REGISTRATION RIGHTS AGREEMENT
Exhibit
10.3
EXECUTION
VERSION
This
Registration Rights Agreement (the "Agreement") is made and entered into as
of
October 26,
2007 by
and between NexMed, Inc., a Nevada corporation (the "Company"), and the
"Purchaser" named in that Purchase Agreement of even date herewith by and
between the Company and the Purchaser (the "Purchase Agreement").
The
parties hereby agree as follows:
1.
Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following meanings and
any
terms
not defined herein shall have the meaning ascribed to them in the Purchase
Agreement:
"Common
Stock"
shall
mean the Company's common stock, par value $0.001 per share.
"Investor"
and
"Investors"
shall
mean the Purchaser identified in the Purchase Agreement and any transferee
of
the Purchaser who is a permitted assignee of any Note, Warrant or Registrable
Securities.
"Note"
shall
mean the Company's note Due June 30, 2009 issued and sold to the Purchaser
pursuant to the Purchase Agreement.
"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.
"Trading
Day"
shall
mean a day on which there is trading on the Principal Market.
"Prospectus"
shall
mean the prospectus included in any Registration Statement, as amended
or supplemented by any prospectus supplement, with respect to the terms of
the
offering
of any portion of the Registrable Securities covered by such Registration
Statement and by
all
other amendments and supplements to the prospectus, including post-effective
amendments
and all material incorporated by reference in such prospectus.
"Register,"
"registered"
and
"registration"
refer
to a registration made by preparing
and filing a registration statement or similar document in compliance with
the
1933 Act
(as
defined below), and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable
Securities"
shall
mean (a) the Underlying Shares or other securities issued or issuable to each
Holder or its permitted transferee or designee (i) upon exercise of the
Warrant,
or (ii) upon any distribution with respect to, any exchange for or any
replacement of such
Warrant, or (iii) upon any conversion, exercise or exchange of any securities
issued in connection
with any such distribution, exchange or replacement; (b) securities issued
or
issuable upon
any
stock split, stock dividend, recapitalization or similar event with respect
to
the foregoing;
and (c) any other security issued as a dividend or other distribution with
respect to, in exchange for or in replacement of the securities referred to
in
the preceding clauses.
"Registration
Statement"
shall
mean any registration statement filed under the 1933
Act
of the Company that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement, amendments and supplements to
such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
"SEC"
means
the U.S. Securities and Exchange Commission.
"Underlying
Shares"
means
the shares underlying the Warrant to purchase up to: (i) 350,000 shares of
the
Company's Common Stock upon Closing, and (ii) 100,000 shares of the Company's
Common Stock if the Note remains outstanding twelve (12) months from the
date
of
this Registration Rights Agreement.
"Warrant"
means
the Company's warrant issued and sold to the Purchaser pursuant
to the Purchase Agreement.
"1933
Act"
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
"1934
Act"
means
the Securities Exchange Act of 1934, as amended, and the rules
and
regulations promulgated thereunder.
2.
Registration.
(a) Registration
Statements.
Following the closing of the purchase and sale of the
Note
and Warrant contemplated by the Purchase Agreement (the "Closing Date") and
before November
30, 2007, the Company shall prepare and file with the SEC one Registration
Statement
on Form S-3 (or, if Form S-3 is not then available to the Company, on such
form
of registration statement as is then available to effect a registration for
resale of the Registrable Securities) covering the resale of the Registrable
Securities in an amount equal to the number of shares
of
Common Stock necessary to permit the exercise in full of the Warrant. Such
Registration
Statement also shall cover, to the extent allowable under the 1933 Act and
the
Rules promulgated thereunder (including Rule 416), such indeterminate number
of
additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions
with
respect to the
Registrable Securities. The Registration Statement (and each amendment or
supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided
in
accordance
with Section 3(c) to counsel to the Investor prior to its filing or other
submission.
(b) Expenses.
The
Company will pay all expenses associated with each registration, but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals.
(c) Effectiveness.
