REGISTRATION RIGHTS AGREEMENT
dated as of September 7, 2001
between
INTERNATIONAL COSMETICS MARKETING CO.
and
THE HOLDERS LISTED ON SCHEDULE I
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TABLE OF CONTENTS
Page
Section 1. Definitions............................................................................1
Section 2. Demand Registration....................................................................3
a. Request for Registration by Holders...........................................3
b. Filing and Effectiveness......................................................3
c. Priority on Demand Registration...............................................4
d. Postponement of Demand Registration...........................................4
Section 3. Piggyback Registration.................................................................5
a. Right to Piggyback............................................................5
b. Priority on Piggyback Registrations...........................................5
Section 4. Registration Procedures................................................................6
Section 5. Registration Expenses.................................................................11
Section 6. Indemnification.......................................................................11
a. Indemnification by the Company...............................................12
b. Indemnification by Holders...................................................12
c. Conduct of Indemnification Proceedings.......................................12
d. Contribution.................................................................13
Section 7. Underwritten Registrations............................................................14
Section 8. Covenants of the Company..............................................................14
Section 9. Miscellaneous.........................................................................15
a. Remedies.....................................................................15
b. Amendments and Waivers.......................................................15
c. Notices......................................................................16
d. Successors and Assigns.......................................................16
e. Counterparts.................................................................17
f. Titles and Subtitles.........................................................17
g. Governing Law................................................................17
h. Separability.................................................................17
i. Entire Agreement.............................................................17
-i-
Execution Copy
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of September 7, 2001 by and between INTERNATIONAL COSMETICS
MARKETING CO., a Florida corporation (together with its successors and assigns,
the "Company") and the Persons named on Schedule 1 as Holders, and each other
person who becomes a Holder (as defined below) hereunder.
RECITALS
--------
WHEREAS, the Company and Stanford Venture Capital Holdings, Inc.
("Stanford") have entered into a Stock Purchase Agreement dated as of September
7, 2001 (the "Stock Purchase Agreement"); and
WHEREAS, to induce Stanford to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide to the Holders certain registration
rights under the Securities Act (as defined below).
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein and in the Stock Purchase Agreement, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
capitalized terms have the following meanings:
"Articles of Incorporation" shall mean the Articles of Incorporation of
the Company, as amended to date.
"Assignment Agreement" shall mean the Assignment and Escrow Agreement,
dated as of September 7, 2001 between Xxxx Xxxxxxx, Atlas Xxxxxxxx, P.A. and
Stanford.
"Common Stock" shall mean the Common Stock, par value $.001 per share,
of the Company and any securities into which such Common Stock may be or has
been converted or exchanged in any merger, consolidation or reclassification.
"Holders" shall mean the Persons listed on Schedule 1 and each of such
Person's permitted transferees pursuant to Section 9(d) who agree to be bound by
the provisions of this Agreement in accordance with said section.
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"Option" shall mean that certain Option to purchase Common Stock, dated
as of August 19, 1999, as assigned pursuant to the Assignment Agreement.
"Option Shares" shall mean the shares of Common Stock issuable upon
exercise of the Option and any securities into which such Common Stock may be or
has been converted or exchanged in any merger, consolidation or
reclassification.
"Person" shall mean an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof, or other entity of any
kind.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), 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 all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Registrable Securities" shall mean all Shares, Warrant Shares and
Option Shares, excluding (i) any such shares that have been disposed of by a
Holder pursuant to a Registration Statement relating to the sale thereof that
has become effective under the Securities Act or pursuant to Rule 144 or Rule
145 under the Securities Act and (ii) any such shares that may be sold under
Rule 144 under the Securities Act by a Holder who beneficially owns less than 1%
of the issued and outstanding shares of Common Stock of the Company. Registrable
Securities shall also include any shares of the Common Stock or other securities
(or shares of Common Stock underlying such other securities) that may be
received by the Holders (x) as a result of a stock dividend on or stock split of
Registrable Securities, (y) in exchange for or as a replacement of Registrable
Securities, or (z) on account of Registrable Securities in a recapitalization
of, merger, reorganization or similar transaction involving the Company.
