15
(ii) Each of the Company and the Holders (i) hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts
located in New York City, New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper.
Each of the Company and the Holders 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(f) shall affect or
limit any right to serve process in any other manner permitted by law.
(g) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of 75% of the Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(h) 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 earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) 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 date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service such as Federal Express
or (iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to each Holder at
its address set forth under its name on Schedule 1 attached hereto, or with
respect to the Company, addressed to:
NexMed, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
16
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 Company shall be sent to ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇, Esq.,
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇. Copies of notices to any Holder shall be sent to
the addresses, if any, listed on Schedule 1 attached hereto.
(i) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns and
shall inure to the benefit of each Holder and its successors and assigns;
provided, that the Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder; and
provided, further, that each Holder may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Shares, the Warrants or the Registrable Securities if: (i)
the Holder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment the further disposition of such
securities by the transferee or assignees is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section 8(j),
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions of this Agreement, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.
The Company may require, as a condition of allowing such assignment in
connection with a transfer of Shares, Warrants or Registrable Securities (i)
that the Holder or transferee of all or a portion of the Shares, the Warrants or
the Registrable Securities as the case may be, furnish to the Company a written
opinion of counsel that is reasonably acceptable to the Company to the effect
that such transfer may be made without registration under the Securities Act,
(ii) that the Holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an "accredited investor" as defined in Rule 501(a) promulgated
under the Securities Act.
17
(k) Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by electronic image or
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such electronic image or facsimile
signature were the original thereof.
(l) Governing 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 law thereof.
(m) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(n) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable in any respect, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(o) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
(p) Registrable Securities Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or successors or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(q) Obligations of Purchasers. The Company acknowledges that the
obligations of each Purchaser under this Agreement, 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 this Agreement. The decision of each Purchaser to enter into to
this Agreement has been made by such Purchaser independently of any other
Purchaser. The Company further acknowledges that nothing contained in this
Agreement, and no action taken by any Purchaser pursuant hereto, 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 hereby. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.
18
Each Purchaser acknowledges and agrees that it has been represented by its
own separate legal counsel in their review and negotiation of this Agreement and
with respect to the transactions contemplated hereby. For reasons of
administrative convenience only, this Agreement has been prepared by Special
Counsel (counsel for The Tail Wind Fund Ltd. ("TWF")) and the Special Counsel
will perform certain duties under this Agreement. Such counsel does not
represent all of the Purchasers but only TWF and Solomon Strategic Holdings,
Inc. The Company has elected to provide all Purchasers with the same terms and
Agreement for the convenience of the Company and not because it was required or
requested to do so by the Purchasers. The Company acknowledges that such
procedure with respect to this Agreement in no way creates a presumption that
the Purchasers are in any way acting in concert or as a group with respect to
this Agreement or the transactions contemplated hereby or thereby.
[signature page follows]
19
IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
COMPANY:
NEXMED, INC.
By: /s/ ▇. ▇▇▇▇▇▇ Mo
----------------
Name: ▇. ▇▇▇▇▇▇ Mo, Ph. D.
Title: President & C.E.O.
20
PURCHASER:
Print Exact Name: THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY & MANAGEMENT LTD., as investment manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
21
PURCHASER:
Print Exact Name: BRISTOL INVESTMENT FUND, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
22
PURCHASER:
Print Exact Name: XMARK OPPORTUNITY FUND, Ltd.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: C.O.O.
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
23
PURCHASER:
Print Exact Name: XMARK OPPORTUNITY FUND, Ltd.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: C.O.O.
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
24
PURCHASER:
Print Exact Name: XMARK FUND, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: C.O.O.
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
25
PURCHASER:
Print Exact Name: XMARK FUND, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: C.O.O.
