303606.001(B&F)
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
October 7, 1996
Date of Report (Date of earliest event reported)
INNOVUS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-26790 87-0461856
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
Incorporation)
2060 E. 2100 South
Salt Lake City, Utah 84109
(Address of principal executive offices)
(Zip Code)
(801-463-8200)
Registrant's telephone number, including area code)
Item 5. Other Events.
On October 7, 1996, the Registrant completed a private
placement (the "Placement") of 45,000 shares of Series C
Convertible Preferred Stock ("Series C Preferred") for which it
received $2,250,000 in gross proceeds. The Series C Preferred
shares were sold via the Placement to institutional and other
accredited investors. The Placement was made pursuant to
Regulation D.
The Certificate of Designation of Series C Convertible
Preferred Stock of Innovus Corporation (the "Series C
Designation") originally authorized 45,000 shares. The Series C
Designation was subsequently amended to increase the authorization
to 55,000 shares. The shares, each with a par value of $.001 and
a stated value of $50.00, entitle the holder to cumulative dividends
at the rate per share (as a percentage of the stated value of $50.00
per share) equal to five percent (5%) per annum and priority
distribution rights in the event of a liquidation, dissolution or
winding-up of the Registrant. The Series C Preferred is not entitled
to a vote, except on matters for which Delaware law requires class
voting. Holders of shares of Series C Preferred stock are also
entitled to convert to common stock at a conversion price equal to
the lesser of (a) the average per share market value of the common
stock for the five (5) trading days immediately preceding the
original issue date (i.e. $5.45 per share of common stock) or (b)
75% of the average per share market value of the common stock for
the five (5) trading days immediately preceding the conversion date.
The conversion price may be reduced if the Registrant fails to file
and obtain effectiveness of a registration statement for the
underlying common stock issuable on conversion. The conversion
rates are subject to additional adjustments in the event of
recapitalizations, stock splits or similar events. The Registrant is
entitled to require a conversion of the Series C Preferred at the
conversion price set forth above after one year from the original
issue date if certain conditions are satisfied. The Registrant is
entitled to redeem the Series C Preferred, at then current market
value of the underlying common stock, three years from the original
issue date.
In connection with the Placement, the holder of $1,005,000
of previously issued securities agreed to convert the securities into
20,100 shares of a newly authorized Series D Convertible Preferred
Stock ("Series D Preferred"). The Series D Preferred shares also
have a par value of $.001 and a stated value of $50.00. Like the
Series C Preferred, the Series D Preferred entitle the holders to
cumulative dividends at the rate per share (as a percentage of the
stated value per share) equal to five percent (5%) per annum. The
Series D Preferred shares have distribution rights in the event of a
liquidation, dissolution or winding-up of the Registrant which are
senior to the common stock, but junior to the Series C Preferred.
The Series D Preferred is not entitled to a vote, except on matters
for which Delaware law requires class voting. The Series D
Preferred have a conversion price of $4.00 per share which is
subject to adjustments in the event of recapitalizations, stock splits
or similar events. The Registrant is entitled to require a conversion
of the Series D Preferred at the conversion price set forth above
after one year from the original issue date if certain conditions are
satisfied. The Registrant is entitled to redeem the Series D
Preferred, at its stated value plus accrued dividends, one year from
the original issue date.
The Series C Preferred are senior to the Series D Preferred
in connection with the payment of dividends and distributions in the
event of a liquidation, dissolution, or winding-up of the Registrant.
The Registrant and the holder of the Series D Preferred
further agreed as part of the transaction to allow the holder to
acquire an additional 10,000 shares of Series C Preferred at the
stated value of $50.00 per share.
The Series C Preferred and the Series D Preferred are
collectively convertible into a minimum of 755,837 shares of
common stock. The ultimate number of shares issued upon
conversion is subject to possible adjustment based on market and
other factors.
The Registrant has also announced that previously
outstanding options held by certain founders of Registrant to
purchase up to 408,750 shares have been surrendered or allowed to
expire. The options had an exercise price of $.254 per share.
Item 7. Financial Statements and Exhibits
The following exhibits are filed herewith:
4.1 Certificate of Designation of Series C Convertible
Preferred Stock of Innovus Corporation.
4.2 Certificate of Increase to the Certificate of
Designation of Series C Convertible Preferred Stock
of Innovus Corporation.
4.3 Certificate of Designation of Series D Convertible
Preferred Stock of Innovus Corporation.
4.4 Certificate of Correction to the Certificate of
Designation of Series D Convertible Preferred Stock
of Innovus Corporation.
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.
INNOVUS CORPORATION
Date November ___, 1996
By /s/
David Mock
Chief Financial Officer
Exhibit 4.1
CERTIFICATE OF DESIGNATION OF
SERIES C CONVERTIBLE PREFERRED STOCK OF
INNOVUS CORPORATION
The undersigned, Terry Haas and David Mock, hereby certify that:
I. They are the duly elected and acting President and Secretary,
respectively, of Innovus Corporation, a Delaware corporation (the
"Company").
II. The Certificate of Incorporation of the Company authorizes
1,000,000 shares of preferred stock, par value $.001 per share, of
which the following have been authorized and are issued and
outstanding: 120,000 Series A Preferred Stock authorized, none
outstanding.
III. The following is a true and correct copy of resolutions duly
adopted by the Board of Directors at meetings duly held on August
8, 9 and 12, 1996, which constituted all requisite action on the part
of the Company for adoption of such resolutions.
RESOLUTIONS
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") is authorized to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or restrictions
thereof;
WHEREAS, the Board of Directors desires, pursuant to its
authority as aforesaid, to designate a new series of preferred stock,
set the number of shares constituting such series and fix the rights,
preferences, privileges and restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors hereby designates a new series of preferred stock and the
number of shares constituting such series and fixes the rights,
preferences, privileges and restrictions relating to such series as
follows:
Section 1. Designation, Amount and Par Value.
The series of Preferred Stock shall be designated as the
Series C Convertible Preferred Stock (the "Preferred Stock"), and
the number of shares so designated shall be 45,000. The par value
of each share of Preferred Stock shall be $.001. Each share of
Preferred Stock shall have a stated value of $50.00 per share (the
"Stated Value").
Section 2. Dividends.
(a) Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of
funds legally available therefor, and the Company shall pay,
cumulative dividends at the rate per share (as a percentage of the
Stated Value per share) equal to 5% per annum, payable, in cash or
shares of Common Stock, in arrears on the Conversion Date (as
hereinafter defined). Dividends on the Preferred Stock shall accrue
daily commencing the Original Issue Date (as defined in Section 7)
and shall be deemed to accrue on such date whether or not earned
or declared and whether or not there are profits, surplus or other
funds of the Company legally available for the payment of
dividends. The party that holds the Preferred Stock on an
applicable record date for any dividend payment will be entitled to
receive such dividend payment and any other accrued and unpaid
dividends which accrued prior to such dividend payment date,
without regard to any sale or disposition of such Preferred Stock
subsequent to the applicable record date but prior to the applicable
dividend payment date. Except as otherwise provided herein, if at
any time the Company pays less than the total amount of dividends
then accrued to any class of Preferred Stock, such payment shall be
distributed ratably among the holders of such class based upon the
number of shares held by each holder.
(b) So long as any Preferred Stock shall remain
outstanding, neither the Company nor any subsidiary thereof shall
redeem, purchase or otherwise acquire directly or indirectly any
Junior Securities (as defined in Section 7), nor shall the Company
directly or indirectly pay or declare any dividend or make any
distribution (other than a dividend or distribution described in
Section 5) upon, nor shall any distribution be made in respect of,
any Junior Securities, nor shall any monies be set aside for or
applied to the purchase or redemption (through a sinking fund or
otherwise) of any Junior Securities unless all dividends on the
Preferred Stock for all past dividend periods shall have been paid.
Section 3. Voting Rights.
Except as otherwise provided herein and as otherwise
provided by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding,
the Company shall not, without the affirmative vote of the holders
of a majority of the shares of the Preferred Stock then outstanding,
(i) alter or change adversely the powers, preferences or rights given
to the Preferred Stock or (ii) authorize or create any class of stock
ranking as to dividends or distribution of assets upon a Liquidation
(as defined below) senior to, prior to or pari passu with the
Preferred Stock.
