0001116502-01-501194.txt : 20011010 0001116502-01-501194.hdr.sgml : 20011010 ACCESSION NUMBER: 0001116502-01-501194 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010907 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011005 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL COSMETICS MARKETING CO CENTRAL INDEX KEY: 0001097339 STANDARD INDUSTRIAL CLASSIFICATION: [9995] IRS NUMBER: 650598868 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27833 FILM NUMBER: 1753225 BUSINESS ADDRESS: STREET 1: 6501 N W PARK OF COMMERCE BLVD STREET 2: SUITE 205 CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5619998878 MAIL ADDRESS: STREET 1: 6501 N W PARK OF COMMERCE BLVD STREET 2: SUITE 205 CITY: BOCA RATON STATE: FL ZIP: 33487 8-K 1 internationalcosmetics-8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report:(Date of earliest event reported)September 7, 2001 INTERNATIONAL COSMETICS MARKETING CO. (Exact name of registrant as specified in its charter) FLORIDA 0-27833 65-0598868 ---------------- --------- --------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 6501 NW Park of Commerce Blvd., Suite 205, Boca Raton, Florida 33487 -------------------------------------------------------------------- (Address of executive offices and Zip Code) Registrant's telephone number,including area code: (561) 999-8878 (Former name or former address, if changed since last report) ITEM 5. Other Events. On September 7, 2001, International Cosmetics Marketing Co., d/b/a Beverly Sassoon & Co. (the "Company"), entered into a Stock Purchase Agreement pursuant to which the Company sold an aggregate of 1,000,000 shares of its Common Stock, par value $.001 per share (the "Shares") and Common Stock Purchase Warrants to purchase 750,000 shares of its Common Stock, par value $.001 per share (the "Warrant") for an aggregate purchase price of $1,500,000 in a private transaction exempt from registration under the Securities Act of 1933, as amended (the "Act"), in reliance on Section 4(2) of said Act. The purchaser was an accredited investor. The five year Warrants are exercisable at $2.125 per share. Noble International Investments, Inc. and Stanford Group Company acted as placement agents in the transaction, and we paid compensation of an aggregate of $195,000 in cash and five year Placement Agent Warrants exercisable into an aggregate of 175,000 shares of our Common Stock, par value $.001 per share of which 100,000 Warrants are exercisable at $1.50 per share and 75,000 Warrants are exercisable at $2.125 per share. The Warrants and Placement Agent Warrants contain certain registration rights (described below). Contemporaneously with the closing of the Stock Purchase Agreement, the Purchaser also purchased 250,000 Options in the Company from a non-affiliate Option holder. The Company did not receive any proceeds from the sale of these Options by the selling Option holder. The Options are exercisable at $.001 per share until August 19, 2019. The Stock Purchase Agreement contains certain anti-dilution provisions if the Company should issue Common Stock or instruments convertible or exercisable into Common Stock at a purchase price or an exercise price per share less than the Exercise Price (as adjusted). The Company has agreed to file a registration statement with the Securities and Exchange Commission to permit the public resale of the Shares, including the shares issuable upon the exercise of the Warrants, the Placement Agent Warrants and the Options, within 90 days from the closing date of the transaction. The Company has also granted the purchaser certain demand and piggy-back registration rights. The Company has agreed to use its best efforts to have the registration statement declared effective and remain effective until all registrable securities covered by such registration statement have been sold pursuant to such registration statement. In the event that the registration statement filed by the Company pursuant to a demand of the purchaser fails to remain effective until all registrable securities have been sold pursuant to such registration statement, then the exercise price of the Warrants will automatically be reduced by fifty (50%) percent. The description of the above stock purchase agreement and registration rights agreement are in summary form and are subject to the terms and conditions of the definitive agreements. The definitive stock purchase agreement and registration rights agreement are included as Exhibits to this Form 8-K. ITEM 7. Financial Statements and Exhibits (3) Exhibits Exhibit No. Description ----------- ----------- 4.1 Form of Common Stock Purchase Warrant 10.1 Stock Purchase Agreement by and between International Cosmetics Marketing Co. and Stanford Venture Capital Holdings, Inc. 10.2 Registration Rights Agreement by and between International Cosmetics Marketing Co. and the persons named on Schedule 1 attached thereto SIGNATURE 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. INTERNATIONAL COSMETICS MARKETING CO. /s/ Sam A. Lazar ----------------------- Sam A. Lazar, President Dated: October 5, 2001 EX-4.1 3 ex4-1.txt FORM OF COMMON STOCK PURCHASE WARRANT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THE COMPANY (AS DEFINED BELOW) WILL TRANSFER SUCH SECURITY ONLY UPON RECEIPT OF AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, THAT THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY APPLICABLE STATE SECURITIES LAWS. EXERCISABLE AT ANY TIME SUBJECT TO THE PROVISIONS HEREOF NO. _____ INTERNATIONAL COSMETICS MARKETING CO. D/B/A BEVERLY SASSOON & CO. WARRANT CERTIFICATE Warrant Certificate for _________ Warrants to Purchase _________ Warrant Shares This Warrant Certificate certifies that, for value received, ________________ (the "Holder") is the owner of the number of warrants set forth above (the "Warrants"), which entitle the Holder to purchase from International Cosmetics Marketing Co. d/b/a Beverly Sassoon & Co. (the "Company") at any time from and after the date hereof and without expiration an aggregate of _______ Warrant Shares (as defined below), at the purchase price stated in Section 2.3 hereof (the "Exercise Price"). The number of Warrant Shares purchasable upon exercise of the Warrants and the Exercise Price shall be subject to adjustment from time to time as herein provided. For purposes of this Warrant Certificate, "Warrant Shares" shall mean shares of the Company's Common Stock, par value $.001 (the "Common Stock"); provided, however, that if, in accordance with Section 6.3 hereof, the securities issuable upon exercise of the Warrants are issued by an entity other than the Company or there is a change in the class of securities so issuable, then the "Warrant Shares" shall mean the securities so issuable by such entity or the securities of the class of securities so issuable. The Warrants are subject to the following terms, conditions and provisions: SECTION 1. Registration; Transferability; Exchange of Warrant Certificate. 1.1 Registration. The Company shall number and register the Warrants in a register (the "Warrant Register") maintained at the principal office of the Company (the "Office"). The Company shall be entitled to treat the Holder of the Warrants as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrants on the part of any other person. 1.2 Transfer and Exchange. (a) The Warrants shall be transferable only on the Warrant Register upon delivery thereof by the Holder or by his duly authorized attorney or representative or accompanied by proper evidence of succession, assignment or authority to transfer. Upon any such registration of transfer, a new Warrant Certificate, in substantially the form of this Warrant Certificate, evidencing the Warrants so transferred shall be issued to the transferee of such Warrants and a new Warrant Certificate, in substantially the form of this Warrant Certificate, evidencing the remaining Warrants, if any, not so transferred, shall be issued to the Holder. No transfer of the Warrants or any interest therein other than in compliance with this Section 1.2 shall be made or recorded in the Warrant Register, and any such purported transfer shall be void and of no effect. (b) This Warrant Certificate is exchangeable, in whole or in part, upon the surrender hereof by the holder hereof at the Office for new Warrant Certificates, in substantially the form of this Warrant Certificate, evidencing in the aggregate the right to purchase the number of Warrant Shares that may then be purchased hereunder, each of such new Warrant Certificates to be dated the date of such exchange and to represent the right to purchase such number of Warrant Shares as shall be designated by the holder of such new Warrant Certificates at the time of such surrender. SECTION 2. Term of Warrants; Exercise of Warrants. 2.1 Term of Warrant. Subject to the terms of this Warrant Certificate, the Holder shall have the right, which may be exercised by the registered Holder hereof from time to time on any Business Day before 5:00 P.M. (New York City time) during the period through and including the fifth anniversary hereof (the "Expiration Date") to purchase from the Company an aggregate of _______ fully paid and non-assessable Warrant Shares or such other number of Warrant Shares which the Holder may at the time be entitled to purchase in accordance with this Warrant Certificate. At 5:00 P.M. (New York City time) on the Expiration Date, each Warrant not exercised prior thereto shall be and become void and of no value. 2.2 Exercise of Warrants. Subject to the terms of this Warrant Certificate, the Warrants evidenced by this Warrant Certificate may be exercised in whole or in part, upon surrender to the Company, at its Office, of this Warrant Certificate, with a Purchase Form substantially in the form attached hereto duly completed and signed, and upon payment to the Company of the Exercise Price. Payment of the aggregate Exercise Price shall be in cash or by check payable to the order of the Company; provided that in lieu of payment in cash, at the option of the Holder, the Exercise Price may be payable either by (i) delivery to the Company of securities of the Company owned by the Holder having a Fair Market Value (as hereinafter defined), or in the case of preferred stock, an aggregate liquidation preference, equal to the Exercise Price; or (ii) surrender to the Company of a portion of the Warrants evidenced by this Warrant Certificate representing the right to purchase such number of Warrant Shares as to which the aggregate Fair Market Value of such Warrant Shares minus the Exercise Price therefor equals the Exercise Price for the Warrant Shares as to which Warrants evidenced hereby are being exercised. As used herein, "Fair Market Value" of the Common Stock or other securities means, on any date, the average of the last sale price, regular way, for the 10-business day period immediately preceding such date, or if no such sales took place during such 10-business day period, the average of the closing bid and asked prices, regular way, for each day in such 10- business day period, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock or such other securities are listed, or, if the Common Stock or such other securities are not listed or admitted to trading on any national securities exchange, the average of the last quoted sale price for such 10-business day period or, if not so quoted, the average of the high bid and low asked prices for each day in such 10-business day period in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such date the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices during such 10-business day period as furnished by a professional market maker making a market in the Common Stock or such other securities selected by the Board of Directors of the Company. If the shares of Common Stock or such other securities are not publicly held or so listed or publicly traded, "Fair Market Value" shall mean the fair market value per share of Common Stock or such other securities as determined, in good faith and in the exercise of reasonable business judgment, by the Board of Directors of the Company. Upon the surrender of this Warrant Certificate, with the Purchase Form duly executed, and payment of the Exercise Price as aforesaid, the Company shall promptly and, in any event within ten Business Days, issue and deliver to or upon the written order of the Holder and in such name or names as the Holder may designate a certificate or certificates for such number of Warrant Shares so purchased. Such certificate or certificates shall be dated and deemed to have been issued as of the date of the surrender of this Warrant Certificate and payment of the Exercise Price, as aforesaid. The right of purchase represented by this Warrant Certificate shall be exercisable, at the election of the Holder, in full at any time or in part from time to time. In the event the Holder shall exercise fewer than all the Warrants evidenced hereby, a new Warrant Certificate shall be issued evidencing the remaining unexercised Warrants. 2.3 Exercise Price. The price per share at which each Warrant Share shall be purchased upon exercise of each Warrant (the "Exercise Price") shall be $_____, subject to adjustment pursuant to Section 6. SECTION 3. Payment of Taxes. The Company covenants and agrees that it will pay when due and payable all documentary, stamp and other similar taxes, if any, which may be payable in respect of the issuance or delivery of the Warrants or of the Warrant Shares purchasable and issuable upon the exercise of the Warrants; provided, however, that the Company shall not be required to pay any such tax or other charge imposed in respect of the transfer of Warrants, or the issuance or delivery of certificates for Warrant Shares or other Securities in respect of the Warrant Shares upon the exercise of Warrants, to a person or entity other than a then-existing registered Holder of Warrants. SECTION 4. Mutilated or Missing Warrants. In the event this Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and in substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent right or interest, but only upon, in the event of a lost, stolen or destroyed certificate, receipt of evidence satisfactory to the Company of such loss, theft or destruction and, if requested by the Company, upon indemnity that also is satisfactory to it; provided that a written undertaking of such loss, theft or destruction of this Warrant Certificate by the registered Holder hereof or any Affiliate thereof shall be deemed a satisfactory indemnity of the Company for purposes of this Section 4. In making application for such a substitute Warrant Certificate, the Holder shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe. SECTION 5. Reservation and Availability of Warrant Shares; Purchase and Cancellation of Warrants. 5.1 Reservation of Warrant Shares. (a) The Company shall at all times reserve and keep available free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock, for the purpose of enabling it to satisfy any obligations to issue the Warrant Shares upon exercise of the Warrants, the full number of Warrant Shares deliverable upon the exercise of all the Warrants evidenced by this Warrant Certificate (as adjusted pursuant to Section 6). The Company or, if appointed, the transfer agent for the Common Stock and every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of any of the rights of purchase aforesaid (each, a "Transfer Agent") shall be irrevocably authorized and directed at all times to reserve such number of authorized shares of Common Stock as shall be required for such purpose. The Company will keep a copy of this Warrant Certificate on file with each Transfer Agent. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto which are transmitted to the Holder pursuant to Section 6 hereof. (b) The Company covenants that all Warrant Shares issuable upon exercise of the Warrants will, upon issuance, be fully paid, non-assessable and free from preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof. (c) Before taking any action which would cause an adjustment pursuant to Section 6, the Company will take any and all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non- assessable Warrant Shares at the Exercise Price as so adjusted. 5.2 Warrant Shares Record Date. Each person in whose name any stock certificate for Warrant Shares is issued shall for all purposes be deemed to have become the holder of record of the Warrant Shares represented thereby, and such stock certificate shall be dated the date upon which this Warrant Certificate was duly surrendered and payment of the Exercise Price (and any applicable transfer taxes) was made. 5.3 Cancellation of Warrant. Upon surrender of the Warrant Certificate for exchange, substitution, transfer or exercise, it shall be canceled by the Company and retired. SECTION 6. Adjustment of Number of Warrant Shares and Exercise Price. The number of securities purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of certain events as hereinafter described. 6.1 Mandatory Adjustments. The number of securities purchasable upon the exercise of the Warrants and the Exercise Price shall be subject to adjustment as follows: (a) In case the Company shall (i) declare or pay a dividend on any of its outstanding Common Stock in shares of Common Stock or make a distribution to holders of its outstanding Common Stock in shares of Common Stock, (ii) subdivide any of its outstanding Common Stock into a greater number of shares of Common Stock, (iii) combine any of its outstanding Common Stock into a smaller number of shares of Common Stock, or (iv) issue by reclassification of any of its shares of Common Stock other securities of the Company (including any such reclassification in connection with a consolidation, merger or other business combination in which the Company is the surviving corporation), the number and kind of Warrant Shares purchasable and issuable upon exercise of the Warrants shall be adjusted so that the Holder, upon exercise thereof, shall be entitled to receive the number and kind of Warrant Shares and other securities of the Company that the Holder would have owned or have been entitled to receive after the happening of any of the events described above had the Warrants been exercised and the relevant Warrant Shares issued in the name of the Holder immediately prior to the happening of such event or, if applicable, any record date with respect thereto. An adjustment made pursuant to this paragraph (a) shall become effective on the date of the dividend payment, subdivision, combination or issuance retroactive to the record date with respect thereto, if any, for such event. Upon adjustment of the number of Warrant Shares as provided in this paragraph (a), the Exercise Price payable upon exercise of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of each Warrant immediately prior to such adjustment and of which the denominator shall be the number of Warrant Shares purchasable immediately thereafter. (b) In case the Company shall distribute to all holders of its outstanding Common Stock evidences of indebtedness of the Company, cash (including cash dividends payable out of consolidated earnings or earned surplus) or assets or securities other than its Common Stock (including stock of a subsidiary or securities convertible into or exercisable for such stock but excluding dividends or distributions referred to in Sections 6.1(a) above or Section 6.1(c) below) (any such evidences of indebtedness, cash, assets or securities, the "assets or securities"), then, in each case, the Exercise Price shall be adjusted by subtracting from the Exercise Price then in effect the value (as determined in accordance with Section 6.2(b)) of the assets or securities that the Holder would have been entitled to receive per Warrant Share as a result of such distribution had the Warrant been exercised and the relevant Warrant Shares issued in the name of the Holder immediately prior to the record date for such distribution; provided that if, after giving effect to such adjustment, the Exercise Price would be less than the then par value of the Common Stock, the Company shall distribute such assets or securities to the Holder as if the Holder had exercised the Warrants and the Warrant Shares had been issued in the name of the Holder immediately prior to the record date for such distribution. Any adjustment required by this Section 6.1(b) shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. (c) If at any time after the date hereof the Company shall issue or sell any shares of Common Stock or any warrants, options or rights to subscribe for or purchase Common Stock ("Purchase Rights") or securities convertible into Common Stock ("Convertible Securities") (but excluding distributions referred to in paragraph (a) or (b) above), and the consideration per share for, or the price per share at which such Purchase Right or Convertible Security is exercisable for or convertible into, such Common Stock (the "Subsequent Issue Price") is less than the Exercise Price in effect immediately prior to such issuance or sale, then, forthwith upon such issuance or sale, the Exercise Price shall be reduced to the Subsequent Issue Price. In the case of an adjustment pursuant to this Section 6.1(c) for a subsequent issuance of Purchase Rights or Convertible Securities, the Subsequent Issue Price shall be deemed to be the lowest possible price in any range of prices at which such Purchase Rights or Convertible Securities may be exercised or converted. No further adjustments of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Purchase Rights or Convertible Securities and, if any issue or sale of such Purchase Rights or Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase any such Purchase Rights or Convertible Securities for which adjustments of the Exercise Price have been or are to be made pursuant to other provisions of this Section 6.1, no further adjustments of the Exercise Price shall be made by reason of such issue or sale. For the purposes of this subparagraph (c), the date as of which the Exercise Price shall be computed shall be the earlier of (i) the date on which the Company shall enter into a firm contract for the issuance of such Purchase Rights or Convertible Securities; and (ii) the date of actual issuance of such Purchase Rights or Convertible Securities. Such adjustments shall be made upon each issuance of Purchase Rights or Convertible Securities and shall become effective immediately after such issuance. (d) The Exercise Price shall be adjusted when and as needed pursuant to Section 2(b)(ii) of the Registration Rights Agreement between Stanford Venture Capital Holdings, Inc. and the Company. (e) Upon each adjustment of the Exercise Price pursuant to paragraphs (b)-(d) of this Section 6.1, this Warrant Certificate shall be deemed to evidence the right to purchase, at the adjusted Exercise Price, that number of Warrant Shares obtained by multiplying the number of Warrant Shares covered by this Warrant Certificate immediately prior to such adjustment by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the Exercise Price in effect after such adjustment. 6.2 Notice of Adjustment. (a) The Company hereby agrees that whenever any adjustment of the number of Warrant Shares purchasable upon the exercise of the Warrants or the Exercise Price of such Warrants is effected as herein provided, the Company shall promptly notify the Holder, by first class mail, postage prepaid, of such adjustment and shall deliver to the Holder a certificate of the Chief Financial officer of the Company, setting forth in reasonable detail (i) the number of Warrant Shares purchasable upon the exercise of the Warrants and the Exercise Price of the Warrants after such adjustment, (ii) a brief statement of the facts requiring such adjustment, and (iii) the computation by which such adjustment was made. (b) If any adjustment is required to be made pursuant to Section 6.1(b) (unless the proviso to the first sentence of that Section is applicable to the action), the Company and the Holder shall negotiate in good faith toward agreeing upon the value of the assets or securities and the necessary adjustment. If no agreement can be reached within 14 days from the date of receipt by the Holder of such notice, the Company and the Holder shall appoint within 21 days from the date of such receipt a mutually acceptable independent investment banking firm to determine the necessary adjustment. Such firm shall make the necessary determination which shall be binding absent actual fraud or manifest error. The fees of such firm for making such determination and any related reimbursable expenses shall be paid by the Company. 6.3 Preservation of Purchase Rights Upon Merger, Consolidation, etc. (a) In the event of any merger, consolidation or other acquisition or business combination in which the Company is not the surviving corporation or in which all of the outstanding Common Stock of the Company is converted into, acquired or exchanged for securities, cash or property or in the event of the sale or other disposition of all or substantially all the assets of the Company, then, and in each such case, proper provision shall be made so that, upon the basis and upon the terms and in the manner provided in this Section 6.3, the holder of this Warrant Certificate, upon the exercise of any of its Warrants at any time after the consummation of such consolidation, merger, transfer, reorganization or reclassification, shall be entitled to receive, in lieu of shares of Common Stock issuable upon such exercise prior to such consummation, the stock, securities, cash and assets to which such holder would have been entitled upon such consummation if such holder had so exercised such Warrant immediately prior thereto, at the aggregate Exercise Price in effect for all shares of Common Stock issuable upon such exercise immediately prior to such consummation as adjusted to the time of such transaction (subject to adjustments subsequent to such corporate action as nearly equivalent as possible to the adjustments provided for in Section 6.1 above). Such undertaking shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 6, provided, however, that if upon such consolidation, merger, transfer, reorganization or reclassification, different holders of Common Stock shall be entitled to receive different forms of consideration for their Common Stock, the form of such consideration thereafter deliverable upon the exercise of the Warrants shall be as determined in good faith by the Board of Directors, whose determination shall be conclusive. The provisions of this Section 6.3 shall also apply to successive mergers or consolidations. (b) Upon any liquidation, dissolution or winding up of the Company, the Holder shall receive such cash or property (less the Exercise Price) which the Holder would have been entitled to receive upon the happening of such liquidation, dissolution or winding up had the Warrants been exercised and the Warrant Shares issued immediately prior to the occurrence of such liquidation, dissolution or winding up. 6.4 Statement on the Warrant. Irrespective of any adjustments in the number or kind of securities purchasable upon the exercise of the Warrant or the Exercise Price, any Warrant Certificate theretofore or thereafter issued may continue to express the same price and number and any kind of shares as are stated in this Warrant Certificate. SECTION 7. Fractional Interests. The Company shall not be required to issue fractional securities on the exercise of Warrants. If any fraction of a security would be issuable on the exercise of Warrants, the Company shall pay to the Holder of such Warrants an amount in cash equal to the Fair Market Value of such fraction. SECTION 8. Registration. The Holder shall, from time to time, have the rights, if any, with respect to registration of Warrant Shares as are set forth in the Registration Rights Agreement, between the Company and ___________________________. SECTION 9. No Rights as a Stockholder; Notices to Holder. Nothing contained in this Warrant Certificate shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a stockholder in respect of any meeting of stockholders of the Company for the election of the directors of the Company or any other matter, or any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the exercise of the Warrants evidenced by this Warrant Certificate, any of the following events shall occur: (a) the Company shall declare any dividend payable in cash or in any securities upon its shares of Common Stock or make any distribution to the holders of its shares of Common Stock; (b) the Company shall offer to all holders of its shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; (c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation, merger, sale, transfer or lease of all or substantially all of its property, assets and business as an entirety) shall be proposed; or (d) any consolidation or merger to which the Company is a party and for which approval of the holders of Common Stock is required, or of the conveyance or transfer of all or substantially all assets of the Company as, or substantially as, an entirety, or of any reclassification or change of outstanding shares of Common Stock issuable upon exercise of the Warrant (other than a change in par value to no par value, or from no par value to par value) or as a result of a subdivision or combination, then in any one or more of said events, the Company shall give to the Holder the greater of 30 business days written notice and the number of days written notice required to be given to stockholders with respect to such action prior to the applicable record date hereinafter specified, stating (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such dividends, rights or warrants are to be determined; or (ii) the date on which any such dissolution, liquidation, winding up, consolidation, merger, conveyance or transfer is expected to become effective and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation, or winding up. SECTION 10. Identity of Transfer Agent. Forthwith upon the appointment of any Transfer Agent for the Common Stock, or any other shares of the Company's capital stock issuable upon the exercise of the Warrants, the Company shall promptly notify the Holder of the name and address of such Transfer Agent. SECTION 11. Notices. Any notice, except as provided in Section 9 of this Warrant Certificate, or demand authorized by this Warrant Certificate to be given by the Holder to the Company, shall be in writing and shall be delivered in person or by facsimile transmission, or mailed by overnight courier, or otherwise delivered, to the Company, at 6501 N.W. Park of Commerce Blvd., Suite 205, Boca Raton, FL 33487, Attn: Sam A. Lazar. The Company may change the address to which notices to it are to be delivered or mailed hereunder by notice to the Holder pursuant to this Section 11. Any notice pursuant to this Warrant Certificate by the Company to the Holder shall be in writing and shall be mailed by overnight courier or otherwise delivered, to the Holder at its address set forth in the Warrant Register. Notices delivered personally shall be effective at the time delivered by hand, notices sent by mail shall be effective when received, notices sent by facsimile transmission shall be effective when confirmed and notices sent by courier guaranteeing next day delivery shall be effective on the next business day after timely delivery to the courier. SECTION 12. Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant Certificate may be amended, or compliance therewith may be waived, by a written instrument or written instruments executed by the Company and the Holder. SECTION 13. Successors. All the covenants and provisions of this Warrant Certificate by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and assigns hereunder. SECTION 14. Governing Law. This Warrant Certificate shall be construed in accordance with and governed by the internal laws of the State of Florida applicable to contracts executed and to be performed wholly within such state, without regard to the principles of conflicts or choice of law. SECTION 15. Benefits of this Warrant Certificate. Nothing in this Warrant Certificate shall be construed to give to any person or entity other than the Company and the Holder any legal or equitable right, remedy or claim under this Warrant Certificate; and this Warrant Certificate shall be for the sole and exclusive benefit of this Company and the Holder. SECTION 16. Termination. This Warrant Certificate shall terminate and be of no further force and effect on the earlier of 5:00 P.M. (New York City time) on the Expiration Date or the date on which all of the Warrants have been exercised. SECTION 17. Captions. The captions of the Sections and paragraphs of this Warrant Certificate have been inserted for convenience only and shall have no substantive effect. [SIGNATURES ON NEXT PAGE] IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed this ____ day of ____________, 2001. INTERNATIONAL COSMETICS MARKETING CO. D/B/A BEVERLY SASSOON & CO. By:_______________________________ Name:____________________________ Title:_____________________________ Attest: By:______________________________ Name:___________________________ Title:_____________________________ FORM OF ELECTION TO PURCHASE (To Be Executed by the Holder if the Holder Desires to Exercise Warrants Evidenced by the Foregoing Warrant Certificate) To: [Company] The undersigned hereby irrevocably elects to exercise ________________ Warrants evidenced by the attached Warrant Certificate for, and to purchase thereunder, full shares of Common Stock issuable upon exercise of said Warrants, all at the price and on the terms and conditions specified in the attached Warrant Certificate. The undersigned requests that certificates for such shares be issued in the name of and delivered to ______________________, whose address is ______________________________. PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER (Please print name and address) If said number of Warrants shall not be all the Warrants evidenced by the attached Warrant Certificate, the undersigned requests that a new Warrant Certificate evidencing the Warrants not so exercised be issued in the name of and delivered to (Please print name and address) By: Name: Title: Dated: FORM OF ASSIGNMENT FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned in and to the number of Warrants (as defined in and evidenced by the attached Warrant Certificate) set opposite the name of such assignee below and in and to the attached Warrant Certificate with respect to said Warrants and the shares of Common Stock issuable upon exercise of said Warrants: Name of Assignee Address Number of Warrants ---------------- ------- ------------------ If the total of said Warrants shall not be all the Warrants evidenced by the attached Warrant Certificate, the undersigned requests that a new Warrant Certificate evidencing the Warrants not so assigned be issued in the name of and delivered to the undersigned. By: Name: Title: Dated: EX-10.1 4 ex10-1.txt STOCK PURCHASE AGREEMENT EXECUTION COPY -------------- STOCK PURCHASE AGREEMENT BY AND BETWEEN STANFORD VENTURE CAPITAL HOLDINGS, INC. AND INTERNATIONAL COSMETICS MARKETING CO. D/B/A BEVERLY SASSOON & CO. September 7, 2001
CONTENTS Authorization and Closing.........................................................................................1 Authorization of the Stock...............................................................................1 Purchase and Sale of the Stock...........................................................................1 Conditions of the Purchasers' Obligations.........................................................................1 Conditions to Closing....................................................................................1 Covenants.........................................................................................................3 Current Public Information...............................................................................3 Indemnification..........................................................................................3 No Affiliated Party Transactions.........................................................................4 Board Representation.....................................................................................4 Compliance with Laws..............................................................................................4 Transfer of Restricted Securities.................................................................................4 Representations and Warranties of the Company.....................................................................4 Organization and Corporate Power.........................................................................5 Capital Stock and Related Matters........................................................................5 Authorization; No Breach.................................................................................6 Undisclosed Liabilities..................................................................................6 Tax Matters..............................................................................................6 Litigation, etc..........................................................................................7 Governmental Consent, etc................................................................................7 Compliance with Laws.....................................................................................7 Disclosure...............................................................................................7 Recent Occurrences.......................................................................................8 Registration Rights......................................................................................8 Securities Laws..........................................................................................8 Commission Documents.....................................................................................8 Transactions with Affiliates.............................................................................9 Vote Required; State Takeover Statutes...................................................................9 Definitions.......................................................................................................9 Miscellaneous....................................................................................................12 Expenses................................................................................................12 Remedies 13 Purchasers' Investment Representations..................................................................13 Consent to Amendments...................................................................................13 Survival of Representations and Warranties..............................................................14 Successors and Assigns..................................................................................14 Severability............................................................................................14 Counterparts............................................................................................14 Descriptive Headings; Interpretation....................................................................14 Governing Law...........................................................................................14 Notices 15 Rights 16 Amendments..............................................................................................16 List of Exhibits ---------------- Exhibit A - Form of Registration Rights Agreement Exhibit B - Form of Assignment Agreement Exhibit C - Form of Letter Agreement Exhibit D - Form of Warrant Schedule of Exceptions Schedule 5.B.(i)
STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of September 7, 2001, by and between STANFORD VENTURE CAPITAL HOLDINGS, INC. (the "Purchaser" or "Stanford"), and INTERNATIONAL COSMETICS MARKETING CO. D/B/A BEVERLY SASSOON & CO., a Florida corporation ("Company"). Except as otherwise indicated herein, capitalized terms used herein are defined in Section 6 hereof. In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, hereby agree as follows: Section 1. Authorization and Closing. A. Authorization of the Stock. The Company has authorized the issuance and sale to the Purchaser of 1,000,000 shares of its Common Stock, par value $.001 per share (the "Common Stock") and 750,000 Warrants to purchase Common Stock at $2.125 per share (the "Warrants"). B. Purchase and Sale of the Stock. At the Closing (as defined below), the Company shall sell to the Purchaser and, subject to the terms and conditions set forth herein, the Purchaser shall purchase from the Company, 1,000,000 shares of Common Stock and 750,000 Warrants at an aggregate purchase price of $1,500,000. The closing of the purchase and sale of the Common Stock pursuant hereto (the "Closing") shall take place at the offices of Akerman Senterfitt, 1 S.E. 3rd Avenue, Suite 2700, Miami, Florida 33131 simultaneously with the execution and delivery of this Agreement. At the Closing, pursuant to the escrow provisions of the Assignment Agreement, the Company shall deliver to the Purchaser stock certificates evidencing the Common Stock purchased by the Purchaser, registered in the Purchaser's name, and the Purchaser shall pay to the Company the purchase price by certified or bank check or wire transfer of immediately available funds. Section 2. Conditions of the Purchaser' Obligations. A. Conditions to Closing. The obligation of the Purchaser to purchase and pay for the Common Stock at the Closing is subject to the satisfaction or written waiver as of the Closing of the following conditions: (i) Representations and Warranties; Covenants. The representations and warranties contained in Section 5 hereof shall be true and correct at and as of the Closing, and the Company shall have performed all of the covenants required to be performed by it hereunder prior to the Closing. (ii) Registration Rights Agreement. The Company and the Purchaser shall have entered into an Registration Rights Agreement in form and substance set forth in Exhibit A attached hereto (the "Registration Rights Agreement"), and the Registration Rights Agreement shall not have been amended or modified and shall be in full force and effect as of the Closing. (iii) Assignment and Escrow Agreement. Paul Lambert, Atlas Pearlman, P.A. and the Purchaser shall have entered into an Assignment and Escrow Agreement in form and substance set forth in Exhibit B attached hereto (the "Assignment Agreement"), relating to the assignment of that certain option (the "Option"), dated as of August 19, 1999, to purchase 250,000 shares of Common Stock, which is being assigned to Purchaser simultaneously herewith, and the Assignment Agreement shall not have been amended or modified and shall be in full force and effect as of the Closing. (iv) Letter Agreement. The Purchaser and Nico Pronk shall have entered into a Letter Agreement in form and substance set forth in Exhibit C attached hereto (the "Letter Agreement"), and the Letter Agreement shall not have been amended or modified and shall be in full force and effect as of the Closing. (v) Warrants. The Company shall have executed warrant certificates in form and substance set forth in Exhibit D attached hereto representing the Warrants, and the Warrants shall not have been amended or modified and shall be in full force and affect as of the Closing. (vi) Consents and Approvals. The Company shall have received or obtained all third-party, governmental and regulatory consents and approvals necessary for the consummation of the transactions contemplated hereby. (vii) Compliance with Applicable Laws. The sale of Common Stock to the Purchaser hereunder shall not be prohibited by any applicable law or governmental regulation. (viii) Fees and Expenses. The Company shall have reimbursed Purchaser's expenses, paid the fee and issued the Placement Warrants as provided in Section 7.A. (ix) Closing Documents. The Company shall have delivered to Purchaser all of the following documents: (a) an Officer's Certificate, dated the date of the Closing, stating that the conditions specified in this Section 2 have been fully satisfied; (b) certified copies of the resolutions duly adopted by the Company's board of directors (its "Board"), including the consent of the majority holder of the Company's Series A Convertible Preferred Stock and the holder of the Company's outstanding debentures, authorizing the execution, delivery, and performance of the Transaction Documents, the issuance and sale of the Common Stock and the consummation of all other transactions contemplated by this Agreement; and 2 (c) certified copies of (1) the Company's Articles of Incorporation and (2) the Company's Bylaws, each as in effect at the Closing. (x) No Material Adverse Change. There shall not have occurred any material adverse change in the financial condition, operating results, assets, operations or business prospects of the Company since the Financial Statement Date. (xi) Opinion. The Company shall have delivered to the Purchaser a legal opinion, in form and content reasonably satisfactory to Purchaser, with respect to such matters (including, but not limited to, the absence of dissenters' rights with respect to this transaction) as Purchaser shall reasonably request. (xii) Rights of First Refusal, Anti-Dilution Rights, and Preemptive Rights Waived. The Company shall have delivered to Purchaser evidence reasonably satisfactory to Purchaser that no rights of first refusal to purchase securities of the Company, anti-dilution rights or preemptive rights will be contravened by the consummation of the transactions contemplated in connection herewith. (xiii) Other. The Purchaser shall have received such other documents relating to the transactions contemplated hereby as Purchaser or its counsel may reasonably request. Any condition specified in this Section 2 may be waived only if such waiver is set forth in a writing executed by Purchaser. Section 3. Covenants. As an inducement to enter into the transactions contemplated by this Agreement, the Company hereby covenants to undertake the obligations set forth in this Section 3. A. Current Public Information. For so long as Purchaser beneficially owns any securities of the Company, the Company shall timely file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Commission thereunder and shall take such further action as any holder or holders of Restricted Securities may reasonably request, all to the extent required to enable: (i) such holders to sell Restricted Securities pursuant to Rule 144 adopted by the Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Commission; or (ii) the Company to be eligible to register its securities pursuant to a registration statement on Form S-2 or S-3 or any similar registration form hereafter adopted by the Commission. Upon request, the Company shall deliver to any holder of Restricted Securities a written statement as to whether it has complied with such requirements. 