NexMed, Inc. DOCS® financing facility $10,000,000 of Common Stock, $0.001 par value SALES AGREEMENT April 21, 2010
EXHIBIT
1.1
NexMed,
Inc.
DOCS®
financing facility
$10,000,000
of Common Stock,
$0.001
par value
April 21,
2010
THIS
SALES AGREEMENT (the “Agreement”) dated as of April 21, 2010 between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Securities Corporation, having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the “Sales Manager”) and NexMed, Inc., a
corporation organized and existing under the laws of the State of Nevada (the
“Company”).
WHEREAS,
the Company desires to issue and sell through the Sales Manager, as agent, up to
$10,000,000 (the “Maximum Amount”) of its Common Stock, $0.001 par value (the “Stock”), on
the terms set forth in Article II below. The Maximum Amount shall be
appropriately adjusted for stock splits and reverse splits.
IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company
and the Sales Manager agree as follows:
ARTICLE
I
REPRESENTATIONS
AND WARRANTIES
OF THE
COMPANY
1.1 For
purposes of this Agreement, unless the context requires to the contrary, the
term “Company” shall also include all significant subsidiaries (as defined by
Section 1-02 of Regulation S-X) of the Company. The Company
represents and warrants to, and agrees with, the Sales Manager
that:
(a) The
Company meets the requirements for use of Form S-3 under the Securities Act of
1933, as amended (the “Act”), and the rules and regulations thereunder (“Rules
and Regulations”), and the Company is eligible to use Form S-3 for the
transactions contemplated by this Agreement. A registration statement
on Form S-3 (Registration No. 333-165960) with respect to, among other
securities, the Stock, including a form of prospectus, has been prepared by the
Company in conformity with the requirements of the Act and the Rules and
Regulations, has been filed with the Securities and Exchange Commission (the
“Commission”) and has been declared effective by the Commission. No
stop order suspending the effectiveness of such registration statement has been
issued, and no proceeding for that purpose has been instituted or, to the
knowledge of the Company, threatened by the Commission. Such
registration statement, as it may have heretofore been or may hereafter be
amended, is referred to herein as the “Registration Statement,” and the final
form of prospectus included in the Registration Statement for purposes of offers
and sales of the Stock contemplated herein, as amended or supplemented from time
to time, is referred to herein as the “Prospectus.” Any reference
herein to the Registration Statement, the Prospectus, or any amendment or
supplement thereto shall be deemed to refer to and include the documents
incorporated (or deemed to be incorporated) by reference therein, and any
reference herein to the terms “amend,” “amendment” or “supplement” with respect
to the Registration Statement or Prospectus shall be deemed to refer to and
include the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein.
(b) Each
part of the Registration Statement, when such part became or becomes effective,
and the Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at each Settlement Date (as hereinafter
defined), conformed or will conform in all material respects with the
requirements of the Act and the Rules and Regulations; each part of the
Registration Statement, when such part became or becomes effective, did not or
will not 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 not misleading; and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each
Settlement Date, did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that the foregoing shall not apply to statements in or omissions from any
such document in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Sales Manager, specifically for
use in the Registration Statement, the Prospectus or any amendment or supplement
thereto. There are no Commission comments to any part of the
Registration Statement, Prospectus or any amendment or supplement thereto, that
have not been resolved as of the date hereof.
(c) The
documents incorporated by reference in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, when they were or are filed
with the Commission under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), conformed or will conform in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder.
(d) The
financial statements of the Company, together with the related schedules and
notes thereto, set forth or included in the Registration Statement and
Prospectus, fairly present the financial condition of the Company as of the
dates indicated and the results of operations, changes in financial position,
stockholders’ equity, and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated
therein). The summary and selected financial and statistical data, if
any, included in the Registration Statement and the Prospectus present fairly
the information shown therein and, to the extent based upon or derived from the
financial statements, have been compiled on a basis consistent with the
financial statements presented therein. As of the date hereof, there
are no comments pending from the Commission that, if not resolved favourably to
the Company, could have the effect of requiring a restatement of financial
statements of the Company.
(e) The
accountants who certified the financial statements and the supporting schedules
included in the Registration Statement are and, during the periods covered by
their reports, were qualified and independent public accountants as required by
Rule 2-01 of Regulation S-X.
(f) The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Nevada. The Company is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification necessary
(including every jurisdiction in which it owns or leases real property), except
for such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect on the Company. For purposes of this Agreement,
“Material Adverse Effect” means (i) any adverse effect on the business,
operations, properties or financial condition of the Company that is (either
alone or together with all other adverse effects) material to the Company,
and/or (ii) any material adverse effect on the transactions contemplated under
this Agreement or any other agreement or document contemplated hereby or
thereby. Each of the Company’s significant subsidiaries is validly
existing as a corporation, limited liability company or partnership, as
applicable, in its respective jurisdiction of formation. Schedule 1.1(f) hereto
identifies each of the Company’s subsidiaries that is a significant subsidiary
(as defined in Section 1-02 of Regulation S-X) of the Company. All of
the issued and outstanding capital stock, limited liability company interests or
partnership interests, as applicable, of each significant subsidiary has been
duly authorized and validly issued, is fully paid and nonassessable and (except
as otherwise disclosed in the Registration Statement and the Prospectus) is
owned by the Company, directly or indirectly, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity. Except as disclosed in the Registration Statement and the
Prospectus, the Company does not own, lease or license any material asset or
property or conduct any business outside the United States of
America. The Company has all requisite corporate power and authority
and all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental orders or regulatory
bodies or any other person or entity, to own, lease, license and operate its
assets and properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus; except for such
authorizations, approvals, consents, orders, licenses, certificates and permits
the absence of which would not have a Material Adverse Effect.