Section 4. Liquidation.
Upon any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary (a "Liquidation"), the
holders of shares of Preferred Stock shall be entitled to receive out
of the assets of the Company, whether such assets are capital or
surplus, for each share of Preferred Stock an amount equal to the
Stated Value, plus an amount equal to accrued but unpaid dividends
per share, whether declared or not, but without interest, before any
distribution or payment shall be made to the holders of any Junior
Securities, and if the assets of the Company shall be insufficient to
pay in full such amounts, then the entire assets to be distributed
shall be distributed among the holders of Preferred Stock ratably in
accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. A sale,
conveyance or disposition of all or substantially all of the assets of
the Company or the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting
power of the Company is disposed of shall be deemed a Liquidation;
provided that, a consolidation or merger of the Company with or
into any other company or companies shall not be treated as a
Liquidation, but instead shall be subject to the provisions of Section
5. The Company shall mail written notice of any such liquidation,
not less than 60 days prior to the payment date stated therein, to
each record holder of Preferred Stock.
Section 5. Conversion.
(a) Each share of Preferred Stock shall be convertible
into shares of Common Stock at the Conversion Ratio (as defined in
Section 7) at the option of the holder in whole or in part at any time
after the expiration of the earlier to occur of (i) 105 days after the
Original Issue Date and (ii) the date that the Securities and
Exchange Commission (the "Commission") declares effective under
the Securities Act of 1933, as amended (the "Securities Act") the
registration statement contemplated by the Registration Rights
Agreement, dated the Original Issue Date (the "Registration Rights
Agreement"), by and between the Company and the original holder
of Preferred Stock relating to the Preferred Stock and the shares of
Common Stock into which the Preferred Stock is convertible in
accordance with the terms hereof. The holder shall effect
conversions by surrendering the certificate or certificates
representing the shares of Preferred Stock to be converted to the
Company, together with the form of conversion notice attached
hereto as Exhibit A (the "Holder Conversion Notice") in the manner
set forth in Section 5(j). Each Holder Conversion Notice shall
specify the number of shares of Preferred Stock to be converted and
the date on which such conversion is to be effected, which date may
not be prior to the date the Holder delivers such Notice by facsimile
(the "Holder Conversion Date"). Subject to Section 5(c) and, as to
the original Holder (or its sole designee), subject to Section 4.13 of
the Purchase Agreement (as defined in Section 7), each Holder
Conversion Notice, once given, shall be irrevocable. If the holder
is converting less than all shares of Preferred Stock represented by
the certificate or certificates tendered by the holder with the Holder
Conversion Notice, the Company shall promptly deliver to the
holder a certificate for such number of shares as have not been
converted.
(b) Provided that ten (10) Trading Days (as defined in
Section 7) shall have elapsed from the date the Commission declared
the registration statement contemplated by the Registration Rights
Agreement effective under the Securities Act, each share of the
Preferred Stock shall be convertible into shares of Common Stock
at the Conversion Ratio at the option of the Company in whole or
in part at any time on or after the expiration of one year after the
Original Issue Date; provided, however, that the Company is not
permitted to deliver a Company Conversion Notice (as defined
below) within ten (10) days of issuing any press release or other
public statement relating to such conversion. The Company shall
effect such conversion by delivering to the holders of such shares of
Preferred Stock to be converted a written notice in the form attached
hereto as Exhibit B (the "Company Conversion Notice"), which
Company Conversion Notice, once given, shall be irrevocable.
Each Company Conversion Notice shall specify the number of
shares of Preferred Stock to be converted and the date on which
such conversion is to be effected, which date will be at least one (1)
Trading Day after the date the Company delivers such Notice by
facsimile to the holder (the "Company Conversion Date"). The
Company shall give such Company Conversion Notice in
accordance with Section 5(j) below at least one (1) Trading Day
before the Company Conversion Date. Any such conversion shall
be effected on a pro rata basis among the holders of Preferred
Stock. Upon the conversion of shares of Preferred Stock pursuant
to a Company Conversion Notice, the holders of the Preferred Stock
shall surrender the certificates representing such shares at the office
of the Company or of any transfer agent for the Preferred Stock or
Common Stock. If the Company is converting less than all shares
of the Preferred Stock, the Company shall, upon conversion of such
shares subject to such Company Conversion Notice and receipt of
the certificate or certificates representing such shares of Preferred
Stock deliver to the holder or holders a certificate for such number
of shares of Preferred Stock as have not been converted. Each of
a Holder Conversion Notice and a Company Conversion Notice is
sometimes referred to herein as a "Conversion Notice," and each of
a "Holder Conversion Date" and a "Company Conversion Date" is
sometimes referred to herein as a "Conversion Date."
(c) Not later than three (3) Trading Days after the
Conversion Date, the Company will deliver to the holder (i) a
certificate or certificates which shall be free of restrictive legends
and trading restrictions (other than those then required by law and
as set forth in the Purchase Agreement), representing the number of
shares of Common Stock being acquired upon the conversion of
shares of Preferred Stock and (ii) one or more certificates
representing the number of shares of Preferred Stock not converted;
provided, however that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon
conversion of any shares of Preferred Stock until certificates
evidencing such shares of Preferred Stock are either delivered for
conversion to the Company or any transfer agent for the Preferred
Stock or Common Stock, or the holder notifies the Company that
such certificates have been lost, stolen or destroyed and provides a
bond (or other adequate security reasonably acceptable to the
Company) satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection therewith. The Company
shall, upon request of the holder, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company
under this Section 5(c) electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions. In the case of a conversion pursuant to a Holder
Conversion Notice, if such certificate or certificates are not
delivered by the date required under this Section 5(c), the holder
shall be entitled by written notice to the Company at any time on or
before such holder's receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company
shall immediately return the certificates representing the shares of
Preferred Stock tendered for conversion.
(d) (i) The conversion price for each share of
Preferred Stock (the "Conversion Price") in effect on any
Conversion Date shall be the lesser of (a) the average Per Share
Market Value for the five (5) Trading Days immediately preceding
the Original Issue Date or (b) 75% of the average Per Share Market
Value for the five (5) Trading Days immediately preceding the
Conversion Date; provided, however, (x) if the registration
statement to be filed by the Company in accordance with the
Registration Rights Agreement is not filed with and declared
effective by the Commission on or prior to the Effectiveness Date
(as defined in the Registration Rights Agreement), or (y) if such
registration statement filed is declared effective but thereafter ceases
to be effective at any time during the Effectiveness Period (as
defined in the Registration Rights Agreement) without being
succeeded within 30 days by a subsequent registration statement
filed with and declared effective by the Commission (any such
failure being hereinafter referred to as an "Event", and for purposes
of clause (x), the date on which such Event occurs, or for purposes
of clause (y), the date on which such 30-day limit is exceeded, being
hereinafter referred to as an "Event Date"), the Conversion Price
shall be decreased by 1.5% monthly (i.e., 73.5% at the beginning
of the first such month and 72% at the beginning of the second such
month). Commencing on the third month after an Event Date, the
1.5% monthly penalty shall be paid to the Holder in cash, and any
penalty amount not paid when due shall accrue interest at the rate of
1.5% per month until paid.
