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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - April 29, 1997
(Date of Earliest Event Reported)
INNOPET BRANDS CORP.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-28912 65-0639984
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1 East Broward Blvd., Suite 1100
Fort Lauderdale, Florida 33301
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (954) 453-2400
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Item 5. Other Events.
On April 29, 1997, InnoPet Brands Corp. (the "Company")
completed a $2.5 million private placement (the "Private Placement"). The shares
were purchased by Entrepreneurial Investors, Ltd., a Bahamas company ("EIL"),
which serves as an investment vehicle for a group of private European investors
represented by Messrs. Karl Schafer and Heinz Winzeler of Zurich, Switzerland.
The sole officer and director of EIL is Mr. Robert Cordes. The Private Placement
consisted of the sale of 625,000 shares of Series A 4% Cumulative Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Company at $4.00 per share. The Company anticipates using the net proceeds of
the Private Placement (approximately $2 million) for general corporate purposes.
Each share of Preferred Stock converts, at the holder's
option, into one share of common stock, par value $.01 per share (the "Common
Stock"), of the Company. In addition, the holder was granted certain
registration rights, consisting of one demand registration right and unlimited
incidental (piggyback) registration rights. No registration request may be made
prior to July 29, 1997. The Preferred Stock bears a cumulative dividend of four
percent (4%) per annum, payable quarterly. The dividend shall be paid by the
issuance of Common Stock of the Company. The number of shares of Common Stock to
be issued as a dividend shall be determined based on the average closing bid
price for shares of the Common Stock as reported by the NASDAQ SmallCap Market
for the twenty (20) trading days preceding the record date for the declaration
of the dividend.
Item 7. Financial Statements and Exhibits.
Exhibit No. Document
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3.1 Certificate of Designation of Preferred Stock.
4.1 Investors Subscription Agreement.
4.2 Registration Rights Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INNOPET BRANDS CORP.
By: /s/ Marc Duke
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Name: Marc Duke
Title: Chief Executive Officer
Date: May 12, 1997
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EXHIBIT 3.1
CERTIFICATE OF DESIGNATION OF
PREFERRED STOCK
OF
INNOPET BRANDS CORP.
InnoPet Brands Corp. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
that, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, and pursuant to the provisions of
Section 151 of Title 8 of the Delaware Code of 1953, said Board of Directors, by
unanimous written consent of its members, filed with the minutes of the Board,
adopted a resolution providing for the issuance of a series of shares of Series
A Preferred Stock, which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of its Certificate
of Incorporation, a series of Preferred Stock of the Company be and hereby is
created, such series of Preferred Stock to be designated Series A Preferred
Stock, to consist of shares of the par value of $.01 per share, and shall
possess the rights and preferences set forth below:
Section 1. Designation and Amount. The shares of such series
shall have a par value of $.01 per share and shall be designated as Preferred
Stock (Series A) (the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be Six Hundred Eighty Seven
Thousand Five Hundred (687,500). The Series A Preferred Stock shall be issued
for and shall be deemed to have an original issue price per share of $4.00 per
share.
Section 2. Rank. The Series A Preferred Stock shall rank: (i)
prior to all of the Company's common stock, $.01 par value per share (the
"Common Shares"); (ii) prior to any class or series of capital stock of the
Company hereafter created not specifically ranking by its terms senior to or on
parity with any Preferred Stock of whatever subdivision (collectively, with the
Common Shares, "Junior Securities"); and (iii) on parity with any class or
series of capital stock of the Company hereafter created specifically ranking by
its terms on parity with the Series A Preferred Stock ("Parity Securities") in
each case as to distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary (all such distributions
being referred to collectively as "Distributions").
Section 3. Dividends. The Series A Preferred Stock will bear a
dividend of four percent (4%) per annum, payable quarterly, which shall be paid
by the issuance of additional
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Common Shares of the Company as follows: The number of shares to be issued shall
be determined based on the average closing bid price for shares of Common Shares
as reported by the NASDAQ SmallCap Market for the twenty (20) trading days
preceding the record date for the declaration of the dividend.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding up of the Company, either voluntary or involuntary, the holders of
Series A Preferred Stock (the "Holders") shall be entitled to receive, prior in
preference to any distribution to Junior Securities but in parity with any
distribution to Parity Securities, an amount per share equal to the original
preferred stock issue price. If upon the occurrence of such event, and after
payment in full of the preferential amounts with respect to the Senior
Securities, the assets and funds available to be distributed among the Holders
of the Series A Preferred Stock and Parity Securities shall be insufficient to
permit the payment to such Holders of the full preferential amounts due to the
Holders of the Series A Preferred Stock and the Parity Securities, respectively,
then the entire assets and funds of the Company legally available for
distribution shall be distributed among the Holders of the Series A Preferred
Stock and the Parity Securities, pro rata, based on the respective liquidation
amounts to which each such series of stock is entitled by the Company's
Certificate of Incorporation and any certificate(s) of designation relating
thereto.
(b) Upon the completion of the distribution required
by Section 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or
disposition of all or substantially all the assets of the Company to a private
entity, the common stock of which is not publicly traded, shall be deemed to be
a liquidation, dissolution or winding up within the meaning of this Section 4;
provided, however, that an event described in the prior clause that the Holder
does not elect to treat as a liquidation and a consolidation, merger,
acquisition, or other business combination of the Company with or into any other
company or companies shall not be treated as a liquidation, dissolution or
winding up within the meaning of this Section 4, but instead shall be treated
pursuant to Section 5(d) hereof (a Holder who elects to have the transaction
treated as a liquidation is herein referred to as a "Liquidating Holder").
(d) Prior to the closing of a transaction described
in Section 4(c) which would constitute a liquidation event, the Company shall
either (i) make all cash distributions it is required to make to the Liquidating
Holders pursuant to the first sentence of Section 4(a), (ii) set aside
sufficient funds from which the cash distributions required to be made to the
Liquidating Holders can be made, or (iii) establish an escrow or other similar
arrangement with a third party pursuant to which the proceeds payable to the
Company from a sale of all or substantially all the assets of the Company will
be used to make the liquidating payments to the
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Liquidating Holders immediately after the consummation of such sale. In the
event that the Company has not fully complied with either of the foregoing
alternatives, the Company shall either: (x) cause such closing to be postponed
until such cash distributions have been made, or (y) cancel such transaction, in
which event the rights of the Holders or other arrangements shall be the same as
existing immediately prior to such proposed transaction.