"Registration Statement" shall mean any registration statement of the
Company under the Securities Act (including Shelf Registrations) that covers any
of the Registrable Securities pursuant to the provisions of this Agreement,
including the related Prospectus, any preliminary Prospectus, all amendments and
supplements to such registration statement (including post-effective
amendments), all exhibits and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, all as the same shall be in
effect from time to time.
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"Shares" shall mean the shares of Common Stock acquired pursuant to the
Stock Purchase Agreement, as well as any securities into which such Common Stock
may be or has been converted or exchanged in any merger, consolidation or
reclassification.
"Shelf Registration" shall mean any registration statement filed with
the SEC in accordance with the Securities Act pursuant to which offers may be
made on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act.
"Stock Purchase Agreement" shall have the meaning set forth in the
recitals hereto.
"Underwritten Offering" shall mean a distribution, registered pursuant
to the Securities Act, in which securities of the Company are sold to the public
through one or more underwriters.
"Warrants" shall mean the Warrants and the Placement Warrants (as each
term is defined in the Stock Purchase Agreement) representing an aggregate of
925,000 Warrants to purchase Common Stock issued by the Company to each of the
Holders listed on Schedule 1.
"Warrant Shares" shall have the meaning set forth in the Warrants.
Section 2. Demand Registration.
a. Request for Registration by Holders. Subject to the
conditions set forth in this Agreement, at any time, one or more Holders will
have the right, by written notice delivered to the Company (a "Demand Notice"),
to require the Company to register Registrable Securities under and in
accordance with the provisions of the Securities Act (a "Demand Registration");
provided that: (i) the Holders may not make more than one (1) Demand
Registration under this Agreement. The Demand Notice shall set forth (A) the
name of each Holder signing such Demand Notice, (B) the number of Registrable
Securities held by each such Holder, and, if different, the number of
Registrable Securities such Holder has elected to have registered, and (C) the
intended methods of disposition of the Registrable Securities. A Demand
Registration shall not be deemed to have been effected (i) unless a Registration
Statement with respect thereto has become effective, (ii) if after such
Registration Statement has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason not attributable to the
selling Holders and such interference is not thereafter eliminated within 10
days, or (iii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure on the part of the
selling Holders. If the Company shall have complied with its obligations under
this Agreement, a right to demand a registration pursuant to this Section 2
shall be deemed to have been satisfied upon the date as of which all of the
Registrable Securities set forth in the Demand Notice shall have been disposed
of pursuant to an effective Registration Statement.
b. Filing and Effectiveness.
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(i) The Company will file a Registration Statement
relating to any Demand Registration as promptly as practicable (but in any event
within 75 days) following the date on which the Demand Notice is given and will
use its reasonable best efforts to cause the same to be declared effective by
the SEC as soon as practicable thereafter, but in any event within 120 days
thereafter (the "Effectiveness Date"). A registration pursuant to this Section 2
shall be on such appropriate registration form of the SEC as shall (i) be
selected by the Company and be reasonably acceptable to the Holders, and (ii)
permit the disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the Demand Notice.
(ii) The Company agrees to use its best efforts to
comply with all necessary provisions of the federal securities laws in order to
keep each Registration Statement relating to a Demand Registration continuously
effective until all Registrable Securities covered by such Registration
Statement have been sold pursuant to such Registration Statement. If such
Registration Statement fails to remain effective for such period of time for any
reason, then the Exercise Price (as defined in the Warrants and the Option,
respectively) of each of the Warrants and the Option shall automatically be
reduced by fifty percent (50%), effective immediately.