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
26
PURCHASER:
Print Exact Name: ENABLE GROWTH PARTNERS
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
27
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Purchaser
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
28
PURCHASER:
---------
Print Exact Name: ▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title:
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
29
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
30
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Purchaser
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
31
PURCHASER:
---------
Print Exact Name: ▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Purchaser
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
32
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title:
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
33
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title:
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
34
PURCHASER:
Print Exact Name: CADUCEUS MASTER FUND LIMITED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Investment Advisor
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
35
PURCHASER:
Print Exact Name: CADUCEUS CAPITAL II, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
36
PURCHASER:
Print Exact Name: UBS EUCALYPTUS FUND, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: JU Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
37
PURCHASER:
Print Exact Name: PW EUCALYPTUS FUND, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: JU Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
38
PURCHASER:
Print Exact Name: HFR SHC AGGRESSIVE MASTER TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Investment Advisor
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
39
PURCHASER:
Print Exact Name: OMICRON MASTER TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
40
PURCHASER:
Print Exact Name: MIDSUMMER INVESTMENT LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
41
PURCHASER:
Print Exact Name: CLARION CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
42
PURCHASER:
Print Exact Name: CHULA PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
43
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
44
PURCHASER:
Print Exact Name: ▇▇▇ ▇▇▇▇▇▇ CREDIT SHELTER TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
45
PURCHASER:
Print Exact Name: ▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
46
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ REVOCABLE TRUST UA 3-28-95
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Trustee
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
47
PURCHASER:
Print Exact Name: PROMED PARTNERS, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
48
PURCHASER:
Print Exact Name: PROMED PARTNERS II, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
49
PURCHASER:
Print Exact Name: PROMED OFFSHORE FUND, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
50
PURCHASER:
Print Exact Name: PROMED OFFSHORE FUND II, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
51
PURCHASER:
Print Exact Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
52
PURCHASER:
Print Exact Name: ROSMOR LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
[Omnibus NexMed, Inc. Investor Rights Agreement Signature Page]
53
SCHEDULE 1
PURCHASERS
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other
successors-in-interest directly to purchasers or to or through underwriters,
broker-dealers or through agents. Sales may be made from time to time on the
Nasdaq National Market, any other exchange or market upon which our shares may
trade in the future, in the over-the-counter market or otherwise, at market
prices prevailing at the time of sale, at prices related to market prices, or at
negotiated or fixed prices. The shares may be sold by one or more of, or a
combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction (including crosses in which the
same broker acts as agent for both sides of the transaction);
- purchases by a broker-dealer as principal and resale by such
broker-dealer, including resales for its account, pursuant to this
prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in making short sales or in transactions to cover short sales; and
- put or call option transactions relating to the shares.
The selling security holders may effect these transactions by
selling shares directly to purchasers or to or through broker-dealers, which may
act as agents or principals. These broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling security
holders and/or the purchasers of shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
selling security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holders. The selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of shares offered by this prospectus to those
broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).
54
The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security holders
and each selling security holder has agreed, severally and not jointly, to
indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.
Selling security holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
- other facts material to the transactions.
55
In addition, if required under applicable law or the rules or regulations
of the Commission, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.
We are paying all expenses and fees in connection with the registration of
the shares. The selling security holders will bear all brokerage or underwriting
discounts or commissions paid to broker-dealers in connection with the sale of
the shares.
56
EXHIBIT B
NEXMED, INC.
Form of Selling Shareholder Questionnaire
This Questionnaire and Agreement is being furnished to all of the
individuals and entities who hold shares of the Company's Common Stock and
Warrants to purchase shares of the Company's Common Stock issued in connection
with the Common Stock and Warrant Purchase Agreement dated December 17, 2004
between the Company and the Purchasers listed on Schedule 1 thereto (such shares
of Common Stock and the shares of Common Stock issuable on the exercise of the
Warrants, collectively "the Shares"), that are to be registered for resale under
a registration statement on Form S-3 (the "Registration Statement") to be filed
with the Securities and Exchange Commission in connection with the public
offering of the Shares by the undersigned (the "Offering"). The Company will
rely on the information supplied by you in response to this Questionnaire and
Agreement to prepare such registration statement.
Please Print or Type.