(ii) If the Company, at any time while any shares
of Preferred Stock are outstanding, (a) shall pay a stock dividend or
otherwise make a distribution or distributions on shares of its Junior
Securities payable in shares of its capital stock (whether payable in
shares of its Common Stock or of capital stock of any class), (b)
subdivide outstanding shares of Common Stock into a larger number
of shares, (c) combine outstanding shares of Common Stock into a
smaller number of shares, or (d) issue by reclassification of shares
of Common Stock any shares of capital stock of the Company, the
Conversion Price designated in Section 5(d)(i) shall be multiplied by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this
Section 5(d)(ii) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(iii) If the Company, at any time while any shares
of Preferred Stock are outstanding, shall issue rights or warrants to
all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
Per Share Market Value of Common Stock at the record date
mentioned below, the Conversion Price designated in Section 5(d)(i)
shall be multiplied by a fraction, of which the denominator shall be
the number of shares of Common Stock (excluding treasury shares,
if any) outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants
plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Per Share
Market Value. Such adjustment shall be made whenever such rights
or warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such rights or warrants. However, upon the expiration of
any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Price designated
in Section 5(d)(i) pursuant to this Section 5(d)(iii), if any such right
or warrant shall expire and shall not have been exercised, the
Conversion Price designated in Section 5(d)(i) shall immediately
upon such expiration be recomputed and effective immediately upon
such expiration be increased to the price which it would have been
(but reflecting any other adjustments in the Conversion Price made
pursuant to the provisions of this Section 5 after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made
upon the issuance of such rights or warrants been made on the basis
of offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of such
rights or warrants actually exercised.
(iv) If the Company, at any time while shares of
Preferred Stock are outstanding, shall distribute to all holders of
Common Stock (and not to holders of Preferred Stock) evidences of
its indebtedness or assets or rights or warrants to subscribe for or
purchase any security (excluding those referred to in Section
5(d)(iii) above) then in each such case the Conversion Price at
which each share of Preferred Stock shall thereafter be convertible
shall be determined by multiplying the Conversion Price in effect
immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the Per Share Market Value of
Common Stock determined as of the record date mentioned above,
and of which the numerator shall be such Per Share Market Value
of the Common Stock on such record date less the then fair market
value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of
Common Stock as determined by the Board of Directors in good
faith; provided, however that in the event of a distribution
exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by a nationally recognized or
major regional investment banking firm or firm of independent
certified public accountants of recognized standing (which may be
the firm that regularly examines the financial statements of the
Company) (an "Appraiser") selected in good faith by the holders of
a majority in interest of the shares of Preferred Stock; and provided,
further that the Company, after receipt of the determination by such
Appraiser shall have the right to select an additional Appraiser, in
which case the fair market value shall be equal to the average of the
determinations by each such Appraiser. In either case the
adjustments shall be described in a statement provided to all holders
of Preferred Stock of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to
one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(v) All calculations under this Section 5 shall be
made to the nearest cent or the nearest 1/100th of a share, as the
case may be.
(vi) Whenever the Conversion Price is adjusted
pursuant to Section 5(d)(ii),(iii), (iv) or (v), the Company shall
promptly mail to each holder of Preferred Stock, a notice setting
forth the Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment.
(vii) In case of any reclassification of the Common
Stock, any consolidation or merger of the Company with or into
another person, the sale or transfer of all or substantially all of the
assets of the Company or any compulsory share exchange pursuant
to which the Common Stock is converted into other securities, cash
or property, the holders of the Preferred Stock then outstanding
shall have the right thereafter to convert such shares only into the
shares of stock and other securities and property receivable upon or
deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share
exchange, and the holders of the Preferred Stock shall be entitled
upon such event to receive such amount of securities or property as
the shares of the Common Stock of the Company into which such
shares of Preferred Stock could have been converted immediately
prior to such reclassification, consolidation, merger, sale, transfer
or share exchange would have been entitled. The terms of any such
consolidation, merger, sale, transfer or share exchange shall include
such terms so as to continue to give to the holder of Preferred Stock
the right to receive the securities or property set forth in this Section
5(d)(vii) upon any conversion following such consolidation, merger,
sale, transfer or share exchange. This provision shall similarly
apply to successive reclassifications, consolidations, mergers, sales,
transfers or share exchanges.
(viii) If:
a. the Company shall declare a
dividend (or any other distribution) on its Common Stock; or
b. the Company shall declare a
special nonrecurring cash dividend on or a redemption of its
Common Stock; or
c. the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any rights; or
d. the approval of any stockholders
of the Company shall be required in connection with any
reclassification of the Common Stock of the Company (other than
a subdivision or combination of the outstanding shares of Common
Stock), any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property;
or
e. the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding-up of
the affairs of the Company;
then the Company shall cause to be
filed at each office or agency maintained for the purpose of
conversion of Preferred Stock, and shall cause to be mailed to the
holders of Preferred Stock at their last addresses as they shall appear
upon the stock books of the Company, at least 30 calendar days
prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined,
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or
winding-up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding-up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be
specified in such notice.
(e) If at any time conditions shall arise by reason of
action taken by the Company which in the opinion of the Board of
Directors are not adequately covered by the other provisions hereof
and which might materially and adversely affect the rights of the
holders of Preferred Stock (different than or distinguished from the
effect generally on rights of holders of any class of the Company's
capital stock) or if at any time any such conditions are expected to
arise by reason of any action contemplated by the Company, the
Company shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the
rights of the holders of Preferred Stock at least 30 calendar days
prior to the effective date of such action, and an Appraiser selected
by the holders of majority in interest of the Preferred Stock shall
give its opinion as to the adjustment, if any (not inconsistent with
the standards established in this Section 5), of the Conversion Price
(including, if necessary, any adjustment as to the securities into
which shares of Preferred Stock may thereafter be convertible) and
any distribution which is or would be required to preserve without
diluting the rights of the holders of shares of Preferred Stock;
provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select an
additional Appraiser, in which case the adjustment shall be equal to
the average of the adjustments recommended by each such
Appraiser. The Board of Directors shall make the adjustment
recommended forthwith upon the receipt of such opinion or opinions
or the taking of any such action contemplated, as the case may be;
provided, however, that no such adjustment of the Conversion Price
shall be made which in the opinion of the Appraiser(s) giving the
aforesaid opinion or opinions would result in an increase of the
Conversion Price to more than the Conversion Price then in effect.
(f) The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
Common Stock solely for the purpose of issuance upon conversion
of Preferred Stock as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than
the holders of Preferred Stock, such number of shares of Common
Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 5(b) and Section 5(d) hereof) upon the
conversion of all outstanding shares of Preferred Stock. The
Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued
and fully paid and nonassessable.
(g) Upon a conversion hereunder the Company shall not
be required to issue stock certificates representing fractions of
shares of Common Stock, but may if otherwise permitted, make a
cash payment in respect of any final fraction of a share based on the
Per Share Market Value at such time. If the Company elects not,
or is unable, to make such a cash payment, the holder of a share of
Preferred Stock shall be entitled to receive, in lieu of the final
fraction of a share, one whole share of Common Stock.
(h) The issuance of certificates for shares of Common
Stock on conversion of Preferred Stock shall be made without
charge to the holders thereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay
any tax that may be payable in respect of any transfer involved in
the issuance and delivery of any such certificate upon conversion in
a name other than that of the holder of such shares of Preferred
Stock so converted and the Company shall not be required to issue
or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
(i) Shares of Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but
unissued shares of preferred stock.
(j) Each Holder Conversion Notice shall be given by
facsimile and by mail, postage prepaid, addressed to the attention of
the Chief Financial Officer of the Company at the facsimile
telephone number and address of the principal place of business of
the Company. Each Company Conversion Notice shall be given by
facsimile and by mail, postage prepaid, addressed to each holder of
Preferred Stock at the facsimile telephone number and address of
such holder appearing on the books of the Company or provided to
the Company by such holder for the purpose of such Company
Conversion Notice, or if no such facsimile telephone number or
address appears or is so provided, at the principal place of business
of the holder. Any such notice shall be deemed given and effective
upon the earliest to occur of (i)(a) if such Conversion Notice is
delivered via facsimile at the facsimile telephone number specified
in this Section 5(j) prior to 4:30 p.m. (Eastern Standard Time) on
any date, such date (or, in the case of a Company Conversion
Notice, the next Trading Day) or such later date as is specified in
the Conversion Notice, and (b) if such Conversion Notice is
delivered via facsimile at the facsimile telephone number specified
in this Section 5(j) after 11:59 p.m. (Eastern Standard Time) on any
date, the next date (or, in the case of a Company Conversion
Notice, the next Trading Day after such next day) or such later date
as is specified in the Conversion Notice, (ii) five days after deposit
in the United States mails or (iii) upon actual receipt by the party to
whom such notice is required to be given.
