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Exhibit 10.5
SUBSIDIARY GUARANTY
SUBSIDIARY
GUARANTY, dated as of June 30, 2008, made by NexMed (U.S.A),
Inc., a Delaware corporation (the “
Guarantor ”),
in favor of each of the Holders (as defined below).
W I T N E S S E T H:
Whereas, pursuant
to that certain Purchase Agreement (the “
Purchase Agreement ”)
dated on or about the date hereof by and among NexMed, Inc., a
Nevada corporation (the “
Company ”),
and the Purchasers named therein (the “
Purchasers ”),
the Company issued to the Purchasers the Company’s 7%
Convertible Notes Due December 31, 2011 (the “
Notes ”);
and
Whereas, the
Guarantor is a wholly-owned subsidiary of the Company;
and
Whereas ,
as a condition precedent to the Purchasers’ purchase of the
Notes and in order to induce the Purchasers to purchase the Notes
and make the loans evidenced by the Notes, the Company agreed that
the Guarantor would guaranty the obligations under the Notes in
accordance with the terms set forth in this Guaranty, the Notes,
the Mortgage (as defined herein) and the Purchase
Agreement.
NOW, THEREFORE, in
consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce the Holders to make and maintain
the loans evidenced by the Notes, Guarantor hereby agrees with the
Holders as follows:
SECTION 1.
DEFINED TERMS
1.1
Definitions
(a)
Capitalized
terms used herein and not otherwise defined herein shall have
the meanings given to them in the Notes or Purchase
Agreement.
(b)
The
following terms shall have the following
meanings:
“
Guaranty ”
means this Subsidiary Guaranty, as the same may be amended,
supplemented or otherwise modified from time to time.
“
Holders ”
mean all of the Holders (as identified in each Note) of the
Notes.
“
Mortgage ”
means the Mortgage, Security Agreement and Assignment of Leases and
Rents executed by the Guarantor in favor of the Purchasers on or
about the date hereof, securing the Company’s Obligations
under the Notes and the Guarantor’s obligations
hereunder.
“
Obligations ”
mean the collective reference to the unpaid principal of and
default interest on the Notes and Accreted Amounts thereunder and
all other obligations and liabilities of the Company to the Holders
(including, without limitation, default interest accruing at the
then applicable rate provided in the Notes after the maturity of
the Notes and interest accruing at the then applicable rate after
the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the
Company, if a claim for post-filing or post-petition interest is
allowed in such proceeding, and including, without limitation, the
conversion of Notes into Common Stock), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection
with, the Purchase Agreement, the Notes, this Guaranty, the
Mortgage or the other Agreements, or any other document made,
delivered or given in connection therewith, in each case whether on
account of principal, interest, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Holders that are required to be
paid by the Company or the Guarantor pursuant to the terms of any
of the foregoing agreements).
“
Person ”
shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture
or other entity or a governmental authority.
1.2
Other Definitional Provisions .
The
words “hereof,” “herein”,
“hereto” and “hereunder” and words of
similar import when used in this Guaranty shall refer to this
Guaranty as a whole and not to any particular provision of this
Guaranty, and Section references are to this Guaranty unless
otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms
of such terms.
SECTION 2.
GUARANTY
2.1
Guaranty .
The Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to the Holders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment
and performance by the Company when due (whether at the stated
maturity, by acceleration or otherwise) of the
Obligations.
2.2
Nature of Guaranty .
Guarantor’s liability under this Guaranty shall be unlimited,
open and continuous for so long as this Guaranty remains in force.
Guarantor intends to guaranty at all times the performance and
prompt payment when due, whether at maturity or earlier by reason
of acceleration or otherwise, of all Obligations. Accordingly, no
payments made upon the Obligations will discharge or diminish the
continuing liability of Guarantor in connection with any remaining
portions of the Obligations or any of the Obligations which
subsequently arises or is thereafter incurred or contracted. No
payment made by the Company, the Guarantor, any other guarantor or
any other Person or received or collected by the Holders from the
Company, the Guarantor, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation
or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of Guarantor hereunder
which shall, notwithstanding any such payment (other than payment
and performance in full of the Obligations), remain liable for the
Obligations until the Obligations are paid and performed in
full.
2.3
Duration of Guaranty .
This Guaranty will take effect when received by the Holders without
the necessity of any acceptance by the Holders, or any notice to
Guarantor or to the Company, and will continue in full force until
all the Obligations incurred or contracted shall have been fully
and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full.
All renewals, extensions, substitutions, and modifications of the
Obligations, release of any other guarantor or termination of any
other guaranty, of the Obligations shall not affect the liability
of Guarantor under this Guaranty. This Guaranty is irrevocable and
is binding upon Guarantor and Guarantor’s successors and
assigns so long as any of the guaranteed Obligations remain
unpaid.
2.4
No Subrogation .