1. Name of individual or entity:
--------------------------------------------------------------------------
2. Address of principal place of business or, if an individual, address of
residence
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
3. Jurisdiction of formation or incorporation (if the undersigned is an
entity):
--------------------------------------------------------------------------
4. Telephone and fax numbers:
--------------------------------------------------------------------------
5. Contact person:
--------------------------------------------------------------------------
SHARES PURCHASED IN DECEMBER ___, 2004 OFFERING
6. Number of Shares of Common Stock purchased by Purchaser in connection with
the December 17, 2004 Common Stock and Warrant Purchase Agreement:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
7. Number of Shares issuable upon the exercise of Warrants purchased in
connection with the December 17, 2004 Common Stock and Warrant Purchase
Agreement:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
57
8. Do you wish for all Shares listed in Questions 6 and 7 to be registered
for resale in the Registration Statement?
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Yes No
-------------- ---------------
SHARES HELD BY UNDERSIGNED OTHER THAN THOSE PURCHASED IN DECEMBER 2, 2004
OFFERING
9. Number of shares of Common Stock owned by the undersigned, other than
those shares purchased in connection with the December 17, 2004 Common
Stock and Warrant Purchase Agreement:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
10. Number of shares issuable upon the exercise of Warrants owned by the
undersigned, other than those Warrants purchased in connection with the
December 17, 2004 Common Stock and Warrant Purchase Agreement:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
11. Number of shares issuable upon conversion of the Company's 5% Convertible
Notes:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
12. Relationship of the undersigned or its affiliates with the Company or its
affiliates, other than as a holder of Shares (include any material
relationship within the past three years). If "none", so state:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
13. Are you a member, an affiliate of a member, or a person associated with a
member, of the National Association of Securities Dealers, Inc. (the
"NASD")?
Yes No
------------- ---------------
If the answer to Question 13 is "yes", state (a) the name of any such NASD
member, (b) the nature of your affiliation or association with such NASD
member, (c) information as to such NASD member's participation in any
capacity in the offering or the original placement of the Securities.
14. If you answered "yes" to Question 13 above, please fill out the following
table with respect to any purchases from the Company or any of its
affiliates in a private placement within twelve months prior to the date
hereof (excluding your purchase of the Shares).
Amount
and Name of Price or Other
Date of Purchase Seller Securities Consideration
---------------- ------ ---------- -------------
---------------- ------ ---------- -------------
---------------- ------ ---------- -------------
---------------- ------ ---------- -------------
58
15. Have you entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of the Shares?
Yes No
-------------- ---------------
The undersigned consents to the disclosure of the answers to the above in the
registration statement.
IN WITNESS WHEREOF, the undersigned executed this Questionnaire and Agreement on
this ___ day of ______, 2004.
______________________________________
______________________________________
(Signature)
______________________________________
______________________________________
(Print Name and Title, if applicable)
59
EXHIBIT C
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Date]
▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Shareowner Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Re: NexMed, Inc.
Ladies and Gentlemen:
We are counsel to NexMed, Inc. (the "Company") and have been requested to
furnish you with an opinion with respect to (a) the removal of the restrictive
legend from certificates representing shares of the Company's common stock,
$0.001 par value per share (the "Common Shares") currently held by the
individuals and/or entities who are listed, and in the amounts set forth, in
Column A on Schedule A attached hereto (individually, a "Holder" and
collectively, the "Holders") and (b) certain issuances of the Common Shares upon
exercise of the Company's warrants listed in Column B on Schedule A attached
hereto (the "Warrants") in each case held by the Holders and in the amounts set
forth in Column B on Schedule A.
Please be advised that the Common Shares referred to above have been registered
for resale by the Holders under the Securities Act of 1933 (the "1933 Act")
pursuant to a Registration Statement on Form S-3 (File No. 333-_______) filed
with the Securities and Exchange Commission ____________, and declared effective
on _____________ (the "Registration Statement").
For the purposes of rendering the opinions expressed herein, we have examined
and relied upon such documents as we have deemed relevant and necessary as the
basis for said opinions. In such examination we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such documents.
