7% CONVERTIBLE NOTE DUE DECEMBER 31, 2011 OF NEXMED, INC.
Exhibit
10.2
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS
NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL
REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION
OF
ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRETED AMOUNTS SET FORTH
BELOW.
7%
CONVERTIBLE NOTE DUE DECEMBER 31, 2011
OF
NEXMED,
INC.
This
Note
(“Note”)
is one
of a duly authorized issue of Notes of NEXMED,
INC.,
a
corporation duly organized and existing under the laws of the State of Nevada
(the
“Company”),
designated as the Company's 7% Convertible Notes Due December 31,
2011
(“Maturity
Date”)
in
an
aggregate principal amount (when taken together with the original principal
amounts of all other Notes) which does not exceed Five Million Seven Hundred
Fifty Thousand U.S. Dollars (U.S. $5,750,000) (the “Notes”).
For
Value
Received,
the
Company hereby promises to pay to the order of [HOLDER]
or
its
registered assigns or successors-in-interest (“Holder”)
the
principal sum of _____________________________ (U.S. $________), together with
all accrued but unpaid accretions thereto, if any, on the Maturity Date, to
the
extent such principal amount and accretion has not been repaid with or converted
into the Company's Common Stock, $0.001 par value per share (the “Common
Stock”),
in
accordance with the terms hereof. The unpaid principal balance hereof shall
automatically increase daily at the rate of 7% per annum from the date of
original issuance hereof (the “Issuance
Date”)
until
the same becomes due and payable on the Maturity Date, or such earlier date
upon
acceleration or by conversion or redemption in accordance with the terms hereof
or of the other Agreements. Such principal accretion under this Note shall
occur
daily commencing on the Issuance Date and shall be computed on the basis of
a
360-day year and shall be payable in accordance with Section 2 hereof.
Notwithstanding anything contained herein, this Note shall bear interest on
the
due and unpaid Principal Amount from and after the occurrence and during the
continuance of an Event of Default pursuant to Section 5(a), at the rate (the
“Default
Rate”)
equal
to the lower of twenty percent (20%) per annum or the highest rate permitted
by
law. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid default interest
and Accreted Amounts (as defined below), and fees and any remaining amount
to
principal.
All
payments of principal (including accreted principal) and default interest on
this Note which are not paid in shares of Common Stock as permitted or required
hereunder shall be made in lawful money of the United States of America by
wire
transfer of immediately available funds to such account as the Holder may from
time to time designate by written notice in accordance with the provisions
of
this Note or by Company check. This Note may not be prepaid in whole or in
part
except as otherwise provided herein or in the other Agreements. Whenever any
amount expressed to be due by the terms of this Note is due on any day which
is
not a Business Day (as defined below), the same shall instead be due on the
next
succeeding day which is a Business Day.
The
following terms and conditions shall apply to this Note:
Section
1. Definitions.
Capitalized
terms used herein and not otherwise defined shall have the meanings set forth
in
the Purchase Agreement dated on or about the Issuance Date pursuant to which
the
Notes were originally issued (the “Purchase
Agreement”).
For
purposes hereof the following terms shall have the meanings ascribed to them
below:
“Bankruptcy
Event”
means
any of the following events: (a) the Company or any subsidiary commences a
case
or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or
similar law of any jurisdiction relating to the Company or any subsidiary
thereof; (b) there is commenced against the Company or any subsidiary any such
case or proceeding that is not dismissed within 60 days after commencement;
(c)
the Company or any subsidiary is adjudicated insolvent or bankrupt or any order
of relief or other order approving any such case or proceeding is entered;
(d)
the Company or any subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not discharged
or
stayed within 60 days; (e) the Company or any subsidiary makes a general
assignment for the benefit of creditors; (f) the Company or any subsidiary
fails
to pay, or states that it is unable to pay or is unable to pay, its debts
generally as they become due; or (g) the Company or any subsidiary, by any
act
or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action
for
the purpose of effecting any of the foregoing.
“Business
Day”
shall
mean any day other than a Saturday, Sunday or a day on which commercial banks
in
the City of New York are authorized or required by law or executive order to
remain closed.
2
“Change
in Control Transaction”
will
be
deemed to exist if (i) there occurs any consolidation, merger or other business
combination of the Company with or into any other corporation or other entity
or
person (whether or not the Company is the surviving corporation), or any other
corporate reorganization or corporate transaction or series of related
transactions in which in any of such events the voting stockholders of the
Company prior to such event cease to own 50% or more of the voting power, or
corresponding voting equity interests, of the surviving corporation after such
event (including without limitation any “going private” transaction under Rule
13e-3 promulgated pursuant to the Exchange Act or tender offer by the Company
under Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of
the
Company's Common Stock), (ii) any person (as defined in Section 13(d) of the
Exchange Act), together with its affiliates and associates (as such terms are
defined in Rule 405 under the Securities Act), beneficially owns or is deemed
to
beneficially own (as described in Rule 13d-3 under the Exchange Act without
regard to the 60-day exercise period) in excess of 50% of the Company's voting
power, (iii) there is a replacement of more than one-half of the members of
the
Company’s Board of Directors which is not approved by those individuals who are
members of the Company's Board of Directors on the date thereof, (iv) in one
or
a series of related transactions, there is a sale or transfer of all or
substantially all of the assets of the Company, determined on a consolidated
basis, (v) the Company enters into an agreement providing for an event set
forth
in (i), (ii), (iii) or (iv) above, or (vi) any of the foregoing occurs with
respect to the Company or the Operating Subsidiary.
“Conversion
Price”
shall
initially equal $2.00 (which Conversion Price shall be subject to adjustment
as
set forth herein).
