REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as
of this 4th day of August, 1998, by and among INNOVUS CORPORATION, a
Delaware corporation (the "Company"), and those holders of the
Company's Series H Preferred Stock ("Preferred Stock") as listed in
Exhibit A hereto (each individually, a "Holder" and collectively, the
"Holders")
R E C I T A L S
A. Pursuant to the Agreement And Plan Of Share Exchange
(the "Acquisition Agreement"), as amended, made as of the 5th day of
May, 1998, by and among the Company, INTERMARK CORPORATION, a
California corporation ("Intermark"), and the security holders of
Intermark identified on the signature pages thereto (the "Acquisition
Agreement"), the Company is, on the date hereof, issuing to the Holders
1,033,669 shares of the Company's Common Stock and an aggregate of
78,706 shares of Preferred Stock convertible into an aggregate of
44,272,125 shares of the Company's Common Stock, subject only to their
being sufficient authorized and unissued shares of Common Stock for
issuance upon conversion (the Company's Common Stock, including shares
of a successor issuer, reclassified shares, or shares received in
exchange for such shares in a reorganization of the Company, herein
called the "Common Stock").
B. It is a condition to the obligations of the Holders
under the Acquisition Agreement that this Agreement be executed by the
parties hereto, and the parties are willing to execute this Agreement
and to be bound by the provisions hereof.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the Company and the Holders agree as follows:
REGISTRATION
1. DEFINITIONS
As used herein:
1.1 The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the declaration or
ordering of the effectiveness of such registration statement
1.2 The term "Registrable Shares" means and includes the Common
Stock held by the Holders as of the date of this Agreement or issued or
issuable upon conversion of the Preferred Stock. In the event that any
Holder desires to convert any shares of Preferred Stock and
insufficient shares of Common Stock are reserved for issuance upon such
conversion at any time on or after the expiration of one year after the
date hereof, all of the Holders shall have registration rights with
respect to the Preferred Stock equal to the registration rights with
respect to the Common Stock, and all rights of Holders with respect to
Common Stock shall become rights with respect to Preferred Stock and/or
Common Stock.
1.3 The term "Ownership Percentage" means and includes, with
respect to each Holder requesting inclusion of Registrable Shares in an
offering pursuant to this Agreement, the number of Registrable Shares
held by such Holder divided by the aggregate of (i) all Registrable
Shares held collectively by the Holders requesting registration in such
offering and (ii) the total number of all other securities entitled to
registration pursuant to agreements with the Company and held by others
participating in the offering.
1.4 The term "Securities Act" means the Securities Act of 1933,
as amended.
2. REGISTRATION RIGHTS
2.1 "PIGGY BACK" REGISTRATION. If at any time the Company shall
determine to register under the Securities Act (including pursuant to a
demand of any shareholder of the Company exercising registration
rights) any of its Common Stock (except shares to be issued solely in
connection with any acquisition of any entity or business, shares
issuable solely upon exercise of stock options, or shares issuable
solely pursuant to employee benefit plans), it shall send to each
Holder written notice of such determination and, if within ten (10)
days after receipt of such notice, such Holder shall so request in
writing, the Company shall use its best efforts to include in such
registration statement all or any part of the Registrable Shares that
such Holder requests to be registered, except that if, in connection
with the first underwritten public offering under the Securities Act of
Common Stock to be issued by the Company after the date of this
Agreement, the managing underwriter shall impose a limitation on the
number of shares of Common Stock included in any such registration
statement because, in its judgment, such limitation is necessary to
effect an orderly public distribution, and such limitation is imposed
as provided herein among the holders of such Common Stock having an
incidental ("piggy back") right to include such Common Stock in the
registration statement, then, to the extent any Registrable Shares
remain available for registration after the underwriter's cut-back (the
"Available Shares"), the Company shall be obligated to include in such
registration statement, with respect to the requesting Holder, only the
product of (i) the number of Available Shares and (ii) such Holder's
Ownership Percentage, as that term is defined in Section 1.3.
Notwithstanding the foregoing, such a reduction or cut-back shall be
made by the underwriter with respect to all of the holders of Common
Stock having rights to include such Common Stock in the registration
statement, as follows: the underwriter shall reduce or cut-back a
number of the Holders' Registrable Shares based on reducing all
holder's shares to be included to an amount that is proportionate to
such holder's respective Ownership Percentage. If any Holder
disapproves of the terms of such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. No
incidental right under this Section 2.1 shall be construed to limit any
registration required under Section 2.2.