Section 6. Company Redemption Option.
The Company may, at its option, redeem any outstanding
and unconverted Preferred Stock on the third anniversary of the
Original Issue Date (the "Optional Redemption Date"), provided
that the Company notifies the holders thereof no later than the third
Trading Day prior to the Optional Redemption Date of its intention
to do so.
If the Company elects to redeem such outstanding and
unconverted shares of Preferred Stock, the redemption price per
share (the "Optional Redemption Price") shall equal the Conversion
Ratio multiplied by the Per Share Market Value on the Optional
Redemption Date and shall be paid by the Company to the Holders
of such unconverted Preferred Stock on the Optional Redemption
Date. If any portion of the Optional Redemption Price shall not be
paid by the Company within 7 calendar days after the Optional
Redemption Date, such Optional Redemption Price shall be
increased by an amount accruing from the 7th day to the 21st day
after the Optional Redemption Date at the rate of 5% per annum,
from the 22nd day to the 60th day at 8% per annum and from the
61st day until paid at the rate of 12% per annum, except that no
such interest shall accrue until the Purchaser shall have delivered to
the Company the certificates representing the shares of Preferred
Stock to be so redeemed. If any portion of the Optional Redemption
Price remains unpaid more than 7 calendar days after the Optional
Redemption Date, then the Holder may elect, by written notice to
the Company given within 45 days after the Optional Redemption
Date, to either (i) demand conversion in accordance with the
formula and the time frame therefor set forth in Section 5 for a
conversion at the option of the Holder hereof of all Preferred Stock
for which the Optional Redemption Price, plus interest, has not been
paid in full (the "Unpaid Optional Redemption Stock"), in which
event the Per Share Market Value for such shares shall be the lower
of the Per Share Market Value calculated on the Optional
Redemption Date and the Per Share Market Value as of the Holder's
written demand for conversion, or (ii) demand that the Company
withdraw its election to force such redemption. If the Holder elects
option (i) above, the Company shall within three Business Days of
its receipt of such election deliver to the Holder the shares of
Common Stock issuable upon conversion of the Unpaid Optional
Redemption Stocks subject to such Holder conversion demand and
otherwise perform its obligations hereunder with respect thereto; or,
if the Holder elects option (ii) above, the Company shall promptly,
and in any event not later than three Business Days from receipt of
Holder's notice of such election, return to the Holder all of the
Unpaid Optional Redemption Stock.
Section 7. Definitions.
For the purposes hereof, the following terms shall have the
following meanings:
"Business Day" means any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking
institutions in the state of New York are authorized or required by
law or other government actions to close.
"Common Stock" means shares now or hereafter authorized
of the class of Common Stock, par value $.001, of the Company
and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Conversion Ratio" means, at any time, a fraction, of which
the numerator is Stated Value plus accrued but unpaid dividends,
and of which the denominator is the Conversion Price at such time.
"Junior Securities" means the Common Stock and all other
equity securities of the Company.
"Original Issue Date" shall mean the date of the first
issuance of any shares of the Preferred Stock regardless of the
number transfers of any particular shares of Preferred Stock and
regardless of the number of certificates which may be issued to
evidence such Preferred Stock.
"Per Share Market Value" means on any particular date (a)
the closing bid price per share of the Common Stock on such date
on the Nasdaq SmallCap Market or other national securities
exchange on which the Common Stock has been listed or if there is
no such price on such date, then the closing bid price on such
national securities exchange or market on the date nearest preceding
such date, or (b) if the Common Stock is not listed on the Nasdaq
SmallCap Market or any national securities exchange or market, the
closing bid for a share of Common Stock in the over-the-counter
market, as reported by the Nasdaq SmallCap Market at the close of
business on such date, or (c) if the Common Stock is not quoted on
the Nasdaq SmallCap Market, the closing bid price for a share of
Common Stock in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), or (d) if the
Common Stock is no longer reported by the National Quotation
Bureau Incorporated (or similar organization or agency succeeding
to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period as determined by
the Holder, or (e) if the Common Stock is no longer publicly traded
the fair market value of a share of Common Stock as determined by
an Appraiser (as defined in Section 5(d)(iv) above) selected in good
faith by the Holders of a majority in interest of the shares of the
Preferred Stock; provided, however, that the Company, after receipt
of the determination by such Appraiser, shall have the right to select
an additional Appraiser, in which case, the fair market value shall
be equal to the average of the determinations by each such
Appraiser.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"Purchase Agreement" means the Convertible Preferred
Stock Purchase Agreement, dated as of the Original Issue Date,
between the Company and the original Holder of the Preferred
Stock.
"Trading Day" means (a) a day on which the Common Stock
is traded on the Nasdaq SmallCap Market or principal national
securities exchange or market on which the Common Stock has been
listed, or (b) if the Common Stock is not listed on the Nasdaq
SmallCap Market or any stock exchange or market, a day on which
the Common Stock is traded in the over-the-counter market, as
reported by the Nasdaq SmallCap Market, or (c) if the Common
Stock is not quoted on the Nasdaq SmallCap Market, a day on
which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting
prices).
RESOLVED FURTHER, that the President and Secretary of the
Company be, and they hereby are, authorized and directed to
prepare, execute, verify, and file in Delaware, a Certificate of
Designation in accordance with these resolutions and as required by
law.
IN WITNESS WHEREOF, Innovus Corporation has caused its
corporate seal to be hereunto affixed and this certificate to be signed
by Terry Haas, its President, and attested by David Mock, its
Secretary, this 1st day of October, 1996.
INNOVUS CORPORATION
By /s/
Terry Haas
President
Attest:
By:/s/
David Mock
Secretary
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of
shares of Series C Convertible Preferred Stock indicated below, into
shares of Common Stock, par value U.S.$.001 per share (the
"Common Stock"), of Innovus Corporation (the "Company")
according to the conditions hereof, as of the date written below. If
shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the Holder for any conversion,
except for such transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
Applicable Conversion Price
Signature
Name:
Address:
The Company undertakes to promptly upon its receipt of this
conversion notice (and, in any case prior to the time it effects the
conversion requested hereby), notify the converting holder by
facsimile of the number of shares of Common Stock outstanding on
such date and the number of shares of Common Stock which would
be issuable to the holder if the conversion requested in this
conversion notice were effected in full, whereupon, the holder may,
within one day of the notice from the Company, revoke the
conversion requested hereby to the extent that it determines that
such conversion would result in it owning in excess of 4.9% of the
outstanding shares of Common Stock on such date, and the
Company shall issue to the holder one or more certificates
representing shares of Preferred Stock which have not been
converted as a result of this provision. If the holder waives the
applicability of this limitation by notice to the Company delivered
upon its receipt of the Company's notice regarding the number of
outstanding shares of Common Stock or if the Purchaser fails to
respond to the Company's notice within one day thereafter, the
Company shall effect in full the conversion requested in this notice.
EXHIBIT B
INNOVUS CORPORATION
NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY
The undersigned in the name and on behalf of Innovus Corporation
(the "Company") hereby notifies the addressee hereof that the
Company hereby elects to exercise its right to convert
[ ] shares of its Series C Convertible Preferred Stock held
by the Holder into shares of Common Stock, par value U.S.$.001
per share (the "Common Stock") of the Company according to the
terms hereof, as of the date written below. No fee will be charged
to the Holder for any conversion hereunder, except for such transfer
taxes, if any which may be incurred by the Company if shares are
to be issued in the name of a person other than the person to whom
this notice is addressed.
Conversion calculations:
Date to Effect Conversion
Number of Shares of Preferred Stock to be Converted
Applicable Conversion Price
Number of Shares of Common Stock outstanding
at close of trading on Conversion Date
Signature
Name:
Address:
Exhibit 4.2
CERTIFICATE OF INCREASE TO THE
CERTIFICATE OF DESIGNATION OF
SERIES C CONVERTIBLE PREFERRED STOCK OF
INNOVUS CORPORATION
The undersigned, Terry Haas and David Mock, hereby certify that:
IV. They are the duly elected and acting President and Secretary,
respectively, of Innovus Corporation, a Delaware corporation (the
"Company").