“Convertible
Securities”
means
any convertible securities, warrants, options or other rights to subscribe
for
or to purchase or exchange for, shares of Common Stock.
“Effective
Registration” shall
mean (i) the resale of all Registrable Securities (as defined in the
Registration Rights Agreement) is either covered by an effective registration
statement in accordance with the terms of the Registration Rights Agreement
which registration statement is not subject to any suspension or stop orders
or
permitted without registration under the Securities Act and without any
limitations or restrictions pursuant to Rule 144 promulgated under the
Securities Act (provided
that independent counsel for the Company furnishes to the Company’s transfer
agent a written legal opinion confirming such permitted resale under Rule 144,
which counsel and form of opinion shall be reasonably acceptable to the
Holder);
(ii)
the resale of such Registrable Securities may be effected either pursuant to
a
current and deliverable prospectus that is not subject at the time to any
blackout or similar circumstance or pursuant to Rule 144 promulgated under
the
Securities Act without registration and without any limitations or restrictions
(provided that independent counsel for the Company furnishes to the Company’s
transfer agent a written legal opinion confirming such permitted resale under
Rule 144, which counsel and form of opinion shall be reasonably acceptable
to
the Holder); (iii) such Registrable Securities are listed, or approved for
listing prior to issuance, on an Approved Market and are not subject to any
trading suspension (nor shall trading generally have been suspended on such
exchange or market), and the Company shall not have been notified of any pending
or threatened proceeding or other action to delist or suspend the Common Stock
on the Approved Market on which the Common Stock is then traded or listed;
(iv)
the requisite number of shares of Common Stock shall have been duly authorized
and reserved for issuance as required by the terms of the Agreements; (v) the
closing bid price of the Common Stock on the Principal Market shall be at least
$1.00; and (vi) none of the Company or any direct or indirect subsidiary of
the
Company is subject to any Bankruptcy Event.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
“Interim Conversion
Price”
shall
initially equal $1.75 (which Interim Conversion Price shall be subject to
adjustment as set forth herein).
3
“Market
Price”
shall
equal the average of the daily VWAPs over the five (5) consecutive Trading
Days
immediately preceding the date on which the Market Price is being
determined.
“Per
Share Selling Price”
shall
include the amount actually paid by third parties for each share of Common
Stock
in a sale or issuance by the Company. In the event a fee is paid by the Company
in connection with such transaction directly or indirectly to such third party
or its affiliates, any such fee shall be deducted from the selling price pro
rata to all shares sold in the transaction to arrive at the Per Share Selling
Price. A sale of shares of Common Stock shall include the sale or issuance
of
Convertible Securities, and in such circumstances the Per Share Selling Price
of
the Common Stock covered thereby shall also include the exercise, exchange
or
conversion price thereof (in addition to the consideration received by the
Company upon such sale or issuance less the fee amount as provided above).
In
case of any such security issued in a Variable Rate Transaction, the Per Share
Selling Price shall be deemed to be the lowest conversion or exercise price
at
which such securities are converted or exercised or might have been converted
or
exercised, or the lowest adjustment price, as the case may be, over the life
of
such securities. If shares are issued for a consideration other than cash,
the
Per Share Selling Price shall be the fair value of such consideration as
determined in good faith by independent certified public accountants mutually
acceptable to the Company and the Holder. In the event the Company directly
or
indirectly effectively reduces the conversion, exercise or exchange price for
any Convertible Securities which are currently outstanding, then the Per Share
Selling Price shall equal such effectively reduced conversion, exercise or
exchange price.
“Principal
Amount”
shall
refer to the sum of (i) the original principal amount of this Note, (ii) all
accrued but unpaid Accreted Amounts hereunder, and (iii) any default payments
(including default interest) owing under the Agreements but not previously
paid
or added to the Principal Amount.
“Principal
Market”
shall
mean the NASDAQ Capital Market or such other principal market or exchange on
which the Common Stock is then listed for trading.
“Registration
Statement”
shall
have the meaning set forth in the Registration Rights Agreement.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Stock
Payment Price”
on
any
particular day shall mean the lesser of (a) 95% of the Market Price as of such
day, or (b) the Market Price as of such day less $0.08.
“Trading
Day”
shall
mean a day on which there is trading on the Principal Market.
4
“VWAP”
shall
mean the daily dollar volume-weighted average sale price for the Common Stock
on
the Principal Market on any particular Trading Day during the period beginning
at 9:30 a.m., New York City Time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at 4:00 p.m.,
New York City Time (or such other time as the Principal Market publicly
announces is the official close of trading), as reported by Bloomberg through
its "Volume at Price" functions or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market
on
the electronic bulletin board for such security during the period beginning
at
9:30 a.m., New York City Time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at 4:00 p.m.,
New York City Time (or such other time as the Principal Market publicly
announces is the official close of trading), as reported by Bloomberg, or,
if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported
in
the "pink sheets" by the National Quotation Bureau, Inc. If the VWAP cannot
be
calculated for such security on such date on any of the foregoing bases, the
VWAP of such security on such date shall be the fair market value as mutually
determined by the Company and the holders of at least a majority of the
principal amount of the Notes then outstanding. All such determinations of
VWAP
shall to be appropriately and equitably adjusted in accordance with the
provisions set forth herein for any stock dividend, stock split, stock
combination or other similar transaction occurring during any period used to
determine the Market Price (or other period utilizing VWAPs).