2.2 REGISTRATION ON FORM S-3. In addition to the rights
provided to the Holders in Section 2.1 above, if a registration of
Registrable Shares under the Securities Act can be effected on Form S-3
(or any similar form promulgated by the Securities and Exchange
Commission (the "Commission")), the Company will use its best efforts
to effect qualification and registration under the Securities Act on
said Form S-3 of all or such portion of the Registrable Shares as the
Holder or Holders shall specify. Notwithstanding the foregoing, the
Company shall not be required to register any Registrable Shares on
Form S-3 pursuant to a demand by the Holders thereof (i) which would
constitute an aggregate offering of less than $500,000; (ii) within 180
days of a prior registration; or (iii) more than twice during any
calendar year. Notwithstanding anything contained in this Section 2.2
to the contrary, if the Company furnishes to the Holders requesting any
registration rights pursuant to this Section 2.2 a certificate signed
by the President of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, such registration
would be detrimental to the Company and that it is in the best
interests of the Company to defer the filing of a registration
statement, then the Company shall have the right to defer the filing of
a registration statement with respect to such offering for a period of
not more than 120 days from receipt by the Company of the request by
the initiating Holder; PROVIDED, HOWEVER, that the Company may not
exercise such right more than two times, nor may the Company exercise
such right consecutively.
2.3 EFFECTIVENESS. The Company will use its best efforts
to maintain the effectiveness of any registration statement pursuant to
Section 2.2 hereof and from time to time will amend or supplement such
registration statement and the prospectus contained therein as and to
the extent necessary to comply with the Securities Act and any
applicable state securities statute or regulation.
2.4 INDEMNIFICATION OF HOLDERS. In the event that the Company
registers any of the Registrable Shares under the Securities Act, the
Company will indemnify and hold harmless each Holder and each
underwriter of the Registrable Shares so registered (including any
broker or dealer through whom such shares may be sold) and each person,
if any, who controls such Holder or any such underwriter within the
meaning of Section 15 of the Securities Act from and against any and
all losses, claims, damages, expenses or liabilities, joint or several,
to which they or any of them become subject under the Securities Act or
under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse each such Holder, each such
underwriter and each such controlling person, if any, for any legal or
other expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not resulting in
any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the registration statement, in any preliminary or amended preliminary
prospectus or in the prospectus (or the registration statement or
prospectus as from time to time amended or supplemented by the Company)
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading or any
violation by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration,
unless such untrue statement or omission was made in such registration
statement, preliminary or amended, preliminary prospectus or prospectus
in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by such Holder, any such
underwriter or any such controlling person expressly for use therein;
PROVIDED, HOWEVER, that the Company's obligations hereunder shall be
limited to an amount equal to the proceeds received by the Company
pursuant to such registration. Promptly after receipt by any Holder,
any underwriter or any controlling person of notice of the commencement
of any action in respect of which indemnity may be sought against the
Company, such Holder, or such underwriter or such controlling person,
as the case may be, will notify the Company in writing of the
commencement thereof, and, subject to the provisions hereinafter
stated, the Company shall assume the defense of such action (including
the employment of counsel, who shall be counsel reasonably satisfactory
to such Holder, such underwriter or such controlling person, as the
case may be), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be
sought against the Company. Such Holder, any such underwriter or any
such controlling person shall have the right to employ separate counsel
in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of the
Company unless the employment of such counsel has been specifically
authorized by the Company. The Company shall not be liable to
indemnify any person for any settlement of any such action effected
without the Company's consent. The Company shall not, except with the
approval of each party being indemnified under this Section 2.5,
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 the parties being so indemnified of a release from all
liability in respect to such claim or litigation.
2.5 INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each
Holder of the Registrable Shares so registered will indemnify and hold
harmless the Company, each of its directors, each of its officers who
have signed the registration statement, each underwriter of the
Registrable Shares so registered (including any broker or dealer
through whom any of such shares may be sold) and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act or under any other statute
or at common law or otherwise, and, except as hereinafter provided,
will reimburse the Company and each such director, officer, underwriter
or controlling person for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or
defending any actions whether or not resulting in any liability,
insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in
the prospectus (or the registration statement or prospectus as from
time to time amended or supplemented) or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith
by such holder of Registrable Shares, expressly for use therein;
PROVIDED, HOWEVER, that such Holder's obligations hereunder shall be
limited to an amount equal to the proceeds to such Holder of the
Registrable Shares sold in such registration. Promptly after receipt
of notice of the commencement of any action in respect of which
indemnity may be sought against such Holder, the Company will notify
such Holder in writing of the commencement thereof, and such Holder
shall, subject to the provisions hereinafter stated, assume the defense
of such action (including the employment of counsel, who shall be
counsel satisfactory to the Company) and the payment of expenses
insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such Holder. The Company and
each such director, officer, underwriter or controlling person shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such
counsel shall not be at the expense of such Holder unless employment of
such counsel has been specifically authorized by such Holder.
Notwithstanding the two preceding sentences, if the action is one in
which the Company may be obligated to indemnify any Holder pursuant to
Section 2.5, the Company shall have the right to assume the defense of
such action, subject to the right of such holders to participate
therein as permitted by Section 2.5. Such Holder shall not be liable
to indemnify any person for any settlement of any such action effected
without such Holder's consent. Such Holder shall not, except with the
approval of the Company, 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 the party being so
indemnified of a release from all liability in respect to such claim or
litigation.
2.6 EXCHANGE ACT REGISTRATION. So long as the Company is
required to file information with the Commission under either of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company will use its best efforts to
file on a timely basis with the Commission all information such
information that the Commission requires, and, so long as it is
required to file such information, shall use its best efforts to take
all action that may be required as a condition to the availability of
Rule 144 under the Securities Act (or any successor exemptive rule
hereinafter in effect) with respect to the Company's Common Stock. The
Company shall furnish to any Holder forthwith upon request (i) a
written statement by the Company as to its compliance with the
reporting requirements of Rule 144, (ii) a copy of the most recent
annual or quarterly report of the Company as filed with the Commission,
and (iii) any other reports and documents that a Holder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such Registrable Shares without
registration.
2.7 FURTHER OBLIGATIONS OF THE COMPANY. Whenever the
Company is required hereunder to register Registrable Shares, it agrees
that it shall also do the following:
(a) Furnish to each selling Holder such copies of each
preliminary and final prospectus and any other documents that such
Holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares to be registered pursuant to this Agreement under
the applicable securities or "blue sky" laws of such jurisdictions as
any selling holder may reasonably request; PROVIDED, HOWEVER, that the
Company shall not be obligated to qualify to do business in any
jurisdiction where it is not then so qualified or to take any action
that would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling Holder a copy of the signed
opinion of counsel for the Company, dated the effective date of the
registration statement;
(d) Permit each selling Holder or his counsel or other
representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them; and
(e) Furnish to each selling Holder, upon request, a copy
of all documents filed and all correspondence from or to the Commission
in connection with any such offering unless confidential treatment of
such information has been requested of the Commission.
2.8 EXPENSES. In the case of a registration under Sections 2.1
or 2.2, the Company shall bear all costs and expenses of each such
registration, including, but not limited to, printing, legal and
accounting expenses, Commission filing fees and "blue sky" fees and
expenses; PROVIDED, HOWEVER, that the Company shall have no obligation
to pay or otherwise bear (i) any portion of the fees or disbursements
of more than one counsel for the selling Holders in connection with the
registration of their Registrable Shares, (ii) any portion of the
underwriter's commissions or discounts attributable to the Registrable
Shares being offered and sold by the Holders, or (iii) any of such
expenses if the payment of such expenses by the Company is prohibited
by the laws of a state in which such offering is qualified and only to
the extent so prohibited; and PROVIDED FURTHER, that, in the event any
registration under the Securities Act is initiated by any Holders
pursuant to Section 2.2 of this Agreement and such registration is
thereafter withdrawn or terminated by such Holders for reasons other
than the occurrence of one or more events regarding the Company, which
event or events may have a material adverse effect upon the business or
prospects of the Company, and such Holders learn of such event or
events after the date of the demand registration and prior to the date
of withdrawal or termination by them and such withdrawal or termination
occurs with reasonable promptness thereafter, then the Company shall
have no obligation to pay or otherwise bear any fees, expenses or other
costs arising out of or relating to such registration.
2.9 TRANSFER OF REGISTRATION RIGHTS. The registration rights of
the Holders under this Agreement may be transferred by any Holder by
gift or sale, or upon death or permanent incapacity to his guardian,
conservator, executor, administrator, trustees or beneficiaries of his
will, spouse, children, stepchildren, grandchildren, parents, siblings
or legal dependents, to a trust of which the beneficiary or
beneficiaries of the corpus and the income shall be such a person or
persons or the Holders, to a partnership of which the partners shall be
such a person or persons or the Holder or to another Holder.
2.10 NO SUPERIOR RIGHTS. The Company will not, without the consent of
the Holders, grant registration rights to any Person that are superior
to the rights granted hereunder.
2.11 MARKET STAND-OFF AGREEMENT. Provided that all Holders are
treated equally and substantially all executive officers and directors
of the Company are also so bound, no Holder shall, to the extent
requested by the Company or any managing underwriter of the Company,
sell or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any Registrable Shares during a period
(the "Stand-Off Period") equal to 180 days following the effective date
of a registration statement of the Company filed under the Securities
Act (or such shorter period as the Company or managing underwriter may
authorize) except for securities sold as part of the offering covered
by such registration statement in accordance with the provisions of
this Agreement. In order to enforce the foregoing covenant, the
Company may impose stock transfer restrictions with respect to the
Registrable Shares of each Holder until the end of the Stand-Off Period.