(i) The
Company shall use its best efforts to have each Registration Statement
declared effective as soon as practicable, but in no event later than 5 days
following the
date
on which the SEC notifies the Company or its counsel that the Registration
Statement is not subject to any further review. In connection therewith, the
Company shall respond to all SEC comments on the Registration Statement and
file
any amendments to the Registration Statement as soon as reasonably practicable
following any date on which the SEC furnishes comments to, asks questions of,
or
requests further information from, the Company or its counsel with respect
to
the Registration Statement or any part thereof or any document incorporated
by
reference therein. After any Registration Statement is declared effective by
the
SEC, the Company
shall cause such Registration Statement to remain effective in accordance with
the terms
hereof, subject to permitted suspension of such effectiveness only for Allowed
Delays (as defined below). On or prior to the date any Registration Statement
is
declared effective by the SEC, the Company shall cause the Registrable
Securities to be specifically listed or included for quotation on the Nasdaq
National Market System, the Nasdaq Small Cap Market, the New York Stock
Exchange or the American Stock Exchange, and maintain such listing and quotation
for the
Registrable Securities and the Common Stock in general.
(ii) For
not
more than twenty (20) consecutive Trading Days and
for a
total of not more than sixty (60) Trading Days in any twelve (12) consecutive
month period, the Company may delay the disclosure of material non-public
information concerning the Company, by suspending effectiveness of any
registration
contemplated by this Section not containing such information, the disclosure
of
which
at
the time is not, in the good faith opinion of the Company, in the best interests
of the Company
(an "Allowed Delay"); provided, that the Company shall promptly (a) notify
the
Investor
in writing of the existence of (but in no event, without the prior written
consent of the Investor, shall the Company disclose to the Investor any of
the
facts or circumstances regarding) material non-public information giving rise to
an Allowed Delay, and (b) advise the Investor in writing
to cease all sales under the Registration Statement until the end of the Allowed
Delay. The
duration of the Registration Period will be extended by the number of days
of
any and all Allowed Delays.
(d)
Underwritten
Offering.
If any
offering pursuant to a Registration Statement
pursuant to Section 2(a) hereof involves an underwritten offering, the Company
shall have the right to select an investment banker and manager to administer
the offering, which investment banker or manager shall be reasonably
satisfactory to the Investor.
3. Company
Obligations.
The
Company will use its best efforts to effect the registration
of the Registrable Securities in accordance with the terms hereof, and pursuant
thereto
the Company will, as expeditiously as possible:
(a) use
its
best efforts to cause such Registration Statement to become effective
and to remain continuously effective for a period (the "Registration Period")
that will terminate upon the earlier of the date on which all Registrable
Securities, covered by such Registration Statement, as amended from time to
time
(i) have been sold or (ii) become available for resale without registration
or
limitation pursuant to Rule 144(k) of the 1933 Act.
(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 3(a) and
to
comply with the provisions of the 1933 Act and the 1934 Act with respect to
the
distribution of all Registrable Securities;
provided that, at least five (5) business days prior to the filing of a
Registration Statement
or Prospectus, or any amendments or supplements thereto, the Company will
furnish to
counsel to the Investor copies of all documents proposed to be
filed;
(c) permit
counsel designated by the Investor to review each Registration Statement
and all amendments and supplements thereto no fewer than five (5) business
days
prior
to
their filing with the SEC, and reimburse Investor for the documented cost of
such review, not to exceed $2,000.00;
(d) furnish
to the Investor and its legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus
and each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or
the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion
of any thereof which contains information for which the Company has sought
confidential
treatment, and provided that such items shall be redacted prior to delivering
to
the Investor and its counsel to the extent necessary to avoid disclosure of
material non-public information concerning the Company), and (ii) such number
of
copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor;
(e) in
the
event the Company selects an underwriter for the offering, the Company
shall enter into and perform its reasonable obligations under an underwriting
agreement,
in usual and customary form, including, without limitation, customary
indemnification
and contribution obligations, with the underwriter of such
offering;
(f) if
required by the underwriter, at the request of the Investor, the Company
shall
furnish, on the date that Registrable Securities, as applicable, are delivered
to an underwriter,
if any, for sale in connection with the Registration Statement (i) an opinion,
dated as of
such
date, from counsel representing the Company for purposes of such Registration
Statement,
in form, scope and substance as is customarily given in an underwritten public
offering,
addressed to the underwriter and the Investor and (ii) a letter, dated such
date, from the Company's
independent certified public accountants in form and substance as is customarily
given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriter and the Investor;
(g) make
reasonable effort to prevent the issuance of any stop order or other
suspension
of effectiveness and, if such order is issued, obtain the withdrawal of any
such
order at
the
earliest possible moment;
(h) prior
to
any public offering of Registrable Securities, use its reasonable best
efforts to register or qualify or cooperate with the Investor and its counsel
in
connection with
the
registration or qualification of such Registrable Securities for offer and