Section
2. Accretion.
(a) Payment
Dates. On
the
first day of each calendar quarter after the Issuance Date beginning on October
1, 2008 (each an “Accretion
Payment Date”),
the
Company shall either pay in cash the dollar amount accrued and accreted to
the
principal amount hereunder since the prior Accretion Payment Date (or Issuance
Date if no such Accretion Payment Date has yet to occur) (“Accreted
Amount”)
or
effect the automatic conversion of such Accreted Amount as provided in this
Section 2.
(b) Payment
or Automatic Conversion.
Subject
to the terms hereof, the Company shall either (i) pay the Accreted Amount in
full in cash on each Accretion Payment Date or (ii) effect an automatic
conversion of such Accreted Amount into shares of Common Stock in accordance
with the terms hereof, but not both, at the Company’s option. Prior to each
Accretion Payment Date the Company shall deliver to all the holders of Notes
a
written irrevocable notice electing to pay such Accreted Amount in cash or
effect such automatic conversion on such Accretion Payment Date. Such notice
shall be delivered at least five (5) Trading Days prior to the applicable
Accretion Payment Date but no more than twenty (20) days prior to such Accretion
Payment Date. If such notice is not delivered within the prescribed period
set
forth in the preceding sentence, then the Accreted Amount shall be paid in
cash.
If the Company elects to pay any Accreted Amount in cash on an Accretion Payment
Date, then on such date the Company shall pay to the Holder an amount equal
to
the Accreted Amount due in satisfaction of such obligation. If the Company
elects to effect an automatic conversion of such Accreted Amount into shares
of
Common Stock, the number of such shares to be issued for such Accretion Payment
Date shall be the number determined by dividing (x) the Accreted Amount due,
by
(y) the Stock Payment Price as of such Accretion Payment Date. Such shares
shall
be issued and delivered within three (3) Trading Days following such Accretion
Payment Date and shall be duly authorized, validly issued, fully paid,
non-assessable and free and clear of all encumbrances, restrictions and legends.
If any Holder does not receive the requisite number of shares of Common Stock
in
the form required above within such three Trading Day period, the Holder shall
have the option of either (a) requiring the Company to issue and deliver all
or
a portion of such shares or (b) canceling such election to effect such automatic
conversion of the Accreted Amount (in whole or in part), in which case the
Company shall immediately pay in cash the Accreted Amount due hereunder or
such
portion as the Holder specifies is to be paid in cash instead of being
converted. Except as otherwise provided in this Section 2, all holders of Notes
must be treated equally with respect to such payment and conversion of Accreted
Amounts. Any conversion of the Accreted Amount hereunder into shares of Common
Stock pursuant to the terms hereof shall constitute and be deemed a conversion
of such portion of the Principal Amount of this Note for all purposes under
this
Note and the other Agreements (except that such conversion shall be at the
Stock
Payment Price and except as otherwise provided herein).
5
(c) Limitations
to Automatic Conversion into Common Stock.
Notwithstanding anything to the contrary herein, the Company shall be prohibited
from exercising its right to effect an automatic conversion of any Accreted
Amount hereunder (and must deliver cash in respect thereof) on the applicable
Accretion Payment Date (1) if at any time within ten (10) Trading Days prior
to
the Accretion Payment Date there fails to exist Effective Registration or an
Event
of
Default hereunder exists or occurs,
unless
otherwise waived in writing by the Holder in whole or in part at the Holder’s
option, (2) if the Company’s net cash on hand (including cash equivalents) as of
such Accretion Payment Date is greater than $3 million (any conversion election
by the Company under this Section 2 shall constitute a representation by the
Company that such net cash amount is below $3 million), and (3) to the extent,
and only to the extent, that such conversion into shares of Common Stock would
result in the Holder hereof exceeding the limitations contained in Section
3(i)
below.
Section
3. Conversion.
(a) Conversion
Right.
Subject
to the terms hereof and restrictions and limitations contained herein, the
Holder shall have the right, at such Holder's option, at any time and from
time
to time to convert the outstanding Principal Amount under this Note in whole
or
in part by delivering to the Company a fully executed notice of conversion
in
the form of conversion notice attached hereto as Exhibit
A
(the
“Conversion
Notice”),
which
may be transmitted by facsimile. Notwithstanding anything to the contrary
herein, this Note and the outstanding Principal Amount hereunder shall not
be
convertible into Common Stock to the extent that such conversion would result
in
the Holder hereof exceeding the limitations contained in, or otherwise violating
the provisions of, Section 3(i) below.
(b) Common
Stock Issuance Upon Conversion.
(i) Conversion
Date Procedures.
Upon
conversion of this Note pursuant to Section 3(a) above, the outstanding
Principal Amount hereunder shall be converted into such number of fully paid,
validly issued and non-assessable shares of Common Stock, free of any liens,
claims and encumbrances, as is determined by dividing the outstanding Principal
Amount being converted by the then applicable Conversion Price. The date of
any
Conversion Notice hereunder shall be referred to herein as the “Conversion
Date”.
If a
conversion under this Note cannot be effected in full for any reason, or if
the
Holder is converting less than all of the outstanding Principal Amount hereunder
pursuant to a Conversion Notice, the Company shall promptly deliver to the
Holder (but no later than five Trading Days after the Conversion Date) a Note
for such outstanding Principal Amount as has not been converted if this Note
has
been surrendered to the Company for partial conversion. The Holder shall not
be
required to physically surrender this Note to the Company upon any conversion
hereunder unless the full outstanding Principal ▇▇▇▇▇▇ represented by this
Note
is being converted. The Holder and the Company shall maintain records showing
the outstanding Principal Amount so converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon each such
conversion.
6
(ii) Stock
Certificates or DWAC.