As to questions of fact material to the opinions expressed herein, we have
relied, without independent investigation or verification, upon the statements
of fact contained in the documents which we have examined. Based on the
foregoing, and with due regard to such legal considerations as we have deemed
relevant, we are of the opinion that for so long as the Company remains current
in its filings under the Securities Exchange Act of 1934 (the "1934 Act") and
the Registration Statement remains effective under the 1933 Act:
60
1. upon your receipt of (a) a legended certificate and/or certificates
representing a number of Common Shares set forth opposite a Holder's name
in Column A of Schedule A attached hereto, together with (b) a
representation from such Holder in the form of Annex I attached hereto
stating that it has sold or intends to resell such Common Shares solely in
accordance with the Registration Statement, certificates representing such
Common Shares may be issued to such Holder free of any restrictive legend;
and
2. upon your receipt of (a) written instructions from the Secretary of the
Company stating that any Warrants held by a Holder have been duly
exercised, and the number of Common Shares to be issued upon such
exercise, together with (b) a representation from such Holder identifying
the Warrants that it is exercising into Common Shares and stating that it
has current plans to resell such Common Shares in accordance with the
Registration Statement in the form of the representation contained in
Annex I (which representation may be contained in the Subscription Form
delivered upon exercise of such Warrants), certificates representing such
Common Shares, in an amount up to the number of unissued Common Shares set
forth opposite such Holder's name in Column B of Schedule A attached
hereto, may be issued to such Holder in accordance with the Company's
instructions, free of any restrictive legend.
This is to advise you that, to the extent a Holder does not furnish a
representation letter as set forth in paragraphs 1 or 2 above for any Common
Shares, then certificates for those Common Shares should be issued with a
restrictive legend.
This opinion letter being provided to you as of the date hereof in connection
with the issuance of certificates representing up to the number of Common Shares
set forth opposite the names of the Holders listed on Schedule A, is solely for
your benefit and may not be used, circulated, quoted or otherwise referred to or
relied upon by you for any other purpose, or by any other person for any
purpose, without our prior written consent.
Very truly yours.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ________________________________
A Partner
61
SCHEDULE A
----------
COLUMN A COLUMN B
-------- --------
COMMON SHARES
NAME OF COMMON SHARES ISSUABLE WITH
SELLING SHAREHOLDER CURRENTLY OWNED RESPECT TO WARRANTS
------------------- --------------- -------------------
A WARRANTS B WARRANTS
---------- ----------
------------------- --------------- ---------- ----------
------------------- --------------- ---------- ----------
------------------- --------------- ---------- ----------
------------------- --------------- ---------- ----------
------------------- --------------- ---------- ----------
------------------- --------------- ---------- ----------
62
ANNEX I
HOLDER REPRESENTATION
Dated: ___________
▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Shareowner Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Re: NexMed, Inc.
Dear ▇▇. ▇▇▇▇▇:
In connection with a private placement transaction ("Private Placement") which
was consummated on or about December 17, 2004, NexMed, Inc. ("Company") issued
to the undersigned ("Holder") shares of the Company's common stock, $0.001 par
value per share ("Common Shares"), and warrants ("Warrants") to purchase Common
Shares. Holder hereby represents to you that: (check below as appropriate)
|_| it has sold or has current plans to resell _____________ Common
Shares purchased by Holder in connection with the Private Placement,
solely in accordance with the terms of the Registration Statement
filed with the U.S. Securities and Exchange Commission by the
Company covering such Common Shares as described under the section
entitled "Plan of Distribution" therein; and/or
|_| it has exercised Warrant(s) No. ___, and in connection with such
exercise has purchased _____________ Common Shares, and it has sold
or has current plans to resell _____________ of such Common Shares,
solely in accordance with the terms of the Registration Statement
filed with the U.S. Securities and Exchange Commission by the
Company covering such Common Shares as described under the section
entitled "Plan of Distribution" therein.
Please contact _____________________ at (___) __________ if you require any
further representation, confirmation or information. Thank you.
Holder Name: __________________________
By: _______________________
Name:
Title:
62