V. The Certificate of Incorporation of the Company authorizes
1,000,000 shares of preferred stock, par value $.001 per share, of
which the following have been authorized and are issued and
outstanding: 100,000 Series A Preferred Stock authorized, none
outstanding; 45,000 Series C Preferred authorized, 45,000
outstanding.
VI. The following is a true and correct copy of resolutions duly
adopted by the Board of Directors at a meeting duly held on
October 9, 1996, which constituted all requisite action on the part
of the Company for adoption of such resolutions.
RESOLUTIONS
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") is authorized to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or restrictions
thereof;
WHEREAS, pursuant to that certain Certificate of Designation of
Series C Convertible Preferred Stock of Innovus Corporation (the
"Original Certificate"), the Board of Directors authorized 45,000
shares of Series C Convertible Preferred Stock (the "Series C
Preferred"), all of which have been issued;
WHEREAS, Section 151 of the Delaware Corporation Law
authorizes the Board of Directors to increase the number of shares
of stock of any series;
WHEREAS, the Original Certificate provides for the authorization
of additional shares of Series C Preferred with the consent of the
holders of the existing Series C Preferred shares; and
WHEREAS, the holders of the Series C Preferred have consented
to the increase in the number of shares of Series C Preferred from
45,000 to 55,000.
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors hereby designates additional shares of Series C Preferred,
and fixes the rights, preferences, privileges and restrictions relating
to such series as follows:
RESOLVED, that the number of shares of Series C Preferred
authorized in "Section 1. Designation, Amount and Par Value" of
the Original Certificate is hereby increased from 45,000 to 55,000
by amending said Section 1 to read as follows:
Section 1. Designation, Amount and Par Value. The series of
Preferred Stock shall be designated as the Series C Convertible
Preferred Stock (the "Preferred Stock"), and the number of shares
so designated shall be 55,000. The par value of each share of
Preferred Stock shall be $.001. Each share of Preferred Stock shall
have a stated value of $50.00 per share (the "Stated Value").
RESOLVED FURTHER, that all other rights, preferences,
privileges and restrictions relating to the Series C Preferred shall
remain in effect and unchanged.
RESOLVED FURTHER, that the President and Secretary of the
Company be, and they hereby are, authorized and directed to
prepare, execute, verify, and file in Delaware, an Amendment to the
Certificate of Designation in accordance with these resolutions and
as required by law.
IN WITNESS WHEREOF, Innovus Corporation has caused its
corporate seal to be hereunto affixed and this certificate to be signed
by Terry Haas, its President, and attested by David Mock, its
Secretary, this __ day of October, 1996.
INNOVUS CORPORATION
By /s/
Terry Haas
President
Attest:
By:/s/
David Mock
Secretary
Exhibit 4.3
CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK OF
INNOVUS CORPORATION
The undersigned, Terry Haas and David Mock, hereby certify that:
VII. They are the duly elected and acting President and Secretary,
respectively, of Innovus Corporation, a Delaware corporation (the
"Company").
VIII. The Certificate of Incorporation of the Company authorizes
1,000,000 shares of preferred stock, par value $.001 per share, of
which the following have been authorized and are issued and
outstanding: 100,000 Series A Preferred Stock authorized, none
outstanding; 55,000 Series C Preferred Stock authorized, 45,000
shares outstanding.
IX. The following is a true and correct copy of resolutions duly
adopted by the Board of Directors at meetings duly held on October
9, 1996, which constituted all requisite action on the part of the
Company for adoption of such resolutions.
RESOLUTIONS
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") is authorized to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or restrictions
thereof;
WHEREAS, the Board of Directors desires, pursuant to its
authority as aforesaid, to designate a new series of preferred stock,
set the number of shares constituting such series and fix the rights,
preferences, privileges and restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors hereby designates a new series of preferred stock and the
number of shares constituting such series and fixes the rights,
preferences, privileges and restrictions relating to such series as
follows:
Section 1. Designation, Amount and Par Value.
The series of Preferred Stock shall be designated as
the Series D Convertible Preferred Stock (the "Preferred Stock"),
and the number of shares so designated shall be 20,100. The par
value of each share of Preferred Stock shall be $.001. Each share
of Preferred Stock shall have a stated value of $50.00 per share (the
"Stated Value").
Section 2. Dividends.
(a) Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of
funds legally available therefor, and the Company shall pay,
cumulative dividends at the rate per share (as a percentage of the
Stated Value per share) equal to 5% per annum, payable, in cash or
shares of Common Stock, in arrears on the Conversion Date (as
hereinafter defined). Dividends on the Preferred Stock shall accrue
daily commencing October 1, 1997 and shall be deemed to accrue
on such date whether or not earned or declared and whether or not
there are profits, surplus or other funds of the Company legally
available for the payment of dividends. The party that holds the
Preferred Stock on an applicable record date for any dividend
payment will be entitled to receive such dividend payment and any
other accrued and unpaid dividends which accrued prior to such
dividend payment date, without regard to any sale or disposition of
such Preferred Stock subsequent to the applicable record date but
prior to the applicable dividend payment date. Except as otherwise
provided herein, if at any time the Company pays less than the total
amount of dividends then accrued to any class of Preferred Stock,
such payment shall be distributed ratably among the holders of such
class based upon the number of shares held by each holder.
(b) So long as any Preferred Stock shall remain
outstanding, neither the Company nor any subsidiary thereof shall
redeem, purchase or otherwise acquire directly or indirectly any
Junior Securities (as defined in Section 7), nor shall the Company
directly or indirectly pay or declare any dividend or make any
distribution (other than a dividend or distribution described in
Section 5) upon, nor shall any distribution be made in respect of,
any Junior Securities, nor shall any monies be set aside for or
applied to the purchase or redemption (through a sinking fund or
otherwise) of any Junior Securities unless all dividends on the
Preferred Stock for all past dividend periods shall have been paid.
Section 3. Voting Rights.
Except as otherwise provided herein and as
otherwise provided by law, the Preferred Stock shall have no voting
rights. However, so long as any shares of Preferred Stock are
outstanding, the Company shall not, without the affirmative vote of
the holders of a majority of the shares of the Preferred Stock then
outstanding, (i) alter or change adversely the powers, preferences
or rights given to the Preferred Stock or (ii) authorize or create any
class of stock ranking as to dividends or distribution of assets upon
a Liquidation (as defined below) senior to, prior to or pari passu
with the Preferred Stock.
Section 4. Liquidation.
Upon any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary (a "Liquidation"),
the holders of shares of Preferred Stock shall be entitled to receive
out of the assets of the Company, whether such assets are capital or
surplus, for each share of Preferred Stock an amount equal to the
Stated Value, plus an amount equal to accrued but unpaid dividends
per share, whether declared or not, but without interest, before any
distribution or payment shall be made to the holders of any Junior
Securities, and if the assets of the Company shall be insufficient to
pay in full such amounts, then the entire assets to be distributed
shall be distributed among the holders of Preferred Stock ratably in
accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. A sale,
conveyance or disposition of all or substantially all of the assets of
the Company or the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting
power of the Company is disposed of shall be deemed a Liquidation;
provided that, a consolidation or merger of the Company with or
into any other company or companies shall not be treated as a
Liquidation, but instead shall be subject to the provisions of Section
5. The Company shall mail written notice of any such liquidation,
not less than 60 days prior to the payment date stated therein, to
each record holder of Preferred Stock.
Section 5. Conversion.
(a) Each share of Preferred Stock shall be
convertible into shares of Common Stock at the Conversion Ratio
(as defined in Section 7) at the option of the holder in whole or in
part at any time after the expiration of the earlier to occur of (i) 74
days after the Original Issue Date (as defined in Section 7) and (ii)
the date that the Securities and Exchange Commission (the
"Commission") declares effective under the Securities Act of 1933,
as amended (the "Securities Act") the registration statement
contemplated by the Registration Rights Agreement, dated
September 30, 1996, by and between the Company and the original
holders of the Company's Series C Preferred Stock as amended by
the Amended and Restated Registration Rights Agreement dated
October 31, 1996 between the Company and the original holder of
the Company's Series D Preferred Stock (as so amended, the
"Registration Rights Agreement"), relating among other things to
the Preferred Stock and the shares of Common Stock into which the
Preferred Stock is convertible in accordance with the terms hereof.