The
Company will deliver to the Holder not
later
than three (3) Trading Days after the Conversion Date, a certificate or
certificates, which shall be free of restrictive legends and trading
restrictions if the Registration Statement has been declared effective,
representing the number of shares of Common Stock being acquired upon the
conversion of this Note. In lieu of delivering physical certificates
representing the shares of Common Stock issuable upon conversion of this Note,
provided the Company's transfer agent is participating in the Depository Trust
Company (“DTC”)
Fast
Automated Securities Transfer (“FAST”)
program, upon request of the Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent to electronically transmit such
shares issuable upon conversion to the Holder (or its designee), by crediting
the account of the Holder’s (or such designee’s) prime broker with DTC through
its Deposit Withdrawal Agent Commission system (provided that the same time
periods herein as for stock certificates shall apply). If in the case of any
conversion hereunder, such certificate or certificates are not delivered to
or
as directed by the Holder by the fifth Trading Day after the Conversion Date,
the Holder shall be entitled by written notice to the Company at any time on
or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return this Note
tendered for conversion. If the conversion has not been rescinded in accordance
with the previous sentence and the Company fails to deliver to the Holder such
certificate or certificates (or shares through DTC) pursuant to this Section
3(b) (free of any restrictions on transfer or legends, if such shares have
been
registered) in accordance herewith, prior to the seventh Trading Day after
the
Conversion Date, the Company shall pay to the Holder, in cash, an amount equal
to 2% of the Principal Amount per month until such delivery takes place (pro
rated for partial months).
(c) Conversion
Price Adjustments.
(i) Stock
Dividends, Splits and Combinations.
If the
Company or any of its subsidiaries, at any time while the Notes are outstanding
(A) shall pay a stock dividend or otherwise make a distribution or distributions
on any equity securities (including instruments or securities convertible into
or exchangeable for such equity securities) in shares of Common Stock, (B)
subdivide outstanding Common Stock into a larger number of shares, or (C)
combine outstanding Common Stock into a smaller number of shares, then each
Affected Conversion Price (as defined below) shall be multiplied by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
before such event and the denominator of which shall be the number of shares
of
Common Stock outstanding after such event. Any adjustment made pursuant to
this
Section 3(c)(i) shall become effective immediately after the record date for
the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case
of a
subdivision or combination.
7
As
used
in this Note, the Affected Conversion Prices (each an “Affected
Conversion Price”)
shall
refer to: (i) the Conversion Price; (ii) the Interim Conversion Price; and
(iii)
each reported VWAP occurring on any Trading Day included in the period used
for
determining the Market Price, which Trading Day occurred before the record
date
in the case of events referred to in clause (A) of this subparagraph 3(c)(i)
and
before the effective date in the case of the events referred to in clauses
(B)
and (C) of this subparagraph 3(c)(i).
(ii) Distributions.
If the
Company or any of its subsidiaries, at any time while the Notes are outstanding,
shall distribute to all holders of Common Stock evidences of its indebtedness
or
assets or cash or rights or warrants to subscribe for or purchase any security
of the Company or any of its subsidiaries (excluding those referred to in
Section 3(c)(i) above), then concurrently with such distributions to holders
of
Common Stock, the Company shall distribute to holders of the Notes the amount
of
such indebtedness, assets, cash or rights or warrants which the holders of
Notes
would have received had all their Notes then held been converted into Common
Stock at the applicable Conversion Price immediately prior to the record date
for such distribution.
(iii) Common
Stock Issuances.
In the
event that the Company or any of its subsidiaries (A) issues or sells any Common
Stock or Convertible Securities or (B) directly or indirectly effectively
reduces the conversion, exercise or exchange price for any Convertible
Securities which are currently outstanding, at or to an effective Per Share
Selling Price which is less than the Conversion Price or Interim Conversion
Price, then in each such case the Conversion Price and/or Interim Conversion
Price, as the case may be, in effect immediately prior to such issue or sale
or
record date, as applicable, shall be automatically reduced effective
concurrently with such issue or sale to an amount determined by multiplying
the
Conversion Price and/or Interim Conversion Price, as the case may be, then
in
effect by a fraction, (x) the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such issue
or
sale, plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would purchase
at such Conversion Price or Interim Conversion Price, as the case may be, and
(y) the denominator of which shall be the number of shares of Common Stock
of
the Company outstanding immediately after such issue or sale. The foregoing
provision shall not apply to any issuances or sales of Common Stock or
Convertible Securities (i) pursuant to any Convertible Securities currently
outstanding on the date hereof in accordance with the terms of such Convertible
Securities in effect on the date hereof, (ii) pursuant to the Notes, or (iii)
to
any officer, director, employee or Consultant (as defined below) of the Company
pursuant to a bona fide option or equity incentive plan duly adopted by the
Company, provided that any such issuances or sales to Consultants must be
reasonable consideration for the services rendered by such Consultants and
shall
not exceed more than $1 million in market value to all Consultants in the
aggregate under any circumstances. “Consultant” shall mean any natural person
providing bona fide services to the Company which are not in connection with
the
offer or sale of securities in a capital raising transaction and which do not
directly or indirectly promote or maintain a market for the Company’s
securities. The Company shall give to the Holder written notice of any such
sale
of Common Stock within 24 hours of the closing of any such sale and shall within
such 24 hour period issue a press release announcing such sale if such sale
is a
material event for, or otherwise material to, the Company.
8
(iv) Rounding
of Adjustments. All
calculations under this Section 3 or Section 2 shall be made to the nearest
cent
or the nearest 1/100th of a share, as the case may be.
