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
August 5, 1998
-------------------
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 Number) (IRS Employer
jurisdiction of Identification
Incorporation) No.)
4600 Campus Drive
Newport Beach, CA 92660
------------------------
(Address of principal executive offices)
(Zip Code)
(949) 833-1220
--------------
(Registrant's telephone number, including area code)
Not applicable
----------------
(Former name or address, if changed since last report.)
<PAGE>
Item 1. Changes in Control of the Registrant
On May 8, 1998, after the close of business, the Registrant entered into an
Agreement and Plan of Share Exchange dated as of May 8, 1998 (the "Agreement")
by and among the Registrant and Intermark Corporation, a California corporation
("Intermark"), and the securityholders of Intermark Corporation ("Exchanging
Securityholders"). Exhibit 2.1 to this Report is incorporated herein by this
reference.
On June 17, 1998, the Registrant entered into the First Amendment of
Agreement and Plan of Share Exchange dated as of May 8, 1998. Exhibit 2.2 filed
with this Report is incorporated herein by this reference.
On July 30, 1998, the Registrant entered into the Second Amendment of
Agreement and Plan of Share Exchange dated as of May 8, 1998 ("Second
Amendment"). Exhibit 2.3 filed with this Report is incorporated herein by this
reference.
The closing of the transactions contemplated by the Agreement ("Closing")
occurred on August 5, 1998. The Closing resulted in a change in control of the
Registrant.
The Agreement, as amended, provided for the Exchanging Securityholders to
deliver and exchange all of the outstanding capital stock of Intermark
Corporation and options or other rights to purchase such capital stock for
capital stock of the Registrant having voting power equal to 77.5% of the
capital stock of the Registrant outstanding as of immediately after the Closing,
assuming that all of the holders of Intermark Corporation securities execute the
Agreement.
Management of Intermark Corporation as of prior to the Closing became the
record and beneficial owners of approximately 62% of the Registrant's capital
stock as of the Closing.
Thomas Hemingway, the Chief Executive Officer of Intermark Corporation,
became the Chief Executive Officer of the Registrant.
In accordance with the Agreement, as amended, on the Closing Thomas
Hemingway was elected to the Board of Directors of the Registrant and David Mock
remained on the Registrant's Board of Directors, while all other directors of
the Registrant as of prior to the Closing resigned effective upon the Closing.
Additional designates of Thomas Hemingway, or the then-remaining directors, will
be elected to the Board of Directors of the Registrant following the
Registrant's mailing to stockholders and filing with the Securities and Exchange
Commission (the "Commission") of substantially the same information, regarding
the Registrant's new management, as would be included in a proxy statement for
an annual meeting. The Registrant anticipates filing preliminary proxy
information with the Commission in connection with the Registrant's solicitation
proxies to effect a 1-for-10 reverse stock split; and, therefore, the Company
intends to include such management information in such proxy for purposes of
efficiency.
The capital stock issuable by the Registrant to the Exchanging
Securityholders upon the Closing was comprised of 1,033,669 of the authorized
and previously unissued shares of the Registrant's Common Stock, par value $.001
("Common Stock"), and 78,706 of the authorized and previously unissued shares of
Series H Preferred Stock, a new series designated before the Closing by the
Registrant's Board of Directors. Each one (1) such share
is convertible into 562 and 1/2 shares of Common Stock (subject to and
conditioned upon the future availability of a sufficient number of authorized
and unissued shares of Common Stock) and has voting rights equivalent to the
same number of shares of Common Stock which would be issuable upon conversion
(without regard to whether there is an inadequate amount of authorized and
unissued Common Stock actually available for issuance upon conversion).
Accordingly, the Registrant's Board of Directors prior to the Closing also
authorized and agreed to recommend to the Registrant's stockholders for approval
a 1-for-10 reverse stock split of the Common Stock, which would result in an
automatic conversion of all outstanding shares of the Registrant's Series H
Preferred Stock into the Registrant's Common Stock, as then reclassified.
15,000,000 shares of Common Stock are presently authorized and the same number
would remain authorized after the reverse stock split; however additional shares
would become available for future issuance because each ten outstanding shares
will be combined into one share of new Common Stock (and the conversion rate of
each share of the Series H Preferred Stock will be reduced proportionately from
562 1/2 shares of Common Stock presently to 56 and 1/4 shares of new common
stock). These available shares would be used for conversion of Series H
Preferred Stock into Common Stock and for other purposes. Upon such shares
becoming available, as a result of the reverse split or otherwise, the Series H
Preferred Stock would be automatically convertible into Common Stock at the
election of the Registrant and the holders may also elect such conversion.