Section 5. Conversion. The record Holders of the Series A
Preferred Stock shall have conversion rights as follows:
(a) Right to Convert. Each record Holder of Series A
Preferred Stock shall be entitled to convert whole shares of Series A Preferred
Stock into Common Shares issuable upon conversion of the Series A Preferred
Stock, as follows: each outstanding share of Series A Preferred Stock is
convertible at any time into one fully-paid and non-assessable Common Share of
the Company, subject to adjustment as provided in Section 5(c) hereof. The
number of Common Shares issuable upon the conversion of one share of Series A
Preferred Stock is hereinafter referred to as the "Conversion Rate."
(b) Mechanics of Conversion. In order to convert
Series A Preferred Stock into full Common Shares, the Holder shall (i) fax, on
or prior to 6:00 p.m., New York City time on the Date of Conversion, a copy of a
fully executed notice of conversion ("Notice of Conversion") to the Company at
the office of the Company or to the Company's designated transfer agent (the
"Transfer Agent") for the Series A Preferred Stock stating that the Holder
elects to convert, which notice shall specify the date of conversion and the
number of shares of Series A Preferred Stock to be converted, and (ii) surrender
to a common courier for either overnight or two (2) day delivery to the office
of the Company or the Transfer Agent, the original certificates representing the
Series A Preferred Stock being converted (the "Series A Preferred Stock
Certificates"), duly endorsed for transfer, provided, however, that the Company
shall not be obligated to issue certificates evidencing the Common Shares
issuable upon such conversion unless the Series A Preferred Stock Certificates
are delivered to the Company or the Transfer Agent as provided above, or the
Holder notifies the Company or the Transfer Agent that such certificates have
been lost, stolen or destroyed (subject to the requirements of subparagraph (i)
below).
(i) Lost or Stolen Certificates. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of any Series
A Preferred Stock Certificates representing shares of Series A Preferred Stock,
and (in the case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
the Series A Preferred Stock Certificate(s), if mutilated, the Company shall
execute and deliver new Series A Preferred Stock Certificate(s) of like tenor
and date.
However, the Company shall not be obligated
to re-issue such lost or stolen Series A Preferred Stock Certificates if Holder
contemporaneously requests the Company to convert such Series A Preferred Stock
into Common Shares.
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(ii) Delivery of Common Shares Upon Conversion. The
Company no later than 6:00 p.m. (New York City time) on the third (3rd) business
day after receipt by the Company or its Transfer Agent of all necessary
documentation duly executed and in proper form required for conversion,
including the original Series A Preferred Stock Certificates to be converted (or
after provision for security or indemnification in the case of lost, stolen or
destroyed certificates, if required), shall issue and deliver to the Holder as
shown on the stock records of the Company a certificate for the number of Common
Shares to which the Holder shall be entitled as aforesaid.
(iii) No Fractional Shares. If any conversion of the
Series A Preferred Stock would create a fractional Common Share or a right to
acquire a fractional Common Share, such fractional share shall be disregarded
and the number of Common Shares issuable upon conversion, in the aggregate,
shall be the next higher number of shares.
(iv) Date of Conversion. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date such Notice of
Conversion is faxed to the Company or the Transfer Agent, as the case may be,
provided an advance copy of the Notice of Conversion is faxed to the Company on
or prior to 6:00 p.m, New York City time, on the Date of Conversion. The
original Series A Preferred Stock Certificates representing the shares of Series
A Preferred Stock to be converted shall be surrendered by depositing such
certificates with a common courier for either overnight or two (2) day delivery,
as soon as possible following the Date of Conversion. The person or persons
entitled to receive the shares of Common Shares issuable upon such conversion
shall be treated for all purposes as the record Holder or Holders of such Common
Shares on the Date of Conversion.
(c) Adjustment to Conversion Rate.
(i) Adjustment Due to Stock Split, Stock Dividend,
Etc. If, prior to the conversion of all the Series A Preferred Stock, the number
of outstanding Common Shares is increased by a stock split, stock dividend, or
other similar event, the Conversion Rate shall be proportionately increased, or
if the number of outstanding Common Shares is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Rate shall be
proportionately decreased.
(ii) Adjustment Due to Merger, Consolidation, Etc.
If, prior to the conversion of all the Series A Preferred Stock, there shall be
any merger, consolidation, exchange of shares, recapitalization, reorganization,
or other similar event, as a result of which Common Shares of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities of the Company or another entity or
there is a sale of all or substantially all the Company's assets that is not
deemed to be a liquidation pursuant to Section 4(c), then the Holders of Series
A Preferred Stock shall thereafter have the right to receive upon conversion of
Series A Preferred Stock, upon the basis and upon the terms and conditions
specified herein and in lieu of the Common Shares, immediately
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theretofore issuable upon conversion, such stock, securities and/or other assets
which the Holder would have been entitled to receive in such transaction had the
Series A Preferred Stock been converted immediately prior to such transaction,
and in any such case appropriate provisions shall be made with respect to the
rights and interests of the Holders of the Series A Preferred Stock to the end
that the provisions hereof (including, without limitation, provisions for the
adjustment of the Conversion Rate and of the number of shares issuable upon
conversion of the Series A Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any securities thereafter
deliverable upon the conversion thereof. The Company shall not effect any
transaction described in this subsection 5(c)(ii) unless (a) it first gives
fifteen (15) calendar days prior notice of such merger, consolidation, exchange
of shares, recapitalization, reorganization, or other similar event (during
which time the Holders shall be entitled to convert their Series A Preferred
Stock into Common Shares to the extent permitted hereby) and (b) the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation of the Company under this Certificate of Designation, including
the obligation of this subsection 5(d)(ii).
(iii) No Fractional Shares. If any adjustment under
this Section 5(c) would create a fractional Common Share or a right to acquire a
fractional Common Share, such fractional share shall be disregarded and the
number of Common Shares issuable upon conversion shall be the next higher number
of shares.
Section 6. Voting Rights. The Holders of the Series A
Preferred Stock shall have no voting power whatsoever, except as otherwise
provided by the General Corporation Law of the State of Delaware ("Delaware
Law"), and no Holder of Series A Preferred Stock shall vote or otherwise
participate in any proceeding in which actions shall be taken by the Company or
the shareholders thereof or be entitled to notification as to any meeting of the
shareholders.