(v) Notice
of Adjustments. Whenever
any Affected Conversion Price is adjusted pursuant to Section 3(c)(i), (ii)
or
(iii) above, the Company shall promptly deliver to each holder of the Notes,
a
notice setting forth the Affected Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment, provided
that any failure to so provide such notice shall not affect the automatic
adjustment hereunder.
(vi) Change
in Control Transactions.
In case
of any Change in Control Transaction, the Holder shall have the right thereafter
to, at its option, (A) convert this Note, in whole or in part, at the then
applicable Conversion Price into the shares of stock and other securities,
cash
and/or property receivable upon or deemed to be held by holders of Common Stock
following such Change in Control Transaction, and the Holder shall be entitled
upon such event to receive such amount of securities, cash or property as the
shares of the Common Stock of the Company into which this Note could have been
converted immediately prior to such Change in Control Transaction would have
been entitled if such conversion were permitted, subject to such further
applicable adjustments set forth in this Section 3 or (B) require the Company
or
its successor to redeem this Note, in whole or in part, at a redemption price
equal to 110% of the outstanding Principal Amount being redeemed. The terms
of
any such Change in Control Transaction shall include such terms so as to
continue to give to the Holders the right to receive the amount of securities,
cash and/or property upon any conversion or redemption following such Change
in
Control Transaction to which a holder of the number of shares of Common Stock
deliverable upon such conversion would have been entitled in such Change in
Control Transaction, and default interest and Accreted Amounts payable hereunder
shall be in cash or such new securities and/or property, at the Holder’s option.
This provision shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(vii) Notice
of Certain Events.
If:
|
A.
|
the
Company shall declare a dividend (or any other distribution) on its
Common
Stock; or
|
|
B.
|
the
Company shall declare a special nonrecurring cash dividend on or
a
redemption of its Common Stock; or
|
|
C.
|
the
Company shall authorize the granting to all holders of the Common
Stock
rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights;
or
|
|
D.
|
the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company
is
a party, any sale or transfer of all or substantially all of the
assets of
the Company, or any compulsory share of exchange whereby the Common
Stock
is converted into other securities, cash or property;
or
|
9
|
E.
|
the
Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the
Company;
|
then
the
Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of this Note, and shall cause to be mailed to the Holder
at its last address as it shall appear upon the books of the Company, on or
prior to the date notice to the Company's stockholders generally is given,
a
notice stating (x) the date on which a record is to be taken for the purpose
of
such dividend, distribution, redemption, rights or warrants, or if a record
is
not to be taken, the date as of which the holders of Common Stock of record
to
be entitled to such dividend, distributions, redemption, rights or warrants
are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock
of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange.
(d) Reservation
and Issuance of Underlying Securities.
The
Company covenants that it will at all times reserve and keep available out
of
its authorized and unissued Common Stock solely for the purpose of issuance
upon
conversion of this Note (including repayments in stock), free from preemptive
rights or any other actual contingent purchase rights of persons other than
the
holders of the Notes, not less than such number of shares of Common Stock as
shall (subject to any additional requirements of the Company as to reservation
of such shares set forth in the Purchase Agreement) be issuable (taking into
account the adjustments under this Section 3 but without regard to any ownership
limitations contained herein) upon the conversion of this Note hereunder in
Common Stock (including conversion of Accreted Amounts or the Interim Repayment
Amount into Common Stock). The Company covenants that all shares of Common
Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid, nonassessable.
(e) No
Fractions.
Upon a
conversion hereunder the Company shall not be required to issue stock
certificates representing fractions of shares of Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final fraction of
a
share based on the closing price of a share of Common Stock at such time. If
the
Company elects not, or is unable, to make such a cash payment, the Holder shall
be entitled to receive, in lieu of the final fraction of a share, one whole
share of Common Stock.
(f) Charges,
Taxes and Expenses.
Issuance of certificates for shares of Common Stock upon the conversion of
this
Note (including conversion of Accreted Amounts and the Interim Repayment Amount)
shall be made without charge to the holder hereof for any issue or transfer
tax
or other incidental expense in respect of the issuance of such certificate,
all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided,
however,
that in
the event certificates for shares of Common Stock are to be issued in a name
other than the name of the Holder, this Note when surrendered for conversion
shall be accompanied by an assignment form; and provided further,
that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any such transfer.
10
(g) Cancellation.
After
all of the Principal Amount (including accrued but unpaid interest and Accreted
Amounts and default payments at any time owed on this Note) have been paid
in
full or converted into Common Stock, this Note shall automatically be deemed
canceled and the Holder shall promptly surrender the Note to the Company at
the
Company’s principal executive offices.
(h) Notices
Procedures.
Any and
all notices or other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Conversion Notice, shall be in
writing and delivered personally, by confirmed facsimile, or by a nationally
recognized overnight courier service to the Company at the facsimile telephone
number or address of the principal place of business of the Company as set
forth
in the Purchase Agreement. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or by a nationally recognized overnight
courier service addressed to the Holder at the facsimile telephone number or
address of the Holder appearing on the books of the Company, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when delivered personally,
(ii) when 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) upon receipt,
when deposited with a nationally recognized overnight courier
service.
(i) Beneficial
Ownership Limitation.
Notwithstanding anything to the contrary contained herein, the number of shares
of Common Stock that may be acquired by the Holder upon conversion pursuant
to
the terms hereof (including conversion of Accreted Amounts and the Interim
Repayment Amount into Common Stock hereunder) shall not exceed a number that,
when added to the total number of shares of Common Stock deemed beneficially
owned by such Holder (other than by virtue of the ownership of securities or
rights to acquire securities (including the Notes) that have limitations on
the
Holder’s right to convert, exercise or purchase similar to the limitation set
forth herein), together with all shares of Common Stock deemed beneficially
owned at such time (other than by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by the holder’s
“affiliates” at such time (as defined in Rule 144 of the Securities Act)
(“Aggregation
Parties”)
that
would be aggregated for purposes of determining whether a group under Section
13(d) of the Exchange Act exists, would exceed 9.9% of the total issued and
outstanding shares of the Common Stock (the “Restricted
Ownership Percentage”).