Within ten (10) business days after receipt of
such Demand Notice, the Company will serve written notice thereof (the "Notice")
to all other Holders and will, subject to the provisions of Section 2(c),
include in any registration required under this Section 2 all Registrable
Securities with respect to which the Company receives written requests for
inclusion therein within fifteen (15) business days after receipt of the Notice
by the applicable Holder. The Holder will be permitted to withdraw in good faith
all or part of the Registrable Securities from a Demand Registration at any time
prior to the effective date of such Demand Registration, in which event the
Company will promptly amend or, if applicable, withdraw the related Registration
Statement.
c. Priority on Demand Registration. If the managing
underwriter or underwriters of an Underwritten Offering to which a Demand
Registration relates advises the Holders that the total amount of Registrable
Securities that such Holders intend to include in such Demand Registration is in
the aggregate such as to materially and adversely affect the success of such
offering, then the number of Registrable Securities to be included in such
Demand Registration will, if necessary, be reduced and there will be included in
such underwritten offering the number of Registrable Securities that, in the
opinion of such managing underwriter or underwriters, can be sold without
materially and adversely affecting the success of such Underwritten Offering.
The Registrable Securities of the Holder or Holders initiating the Demand
Registration shall receive priority in such Underwritten Offering to the full
extent of the Registrable Securities such Holder or Holders desire to sell and
the remaining allocation available for sale, if any, shall be allocated pro rata
among the other Holders on the basis of the amount of Registrable Securities
requested to be included therein by each such Holder.
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d. Postponement of Demand Registration. Notwithstanding
anything to the contrary in any other provision of this Agreement, the Company
will be entitled to postpone the filing period of any Demand Registration for a
reasonable period of time not in excess of 60 calendar days if the Board of
Directors of the Company determines, in the good faith exercise of its business
judgment, and has delivered to the Holders written certification to the effect,
that such registration and offering could materially interfere with, or require
premature disclosure of, a bona fide financing transaction of the Company,
including without limitation a primary offering of securities, or any other
material acquisition or reorganization of the Company. If the Company postpones
the filing of a Registration Statement, it will promptly notify the Holders in
writing when the events or circumstances permitting such postponement have
ended.
Section 3. Piggyback Registration.
a. Right to Piggyback. If at any time the Company proposes to
file a Registration Statement, whether or not for sale for the Company's own
account, on a form and in a manner that would also permit registration of
Registrable Securities (other than in connection with a registration statement
on Forms S-4 or S-8 or any similar or successor form) the Company shall give to
Holders holding Registrable Securities, written notice of such proposed filing
promptly, but in any case at least twenty (20) days before the anticipated
filing. The notice referred to in the preceding sentence shall offer Holders the
opportunity to register such amount of Registrable Securities as each Holder may
request (a "Piggyback Registration"). Subject to Section 3(b), the Company will
include in each such Piggyback Registration (and any related qualification under
state blue sky laws and other compliance filings, and in any underwriting
involved therein) all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within twenty (20) days
after the written notice from the Company is given. The Holders will be
permitted to withdraw all or part of the Registrable Securities from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration.
Notwithstanding the foregoing, the Company will not be
obligated to effect any registration of Registrable Securities under this
Section 3 as a result of the registration of any of its securities solely in
connection with mergers, acquisitions, exchange offers, dividend reinvestment
and share purchase plans offered solely to current holders of the Common Stock,
rights offerings or option or other employee benefit plans.
The Company hereby agrees to file such a Registration
Statement within ninety (90) days of the date hereof so that the Holders shall
be able to participate pursuant to this Section 3.
b. Priority on Piggyback Registrations. The Company will cause
the managing underwriter or underwriters of a proposed Underwritten Offering to
permit Holders holding Registrable Securities requested to be included in the
registration for such offering to include therein all such Registrable
Securities requested to be so included (such securities, together with any other
shares of the same class requested to be included in such registration by any
other Person pursuant
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to similar registration rights, the "Piggyback Shares") on the same terms and
conditions as any other securities of the Company, whether or not for the
Company's own account, included therein (other than the indemnification by the
Holders, which will be limited as set forth in Section 6 hereof and that the
Holders shall give customary representations and warranties). The Company shall
cooperate with any such Holder of Registrable Securities in order to limit any
representations and warranties to, or agreements with, the Company or the
underwriters to be made by such Holder only to those representations, warranties
or agreements regarding such Holder, such Holder's Registrable Securities and
such Holder's intended method of distribution and any other representation
required by law. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such Underwritten Offering advises the Holders to the effect
that the total amount of securities that such Holders and the Company propose to
include in such Underwritten Offering is such as to materially and adversely
affect the success of such offering, then the Company will include in such
registration:
(x) in the case of a registration in connection with a sale of
securities for the Company's own account, (i) first, 100% of
the securities that the Company proposes to sell for its own
account, and (ii) second, to the extent that the number of
securities in clause (i) above is less than the number of
securities which the Company has been advised can be sold in
such offering without having the adverse effect referred to
above, the number of Piggyback Shares of each Holder and the
number of Piggyback Shares requested to be included in such
offering by any other Persons pursuant to similar existing
registration rights, determined pro rata on the basis of the
number of shares of the class being sold owned by each Holder
requesting registration and such other Persons requesting
registration, collectively; and
(y) in the case of a registration in connection with a sale of
securities on account of any Person other than the Company
(the "Initiating Party"), (i) first, 100% of the securities,
if any, that the Initiating Party proposes to sell, (ii)
second, to the extent that the number of securities in clause
(i) above is less than the number of securities which the
Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of
Piggyback Shares of each Holder and the number of Piggyback
Shares requested to be included in such offering by any other
Persons pursuant to similar existing registration rights,
determined pro rata on the basis of the number of shares of
the class being sold owned by each Holder requesting
registration and such other Persons requesting registration,
collectively, and (iii) third, to the extent that the number
of securities in clauses (i) and (ii) above is less than the
number of securities which the Company has been advised can be
sold in such offering without having the adverse effect
6
referred to above, the securities included by the Company in
the offering.
Section 4. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 2 and 3, the Company will effect
such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible, and in each case
to the extent applicable:
a. Prepare and file with the SEC a Registration Statement on
any appropriate form under the Securities Act available for the sale of the
Registrable Securities by the holders thereof in accordance with the intended
method or methods of distribution thereof, and cause such Registration Statement
to become effective and remain effective as provided herein; provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto (including documents that would be incorporated or deemed to
be incorporated therein by reference) the Company will furnish to the Holders
holding Registrable Securities covered by such Registration Statement, not more
than one counsel chosen by Holders holding a majority of the Registrable
Securities being registered ("Special Counsel") and the managing underwriters,
if any, copies of all such documents proposed to be filed, which documents will
be subject to the review of such Holders, such Special Counsel and such
underwriters, and the Company will not file any such document to which the
Holders holding a majority of the Registrable Securities covered by such
Registration Statement, the Special Counsel or the managing underwriter, if any,
shall reasonably object.
b. Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
periods specified herein; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented. Subject to Rule 415 under the Securities Act, if
the Registration Statement relates to a Shelf Registration, the Company shall
amend the Registration Statement or supplement or amend the Prospectus whenever
required so that it will remain current and in compliance with the requirements
of the Securities Act for three (3) years after its effective date.
c. Promptly notify the selling Holders and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional
7
information, (iii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time the representations and warranties of the Company contained
in any agreement contemplated by Section 4(n) (including any underwriting
agreement) cease to be true and correct in any material respect, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the occurrence of any event or development
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in a Registration Statement, Prospectus or any such document so that, in
the case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and, in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
d. Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment.
e. If requested by the managing underwriters, if any, or
Holders holding a majority of the Registrable Securities being registered, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holders agree should
be included therein as may be required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company will not be required to take any
actions under this Section 4(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law; and provided further that to the
extent that any such information relates only to a particular Holder, the
consent of the Holders of a majority of the Registrable Securities being
registered shall not be required.
f. Furnish to each selling Holder and each managing
underwriter, if any, without charge, at least one conformed copy of the
Registration Statement and any pre-effective or post- effective amendment
thereto (but excluding schedules, all documents incorporated or deemed
incorporated therein by reference and all exhibits, unless requested in writing
by such holder or underwriter) and such other documents as any such selling
Holders may reasonably request in order to facilitate the disposition of
Registrable Securities owned by such selling Holder.
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g. Deliver to each selling Holder and the underwriters, if
any, without charge as many copies of the Prospectus or Prospectuses relating to
such Registrable Securities (including each preliminary prospectus) and any
amendment or supplement thereto as such persons may reasonably request; and the
Company hereby consents to the use of such Prospectus or each amendment or
supplement thereto by each of the selling Holders and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto.
h. Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing; use all reasonable efforts to keep such
registration or qualification (or exemption therefrom) effective during the
period the applicable Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in each such jurisdiction of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the Company will
not be required to (i) qualify to do business in any jurisdiction where it is
not then so qualified, or (ii) take any action that would subject it to taxation
or service of process in any such jurisdiction where it is not then so subject,
except, in each case, as required pursuant to registrations under blue sky laws
contemplated by this Agreement.
i. Cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and enable such
Registrable Securities to be in such denominations and registered in such names
as the Holders or managing underwriters, if any, shall request at least two
business days prior to any sale of Registrable Securities to the underwriters or
third parties.
j. Use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States except as may be required solely as a consequence of the nature of any
selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
k. Upon the occurrence of any event contemplated by Section
4(c)(vi) or 4(c)(vii), prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus 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, in light of the circumstances under
which they were made, not misleading. Upon the
9
occurrence of any other event enumerated in Section 4(c) (other than 4(c)(iii)),
use its best efforts to remedy such problems as soon as possible.
l. Use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be (i) listed on each securities
exchange, if any, on which securities issued by the Company of the same class
are then listed, or (ii) authorized to be quoted on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq"), if the securities
qualify to be so quoted.
m. As needed, (i) engage an appropriate transfer agent and
provide the transfer agent with printed certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
(ii) provide a CUSIP number for the Registrable Securities.
n. Enter into such customary agreements (including, in the
event of an Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
commercially reasonable and customary actions in connection therewith (including
those reasonably requested by the Holders holding a majority of the Registrable
Securities being sold or, in the event of an Underwritten Offering, those
reasonably requested by the managing underwriters) in order to facilitate the
disposition of such Registrable Securities and in such connection, but only
where an underwriting agreement is entered into in connection with an
underwritten registration, (i) make such representations and warranties to the
underwriters with respect to the businesses of the Company and its subsidiaries,
the Registration Statement, Prospectus and documents incorporated by reference
or deemed incorporated by reference therein, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof, which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, addressed to each of the underwriters covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such underwriters;
(iii) obtain "comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data is, or
is required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "comfort" letters in connection with
underwritten offerings; (iv) cause the Company's management to be made available
for, and assist in, the marketing and disposition of such Registrable Securities
in the manner and to the extent reasonably requested by the underwriters
including, without limitation, participation by management in customary road
shows, investor conferences and other similar presentations and (v) deliver such
documents and certificates as may be reasonably requested by the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties of the Company and its subsidiaries made pursuant to clause (i)
above and to evidence compliance with any customary conditions contained in the
underwriting
10
agreement entered into by the Company. The foregoing actions will be taken in
connection with each closing under such underwriting agreement as and to the
extent required thereunder.
o. Make available for reasonable inspection during normal
business hours by a representative of the Holders holding Registrable Securities
being sold, any underwriter participating in any disposition of Registrable
Securities, and any attorney or accountant retained by such selling Holders or
underwriter, all financial and other records, pertinent corporate and legal
documents and properties of the Company and its subsidiaries, and cause the
officers, directors and employees of the Company and its subsidiaries and its
independent public accountants who have certified the audited financial
statements included in such Registration Statement to be available to discuss
the business affairs of the Company and to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration Statement; provided, however, that any
records, information or documents that are designated by the Company in writing
as confidential at the time of delivery of such records, information or
documents will be kept confidential by such persons unless (i) such records,
information or documents are in the public domain or otherwise publicly
available, (ii) disclosure of such records, information or documents is required
by court or administrative order or is necessary to respond to inquiries of
regulatory authorities, or (iii) disclosure of such records, information or
documents, in the reasonable opinion of counsel to such person, is otherwise
required by law (including, without limitation, pursuant to the requirements of
the Securities Act).
p. Comply with all applicable rules and regulations of the SEC
and make generally available to Holders copies of all periodic reports, proxy
statements and other information referred to in Section 8(a) and earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 calendar days after the end of any 12-month period (or 90
calendar days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering, or (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company, after
the effective date of a Registration Statement, which statements shall cover
such 12-month period.
q. Take such other actions as are reasonably required in order
to expedite or facilitate the disposition of Registrable Securities covered by
each such Registration Statement.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing,
and the Company may exclude from such registration the Registrable Securities of
any seller who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
11
Section 5. Registration Expenses. Subject to the second to last
sentence of this Section 5, all fees and expenses incident to the performance of
or compliance with this Agreement by the Company will be borne by the Company
whether or not any of the Registration Statements become effective. Such fees
and expenses will include, without limitation, (i) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company and of printing
a reasonable number of Prospectuses if the printing of such Prospectuses is
requested by the Holders holding a majority of the Registrable Securities
included in any Registration Statement), (ii) messenger, telephone and delivery
expenses incurred by the Company, (iii) fees and disbursements of counsel for
the Company incurred by the Company, (iv) all registration and filing fees, (v)
fees and disbursements of all independent certified public accountants referred
to in Section 4(n)(iii) and 4(o) (including the expenses of any special audit
and "comfort" letter required by or incident to such performance) incurred by
the Company and (vi) the reasonable fees and disbursements of one firm of
counsel for the Holders of Registrable Securities incurred in connection with a
Piggyback Registration (selected by the Holders of a majority of Registrable
Securities included in any such Registration Statement). In addition, the
Company will pay internal expenses (including without limitation all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange on which securities of the same class issued by the Company are then
listed and the fees and expenses of any person, including special experts,
retained by the Company. In no event, however, will the Company be responsible
for any underwriting discounts or selling commissions with respect to any sale
of Registrable Securities pursuant to this Agreement or the legal fees and
expenses of the Holders incurred in connection with a Demand Registration, and
the Holders shall be responsible on a pro rata basis for any taxes of any kind
(including, without limitation, transfer taxes) with respect to any disposition,
sale or transfer of Registrable Securities. Any failure by the Company to pay
any registration expenses as required by this Section 5 shall not relieve the
Company of its obligations under this Agreement.
Section 6. Indemnification.
a. Indemnification by the Company. The Company will indemnify
and hold harmless, to the fullest extent permitted by law, each Holder holding
Registrable Securities registered pursuant to this Agreement, the officers,
directors and agents and employees of each of them, each Person who controls
such a Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of any
such controlling person, from and against all losses, claims, damages,
liabilities, costs (including without limitation the costs of investigation and
attorneys' fees) and expenses (collectively, "Losses"), arising out of or based
upon (i) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, Prospectus or form of Prospectus (including any
preliminary Prospectus) or in any amendment or supplement thereto, (ii) 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, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any applicable state securities law or any rule or regulation
promulgated under the Securities Act,
12
the Exchange Act or any applicable state securities law, except insofar and then
only to the extent that the same are based upon information furnished in writing
to the Company by such Holder specifically for use in connection with such
Registration Statement.
b. Indemnification by Holders. In connection with any
Registration Statement in which a Holder is participating, such Holder will
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement, Prospectus or
preliminary Prospectus and will indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors and officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, from and against all
Losses arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or arising out of or based upon any omission of a material fact
required to be stated therein 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 so furnished in writing by such Holder
to the Company specifically for use in such Registration Statement, Prospectus
or preliminary Prospectus and was relied upon by the Company in the preparation
of such Registration Statement, Prospectus or preliminary Prospectus. In no
event will the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
c. Conduct of Indemnification Proceedings. If any person shall
become entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt written notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any action or proceeding with respect to which such indemnified
party seeks indemnification or contribution pursuant hereto; provided, however,
that the failure to so notify the indemnifying party will not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced materially by such failure. All
reasonable fees and expenses (including any reasonable fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) will be paid to the indemnified party (provided appropriate
documentation for such expenses is also submitted with such notice), as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 6,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
13
d. Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b) in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, severally but not jointly, contribute to the amount
paid or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or indemnifying parties, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party or indemnifying parties, on the
one hand, and such indemnified party, on the other hand, will be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or related to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses will be deemed to include any legal
or other fees or expenses incurred by such party in connection with any action
or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6(d), an indemnifying
party that is a selling Holder will not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such indemnifying party and distributed to the public were
offered to the public exceeds the amount of any damages that such indemnifying
party has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of the Company hereunder will be in addition to any liability the
Company may otherwise have hereunder or otherwise. The provisions of this
Section 6 will survive, notwithstanding any permitted transfer of the
Registrable Securities by any Holder thereof or any termination of this
Agreement.
Section 7. Underwritten Registrations. The Company will have the
exclusive right in connection with any Piggyback Registration that is an
Underwritten Offering to select an investment banker or investment bankers and a
manager or managers to manage the offering. In connection with any Demand
Registration that is an Underwritten Offer, the Holders holding a majority of
the Registrable Securities included in the Demand Notice will have the exclusive
right to select such investment banker(s) or manager(s), provided that such
investment banker(s) is reasonably acceptable to the Company. The Company and
the Holders agree that, in connection with any Underwritten Offering hereunder,
they shall each undertake to offer customary indemnification, representations
and warranties to the participating underwriters and to agree to any
restrictions
14
required by the underwriters on the sale of Common Stock or other securities by
such party after the completion of the underwritten offering.
Section 8. Covenants of the Company. The Company hereby agrees and
covenants as follows:
a. The Company shall file as and when applicable, on a timely
basis, all reports required to be filed by it under the Exchange Act. If the
Company is not required to file reports pursuant to the Exchange Act, upon the
request of any Holder of Registrable Securities, the Company shall make publicly
available the information specified in subparagraph (c)(2) of Rule 144 of the
Securities Act, and take such further action as may be reasonably required from
time to time and as may be within the reasonable control of the Company, to
enable the Holders to transfer Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act or any similar rule or regulation hereafter adopted by
the SEC.
b. The Company shall not, and shall not permit its majority
owned subsidiaries to, effect any public sale or distribution of any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for shares of Common Stock, during the five business days prior to, and during
the 90-day period beginning on, the commencement of a public distribution of the
Registrable Securities pursuant to any registration statement prepared pursuant
to this Agreement (other than by the Company pursuant to such registration if
the registration is pursuant to Section 3). The Company shall not effect any
registration of its securities (other than on Form X-0, Xxxx X-0, or any
successor forms to such forms or pursuant to such other registration rights
agreements as may be approved in writing by the Holders of a majority of
Registrable Securities) or effect any public or private sale or distribution of
any of its securities, including a sale pursuant to Regulation D under the
Securities Act, whether on its own behalf or at the request of any holder or
holders of such securities from the date of a request for a Demand Registration
pursuant to Section 2 until the earlier of (x) 90 days following the date as of
which all securities covered by such Registration Statement shall have been
disposed of, and (y) 120 days following the effective date of such Registration
Statement, unless the Company shall have previously notified in writing all
selling Holders of the Company's desire to do so, and selling Holders owning a
majority of the Registrable Securities or the underwriters' representative, if
any, shall have consented thereto in writing.
Any agreement entered into after the date of this
Agreement pursuant to which the Company or any of its majority owned
subsidiaries issues or agrees to issue any privately placed securities similar
to any issue of the Registrable Securities (other than (x) shares of Common
Stock pursuant to a stock incentive, stock option, stock bonus, stock purchase
or other employee benefit plan of the Company approved by its Board of
Directors, and (y) securities issued to Persons in exchange for ownership
interests in any Person in connection with a business combination in which the
Company or any of its majority owned subsidiaries is a party) shall contain a
provision whereby holders of such securities agree not to effect any public sale
or distribution of any such securities during the periods described in the first
paragraph of this Section 8(b), in each case including a sale
15
pursuant to Rule 144 under the Securities Act (unless such Person is prevented
by applicable statute or regulation from entering into such an agreement).
c. The Company shall not, directly or indirectly, (x) enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation or (y) transfer or agree to transfer all or
substantially all the Company's assets, unless prior to such merger,
consolidation, reorganization or asset transfer, the surviving corporation or
the transferee, respectively, shall have agreed in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to include the securities
which the Holders of Registrable Securities would be entitled to receive in
exchange for Registrable Securities pursuant to any such merger, consolidation
or reorganization.
d. The Company shall not grant to any Person (other than a
Holder of Registrable Securities) any registration rights with respect to
securities of the Company, or enter into any agreement, that would entitle the
holder thereof to have securities owned by it included in a Demand Registration
or Shelf Registration unless such rights are subordinated to the rights of the
Holders herein.