sale
under the securities
or blue sky laws of such jurisdictions as the Investor reasonably requests
in
writing and do
any
and all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by
the
Registration Statement, provided that
the
Company shall not be required in connection therewith or as a condition thereto
to qualify
to do business or to file a general consent to service of process in any such
states or jurisdictions, or to become subject to any tax in any such state
or
jurisdiction where it is not otherwise subject;
(i) cause
all
Registrable Securities covered by a Registration Statement to be listed on
each
securities exchange, interdealer quotation system or other market on which
similar securities issued by the Company are then quoted or listed;
(j) immediately
notify the Investor, at any time when a Prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act,
upon discovery that,
or
upon the happening of any event as a result of which, the Prospectus included
in
such Registration Statement, as then in effect, includes an untrue statement
of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the request
of any such holder,
promptly prepare and furnish to such holder a reasonable number of copies of
a
supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such Registrable Securities, such Prospectus
shall
not include 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 in the light of the circumstances then existing; and
(k) otherwise
use its best efforts to comply with all applicable rules and regulations of
the
SEC under the 1933 Act and the 1934 Act, take such other actions as may be
reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder; and make
available to its security holders, as soon as reasonably practicable, but not
later than the Availability Date (as defined below), an earnings statement
covering a period of at least twelve months,
beginning after the effective date of each Registration Statement, which
earnings statement
shall satisfy the provisions of Section 11(a) of the 1933 Act (for the purpose
of this subsection 3(1), "Availability Date" means the 45th day following the
end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter).
4.
Obligations
of the Investor.
(a)
It
shall be a condition precedent to the obligations of the Company to complete
the registration pursuant to this Agreement with respect to the Registrable
Securities, that the Investor shall furnish in writing to the Company such
information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities,
and shall execute such documents in connection with such registration as the
Company
may reasonably request. At least ten (10) business days prior to the first
anticipated filing
date of any Registration Statement, the Company shall notify the Investor of
the
information
the Company requires from the Investor if the Investor elects to have any of
the
Registrable Securities included in the Registration Statement. The Investor
shall provide such information to the Company at least five (5) business days
prior to the first anticipated filing date of such Registration Statement if
the
Investor elects to have any of the Registrable Securities included in the
Registration Statement.
(b) The
Investor, by its acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation
and filing of a Registration Statement hereunder, unless such Investor has
notified the
Company in writing of its election to exclude all of its Registrable Securities
from the Registration Statement, in which case the Investor shall be deemed
to
have waived its rights to have Registrable Securities registered under this
Agreement.
(c) The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event rendering a Registration Statement no longer effective,
the Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities,
until the Investor's receipt of the copies of the supplemented or amended
prospectus filed with the SEC and, if required, declared effective and, if
so
directed by the Company, the Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in the Investor's possession of the prospectus covering
the Registrable Securities, current at the time of receipt of such
notice.
5.
Indemnification.
(a)
Indemnification
by Company.
The
Company agrees to indemnify and hold
harmless, to the fullest extent permitted by law the Investor, its officers,
directors, stockholders and employees and each person who controls such Investor
(within the meaning of the 0000 Xxx) against all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses imposed on such person caused by (i) any untrue
or
alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or any
preliminary prospectus or any amendment or supplement thereto or any omission
or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar
as
the same are based upon any information furnished
in writing to the Company by such Investor, expressly for use therein, or (ii)
any violation
by the Company of any federal, state or common law, rule or regulation
applicable to the
Company in connection with any Registration Statement, Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, and shall
reimburse in accordance with subparagraph (c) below, each of the foregoing
persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claims. The
foregoing
is subject to the condition that, insofar as the foregoing indemnities relate
to
any untrue
statement, alleged untrue statement, omission or alleged omission made in any
preliminary
prospectus or Prospectus that is eliminated or remedied in any Prospectus or
amendment
or supplement thereto, the above indemnity obligations of the Company shall
not
inure
to
the benefit of any indemnified party if a copy of such corrected Prospectus
or
amendment
or supplement thereto had been made available to such indemnified party and
was
not
sent
or given by such indemnified party at or prior to the time such action was
required of such
indemnified party by the 1933 Act and if delivery of such Prospectus or
amendment or supplement thereto would have eliminated (or been a sufficient
defense to) any liability of such indemnified party with respect to such
statement or omission. Indemnity under this Section 5(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the permitted transfer of the Registrable
Securities.