Notwithstanding the above, the Company shall provide the
Holders of the Series A Preferred Stock with notification of any meeting of the
shareholders regarding any major corporate events affecting the Company. In the
event of any taking by the Company of a record of its shareholders for the
purpose of determining shareholders who are entitled to receive payment of any
dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property
(including by way of merger, consolidation or reorganization), or to receive any
other right, or for the purpose of determining shareholders who are entitled to
vote in connection with any proposed sale, lease or conveyance of all or
substantially all the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, the Company shall mail a notice to
such Holders, at least five (5) days prior to the record date specified therein,
of the date on which any such record is to be taken for the purpose of such
dividend, distribution, right or other event, and a brief statement regarding
the amount and character of such dividend, distribution, right or other event to
the extent known at such time.
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To the extent that under Delaware Law the vote of the Holders
of the Series A Preferred Stock, voting separately as a class, is required to
authorize a given action of the Company, the affirmative vote or consent of the
Holders of at least a majority of the shares of the Series A Preferred Stock,
represented at a duly held meeting at which a quorum is present or by written
consent of a majority of the shares of Series A Preferred Stock (except as
otherwise may be required under Delaware Law) shall constitute the approval of
such action by the class. To the extent that under Delaware Law the Holders of
the Series A Preferred Stock are entitled to vote on a matter with holders of
Common Shares, voting together as one (1) class, each share of Series A
Preferred Stock shall be entitled to a number of votes equal to the number of
Common Shares into which it is then convertible using the record date for the
taking of such vote of stockholders as the date as of which the Conversion Rate
is calculated. Holders of the Series A Preferred Stock also shall be entitled to
notice of all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Company's by-laws and applicable statutes.
Section 7. Protective Provision. So long as shares of Series A
Preferred Stock are outstanding, the Company shall not without first obtaining
the approval (by vote or written consent, as provided by Delaware Law) of the
Holders of at least sixty-six and two-thirds percent (66 2/3%) of the then
outstanding Series A Preferred Stock, and at least sixty-six and two-thirds
percent (66 2/3%) of the then outstanding Holders:
(a) alter or change the rights, preferences or
privileges of the Series A Preferred Stock or any Senior Securities so as to
affect adversely the Series A Preferred Stock;
(b) create any new class or series of stock having a
preference over the Series A Preferred Stock or increase the size of the
authorized number of Series A Preferred Stock; or
(c) do any act or thing not authorized or
contemplated by this Certificate of Designation which would result in taxation
of the holders of shares of the Series A Preferred Stock under Section 305 of
the Internal Revenue Code of 1986, as amended (or any comparable provision of
the Internal Revenue Code as hereafter from time to time amended).
Section 8. Status of Converted Stock. In the event any Series
A Preferred Stock shall be converted pursuant to Section 5 hereof, the shares so
converted shall be canceled, shall return to the status of authorized but
unissued Preferred Shares of no designated series, and shall not be issuable by
the Company as Series A Preferred Stock.
Section 9. Preference Rights. Nothing contained herein shall
be construed to prevent the Board of Directors of the Company from issuing one
(1) or more series of Series A Preferred Shares with dividend and/or liquidation
preferences junior to or in parity with the dividend and liquidation preferences
of the Series A Preferred Stock.
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Signed on April 28, 1997
/s/ Marc Duke
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Marc Duke, Chief Executive Officer
Attest:
/s/ Robin Hunter
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Robin Hunter, Secretary
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EXHIBIT 4.1
INVESTOR SUBSCRIPTION AGREEMENT
OF INNOPET BRANDS CORP.
THIS INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") is made
and entered into as of this 28th day of April, 1997, by and between INNOPET
BRANDS CORP., a Delaware corporation ("Seller"), with offices at One East
Broward Boulevard, Suite 1100, Ft. Lauderdale, Florida 33301 and Entrepreneurial
Investors, Ltd., a Bahamas company ("Buyer"), with offices at Citibank Building,
2nd Floor, East Mall Drive, P.O. Box 40643, Freeport, Bahamas, providing for the
purchase and sale of 625,000 shares (the "Shares") of Series A 4% Cumulative
Convertible Preferred Stock of Seller (the "Series A Preferred Stock"),
convertible into shares of the common stock, par value $.01 per share (the
"Common Stock"), of Seller. Seller and Buyer (collectively, the "Parties")
hereby represent and agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Buyer hereby subscribes for 625,000 Shares of
Series A Preferred Stock in exchange for $2.5 million in cash
(the "Purchase Price"). Each share of Series A Preferred Stock
shall be convertible into one share of Common Stock in
accordance with the terms set forth in the Certificate of
Designation attached as Exhibit A to this Agreement.
(ii) The Series A Preferred Stock shall pay a
quarterly dividend equal to 4% per annum. The dividend shall
be payable by the issuance of additional shares of Common
Stock. The number of shares to be issued as a dividend shall
be determined based on the average closing bid price for a
share of Common Stock as reported by the Nasdaq SmallCap
Market for the 20 trading days preceding the record date for
the declaration of the dividend.
(iii) Buyer shall pay the aforesaid principal amount
as the purchase price for the Shares subscribed for by it by
wire transfer of immediately available, federal funds in
United States dollars against counter-delivery of the Shares
by Seller. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on or about April 28, 1997,
at 10:00 a.m. at the offices of Seller's counsel, Camhy
Karlinsky & Stein LLP, 1740 Broadway, 16th Floor, New York, NY
10019.