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(g) The
Company has good and marketable title to, or leasehold interests in, all
properties and assets (including, without limitation, mortgaged assets) as
described in the Registration Statement and the Prospectus as owned by the
Company, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Registration Statement and the Prospectus
and except such as would not have a Material Adverse Effect on the
Company. The Company has such consents, easements, rights-of-way or
licenses (collectively, “rights-of-way”) from any person as are necessary to
conduct its business in the manner described in the Registration Statement,
except for those which if not obtained would not, singly or in the aggregate,
have a Material Adverse Effect on the Company, and none of such rights-of-way
contains any restriction that is materially burdensome to the
Company.
(h) The
Company has been subject to the requirements of Section 12 of the Exchange Act
during the period commencing 36 months preceding the filing of the Registration
Statement and ending on the date hereof (the “Reporting Period”) and during such
Reporting Period the Company has timely filed all material and reports required
under Sections 13(a), 14 and/or 15(d) of the Exchange Act. All such
materials and reports conformed in form and substance to the requirements of the
Exchange Act and the rules and regulations thereunder. As of the date
of filing of the Registration Statement, and as of the date hereof, the
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Company was and is at least $50 million. The Company has not sold
in the 12 months prior to the date of this Agreement, securities with an
aggregate market value in excess of the amount allowed under General Instruction
I.B.6 of Form S-3 under the Act.
(i) There
is no litigation or governmental or other proceeding or investigation before any
court or before or by any public body or board pending or, to the knowledge of
the Company, threatened against, or involving the assets, properties or
businesses of the Company which would have a Material Adverse Effect on the
Company or the offering contemplated by this Agreement.
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(j) The
Company maintains insurance (issued by insurers of recognized financial
responsibility) of the types and in the amounts generally deemed adequate for
its businesses and, to the knowledge of the Company, consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, product liability insurance covering the Company’s products,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
(k) Subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as described therein, (i) there has not
been any material adverse change in the assets or properties, business, results
of operations, or condition (financial or otherwise) of the Company, whether or
not arising from transactions in the ordinary course of business; (ii) the
Company has not sustained any material loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree; (iii) since the date of the latest balance sheet, included or
incorporated by reference in the Registration Statement and the Prospectus,
except as reflected therein, the Company has not undertaken any liability or
obligation, direct or contingent, except such liabilities or obligations
undertaken in the ordinary course of business; and (iv) there has not been any
transaction that is material to the Company, except transactions in the ordinary
course of business or as otherwise disclosed in the Registration Statement and
the Prospectus.
(l) There
is no document or contract of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed in the manner and within
the time periods required under the Exchange Act. Each document,
instrument, contract and agreement of the Company described in the Registration
Statement or the Prospectus or incorporated by reference therein or listed as
exhibits to the Registration Statement is in full force and effect and is valid
and enforceable by and against the Company in accordance with their terms,
assuming the due authorization, execution and delivery thereof by each of the
other parties thereto except as otherwise disclosed in the Registration
Statement or Prospectus. The Company is not, nor to the knowledge of
the Company is any other party, in default in the observance or performance of
any term or obligation to be performed by it under any such agreement, and no
event has occurred which with notice or lapse of time or both would constitute
such a default, which default or event would have a Material Adverse
Effect. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company of
any other agreement or instrument to which the Company is a party or by which it
or its properties or business may be bound or affected, which default or event
would have a Material Adverse Effect.
(m) The
Company is not in violation of any term or provision of its charter or
by-laws. The Company is not in violation of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse
Effect.
4
(n) Neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Stock) will give rise to
a right to terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or constitute
a default (or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver under, or result
in the execution or imposition of any lien, charge, encumbrance, claim, security
interest, restriction or defect upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which the Company
is bound, or any of its properties are bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the Company
or violate any provision of the charter or by-laws of the Company, except for
such consents or waivers which have already been obtained and are in full force
and effect.
(o) All
of the outstanding shares of common stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and none of
such shares were issued in violation of any pre-emptive or other similar
right. The Stock, when issued and sold pursuant to this Agreement,
will be duly authorized and validly issued, fully paid and nonassessable and
will not be issued in violation of any pre-emptive or other similar
right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of, and there is no commitment, plan or arrangement to issue, any
capital stock of the Company or any security convertible into or exercisable or
exchangeable for such capital stock, except for standard dividend reinvestment
plans. The Stock conforms in all material respects to all statements
relating thereto contained in the Registration Statement and the
Prospectus. All stock options issued by the Company have been issued
in compliance with law; and the terms and provision of such stock options were
established in compliance with law.
(p) Subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as (x) described or referred to therein, or
(y) are not material (as to clauses (i) and (ii) only), are consistent with past
practice (as to clauses (i) and (ii) only), and are publicly disclosed, the
Company has not (i) issued any securities (except as would have been permitted
pursuant to the proviso contained in Section 3.1(k) of this Agreement) or
incurred any liability or obligation, direct or contingent, except such
liabilities or obligations incurred in the ordinary course of business
including, without limitation, debt financing to acquire and develop properties,
(ii) entered into any transaction not in the ordinary course of business or
(iii) declared or paid any dividend or made any distribution on any shares of
its capital stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital
stock.