Each
holder shall have the right (x) at any time and from time to time to reduce
its
Restricted Ownership Percentage immediately upon notice to the Company and
(y)
(subject to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the announcement
as
pending or planned, of a Change in Control Transaction. The Company’s obligation
to issue shares of Common Stock which would exceed such limits referred to
in
this Section 3(i) shall be suspended to the extent necessary until such time,
if
any, as shares of Common Stock may be issued in compliance with such
restrictions.
11
Section
4. Principal
Repayments.
(a) Interim
Repayment Right.
(i) Holder
Repayment Right.
The
Holder shall have the right to compel the Company to repay up to its pro rata
share of $1,000,000 in outstanding principal hereunder (based on the original
principal amount of this Note relative to the original principal amount of
all
Notes issued under the Purchase Agreement), together with all Accreted Amounts
accrued thereon through the date of payment (“Interim
Repayment Amount”),
on
December 31, 2008 (“Interim
Repayment Date”)
either
in cash or by automatically converting such amount into shares of Common Stock,
or a combination thereof, at the Holder’s option.
(ii) Exercise
Procedure.
In
order to exercise such interim repayment right, the Holder shall deliver the
Company a written notice electing to compel such interim repayment
(“Repayment
Election Notice”),
specifying the dollar amount of the Interim Repayment Amount to be converted
into Common Stock and the dollar amount of the Interim Repayment Amount to
be
repaid in cash. Such Repayment Election Notice may be delivered at any time
prior to the Interim Repayment Date, provided that the Interim Repayment Amount
is not required to be paid until the tenth day after such Repayment Election
Notice is delivered if it is delivered after December 21, 2008.
(iii) Payment/Conversion.
On the
Interim Repayment Date, (x) the Company shall pay to the Holder in cash the
portion of the Interim Repayment Amount elected to be repaid in cash in the
Repayment Election Notice and (y) the portion of the Interim Repayment Amount
elected to be converted into stock in the Repayment Election Notice shall be
automatically converted into Common Stock in accordance with the terms hereof.
If the Holder does not receive the requisite amount of cash in connection with
such repayment within three (3) Trading Days following the Interim Repayment
Date, such amount shall bear interest hereunder at the Default Rate. To the
extent the Holder elects to make any such repayment by converting all or a
portion of the Interim Repayment Amount into shares of Common Stock pursuant
to
this Section 4(a), the number of such shares to be issued upon such conversion
as of the Interim Repayment Date shall be the number determined by dividing
(x)
the portion of the Interim Repayment Amount to be converted into Common Stock,
by (y) the Interim Conversion Price as of the Interim Repayment Date. Such
shares shall be issued and delivered within three (3) Trading Days following
the
Interim Repayment Date and shall be duly authorized, validly issued, fully
paid,
non-assessable and free and clear of all encumbrances, restrictions and legends.
Notwithstanding anything to the contrary herein, the Holder shall be prohibited
from exercising its right to convert any portion of the Interim Repayment Amount
into shares of Common Stock on the applicable Interim Repayment Date to the
extent, and only to the extent, that such conversion into shares of Common
Stock
would result in the Holder hereof exceeding the limitations contained in Section
3(i) above. Any conversion hereunder into shares of Common Stock pursuant to
the
terms hereof shall constitute and be deemed a conversion of such portion of
the
Principal Amount of this Note for all purposes under this Note and the other
Agreements (except that such conversion shall be at the Interim Conversion
Price
and except as otherwise provided herein).
12
(b) Maturity
Date.
(i) Holder
Election.
The
Holder may elect to have the all or part of the principal balance hereunder
remaining outstanding on the Maturity Date, together with all Accreted Amounts
accrued thereon through the Maturity Date (“Maturity
Amount”),
repaid on the Maturity Date either in cash or by automatically converting such
amount into shares of Common Stock, or a combination thereof, at the Holder’s
option.
(ii) Exercise
Procedure.
Prior
to the Maturity Date the Holder shall deliver a written notice, which may be
by
email (“Maturity
Election Notice”),
specifying the dollar amount of the Maturity Amount to be converted into Common
Stock and the dollar amount of the Maturity Amount to be repaid in cash.
(iii) Payment/Conversion.
On the
Maturity Date, (x) the Company shall pay to the Holder in cash the portion
of
the Maturity Amount elected to be repaid in cash in the Maturity Election Notice
and (y) the portion of the Maturity Amount elected to be converted into stock
in
the Maturity Election Notice shall be automatically converted into Common Stock
in accordance with the terms hereof. If the Holder does not receive the
requisite amount of cash in connection with such repayment within three (3)
Trading Days following the Maturity Date, such amount shall bear interest
hereunder at the Default Rate. To the extent the Holder elects to make any
such
repayment by converting all or a portion of the Maturity Amount into shares
of
Common Stock pursuant to this Section 4(a), the number of such shares to be
issued upon such conversion as of the Maturity Date shall be the number
determined by dividing (x) the portion of the Maturity Amount to be converted
into Common Stock, by (y) the Conversion Price as of the Maturity Date. Such
shares shall be issued and delivered within three (3) Trading Days following
the
Maturity Date and shall be duly authorized, validly issued, fully paid,
non-assessable and free and clear of all encumbrances, restrictions and legends.