2. BUYER'S REPRESENTATIONS AND COVENANTS.
Buyer represents, warrants and covenants to Seller as
follows:
(i) This Agreement has been duly authorized, validly
executed and delivered on behalf of Buyer and is a valid and
binding agreement of Buyer
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enforceable in accordance with its terms, subject to general
principles of equity and of bankruptcy or other laws affecting
the enforcement of creditors' rights;
(ii) Buyer is purchasing the Shares for its own
account for investment purposes only and not with a view
towards distribution. Buyer understands and agrees that it
must bear the economic risks of its investment for an
indefinite period of time. Buyer has received and carefully
reviewed copies of the Public Documents (as defined in Section
3). Buyer understands that the offer and sale of the Shares
are being made only by means of this Agreement. No
representations or warranties have been made to Buyer by
Seller, the officers or directors of Seller, or any agent,
employee or affiliate of any of them, except as specifically
set forth herein or as set forth in documents referenced
herein. Buyer is aware that the purchase of the Shares
involves a high degree of risk and that it may sustain, and
has the financial ability to sustain, the loss of its entire
investment. Buyer has had the opportunity to ask questions of,
and receive answers satisfactory to it from, Seller's
management regarding Seller. Buyer understands that no federal
or state governmental authority has made any finding or
determination relating to the fairness of an investment in the
Shares and that no federal or state governmental authority has
recommended or endorsed, or will recommend or endorse, the
investment herein. Buyer, in making the decision to purchase
the Shares subscribed for, has relied upon independent
investigation made by it and has not relied on any information
or representations made by third parties. Buyer has
significant assets and upon consummation of the purchase of
the Shares will continue to have significant assets exclusive
of the Shares. Buyer has not been organized for the sole
purpose of acquiring the Shares;
(iii) Buyer (a) is not a citizen or resident of the
United States of America, (b) is not an entity organized under
any laws of any state of the United States of America, and (c)
does not have offices in the United States of America;
(iv) Buyer is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act");
(v) Buyer understands that the Shares are being
offered and sold to it in reliance on specific provisions of
federal and state securities laws and that Seller is relying
upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of
Buyer set forth herein in order to determine the applicability
of such provisions;
(vi) Buyer agrees that for a period of two (2) years
from the date of Closing it shall not offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of any
Common Stock (any of the foregoing, a "Short-Sale") that Buyer
does not own as of such date; provided, however, that no such
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restriction shall apply to any Shares upon the conversion of
any Series A Preferred Stock;
(vii) Buyer is capable of evaluating the risks and
merits of this investment by virtue of its experience as an
investor and its knowledge, experience, and sophistication in
financial and business matters;
(viii) Buyer agrees that with respect to one-half of
the Shares purchased, including the shares of Common Stock
issuable upon conversion thereof, it shall not transfer such
securities for six (6) months from the date of Closing. Buyer
also agrees that with respect to the remaining one-half of the
Shares purchased, including the shares of Common Stock
issuable upon conversion thereof, it shall not transfer such
securities for one (1) year from the date of Closing;
(ix) Buyer shall execute the Registration Rights
Agreement in the form attached hereto as Exhibit B.
(x) Buyer has not employed any investment banker,
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement; and
(xi) Buyer understands that neither the Shares nor
the shares of Common Stock issuable upon conversion have been
registered under the Securities Act and therefore it cannot
dispose of any or all of the Shares or Common Stock unless and
until such Shares or Common Stock, as the case may be, are
subsequently registered under the Securities Act or exemptions
from such registration are available. Buyer acknowledges that
a legend substantially as follows will be placed on the
certificates representing the Shares and/or Common Stock:
THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. THE ISSUER OF THESE SECURITIES WILL NOT TRANSFER SUCH
SECURITIES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT THE
REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
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3. SELLER'S REPRESENTATIONS AND COVENANTS.
Seller represents, warrants and covenants to Buyer as
follows:
(i) Seller has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own,
lease and operate its properties and to conduct its business
as currently conducted, and is duly registered and qualified
to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or
qualification, except where the failure to register or qualify
is not reasonably anticipated to have a material adverse
effect on the condition (financial or otherwise), business,
properties, net worth or results of operations of Seller;
(ii) Seller has registered shares of its Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is in full compliance with
all reporting requirements of the Exchange Act, and the Common
Stock is quoted on the Nasdaq SmallCap Market (trading symbol
INBC);
(iii) Seller has furnished Buyer with copies of
Seller's Prospectus dated December 5, 1996, its most recent
Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the "Commission") and all Forms 10-Q and
8-K filed thereafter, if any (collectively, the "Public
Documents"). The Public Documents at the time of their filing
did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances
under which they were made, not misleading;
(iv) At the Closing, the Shares shall be duly
authorized and validly issued and when issued and delivered,
each of them shall be enforceable in accordance with their
terms (subject to general principles of equity and bankruptcy,
fraudulent conveyance, preference and other laws affecting
creditors' rights generally). The shares of Common Stock, when
issued and delivered upon conversion of the Series A Preferred
Stock, will be duly and validly authorized and issued, fully
paid and nonassessable, free from all encumbrances and
restrictions other than restrictions on transfer imposed by
applicable securities laws and/or this Agreement, and will not
subject the holders thereof to personal liability by reason of
being such holders;
(v) The Company has granted the Buyer one demand and
certain incidental registration rights ("Piggy-Back
Registration Rights") pursuant to the terms and conditions of
the Registration Rights Agreement annexed hereto as Exhibit B
which the Company agrees to execute at Closing. The Buyer has
one
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demand registration right beginning ninety (90) days after the
date of Closing and Piggy-Back Registration Rights beginning
immediately upon Closing.
(vi) This Agreement has been duly authorized, validly
executed and delivered on behalf of Seller and is a valid and
binding agreement of Seller enforceable in accordance with its
terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and Seller has full power and
authority to execute and deliver this Agreement and the other
agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder;
(vii) The execution and delivery of this Agreement,
the issuance of the Shares and the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and
the consummation of the transactions contemplated by this
Agreement by Seller, will not conflict with or result in a
breach of or a default under any of the terms or provisions
of, Seller's certificate of incorporation or By-laws, or of
any material provision of any indenture, mortgage, deed of
trust or other material agreement or instrument to which
Seller is a party or by which it or any of its properties or
assets is bound, any material provision of any law, statute,
rule, regulation, or any existing applicable decree, judgment
or order by any court, federal or state regulatory body,
administrative agency, or other governmental body having
jurisdiction over Seller, or any of its properties or assets
or will result in the creation or imposition of any material
lien, charge or encumbrance upon any property or assets of
Seller or any of its subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of their
property or any of them is subject;
(viii) No authorization, approval, filing with or
consent of any governmental body is required for the issuance
and sale of the Shares;
(ix) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or
foreign, now pending against or affecting Seller, or any of
its properties, which would reasonably be anticipated to
result in any material adverse change in the condition
(financial or otherwise) or in the earnings, business affairs,
business prospects, properties or assets of Seller; and
(x) Seller has not employed any investment banker,
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement except that Seller
has retained, directly or indirectly, Equity Services, Ltd.
and Capital Solutions, Inc. Equity Services, Ltd. is entitled
to receive a fee consisting of an amount equal to ten percent
(10%) of the aggregate principal amount of the
5
<PAGE>
Shares, reimbursement of expenses and warrants. Capital
Solutions, Inc. is entitled to receive a fee in an amount
equal to two percent (2%) of the aggregate principal amount of
the Shares.