3 B. Indemnification. The Company shall indemnify, defend and hold the Purchaser and its respective directors, officers, employees, affiliates and agents (collectively, the "Indemnified Persons") harmless from and against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including, without limitation, interest, penalties, court costs and attorneys' fees (collectively, "Losses"), that any Indemnified Person shall incur or suffer, which arise, result from, or relate to (a) any breach of, or failure by the Company to perform, any of its representations, warranties, covenants or agreements in any Transaction Document or any violation of any securities law by the Company, and (b) any claim, litigation, investigation or proceeding (whether or not such Indemnified Person is a party thereto) relating to any transactions, services or matters that are the subject of any Transaction Document. C. No Affiliated Party Transactions. For so long as the Purchaser beneficially owns any securities of the Company, the Company and each of its Subsidiaries shall not, without the prior written consent of the Purchaser, enter into any transaction with any of its or any Subsidiary's officers, directors, employees or Affiliates or any individual related by blood, marriage or adoption to any such Person or any entity in which any such Person or individual owns a beneficial interest, except for (i) normal employment arrangements and benefit programs on reasonable terms, (ii) the Letter Agreement, dated as of October 13, 2000, between the Company and Noble International Investments, Inc. and (iii) except as otherwise expressly contemplated by this Agreement. D. Board Representation. Upon Closing, and until the earlier to occur of the following events: (a) two years from the date of this Agreement; or (b) any event which results in Purchaser or its Affiliates, at any time, collectively being the beneficial owners of less than 50% of the securities of the Company (on an as-converted basis) acquired pursuant to this Agreement, the Warrants and the Assignment Agreement, the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special Board meetings), so that one (1) representative designated by the Purchaser shall be nominated and/or appointed to Board. E. Compliance with Laws. The Company shall take all necessary actions to comply with all state and federal securities laws in connection with the issuance and sale of its securities to any other party, by private placement or otherwise. Section 4. Transfer of Restricted Securities. The Purchaser acknowledges that the Restricted Securities are transferable only pursuant to: (a) public offerings registered under the Securities Act; (b) Rule 144 or Rule 144A under the Securities Act (or any similar rule or rules then in force) if such rule or rules are available; (c) any other legally available means of transfer; and (d) any other agreement to which such Purchaser is a party. In connection with the transfer of any Restricted Securities (other than a transfer described in clauses (a) or (b) above), the holder thereof shall deliver written notice to the Company describing in reasonable detail the transfer or proposed transfer. In addition, upon the request of the Purchaser, the Company shall promptly supply to such Purchaser or its prospective transferees all information regarding the Company required to be delivered in connection with a transfer pursuant to Rule 144A under the Securities Act. 4 Section 5. Representations and Warranties of the Company. As a material inducement to the Purchaser to enter into this Agreement and purchase the Common Stock, the Company hereby represents and warrants to the Purchaser that, except as expressly set forth on the Schedule of Exceptions attached hereto: A. Organization and Corporate Power. The Company is a corporation duly organized, validly existing, and in good standing under the laws of Florida and is qualified to do business in every jurisdiction in which the failure to so qualify might reasonably be expected to have a material adverse effect on the financial condition, operating results, assets, operations, or business prospects of the Company. The Company has all requisite corporate power and authority and all material licenses, permits, and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted, and to carry out the transactions contemplated by this Agreement and the agreements and documents contemplated in connection therewith. The copies of the Company's Articles of Incorporation and the Company's Bylaws which have been furnished to Purchaser's counsel reflect all amendments made thereto at any time before the Closing and are correct and complete. B. Capital Stock and Related Matters. (i) The authorized capital stock of the Company consists of 30,000,000 shares of capital stock, of which 5,000,000 shares are designated as Preferred Stock, par value $.001, and of which 25,000,000 shares are designated as Common Stock, par value $.001. Immediately prior to the Closing, the Company had that number of shares outstanding as set forth on Schedule 5.B.(i). Except as set forth on Schedule 5.B.(i), or the Schedule of Exceptions, the Company does not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor does it have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plans other than pursuant to, and as contemplated by, this Agreement. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options, or other rights to acquire its capital stock. All of the outstanding shares of the Company's capital stock are and shall be validly issued, fully paid, and non-assessable and free of any Liens other than Liens created by the holders thereof. No event has occurred which would change the conversion price or number of shares issuable upon conversion of any of the Company's outstanding securities. (ii) Except as set forth on the Schedule of Exceptions, there are no statutory or contractual preemptive rights, anti-dilution rights, or rights of first refusal with respect to the issuance of any of the Common Stock hereunder and the Company has never issued securities in contravention of any rights of first refusal, anti-dilution rights, or preemptive rights. The Company has not violated any applicable federal or state securities laws in connection with the offer, sale, or issuance of any of its capital stock, and the offer, sale, and issuance of the Common Stock hereunder does not and will not require registration under the Securities Act or any applicable state securities laws. Except as disclosed on the Schedule of Exceptions, there are no agreements between the Company's stockholders with respect to the voting or transfer of the Company's capital stock or with respect to any other aspect of the Company's affairs. 5 C. Authorization; No Breach. The execution, delivery, and performance of the Transaction Documents have been duly authorized by the Company. The Transaction Documents each constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms. The execution and delivery by the Company of the Transaction Documents, the offering, sale, and issuance of the Common Stock hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and will not: (i) conflict with or result in a breach of the terms, conditions, or provisions of; (ii) constitute a default under; (iii) result in the creation of any Lien, security interest, charge, or encumbrance upon the Company's capital stock or assets pursuant to; (iv) give any third party the right to modify, terminate, or accelerate any obligation under; (v) result in a violation of; or (vi) require any authorization, consent, approval, exemption, or other action by or notice to any court or administrative or governmental body pursuant to, the Articles of Incorporation or Bylaws of the Company, or any law, statute, rule, or regulation to which the Company is subject, or any agreement, instrument, order, judgment, or decree to which the Company or any of its Affiliates or employees is a party or by which it or any of the foregoing Persons is bound. Furthermore, the offering, sale and issuance of Common Stock hereunder (and the conversion thereof) will not contravene or give rights to any Person pursuant to any right of first refusal to purchase securities of the Company, anti-dilution right or preemptive right granted by the Company. D. Undisclosed Liabilities. Except as set forth in the financial statements referenced in Section 5.M, the Company has no liabilities, commitments or obligations of any nature whatsoever, whether accrued, contingent or otherwise and whether due or to become due (other than nonmaterial, both individually and in the aggregate, liabilities, commitments or obligations incurred since the Financial Statement Date in the ordinary course of business consistent with past practices to Persons other than Affiliates of the Company) or any unrealized or unanticipated losses from any commitments of the Company, and there is no basis for assertion against the Company of any such liability, commitment, obligation or loss. E. Tax Matters. Except as set forth on the Schedule of Exceptions, the Company has filed all Tax Returns (if any) which it is required to file under applicable laws and regulations; all such Tax Returns are complete and correct in all material respects; the Company has paid all Taxes due and owing by it and has withheld and paid over all Taxes which it is obligated to withhold from amounts paid or owing to any employee, stockholder, creditor or other third party; the Company has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency; the assessment of any additional Taxes for periods for which returns have been filed is not expected; no foreign, federal, state or local Tax audits 6 are pending or being conducted with respect to the Company, no information related to Tax matters has been requested by any foreign, federal, state or local taxing authority and no notice indicating an intent to open an audit or other review has been received by the Company from any foreign, federal, state or local taxing authority; and there are no unresolved questions or claims concerning the Company's Tax liability. The Company has not made an election under Section 341 (f) of the IRC. F. Litigation, etc. There are no actions, suits, proceedings, orders, investigations or claims pending or, to the best of the Company's knowledge, threatened against or affecting the Company (or to the best of the Company's knowledge, pending or threatened against or affecting any of the officers, directors or employees of the Company with respect to their business or proposed business activities) at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality (including, without limitations, any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement) which (i) could have a material adverse effect on the financial condition, operating results, assets, operations or business prospects of the Company, or (ii) questions the validity of the transactions contemplated in connection herewith or seeks to enjoin or restrict same. The Company is not subject to any arbitration proceedings under collective bargaining agreements or otherwise or, to the best of the Company's knowledge, any governmental investigations or inquiries; and, to the best of the Company's knowledge, there is no basis for any of the foregoing. The Company is not subject to any judgment, order or decree of any court or other governmental agency. The Company has not received any opinion or memorandum or legal advice from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage which may be material to its business. G. Governmental Consent, etc. Except for filings under Regulation D under the Securities Act, no permit, consent, approval or authorization of, or declaration to or filing with, any governmental authority or other Person is required in connection with the execution, delivery and performance by the Company of this Agreement, any other Transaction Documents, or the consummation by the Company of any other transactions contemplated hereby or thereby. H. Compliance with Laws. The Company has not violated any law or any governmental regulation or requirement which violation could have a material adverse effect upon the financial condition, operating results, assets, operations or business prospects of the Company, and the Company has not received notice of any such violation. The Company is not subject to any clean up liability, and the Company has no reason to believe it may become subject to any clean up liability, under any federal, state or local environmental law, rule or regulation. I. Disclosure. Neither this Agreement nor any of the schedules, attachments, written statements, documents, certificates or other items prepared or supplied to the Purchaser by or on behalf of the Company with respect to the transactions contemplated hereby contain any untrue statement of a material fact or omit a material fact necessary to make each statement contained herein or therein not misleading. There is no fact which the Company has not disclosed to the Purchaser in writing making specific reference hereto and of which any of its officers, directors or executive employees is aware and which has had or might reasonably be anticipated to have a material adverse effect upon the 7 existing or expected financial condition, operating results, assets, customer or supplier relations, employee relations or business prospects of the Company. J. Recent Occurrences. Since the Financial Statement Date, the Company has conducted its business only in the ordinary and usual course and there has not occurred any material adverse change in the financial condition, operating results, assets, or business prospects of the Company. Since the Financial Statement Date, the Company has not (i) suffered any material damage, destruction or loss, whether or not covered by insurance; (ii) waived any valuable right or debt; (iii) entered into or amended or suffered the termination or expiration of or defaulted on any material contract or agreement; (iv) incurred any indebtedness; (v) suffered any resignation, termination or other cessation of employment of any officer or key employee; (vi) disclosed any material confidential and proprietary information; (vii) satisfied or waived any Lien or obligation, except in the ordinary course of business which in the aggregate are not material; (viii) modified any compensation arrangement; (ix) sold, assigned, transferred or licensed any patent, trademark, copyright, trade secret or other intellectual property right, or any interest therein; (x) received notice that any significant customer or supplier has (or intends to) adversely modify its business relationship with the Company or cancel any order; (xi) suffered any event or occurrence that could cause any material adverse change in the financial condition, operating results, assets, operations or business prospects of the Company; or (xii) entered into any arrangement or commitment to do any of the foregoing. K. Registration Rights. Except as set forth on the Schedule of Exceptions, the Company is not currently under any obligation to register under the Securities Act any of its presently outstanding securities or any of its securities which may hereafter be issued. The Company is not restricted pursuant to the terms of any existing registration rights from granting additional registration rights as contemplated by the Registration Rights Agreement and none of the registration rights disclosed on the Schedule of Exceptions provides the holders thereof priority over the Holders (as defined in the Registration Rights Agreement) in the event of a "claw back" by an underwriter or manager of an underwriter public offering. L. Securities Laws. The sale and delivery of the Common Stock issued to the Purchaser are exempt from the requirement of registration under the Securities Act and applicable state securities laws. Except as set forth on the Schedule of Exceptions, the Securities Act and