(b) Indemnification
by Holder.
In
connection with any registration pursuant to
the
terms of this Agreement, the Investor will furnish to the Company in writing
such information
as the Company reasonably requests concerning the holders of Registrable
Securities or
the
proposed manner of distribution for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and
expense (including reasonable attorney's fees) resulting from any untrue
statement of a material
fact or any omission of a material fact required to be stated in the
Registration Statement or
Prospectus or preliminary prospectus or amendment or supplement thereto or
necessary to make
the
statements therein not misleading, to the extent, but only to the extent that
such untrue statement
or omission is contained in any information furnished in writing by such
Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment
or supplement thereto. In no event shall the liability of an Investor be greater
in amount
than the dollar amount of the proceeds (net of all expense paid by such Investor
and the amount of any damages such holder has otherwise been required to pay
by
reason of such untrue statement or omission) received by such Investor upon
the
sale of the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying party of any claim
with
respect to which it seeks indemnification and (ii) permit such indemnifying
party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided that
any
person entitled to indemnification hereunder shall have the right to employ
separate counsel
and to participate in the defense of such claim, but the fees and expenses
of
such counsel shall be at the expense of such person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (c) in the reasonable judgment
of any such person, based upon written advice of its counsel, a conflict of
interest exists
between such person and the indemnifying party with respect to such claims
(in
which case,
if
the person notifies the indemnifying party in writing that such person elects
to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the
right
to assume the defense of such claim on behalf of such person); and provided,
further, that
the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying
party of its obligations hereunder, except to the extent that such failure
to
give notice
shall materially adversely affect the indemnifying party in the defense of
any
such claim or
litigation. It is understood that the indemnifying party shall not, in
connection with any proceeding
in the same jurisdiction, be liable for fees or expenses of more than one
separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with
the
consent of the indemnified party, consent to entry of any judgment or enter
into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
(d)
Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it
harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to
the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the relative
fault of the indemnified party and
the
indemnifying party, as well as any other relevant equitable considerations.
No
person guilty
of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder and the amount of any damages
such holder has otherwise been required to pay by reason of such untrue or
alleged untrue
statement or omission or alleged omission) received by it upon the sale of
all
the Registrable
Securities sold by such indemnified party which were covered by the relevant
Registration Statement or Prospectus contained therein.
6. Miscellaneous.
(a)
Amendments
and Waivers.
This
Agreement may be amended only by a writing
signed by the parties hereto. The Company may take any action herein prohibited,
or omit
to
perform any act herein required to be performed by it, only if the Company
shall
have obtained the written consent to such amendment, action or omission to
act,
of the Investor.
(b)
Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in the Purchase Agreement.
(c)
Assignments
and Transfers by Investor.
This
Agreement and all the rights and
obligations of the Investor hereunder may not be assigned or transferred to
any
transferee or assignee except to a holder of any Note or Registrable Securities
which is a permitted assignee pursuant to the assignment provisions of such
instruments.
(d)
Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company without the prior written consent
of Investor, except that without the prior written consent of the Investor,
but
after notice duly given, the Company shall assign its rights and delegate its
duties hereunder to any successor-in-interest corporation, and such successor-in-interest
shall assume such rights and duties, in the event of a merger or consolidation
of the Company with or into another corporation or the sale of all or
substantially all
of
the Company's assets.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of
the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(f) Counterparts.
This
Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one
and
the same instrument.
(g) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used
for
convenience only and are not to be considered in construing or interpreting
this
Agreement.
(h) Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and
the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be
enforceable in accordance with its terms to the fullest extent permitted by
law.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments
and documents and take all such other actions as may reasonably be required
to
carry
out
the transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(k) Applicable
Law.
This
Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to principles of
conflicts of law.
(l) No
Jury Trial.
The
Company and, by acceptance of the benefits hereof, the Purchaser, knowingly
and
voluntarily waive any and all rights they may have to a trial by jury with
respect to any litigation based on, or arising out of, under, or in connection
with, this Registration Rights Agreement and for any counterclaim
therein.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
The
Company:
|
NEXMED, INC. | |
|
|
|
By: | /s/ Xxxx Xxxxxxxx | |
Xxxx Xxxxxxxx |
||
Vice President and Chief Financial Officer |
The
Investor:
|
TWIN RIVERS ASSOCIATES LLC | |
|
|
|
By: | /s/ Xxxxxxx Duck Jr. | |
Xxxxxxx Duck Jr. |
||
Managing Member |