(xi) Subsequent to the dates as of which information
is given in the Public Documents, except as contemplated
herein, Seller has not incurred any material liabilities or
material obligations, direct or contingent, or entered into
any material transactions not in the ordinary course of
business, and there has not been any change in its
capitalization or any material adverse change in its condition
(financially or other), net worth, results of operations or
prospectus;
(xii) Seller has conducted, is conducting and will
conduct its business so as to comply in all material respects
with all applicable statutes and regulations, and Seller is
not charged with and, to the knowledge of Seller, is not under
investigation with respect to any violation of any statutes or
regulations nor is it the subject of any pending or threatened
adverse proceedings by any regulatory authority having
jurisdiction over its business or operations except as
disclosed in the Public Documents;
(xiii) Except as set forth in the Public Documents,
Seller has good and marketable title to all properties and
assets described therein as owned by it, free and clear of all
liens, charges, encumbrances, or restrictions;
(xiv) Seller has filed all necessary federal and
state income and franchise tax returns and has paid all taxes
shown as due thereon;
(xv) Seller has no knowledge of any tax deficiency
that might be asserted against it that might materially and
adversely affect its business or properties;
(xvi) Seller maintains insurance of the types and in
amounts generally deemed adequate for its business and
consistent with insurance coverage maintained by similar
companies and businesses, including, but not limited to,
insurance covering all real and personal property owned or
leased by Seller against theft, damage, destruction, acts of
vandalism, products liability and all other risks customarily
insured against, all of which insurance is in full force and
effect;
(xvii) No labor disturbance by the employees of
Seller exists or is imminent that could reasonably be expected
to have a material adverse affect on the conduct of the
business, operations, financial condition or income of the
Seller;
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<PAGE>
(xviii) To the best of the knowledge of Seller's
management, neither the Seller nor any employee or agent of
Seller has made any payment of funds of Seller or received or
retained any funds in violation of law;
(xix) Subject in part to the truth and accuracy of
Buyer's representations set forth in this Agreement, and the
representations and covenants of Seller made in this Agreement
being true, the offer, sale and issuance of the Shares are
exempt from registration requirements of the 1933 Act, and
neither Seller nor any authorized agent acting on its behalf
will take any action hereafter that will cause the loss of
such exemption;
(xx) Seller has sufficient title and ownership of all
trademarks, service marks, trade names, copyrights, patents,
trade secrets and other proprietary rights necessary for its
business as now conducted and as proposed to be conducted as
described in the Public Documents without any conflict with or
infringement of the rights of others. Except as set forth in
the Public Documents, there are no material outstanding
options, licenses or agreements of any kind relating to the
foregoing, nor is Seller bound by or party to any material
options, licenses or agreements of any kind with respect to
the trademarks, service marks, trade names, copyrights,
patents, trade secrets, licenses and other proprietary rights
of any other person or entity. Seller is not aware that any of
its executive officers is obligated under any contract
(including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or
order of any court or administrative agency that would
interfere with the use of his or her best efforts to promote
the interest of Seller or that would conflict with Seller's
business as proposed to be conducted; and
(xxi) Except for agreements explicitly contemplated
hereby or set forth in the Public Documents, there are no
other agreements between Seller and any of its officers,
directors, affiliates or any affiliate thereof.
4. INDEMNIFICATION BY BUYER.
Buyer hereby agrees to indemnify and hold harmless
Seller and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the
Securities Act, or under any other statute, at common law or otherwise, insofar
as such losses, claims, demands, liabilities and expenses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact made by Buyer, (ii) any omission or alleged omission of a material fact
with respect to Buyer or (iii) any breach of any representation, warranty or
agreement made by Buyer in this Agreement.
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<PAGE>
5. DELIVERIES AT CLOSING.
(i) At Closing Buyer shall (a) deliver payment of the
Purchase Price; and (b) execute and deliver the Registration
Rights Agreement.
(ii) At Closing Seller shall deliver to Buyer: (a)
certificates for the Series A Preferred Stock in the name of
the Buyer and (b) execute and deliver the Registration Rights
Agreement.
(iii) At Closing, Buyer shall have received an
opinion addressed to Equity Services, Ltd. and the Buyer, from
Camhy Karlinsky & Stein LLP, stating the following:
(a) Seller has been duly incorporated and is
validly existing and in good standing under the laws
of the State of Delaware, with full corporate power
and authority to own, lease and operate its
properties and to conduct its business as currently
conducted;
(b) The Shares shall be duly authorized and
validly issued and when issued and delivered, each of
them shall be enforceable in accordance with their
terms (subject to general principles of equity and
bankruptcy, fraudulent conveyance, preference and
other laws affecting creditors' rights generally).
The shares of Common Stock, when issued and delivered
upon conversion of the Series A Preferred Stock, will
be duly and validly authorized and issued, fully paid
and nonassessable, free from all encumbrances and
restrictions other than restrictions on transfer
imposed by applicable securities laws and/or this
Agreement, and will not subject the holders thereof
to personal liability by reason of being such
holders;
(c) The Agreement has been duly authorized,
validly executed and delivered on behalf of Seller
and is a valid and binding agreement of Seller
enforceable in accordance with its terms, subject to
general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors'
rights generally, and Seller has full power and
authority to execute and deliver the Agreement and
the other agreements and documents contemplated
hereby and to perform its obligations thereunder; and
(d) The execution and delivery of the
Agreement, the issuance of the Shares and the shares
of Common Stock issuable upon conversion of the
Series A Preferred Stock and the consummation of the
transactions contemplated by this Agreement by
Seller, will not conflict with or result
8
<PAGE>
in a breach of or a default under any of the terms or
provisions of, Seller's certificate of incorporation
or By-laws.
6. MISCELLANEOUS.
(i) This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Delaware without giving effect to the rules governing the
conflicts of laws.
(ii) This Agreement may be executed by facsimile
signature and in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.
(iii) Each of the parties agrees to pay its own
expenses incident to this Agreement and the performance of its
obligations hereunder, including, but not limited to, the fees
and expenses of each such party's legal counsel.
(iv) All notices and other communications provided
for or permitted hereunder shall be made in writing by hand
delivery, express overnight courier, registered first class
mail, overnight courier, or telecopied, initially to the
address set forth below, and thereafter at such other address,
notice of which is given in accordance with the provisions of
this Section 6.
if to Seller:
InnoPet Brands Corp.
One East Broward Boulevard, Suite 1100
Fort Lauderdale, Florida 33301
Attn: CEO
Telephone: 954-453-2400
Telecopier: 954-453-2500
with a copy (which shall not constitute notice) to:
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, New York 10019
Attn: Robert S. Matlin, Esq.