3. ASSIGNABILITY
This Agreement shall be binding upon and inure to the benefit of
the respective heirs, successors and assigns of the parties hereto.
4. LAW
This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
5. AMENDMENT
Any modification, amendment, or waiver of this Agreement or any
provision hereof shall be in writing and executed by Holders of not
less than [75] percent of the Registrable Shares; provided however,
that no such modification, amendment or waiver shall reduce the
aforesaid percentage of Registrable Shares without the consent of the
record of beneficial Holders of no less than [90] percent of the
Registrable Shares.
6. CONFLICT
In the event of any conflict between the terms of this Agreement
and the Acquisition Agreement, the terms of this Agreement shall control.
7. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall
constitute one instrument.
8. NOTICE
Any notices and other communications required or permitted under
this Agreement shall be effective if in writing and delivered
personally or sent by telecopier, Federal Express or registered or
certified mail, postage prepaid, addressed as follows:
If to the Company: Xxxxx Xxxx Xxx Xxxxxxxxx
P.O. Box 20201 0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
with a copy to: Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxx & XxXxxxxxxx
Gateway Tower E., Ste 900
00 Xxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
If to the Holders, to: The names and addresses set forth on Exhibit A
hereto.
Unless otherwise specified herein, such notices or other
communications shall be deemed effective (a) on the date delivered, if
delivered personally, (b) two business days after being sent, if sent
by Federal Express, (c) one business day after being sent, if sent by
telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or
certified mail. Each of the parties herewith shall be entitled to
specify another address by giving notice as aforesaid to each of the
other parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
"THE COMPANY"
INNOVUS CORPORATION,
a Delaware corporation
By: XXXXX XXXX
-------------------
"THE HOLDERS"
XXX XXXXXXXXX
--------------------
Xxx Xxxxxxxxx, Attorney in Fact for the Holders
EXHIBIT A
LIST OF HOLDERS
Preferred Shares
------------------
Name Common Shares Escrow Balance
Xxxxx Xxxx 256,157 660 18,844
Xxxxxx Xxxxxxxxx 256,157 660 18,844
T. Xxxxxxx Xxxx 256,157 660 18,844
Xxxxx Xxxxx 32,020 83 2,356
Xxx Xxxx 9,339 24 687
XX X'Xxxxxx 24,015 62 1,767
Xxxxx Xxxxxxx 18,678 48 1,374
Xxxxx Xxxxx 9,339 24 687
Xxxxx Xxx 2,668 7 196
Xxxxxxxx Xxxxx 2,668 7 196
Xxxxxxxx Xxxxx 16,010 41 1,178
Xxxxx Xxxxxx 3,335 9 245
Xxxx Xxxxx 3,335 9 245
Xxxxx Xxxxxx 2,668 7 196
Global Marketing 1,067 3 79
Partners, Inc.
Xxxx Xxxxx 5,337 14 393
Xxxx Xxxxxxxxxx 6,671 17 491
Xxx Xxxx 1,601 4 118
Xxxxxxx Xxxxxxx 1,001 3 74
Xxxxx Xxxxxx 18,345 47 1,350
Xxx X'Xxxxxx 3,335 9 245
Xxxxxxx X. Xxxxx 834 2 61
Xxxx Xxx Xxxxx 3,335 9 245
Xxxx Xxxxxxx, Jr. 1,668 4 123
Xxxxx Xxxxx 834 2 61
Xxxxx Xxxxxx 1,668 4 123
Xxxxxxx X. Vierila, Trustee 3,335 9 245
Xxxxx Xxxx, Trustee 3,335 9 245
Xxxx Xxx 834 2 61
Xxxx Xxxxxxxx 5,271 14 388
Jinx Racquoy 1,668 4 123
Professional Community 6,671 17 491
Xxxxx Xxxxxxx 13,342 34 981
Xxxxx and Xxxxxx Work 6,671 17 491
Xxx Xxxxxx 6,671 17 491
Xxxx Xxxxxxxx 3,335 9 245
Xxxxx Xxxxxxxx 2,668 7 196
Xxxxxx X. Xxxxx 5,337 14 393
Nutridata 1,601 4 118
Xxxxxxx X. Fiaute 13,342 34 981
Xxxxxxx Xxxxx 21,346 55 1,570
Totals: 1,033,669 2,665 76,041
Address for Notices to Holders: Exchanging Securityholders x/x Xxx
Xxxxxxxxx, Xxxxxxxx-xx-Xxxx, Intermark Corporation, 0000 Xxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000 Fax: (000) 000-0000