The information set forth in Item 2 of this Report is incorporated herein
by this reference. The information set forth in Item 5 of this Report is
incorporated herein by this reference.
<PAGE>
Item 2. Acquisitions or Dispositions of Assets
(a)
Intermark became a wholly-owned subsidiary of the Registrant on the Closing
of the transactions contemplated in the Agreement. The Exchanging
Securityholders became the owners of 77.5% of the Registrant's Common Stock, on
a fully-diluted basis. The Exchanging Securityholders are comprised of the
persons identified in the Second Amendment and the following persons:
Professional Community; Scott Jackson; Denise Work and Roger Work; Guy Emmons;
Bradley Fiene; Don Gray; Gayle Gunnison; John Gunnison; Jinx Racquoy; Wallie
Meyer; and Douglas L. Fiaute.
Bill Kesselring, the Chief Operating Officer of the Registrant prior to the
Closing, is one of the Exchanging Securityholders. He received on the Closing
508 shares of Series H Preferred Stock (including 17 escrowed shares). He
provided administrative services to Intermark valued at $25,000 and was issued
shares of Intermark Common Stock valued at $25,000, which he exchanged for the
shares of Series H Preferred Stock. Such services included relocating the
Registrant, assisting with negotiations with creditors of the Registrant's
subsidiary, and administrative assistance. The terms available to Mr. Kesselring
were not more favorable than those provided to other investors in Intermark from
approximately January 1998 to July 1998. His services were performed from May 9,
1998 through August 1, 1998, and were considered invaluable by Intermark. Prior
to May 9, 1998, Mr. Kesselring provided similar services to the Registrant,
despite the fact that the Registrant was financially unable to compensate its
management, such as Mr. Kesselring.
Since approximately January 1998 and prior to the Closing, Intermark raised
funds in a private placement of its convertible notes at par, with conversion
prices ranging from $1.00 to $1.25 per share of Intermark Common Stock. A
portion of these funds were utilized for transaction costs and to settle
existing indebtedness of the Registrant's subsidiary.
In connection with the transactions contemplated by the Agreement, the
Registrant sought voluntary conversion by the holders of the Registrant's
outstanding Preferred Stock into shares of the Registrant's Common Stock. All of
the Preferred Stock outstanding prior to the Closing was converted, and an
aggregate of approximately 5 million shares of Common Stock were issued upon
such conversions. Such shares are freely-trading shares to the extent that the
holders thereof have satisfied the 2-year holding period requirement of Rule
144(k), and a large portion of the previously outstanding Preferred Stock had
been issued more than two years before the date hereof.
The information set forth in Item 1 of this Report is incorporated herein
by this reference. The information set forth in Item 5 of this Report is
incorporated herein by this reference.
(b)
As previously reported, the assets of the Registrant were relocated from
Salt Lake City, Utah, to Newport Beach, California prior to the Closing. Also
prior to the Closing the Registrant had furloughed substantially all of its
employees. The Registrant intends to liquidate Innovus Multimedia and apply the
proceeds to pay creditors of Innovus Multimedia.
The information set forth in Item 5 of this Report is incorporated herein
by this reference.
Item 5. Other Events
On August 5, 1998, the Registrant and Intermark Corporation jointly issued
the following news release:
Contact: James Budd, Intermark Corporation
Voice: 714-833-1220
Email: [email protected]
Innovus/Intermark Acquisition Complete.
NEWPORT BEACH, CA - August 5, 1998 - Innovus Corporation (OTC BB:INUS) today
announced that it has completed its acquisition of Intermark Corporation. The
focus of the combined companies is the Internet--(ESD) Electronic Software
Distribution technology, and Internet software publishing.
As a result of this acquisition, the previous holders of Intermark securities
will receive shares of Innovus Corporation that represent 77.5% of the stock of
Innovus, fully diluted. According to the terms of the acquisition agreement,
Innovus issued to Intermark securities holders Common Stock and Series H
Convertible Preferred Stock representing, in the aggregate, the equivalent of
51,623,196 shares of Innovus Common Stock. In addition, as part of the completed
share exchange, Innovus' Board of Directors has approved a 10-for-1 reverse
split of Innovus Common Stock, which requires approval of the Innovus
stockholders. The share exchange agreement originally provided for a 75%--25%
ratio, and the parties agreed to increase the Intermark securityholders share in
consideration of their having no future claims against Innovus in regard to its
disclosed liabilities and obligations.
David Mock, Chairman of the Board and Chief Financial Officer of Innovus
commented, "This is a win-win situation for everyone, including our shareholders
and our customers. This completes our transition to an Internet technology
solutions company; taking advantage of the increased revenue growth provided by
the Internet."