Telephone: 212-977-6600
Telecopier: 212-977-8389
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if to Buyer:
Entrepreneurial Investors, Ltd.
Citibank Building, 2nd Floor
East Mall Drive
P.O. Box 40643
Freeport, Bahamas
Attn: Mr. Robert E. Cordes, Director
Telephone: 242-352-7063
Telecopier: 242-352-3932
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Flynn, P.C.
2000 St. Paul Place
750 N. St. Paul Street
Dallas, Texas 75201-3286
Attn: I. Bobby Majumder, Esq.
Telephone: 214-922-9221
Telecopier: 214-969-7557
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally
delivered; three (3) business days after being deposited in
the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited
with a nationally recognized, overnight courier service; when
receipt is acknowledged, if telecopied.
(v) This Agreement together with the Exhibits hereto
constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior oral or
written proposals or agreements relating thereto. This
Agreement may not be amended or any provision hereof waived in
whole or in part, except by a written amendment signed by both
of the parties.
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<PAGE>
IN WITNESS WHEREOF, this Agreement was duly executed on the
date first written above.
INNOPET BRANDS CORP.
By: /s/ Marc Duke
-------------------------------
Name: Marc Duke
Title: Chief Executive Officer
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Robert E. Cordes
-------------------------------
Name: Robert E. Cordes
Title: Director
11
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of the 28th day of April, 1997 by and between INNOPET BRANDS
CORP., a Delaware corporation (the "Company") and ENTREPRENEURIAL INVESTORS,
LTD. (the "Shareholder").
R E C I T A L S :
WHEREAS, the Shareholder is acquiring 625,000 shares (the
"Shares") of Series A 4% Convertible Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), pursuant to the Investor Subscription
Agreement by and between the Company and the Shareholder dated the same date as
hereof (the "Investor Agreement"); and
WHEREAS, the Company desires to grant to the Shareholder
certain registration rights relating to the shares of common stock, par value
$.01 per share (the "Common Stock") issuable upon conversion of the Shares and
the Shareholder desires to obtain such registration rights, subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions and References. For purposes of this Agreement,
in addition to the definitions set forth above and elsewhere herein, the
following terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
(b) The terms "register", "registered" and
"registration" shall refer to a registration effected by
preparing and filing a registration statement or similar
document in compliance with the 1933 Act (as herein defined)
and the declaration or ordering of effectiveness of such
registration statement or document.
(c) For purposes of this Agreement, the term
"Registrable Stock" shall mean (i) any shares of Common Stock
issued or issuable upon the conversion of Shares, (ii) any
Common Stock issued by way of a stock split, and (iii) any
Common Stock issued as a stock dividend of the Shares. For
purposes of this Agreement, any Registrable Stock shall cease
to be Registrable Stock when (v)
<PAGE>
a registration statement covering such Registrable Stock has
been declared effective and such Registrable Stock has been
disposed of pursuant to such effective registration statement,
(w) such Registrable Stock is sold pursuant to Rule 144 (or
any similar provision then in force) under the 1933 Act, (x)
such Registrable Stock is eligible to be sold pursuant to Rule
144(k) under the 1933 Act, (y) such Registrable Stock has been
otherwise transferred, no stop transfer order affecting such
stock is in effect and the Company has delivered new
certificates or other evidences of ownership for such
Registrable Stock not bearing any legend indicating that such
shares have not been registered under the 1933 Act, or (z)
such Registrable Stock is sold by a person in a transaction in
which the rights under the provisions of this Agreement are
not assigned.
(d) The term "Holder" shall mean the Shareholder or any
transferee or assignee thereof to whom the rights under this
Agreement are assigned in accordance with Section 10 hereof,
provided that the Shareholder or such transferee or assignee
shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act
of 1933, as amended.
(f) An "affiliate of such Holder" shall mean a person
who controls, is controlled by or is under common control with
such Holder, or the spouse or children (or a trust exclusively
for the benefit of the spouse and/or children) of such Holder,
or, in the case of a Holder that is a partnership, its
partners.
(g) The term "Person" shall mean an individual,
corporation, partnership, trust, limited liability company,
unincorporated organization or association or other entity,
including any governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or
Holders of in the aggregate of at least a majority of the
Registrable Stock.
(i) References in this Agreement to any rules,
regulations or forms promulgated by the Commission shall
include rules, regulations and forms succeeding to the
functions thereof, whether or not bearing the same
designation.
2. Demand Registration.
(a) Commencing ninety (90) days after the date of
Closing (as defined in the Investor Agreement), any Requesting
Holders may make a written request to the Company (specifying
that it is being made pursuant to this Section 2) that the
Company file a registration statement under the 1933 Act (or a
similar document pursuant to any other statute then in effect
corresponding to the 1933 Act) covering the registration of
Registrable Stock. In such event, the Company shall (x) within
ten (10) days thereafter notify in writing all other Holders
of Registrable
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<PAGE>
Stock of such request, and (y) use its best efforts to cause
to be registered under the 1933 Act all Registrable Stock that
the Requesting Holders and such other Holders have, within
forty-five (45) days after the Company has given such notice,
requested be registered.
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an
underwritten offering, they shall so advise the Company as a
part of their request pursuant to Section 2(a) above, and the
Company shall include such information in the written notice
referred to in clause (x) of Section 2(a) above. In such
event, the Holder's right to include its Registrable Stock in
such registration shall be conditioned upon such Holder's
participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten
offering to the extent provided in this Section 2. All Holders
proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting Holders
and shall be approved by the Company, which approval shall not
be unreasonably withheld; provided, that all of the
representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting
agreement shall be conditions precedent to the obligations of
such Holders; and provided further, that no Holder shall be
required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such
Holder, the Registrable Stock of such Holder and such Holder's
intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section
2 to the contrary, if the managing underwriter of an
underwritten offering of the Registrable Stock requested to be
registered pursuant to this Section 2 advises the Requesting
Holders in writing that in its opinion marketing factors
require a limitation of the number of shares to be
underwritten, the Requesting Holders shall so advise all
Holders of Registrable Stock that would otherwise be
underwritten pursuant hereto, and the number of shares of
Registrable Stock that may be included in such underwritten
offering shall be allocated among all such Holders, including
the Requesting Holders, in proportion (as nearly as
practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of
filing the registration statement; provided, that in the event
of such limitation of the number of shares of Registrable
Stock to be underwritten, the Holders shall be entitled to an
additional demand registration pursuant to this Section 2. If
any Holder of Registrable Stock disapproves of the terms of
the underwriting, such Holder may elect to withdraw by written
notice to the
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<PAGE>
Company, the managing underwriter and the Requesting Holders.