state securities laws were not violated by the original issuance of the Company's capital stock to its existing shareholders and will not be violated by the execution of this Agreement or the consummation of the transactions contemplated hereby; provided that, the representations and warranties made in this Section 5.L with respect to the Purchaser assume that the representations and warranties of the Purchaser contained in Section 7.C are true and correct. M. Commission Documents. The Company has delivered or made available to the Purchaser each registration statement, report, proxy statement or information statement (as defined in Regulation 14C under the Exchange Act) prepared by it since January 1, 1998, which reports constitute all of the documents required to be filed by the Company with the Commission since such date, each in the form filed with the Commission (collectively, the "Company Reports"). As of their respective dates, the Company Reports (a) complied as to form in all material respects with the applicable requirements of the Securities Act or the Securities Exchange Act, as the case may be, and the rules and regulations thereunder; and (b) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Company has timely filed with the Commission all reports required to be filed under Section 13, 14 and 15(d) of the Exchange Act. Each of the balance sheets of the Company included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly present in all material respects the financial position of 8 the Company and its Subsidiaries as of its date (subject, in the case of unaudited statements, to normal year-end audit adjustments which would not be material in amount or effect), and each of the statements of operations, changes in stockholders' equity and cash flows of the Company included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly present in all material respects the results of operations, changes in stockholders' equity or cash flows, as the case may be, of the Company and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to normal year-end audit adjustments which would not be material in amount or effect). The financial statements of the Company, including the notes thereto, included in or incorporated by reference into the Company Reports comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, and have been prepared in accordance with GAAP. Since January 1, 1998, there has been no material change in the Company's accounting methods or principles except as described in the notes to such Company financial statements. N. Transactions with Affiliates. Except as set forth in the Company Reports and except with respect to the transactions contemplated hereby, there has been no transaction, agreement, arrangement or understanding, or any related series thereof, between the Company and/or the Subsidiaries and the Company"s Affiliates (other than wholly-owned Subsidiaries). O. No Vote Required; State Takeover Statutes; Poison Pill. (i) No vote of holders of the Company's capital stock is necessary to execute and deliver this Agreement, or to consummate the transactions contemplated by this Agreement. (ii) No state takeover statute or similar statute or regulation of the State of Florida (and, to the knowledge of the Company after due inquiry, of any other jurisdiction) applies or purports to apply to this Agreement or any of the transactions contemplated hereby. No provision of the Articles of Incorporation, By-laws or other governing instruments of the Company or any of the Subsidiaries or any applicable law would, directly or indirectly, restrict or impair the ability of the Purchaser to vote, or otherwise to exercise the rights of a shareholder with respect to, shares of the Company that may be beneficially owned by the Purchaser. 9 (iii) The Company is not subject to any Rights Plan or Rights Agreement or any other document commonly referred to as a "poison pill" which would be triggered by or as a result of this transaction. Section 6. Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below: "Affiliate" of any particular Person means any other Person controlling, controlled by, or under common control with such particular Person, including, but not limited to, any current or former employee, officer or director or entity in which any of them has any direct or indirect interest. "Affiliated Group" means an affiliated group as defined in Section 1504 of the IRC (or any analogous combined, consolidated, or unitary group defined under state, local, or foreign income Tax law). "Assignment Agreement" has the meaning set forth in Section 2.A. "Financial Statement Date" means June 30, 2001, provided that the draft financial statements relating to that date and for the quarter and fiscal year ended on such date which were presented to the Purchaser for review are certified by the Company's independent auditors, and if not so certified, then "Financial Statement Date" means June 30, 2000. "Commission" means the Securities and Exchange Commission and includes any governmental body or agency succeeding to the functions thereof. "Common Stock" means the Company's Common Stock, par value $.001. "Company Reports" has the meaning set forth in Section 5.M. "GAAP" means generally accepted accounting principles consistently applied. "IRC" means the Internal Revenue Code of 1986, as amended, and any reference to any particular IRC section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified. "Lien" means any mortgage, pledge, security interest, encumbrance, lien, or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Company or any of its Affiliates, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the Company under a lease which is not in the nature of a conditional sale or title retention agreement, or any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business). 10 "Officer's Certificate" means a certificate signed by the Company's President, stating that: (i) the officer signing such certificate has made or has caused to be made such investigations as are necessary in order to permit such officer to verify the accuracy of the information set forth in such certificate; and (ii) such certificate does not misstate any material fact and does not omit to state any fact necessary to make the certificate not misleading. "Option" has the meaning set forth in Section 2.A. "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other entity, and a governmental entity or any department, agency, or political subdivision thereof. "Placement Warrants" has the meaning set forth in Section 7.A. "Restricted Securities" means: (i) the Common Stock issued hereunder; (ii) the Warrants and the Placement Warrants and the shares of Common Stock issuable upon conversion thereof; and (iii) any securities issued with respect to the securities referred to in clause (i) or (ii) above by way of a stock dividend or stock split, or in connection with combination of shares, recapitalization, merger, consolidation, or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have: (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them; (b) become eligible for sale pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act; or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 7.C have been delivered by the Company in accordance with Section 7.C. Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing a Securities Act legend of the character set forth in Section 7.C. "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force. "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association, or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a 11 limited liability company, partnership, association, or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity. "Tax" or "Taxes" means any: (i) federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties, or additions to tax or additional amounts in respect of the foregoing; (ii) liability of the Company for the payment of any amounts of the type described in clause (i) arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return relating thereto); and (iii) liability of the Company for the payment of any amounts of the type described in clause (i) as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other person (including, but not limited to, as a successor or transferee). "Tax Returns" means returns, declarations, reports, claims for refund, information returns, or other documents (including any related or supporting schedules, statements, or information) filed or required to be filed in connection with the determination, assessment, or collection of Taxes of any party or the administration of any laws, regulations, or administrative requirements relating to any Taxes. "Transaction Documents" means this Agreement, the Registration Rights Agreement, the Assignment Agreement, the Escrow Agreement and all other agreements contemplated hereby to which the Company is, or may be from time to time, a party, or any schedule, certificate, exhibit or instrument furnished or to be furnished by the Company hereunder or thereunder. "Warrants" shall have the meaning set forth in Section 1.A. Section 7. Miscellaneous. A. Expenses. As a further inducement for the Purchaser to consummate the transactions contemplated hereby, the Company agrees to pay Stanford Group Company a fee at Closing of $97,500 in cash and to issue Stanford Group Company warrants to purchase 50,000 shares of Common Stock at an exercise price of $1.50 per share and warrants to purchase 37,500 shares of Common Stock at an exercise price of $2.125 per share (the "Placement Warrants"). In addition, the Company shall reimburse Purchaser for its reasonable fees and expenses (including its reasonable fees and expenses of its counsel and other advisors) which Purchaser has incurred in connection with the Closing up to a maximum of $10,000. In addition, the Company agrees to pay, and hold Purchaser harmless against liability for the payment of: (i) its reasonable fees and expenses (including its reasonable fees and expenses of its counsel and other advisors) arising in connection with the interpretation, modification, monitoring and enforcement of 12 its rights under the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby (including, but not limited to, any subsequent or proposed acquisitions, sales, mergers, or re-capitalizations by the Company); (ii) the reasonable fees and expenses incurred with respect to any amendments or waivers (whether or not the same become effective) under or in respect of the Transaction Documents; (iii) reasonable travel expenses and other reasonable out-of-pocket fees and expenses as have been or may be incurred by Purchaser, its directors, officers and employees in connection with the transactions contemplated hereby or in attending Board or other of the Company's meetings; and (iv) stamp and other Taxes which may be payable in respect of the execution and delivery of this Agreement or the issuance, delivery, or acquisition of any shares of Common Stock purchased hereunder. B. Remedies. The Purchaser shall have all rights and remedies set forth in this Agreement and all rights and remedies which such holder has been granted at any time under any other agreement or contract and all of the rights which such holder has under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement, and to exercise all other rights granted by law. C. Purchaser's Investment Representations. The Purchaser hereby represents that such Purchaser is acquiring the Restricted Securities purchased hereunder for its own account with the present intention of holding such securities for purposes of investment, and that it has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws; provided that nothing contained herein shall prevent such Purchaser and subsequent holders of Restricted Securities from transferring such securities in compliance with the provisions of Section 4 hereof and any agreements to which such Persons may be parties. Each certificate for Restricted Securities shall be imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON SEPTEMBER 7, 2001, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK PURCHASE AGREEMENT, DATED AS OF SEPTEMBER 7, 2001, BETWEEN THE ISSUER (THE "COMPANY") AND A CERTAIN INVESTOR, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE." 13 If the holder of the Restricted Securities delivers to the Company an opinion of qualified securities counsel reasonably acceptable to the Company that no subsequent transfer of such Restricted Securities shall require registration under the Securities Act, however, the Company shall promptly upon such contemplated transfer deliver new certificates for such Restricted Securities which do not bear the Securities Act legend set forth in this Section 7.C. D. Consent to Amendments. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if and when the Company has obtained the written consent of Purchaser. No other course of dealing between the Company and Purchaser or any delay in exercising any rights hereunder shall operate as a waiver of any rights of Purchaser. E. Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement for the applicable statute of limitations, regardless of any investigation made by the Purchaser or on its behalf. F. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, and whether or not any express assignment has been made, the provisions of this Agreement which are for the Purchaser's benefit as the Purchaser or holder of Common Stock are also for the benefit of, and enforceable by, any subsequent holder of such Common Stock. G. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement is held to be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. H. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. 14 I. Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Without limiting the generality of the immediately preceding sentence, no amendment or other modification to any agreement, document, or instrument that requires the consent of any Person pursuant to the terms of this Agreement or any other agreement will be given effect hereunder unless such Person has consented in writing to such amendment or modification. J. Governing Law. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Florida applicable to contracts executed and to be wholly performed within such State without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any other jurisdiction other than the State of Florida. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDINGS OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTES OR CLAIMS, WHETHER ANY SUCH PROCEEDINGS, DISPUTES OR CLAIMS RELATE TO OR ARISE IN CONTRACT, TORT OR OTHERWISE, WHETHER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. This Agreement shall be subject to the exclusive jurisdiction of the courts of the State of Florida located in Miami-Dade County, Florida or the United States District Court for the Southern District of Florida. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of Florida by virtue of a failure to perform an act required to be performed in the State of Florida and irrevocably and expressly agree to submit to the jurisdiction of such courts in the State of Florida for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in Miami-Dade County, Florida, and further irrevocably waive any claim that any suit, action or proceeding brought in Miami-Dade County, Florida has been brought in an inconvenient forum. K. Notices. All notices, demands, or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient or sent to the recipient by a nationally-recognized express courier 15 service (charges prepaid) for next business day delivery. Such notices, demands, and other communications shall be sent to the Purchaser and to the Company at the address indicated below: If to the Company: International Cosmetics Marketing Co. 6501 N.W. Park of Commerce Blvd., Suite 205 Boca Raton, FL 33487 Attn: Sam A. Lazar with a copy to: Atlas Pearlman, P.A. 350 E. Las Olas Boulevard, Suite 1700 Fort Lauderdale, FL 33301 Attn: Roxanne K. Beilly, Esq. If to the Purchaser: Stanford Venture Capital Holdings, Inc. 5050 Westheimer Road Houston, TX 77056 Attn: Mauricio Alvarado, Esq. with a copy to: Akerman Senterfitt 1 S.E. 3rd Avenue Suite 2700 Miami, Florida 33131 Attention: Carl D. Roston, Esq. or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. L. Rights. This Agreement shall not confer any rights or remedies upon any Person, other than the parties hereto and their respective heirs, successors, and permitted assigns. M. Amendments. Any reference contained herein to any agreement, instrument, or other document shall include any amendments or modifications made to such agreement, instrument, or other document made from time to time in accordance with the terms thereof, and if applicable, hereof. [THIS SPACE INTENTIONALLY LEFT BLANK] 16 IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the date first written above. INTERNATIONAL COSMETICS MARKETING CO. D/B/A BEVERLY SASSOON & CO. By: /s/ Sam A. Lazar --------------------------------------------- Name: Sam A. Lazar Title: President STANFORD VENTURE CAPITAL HOLDINGS, INC. By: /s/ James Davis --------------------------------------------- Name: James Davis Title: Authorized Person EX-10.2 5 ex10-2.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of September 7, 2001 between INTERNATIONAL COSMETICS MARKETING CO. and THE HOLDERS LISTED ON SCHEDULE I ---------------------