According to Tom Hemingway, President and CEO of Intermark, and now Innovus
Corporation, "We are building a future with our Internet and intranet products
that set a new standard of high quality and functionality the industry demands.
The company's proprietary Electronic Software Distribution (ESD) technology, and
its Internet product development focus, will carry Intermark and Innovus into
the 21st century as a leading provider of ESD solutions and services for
electronic commerce."
Founded in 1995, Intermark Corporation's primary business is the development,
publishing, sales and support of computer software and on-line technologies,
including Internet and intranet.
Statements expressing the beliefs and expectations of management regarding
future performance are forward-looking and involve risks and uncertainties,
including, but not limited to, Innovus' ability to manage and integrate acquired
businesses, quarterly fluctuations in results, ability to raise working capital
and other financing, competition, rapidly changing technology, and other risks.
These risks are and will be detailed from time to time in Innovus' Securities
and Exchange Commission filings, including its Form 10-K for the year ended
December 31, 1997 and subsequent Form 10-Q's and 8-K's. Actual results may
differ materially from Management's expectations.
For more information, contact Intermark Corporation, 4600 Campus Drive, Newport
Beach, Ca 92660, at (714) 833-1220 or visit its website at
http://www.imarkmall.com .
####
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The financial statements required by this Item 7(a) will be filed by
amendment not later than Monday, October 19, 1998.
(b) Pro forma financial information.
The pro forma financial information required by this Item 7(b) will be
filed by amendment not later than Monday, October 19, 1998.
(c) Exhibits. The following exhibits are incorporated herein by this
reference:
Exhibit No. Description of Exhibit
----------- ----------------------
2.1* Agreement and Plan of Share Exchange dated as of
May 8, 1998 among the Registrant; Intermark
Corporation, a California corporation; and the
Exchanging Securityholders of Intermark
Corporation. Omitted from this Form 8-K filing are
the following schedules or attachments to the
agreement identified immediately above:
(A) Form of Certificate of Designation of
Series H Convertible Preferred Stock;
(B) Intermark Corporation Financial Statements
(Unaudited) for its 1997 Fiscal Year;
(C) Confidentiality Agreement dated March 1998
between the Registrant and Intermark
Corporation;
(D) Disclosure Schedule of Intermark
Corporation;
(E) Disclosure Schedule of the Registrant.
2.2** First Amendment, dated as of June 17, 1998, of
Agreement and Plan of Share Exchange dated as of
May 8, 1998 among the Registrant; Intermark
Corporation, a California corporation; and the
Exchanging Securityholders of Intermark Corporation
2.3** Second Amendment, dated as of July 30, 1998, of
Agreement and Plan of Share Exchange dated as of
May 8, 1998 among the Registrant; Intermark
Corporation, a California corporation; and the
Exchanging Securityholders of Intermark Corporation
4.10** Certificate of Designation - Series H Preferred
Stock
- ----------------
* Incorporated by reference to Exhibit 2.1 to the Form 8-K filed May 12, 1998 by
the Registrant with the Securities and Exchange Commission.
** Filed herewith.
<PAGE>
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: August 19, 1998. By /s/ Tom Hemingway
----------------------------
Tom Hemingway,
Chief Executive Officer
FIRST AMENDMENT OF THE AGREEMENT AND PLAN OF SHARE EXCHANGE
FOR GOOD AND VALUABLE CONSIDERATIONS, the receipt and sufficiency of which is
hereby acknowledged, the Agreement And Plan Of Share Exchange (the "Agreement"),
made as of the 5th day of May, 1998, by and among INNOVUS CORPORATION, a
Delaware corporation ("Innovus"), INTERMARK CORPORATION, a California
corporation ("Intermark"), and the securityholders of Intermark identified on
the signature pages hereto who execute this Agreement ("Exchanging
Securityholders"), is hereby amended as follows:
Section 7 of the Agreement is amended to define the term Termination Date
to mean July 20, 1998 for any and all purposes under each and every Section,
term or provision of the Agreement in which the term Termination Date appears.
The Agreement, as expressly amended hereby, shall continue in full force
and effect, on and subject to the terms of the Agreement, as hereby amended.
Except as expressly stated herein, the Agreement is not otherwise amended
hereby.
IN WITNESS WHEREOF, the parties hereto have entered into the foregoing
First Amendment of Agreement and Plan of Share Exchange as of the 17th day of
June, 1998.