The securities so withdrawn shall also be withdrawn from
registration.
(d) Notwithstanding any provision of this Agreement to
the contrary, the Company shall not be required to effect a
registration pursuant to this Section 2 during the period
starting with the fourteenth (14th) day immediately preceding
the date of an anticipated filing by the Company of, and
ending on a date ninety (90) days following the effective date
of, a registration statement pertaining to a public offering
of securities for the account of the Company; provided, that
the Company shall actively employ in good faith all reasonable
efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate
of the date of filing such registration statement shall be
made in good faith.
(e) The Company shall be obligated to effect and pay
for a total of only one (1) registration pursuant to this
Section 2, unless increased pursuant to Section 2(c) hereof;
provided, that a registration requested pursuant to this
Section 2 shall not be deemed to have been effected for
purposes of this Section 2(e), unless (i) it has been declared
effective by the Commission, (ii) if it is a shelf
registration, it has remained effective for the period set
forth in Section 3(b), (iii) the offering of Registrable Stock
pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the
Commission (other than any such action prompted by any act or
omission of the Holders), and (iv) no limitation of the number
of shares of Registrable Stock to be underwritten has been
required pursuant to Section 2(c) hereof.
3. Obligations of the Company. Whenever required under Section
2 to use its best efforts to effect the registration of any Registrable Stock,
the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later
than 90 days after receipt of a request to file a registration
statement with respect to such Registrable Stock, a
registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of
such issue of Registrable Stock in accordance with the
intended method of distribution thereof, and use its best
efforts to cause such registration statement to become
effective as promptly as practicable thereafter; provided that
before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i)
furnish to one counsel selected by the Requesting Holders
copies of all such documents proposed to be filed, and (ii)
notify each such Holder of any stop order issued or threatened
by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if
entered;
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<PAGE>
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period of not less than one year or such shorter period which
will terminate when all Registrable Stock covered by such
registration statement has been sold (but not before the
expiration of the forty (40) or ninety (90) day period
referred to in Section 4(3) of the 1933 Act and Rule 174
thereunder, if applicable), and comply with the provisions of
the 1933 Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to each Holder and any underwriter of
Registrable Stock to be included in a registration statement
copies of such registration statement as filed and each
amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus)
and such other documents as such Holder may reasonably request
in order to facilitate the disposition of the Registrable
Stock owned by such Holder;
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws
of such jurisdictions as any selling Holder or any underwriter
of Registrable Stock reasonably requests, and do any and all
other acts which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Stock owned by such Holder;
provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d)
hereof, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process
in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with
or approved by such other governmental agencies or other
authorities as may be necessary by virtue of the business and
operations of the Company to enable the selling Holders
thereof to consummate the disposition of such Registrable
Stock;
(f) notify each selling Holder of such Registrable
Stock and any underwriter thereof, at any time when a
prospectus relating thereto is required to be delivered under
the 1933 Act (even if such time is after the period referred
to in Section 3(b)), of the happening of any event as a result
of which the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a
supplement or amendment to such prospectus so that,
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<PAGE>
as thereafter delivered to the purchasers of such Registrable
Stock, such prospectus will not contain an 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
in light of the circumstances being made not misleading;
(g) make available for inspection by any selling
Holder, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), and
cause the Company's officers, directors and employees to
supply all information reasonably requested by any such
Inspector, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, in connection
with such registration statement. Records or other information
which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records or other information is
necessary to avoid or correct a misstatement or omission in
the registration statement, or (ii) the release of such
Records or other information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each
selling Holder shall, upon learning that disclosure of such
Records or other information is sought in a court of competent
jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records or other
information deemed confidential;
(h) furnish, at the request of any Requesting Holder,
on the date that such shares of Registrable Stock are
delivered to the underwriters for sale pursuant to such
registration or, if such Registrable Stock is not being sold
through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock
becomes effective, (1) a signed opinion, dated such date, of
the legal counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and
if such Registrable Stock is not being sold through
underwriters, then to the Requesting Holders as to such
matters as such underwriters or the Requesting Holders, as the
case may be, may reasonably request and as would be customary
in such a transaction; and (2) a letter dated such date, from
the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable
Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver
such letter to such Holder, then to the Company (i) stating
that they are independent certified public accountants within
the meaning of the 1933 Act and that, in the opinion of such
accountants, the financial statements and other financial data
of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act, and (ii) covering
such other financial matters (including information as to the
period
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<PAGE>
ending not more than five (5) business days prior to the date
of such letter) with respect to the registration in respect of
which such letter is being given as the Requesting Holders may
reasonably request and as would be customary in such a
transaction;
(i) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Stock to be so
included in the registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, but not later than eighteen (18) months after the
effective date of the registration statement, an earnings
statement covering the period of at least twelve (12) months
beginning with the first full month after the effective date
of such registration statement, which earnings statements
shall satisfy the provisions of Section 11(a) of the 1933 Act;
and
(k) use its best efforts to cause all such Registrable
Stock to be listed on the Nasdaq SmallCap Market and/or any
other securities exchange on which similar securities issued
by the Company are then listed or traded.
The Company may require each selling Holder of Registrable
Stock as to which any registration is being effected to furnish to the Company
such information regarding the distribution of such Registrable Stock as the
Company may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f)
hereof, such Holder will forthwith discontinue disposition of Registrable Stock
pursuant to the registration statement covering such Registrable Stock until
such Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Stock current at the time of receipt of such notice.
In the event the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement (including the period referred to in
Section 3(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 3(f) hereof to and
including the date when each selling Holder of Registrable Stock covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 3(f) hereof.
4. Incidental Registration. Commencing immediately after the
date of Closing (as defined in the Investor Agreement), if the Company
determines that it shall file a registration
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statement under the 1933 Act (other than a registration statement on a Form S-4
or S-8 or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders) on any form that would
also permit the registration of the Registrable Stock and such filing is to be
on its behalf and/or on behalf of selling holders of its securities for the
general registration of its common stock to be sold for cash, at each such time
the Company shall promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than forty (40) days from the date of
such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than twenty (20) days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Holder has so requested
to be registered. If, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the written
opinion of the placement agent, or if there is none, the Company), the total
amount of such securities to be so registered, including such Registrable Stock,
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to the then current market value of such
securities, or (ii) without otherwise materially and adversely affecting the
entire offering, then the amount of Registrable Stock to be offered for the
accounts of Holders shall be reduced pro rata to the extent necessary to reduce
the total amount of securities to be included in such offering to the
recommended amount; provided, that if securities are being offered for the
account of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of securities intended to be offered
by Holders than the fraction of similar reductions imposed on such other Persons
other than the Company over the amount of securities they intended to offer.
5. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law,
each Holder whose Registrable Stock is included in a
registration statement agrees not to effect any public sale or
distribution of the issue being registered or a similar
security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the 1933 Act, during the
fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of such registration
statement (except as part of the registration), if and to the
extent requested by the Company in the case of a
non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the
case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and
Others. The Company agrees (i) not to effect any public sale
or distribution of any securities similar to those being
registered, or any securities convertible into or exchangeable
or exercisable for such securities, during the fourteen (14)
days prior to, and during the ninety (90) day period beginning
on, the effective date of any registration statement in which
Holders are participating (except as part of such
registration), if and to the extent requested by the Holders
in the case of a non-underwritten
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<PAGE>
public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an
underwritten public offering; and (ii) that any agreement
entered into after the date of this Agreement pursuant to
which the Company issues or agrees to issue any securities
convertible into or exchangeable or exercisable for such
securities (other than pursuant to an effective registration
statement) shall contain a provision under which holders of
such securities agree not to effect any public sale or
distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant
to Rule 144 under the 1933 Act.
6. Expenses of Registration. The Company agrees to pay all
expenses incurred in connection with each registration pursuant to Sections 2
and 4 of this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holders shall bear and pay
the underwriting commissions and discounts applicable to the Registrable Stock
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees
to indemnify, to the full extent permitted by law, each
Holder, its officers, directors and agents and each Person who
controls such Holder (within the meaning of the 1933 Act)
against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or
preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The
Company will also indemnify any underwriters of the
Registrable Stock, their officers and directors and each
Person who controls such underwriters (within the meaning of
the 1933 Act) to the same extent as provided above with
respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such
information with respect to such Holder as the Company
reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify,
to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages,
liabilities and
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<PAGE>
expenses resulting from any untrue or alleged untrue statement
of material fact or any omission or alleged omission of a
material fact required to be stated in the registration
statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission was
made in reliance upon and in conformity with any information
with respect to such Holder so furnished in writing by such
Holder. Notwithstanding the foregoing, the liability of each
such Holder under this Section 7(b) shall be limited to an
amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability
arises out of or is based on willful misconduct of such
Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt
written notice to the indemnifying party after the receipt by
such Person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory to
such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld).
Failure by such Person to provide said notice to the
indemnifying party shall itself not create liability except to
the extent of any injury caused thereby. No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim or litigation. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim,
it will not be obligated to pay the fees and expenses of more
than one (1) counsel with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnity
provided for in this Section 7 is unavailable to, or is
insufficient to hold harmless, an indemnified party, then the
indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the
indemnified party on the other, or (ii) if the allocation
provided by clause (i) above is not permitted by
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<PAGE>
applicable law, or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand
and the indemnified party on the other but also the relative
fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified
parties shall 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 to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party
or indemnified parties; and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 7(c), any legal or
other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7 (d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
If indemnification is available under this Section 7,
the indemnifying parties shall indemnify each indemnified
party to the full extent provided in Sections 7(a) and (b)
without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable
consideration provided for in this Section 7.
8. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the 1933 Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations adopted by the
Commission thereunder; and it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Stock without registration under the 1933 Act within
the limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon
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<PAGE>
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
10. Transfer of Registration Rights. The registration rights
of any Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided that such
transfer may otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall give the Company
written notice at or prior to the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being transferred; provided further, that
such transferee shall agree in writing, in form and substance satisfactory to
the Company, to be bound as a Holder by the provisions of this Agreement; and
provided further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by such
transferee is restricted under the 1933 Act. Except as set forth in this Section
10, no transfer of Registrable Stock shall cause such Registrable Stock to lose
such status.
11. Mergers, Etc. The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to "Registrable Stock" shall be deemed to
be references to the securities which the Holders would be entitled to receive
in exchange for Registrable Stock under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 11 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely of
(i) cash, (ii) securities of the acquiring corporation which may be immediately
sold to the public without registration under the 1933 Act, or (iii) securities
of the acquiring corporation which the acquiring corporation has agreed to
register within ninety (90) days of completion of the transaction for resale to
the public pursuant to the 1933 Act.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to
the Holders in this Agreement.
(b) Remedies. Each Holder, 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. The Company agrees that
monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of
this Agreement and hereby agrees to waive (to the extent
permitted by law) the defense in any action for specific
performance that a remedy of law would be adequate.
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<PAGE>
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written
consent of the Holders of at least a majority of the
Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise
expressly provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto or their
respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the
State of Delaware applicable to contracts made and to be
performed wholly within that state, without regard to the
conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
(g) Headings. The headings in this Agreement are used
for convenience of reference only and are not to be considered
in construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under
this Agreement shall be given in writing and shall be
delivered in person or by telecopy or by overnight courier
guaranteeing no later than second business day delivery,
directed to (i) the Company at the address set forth below its
signature hereof or (ii) a Holder at the address set forth
below its signature hereof. Any party may change its address
for notice by giving ten (10) days advance written notice to
the other parties. Every notice or other communication
hereunder shall be deemed to have been duly given or served on
the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier
service, with receipt acknowledged.
(i) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be
in any way impaired thereby, it being
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intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings other than
those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(k) Enforceability. This Agreement shall remain in
full force and effect notwithstanding any breach or purported
breach of, or relating to, the Purchase Agreement.
(l) Recitals. The recitals are hereby incorporated in
the Agreement as if fully set forth herein.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INNOPET BRANDS CORP.
By: /s/ Marc Duke
-------------------------------
Name: Marc Duke
Title: Chairman and CEO
One East Broward Boulevard
Suite 1100
Ft. Lauderdale, Florida 33301
Tel: (954) 453-2400
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Robert E. Cordes
-------------------------------
Name: Robert E. Cordes
Title: Director
Citibank Building, 2nd Floor
East Mall Drive
P.O. Box 40643
Freeport, Bahamas
Attn: Mr. Robert E. Cordes, Director
Telephone: 242-352-7063
Telecopier: 242-352-3932
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