TABLE OF CONTENTS Page Section 1. Definitions............................................................................1 Section 2. Demand Registration....................................................................3 a. Request for Registration by Holders...........................................3 b. Filing and Effectiveness......................................................3 c. Priority on Demand Registration...............................................4 d. Postponement of Demand Registration...........................................4 Section 3. Piggyback Registration.................................................................5 a. Right to Piggyback............................................................5 b. Priority on Piggyback Registrations...........................................5 Section 4. Registration Procedures................................................................6 Section 5. Registration Expenses.................................................................11 Section 6. Indemnification.......................................................................11 a. Indemnification by the Company...............................................12 b. Indemnification by Holders...................................................12 c. Conduct of Indemnification Proceedings.......................................12 d. Contribution.................................................................13 Section 7. Underwritten Registrations............................................................14 Section 8. Covenants of the Company..............................................................14 Section 9. Miscellaneous.........................................................................15 a. Remedies.....................................................................15 b. Amendments and Waivers.......................................................15 c. Notices......................................................................16 d. Successors and Assigns.......................................................16 e. Counterparts.................................................................17 f. Titles and Subtitles.........................................................17 g. Governing Law................................................................17 h. Separability.................................................................17 i. Entire Agreement.............................................................17
-i- Execution Copy REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of September 7, 2001 by and between INTERNATIONAL COSMETICS MARKETING CO., a Florida corporation (together with its successors and assigns, the "Company") and the Persons named on Schedule 1 as Holders, and each other person who becomes a Holder (as defined below) hereunder. RECITALS -------- WHEREAS, the Company and Stanford Venture Capital Holdings, Inc. ("Stanford") have entered into a Stock Purchase Agreement dated as of September 7, 2001 (the "Stock Purchase Agreement"); and WHEREAS, to induce Stanford to execute and deliver the Stock Purchase Agreement, the Company has agreed to provide to the Holders certain registration rights under the Securities Act (as defined below). NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein and in the Stock Purchase Agreement, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Definitions. For purposes of this Agreement, the following capitalized terms have the following meanings: "Articles of Incorporation" shall mean the Articles of Incorporation of the Company, as amended to date. "Assignment Agreement" shall mean the Assignment and Escrow Agreement, dated as of September 7, 2001 between Paul Lambert, Atlas Pearlman, P.A. and Stanford. "Common Stock" shall mean the Common Stock, par value $.001 per share, of the Company and any securities into which such Common Stock may be or has been converted or exchanged in any merger, consolidation or reclassification. "Holders" shall mean the Persons listed on Schedule 1 and each of such Person's permitted transferees pursuant to Section 9(d) who agree to be bound by the provisions of this Agreement in accordance with said section. 1 "Option" shall mean that certain Option to purchase Common Stock, dated as of August 19, 1999, as assigned pursuant to the Assignment Agreement. "Option Shares" shall mean the shares of Common Stock issuable upon exercise of the Option and any securities into which such Common Stock may be or has been converted or exchanged in any merger, consolidation or reclassification. "Person" shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus. "Registrable Securities" shall mean all Shares, Warrant Shares and Option Shares, excluding (i) any such shares that have been disposed of by a Holder pursuant to a Registration Statement relating to the sale thereof that has become effective under the Securities Act or pursuant to Rule 144 or Rule 145 under the Securities Act and (ii) any such shares that may be sold under Rule 144 under the Securities Act by a Holder who beneficially owns less than 1% of the issued and outstanding shares of Common Stock of the Company. Registrable Securities shall also include any shares of the Common Stock or other securities (or shares of Common Stock underlying such other securities) that may be received by the Holders (x) as a result of a stock dividend on or stock split of Registrable Securities, (y) in exchange for or as a replacement of Registrable Securities, or (z) on account of Registrable Securities in a recapitalization of, merger, reorganization or similar transaction involving the Company. "Registration Statement" shall mean any registration statement of the Company under the Securities Act (including Shelf Registrations) that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the related Prospectus, any preliminary Prospectus, all amendments and supplements to such registration statement (including post-effective amendments), all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "SEC" shall mean the Securities and Exchange Commission or any successor agency. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect from time to time. 2 "Shares" shall mean the shares of Common Stock acquired pursuant to the Stock Purchase Agreement, as well as any securities into which such Common Stock may be or has been converted or exchanged in any merger, consolidation or reclassification. "Shelf Registration" shall mean any registration statement filed with the SEC in accordance with the Securities Act pursuant to which offers may be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act. "Stock Purchase Agreement" shall have the meaning set forth in the recitals hereto. "Underwritten Offering" shall mean a distribution, registered pursuant to the Securities Act, in which securities of the Company are sold to the public through one or more underwriters. "Warrants" shall mean the Warrants and the Placement Warrants (as each term is defined in the Stock Purchase Agreement) representing an aggregate of 925,000 Warrants to purchase Common Stock issued by the Company to each of the Holders listed on Schedule 1. "Warrant Shares" shall have the meaning set forth in the Warrants. Section 2. Demand Registration. a. Request for Registration by Holders. Subject to the conditions set forth in this Agreement, at any time, one or more Holders will have the right, by written notice delivered to the Company (a "Demand Notice"), to require the Company to register Registrable Securities under and in accordance with the provisions of the Securities Act (a "Demand Registration"); provided that: (i) the Holders may not make more than one (1) Demand Registration under this Agreement. The Demand Notice shall set forth (A) the name of each Holder signing such Demand Notice, (B) the number of Registrable Securities held by each such Holder, and, if different, the number of Registrable Securities such Holder has elected to have registered, and (C) the intended methods of disposition of the Registrable Securities. A Demand Registration shall not be deemed to have been effected (i) unless a Registration Statement with respect thereto has become effective, (ii) if after such Registration Statement has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason not attributable to the selling Holders and such interference is not thereafter eliminated within 10 days, or (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived, other than by reason of a failure on the part of the selling Holders. If the Company shall have complied with its obligations under this Agreement, a right to demand a registration pursuant to this Section 2 shall be deemed to have been satisfied upon the date as of which all of the Registrable Securities set forth in the Demand Notice shall have been disposed of pursuant to an effective Registration Statement. b. Filing and Effectiveness. 3 (i) The Company will file a Registration Statement relating to any Demand Registration as promptly as practicable (but in any event within 75 days) following the date on which the Demand Notice is given and will use its reasonable best efforts to cause the same to be declared effective by the SEC as soon as practicable thereafter, but in any event within 120 days thereafter (the "Effectiveness Date"). A registration pursuant to this Section 2 shall be on such appropriate registration form of the SEC as shall (i) be selected by the Company and be reasonably acceptable to the Holders, and (ii) permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the Demand Notice. (ii) The Company agrees to use its best efforts to comply with all necessary provisions of the federal securities laws in order to keep each Registration Statement relating to a Demand Registration continuously effective until all Registrable Securities covered by such Registration Statement have been sold pursuant to such Registration Statement. If such Registration Statement fails to remain effective for such period of time for any reason, then the Exercise Price (as defined in the Warrants and the Option, respectively) of each of the Warrants and the Option shall automatically be reduced by fifty percent (50%), effective immediately. Within ten (10) business days after receipt of such Demand Notice, the Company will serve written notice thereof (the "Notice") to all other Holders and will, subject to the provisions of Section 2(c), include in any registration required under this Section 2 all Registrable Securities with respect to which the Company receives written requests for inclusion therein within fifteen (15) business days after receipt of the Notice by the applicable Holder. The Holder will be permitted to withdraw in good faith all or part of the Registrable Securities from a Demand Registration at any time prior to the effective date of such Demand Registration, in which event the Company will promptly amend or, if applicable, withdraw the related Registration Statement. c. Priority on Demand Registration. If the managing underwriter or underwriters of an Underwritten Offering to which a Demand Registration relates advises the Holders that the total amount of Registrable Securities that such Holders intend to include in such Demand Registration is in the aggregate such as to materially and adversely affect the success of such offering, then the number of Registrable Securities to be included in such Demand Registration will, if necessary, be reduced and there will be included in such underwritten offering the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without materially and adversely affecting the success of such Underwritten Offering. The Registrable Securities of the Holder or Holders initiating the Demand Registration shall receive priority in such Underwritten Offering to the full extent of the Registrable Securities such Holder or Holders desire to sell and the remaining allocation available for sale, if any, shall be allocated pro rata among the other Holders on the basis of the amount of Registrable Securities requested to be included therein by each such Holder. 