Notwithstanding anything to the contrary herein, the Holder shall be prohibited
from exercising its right to convert any portion of the Maturity Amount into
shares of Common Stock on the Maturity Date to the extent, and only to the
extent, that such conversion into shares of Common Stock would result in the
Holder hereof exceeding the limitations contained in Section 3(i) above. Any
conversion hereunder into shares of Common Stock pursuant to the terms hereof
shall constitute and be deemed a conversion of such portion of the Principal
Amount of this Note for all purposes under this Note and the other
Agreements.
Defeasement.
In the
event the Mortgage is defeased as set forth in Section 7.2(c) of the Purchase
Agreement, then the Holder may at any time and from time to time thereafter
demand immediate repayment of all or part of the amounts (including principal
and Accreted Amounts) then outstanding and accrued under this Note.
Section
5. Defaults
and Remedies.
(a) Events
of Default. An
“Event
of Default”
is:
(i) a
default
in payment of the Principal Amount under any of the Notes on or after the date
such payment is due, which default continues for five (5) Business Days after
written notice of such non-payment has been received by the Company, or a
default in payment of accrued but unpaid Accreted Amounts under any of the
Notes
on or after the date such payment is due, which default continues for fifteen
(15) days after written notice of such non-payment has been received by the
Company;
13
(ii) a
default
in the timely issuance of Underlying Shares upon and in accordance with terms
hereof, which default continues for five (5) Business Days after the Company
has
received written notice informing the Company that it has failed to issue shares
or deliver stock certificates within the third Trading Day following the
Conversion Date;
(iii) failure
by the Company or the Operating Subsidiary for thirty (30) days after written
notice has been received by the Company to comply with any material provision
of
any of the Notes, the Purchase Agreement, the Registration Rights Agreement,
the
Subsidiary Guaranty or the Mortgage or any other agreement between the Holder,
on the one hand, and the Company and/or the Operating Subsidiary, on the other
hand (including without limitation the failure to issue the requisite number
of
shares of Common Stock upon conversion hereof and the failure to redeem Notes
upon the Holder’s request following a Change in Control Transaction pursuant to
this Note);
(iv) any
representation, warranty or statement made or furnished by the Company or any
of
its subsidiaries to the Holder (or any collateral agent on behalf of the Holder)
under the Purchase Agreement, Registration Rights Agreement, Subsidiary
Guaranty, Mortgage or any other agreement between the Holder and the Company
or
any certificate of schedule required thereby, is false or misleading in any
material respect when made;
(v) the
Subsidiary Guaranty or Mortgage ceases to be in full force and effect (including
failure to create a valid and perfected first priority lien on and security
interest in the Mortgaged Property (as defined in the Mortgage) at any time
for
any reason, or, if the Mortgage is defeased in accordance with Section 7.2(c)
of
the Purchase Agreement, the Escrow Funds fail to be held in accordance with
the
terms of such Section and the Escrow Agreement (as such terms are defined in
such Section);
(vi) any
material adverse change in the condition, value or operation of a material
portion of the Mortgaged Property or, if the Mortgage is defeased in accordance
with Section 7.2(c) of the Purchase Agreement, any material adverse change
in
the condition or value or a material portion of the Escrow Funds;
(vii) any
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any of its subsidiaries for
in
excess of $250,000 or for money borrowed the repayment of which is guaranteed
by
the Company or any of its subsidiaries for in excess of $250,000, whether such
indebtedness or guarantee now exists or shall be created hereafter;
(viii) the
dissolution or termination of the Company or the Operating Subsidiary as a
going
concern; or
(ix) if
the
Company is subject to any Bankruptcy Event.
14
Remedies.
If an
Event of Default occurs and is continuing with respect to any of the Notes,
the
Holder may declare all of the then outstanding Principal Amount of this Note
and
all other Notes held by the Holder, including any default interest and Accreted
Amounts due thereon, to be due and payable immediately, except that in the
case
of an Event of Default arising from events described in clauses (viii) through
(ix) of Section 5(a), this Note shall become due and payable without further
action or notice. In the event of such acceleration, the amount due and owing
to
the Holder shall be the greater of (1) 120% of the outstanding Principal Amount
of the Notes held by the Holder (plus all accrued and unpaid default interest
and Accreted Amounts, if any) and (2) the product of (A) the highest closing
price for the five (5) Trading Days immediately preceding the Holder’s
acceleration and (B) the outstanding Principal Amount divided by the lower
of
the Conversion Price and the Interim Conversion Price (if still in effect).
In
either case the Company shall pay interest on such amount in cash at the Default
Rate to the Holder if such amount is not paid within 7 days of Holder’s request.
The remedies under this Note shall be cumulative.
Section
6.
Security and Guaranty.
The
Company’s and the Operating Subsidiary’s obligations under this Note and the
other Agreements are secured by Mortgaged Property (as defined in the Mortgage)
pursuant to the terms of the Mortgage (or the Escrow Funds (as defined in the
Purchase Agreement), if the Mortgage is defeased pursuant to Section 7.2(c)
of
the Purchase Agreement) and the obligations under this Note are guaranteed
by
the Operating Subsidiary pursuant to the Subsidiary Guaranty.
Section
7. General.
(a) Payment
of Expenses.
The
Company agrees to pay all reasonable charges and expenses, including attorneys'
fees and expenses, which may be incurred by the Holder in successfully enforcing
this Note and/or collecting any amount due under this Note. This includes,
without limitation and subject to any limits under applicable law, Holder’s
reasonable collection costs under Section 5(b) and Holder’s reasonable
attorneys’ fees and legal expenses whether or not there is a lawsuit, including
reasonable attorneys’ fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any
automatic stay or injunction), appeals and any anticipated post-judgment
collection services. If not prohibited by applicable law, the Company also
will
pay any court costs, in addition to all other sums provided by law.