INNOVUS CORPORATION, INTERMARK CORPORATION,
a Delaware corporation a California corporation
Terry R. Haas Tom Hemingway
By:------------------------ By:-----------------------
Terry R. Haas, Chief Executive Officer Tom Hemingway, Chief Executive
and President Officer
David Mock T. Richard Hutt
By:----------------------- By:-----------------------
David Mock, Chief Financial Officer T. Richard Hutt, Secretary
and Chairman of the Board
James Budd
By:-----------------------
James Budd, Vice President
[SIGNATURES CONTINUE ON NEXT PAGE]
1
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
EXCHANGING SECURITYHOLDERS
/s/ Tom Hemingway
--------------------------
Tom Hemingway, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 250,000
/s/ James Budd
--------------------------
James Budd, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 100,000
/s/ T. Richard Hutt
--------------------------
T. Richard Hutt, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 100,000
/s/ Detra Mauro
--------------------------
Detra Mauro, an individual
Number of Intermark
Common Shares: 120,000
By: Tom Hemingway, attorney-in-fact
/s/ Tom Kirk
--------------------------
Tom Kirk, an individual
Number of Intermark
Common Shares: 35,000
By: Tom Hemingway, attorney-in-fact
/s/ CJ D'Angelo
--------------------------
CJ D'Angelo, an individual
Number of Intermark
Common Shares: 90,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
2
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Robin Cruse
--------------------------
Robin Cruse, an individual
Number of Intermark
Common Shares: 35,000
By: Tom Hemingway, attorney-in-fact
/s/ Brian Bae
--------------------------
Brian Bae, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Jennifer Nagel
--------------------------
Jennifer Nagel, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Terry Murphy
--------------------------
Terry Murphy, an individual
Number of Intermark
Common Shares: 12,500
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Greg Clark
--------------------------
Greg Clark, an individual
Number of Intermark
Common Shares: 12,500
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Nick Yocca
--------------------------
Nick Yocca, an individual
Number of Intermark
Common Shares issuable under
convertible note: 20,000
Number of Intermark Options: 60,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
3
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Lawrence L. Tyson
--------------------------
Lawrence L. Tyson, an individual
Number of Intermark
Common Shares: 60,000
By: Tom Hemingway, attorney-in-fact
/s/ Kirit Goradia
--------------------------
Kirit Goradia, an individual
Number of Intermark
Common Shares: 45,000
By: Tom Hemingway, attorney-in-fact
/s/ Matthew Minardi
--------------------------
Matthew Minardi, an individual
Number of Intermark
Common Shares issuable under
convertible note: 3,000
By: Tom Hemingway, attorney-in-fact
/s/ John Schmitz
--------------------------
John Schmitz, an individual
Number of Intermark
Common Shares issuable under
convertible note: 5,000
By: Tom Hemingway, attorney-in-fact
/s/ John Saunders
--------------------------
John Saunders, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 79,155
By: Tom Hemingway, attorney-in-fact
/s/ Terry Dorsey
--------------------------
Terry Dorsey, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 55,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
4
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Sam D'Angelo
--------------------------
Sam D'Angelo, an individual
Number of Intermark
Common Shares issuable under
convertible note: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Charles F. Marks
--------------------------
Charles F. Marks, an individual
Number of Intermark
Common Shares issuable under
convertible note: 2,500
By: Tom Hemingway, attorney-in-fact
/s/ James Cruse
--------------------------
James Cruse, an individual
Number of Intermark
Common Shares issuable under
convertible note: 2,500
By: Tom Hemingway, attorney-in-fact
/s/ Dale Max Boyko
--------------------------
Dale Max Boyko, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 5,000
By: Tom Hemingway, attorney-in-fact
/s/ Karen Emmett
--------------------------
Karen Emmett, an individual
Number of Intermark
Common Shares issuable under
convertible note: 5,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
5
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Delores E. Vierila
--------------------------
Delores E. Vierila, Trustee of the
Delores E. Vierila Trust
Number of Intermark
Common Shares issuable under
convertible note: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Allan Budd
--------------------------
Allan Budd, an individual
Number of Intermark
Common Shares issuable under
convertible note: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Gary Noe
--------------------------
Gary Noe, an individual
Number of Intermark
Common Shares issuable under
convertible note: 2,500
By: Tom Hemingway, attorney-in-fact
GLOBAL MARKETING PARTNERS, INC.
By: /s/ Stan Hirshman
--------------------------
Stan Hirshman, President
Number of Intermark
Common Shares: 6,000
By: Tom Hemingway, attorney-in-fact
NUTRIDATA
By: /s/ Riza Rahman
-------------------------------
Riza Rahman, President
Number of Intermark
Common Shares: 6,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
6
<PAGE>
[AGREEMENT AND PLAN OF SHARE EXCHANGE: SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Bill Kesselring
--------------------------
Bill Kesselring, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 25,000
By: Tom Hemingway, attorney-in-fact
/s/ Dave Lyons
--------------------------
Dave Lyons, an individual
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Bobby Orbach
--------------------------
Bobby Orbach, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
7
SECOND AMENDMENT OF THE AGREEMENT AND PLAN OF SHARE EXCHANGE
This SECOND AMENDMENT OF THE AGREEMENT AND PLAN OF SHARE EXCHANGE
("Amendment") is made as of the date set forth above the signatures hereto, by
and among INNOVUS CORPORATION, a Delaware corporation ("Innovus"), INTERMARK
CORPORATION, a California corporation ("Intermark"), and the securityholders of
Intermark identified on the signature pages hereto who execute this Amendment,
in order to amend the Agreement And Plan Of Share Exchange (the "Agreement"),
made as of the 8th day of May, 1998, by and among INNOVUS CORPORATION, a
Delaware corporation ("Innovus"), INTERMARK CORPORATION, a California
corporation ("Intermark"), and the securityholders of Intermark identified on
the signature pages hereto who execute the Agreement ("Exchanging
Securityholders").
FOR GOOD AND VALUABLE CONSIDERATIONS, the receipt and sufficiency of which
are hereby acknowledged, the Agreement is hereby amended as follows:
1. The conditions in Section 6(b)(iii) and Section 6(c)(iii) of the
Agreement are hereby fully and mutually waived, released and relinquished.
2. Section 7 of the Agreement is amended to define the term
Termination Date to mean August 4, 1998 for any and all purposes under each and
every Section, term or provision of the Agreement in which the term Termination
Date appears.
3. The definition of Preferred Exchange Ratio in Section 1 of the
Agreement is incorrect and would yield results that were meaningless. The
definition is hereby amended to reverse the previous order of item (ii) and item
(iii), which were in the wrong order. The definition, as corrected, is restated
in its entirety as follows:
"Preferred Exchange Ratio" means the number that is found by executing
the following calculations in the order as set forth: (i) multiplying
the number of Fully-Diluted Innovus Shares by the number three (3);
(ii) subtracting from that multiplication product the number of
Innovus Available Common Shares; (iii) dividing that subtraction
difference by the number of Fully-Diluted Intermark Shares; and (iv)
dividing that division quotient by five hundred sixty-two and one-half
(562 1/2).
4. The Preferred Exchange Ratio and the Option Exchange Ratio hereby
are increased by multiplying the respective ratio determined in accordance with
the formulae in the Agreement, as amended by Section 3, hereinabove, by a factor
of 1.1481.
5. The obligations of each of the parties under Section 9(d) shall be
deemed satisfied.
6. Section 2(h) shall be amended and restated in full to read as
follows:
(h) On the Closing Date, Innovus shall cause to be delivered to
Innovus and Intermark such resignations of directors and officers of
Innovus and cause to take effect such amendments of its bylaws as may
be necessary or appropriate to elect Thomas Hemingway and other
designates of Intermark to constitute a majority of the authorized
number of members on the Innovus Board of Directors effective 10 days
after Innovus has filed with the SEC and transmitted to the holders of
<PAGE>
voting shares of Innovus the information specified pursuant to Rule
14f-1 as promulgated by the SEC under the Securities Exchange Act of
1934. In the meantime, immediately the Closing, the number of
directors shall be three, with one vacancy, and the members of the
Board of Directors shall be Tom Hemingway and David Mock.
7. Innovus shall have no liability or obligation to Intermark or the
Exchanging Securityholders under, on account of or arising from any
indebtedness, liability or obligation which is disclosed in the SEC Reports
referred to in Section 5(e) of the Agreement (including the financial statements
included therein), the Innovus Disclosure Schedule (as supplemented in writing
to the Closing) or the Innovus Form 10-K (and the financial statements included
therein) to be filed with the SEC and in the form provided to Intermark on or
prior to the Closing Date.
8. The Agreement, as expressly amended hereby, and as previously
amended by the First Amendment of Share Exchange Agreement, dated June 17, 1998,
shall continue in full force and effect, on and subject to the terms of the
Agreement, as amended.
IN WITNESS WHEREOF, the parties hereto have entered into the foregoing
Second Amendment of Agreement and Plan of Share Exchange as of the 30th day of
July, 1998.
INNOVUS CORPORATION, INTERMARK CORPORATION,
a Delaware corporation a California corporation
David Mock /s/ Tom Hemingway
By:------------------------------ By:-------------------------------
David Mock, Chief Financial Officer Tom Hemingway, Chief Executive
and Chairman of the Board Officer
/s/ T. Richard Hutt
By:--------------------------------
T. Richard Hutt, Secretary
/s/ James Budd
By:--------------------------------
[SIGNATURES CONTINUE ON NEXT PAGE] James Budd, Vice President
2
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
EXCHANGING SECURITYHOLDERS
/s/ Tom Hemingway
---------------------------------
Tom Hemingway, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 250,000
/s/ James Budd
---------------------------------
James Budd, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 100,000
/s/ T. Richard Hutt
---------------------------------
T. Richard Hutt, an individual
Number of Intermark
Common Shares: 960,000
Number of Intermark Options: 100,000
/s/ Detra Mauro
---------------------------------
Detra Mauro, an individual
Number of Intermark
Common Shares: 120,000
By: Tom Hemingway, attorney-in-fact
/s/ Tom Kirk
---------------------------------
Tom Kirk, an individual
Number of Intermark
Common Shares: 35,000
By: Tom Hemingway, attorney-in-fact
/s/ CJ D'Angelo
---------------------------------
CJ D'Angelo, an individual
Number of Intermark
Common Shares: 90,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
3
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Robin Cruse
---------------------------------
Robin Cruse, an individual
Number of Intermark
Common Shares: 35,000
By: Tom Hemingway, attorney-in-fact
/s/ Brian Bae
---------------------------------
Brian Bae, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Jennifer Nagel
---------------------------------
Jennifer Nagel, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Terry Murphy
---------------------------------
Terry Murphy, an individual
Number of Intermark
Common Shares: 12,500
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Greg Clark
---------------------------------
Greg Clark, an individual
Number of Intermark
Common Shares: 12,500
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Nick Yocca
---------------------------------
Nick Yocca, an individual
Number of Intermark Shares: 20,000
Number of Intermark Options: 60,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
4
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Lawrence L. Tyson
---------------------------------
Lawrence L. Tyson, an individual
Number of Intermark
Common Shares: 60,000
By: Tom Hemingway, attorney-in-fact
/s/ Kirit Goradia
---------------------------------
Kirit Goradia, an individual
Number of Intermark
Common Shares: 45,000
By: Tom Hemingway, attorney-in-fact
/s/ Matthew Minardi
---------------------------------
Matthew Minardi, an individual
Number of Intermark
Common Shares issuable under
convertible note: 3,750
By: Tom Hemingway, attorney-in-fact
/s/ John Schmitz
---------------------------------
John Schmitz, an individual
Number of Intermark
Common Shares issuable under
convertible note: 6,250
By: Tom Hemingway, attorney-in-fact
/s/ John Saunders
---------------------------------
John Saunders, an individual
Number of Intermark
Common Shares: 19,755
By: Tom Hemingway, attorney-in-fact
/s/ Terry Dorsey
---------------------------------
Terry Dorsey, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 68,750
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
5
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Sam D'Angelo
---------------------------------
Sam D'Angelo, an individual
Number of Intermark
Common Shares issuable under
convertible note: 12,500
By: Tom Hemingway, attorney-in-fact
/s/ Charles F. Marks
---------------------------------
Charles F. Marks, an individual
Number of Intermark
Common Shares issuable under
convertible note: 3,125
By: Tom Hemingway, attorney-in-fact
/s/ James Cruse
---------------------------------
James Cruse, an individual
Number of Intermark
Common Shares issuable under
convertible note: 3,125
By: Tom Hemingway, attorney-in-fact
/s/ Dale Max Boyko
---------------------------------
Dale Max Boyko, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 12,500
By: Tom Hemingway, attorney-in-fact
/s/ Karen Emmett
---------------------------------
Karen Emmett, an individual
Number of Intermark
Common Shares issuable under
convertible note: 6,250
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
6
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Delores E. Vierila
---------------------------------
Delores E. Vierila, Trustee of the
Delores E. Vierila Trust
Number of Intermark
Common Shares issuable under
convertible note: 12,500
By: Tom Hemingway, attorney-in-fact
/s/ Allan Budd
---------------------------------
Allan Budd, an individual
Number of Intermark
Common Shares issuable under
convertible note: 12,500
By: Tom Hemingway, attorney-in-fact
/s/ Gary Noe
---------------------------------
Gary Noe, an individual
Number of Intermark
Common Shares issuable under
convertible note: 3,125
By: Tom Hemingway, attorney-in-fact
GLOBAL MARKETING PARTNERS, INC.
By: /s/ Stan Hirshman
------------------------------
Stan Hirshman, President
Number of Intermark
Common Shares: 6,000
By: Tom Hemingway, attorney-in-fact
NUTRIDATA
By: /s/ Riza Rahman
--------------------------
Riza Rahman, President
Number of Intermark
Common Shares: 6,000
By: Tom Hemingway, attorney-in-fact
[SIGNATURES CONTINUE ON NEXT PAGE]
7
<PAGE>
[SECOND AMENDMENT OF AGREEMENT AND PLAN OF SHARE EXCHANGE:
SIGNATURES CONTINUED FROM PRIOR PAGE]
/s/ Bill Kesselring
---------------------------------
Bill Kesselring, an individual
Number of Intermark
Common Shares issuable under
convertible notes: 25,000
By: Tom Hemingway, attorney-in-fact
/s/ Dave Lyons
---------------------------------
Dave Lyons, an individual
Number of Intermark Options: 10,000
By: Tom Hemingway, attorney-in-fact
/s/ Bobby Orbach
---------------------------------
Bobby Orbach, an individual
Number of Intermark
Common Shares: 10,000
By: Tom Hemingway, attorney-in-fact
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
8
CERTIFICATE OF DESIGNATION OF
SERIES H CONVERTIBLE PREFERRED STOCK
OF
INNOVUS CORPORATION,
A DELAWARE CORPORATION
(Pursuant to Section 151(g) of the
Delaware General Corporation Law)
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 none remain
outstanding and no previous certificate of designation of any series of
preferred stock remains in existence.
III. The following is a true and correct copy of resolutions duly adopted
by the Board of Directors at a meeting duly held on May 8, 1998, 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; and
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 H Convertible Preferred Stock (the
"Preferred Stock"), and the number of shares so designated shall be 100,000. The
par value of each share of Preferred Stock shall be $.001. Each share of
Preferred Stock shall have a stated value of $84.375 per share (the "Stated
Value").
Section 2. DIVIDENDS.
The holders of shares of Series H Preferred Stock shall be
entitled to receive dividends, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this Corporation) on the Common Stock of this
Corporation, when, as and if declared by the Board of Directors. Such dividends
shall not be cumulative and no undeclared or unpaid dividend shall bear
interest. The Corporation at its option may make any dividend payment on the
Series H Preferred Stock in shares of Common Stock or cash, or both, with each
share of Common Stock being valued for this purpose at the Common Stock's fair
market value on the date such dividend is declared. For purposes of this
paragraph, the fair market value of such Common Stock shall be determined in
good faith by the Board of Directors of the Corporation as of the applicable
<PAGE>
date. No dividends (other than those payable solely in the Common Stock of the
Corporation) shall be paid on any Common Stock of the Corporation during any
fiscal year of the Corporation unless a dividend is paid with respect to all
outstanding shares of Series H Preferred Stock (including the amount of any
dividends paid pursuant to the above provisions of this Section (C)1) in an
amount for each such share of Series H Preferred Stock equal to the aggregate
amount of such dividends for all shares of Common Stock into which each such
share of Series H Preferred Stock could then be converted as if the Preferred
Stock were able to convert and did convert into Common Stock, without regard to
the number of shares of authorized and unissued Common Stock reserved for
conversion.
Section 3. VOTING RIGHTS. Except as otherwise provided herein and as
otherwise provided by law, the Preferred Stock shall vote together as a single
class with the Common Stock with each share of Preferred Stock having the same
number of votes as all shares of Common Stock into which each such share of
Series H Preferred Stock could then be converted as if the Preferred Stock were
able to convert and did convert to Common Stock, without regard to the number of
shares of authorized and unissued Common Stock reserved for conversion. 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, voting as a separate class, (i) alter or
change adversely the powers, preferences or rights given to the Preferred Stock,
(ii) authorize, create, issue or reissue any class or series of stock ranking as
to voting, dividends or distribution of assets upon a Liquidation (as defined
below) senior to or prior to the Common Stock, or agree to do any of the
foregoing, (iii) authorize or adopt any agreement for merger, reorganization,
disposition of a substantial part of the assets of the Company or any
subsidiary, or issuance or disposition of a substantial portion of the voting
stock of the Company or any subsidiary, except as expressly contemplated in the
Share Exchange Agreement, or (iv) authorize or adopt any agreement for issuance
of any shares of any series of preferred stock, except as expressly contemplated
in the Share Exchange Agreement.
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, before any
distribution or payment shall be made to the holders of any Junior Securities,
an amount for each share of Preferred Stock equal to the greater of (I) the
Stated Value, plus an amount equal to accrued but unpaid dividends per share,
whether declared or not, but without interest, or (II) the amounts that would be
payable on the number of shares of Common Stock into which such share could be
converted, regardless of an insufficient number of shares of Common Stock being
authorized and unissued, as if all shares of Preferred Stock were converted in
full; and if the assets of the Company shall be insufficient to pay in full the
greater of 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.
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<PAGE>
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 6) at the
option of the holder in whole or in part at any time after the Original Issue
Date, subject only to the Company having sufficient authorized and unissued
shares of Common Stock reserved for issuance upon conversion. In the event that
the Holder of Preferred Stock desires to convert shares of Preferred Stock and
insufficient shares of Common Stock are reserved for issuance, at any time on or
after the expiration of one year after the Original Issue Date the Holder shall
have registration rights with respect to the Preferred Stock pursuant to 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 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 "Conversion Notice") in
the manner set forth in Section 5(j). Each 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 "Conversion Date"). Subject to Section
5(b), and the terms of the Conversion Notice as attached hereto, each 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 Conversion Notice, the Company shall promptly
deliver to the holder a certificate for such number of shares as have not been
converted.
(b) 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 Share Exchange 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(b) electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions. In the case of a
conversion pursuant to a Conversion Notice, if such certificate or certificates
are not delivered by the date required under this Section 5(b), 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.
(c) Upon the effectiveness of the reclassification of the Common
Stock into New Common Stock as described in Section 2(c) or Section 2(d) of the
Share Exchange Agreement, all outstanding shares of Preferred Stock shall
automatically and without any action of the Company or the Holder be converted
into Common Stock at the Conversion Ratio (as defined in Section 6), subject
only to the Company having sufficient authorized and unissued shares of Common
Stock reserved for issuance upon conversion.
(d) (i) The conversion price for each share of Preferred Stock
(the "Conversion Price") in effect on the Original Issue Date shall be $0.15.
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<PAGE>
(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 greater of (A) the Conversion Price
prior to the record date mentioned below or (B) the Per Share Market Value 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 the greater of the Conversion Price or
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 (I) the denominator shall be the greater of
(A) the Conversion Price in effect immediately prior to the record date or (B)
the Per Share Market Value of Common Stock determined as of the record date
mentioned above, and of which (II) the numerator shall be the difference between
(X) an amount equal to the greater of (A) the Conversion Price in effect
immediately prior to the record date or (B) the Per Share Market Value of Common
Stock determined as of the record date mentioned above, in either case minus (Y)
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
4
<PAGE>
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, without regard to an insufficient number of
shares of authorized and unissued Common Stock reserved for conversion. 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;
5
<PAGE>
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 use its best efforts to
cause a sufficient number of shares of Common Stock, or as large a portion
thereof as possible, to be authorized and unissued, and shall at all times
thereafter 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
6
<PAGE>
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 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. 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 10:59 p.m. (Pacific Time) on any date, such date 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 10:59 p.m. (Pacific Time) on any date, the next date or
such later date as is specified in the Conversion Notice, (ii) five days after
deposit in the United States mail, or (iii) upon actual receipt by the party to
whom such notice is required to be given.
Section 6. 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 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 Stock
7
<PAGE>
Exchange at the close of business on such date, or (c) if the Common Stock is
not quoted on the Nasdaq Stock Exchange, 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.
"Share Exchange Agreement" means the Agreement and Plan of Share
Exchange dated as of May 8, 1998, as amended, among the Company, Intermark
Corporation, a California corporation, and the Exchanging Securityholders as
defined therein.
"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 Stock Market, or (c) if the Common Stock is not quoted on the Nasdaq
Stock 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 4th day of August, 1998.
INNOVUS CORPORATION
/s/ Terry Haas
------------------------------
Terry Haas, President
Attest:
David Mock
By: ----------------------------
David Mock, Secretary
8
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert the number of shares of
Series H 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, promptly upon its receipt of this conversion notice
(and, in any case prior to the time it effects the conversion requested hereby),
to notify the converting holder by facsimile of the number of shares of Common
Stock authorized and unissued and reserved for issuance upon conversion of
Common Stock 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, in whole or in part,
if such conversion would result in a partial conversion of the shares of
Preferred Stock indicated above, 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 right of revocation by notice to the Company delivered upon its receipt
of the Company's notice regarding the number of reserved shares of Common Stock
or if the Purchaser fails to respond to the Company's notice within one day
thereafter, the Company shall effect to the fullest extent possible the
conversion requested in this notice and Company shall issue to the holder one or
more certificates representing shares of Preferred Stock which have not been
converted as a result of the limitation.
9