(q) Except
as disclosed in the Registration Statement and Prospectus, no holder of any
security of the Company has the right, which has not been waived, to have any
security owned by such holder included in the Registration
Statement.
5
(r) All
necessary corporate action has been duly and validly taken by the Company to
authorize the execution, delivery and performance of this Agreement and the
issuance and sale of the Stock by the Company. This Agreement has
been duly and validly authorized, executed and delivered by the Company and
constitutes and will constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms. Except for any “blue sky” filings or Trading Market (as
defined below) listing applications to be filed pursuant hereto), each approval,
consent, order, authorization, designation, declaration or filing by or with any
regulatory, administrative or other governmental body necessary in connection
with the execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby and the issuance and sale
of the Stock by the Company has been obtained or made and is in full force and
effect. The Company will use commercially reasonable efforts to cause
the Stock to be listed for trading on the Trading Market. For
purposes of this Agreement, the “Trading Market” is (i) the Nasdaq Capital
Market, and (ii) each other national securities exchange or market on which the
common stock of the Company trades or is admitted for trading.
(s) The
Company has not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement other than as contemplated
hereby or as described in the Registration Statement.
(t) The
Company is conducting its business in compliance with all applicable laws, rules
and regulations of the jurisdictions in which it is conducting business, except
where the failure to be so in compliance would not have a Material Adverse
Effect.
(u) No
transaction has occurred between or among the Company and any of its officers or
directors or any affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Registration Statement
and the Prospectus.
(v) The
Company has not taken, nor will it take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the common stock of the Company to
facilitate the sale or resale of any of the Stock.
(w) The
Company has filed all federal, state, local and foreign tax returns that are
required to be filed through the date hereof (and will file all such tax returns
when and as required to be filed after the date hereof), or has received
extensions thereof, and has paid all taxes shown on such returns to be due on or
prior to the date hereof (and will pay all taxes shown on such returns to be due
after the date hereof) and all assessments received by it to the extent that the
same have become due except where the failure to file such a return or pay such
amount would not have a Material Adverse Effect.
6
(x) The
Company owns or has valid, binding and enforceable licenses or other rights to
use the patents and patent applications, inventions, copyrights, trademarks,
service marks, trade names, service names, technology and know-how (including
without limitation trade secrets and other unpatented and/or unpatentable
proprietary rights but excluding generally commercially available “off the
shelf” software programs licensed pursuant to shrink wrap or “click and accept”
licenses) necessary to conduct the business of the Company in the manner
described in the Registration Statement and the Prospectus (collectively, the
“Company Intellectual Property”), except for any Company Intellectual Property
the absence of which, individually or in the aggregate, would not have a
Material Adverse Effect. Except as described in the Prospectus, the
Company Intellectual Property is free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, whether imposed by
agreement, contract, understanding, law, equity or otherwise, except for (i) liens for taxes not yet due and
(ii) mechanics liens and similar liens for labor, materials or supplies incurred
in the ordinary course of business for amounts that are not delinquent
(collectively, “Permitted Liens”) or where any failure to have such
adequate licenses or other rights of use to such Company Intellectual Property,
individually or in the aggregate, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The
Company is not obligated to pay a royalty, grant a license or provide other
consideration to any third party in connection with the Company Intellectual
Property other than as disclosed in the Registration Statement and the
Prospectus. Except as disclosed in the Registration Statement and the
Prospectus (i) the Company has not received any notice of infringement or
conflict with asserted rights of others with respect to any Company Intellectual
Property, (ii) the conduct of the business of the Company in the manner
described in the Registration Statement and the Prospectus does not and, to the
knowledge of the Company, will not, infringe, interfere or conflict with any
valid issued patent claim or other Intellectual Property right of any third
party and (iii) except as would not have a Material Adverse Effect, no third
party, including without limitation any academic or governmental organization,
possesses or could obtain rights to the Company Intellectual Property which, if
exercised, could enable such party to develop products competitive to those of
the Company, other than rights arising under applicable law in connection with
government sponsorship of Company research activities. Except as
disclosed in the Registration Statement and the Prospectus, the Company has not
received any notice, nor does the Company have any knowledge of (i) any
potential infringement or misappropriation by others of the Company Intellectual
Property or (ii) any Intellectual Property of others that potentially conflicts
or interferes with the Company Intellectual Property, that might reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect. To the Company’s knowledge, no claim of any patent or patent
application (assuming the claims of patent applications issue as currently
pending) included in the Company Intellectual Property is unenforceable or
invalid, except for such unenforceability or invalidity that would not
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect. Each former and current key employee and key
independent contractor of the Company has signed and delivered one or more
written contracts with the Company pursuant to which such employee or
independent contractor assigns to the Company all of his, her or its rights in
and to any inventions, discoveries, improvements, works of authorship, know-how
or information made, conceived, reduced to practice, authored or discovered in
the course of employment by or performance of services for the Company and any
and all patent rights, copyrights, trademark and other intellectual property
rights therein or thereto.