(b) Savings
Clause.
In case
any provision of this Note is held by a court of competent jurisdiction to
be
excessive in scope or otherwise invalid or unenforceable, such provision shall
be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired thereby.
In
no event shall the amount of interest paid or converted hereunder (which for
this purpose shall include all default interest, all Accreted Amounts and all
other consideration or charges deemed to be interest) exceed the maximum rate
of
interest on the unpaid principal balance hereof allowable by applicable law.
If
any sum is collected in excess of the applicable maximum rate, the excess
collected shall be applied to reduce the principal debt. If the interest
actually collected hereunder is still in excess of the applicable maximum rate,
the interest rate shall be reduced so as not to exceed the maximum allowable
under law.
15
(c) Amendment.
Neither
this
Note nor any term hereof may be amended, waived, discharged or terminated other
than by a written instrument signed by the Company and the Holder.
(d) Assignment,
Etc.
The
Holder may assign or transfer this Note to any transferee only with the prior
written consent of the Company, which may not be unreasonably withheld or
delayed, provided that (i) the Holder may assign or transfer this Note to any
of
such ▇▇▇▇▇▇'s Affiliates without the consent of the Company
and
(ii) upon any Event of Default, the Holder may assign or transfer this
Note
without
the consent of the Company, 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 of the Purchase Agreement
shall apply to such Affiliate, transferee or assignee. The
Holder
shall notify the Company of any such assignment or transfer promptly. This
Note
shall be binding upon the Company and its successors and shall inure to the
benefit of the Holder and its successors and permitted assigns.
(e) Waiver.
(i) No
failure on the part of the Holder to exercise, and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Holder of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy
or
power. Each and every right, remedy or power hereby granted to the Holder or
allowed it by law or other agreement shall be cumulative and not exclusive
of
any other, and may be exercised by the Holder from time to time. The release
of
any party liable under this Note shall not operate to release any other party
liable under this Note.
(ii) Except
as
otherwise provided herein, the Company and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
all other notices whatsoever and bringing of suit and diligence in taking any
action to collect amounts called for hereunder, and will be directly and
primarily liable for the payment of all sums owing and to be owing hereunder,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
(f) Governing
Law; Jurisdiction.
(i) Governing
Law. THIS
NOTE
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD
OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION.
(ii) Jurisdiction.
The
Company irrevocably submits to the exclusive jurisdiction of any State or
Federal Court sitting in the State of New York, County of New York, over any
suit, action, or proceeding arising out of or relating to this Note.
The
Company irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any
such suit, action, or proceeding brought in such a court and any claim that
suit, action, or proceeding has been brought in an inconvenient
forum.
16
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three days after
the same has been posted as aforesaid) or by personal service shall be deemed
in
every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holder's right to serve process in
any
other manner permitted by law. The Company agrees that a final non-appealable
judgement in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful
manner.
(iii) NO
JURY TRIAL.
THE
COMPANY
HERETO
KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY
JURY WITH RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR
IN
CONNECTION WITH, THIS NOTE.
(g) Replacement
Notes.
This
Note may be exchanged by Holder at any time and from time to time for a Note
or
Notes with different denominations representing an equal aggregate outstanding
Principal Amount, as reasonably requested by ▇▇▇▇▇▇, upon surrendering the
same.
No service charge will be made for such registration or exchange. In the event
that ▇▇▇▇▇▇ notifies the Company that this Note has been lost, stolen or
destroyed, a replacement Note identical in all respects to the original Note
(except for registration number and Principal Amount, if different than that
shown on the original Note), shall be issued to the Holder, provided that the
Holder executes and delivers to the Company an agreement reasonably satisfactory
to the Company to indemnify the Company from any loss incurred by it in
connection with this Note.
[Signature
Page Follows]
17
IN
WITNESS WHEREOF,
the
Company has caused this Note to be duly executed on the day and in the year
first above written.
|
NEXMED,
INC.
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||
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇
▇▇▇
|
|
|
Title:
|
President
and CEO
|
|
|
By:
|
/s/
▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇
▇▇▇▇▇▇▇▇
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|
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Title:
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Chief
Financial Officer
|
|
18
EXHIBIT
A
FORM
OF CONVERSION NOTICE
(To
be
executed by the Holder
in
order
to convert a Note)
| Re: |
Note
(this “Note”) issued by NEXMED,
INC.
to
______________________________ on or about June ___, 2008 in the
original
principal amount of $_____________.
|
The
undersigned hereby elects to convert the aggregate outstanding Principal ▇▇▇▇▇▇
(as defined in the Note) indicated below of this Note into shares of Common
Stock, $0.001 par value per share (the “Common Stock”), of NEXMED,
INC.
(the
“Company”) according to the conditions hereof, as of the date written below. If
shares are to be issued in the name of a person other than undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested
by
the Company in accordance therewith. No fee will be charged to the holder for
any conversion, except for such transfer taxes, if any. The undersigned
represents as of the date hereof that, after giving effect to the conversion
of
this Note pursuant to this Conversion Notice, the undersigned will not exceed
the “Restricted Ownership Percentage” contained in Section 3(i) of this
Note.
|
Conversion
information:
|
|
|
Date
to Effect Conversion
|
|
|
Aggregate
Principal Amount of Note Being Converted
|
|
|
Number
of Shares of Common Stock to be Issued
|
|
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Applicable
Conversion Price
|
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Signature
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Name
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|
Address
|