The holder shall effect conversions by surrendering the certificate
or certificates representing the shares of Preferred Stock to be
converted to the Company, together with the form of conversion
notice attached hereto as Exhibit A (the "Holder Conversion
Notice") in the manner set forth in Section 5(j). Each Holder
Conversion Notice shall specify the number of shares of Preferred
Stock to be converted and the date on which such conversion is to
be effected, which date may not be prior to the date the Holder
delivers such Notice by facsimile (the "Holder Conversion Date").
Subject to Section 5(c) and, as to the original Holder (or its sole
designee), subject to Section 4.13 of the Purchase Agreement (as
defined in Section 7), each Holder Conversion Notice, once given,
shall be irrevocable. If the holder is converting less than all shares
of Preferred Stock represented by the certificate or certificates
tendered by the holder with the Holder Conversion Notice, the
Company shall promptly deliver to the holder a certificate for such
number of shares as have not been converted.
(b) Provided that ten (10) Trading Days (as
defined in Section 7) shall have elapsed from the date the
Commission declared the registration statement contemplated by the
Registration Rights Agreement effective under the Securities Act,
each share of the Preferred Stock shall be convertible into shares of
Common Stock at the Conversion Ratio at the option of the
Company in whole or in part at any time on or after the expiration
of one year after the Original Issue Date; provided, however, that
the Company is not permitted to deliver a Company Conversion
Notice (as defined below) within ten (10) days of issuing any press
release or other public statement relating to such conversion. The
Company shall effect such conversion by delivering to the holders
of such shares of Preferred Stock to be converted a written notice
in the form attached hereto as Exhibit B (the "Company Conversion
Notice"), which Company Conversion Notice, once given, shall be
irrevocable. Each Company Conversion Notice shall specify the
number of shares of Preferred Stock to be converted and the date on
which such conversion is to be effected, which date will be at least
one (1) Trading Day after the date the Company delivers such
Notice by facsimile to the holder (the "Company Conversion
Date"). The Company shall give such Company Conversion Notice
in accordance with Section 5(j) below at least one (1) Trading Day
before the Company Conversion Date. Any such conversion shall
be effected on a pro rata basis among the holders of Preferred
Stock. Upon the conversion of shares of Preferred Stock pursuant
to a Company Conversion Notice, the holders of the Preferred Stock
shall surrender the certificates representing such shares at the office
of the Company or of any transfer agent for the Preferred Stock or
Common Stock. If the Company is converting less than all shares
of the Preferred Stock, the Company shall, upon conversion of such
shares subject to such Company Conversion Notice and receipt of
the certificate or certificates representing such shares of Preferred
Stock deliver to the holder or holders a certificate for such number
of shares of Preferred Stock as have not been converted. Each of
a Holder Conversion Notice and a Company Conversion Notice is
sometimes referred to herein as a "Conversion Notice," and each of
a "Holder Conversion Date" and a "Company Conversion Date" is
sometimes referred to herein as a "Conversion Date."
(c) Not later than three (3) Trading Days after the
Conversion Date, the Company will deliver to the holder (i) a
certificate or certificates which shall be free of restrictive legends
and trading restrictions (other than those then required by law and
as set forth in the Purchase Agreement), representing the number of
shares of Common Stock being acquired upon the conversion of
shares of Preferred Stock and (ii) one or more certificates
representing the number of shares of Preferred Stock not converted;
provided, however that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon
conversion of any shares of Preferred Stock until certificates
evidencing such shares of Preferred Stock are either delivered for
conversion to the Company or any transfer agent for the Preferred
Stock or Common Stock, or the holder notifies the Company that
such certificates have been lost, stolen or destroyed and provides a
bond (or other adequate security reasonably acceptable to the
Company) satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection therewith. The Company
shall, upon request of the holder, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company
under this Section 5(c) electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions. In the case of a conversion pursuant to a Holder
Conversion Notice, if such certificate or certificates are not
delivered by the date required under this Section 5(c), the holder
shall be entitled by written notice to the Company at any time on or
before such holder's receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company
shall immediately return the certificates representing the shares of
Preferred Stock tendered for conversion.
(d) (i) The conversion price for each share of
Preferred Stock (the "Conversion Price") in effect on any
Conversion Date shall be $5.00 per share.
(ii) If the Company, at any time while any
shares of Preferred Stock are outstanding, (a) shall pay a stock
dividend or otherwise make a distribution or distributions on shares
of its Junior Securities payable in shares of its capital stock (whether
payable in shares of its Common Stock or of capital stock of any
class), (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of Common Stock any shares of capital
stock of the Company, the Conversion Price designated in Section
5(d)(i) shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding before such
event and of which the denominator shall be the number of shares
of Common Stock outstanding after such event. Any adjustment
made pursuant to this Section 5(d)(ii) shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification.
(iii) If the Company, at any time while any
shares of Preferred Stock are outstanding, shall issue rights or
warrants to all holders of Common Stock entitling them to subscribe
for or purchase shares of Common Stock at a price per share less
than the Per Share Market Value of Common Stock at the record
date mentioned below, the Conversion Price designated in Section
5(d)(i) shall be multiplied by a fraction, of which the denominator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase at
such Per Share Market Value. Such adjustment shall be made
whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. However,
upon the expiration of any right or warrant to purchase Common
Stock the issuance of which resulted in an adjustment in the
Conversion Price designated in Section 5(d)(i) pursuant to this
Section 5(d)(iii), if any such right or warrant shall expire and shall
not have been exercised, the Conversion Price designated in Section
5(d)(i) shall immediately upon such expiration be recomputed and
effective immediately upon such expiration be increased to the price
which it would have been (but reflecting any other adjustments in
the Conversion Price made pursuant to the provisions of this Section
5 after the issuance of such rights or warrants) had the adjustment
of the Conversion Price made upon the issuance of such rights or
warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually
exercised.
(iv) If the Company, at any time while
shares of Preferred Stock are outstanding, shall distribute to all
holders of Common Stock (and not to holders of Preferred Stock)
evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to
in Section 5(d)(iii) above) then in each such case the Conversion
Price at which each share of Preferred Stock shall thereafter be
convertible shall be determined by multiplying the Conversion Price
in effect immediately prior to the record date fixed for determination
of stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the Per Share Market Value of
Common Stock determined as of the record date mentioned above,
and of which the numerator shall be such Per Share Market Value
of the Common Stock on such record date less the then fair market
value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of
Common Stock as determined by the Board of Directors in good
faith; provided, however that in the event of a distribution
exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by a nationally recognized or
major regional investment banking firm or firm of independent
certified public accountants of recognized standing (which may be
the firm that regularly examines the financial statements of the
Company) (an "Appraiser") selected in good faith by the holders of
a majority in interest of the shares of Preferred Stock; and provided,
further that the Company, after receipt of the determination by such
Appraiser shall have the right to select an additional Appraiser, in
which case the fair market value shall be equal to the average of the
determinations by each such Appraiser. In either case the
adjustments shall be described in a statement provided to all holders
of Preferred Stock of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to
one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(v) All calculations under this Section 5
shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.