(y) Except
as described in the Registration Statement and the Prospectus, the Company
possesses all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its
business as currently conducted, including without limitation all such
certificates, authorizations and permits required by the United States Food and
Drug Administration (the “FDA”) or any other federal, state or foreign agencies
or bodies engaged in the regulation of pharmaceuticals or biohazardous
materials, except where the failure to so possess such certificates,
authorizations and permits, individually or in the aggregate, would not result
in a Material Adverse Effect. Except as described in the Registration
Statement and the Prospectus, the Company has not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
7
(z) Except
to the extent disclosed in the Registration Statement and the Prospectus, the
Company has not received any written notices or statements from the FDA, the
European Medicines Agency (the “EMEA”) or any other governmental agency, and
otherwise has no knowledge or reason to believe, that (i) any new drug
application or marketing authorization application for Vitaros or NM 100060
anti-fungal treatment (the “Lead Products”) may or will be rejected
or determined to be non-approvable; (ii) a delay in time for review and/or
approval of a marketing authorization application or marketing approval
application in any jurisdiction for the Lead Products is or may be required,
requested or being implemented; (iii) one or more clinical studies for the Lead
Products shall or may be requested or required in addition to the clinical
studies submitted to the FDA prior to the date hereof as a precondition to or
condition of issuance or maintenance of a marketing approval for the Lead
Products; (iv) any license, approval, permit or authorization to conduct any
clinical trial of or market any product or potential product of the Company has
been, will be or may be suspended, revoked, modified or limited, except in the
cases of clauses (i), (ii), (iii) and (iv) where such rejections,
determinations, delays, requests, suspensions, revocations, modifications or
limitations might not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(aa) Except
to the extent disclosed in the Registration Statement and the Prospectus, to the
Company’s knowledge, the preclinical and clinical testing, application for
marketing approval of, manufacture, distribution, promotion and sale of the
products and potential products of the Company is in compliance, in all material
respects, with all laws, rules and regulations applicable to such activities,
including without limitation applicable good laboratory practices, good clinical
practices and good manufacturing practices, except for such non-compliance as
would not, individually or in the aggregate, have a Material Adverse
Effect. The descriptions of the results of such tests and trials
contained in the Registration Statement and the Prospectus are accurate in all
material respects. Except to the extent disclosed in the Registration
Statement and the Prospectus, the Company has not received notice of adverse
finding, warning letter or clinical hold notice from the FDA or any non-U.S.
counterpart of any of the foregoing, or any untitled letter or other
correspondence or notice from the FDA or any other governmental authority or
agency or any institutional or ethical review board alleging or asserting
noncompliance with any law, rule or regulation applicable in any jurisdiction,
except notices, letters, and correspondences and non-U.S. counterparts thereof
alleging or asserting such noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect. Except to the extent disclosed in the
Registration Statement and the Prospectus, the Company has not, either
voluntarily or involuntarily, initiated, conducted or issued, or caused to be
initiated, conducted or issued, any recall, field correction, market withdrawal
or replacement, safety alert, warning, “dear doctor” letter, investigator
notice, or other notice or action relating to an alleged or potential lack of
safety or efficacy of any product or potential product of the Company, any
alleged product defect of any product or potential product of the Company, or
any violation of any material applicable law, rule, regulation or any clinical
trial or marketing license, approval, permit or authorization for any product or
potential product of the Company, and the Company is not aware of any facts or
information that would cause it to initiate any such notice or action and has no
knowledge or reason to believe that the FDA, the EMEA or any other governmental
agency or authority or any institutional or ethical review board or other
non-governmental authority intends to impose, require, request or suggest such
notice or action.
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(bb) The
Company is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(cc) The
Company’s systems of internal accounting controls taken as a whole are
sufficient to meet the broad objectives of internal accounting control insofar
as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company’s
financial statements; and, to the best of the Company’s knowledge, neither the
Company nor any employee or agent thereof has made any payment of funds of the
Company or received or retained any funds, and no funds of the Company have been
set aside to be used for any payment, in each case in violation of any law, rule
or regulation.
(dd) The
Company is not involved in any labor dispute and, to the knowledge of the
Company, no such dispute has been threatened, except for such disputes as would
not have a Material Adverse Effect on the Company, or subject the Company or its
shareholders to any material liability or disability.
(ee) Except
as disclosed in the Registration Statement or the Prospectus, (i) there has been
no storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, hazardous wastes or hazardous substances
by the Company (or to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have a
Material Adverse Effect; (ii) there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the
Company, except for any such spill, discharge, leak emission, injection, escape,
dumping or release which would not have a Material Adverse Effect; and (iii) the
terms “hazardous wastes,” “toxic wastes” and “hazardous substances” shall have
the meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
(ff) There is and has been no failure on the
part of the Company or any of the Company’s directors or officers, in their
capacities as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and the rules and regulations promulgated in connection therewith (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”), including without
limitation Section 402 related to loans and Sections 302 and 906 related to
certifications.
9
ARTICLE
II
SALE AND
DELIVERY OF SECURITIES
2.1 Sale
and Delivery of Securities.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell through the Sales Manager, as agent, and the Sales Manager agrees
to sell, as agent for the Company, on a best efforts basis, up to the Maximum
Amount of the Stock during the term of this Agreement on the terms set forth
herein. The Stock will be sold from time to time as described in the
Registration Statement and Prospectus, in amounts, and subject to price
limitations, as directed by the Company and as agreed to by the Sales
Manager.
(b) The
Company or the Sales Manager may, upon notice to the other party hereto by
telephone (confirmed promptly by facsimile), at any time and from time to time
suspend the offering of Stock; provided, however, that such
suspension shall not affect or impair the parties’ respective obligations with
respect to the Stock sold hereunder prior to the giving of such
notice.