4 d. Postponement of Demand Registration. Notwithstanding anything to the contrary in any other provision of this Agreement, the Company will be entitled to postpone the filing period of any Demand Registration for a reasonable period of time not in excess of 60 calendar days if the Board of Directors of the Company determines, in the good faith exercise of its business judgment, and has delivered to the Holders written certification to the effect, that such registration and offering could materially interfere with, or require premature disclosure of, a bona fide financing transaction of the Company, including without limitation a primary offering of securities, or any other material acquisition or reorganization of the Company. If the Company postpones the filing of a Registration Statement, it will promptly notify the Holders in writing when the events or circumstances permitting such postponement have ended. Section 3. Piggyback Registration. a. Right to Piggyback. If at any time the Company proposes to file a Registration Statement, whether or not for sale for the Company's own account, on a form and in a manner that would also permit registration of Registrable Securities (other than in connection with a registration statement on Forms S-4 or S-8 or any similar or successor form) the Company shall give to Holders holding Registrable Securities, written notice of such proposed filing promptly, but in any case at least twenty (20) days before the anticipated filing. The notice referred to in the preceding sentence shall offer Holders the opportunity to register such amount of Registrable Securities as each Holder may request (a "Piggyback Registration"). Subject to Section 3(b), the Company will include in each such Piggyback Registration (and any related qualification under state blue sky laws and other compliance filings, and in any underwriting involved therein) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within twenty (20) days after the written notice from the Company is given. The Holders will be permitted to withdraw all or part of the Registrable Securities from a Piggyback Registration at any time prior to the effective date of such Piggyback Registration. Notwithstanding the foregoing, the Company will not be obligated to effect any registration of Registrable Securities under this Section 3 as a result of the registration of any of its securities solely in connection with mergers, acquisitions, exchange offers, dividend reinvestment and share purchase plans offered solely to current holders of the Common Stock, rights offerings or option or other employee benefit plans. The Company hereby agrees to file such a Registration Statement within ninety (90) days of the date hereof so that the Holders shall be able to participate pursuant to this Section 3. b. Priority on Piggyback Registrations. The Company will cause the managing underwriter or underwriters of a proposed Underwritten Offering to permit Holders holding Registrable Securities requested to be included in the registration for such offering to include therein all such Registrable Securities requested to be so included (such securities, together with any other shares of the same class requested to be included in such registration by any other Person pursuant 5 to similar registration rights, the "Piggyback Shares") on the same terms and conditions as any other securities of the Company, whether or not for the Company's own account, included therein (other than the indemnification by the Holders, which will be limited as set forth in Section 6 hereof and that the Holders shall give customary representations and warranties). The Company shall cooperate with any such Holder of Registrable Securities in order to limit any representations and warranties to, or agreements with, the Company or the underwriters to be made by such Holder only to those representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities and such Holder's intended method of distribution and any other representation required by law. Notwithstanding the foregoing, if the managing underwriter or underwriters of such Underwritten Offering advises the Holders to the effect that the total amount of securities that such Holders and the Company propose to include in such Underwritten Offering is such as to materially and adversely affect the success of such offering, then the Company will include in such registration: (x) in the case of a registration in connection with a sale of securities for the Company's own account, (i) first, 100% of the securities that the Company proposes to sell for its own account, and (ii) second, to the extent that the number of securities in clause (i) above is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of Piggyback Shares of each Holder and the number of Piggyback Shares requested to be included in such offering by any other Persons pursuant to similar existing registration rights, determined pro rata on the basis of the number of shares of the class being sold owned by each Holder requesting registration and such other Persons requesting registration, collectively; and (y) in the case of a registration in connection with a sale of securities on account of any Person other than the Company (the "Initiating Party"), (i) first, 100% of the securities, if any, that the Initiating Party proposes to sell, (ii) second, to the extent that the number of securities in clause (i) above is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of Piggyback Shares of each Holder and the number of Piggyback Shares requested to be included in such offering by any other Persons pursuant to similar existing registration rights, determined pro rata on the basis of the number of shares of the class being sold owned by each Holder requesting registration and such other Persons requesting registration, collectively, and (iii) third, to the extent that the number of securities in clauses (i) and (ii) above is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect 6 referred to above, the securities included by the Company in the offering. Section 4. Registration Procedures. In connection with the Company's registration obligations pursuant to Sections 2 and 3, the Company will effect such registrations to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company will as expeditiously as possible, and in each case to the extent applicable: a. Prepare and file with the SEC a Registration Statement on any appropriate form under the Securities Act available for the sale of the Registrable Securities by the holders thereof in accordance with the intended method or methods of distribution thereof, and cause such Registration Statement to become effective and remain effective as provided herein; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference) the Company will furnish to the Holders holding Registrable Securities covered by such Registration Statement, not more than one counsel chosen by Holders holding a majority of the Registrable Securities being registered ("Special Counsel") and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the review of such Holders, such Special Counsel and such underwriters, and the Company will not file any such document to which the Holders holding a majority of the Registrable Securities covered by such Registration Statement, the Special Counsel or the managing underwriter, if any, shall reasonably object. b. Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable periods specified herein; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented. Subject to Rule 415 under the Securities Act, if the Registration Statement relates to a Shelf Registration, the Company shall amend the Registration Statement or supplement or amend the Prospectus whenever required so that it will remain current and in compliance with the requirements of the Securities Act for three (3) years after its effective date. c. Promptly notify the selling Holders and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional 7 information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Company contained in any agreement contemplated by Section 4(n) (including any underwriting agreement) cease to be true and correct in any material respect, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (vi) of the occurrence of any event or development that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in a Registration Statement, Prospectus or any such document so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. d. Use its best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment. e. If requested by the managing underwriters, if any, or Holders holding a majority of the Registrable Securities being registered, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and such Holders agree should be included therein as may be required by applicable law and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment; provided, however, that the Company will not be required to take any actions under this Section 4(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law; and provided further that to the extent that any such information relates only to a particular Holder, the consent of the Holders of a majority of the Registrable Securities being registered shall not be required. f. Furnish to each selling Holder and each managing underwriter, if any, without charge, at least one conformed copy of the Registration Statement and any pre-effective or post- effective amendment thereto (but excluding schedules, all documents incorporated or deemed incorporated therein by reference and all exhibits, unless requested in writing by such holder or underwriter) and such other documents as any such selling Holders may reasonably request in order to facilitate the disposition of Registrable Securities owned by such selling Holder. 8 g. Deliver to each selling Holder and the underwriters, if any, without charge as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such persons may reasonably request; and the Company hereby consents to the use of such Prospectus or each amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto. h. Prior to any public offering of Registrable Securities, to register or qualify or cooperate with the selling Holders, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing; use all reasonable efforts to keep such registration or qualification (or exemption therefrom) effective during the period the applicable Registration Statement is required to be kept effective and do any and all other acts or things necessary or advisable to enable the disposition in each such jurisdiction of the Registrable Securities covered by the applicable Registration Statement; provided, however, that the Company will not be required to (i) qualify to do business in any jurisdiction where it is not then so qualified, or (ii) take any action that would subject it to taxation or service of process in any such jurisdiction where it is not then so subject, except, in each case, as required pursuant to registrations under blue sky laws contemplated by this Agreement. i. Cooperate with the selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and enable such Registrable Securities to be in such denominations and registered in such names as the Holders or managing underwriters, if any, shall request at least two business days prior to any sale of Registrable Securities to the underwriters or third parties. j. Use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States except as may be required solely as a consequence of the nature of any selling Holder's business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities. k. Upon the occurrence of any event contemplated by Section 4(c)(vi) or 4(c)(vii), prepare a supplement or post-effective amendment to each Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Upon the 9 occurrence of any other event enumerated in Section 4(c) (other than 4(c)(iii)), use its best efforts to remedy such problems as soon as possible. l. Use its best efforts to cause all Registrable Securities covered by such Registration Statement to be (i) listed on each securities exchange, if any, on which securities issued by the Company of the same class are then listed, or (ii) authorized to be quoted on the National Association of Securities Dealers Automated Quotation System ("Nasdaq"), if the securities qualify to be so quoted. m. As needed, (i) engage an appropriate transfer agent and provide the transfer agent with printed certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Securities. n. Enter into such customary agreements (including, in the event of an Underwritten Offering, an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other commercially reasonable and customary actions in connection therewith (including those reasonably requested by the Holders holding a majority of the Registrable Securities being sold or, in the event of an Underwritten Offering, those reasonably requested by the managing underwriters) in order to facilitate the disposition of such Registrable Securities and in such connection, but only where an underwriting agreement is entered into in connection with an underwritten registration, (i) make such representations and warranties to the underwriters with respect to the businesses of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference therein, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested; (ii) obtain opinions of counsel to the Company and updates thereof, which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, addressed to each of the underwriters covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such underwriters; (iii) obtain "comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data is, or is required to be, included in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with underwritten offerings; (iv) cause the Company's management to be made available for, and assist in, the marketing and disposition of such Registrable Securities in the manner and to the extent reasonably requested by the underwriters including, without limitation, participation by management in customary road shows, investor conferences and other similar presentations and (v) deliver such documents and certificates as may be reasonably requested by the managing underwriters, if any, to evidence the continued validity of the representations and warranties of the Company and its subsidiaries made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting 10 agreement entered into by the Company. The foregoing actions will be taken in connection with each closing under such underwriting agreement as and to the extent required thereunder. o. Make available for reasonable inspection during normal business hours by a representative of the Holders holding Registrable Securities being sold, any underwriter participating in any disposition of Registrable Securities, and any attorney or accountant retained by such selling Holders or underwriter, all financial and other records, pertinent corporate and legal documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries and its independent public accountants who have certified the audited financial statements included in such Registration Statement to be available to discuss the business affairs of the Company and to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any records, information or documents that are designated by the Company in writing as confidential at the time of delivery of such records, information or documents will be kept confidential by such persons unless (i) such records, information or documents are in the public domain or otherwise publicly available, (ii) disclosure of such records, information or documents is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, or (iii) disclosure of such records, information or documents, in the reasonable opinion of counsel to such person, is otherwise required by law (including, without limitation, pursuant to the requirements of the Securities Act). p. Comply with all applicable rules and regulations of the SEC and make generally available to Holders copies of all periodic reports, proxy statements and other information referred to in Section 8(a) and earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 calendar days after the end of any 12-month period (or 90 calendar days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering, or (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company, after the effective date of a Registration Statement, which statements shall cover such 12-month period. q. Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities covered by each such Registration Statement. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing, and the Company may exclude from such registration the Registrable Securities of any seller who unreasonably fails to furnish such information within a reasonable time after receiving such request. 