Notwithstanding any payment made by the Guarantor hereunder or any
set-off or application of funds of the Guarantor by the Holders,
the Guarantor shall not be entitled to be subrogated to any of the
rights of the Holders against the Company or any other guarantor or
guaranty or right of offset held by the Holders for the payment of
the Obligations, nor shall the Guarantor seek or be entitled to
seek any contribution or reimbursement from the Company or any
other guarantor in respect of payments made by the Guarantor
hereunder, until all amounts owing to the Holders by the Company on
account of the Obligations are paid in full. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any
time when all of the Obligations shall not have been paid and
performed in full, such amount shall be held in trust for the
benefit of the Holders, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Holders in the exact form received by such
Guarantor (duly indorsed by the Guarantor to the Holders, if
required), to be applied against the Obligations, whether matured
or unmatured, in such order as the Holders may
determine.
2.5
Amendments, Etc. With Respect To The Obligations
.
Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for
payment or performance of any of the Obligations made by any of the
Holders may be rescinded by such Holder and any of the Obligations
continued, and the Obligations, or the liability of any other
Person upon or for any part thereof, or guaranty therefor or right
of offset with respect thereto, may, from time to time, in whole or
in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Holders, and
the Purchase Agreement, the Notes and the other Agreements and any
other documents executed and delivered in connection therewith may
be amended, modified, supplemented or terminated, in whole or in
part, as the Holders may deem advisable from time to time, and any
guaranty or right of offset at any time held by the Purchasers for
the payment of the Obligations may be sold, exchanged, waived,
surrendered or released.
2.6
Guaranty Absolute And Unconditional .
Guarantor hereby waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by the Holders upon the guaranty contained
in this Section 2 or acceptance of the guaranty contained in this
Section 2; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the Guaranty
contained in this Section 2; and all dealings between the Company
and the Guarantor, on the one hand, and the Holders, on the other
hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guaranty contained in this Section
2. Guarantor hereby waives, to the extent permitted by law,
diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon the Company or the Guarantor with
respect to the Obligations. Guarantor understands and agrees that
the guaranty contained in this Section 2 shall be construed as a
continuing, absolute and unconditional Guaranty of payment and
performance without regard to (a) the validity or enforceability of
the Purchase Agreement, Notes or any of the other Agreements, any
of the Obligations or any other guaranty or right of offset with
respect thereto at any time or from time to time held by the
Holders, (b) any defense, set-off or counterclaim (other than a
defense of actual payment and performance of all Obligations) which
may at any time be available to or be asserted by the Company or
any other Person against the Holders, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company
or Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Company for the
Obligations, or of Guarantor under the guaranty contained in this
Section 2, in bankruptcy or in any other instance. When making any
demand hereunder or otherwise pursuing its rights and remedies
hereunder against Guarantor, the Holders may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such
rights and remedies as they may have against the Company or any
other Person or against any other guaranty for the Obligations or
any right of offset with respect thereto, and any failure by the
Holders to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Company or any other
Person or to realize upon any such other guaranty or to exercise
any such right of offset, or any release of the Company or any
other Person or any such other guaranty or right of offset, shall
not relieve Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Holders
against any Guarantor.
2.7
Reinstatement .
The guaranty contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Holders
upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company, Guarantor or any other guarantor of
the Obligations, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar
officer for, the Company, Guarantor or any other guarantor of the
Obligations or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.8
Payments .
Guarantor hereby guarantees that payments hereunder will be paid to
the Holders without set-off or counterclaim in U.S. dollars at the
addresses set forth or referred to on the signature pages to the
Purchase Agreement (or as otherwise required by the Notes) or by
wire transfer pursuant to instructions provided to the Guarantor by
the Holders.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
Guarantor
represents and warrants to the Holders that:
3.1
Organization, Good Standing and Qualification
.
The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority
to carry on its business as now conducted and own its properties.
The Guarantor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
makes such qualification or licensing necessary unless the failure
to so qualify would not be reasonably likely to result in a
Material Adverse Effect. The Guarantor does not have any
subsidiaries, except for New Brunswick Medical Inc, a Delaware
corporation which is a wholly-owned subsidiary of the Guarantor,
which subsidiary does not own a material amount of assets. The
Guarantor is a wholly-owned subsidiary of the Company and owns, and
has good and marketable title to, all the Mortgaged Property (as
defined in the Mortgage) free and clear of all liens, claims,
encumbrances and defects except those that would not individually
or in the aggregate materially affect the value thereof or
materially interfere with the use made or currently planned to be
made thereof.
3.2
Authorization .
The Guarantor has full power and authority and has taken all
requisite action on the part of the Guarantor, its officers,
directors and stockholders necessary for (i) the authorization,
execution and delivery of this Guaranty and the Mortgage, and (ii)
authorization of the performance of all obligations of the
Guarantor hereunder and thereunder. This Guaranty and the Mortgage
constitute legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with their terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to
or affecting creditors’ rights generally.
3.3
Consents .
The execution, delivery and performance by the Company of this
Guaranty and the Mortgage require no consent of, action by or in
respect of, or filing with, any Person, govern
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