(vi) Whenever the Conversion Price is
adjusted pursuant to Section 5(d)(ii), (iii), (iv) or (v), the Company
shall promptly mail to each holder of Preferred Stock, a notice
setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
(vii) In case of any reclassification of the
Common Stock, any consolidation or merger of the Company with
or into another person, the sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange
pursuant to which the Common Stock is converted into other
securities, cash or property, the holders of the Preferred Stock then
outstanding shall have the right thereafter to convert such shares
only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock
following such reclassification, consolidation, merger, sale, transfer
or share exchange, and the holders of the Preferred Stock shall be
entitled upon such event to receive such amount of securities or
property as the shares of the Common Stock of the Company into
which such shares of Preferred Stock could have been converted
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange would have been entitled. The
terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the
holder of Preferred Stock the right to receive the securities or
property set forth in this Section 5(d)(vii) upon any conversion
following such consolidation, merger, sale, transfer or share
exchange. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
(viii) If:
a. the Company shall declare a
dividend (or any other distribution) on its Common Stock; or
b. the Company shall declare a
special nonrecurring cash dividend on or a redemption of its
Common Stock; or
c. the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any rights; or
d. the approval of any stockholders
of the Company shall be required in connection with any
reclassification of the Common Stock of the Company (other than
a subdivision or combination of the outstanding shares of Common
Stock), any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property;
or
e. the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding-up of
the affairs of the Company;
then the Company shall cause to be
filed at each office or agency maintained for the purpose of
conversion of Preferred Stock, and shall cause to be mailed to the
holders of Preferred Stock at their last addresses as they shall appear
upon the stock books of the Company, at least 30 calendar days
prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined,
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or
winding-up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding-up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be
specified in such notice.
(e) If at any time conditions shall arise by reason
of action taken by the Company which in the opinion of the Board
of Directors are not adequately covered by the other provisions
hereof and which might materially and adversely affect the rights of
the holders of Preferred Stock (different than or distinguished from
the effect generally on rights of holders of any class of the
Company's capital stock) or if at any time any such conditions are
expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly
describing the action contemplated and the material adverse effects
of such action on the rights of the holders of Preferred Stock at least
30 calendar days prior to the effective date of such action, and an
Appraiser selected by the holders of majority in interest of the
Preferred Stock shall give its opinion as to the adjustment, if any
(not inconsistent with the standards established in this Section 5), of
the Conversion Price (including, if necessary, any adjustment as to
the securities into which shares of Preferred Stock may thereafter be
convertible) and any distribution which is or would be required to
preserve without diluting the rights of the holders of shares of
Preferred Stock; provided, however, that the Company, after receipt
of the determination by such Appraiser, shall have the right to select
an additional Appraiser, in which case the adjustment shall be equal
to the average of the adjustments recommended by each such
Appraiser. The Board of Directors shall make the adjustment
recommended forthwith upon the receipt of such opinion or opinions
or the taking of any such action contemplated, as the case may be;
provided, however, that no such adjustment of the Conversion Price
shall be made which in the opinion of the Appraiser(s) giving the
aforesaid opinion or opinions would result in an increase of the
Conversion Price to more than the Conversion Price then in effect.
(f) The Company covenants that it will at all
times reserve and keep available out of its authorized and unissued
Common Stock solely for the purpose of issuance upon conversion
of Preferred Stock as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than
the holders of Preferred Stock, such number of shares of Common
Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 5(b) and Section 5(d) hereof) upon the
conversion of all outstanding shares of Preferred Stock. The
Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued
and fully paid and nonassessable.
(g) Upon a conversion hereunder the Company
shall not be required to issue stock certificates representing fractions
of shares of Common Stock, but may if otherwise permitted, make
a cash payment in respect of any final fraction of a share based on
the Per Share Market Value at such time. If the Company elects
not, or is unable, to make such a cash payment, the holder of a
share of Preferred Stock shall be entitled to receive, in lieu of the
final fraction of a share, one whole share of Common Stock.
(h) The issuance of certificates for shares of
Common Stock on conversion of Preferred Stock shall be made
without charge to the holders thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery
of such certificate, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the holder of such shares of
Preferred Stock so converted and the Company shall not be required
to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
(i) Shares of Preferred Stock converted into
Common Stock shall be canceled and shall have the status of
authorized but unissued shares of preferred stock.
(j) Each Holder Conversion Notice shall be given
by facsimile and by mail, postage prepaid, addressed to the attention
of the Chief Financial Officer of the Company at the facsimile
telephone number and address of the principal place of business of
the Company. Each Company Conversion Notice shall be given by
facsimile and by mail, postage prepaid, addressed to each holder of
Preferred Stock at the facsimile telephone number and address of
such holder appearing on the books of the Company or provided to
the Company by such holder for the purpose of such Company
Conversion Notice, or if no such facsimile telephone number or
address appears or is so provided, at the principal place of business
of the holder. Any such notice shall be deemed given and effective
upon the earliest to occur of (i)(a) if such Conversion Notice is
delivered via facsimile at the facsimile telephone number specified
in this Section 5(j) prior to 4:30 p.m. (Eastern Standard Time) on
any date, such date (or, in the case of a Company Conversion
Notice, the next Trading Day) or such later date as is specified in
the Conversion Notice, and (b) if such Conversion Notice is
delivered via facsimile at the facsimile telephone number specified
in this Section 5(j) after 11:59 p.m. (Eastern Standard Time) on any
date, the next date (or, in the case of a Company Conversion
Notice, the next Trading Day after such next day) or such later date
as is specified in the Conversion Notice, (ii) five days after deposit
in the United States mails or (iii) upon actual receipt by the party to
whom such notice is required to be given.
Section 6. Company Redemption Option.
The Company may, at its option, at any time on or
after November 1, 1997 redeem any outstanding and unconverted
Preferred Stock; provided that the Company notifies the holders
thereof no later than thirty calendar days prior to the effective date
of such redemption (the "Optional Redemption Date") of its
intention to do so.
If the Company elects to redeem such outstanding and
unconverted shares of Preferred Stock, the redemption price per
share (the "Optional Redemption Price") shall equal the Conversion
Ratio multiplied by the Conversion Price on the Optional
Redemption Date and shall be paid by the Company to the Holders
of such unconverted Preferred Stock on the Optional Redemption
Date. If any portion of the Optional Redemption Price shall not be
paid by the Company within 7 calendar days after the Optional
Redemption Date, such Optional Redemption Price shall be
increased by an amount accruing from the 7th day to the 21st day
after the Optional Redemption Date at the rate of 5% per annum,
from the 22nd day to the 60th day at 8% per annum and from the
61st day until paid at the rate of 12% per annum, except that no
such interest shall accrue until the Purchaser shall have delivered to
the Company the certificates representing the shares of Preferred
Stock to be so redeemed. If any portion of the Optional Redemption
Price remains unpaid more than 7 calendar days after the Optional
Redemption Date, then the Holder may elect, by written notice to
the Company given within 45 days after the Optional Redemption
Date, to either (i) demand conversion in accordance with the
formula and the time frame therefor set forth in Section 5 for a
conversion at the option of the Holder hereof of all Preferred Stock
for which the Optional Redemption Price, plus interest, has not been
paid in full (the "Unpaid Optional Redemption Stock"), or
(ii) demand that the Company withdraw its election to force such
redemption. If the Holder elects option (i) above, the Company
shall within three Business Days of its receipt of such election
deliver to the Holder the shares of Common Stock issuable upon
conversion of the Unpaid Optional Redemption Stocks subject to
such Holder conversion demand and otherwise perform its
obligations hereunder with respect thereto; or, if the Holder elects
option (ii) above, the Company shall promptly, and in any event not
later than three Business Days from receipt of Holder's notice of
such election, return to the Holder all of the Unpaid Optional
Redemption Stock.
Section 7. Definitions.
For the purposes hereof, the following terms shall
have the following meanings:
"Business Day" means any day except Saturday,
Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the state of New York are authorized
or required by law or other government actions to close.
"Common Stock" means shares now or hereafter
authorized of the class of Common Stock, par value $.001, of the
Company and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Conversion Ratio" means, at any time, a fraction,
of which the numerator is Stated Value plus accrued but unpaid
dividends, and of which the denominator is the Conversion Price at
such time.
"Junior Securities" means the Common Stock and all
other equity securities of the Company with the exception of the
Series C Preferred Stock.
"Original Issue Date" shall mean October 31, 1996.