Section 9. Miscellaneous.
a. Remedies. In the event of a breach by a party of its
obligations under this Agreement, each other party, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Each party agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any provision of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it will waive the defense that a remedy
at law would be adequate.
b. Amendments and Waivers. The provisions of this Agreement
may not be amended, modified, waived or supplemented without the prior written
consent of the Company and Holders holding in excess of 50% of the Registrable
Securities. No waiver of any terms or conditions of this Agreement shall operate
as a waiver of any other breach of such terms and conditions or any other term
or condition, nor shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof. No written waiver
hereunder, unless it by its own terms explicitly provides to the contrary, shall
be construed to effect a continuing waiver of the provisions being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision.
c. Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then
16
on the next business day; (iii) upon delivery if sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) upon delivery if
deposited with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to the Company: INTERNATIONAL COSMETICS MARKETING CO.
Suite 205
6501 N.W. Park of Commerce Blvd.
Xxxx Xxxxx, XX 00000
Attn: Xxx X. Xxxxx
Facsimile: 000-000-0000
With a copy to: Atlas Xxxxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
If to the Holders: STANFORD VENTURE CAPITAL HOLDINGS, INC.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
With a copy to: Akerman, Senterfitt & Xxxxxx, P.A.
One XX 0xx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
d. Successors and Assigns. Subject to the terms of the Common
Stock, the Warrants and the Option regarding transfers of the Shares, the
Warrant Shares and the Option Shares, respectively, any lawful transferee of all
or a portion of the Registrable Securities shall become a Holder hereunder to
the extent it agrees in writing to be bound by all of the provisions applicable
hereunder to the transferring Holder (such acknowledgment being evidenced by
execution and delivery to the Company of a Counterpart and Acknowledgment
substantially in the form of Exhibit A). Subject to the requirements of this
Section 9(d), this Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of the parties hereto.
17
e. 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.
f. Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
g. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Florida without giving regard to any
conflicts of law principles thereof which would result in the imposition of the
laws of another jurisdiction.
h. Separability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
i. Entire Agreement. This Agreement and the other documents
delivered pursuant hereto, the Stock Purchase Agreement, the Warrants, the
Option and the Assignment Agreement constitute the full and entire understanding
and agreement between the parties with regard to the subjects thereto and no
party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
[Signatures on next page]
18
IN WITNESS WHEREOF, each of the parties has duly executed this
Agreement as of the date first written above.
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Xxx X. Xxxxx
------------------------------------
Name: Xxx X. Xxxxx
Title: Chief Executive Officer
STANFORD VENTURE CAPITAL HOLDINGS, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Authorized Person
STANFORD GROUP COMPANY
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
/s/ Nico X. Xxxxx
----------------------------------------
Nico X. Xxxxx
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
19
SCHEDULE I
----------
HOLDERS
-------
Stanford Venture Capital Holdings, Inc., a Delaware corporation
Stanford Group Company, a Texas corporation
Nico X. Xxxxx
Xxxxx Xxxxx
20
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
COUNTERPART AND ACKNOWLEDGMENT
------------------------------
TO: The Company
RE: The Registration Rights Agreement (the "Agreement") dated as
of September 7, 2001 by and among the Company and the Holders
(as defined in the Agreement)
The undersigned hereby agrees to be bound by the terms of the
Agreement as a party to the Agreement, and shall be entitled to all benefits of
the Holders (as defined in the Agreement) and shall be subject to all
obligations and restrictions of the Holders pursuant to the Agreement, as fully
and effectively as though the undersigned had executed a counterpart of the
Agreement together with the other parties to the Agreement. The undersigned
hereby acknowledges having received and reviewed a copy of the Agreement.
DATED this _____ day of ____________, _____.
By:
----------------------------------------------
Title:
-------------------------------------------
Number of
Shares of
Registrable Securities:
-------------------------