11 Section 5. Registration Expenses. Subject to the second to last sentence of this Section 5, all fees and expenses incident to the performance of or compliance with this Agreement by the Company will be borne by the Company whether or not any of the Registration Statements become effective. Such fees and expenses will include, without limitation, (i) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing a reasonable number of Prospectuses if the printing of such Prospectuses is requested by the Holders holding a majority of the Registrable Securities included in any Registration Statement), (ii) messenger, telephone and delivery expenses incurred by the Company, (iii) fees and disbursements of counsel for the Company incurred by the Company, (iv) all registration and filing fees, (v) fees and disbursements of all independent certified public accountants referred to in Section 4(n)(iii) and 4(o) (including the expenses of any special audit and "comfort" letter required by or incident to such performance) incurred by the Company and (vi) the reasonable fees and disbursements of one firm of counsel for the Holders of Registrable Securities incurred in connection with a Piggyback Registration (selected by the Holders of a majority of Registrable Securities included in any such Registration Statement). In addition, the Company will pay internal expenses (including without limitation all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange on which securities of the same class issued by the Company are then listed and the fees and expenses of any person, including special experts, retained by the Company. In no event, however, will the Company be responsible for any underwriting discounts or selling commissions with respect to any sale of Registrable Securities pursuant to this Agreement or the legal fees and expenses of the Holders incurred in connection with a Demand Registration, and the Holders shall be responsible on a pro rata basis for any taxes of any kind (including, without limitation, transfer taxes) with respect to any disposition, sale or transfer of Registrable Securities. Any failure by the Company to pay any registration expenses as required by this Section 5 shall not relieve the Company of its obligations under this Agreement. Section 6. Indemnification. a. Indemnification by the Company. The Company will indemnify and hold harmless, to the fullest extent permitted by law, each Holder holding Registrable Securities registered pursuant to this Agreement, the officers, directors and agents and employees of each of them, each Person who controls such a Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of any such controlling person, from and against all losses, claims, damages, liabilities, costs (including without limitation the costs of investigation and attorneys' fees) and expenses (collectively, "Losses"), arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of Prospectus (including any preliminary Prospectus) or in any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Securities Act, 12 the Exchange Act or any applicable state securities law, except insofar and then only to the extent that the same are based upon information furnished in writing to the Company by such Holder specifically for use in connection with such Registration Statement. b. Indemnification by Holders. In connection with any Registration Statement in which a Holder is participating, such Holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any Registration Statement, Prospectus or preliminary Prospectus and will indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling persons, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or arising out of or based upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for use in such Registration Statement, Prospectus or preliminary Prospectus and was relied upon by the Company in the preparation of such Registration Statement, Prospectus or preliminary Prospectus. In no event will the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. c. Conduct of Indemnification Proceedings. If any person shall become entitled to indemnity hereunder (an "indemnified party"), such indemnified party shall give prompt written notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any action or proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the failure to so notify the indemnifying party will not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been prejudiced materially by such failure. All reasonable fees and expenses (including any reasonable fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) will be paid to the indemnified party (provided appropriate documentation for such expenses is also submitted with such notice), as incurred, within five calendar days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). The indemnifying party will not consent to entry of any judgment or enter into any settlement or otherwise seek to terminate any action or proceeding in which any indemnified party is or could be a party and as to which indemnification or contribution could be sought by such indemnified party under this Section 6, unless such judgment, settlement or other termination includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder. 13 d. Contribution. If the indemnification provided for in this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b) in respect of any Losses or is insufficient to hold such indemnified party harmless, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, will, severally but not jointly, contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or indemnifying parties, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party or indemnifying parties, on the one hand, and such indemnified party, on the other hand, will be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or related to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses will be deemed to include any legal or other fees or expenses incurred by such party in connection with any action or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6(d), an indemnifying party that is a selling Holder will not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such indemnifying party and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The indemnity, contribution and expense reimbursement obligations of the Company hereunder will be in addition to any liability the Company may otherwise have hereunder or otherwise. The provisions of this Section 6 will survive, notwithstanding any permitted transfer of the Registrable Securities by any Holder thereof or any termination of this Agreement. Section 7. Underwritten Registrations. The Company will have the exclusive right in connection with any Piggyback Registration that is an Underwritten Offering to select an investment banker or investment bankers and a manager or managers to manage the offering. In connection with any Demand Registration that is an Underwritten Offer, the Holders holding a majority of the Registrable Securities included in the Demand Notice will have the exclusive right to select such investment banker(s) or manager(s), provided that such investment banker(s) is reasonably acceptable to the Company. The Company and the Holders agree that, in connection with any Underwritten Offering hereunder, they shall each undertake to offer customary indemnification, representations and warranties to the participating underwriters and to agree to any restrictions 14 required by the underwriters on the sale of Common Stock or other securities by such party after the completion of the underwritten offering. Section 8. Covenants of the Company. The Company hereby agrees and covenants as follows: a. The Company shall file as and when applicable, on a timely basis, all reports required to be filed by it under the Exchange Act. If the Company is not required to file reports pursuant to the Exchange Act, upon the request of any Holder of Registrable Securities, the Company shall make publicly available the information specified in subparagraph (c)(2) of Rule 144 of the Securities Act, and take such further action as may be reasonably required from time to time and as may be within the reasonable control of the Company, to enable the Holders to transfer Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act or any similar rule or regulation hereafter adopted by the SEC. b. The Company shall not, and shall not permit its majority owned subsidiaries to, effect any public sale or distribution of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, during the five business days prior to, and during the 90-day period beginning on, the commencement of a public distribution of the Registrable Securities pursuant to any registration statement prepared pursuant to this Agreement (other than by the Company pursuant to such registration if the registration is pursuant to Section 3). The Company shall not effect any registration of its securities (other than on Form S-4, Form S-8, or any successor forms to such forms or pursuant to such other registration rights agreements as may be approved in writing by the Holders of a majority of Registrable Securities) or effect any public or private sale or distribution of any of its securities, including a sale pursuant to Regulation D under the Securities Act, whether on its own behalf or at the request of any holder or holders of such securities from the date of a request for a Demand Registration pursuant to Section 2 until the earlier of (x) 90 days following the date as of which all securities covered by such Registration Statement shall have been disposed of, and (y) 120 days following the effective date of such Registration Statement, unless the Company shall have previously notified in writing all selling Holders of the Company's desire to do so, and selling Holders owning a majority of the Registrable Securities or the underwriters' representative, if any, shall have consented thereto in writing. Any agreement entered into after the date of this Agreement pursuant to which the Company or any of its majority owned subsidiaries issues or agrees to issue any privately placed securities similar to any issue of the Registrable Securities (other than (x) shares of Common Stock pursuant to a stock incentive, stock option, stock bonus, stock purchase or other employee benefit plan of the Company approved by its Board of Directors, and (y) securities issued to Persons in exchange for ownership interests in any Person in connection with a business combination in which the Company or any of its majority owned subsidiaries is a party) shall contain a provision whereby holders of such securities agree not to effect any public sale or distribution of any such securities during the periods described in the first paragraph of this Section 8(b), in each case including a sale 15 pursuant to Rule 144 under the Securities Act (unless such Person is prevented by applicable statute or regulation from entering into such an agreement). c. The Company shall not, directly or indirectly, (x) enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation or (y) transfer or agree to transfer all or substantially all the Company's assets, unless prior to such merger, consolidation, reorganization or asset transfer, the surviving corporation or the transferee, respectively, shall have agreed in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to "Registrable Securities" shall be deemed to include the securities which the Holders of Registrable Securities would be entitled to receive in exchange for Registrable Securities pursuant to any such merger, consolidation or reorganization. d. The Company shall not grant to any Person (other than a Holder of Registrable Securities) any registration rights with respect to securities of the Company, or enter into any agreement, that would entitle the holder thereof to have securities owned by it included in a Demand Registration or Shelf Registration unless such rights are subordinated to the rights of the Holders herein. Section 9. Miscellaneous. a. Remedies. In the event of a breach by a party of its obligations under this Agreement, each other party, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Each party agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any provision of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it will waive the defense that a remedy at law would be adequate. b. Amendments and Waivers. The provisions of this Agreement may not be amended, modified, waived or supplemented without the prior written consent of the Company and Holders holding in excess of 50% of the Registrable Securities. No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. c. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then 16 on the next business day; (iii) upon delivery if sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) upon delivery if deposited with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Company: INTERNATIONAL COSMETICS MARKETING CO. Suite 205 6501 N.W. Park of Commerce Blvd. Boca Raton, FL 33487 Attn: Sam A. Lazar Facsimile: 561-999-0822 With a copy to: Atlas Pearlman, P.A. 350 East Las Olas Boulevard Suite 1700 Fort Lauderdale, Florida 33301 Attn: Roxanne K. Beilly, Esq. Facsimile: 954-766-7800 If to the Holders: STANFORD VENTURE CAPITAL HOLDINGS, INC. 5050 Westheimer Road Houston, TX 77056 Attn: Mauricio Alvarado, Esq. Facsimile: 713-964-5242 With a copy to: Akerman, Senterfitt & Eidson, P.A. One SE 3rd Avenue, 28th Floor Miami, FL 33131 Attn: Carl D. Roston, Esq. Facsimile: (305) 374-5095 or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. d. Successors and Assigns. Subject to the terms of the Common Stock, the Warrants and the Option regarding transfers of the Shares, the Warrant Shares and the Option Shares, respectively, any lawful transferee of all or a portion of the Registrable Securities shall become a Holder hereunder to the extent it agrees in writing to be bound by all of the provisions applicable hereunder to the transferring Holder (such acknowledgment being evidenced by execution and delivery to the Company of a Counterpart and Acknowledgment substantially in the form of Exhibit A). Subject to the requirements of this Section 9(d), this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. 17 e. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. f. Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. g. Governing Law. This Agreement shall be governed in all respects by the laws of the State of Florida without giving regard to any conflicts of law principles thereof which would result in the imposition of the laws of another jurisdiction. h. Separability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. i. Entire Agreement. This Agreement and the other documents delivered pursuant hereto, the Stock Purchase Agreement, the Warrants, the Option and the Assignment Agreement constitute the full and entire understanding and agreement between the parties with regard to the subjects thereto and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. [Signatures on next page] 18 IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date first written above. INTERNATIONAL COSMETICS MARKETING CO. By: /s/ Sam A. Lazar ------------------------------------ Name: Sam A. Lazar Title: Chief Executive Officer STANFORD VENTURE CAPITAL HOLDINGS, INC. By: /s/ James Davis ------------------------------------ Name: James Davis Title: Authorized Person STANFORD GROUP COMPANY By: /s/ Ronald Stein ------------------------------------ Name: Ronald Stein Title: Senior Vice President /s/ Nico P. Pronk ---------------------------------------- Nico P. Pronk /s/ Wayne Horne ---------------------------------------- Wayne Horne 19 SCHEDULE I ---------- HOLDERS ------- Stanford Venture Capital Holdings, Inc., a Delaware corporation Stanford Group Company, a Texas corporation Nico P. Pronk Wayne Horne 20 EXHIBIT A REGISTRATION RIGHTS AGREEMENT COUNTERPART AND ACKNOWLEDGMENT ------------------------------ TO: The Company RE: The Registration Rights Agreement (the "Agreement") dated as of September 7, 2001 by and among the Company and the Holders (as defined in the Agreement) The undersigned hereby agrees to be bound by the terms of the Agreement as a party to the Agreement, and shall be entitled to all benefits of the Holders (as defined in the Agreement) and shall be subject to all obligations and restrictions of the Holders pursuant to the Agreement, as fully and effectively as though the undersigned had executed a counterpart of the Agreement together with the other parties to the Agreement. The undersigned hereby acknowledges having received and reviewed a copy of the Agreement. DATED this _____ day of ____________, _____. By: ---------------------------------------------- Title: ------------------------------------------- Number of Shares of Registrable Securities: -------------------------