(c) The
compensation to the Sales Manager for sales of Stock shall be at a fixed
commission rate of 4.5% of the gross sales price per share for the Stock sold
under this Agreement. The remaining proceeds, after further deduction
for any transaction fees imposed by any governmental or self-regulatory
organization in respect to such sale shall constitute the net proceeds to the
Company for such Stock (the “Net Proceeds”).
(d) The
Company shall open and maintain a trading account (the “Trading Account”) at a
clearing agent designated by the Sales Manager to facilitate the transactions
contemplated by this Agreement. The Company shall, with respect to
each sale of Stock, effect delivery of the applicable number of shares of Stock
to the Trading Account, on or before the third business day (or such other day
as is industry practice for regular-way trading) following each sale of the
Stock (each, a “Settlement Date”). The Net Proceeds from the sale of
the Stock shall be available in the Trading Account following the settlement of
the sale on the Settlement Date. The Sales Manager’s compensation
shall be withheld from the sales proceeds on each Settlement Date and shall be
paid to the Sales Manager.
(e) At
each Settlement Date, the Company shall be deemed to have affirmed each
representation, warranty, covenant and other agreement contained in this
Agreement. Any obligation of the Sales Manager under this Agreement
shall be subject to the continuing accuracy of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Article IV below.
(f) If
the Company shall default on its obligation to deliver Stock on any Settlement
Date, the Company shall (i) hold the Sales Manager harmless against any loss,
claim or damage arising from or as a result of such default by the Company and
(ii) pay the Sales Manager any commission to which it would otherwise be
entitled absent such default.
10
ARTICLE
III
COVENANTS
OF THE COMPANY
3.1 The
Company covenants and agrees with the Sales Manager that:
(a) As
promptly as practicable after the date of this Agreement, the Company will file
a supplement to the Prospectus under Rule 424(b) of the Act naming the Sales
Manager as an underwriter, to permit sales of the Stock under the
Act.
(b) During
the period in which the Sales Agent has been requested to offer and sell Stock,
the Company will notify the Sales Manager promptly of the time when any
subsequent amendment to the Registration Statement has become effective or any
subsequent supplement to the Prospectus has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or the
Prospectus or for additional information. The Company will prepare
and file with the Commission, promptly upon the Sales Manager’s reasonable
request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Sales Manager’s reasonable opinion, may be necessary or
advisable in connection with the sale of the Stock pursuant to this
Agreement. The Company will not file any amendment or supplement to
the Registration Statement or Prospectus (other than a supplement to the
Prospectus that (i) relates solely to the issuance of securities other than the
Stock of the Company pursuant to this Agreement and (ii) does not materially
change the information about the Company or its business, operations, properties
or financial condition disclosed in the Registration Statement or Prospectus
previously thereto (an “Excluded Supplement”)), unless a copy thereof has been
submitted to the Sales Manager a reasonable period of time before the filing and
the Sales Manager has not reasonably objected thereto; and it will notify the
Sales Manager at the time of filing thereof of any document that, upon filing,
is deemed to be incorporated by reference in the Registration Statement or
Prospectus (unless such document is available on the SEC’s ▇▇▇▇▇ database, in
which case no notification shall be required). The Company will cause
each amendment to the Registration Statement or supplement to the Prospectus,
and each filing or report incorporated therein, to be prepared in form and
substance as required by the Act, the Rules and Regulations, the Exchange Act
and the rules and regulations thereunder, and to be timely filed with the
Commission. Any press releases or similar publicity by the Company
related to this offering that is not covered by the preceding provisions of this
Section 3(b) must be reasonably acceptable to the Sales Manager.
(c) The
Company will advise the Sales Manager, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, of the suspension of
the qualification of the Stock for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceeding for any such purpose; and it
will promptly use its commercially reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such a stop order should be
issued.
(d) Within
the time during which a prospectus relating to the Stock is required to be
delivered under the Act, the Company will comply with all requirements imposed
upon it by the Act and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Stock as contemplated by the provisions hereof and the Prospectus, including
compliance with the requirement that the Company has not sold, within the 12
months immediately prior to, and including, each sale of Stock, securities with
an aggregate market value in excess of the amount allowed under General
Instruction I.B.6 of Form S-3 under the Act. If during such period
any event occurs as a result of which the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Act, the Company will promptly notify the Sales Manager to
suspend the offering of Stock during such period and the Company will amend or
supplement the Registration Statement or Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance
and will use commercially reasonable efforts to have any amendment or supplement
to the Registration Statement or Prospectus declared effective as soon as
possible, unless the Company has reasonable business reasons to defer public
disclosure of the relevant information.
11
(e) The
Company will use commercially reasonable efforts to qualify the Stock for sale
under the securities laws of such jurisdictions as the Sales Manager designates
in writing and to continue such qualifications in effect so long as required for
the sale of the Stock, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(f) The
Company will furnish to the Sales Manager and its legal counsel (at the expense
of the Company) copies of the Registration Statement and the Prospectus during
the period in which a prospectus relating to the Stock is required to be
delivered under the Act, in each case as soon as available and in such
quantities as the Sales Manager may from time to time reasonably
request. The Company will take such action as to enable the
conditions set forth in Rule 153(b) to be satisfied at all times that the Sales
Agent is selling Stock.
(g) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that satisfies the provisions of Section
11(a) of the Act and Rule 158 of the Rules and Regulations.
(h) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all of its expenses incident to the
performance of its obligations hereunder (including, but not limited to, any
transaction fees imposed by any governmental or self-regulatory organization
with respect to transactions contemplated by this Agreement and any blue sky
fees) and will pay the expenses of printing all documents relating to the
offering. The Company will reimburse the Sales Manager for its
reasonable out-of-pocket costs and expenses incurred in connection with entering
into this Agreement, including, without limitation, reasonable travel,
reproduction, printing and similar expenses, initial and ongoing due diligence,
and reasonable fees and disbursements of its legal counsel, up to an aggregate
amount of $50,000.00. In addition, without limiting the foregoing,
the Company will pay, or reimburse the Sales Manager for, any filing fees
incurred by the Sales Manager in connection with filings (if any) required to be
made by the Sales Manager with FINRA.
12
(i) The
Company will use commercially reasonable efforts to maintain the quotation of
the Stock on the Trading Market and to file with the Trading Market all
documents and notices required by the Trading Market of companies quotations for
which are reported by the Trading Market.
(j) The
Company will apply the Net Proceeds from the sale of the Stock as set forth in
the Prospectus.
(k) The
Company will not, directly or indirectly, offer or sell any shares of common
stock (other than the Stock) or securities convertible into or exchangeable for,
or any rights to purchase or acquire, common stock, during the period from the
date of this Agreement through the final Settlement Date for the sale of Stock
hereunder without (i) giving the Sales Manager at least eight hours prior
written notice specifying the nature of the proposed sale and the date of such
proposed sale and (ii) suspending activity under this program for such period of
time as may reasonably be determined by agreement of the Company and the Sales
Manager; provided, however, that no such
notice and suspension shall be required in connection with the Company’s
issuance or sale of (i) shares of common stock pursuant to any employee or
director stock option or benefits plan, stock ownership plan or dividend
reinvestment plan, as such plans may be amended from time to time and (ii)
common stock issuable upon conversion of securities or the exercise of warrants,
options or other rights in effect and outstanding on the date
hereof. Notwithstanding the foregoing, this paragraph (k) shall not
apply during periods that the Company is neither selling Stock through the Sales
Manager nor has requested the Sales Manager to sell Stock.
(l) The
Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise the Sales Manager immediately after it shall have
received notice or obtained knowledge thereof, of any information or fact that
would materially alter or affect any opinion, certificate, letter and other
document provided to the Sales Manager pursuant to Article IV
below.
(m) Each
time that the Registration Statement or the Prospectus shall be amended or
supplemented (other than an Excluded Supplement) and on the dates specified in
Section 4.1(f) below, the Company shall (unless the Company is not then selling
Stock through the Sales Manager and has not requested the Sales Manager to sell
Stock) furnish or cause to be furnished to the Sales Manager forthwith a
certificate, in form and substance satisfactory to the Sales Manager, to the
effect that the statements contained in the certificates referred to in Section
4.1(f) below that were last furnished to the Sales Manager are true and correct
at the time of such amendment, supplement, filing, as the case may be, as though
made at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificates, certificates of the
same tenor as the certificates referred to in said Section 4.1(f) below,
modified as necessary to relate to the Registration Statement and the Prospectus
as amended and supplemented to the time of delivery of such
certificate.
13
(n) Each
time that a post-effective amendment to the Registration Statement is declared
effective or the Company files an Annual Report on Form 10-K, and at such other
times as may be reasonably requested by the Sales Manager, the Company shall
(unless the Company is not then selling Stock through the Sales Manager and has
not requested the Sales Manager to sell Stock) furnish or cause to be furnished
forthwith to the Sales Manager and to its legal counsel, a written opinion of
▇▇▇▇▇▇▇ Procter, LLP and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP (together “Company
Counsel”), or other counsel reasonably satisfactory to the Sales Manager, dated
the date of effectiveness of such amendment or the date of filing with the
Commission of such document, as the case may be, in form and substance
satisfactory to the Sales Manager, of the same tenor as the opinion referred to
in Section 4.1(d) below, but modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such opinion. In addition, at each such time, the Company shall
cause to be forwarded to the Sales Manager such opinions of special counsel to
the Company as may be reasonably requested by the Sales Manager, as well as a
customary negative assurance letter from such counsel confirming that nothing
came to such counsel’s attention causing counsel to believe that the
Registration Statement and the Prospectus contained or contains any untrue
statement of material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
(o) Each
time that a post-effective amendment to the Registration Statement is declared
effective or the Company files a Annual Report on Form 10-K, and at such other
times as may be reasonably requested by the Sales Manager, the Company shall
(unless the Company is not then selling Stock through the Sales Manager and has
not requested the Sales Manager to sell Stock) cause Amper, Politziner &
▇▇▇▇▇▇, LLP, or other independent accountants then retained by the Company,
forthwith to furnish to the Sales Manager a letter, dated the date of
effectiveness of such amendment, or the date of filing of such supplement or
other document with the Commission, as the case may be, in form and substance
satisfactory to the Sales Manager, of the same tenor as the letter referred to
in Section 4.1(e) below but modified to relate to the Registration Statement and
the Prospectus, as amended and supplemented to the date of such
letter.
(p) The
Company represents and agrees that, unless it obtains the prior consent of the
Sales Manager, and the Sales Manager represents and agrees that, unless it
obtains the prior consent of the Company, it has not made and will not make any
offer relating to the Offered Securities that would constitute an Issuer Free
Writing Prospectus, or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405, required to be filed with the
Commission. Any such free writing prospectus consented to by the
Company and the Sales Manager is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it has treated and
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433 (“Rule 433”), and has complied
and will comply with the requirements of Rules 164 and 433, as applicable to any
Permitted Free Writing Prospectus, including timely Commission filings where
required, legending and record keeping.
For the
purposes of this Section, “Issuer Free Writing Prospectus” means any “issuer
free writing prospectus,” as defined in Rule 433 under the Act,
relating to the Stock in
the form filed or required to be filed with the Commission or, if not required
to be filed, in the form retained in the Company’s records pursuant to Rule
433(g).
14
ARTICLE
IV
CONDITIONS
OF THE SALES MANAGER’S OBLIGATIONS
4.1 The
obligations of the Sales Manager to sell the Stock as provided in this Agreement
shall be subject to the accuracy, as of the date hereof, and as of each
Settlement Date contemplated under this Agreement, of the representations and
warranties of the Company in this Agreement, to the performance by the Company
of its obligations in this Agreement and to the following additional
conditions:
(a) The
Registration Statement has been declared effective. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been instituted or, to the
knowledge of the Company or the Sales Manager, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the Sales Manager’s reasonable satisfaction. The supplement
to the Prospectus contemplated by Section 3.1(a) above has been
filed.
(b) The
Sales Manager shall not have advised the Company that the disclosures in the
Registration Statement or the Prospectus are not reasonably acceptable to the
Sales Manager.
(c) Except
as contemplated in the Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there shall not have been any material adverse change in the capital stock of
the Company, or any material adverse change, or any development that may
reasonably be expected to cause a material adverse change, in the condition
(financial or other), business, prospects, net worth or results of operations of
the Company, or any adverse change in the rating assigned to any debt securities
of the Company, if any.
(d) The
Sales Manager shall have received at the date of the first sale of Stock
hereunder (the “Commencement Date”) and at every other date specified in Section
3.1(n) above, opinions of Company Counsel and special counsel, dated as of the
Commencement Date and dated as of such other date, in form and substance
reasonably acceptable to the Sales Manager.
(e) At
the Commencement Date and at such other dates specified in Section 3.1(o) above,
the Sales Manager shall have received a “comfort letter” from Amper, Politziner
& ▇▇▇▇▇▇, LLP, independent public accountants for the Company, or other
independent accountants then retained by the Company, dated the date of delivery
thereof, in form and substance satisfactory to the Sales Manager.
(f) The
Sales Manager shall have received from the Company a certificate, or
certificates, signed by (i) the Chief Financial Officer and (ii) the President
and Chief Executive Officer or any Vice President of the Company, dated as of
the Commencement Date and (unless the Company is not then selling Stock through
the Sales Manager and has not requested the Sales Manager to sell Stock) dated
as of the first and fifteenth business day of each calendar month thereafter
(each, a “Certificate Date”), to the effect that, to the best of their knowledge
based upon reasonable investigation:
15
(i) The
representations and warranties of the Company in this Agreement are true and
correct, as if made at and as of the Commencement Date or the Certificate Date
(as the case may be), and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Commencement Date and each such Certificate Date (as the case may
be);
(ii) No
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been instituted or, to the
knowledge of such officer after due inquiry, is threatened, by the
Commission;
(iii) Since
the date of this Agreement there has occurred no event required to be set forth
in an amendment or supplement to the Registration Statement or Prospectus that
has not been so set forth and there has been no document required to be filed
under the Exchange Act and the rules and regulations of the Commission
thereunder that upon such filing would be deemed to be incorporated by reference
in the Prospectus that has not been so filed; and
(iv) Since
the date of this Agreement, there has not been any material adverse change in
the assets or properties, business, prospects, results of operations, or
condition (financial or otherwise) of the Company, which has not been described
in an amendment or supplement to the Registration Statement or Prospectus
(directly or by incorporation).
(g) At
the Commencement Date and on each Settlement Date, the Company shall have
furnished to the Sales Manager such appropriate further information, officers’
certificates and similar documents as the Sales Manager may reasonably
request.
(h) At
the Commencement Date and on each Settlement Date, the Company shall have listed
for quotation the Stock on the Trading Market.
All such
opinions, certificates, letters and other documents will be in compliance with
the provisions hereof only if they are satisfactory in form and substance to the
Sales Manager. The Company will furnish the Sales Manager with such
conformed copies of such opinions, certificates, letters and other documents, as
the Sales Manager shall reasonably request.
ARTICLE
V
INDEMNIFICATION
AND CONTRIBUTION
5.1 The
Company agrees to indemnify and hold harmless the Sales Manager and each person,
if any, who controls the Sales Manager within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act (collectively, the “Sales Manager
Indemnitees”), as follows:
(a) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment thereto), or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
16
(b) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Company; and
(c) against
any and all expense whatsoever, as incurred (including, subject to Section 5.3
below, the reasonable fees and disbursements of legal counsel chosen by the
Sales Manager), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (a) or (b)
above;
provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by the Sales Manager expressly
for use in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
5.2 The
Sales Manager agrees to indemnify and hold harmless the Company and its
directors and each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
Section 5.1 above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendments thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Sales
Manager expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto). The total liability of the Sales Manager under
this Section 5.2 shall not exceed the amount paid to the Sales Manager pursuant
to Section 2.1(c) of this Agreement.
17
5.3 Any
indemnified party that proposes to assert the right to be indemnified under this
Article V will, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Article V, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from any liability that it might have to any
indemnified party to the extent it is not materially prejudiced as a result
thereof. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with legal counsel reasonably satisfactory to the indemnified party,
and after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided
below. The indemnified party will have the right to employ its own
legal counsel in any such action, but the fees, expenses and other charges of
such legal counsel will be at the expense of such indemnified party unless (1)
the employment of legal counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on the written advice of legal counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on the written advice of legal counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed legal counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of legal counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm admitted to practice in such jurisdiction at any
one time for all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred. An indemnifying party will not be
liable for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld).
5.4 In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in the foregoing paragraphs of this Article V
is applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Sales Manager, the Company and the Sales
Manager will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Sales Manager, such as
persons who control the Company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the Sales Manager
may be subject in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the Sales Manager
on the other. The relative benefits received by the Company on the
one hand and the Sales Manager on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total compensation (before
deducting expenses) received by the Sales Manager from the sale of Stock on
behalf of the Company. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Sales Manager, on the
other, with respect to the statements or omission which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such
offering. Such relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Sales Manager, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Sales Manager agree that
it would not be just and equitable if contributions pursuant to this Section 5.4
were to be determined by pro rata allocation or by any other method of
allocation, which does not take into account, the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 5.4 shall be deemed to
include, for the purpose of this Section 5.4, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the foregoing
provisions of this Section 5.4, the Sales Manager shall not be required to
contribute any amount in excess of the amount by which the amount paid to the
Sales Manager pursuant to Section 2.1(c) of this Agreement exceeds the amount of
any damages that the Sales Manager has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission and
no person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5.4, any person who controls a party to this Agreement within the
meaning of the Act will have the same rights to contribution as that party, and
each officer and director of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 5.4, will notify any such party or parties from whom contribution may be
sought, but the omission so to notify will not relieve that party or parties
from whom contribution may be sought from any other obligation it or they may
have under this Section 5.4. No party will be liable for contribution
with respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
18
5.5 The
indemnity and contribution provided by this Article V shall not relieve the
Company and the Sales Manager from any liability the Company and the Sales
Manager may otherwise have (including, without limitation, any liability the
Sales Manager may have for a breach of its obligations under Article II
above).
ARTICLE
VI
REPRESENTATIONS
AND AGREEMENTS TO SURVIVE DELIVERY
6.1 All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Sales Manager
contained in Article V above, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Sales Manager
or any controlling persons, or the Company (or any of their officers, directors
or controlling persons), and shall survive delivery of and payment for the
Stock.
ARTICLE
VII
TERMINATION
7.1 The
Company shall have the right, by giving notice as hereinafter specified, to
terminate this Agreement in its sole discretion at any time. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 3.1(h), Article V and Article VI above shall
remain in full force and effect notwithstanding such termination.
7.2 The
Sales Manager shall have the right, by giving notice as hereinafter specified,
to terminate this Agreement in its sole discretion at any time. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 3.1(h), Article V and Article VI above
shall remain in full force and effect notwithstanding such
termination.
7.3 This
Agreement shall remain in full force and effect unless terminated pursuant to
Sections 7.1 or 7.2 above or otherwise by mutual agreement of the parties;
provided that any such termination by mutual agreement shall in all cases be
deemed to provide that Section 3.1(h), Article V and Article VI above shall
remain in full force and effect.
7.4 Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided that such termination shall not be effective
until the close of business on the date of receipt of such notice by the Sales
Manager or the Company, as the case may be. If such termination shall
occur during a period when sales of Stock are being made pursuant to this
Agreement, any sales of Stock made prior to the termination of this Agreement
shall settle in accordance with the provisions of this Agreement.
ARTICLE
VIII
NOTICES
8.1 All
notices or communications hereunder shall be in writing and if sent to the Sales
Manager shall be mailed, delivered or facsimiled and confirmed to the Sales
Manager at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Corporate
Finance, or if sent to the Company, shall be mailed, delivered or telecopied and
confirmed to the Company at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer; facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇. Each party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
19
ARTICLE
IX
MISCELLANEOUS
9.1 This
Agreement shall inure to the benefit of and be binding upon the Company and the
Sales Manager and their respective successors and the controlling persons,
officers and directors referred to in Article V above, and no other person will
have any right or obligation hereunder.
9.2 Indemnification
pursuant to Section 5.1 hereof will not constitute the exclusive remedy
available to the Sales Manager Indemnitees for any breach or alleged breach by
the Company of any representation, warranty, covenant or agreement contained in
this Agreement.
9.3 This
Agreement constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, between the
parties hereto with regard to the subject matter hereof.
9.4 THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS.
9.5 This
Agreement may be executed in two counterparts, each of which shall be deemed an
original, but both of which together shall constitute one and the same
instrument. The parties agree that this Agreement will be considered
signed when the signature of a party is delivered by facsimile
transmission. Such facsimile transmission shall be treated in all
respects as having the same effect as an original signature.
[Remainder
of Page Intentionally Left Blank]
20
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date
hereof.
| NEXMED, INC. | |||
|
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D | |||
| Title: President and Chief Executive Officer | |||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SECURITIES CORPORATION | |||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇ | ||
| Name: ▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Managing Director | |||
21
SCHEDULE
1.1(f)
List of
Significant Subsidiaries
Bio-Quant,
Inc.
NexMed
(U.S.A.), Inc.