"Per Share Market Value" means on any particular
date (a) the closing bid price per share of the Common Stock on
such date on the Nasdaq SmallCap Market or other national
securities exchange on which the Common Stock has been listed or
if there is no such price on such date, then the closing bid price on
such national securities exchange or market on the date nearest
preceding such date, or (b) if the Common Stock is not listed on the
Nasdaq SmallCap Market or any national securities exchange or
market, the closing bid for a share of Common Stock in the
over-the-counter market, as reported by the Nasdaq SmallCap
Market at the close of business on such date, or (c) if the Common
Stock is not quoted on the Nasdaq SmallCap Market, the closing bid
price for a share of Common Stock in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of
reporting prices), or (d) if the Common Stock is no longer reported
by the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period as determined by the Holder, or (e) if the
Common Stock is no longer publicly traded the fair market value of
a share of Common Stock as determined by an Appraiser (as defined
in Section 5(d)(iv) above) selected in good faith by the Holders of
a majority in interest of the shares of the Preferred Stock; provided,
however, that the Company, after receipt of the determination by
such Appraiser, shall have the right to select an additional
Appraiser, in which case, the fair market value shall be equal to the
average of the determinations by each such Appraiser.
"Person" means a corporation, an association, a
partnership, organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.
"Purchase Agreement" means the Convertible
Preferred Stock Purchase Agreement, dated as of the Original Issue
Date, between the Company and the original Holder of the Series C
Preferred Stock.
"Trading Day" means (a) a day on which the
Common Stock is traded on the Nasdaq SmallCap Market or
principal national securities exchange or market on which the
Common Stock has been listed, or (b) if the Common Stock is not
listed on the Nasdaq SmallCap Market or any stock exchange or
market, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the Nasdaq SmallCap
Market, or (c) if the Common Stock is not quoted on the Nasdaq
SmallCap Market, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices).
RESOLVED FURTHER, that the President and Secretary of the
Company be, and they hereby are, authorized and directed to
prepare, execute, verify, and file in Delaware, a Certificate of
Designation in accordance with these resolutions and as required by
law.
IN WITNESS WHEREOF, Innovus Corporation has caused its
corporate seal to be hereunto affixed and this certificate to be signed
by Terry Haas, its President, and attested by David Mock, its
Secretary, this __ day of October, 1996.
INNOVUS CORPORATION
By /s/
Terry Haas
President
Attest:
By:/s/
David Mock
Secretary
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holderin order to Convert shares
of Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of
shares of Series D Convertible Preferred Stock indicated below, into
shares of Common Stock, par value U.S.$.001 per share (the
"Common Stock"), of Innovus Corporation (the "Company")
according to the conditions hereof, as of the date written below. If
shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the Holder for any conversion,
except for such transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
$5.00
Applicable Conversion Price
Signature
Name:
Address:
The Company undertakes to promptly upon its receipt of this
conversion notice (and, in any case prior to the time it effects the
conversion requested hereby), notify the converting holder by
facsimile of the number of shares of Common Stock outstanding on
such date and the number of shares of Common Stock which would
be issuable to the holder if the conversion requested in this
conversion notice were effected in full, whereupon, the holder may,
within one day of the notice from the Company, revoke the
conversion requested hereby to the extent that it determines that
such conversion would result in it owning in excess of 4.9% of the
outstanding shares of Common Stock on such date, and the
Company shall issue to the holder one or more certificates
representing shares of Preferred Stock which have not been
converted as a result of this provision. If the holder waives the
applicability of this limitation by notice to the Company delivered
upon its receipt of the Company's notice regarding the number of
outstanding shares of Common Stock or if the Purchaser fails to
respond to the Company's notice within one day thereafter, the
Company shall effect in full the conversion requested in this notice.
EXHIBIT B
INNOVUS CORPORATION
NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY
The undersigned in the name and on behalf of Innovus Corporation
(the "Company") hereby notifies the addressee hereof that the
Company hereby elects to exercise its right to convert [ ]
shares of its Series D Convertible Preferred Stock held by the
Holder into shares of Common Stock, par value U.S.$.001 per
share (the "Common Stock") of the Company according to the
terms hereof, as of the date written below. No fee will be charged
to the Holder for any conversion hereunder, except for such transfer
taxes, if any which may be incurred by the Company if shares are
to be issued in the name of a person other than the person to whom
this notice is addressed.
Conversion calculations:
Date to Effect Conversion
Number of Shares of Preferred Stock to be Converted
Applicable Conversion Price
Number of Shares of Common Stock outstanding
at close of trading on Conversion Date
Signature
Name:
Address:
Exhibit 4.4
CERTIFICATE OF CORRECTION
TO THE
CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK OF
INNOVUS CORPORATION
The undersigned, Terry Haas and David Mock, hereby certify that:
X. They are the duly elected and acting President and Secretary,
respectively, of Innovus Corporation, a Delaware corporation (the
"Company").
XI. On November 1, 1996, the Company filed a document styled
"Certificate of Designation of Series D Convertible Preferred Stock of
Innovus Corporation" (the "Original Filing"). The Original Filing was an
inaccurate record of the corporate action therein referred to, inasmuch as
the conversion price was incorrectly stated as $5.00 per share rather than
$4.00 per share as detailed below.
XII. The following provisions of the Original Filing are hereby corrected
pursuant to Section 103(f) to reflect the true and correct copy of resolutions
duly adopted by the Board of Directors at meetings duly held on October
9, 1996, which constituted all requisite action on the part of the Company
for adoption of such resolutions.
FIRST: Section 5. (d)(i) of the Resolutions is hereby corrected to read as
follows:
Section 5. Conversion.
(d) (i) The conversion price for each share of Preferred Stock (the
"Conversion Price") in effect on any Conversion Date shall be $4.00 per
share.
SECOND: Exhibits A and B to the Original Filing are hereby corrected to
be in the form attached hereto.
<PAGE>
IN WITNESS WHEREOF, Innovus Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Terry Haas,
its President, and attested by David Mock, its Secretary, this __ day of
November, 1996.
INNOVUS CORPORATION
By /s/
Terry Haas
President
Attest:
By /s/
David Mock
Secretary
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder in order to Convert shares of
Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of shares
of Series D Convertible Preferred Stock indicated below, into shares of
Common Stock, par value U.S.$.001 per share (the "Common Stock"), of
Innovus Corporation (the "Company") according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a
person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith.
No fee will be charged to the Holder for any conversion, except for such
transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
$4.00
Applicable Conversion Price
Signature
Name
Address:
The Company undertakes to promptly upon its receipt of this conversion
notice (and, in any case prior to the time it effects the conversion requested
hereby), notify the converting holder by facsimile of the number of shares
of Common Stock outstanding on such date and the number of shares of
Common Stock which would be issuable to the holder if the conversion
requested in this conversion notice were effected in full, whereupon, the
holder may, within one day of the notice from the Company, revoke the
conversion requested hereby to the extent that it determines that such
conversion would result in it owning in excess of 4.9% of the outstanding
shares of Common Stock on such date, and the Company shall issue to the
holder one or more certificates representing shares of Preferred Stock
which have not been converted as a result of this provision. If the holder
waives the applicability of this limitation by notice to the Company
delivered upon its receipt of the Company's notice regarding the number of
outstanding shares of Common Stock or if the Purchaser fails to respond to
the Company's notice within one day thereafter, the Company shall effect
in full the conversion requested in this notice.
EXHIBIT B
INNOVUS CORPORATION
NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY
The undersigned in the name and on behalf of Innovus Corporation (the
"Company") hereby notifies the addressee hereof that the Company hereby
elects to exercise its right to convert [ ] shares of its Series D
Convertible Preferred Stock held by the Holder into shares of Common
Stock, par value U.S.$.001 per share (the "Common Stock") of the
Company according to the terms hereof, as of the date written below. No
fee will be charged to the Holder for any conversion hereunder, except for
such transfer taxes, if any which may be incurred by the Company if shares
are to be issued in the name of a person other than the person to whom this
notice is addressed.
Conversion calculations:
Date to Effect Conversion
Number of Shares of Preferred Stock to be Converted
$4.00
Applicable Conversion Price
Number of Shares of Common Stock outstanding at close of trading on
Conversion Date
Signature
Name:
Address:
