<PAGE>
As filed with the Securities and Exchange Commission on July 11, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VITAFORT INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 68-0110509
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
1800 AVENUE OF THE STARS, SUITE 480
LOS ANGELES, CALIFORNIA 90067
(Address of principal executive offices) (Zip Code)
LETTER AGREEMENTS BETWEEN THE REGISTRANT AND LEE SACKS
LETTER AGREEMENT BETWEEN THE REGISTRANT AND JOFF POLLON
LETTER AGREEMENT BETWEEN THE REGISTRANT AND JOHN BURCHETTE
LETTER AGREEMENT BETWEEN THE REGISTRANT AND ROBERT LUKE
LETTER AGREEMENT BETWEEN THE REGISTRANT AND MARK BEYCHOK
OPTION AGREEMENTS BETWEEN THE REGISTRANT AND MARK BEYCHOK
LETTER AGREEMENT BETWEEN THE REGISTRANT AND ELOY ELLIS
LETTER AGREEMENT BETWEEN THE REGISTRANT AND ALLAN ZACKLER
LETTER AGREEMENT BETWEEN THE REGISTRANT AND ANDREW HARRISON
LETTER AGREEMENT BETWEEN THE REGISTRANT AND KARYNE BOZARJIAN
LETTER AGREEMENT BETWEEN THE REGISTRANT AND BRUCE BARREN
LETTER AGREEMENT BETWEEN THE REGISTRANT AND FRANK HARITON
LETTER AGREEMENT BETWEEN THE REGISTRANT AND THEO BRADFORD
LETTER AGREEMENT BETWEEN THE REGISTRANT AND DON FINKELSTEIN
LETTER AGREEMENT BETWEEN THE REGISTRANT AND DANA PERLMAN
LETTER AGREEMENT BETWEEN THE REGISTRANT AND TOM MYER
LETTER AGREEMENT BETWEEN THE REGISTRANT AND RENE LIDLE
LETTER AGREEMENT BETWEEN THE REGISTRANT AND SCOTT SANDERS
LETTER AGREEMENT BETWEEN THE REGISTRANT AND MATHEAU DAKOSKE
(Full title of the plans)
MARK BEYCHOK
VITAFORT INTERNATIONAL CORPORATION
1800 AVENUE OF THE STARS, SUITE 480
LOS ANGELES, CALIFORNIA 90067
(Name and address of agent for service)
(310) 552-6393
Telephone number, including area code, of agent for service
Copy to:
FRANK J. HARITON, ESQ.
485 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 752-7200
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CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Title of Maximum Maximum Amount of
Securities to Amount to be Price Aggregate Registration
be registered Registered(1) Per Share* Offering Price* Fee**
- --------------------------------------------------------------------------------
Common Stock,
par value
$.0001 per 3,062,261
share shares $0.285 $872,744 $300.95
================================================================================
* Based upon the weighted average of the exercise prices of the options
referred to above and the average of the bid and asked prices of the
Registrant's Common Stock as reflected on the Electronic Bulletin Board on
July 10, 1996 in the case of stock grants in the case of per share data and
based upon the aggregate of the foregoing exercise prices and stock prices in
the case of aggregate data.
** Calculated pursuant to Rule 457(h).
1) Includes 316,000 shares which were issuable pursuant to contracts included
in Registration Statement on Form S-8 number 333-04271, filed by the Registrant
on May 22, 1996, but were inadvertently excluded from the total number of
shares registered thereunder.
<PAGE>
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange
Commission are incorporated herein by reference:
(a) Vitafort International Corporation's (the "Company") Annual Report on
Form 10-KSB for the year ended December 31, 1995, filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996, filed pursuant to Section 13(a) or 15(d) of the Exchange Act.
(c) The Company's Current Report on Form 8-K, dated May 2, 1996, filed
pursuant to Section 13(a) or 15(d) of the Exchange Act.
(d) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document referred
to in (a) above.
(e) The Prospectus of the Company filed by the Company on December 19, 1989
which contains a description of the Company's Common Stock.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment indicating that all securities offered hereby have
been sold or de-registering all such securities then unsold, shall be deemed to
be incorporated by reference into this registration statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Frank J. Hariton, Esq. owns: (i) 229,533 shares of the Company's
common stock; (ii) 800 of the Company's redeemable warrants; (iii) 66,667
common stock purchase options exercisable at $.225 and; (iv) 66,667 common
stock purchase options exercisable at $.30.
Item 6. Indemnification of Directors and Officers.
Article Seventh of the Company's Certificate of Incorporation provides
for indemnification of the Company's officers and directors to the fullest
extent permitted under the General Corporation Law of the State of Delaware
("DGCL").
SECTION 145 of the DGCL, as amended, applies to the Company and
the relevant portion of the DGCL provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
a) A corporation may indemnify any person who was
or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the
right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the
request of the corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable
cause to believe his conduct was
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unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
b) A corporation may indemnify any person who was
or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit
by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request
of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or
settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation
and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court
of Chancery or the court in which such action or suit
was brought shall determine upon application that,
despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall
deem proper.
c) To the extent that a director, officer, employee
or agent of a corporation has been successful on the
merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
d) Any indemnification under subsections (a) and (b)
of this section (unless ordered by a court) shall be
made by the corporation only as authorized in the
specific case upon a determination that indemnification
of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b)
of this section. Such determination shall be made (1) by
the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
e) Expenses (including attorneys' fees) incurred
by an officer or director in defending any civil,
criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation
in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the
corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms
and conditions, if any, as the board of directors
deems appropriate.
f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other
subsections of this section shall not be deemed
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be
entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to
action in another capacity while holding such office.
g) A corporation shall have power to purchase and
maintain insurance on behalf
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of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any
liability asserted against him and incurred by him
in any such capacity, or arising out of his status
as such, whether or not the corporation would have
the power to indemnify him against such liability
under this section
h) For purposes of this section, references to
"the corporation" shall include, in addition to the
resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate
existence had continued, would have had power and
authority to indemnify its directors, officer and
employees or agents, so that any person who is or
was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the
request of such constituent corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section
with respect to the resulting or surviving corporation
as he would have with respect to such constituent
corporation if its separate existence had continued.
i) For purpose of this section, references to "other
enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee
benefit plan; and references to "serving at the request
of the corporation" shall include any service as a
director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of
such a person.
The Company maintains insurance for the benefit of its directors and
officers and the directors and officers of its subsidiaries, insuring such
persons against certain liabilities, including liabilities arising under the
securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable. Furthermore, the Company has given
certain undertakings with respect to indemnification in connection with this
Registration Statement.
Item 7. Exemption from Registration Claimed.
No "restricted securities," as defined in the instructions to Form S-8,
are being offered hereby.
Item 8. Exhibits.
4.l - Certificate of Incorporation of Registrant*
4.2 - By-laws of Registrant*
4.3 - Agreement and Plan of Merger between the Registrant and Vitafort
International Corporation, a California corporation*
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4.4 - Certificate of Designation - Series A Preferred Stock**
4.5 - Certificate of Designation - Series B Preferred Stock**
4.6 - Certificate of Amendment to the Certificate of Incorporation,
November 1991**
4.7 - Certificate of Designation - Series C Preferred Stock**
4.8 - Certificate of Amendment to the Certificate of Incorporation, filed
February 8, 1994***
4.9 - Certificate of Designation - Series D Preferred Stock***
4.10 - Certificate of Amendment to the Certificate of Incorporation, filed
November 1995
4.11 - Specimen Stock Certificate*
4.12 - Specimen Redeemable Common Stock Purchase Warrant*
4.13 - Form of Warrant Agreement*
4.14 - Warrant Extension Agreement, December 18, 1992**
4.15 - Warrant Extension Agreement, December 18, 1994***
4.16 - Warrant Extension Agreement, January 18, 1995***
4.17 - Warrant Extension Agreement, April 3, 1995***
4.18 - Warrant Extension Agreement, May 3, 1995****
4.19 - Warrant Extension Agreement, June 15, 1995****
4.20 - Warrant Extension Agreement, July 17, 1995****
4.21 - Warrant Extension Agreement, August 16, 1995****
4.22 - Warrant Extension Agreement, December 31, 1995****
4.23 - Warrant Extension Agreement, April 30, 1996*****
4.24 - Certificate of Elimination for Series A Preferred Stock,
April 26, 1996*****
4.25 - Certificate of Elimination for Series D Preferred Stock,
May 6, 1996*****
5.01 - Opinion of Frank J. Hariton, Esq..
23.01 - Consent of Frank J. Hariton, Esq. (included in Exhibit 5.01).
23.02 - Consent of KMPG Peat Marwick LLP, Independent Certified Public
Accountants.
24.01 - Power of Attorney (contained on signature page)
99.01 - Letter Agreement between Registrant and Lee Sacks, dated
July 2, 1996.
99.02 - Letter Agreement between Registrant and Joff Pollon, dated
July 1, 1996
99.03 - Letter Agreement between Registrant and John Burchette, dated
July 2, 1996
99.04 - Letter Agreement between Registrant and Robert Luke, dated
July 2, 1996
99.05 - Conversion Agreement, dated as of January 8, 1996, between the
Registrant and Mark Beychok
99.06 - Class A Option Agreement, dated as of January 8, 1996, between the
Registrant and Mark Beychok
99.07 - Class B Option Agreement, dated as of January 8, 1996 between the
Registrant and Mark Beychok
99.08 - Letter Agreement between Registrant and Eloy Ellis, dated July 1, 1996
99.09 - Letter Agreement between Registrant and Allan Zackler, dated
July 1, 1996
99.10 - Letter Agreement between Registrant and Andrew Harrison, dated
July 1, 1996
99.11 - Letter Agreement between Registrant and Karyne Bozarjian, dated
July 1, 1996
99.12 - Letter Agreement between Registrant and Bruce Barren, dated
July 2, 1996.
99.13 - Letter Agreement between Registrant and Frank Hariton, dated
June 30, 1996.
99.14 - Letter Agreement between Registrant and Theo Bradford, dated
July 3, 1996.
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99.15 - Letter Agreement between Registrant and Don Finkelstein, dated
July 2, 1996.
99.16 - Letter Agreement between Registrant and Dana Perlman, dated
July 2, 1996.
99.17 - Letter Agreement between Registrant and Tom Myer, dated July 5, 1996.
99.18 - Letter Agreement between Registrant and Rene Lidle, dated July 2, 1996.
99.19 - Letter Agreement between Registrant and Scott Sanders, dated
July 2, 1996.
99.20 - Letter Agreement between Registrant and Matheau Dakoske, dated
July 2, 1996.
* Incorporated by reference to the exhibits to the Registrant's
Registration Statement on Form S-18, File Number 33-31883.
** Incorporated by reference to the exhibits to the Registrant's
Form 10-KSB for the year ended December 31, 1993.
*** Incorporated by reference to the exhibits to the Registrant's
Form 10-KSB for the year ended December 31, 1994.
**** Incorporated by reference to the exhibits to the Registrant's
Form S-8 dated January 16, 1996.
***** Incorporated by reference to the exhibits to the Registrant's
Form S-8 dated May 22, 1996.
Item 9. Undertakings.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than payment by the
Company of expenses paid or incurred by a director, officer or controlling
person of the Company in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles and State of California, on the 8th day
of July, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ MARK BEYCHOK
------------------------------------
Mark Beychok, President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Mark Beychok and Sheldon Schrager, and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Director, Chief Operating
Officer and President
/s/ MARK BEYCHOK (Principal Executive, Accounting
- ---------------------- and Financial Officer) July 8, 1996
Mark Beychok
/s/ SHELDON SCHRAGER Chairman of the Board and
- ------------------------ a Director July 8, 1996
Sheldon Schrager
/s/ STANLEY J. PASARELL
- ------------------------ Director July 8, 1996
Stanley J. Pasarell
- --------------------- Director
Donald Wohl
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<PAGE>
REOFFER PROSPECTUS
296,261 SHARES
VITAFORT INTERNATIONAL CORPORATION
COMMON STOCK
---------
The shares offered hereby will be sold by the Selling Shareholder. See "Selling
Shareholder." The Company will not receive any of the proceeds from the sale of
the shares offered hereby. However, if all of the shares offered hereby are
sold, the Company will have received proceeds upon the exercise of stock options
of $38,884.
The shares of Common Stock of the Company are traded in the Electronic Bulletin
Board under the symbol "VFRT." On July 3, 1996, the closing bid and asked
prices of the Common Stock were approximately $.30 and $.29 per share.
---------
THESE SHARES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Selling Shareholder has advised the Company that he proposes to offer for
sale and sell the shares registered hereby from time to time in broker's
transactions, in negotiated transactions or through a combination thereof at
prices related to market prices of the Common Stock prevailing at the time of
sale. Such shares are being offered on a continuous basis; the precise amounts
and timing of sales, if any, of the shares offered hereby will be determined by
the Selling Shareholder in his sole discretion from time to time.
---------
THE DATE OF THIS PROSPECTUS IS JULY 11, 1996
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AVAILABLE INFORMATION
Vitafort International Corporation (together with its subsidiaries herein called
the "Company" or "Vitafort") is subject to the informational requirements of the
Securities Exchange Act of 1934 ("Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its New York Regional Office, Room 1228, 75 Park Plaza, New
York, New York 10007; and Chicago Regional Office, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661. Copies can be obtained by
mail at prescribed rates. Requests should be directed to the Commission's
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1995, Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996,
and Current Report on Form 8-K, dated May 2, 1996, each as filed with the
Commission, are incorporated herein by reference. All documents filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of the Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing of such documents.
The Company undertakes to provide without charge to each person to whom a copy
of this Prospectus has been delivered copies of the above documents, other than
exhibits thereto, upon request of any such person to the Company, 1800 Avenue of
the Stars, Suite 480, Los Angeles, California 90067; Attention: Corporate
Secretary (telephone number 310-552-6393).
---------
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THE COMPANY
Vitafort International Corporation (the "Registrant", the "Company" or
"Vitafort") was formed as a California corporation in 1986 and reincorporated as
a Delaware corporation in 1989. Until May 1993, Vitafort was in the business of
formulating and developing value added foods and beverages for third parties and
marketing branded seafood. In May 1993, these businesses were discontinued and,
later in 1993, the Registrant disposed of these businesses. In September 1993,
the Registrant installed new management and entered the business of developing
and marketing branded low fat and fat free foods using proprietary formulations
and processes. During 1994, Vitafort continued with the development of the
business it had entered in 1993 and, in June 1994, commercially introduced a
line of fat free brownies under the brand name Fudgets-Registered Trademark-.
In 1995, the Company continued the development of its business of
developing, manufacturing and marketing low fat and fat free foods. In late
1995 and early 1996, Vitafort began commercial production of Caketts-TM-, a line
of fat free cakes, and Juliettes-TM- a line of low fat chocolate candies.
Vitafort also markets a line of meatless cold cuts under the brand name Trim
Slice/Vegicatessen-TM-, a product line that it acquired in 1993. The Company's
efforts during 1995 were hampered by a lack of operating capital primarily
resulting from the failure to complete a proposed private placement in the first
part of 1995. Management believes that the Company's product development,
manufacturing and marketing efforts will be enhanced in 1996 as a result of the
completion of a $4 million equity financing in January 1996 and other private
placements of its securities. The Company will seek to improve its sales and
production of existing products and to develop and market additional branded fat
free products during 1996. While management is encouraged by the performance of
the Company's products, the Company's business, which was hampered by severe
working capital shortages, did not achieve profitability during 1995, nor in the
quarter ended March 30, 1996.
The Company is developing additional fat free and low fat foods which it
anticipates introducing during 1996 and beyond, including additional fat free
and low fat bakery items, as well as additional varieties of fat-free and low
fat candies. However, no assurance can be given that the Company will be able
to successfully complete the development of these products or that they will
prove to be commercially viable.
The Company's fat free brownies and cakes and low fat confectionery items
are based upon the Company's proprietary formulas, processes, procedures and
technologies, including proprietary technologies for bonding fat free
ingredients to improve taste and texture. The Company seeks to protect its
proprietary information through secrecy agreements with employees, suppliers and
manufacturers. If the Company is advised by counsel that any of its processes,
procedures or other techniques are patentable, then it may seek appropriate
patent protection.
The Company's products are made from generally available ingredients which
are then converted into the Company's unique products through the Company's
proprietary processes, procedures and technology.
Although management believes that the Company's products are unique and
are superior in taste to other products with which it competes, the food
industry is characterized by the continual development of new products
employing various new technologies and processes. Accordingly, no assurance
can be given that new products will not be developed and marketed which are
superior to the Company's products in taste, texture, feel and nutritional
value or that the Company's products will continue to maintain their
market acceptance.
The Company's principal executive offices are located at 1800 Avenue of the
Stars, Suite 480, Los Angeles, California 90067, and its telephone number is
(310) 552-6393.
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RECENT DEVELOPMENT
On May 2, 1996, pursuant to a the terms of a letter agreement, dated May 1,
1996, and the attachments thereto ("FPA") the Registrant acquired the trademarks
"Auburn Farms" and "Nature's Warehouse" and certain related trademarks, trade
dress, and related intangibles in a foreclosure sale from secured lenders of
Auburn Farms, Inc. d.b.a. Nature's Warehouse ("AFI"). The purchase price under
the FPA consisted of $75,000 and deferred payments based upon gross sales (as
defined in the FPA) of products sold by the Company which bear the acquired
trademarks.
RISK FACTORS
LIMITED OPERATING HISTORY
The Company was formed in 1986 and until May 1993 the Company was in the
business of formulating and developing value-added foods and beverages for third
parties and marketing branded seafood. In May 1993 these businesses were
discontinued and later in 1993 the Company disposed of these businesses. In
September 1993 the Company installed new management and entered the business of
developing and marketing branded low fat and fat-free foods using proprietary
formulations and processes. In June 1994 the Company commercially introduced
its principal product, a line of fat-free brownies under the brand name
"Fudgets". The Company's business did not achieve profitability during 1994 or
1995 and although management is encouraged by the performance of the Company's
new products there can be no assurance that the Company will be profitable in
the future. Furthermore, future revenues and profits, if any, will be dependent
on many factors, including, but not limited to, the Company's ability to expand
its operations in a timely manner to meet demand, competition from other makers
of fat-free products and market acceptance of the Company's products.
MARKET ACCEPTANCE AND DEPENDENCE ON PRINCIPAL PRODUCT
Consumer preferences for snack foods in general, and for fat-free and low-
fat foods in particular, are continually changing and are extremely difficult to
predict. During the six months ended June 30, 1996, the Company derived its
revenues from sales of Fudgets-Registered Trademark- (37%), Caketts-TM- (45%),
Auburn Farms Branded Products (14%), Juliettes-TM- (3%), and from the meatless
cold cuts line marketed under the brand name "Trim Slice/Vegicatessen (1%).
There can be no assurance that the Company's products will achieve a significant
degree of market acceptance, that acceptance, if achieved, will be sustained
for any significant period or that product life cycles will be sufficient to
permit the Company to recover start-up and other associated costs. Failure of
the Company's products to achieve or sustain market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations.
COMPETITION
The market for snacks is large and highly competitive. Competitive factors
in the snack industry include product quality and taste, brand awareness among
consumers, access to supermarket shelf space, price, advertising and promotion,
variety of snacks offered, nutritional content, product packaging and package
design. The Company competes in the snack food market segment principally on
the basis of nutritional content and product quality and taste. The Company's
fat-free and low-fat products are priced higher than traditional snacks. As a
result, price erosion due to competitive factors would have a material adverse
effect on the Company.
The Company also competes with a number of manufacturers in the fat-free
and low-fat portion of the industry, including Health Valley Foods, Nabisco
(Snackwell's) and Pepperidge Farms (Greenfield). Additional competitors include
regional and private label snack companies. Potential entrants in the fat-free
and low-fat snack food market segment include the national competitors and
private label competitors.
RP-4
<PAGE>
Certain of the Company's products are made using proprietary production
processes designed by the Company. There is no assurance that others will not
develop equivalent or better technology and processes for manufacturing fat-free
and low-fat snacks, which could materially adversely affect the Company's
business, financial condition and results of operations.
DEPENDENCE ON KEY EXECUTIVE OFFICERS AND OTHER QUALIFIED PERSONNEL
The Company is highly dependent on certain key personnel, including Mark
Beychok, its President and Chief Executive Officer. The other key personnel are
Lawrence Brucia, Director of Product Development; John Coppolino, Director of
Sales; and Eloy Ellis, Director of Finance & Administration. The loss of one or
more key personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company intends to
obtain key man life insurance policies payable to the Company in the amount of
$1.5 million on the life of Mr. Beychok. The recruitment, retention and
motivation of skilled executives, sales and technical personnel and other
employees are important to the Company's operations. Although the Company has
not experienced significant problems in recruiting and retaining qualified
personnel, there can be no assurance that it will not encounter such problems in
the future.
RELIANCE OF NEW TECHNOLOGY
The Company relies heavily on its own trade secrets relating to its
proprietary processes. As is typically the case with new technologies, the
Company has encountered a variety of problems implementing this technology
during the initial phases of its production, which has resulted in some
interruptions of production. Technological problems result in delays and
increased costs when they arise, and there can be no assurance that unforeseen
technological problems will not slow the rate of the Company's expansion or
increase the costs of manufacturing, or other costs. The occurrence of such
events could adversely affect the Company's business, financial condition and
results of operations.
AVAILABILITY OF SHELF SPACE
The majority of the Company's sales are made through supermarkets, and the
Company expects supermarket sales to constitute a significant portion of its
future sales. Such sales are affected by access to shelf space, which is
limited. Food retailers typically seek concessions, allowances or other
discounts from food manufacturers and suppliers, such as the Company and its
distributors, in return for shelf space. Although to date the Company has not
incurred material expenditures to obtain shelf space, the Company believes that
it may have to incur such expenditures in the future in order to obtain or
retain shelf space for its products. Such expenditures, if significant, could
adversely affect the Company's business, financial condition and results of
operations.
CONTRACT MANUFACTURING AGREEMENTS
In order to achieve economies of scale and production flexibility the
Company has entered into contract manufacturing agreements with established food
manufacturers which have the facilities for the production of its products. In
the event of a contract dispute between the Company and any of these contract
manufacturers or if any contract manufacturer experiences an interruption in its
business as a result of labor disputes, acts of God or a similar occurrence over
which the Company has no control, such an event could materially and adversely
affect the Company's business.
MANAGEMENT OF GROWTH
The Company intends to expand its operations significantly during 1996 and
thereafter, through the expansion of its sales and marketing capacity, and the
expansion and addition of distribution channels. There can be no assurance that
the Company will have available sources of funds necessary to achieve rapid
growth, or that the Company will be able successfully to match its production
capacity to the demand for its products in a timely manner or to build and
maintain its distribution system. The
RP-5
<PAGE>
Company has no long-term contracts with its distributors. The Company has
previously experienced problems both with a slowing of demand and resulting
excess capacity, as well as with sharp increases in demand and resulting
shortages of capacity. Efforts by the Company to increase production rapidly in
order to meet sharp increases in demand have sometimes resulted, and could in
the future result, in additional expenses that materially increase the cost of
goods sold and reduce profitability. The occurrence of any of these events would
likely have a material adverse effect on the Company's business, financial
condition and results of operations, as well as on its distribution relationship
and prospects. Because Fudgets and other of the Company's fat-free products
have a limited shelf life, the Company cannot produce significant inventories
for later sale. In addition, because the Company's production process relies
upon recently developed technology, it is possible that unforeseen technological
problems could arise that would slow the rate or increase the cost of expansion
of the Company's production capacity through its contract manufacturing
agreements.
Successful management of rapid growth will require the Company to continue
to implement and improve its financial, accounting and management information
systems and to hire, train, motivate and manage its employees, including
additional middle management, sales and marketing employees. A failure to
manage the Company's growth effectively would have a material adverse effect on
the Company's business, financial condition and results of operations, and on
its ability to execute its business strategy successfully.
NO DIVIDENDS
To date, the Company has not paid any dividends on its Common Stock and
does not intend to declare any dividends in the foreseeable future.
PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS
The Company's success is greatly dependent on its ability to preserve its
trade secrets and trademarks and operate without infringing the proprietary
rights of third parties. In addition, because the Company does not own any
issued patents, its success is also dependent on its own ability to obtain new
patents on such processes and equipment used by the Company. There can be no
assurance that the licensed patents will provide sufficient protection for the
Company's present or future technologies, products and processes. In addition,
there can be no assurance that others will not independently develop
substantially equivalent or improved methods of manufacturing fat-free or low-
fat snack products or obtain access to the Company's know-how. The Company has
registered the trademarks "Fudgets," "Trim Slice/Vegicatessen," "Just Like
Peanut Butter," "Heart and Soul," "Caketts," and "Truffets" in the United
States. No assurance can be given as to the degree of protection the licensed
patents and the trademark will afford, the validity of such patents or the
Company's ability to avoid violating or infringing any patents issued to others.
Moreover, there can be no guarantee that any patents licensed by the Company
will not be infringed by others. Defense and prosecution of patent claims can
be expensive and time consuming, even in those instances in which the outcome is
favorable to the Company, and can result in the diversion of resources from the
Company's other activities. An adverse outcome could subject the Company to
significant liabilities to third parties, require the Company to obtain licenses
from third parties or require the Company to cease any related product
development activities or sales.
The Company's success is also dependent upon the skills, knowledge and
experience (none of which is patentable) of its technical personnel. To help
protect its rights, the Company requires all employees to enter into
confidentiality agreements that prohibit the disclosure of confidential
information to anyone outside the Company. There is no assurance, however, that
these agreements will provide adequate protection for the Company's trade
secrets, know-how or other proprietary information in the event of any
unauthorized use or disclosure.
GOVERNMENT REGULATION
The packaged food industry is subject to numerous federal, state and local
government
RP-6
<PAGE>
regulations, including those relating to the preparation, labeling and marketing
of food products. The Company is particularly affected by the recently enacted
Nutrition Labeling and Education Act ("NLEA"), which requires specified
nutritional information to be disclosed on all packaged foods. The Company's
labeling currently meets these requirements. In addition, the NLEA, which is
administered by the Food and Drug Administration ("FDA"), strictly regulates the
standards that must be met to make a claim that a product is "fat-free" or "low-
fat". In addition, the FDA standards could conceivably be lowered further or
reduced to zero. Changes in fat content could adversely affect the taste and
texture of the Company's products and their acceptability to consumers, which
could adversely affect the Company's sales and results of operations. Labeling
standards imposed by certain other countries may vary from those in the United
States. For example, Canada requires that any product claiming to be "fat-
free" have less than 0.2 grams of fat per ounce (as compared to the new NLEA
requirement of less than 0.5 grams per serving). The Company's operations are
also governed by laws and regulations relating to work place safety and worker
health, principally the Occupational Safety and Health Act ("OSHA"). The
Company believes that it is currently in compliance with such laws and
regulations, and that the costs of complying with OSHA and FDA regulations are
not burdensome.
LIMITED MARKET AND POSSIBLE ILLIQUIDITY OF SHARES
The market price for the Company's securities may be significantly affected
by such factors as the Company's financial results, the introduction of new
products, and various factors affecting the food industry generally.
Additionally, in recent years, the stock market has experienced a high level of
price and volume volatility and market prices for many companies, particularly
small and emerging growth companies the common stock of which trade in the over-
the-counter market, have experienced wide price fluctuations not necessarily
related to the operating performance of such companies. The market price for
the Company's Common Stock may be affected by general stock market volatility.
Currently there is a limited market for the Company's Common Stock in the over-
the-counter ("OTC") market as the Common Stock is traded in the OTC Bulletin
Board. The OTC market is smaller than other securities markets, and prices for
OTC securities are not generally published in the news media. Information about
the Company and transactions in the Company's shares may be more limited on the
OTC market. Further, because the price of the Common Stock is below $5.00 per
share and the Company does not have at least $5,000,000 in net tangible assets,
the Company's Common Stock is deemed to be a "penny stock" under applicable
rules of the SEC. Penny stocks are subject to additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers (as defined in such rules) and accredited investors
(generally, institutions and, for individuals, an investor with assets in excess
of $1,000,000 or annual income exceeding $200,000 or $300,000 together with
such investor's spouse). For transactions covered by these rules, the broker-
dealer must make a special suitability determination for the purchaser and must
have received the purchaser's written consent to the transaction prior to the
purchase. Consequently, the rules may restrict the ability of broker-dealers to
sell the Common Stock and may affect the ability of holders of Common Stock to
sell their shares in the secondary market. The above-described rules may
materially adversely affect the liquidity of the market for the Company's Common
Stock.
RP-7
<PAGE>
SELLING SECURITY HOLDER
The person who may be the Selling Security Holder pursuant to the Prospectus and
the number of shares owned as of July 8, 1996, is as follows:
Number of Number of Shares
Shares Eligible Owned After Sales
Number of for sale Hereunder and
NAME Shares Owned Hereunder Percentage of Class
- ---- ------------ --------- -------------------
Mark Beychok 8,647,485(1) 296,261(1) 8,351,224(7.5%)(1)
(1) Includes, as to shares presently owned and shares owned after sales
hereunder: (i) 704,192 shares owned by Mr. Beychok; (ii) 27,650 shares
owned by Mr. Beychok's IRA and pension plan; (iii) 1,250,000 shares
underlying a presently exercisable option, expiring December 16, 1998,
which has an exercise price of $.15 per share; (iv) 300,000 shares
underlying a presently exercisable option, expiring September 29, 1998,
which has an exercise price of $.10 per share; (v) 2,000,000 shares
underlying a presently exercisable option, expiring September 15, 1998,
which has an exercise price of $.25; (vi) 2,687,500 shares underlying the
presently exercisable option for 10,750,000 shares, expiring December 16,
1998, which has an exercise price of $.15 per share; (vii) 1,000,000 shares
underlying the presently exercisable option for 3,000,000 shares, expiring
December 16, 1998, which has an exercise price of $.15 per share; (vii)
190,941 shares underlying a presently exercisable options with an exercise
price of $.225 per share which expires in April 1997; (viii) 190,941 shares
underlying a presently exercisable option with an exercise price of $.30
per share which expires in October 1997. Includes in number of shares
owned and shares eligible for sale hereunder: (i) 148,131 shares; (ii)
74,065 shares underlying a presently exercisable option with an exercise
price of $.225 per share which expires in October 1997 (15 months from the
date of this prospectus); and (iii) 74,065 shares underlying an option with
an exercise price of $.30 per share which expires in April 1998 (21 months
from the date of this prospectus). Does not include in shares presently
owned or shares owned after the offering; (i) 2,000,000 shares underlying
an option, expiring December 16, 1998, for the purchase of 3,000,000 shares
of which 1,000,000 shares are currently exercisable and 1,000,000 shares
become exercisable on each of January 1, 1997 and January 1, 1998 and which
has an exercise price of $.15 per share; and (ii) 8,062,500 shares
underlying an option, expiring December 16, 2000, for the purchase of
10,750,000 shares of which 2,687,500 are currently exercisable and
2,687,500 becomes exercisable as to one third of the shares covered thereby
on each of January 1, 1997, January 1, 1998 and January 1, 1999, and which
has an exercise price of $.15
Mr. Beychok is a director of the Company and has been President of the
Company since September 1993 and Chief Executive Officer of the Company since
February 1995.
RP-8
<PAGE>
PLAN OF DISTRIBUTION
The Selling Security Holder has advised the Company that he may offer and
sell the shares of Common Stock offered hereby (See "Selling Security Holder")
from time to time in broker's transactions, individually negotiated transactions
or a combination thereof at market prices prevailing from time to time. The
precise amounts and timing of sales if any, of the shares offered hereby will be
determined by each Selling Shareholder in his sole discretion from time to time.
The Company has agreed to bear the costs of registering the shares of
Common Stock offered hereby under the Securities Act of 1933, as amended.
The Selling Shareholder will deliver a Prospectus in connection with the
sale of shares of Common Stock offered hereby. The Selling Shareholder will
comply with the volume limitations of Rule 144(e) promulgated under the
Securities Act of 1933, as amended.
LEGAL OPINION
The validity of the Common Stock offered hereby is being passed upon for
the Company by Frank J. Hariton, Esq., New York, New York. Frank J. Hariton,
Esq. owns: (i) 229,533 shares of Common Stock; (ii) 800 of the Company's
Redeemable Common Stock Purchase Warrants; (iii) 66,667 options with an exercise
price of $.225; and (iv) 66,667 options with an exercise price of $.30.
EXPERTS
The financial statements and schedules of Vitafort International Corporation as
of December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995, incorporated herein by reference and elsewhere in the
registration statement, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1995 financial
statements contains an explanatory paragraph that states that the Company's
recurring losses from operations and net capital deficiency raise substantial
doubt about the entity's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of reported asset amounts or the amounts and
classification of liabilities that might result from the outcome of that
uncertainty.
RP-9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering described herein and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
of any securities specifically offered hereby or of any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information ....................................................RP-2
Incorporation of Certain Documents by Reference ..........................RP-2
The Company ..............................................................RP-3
Risk Factors .............................................................RP-4
Selling Security-Holder...................................................RP-8
Plan of Distribution .....................................................RP-9
Legal Opinion ............................................................RP-9
Experts...................................................................RP-9
- --------------------------------------------------------------------------------
VITAFORT
INTERNATIONAL
CORPORATION
296,261
SHARES OF
COMMON STOCK
- --------------------------------------------------------------------------------
REOFFER PROSPECTUS
July 11, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RP-10
<PAGE>
EXHIBIT 5.01
FRANK J. HARITON ATTORNEY-AT-LAW
- --------------------------------------------------------------------------------
485 Madison Avenue 9th Floor. New York, New York 10022 (212) 752-7200. Fax:
(212) 758-7072
July 11, 1996
Securities and Exchange Commission
450 Fifth Street, NEW
Washington, D.C 20549
VITAFORT INTERNATIONAL CORPORATION - REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
I have been requested by Vitafort International Corporation, a Delaware
corporation (the "Company"), to furnish you with my opinion as to the matters
hereinafter set forth in connection with the above captioned registration
statement (the "Registration Statement") covering an aggregate of 2,746,261
shares (the "Shares") of the Company's common stock, offered on behalf of the
Company in connection with: (i) a letter agreement between the Company and Lee
Sacks; (ii) a letter agreement between the Company and Joff Pollon; (iii) a
letter agreement between the Company and John Burchette; (iv) a letter agreement
between the Company and Robert Luke; (v) a letter agreement and option
agreements between the Company and Mark Beychok; (vi) a letter agreement between
the Company and Eloy Ellis; (vii) a letter agreement between the Company and
Allan Zackler; (viii) a letter agreement between the Company and Andrew
Harrison; (ix) a letter agreement between the Company and Karyne Bozarjian; (x)
a letter agreement between the Company and Bruce Barren; (xi) a letter agreement
between the Company and Frank Hariton; (xii) a letter agreement between the
Company and Don Finkelstein; (xiii) a letter agreement between the Company and
Dana Perlman; (xiv) a letter agreement between the Company and Tom Myer; (xv)
a letter agreement between the Company and Theo Bradford; (xivi) a letter
agreement between the Company and Rene Lidle; (xvii) a letter agreement
between the Company and Scott Sanders; and (xviii) a letter agreement between
the Company and Matheau Dakoske (each a "Plan" and collectively the "Plans").
In connection with this opinion, I have examined the Registration Statement
and the Company's Certificate of Incorporation and by-laws, the Plans, copies of
the records of corporate proceedings of the Company, and such other documents as
I have deemed necessary to enable me to render the opinion hereinafter
expressed.
Based upon and subject to the foregoing, I am of the opinion that the
Shares, when sold in accordance with the Plans, will be legally issued, fully
paid and non-assessable.
I render no opinion as to the laws of any jurisdiction other than the
internal laws of the State of New York and the internal corporate law of the
State of Delaware. I hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the reference to my name under the caption
"Legal Opinions" in the Registration Statement and in the prospectus included in
the Registration Statement. I confirm that, as of the date hereof, I own the
number of shares and derivative securities of the Company set forth in the
Registration Statement under the heading "Interests of Named Experts and
Counsel.
Very truly yours
/s/ FRANK HARITON
--------------------------------------
Frank J Hariton
<PAGE>
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Vitafort International Corporation;
We Consent to incorporation by reference in the registration statement on Form
S-8 of Vitafort International Corporation of our report dated February 16,
1996, relating to the Consolidated balance sheets of Vitafort International
Corporation and subsidiaries as of December 31, 1995, and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1995 and the
related schedule, which report appears in the December 31, 1995, annual report
on Form 10-KSB of Vitafort International Corporation.
KPMG PEAT MARWICK LLP
Los Angeles, California
July 11, 1996
<PAGE>
[LETTERHEAD] EXHIBIT 99.01
July 1, 1996
Lee Sacks
Sacks & Zweig
100 Wilshire Boulevard, Suite 1300 TEL: (310) 451-3113
Santa Monica, CA 90401 FAX: (310) 451-0089
RE: Billing and Retainer Payments in Kind
Dear Lee,
This is to confirm that the you have agreed to accept up to 300,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("Sacks & Zweig"). The terms under which the securities are to be accepted are
as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Lee Sacks shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Lee Sacks may choose, at his sole discretion, to keep the shares of stock
beyond the thirty days noted. In such case, his firm will post a credit on
the Vitafort account in an amount equal to the closing bid price on the
Nasdaq Electronic Bulletin Board as of the date of issuance, less estimated
selling costs (not to exceed 6%). Such credit shall be applied against
valid open invoices and your retainer for future services in the same manner
as a cash payment, and shall be considered payment in full for the stock
issued. Vitafort shall bear no interest in the future sales proceeds of
such stock, regardless of any difference between the actual proceeds and the
credit given.
5) Lee Sacks, via his firm, will continue to bill for approved services and
related fees on a monthly basis, in the ordinary course of business. These
monthly billings will clearly include the both the credits earned via stock
issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ LEE SACKS / 7/2/96 / ###-##-####
--------------------------------------------
Eloy L. Ellis Lee Sacks / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.02
July 1, 1996
Joff Pollon
Vitafort International Corporation
461 Promontory Drive West TEL: (714) 675-1511
Newport Beach, CA 92660 FAX: (714) 490-5811
RE: Billing and Retainer Payments in Kind
Dear Joff,
This is to confirm that the you have agreed to accept up to 100,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by you. The terms
under which the securities are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Joff Pollon shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services or approved expenses, or as a retainer for future services.
4) Joff Pollon may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Joff Pollon, will continue to bill for approved services and related fees
on at least a monthly basis, in the ordinary course of business. These
monthly billings will clearly include the both the credits earned via stock
issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ JOFF POLLON / 7/1/96 / ###-##-####
--------------------------------------------
Eloy L. Ellis Joff Pollon / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.03
July 1, 1996
John Burchette
129 La Venta Drive
Santa Barbara, CA 93110 TEL: (805) 967-5255
RE: Billing and Retainer Payments in Kind
Dear John,
This is to confirm that the you have agreed to accept up to 80,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by you. The terms
under which the securities are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) John Burchette shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services or approved expenses, or as a retainer for future services.
4) John Burchette may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) John Burchette, will continue to bill for approved services and related
fees on at least a monthly basis, in the ordinary course of business. These
monthly billings will clearly include the both the credits earned via stock
issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ JOHN BURCHETTE / 7/2/96 / ###-##-####
---------------------------------------------
Eloy L. Ellis John Burchette / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.04
July 1, 1996
Robert Luke
9740 Wexford Circle TEL: (916) 791-5454
Granite Bay, CA 95746. FAX: (916) 791-5094
RE: Billing and Retainer Payments in Kind
Dear Robert,
This is to confirm that the you have agreed to accept up to 350,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by you. The terms
under which the securities are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Robert Luke shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services or approved expenses, or as a retainer for future services.
4) Robert Luke may choose, at his sole discretion, to keep the shares of stock
beyond the thirty days noted. In such case, his firm will post a credit on
the Vitafort account in an amount equal to the closing bid price on the
Nasdaq Electronic Bulletin Board as of the date of issuance, less estimated
selling costs (not to exceed 6%). Such credit shall be applied against
valid open invoices and your retainer for future services in the same manner
as a cash payment, and shall be considered payment in full for the stock
issued. Vitafort shall bear no interest in the future sales proceeds of
such stock, regardless of any difference between the actual proceeds and the
credit given.
5) Robert Luke, will continue to bill for approved services and related fees
on at least a monthly basis, in the ordinary course of business. These
monthly billings will clearly include the both the credits earned via stock
issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ ROBERT LUKE / 7/2/96 / ###-##-####
--------------------------------------------
Eloy L. Ellis Robert Luke / Date / Taxpayer ID
<PAGE>
AGREEMENT
THIS AGREEMENT is made as of this eighth day of January 1996, between VITAFORT
INTERNATIONAL CORPORATION, a Delaware corporation, with its principal offices
at 1800 Avenue of the Stars, Suite 480, Los Angeles, California 90067
(hereinafter "Vitafort" or the "Company"), and Mark Beychok, an individual.
RECITALS
WHEREAS, Mark Beychok is employed as an executive of Vitafort in the
normal course of business (hereinafter the "Employment Relationship") ; and
WHEREAS, Mark Beychok has voluntarily deferred a portion of his salary
since April 1995, the accrued total of deferred wages as of January 31, 1996
being $22,219.61 and
WHEREAS, the Board of Directors has ratified and approved an offer for
Management and selected consultants to convert all deferred fees from
November 1995 through January 1996 into equity at the same rate as the
Private Placement that closed on January 29, 1996 (One share of Vitafort
International Corporation common stock for each 15 CENTS of deferred salary,
plus 1/2 warrant to purchase a share of common stock at 22 1/2 CENTS and 1/2
warrant to purchase a share of common stock at 30 CENTS).
WHEREAS, Mark Beychok and Vitafort desire to pay the deferred fees by
offsetting the amount due Mark Beychok against a comparable purchase of equity
in Vitafort.
NOW THEREFORE, and in consideration for the foregoing facts and mutual
covenants and agreements contained in this Agreement, the parties agree as
follows:
1. INCORPORATION OF RECITALS
The Recitals above stated are incorporated by reference as if fully set
forth herein.
2. PURCHASE OF EQUITY/PAYMENT OF DEFERRED FEES
The parties agree that the purchase of one hundred forty eight thousand
one hundred thirty one (148,131) shares of common stock, seventy four
thousand sixty five (74,065) A warrants, and seventy four thousand sixty
five (74,065) B warrants identical to those issued in the Private
Placement Equity Offering shall be fully paid in all respects (a) by
offsetting the purchase against the fees Vitafort owes Mark Beychok as of
January 31, 1996, and (b) Mark Beychok shall have no further liability
under and pursuant to payment.
3. ACKNOWLEDGMENT OF PAYMENT AND RELEASE
Vitafort acknowledges that it has been paid the full for the equity
purchase amount and Mark Beychok acknowledges that he has been paid an
equal amount to be applied against fees owed Mark Beychok for 1995.
Vitafort releases and discharges Mark Beychok and his successors,
executors, administrators, heirs and assigns from any liability with
respect to the purchase cost. It is expressly understood and agreed by
Vitafort that the release referred to in
PAGE 1 OF 4
<PAGE>
this paragraph extends to all claims, whether known or unknown or
suspected. Vitafort hereby waives the provisions of Civil Code Section
1542 which provides:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release which, if known by him,
must have materially affected the settlement with the
debtor."
4. REPRESENTATIONS BY THE PARTIES
Each of the parties warrants and represents to the other party that
neither of them has assigned, sold or transferred, or purported to assign,
sell or transfer, to any person not a party to this agreement any matter,
or part of any matter, covered by this Agreement. Each of the parties
agrees to indemnify and hold harmless the other party from and against any
claim, demand, damage, debt, liability, cost, expense, lien, action or
cause of action, including attorneys' fees and costs based upon or arising
out of any breach of any warranty or representation.
Mark Beychok confirms he has read and understands the content of the
subscription agreement prepared for the Private Placement Offering.
Vitafort agrees to register the shares purchased, and the shares
underlying the warrants, as part of the very next registration using S1,
S3, or S8 filings with the SEC.
5. MODIFICATION
No variation, amendment or modification of this Agreement or waiver of any
of the terms or provisions thereof shall be deemed valid unless in writing
as an amendment hereto signed by the parties hereto.
6. NO ASSIGNMENT OF CLAIMS
Each releasing party represents and warrants to each released party that
it has not heretofore voluntarily, by operation of law or otherwise,
assigned, transferred, encumbered or conveyed or purported to assign,
transfer, encumber or convey to any person or entity any claim, debt,
demand, liability, obligation, account, reckoning, cost, expense, lien,
action or cause of action purportedly released pursuant to Paragraph 7
of this Agreement. Each party hereto shall defend and indemnify the other
party hereto for any breach of the aforementioned representations
and warranties.
7. INTEGRATION
This Agreement constitutes the entire agreement and sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, covenants, arrangements,
communications, correspondence, representations or warranties, whether
oral or written, and this Agreement may not be modified, amended or
terminated except by a writing signed by Vita fort, Mark Beychok, and any
other party to be charged.
8. EXECUTION OF ADDITIONAL DOCUMENTS
The parties hereto agree to execute such additional documents as may be
necessary to implement the terms of this Agreement
PAGE 2 OF 4
<PAGE>
9. INTEGRITY OF AGREEMENT
(a) The terms of this Agreement are contractual and not mere recital.
This Agreement is the result of negotiation between the parties, each of
whom has participated in the drafting hereof through its or his respective
attorneys.
(b) This Agreement has been carefully reviewed by each party, with full
understanding thereof, and voluntary execution thereof without duress or
coercion is hereby acknowledged.
(c) Each party hereto agrees that it or he will not take any action which
would interfere with the performance of this Agreement by any other party
hereto or which would adversely affect any of the rights provided for
herein.
(d) Each party hereto covenants and agrees not to bring any claim,
action, suit or proceeding against any other party hereto, directly or
indirectly, regarding any of the released claims, and each party further
covenants and agrees that this Agreement is a bar to any such claim,
action, suit or proceeding. However, this subparagraph shall not bar any
claim, action, suit or proceeding to enforce or interpret, on this
Agreement arising out of the obligations of any party provided herein.
10. HEIRS, SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and shall be binding upon
the heirs, successors and assigns of the parties hereto, and each of them.
11. SEVERABILITV
In the event that any material provision of this Agreement should be held
to be voidable or unenforceable, the remaining portions hereof shall
remain in force and effect.
12. GOVERNING LAW/VENUE/SERVICE JURISDICTION
(a) This Agreement shall be construed in accordance with, and shall be
governed by the laws of the State of California.
(b) Venue for any litigation or arbitration arising out of any claim or
dispute to enforce or interpret this Agreement shall be in the County of
Los Angeles, State of California.
(c) Vitafort and [NAME] each agrees to submit to the jurisdiction of
all Federal and State Courts in the State of California.
13. ATTORNEYS' FEES AND COSTS
In the event of any dispute arising out this Agreement or to enforce any
of its terms, the prevailing party in any legal proceeding shall be
entitled to recover all costs incurred in connection therewith, including
but not limited to reasonable attorneys' fees.
14. INDEMNIFICATION
The parties agree to defend and indemnify each other from any claims made,
arising out of or in connection with any breach of the representations or
agreements contained in this Agreement.
15. GENDER/PARAGRAPH HEADINGS
As used in this Agreement, the masculine, feminine or neuter gender, and
the singular or plural number shall each be deemed to include the others
whenever the context so indicates.
PAGE 3 OF 4
<PAGE>
16. REPRESENTATIVE CAPACITY
Each person executing this Agreement in a representative capacity
represents and warrants that he or she is empowered to do so. Each
corporate entity executing this Agreement represents and warrants that its
Board of Directors has resolved to execute this Agreement.
17. NOTICES
For purposes of notice to any party pursuant to this Agreement, notice
shall be in writing and may be made by personal service or telefax, and
deemed completed on the date of delivery or telefax, or by U.S. Mail, and
deemed completed three business days after deposit in the mail.
Notice to the Vitafort shall be to:
1800 Avenue of the Stars
Suite 480
Los Angeles, California 90067
Telefax (310) 556 1227
Notice to Mark Beychok shall be to:
955 North Beverly Glen
Los Angeles, CA 90077
Changes of any of the foregoing addresses or telefax numbers may be
effected by providing written notice of same pursuant to this Paragraph
18.
18. Counterparts
This Agreement may be executed in counterparts and transmitted via
facsimile, and each such counterpart shall be deemed to be an original
executed document.
19. Execution
THIS AGREEMENT HAS BEEN CAREFULLY READ, REVIEWED, EVALUATED AND UNDERSTOOD
BY EACH OF THE UNDERSIGNED, AND IS HEREBY AGREED UPON.
IN WITNESS WHEREOF, we have set our hands and seals as of the day and year
first above written.
VITAFORT INTERNATIONAL CORPORATION MARK BEYCHOK
By /s/ Eloy L. Ellis /s/ Mark Beychok
------------------------- --------------------
Eloy L. Ellis, Acting Chief Financial Officer Mark Beychok
PAGE 4 OF 4
<PAGE>
EX 99.06
THE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND NEITHER
THE WARRANTS NOR THE SHARES NOR ANY INTEREST IN THE WARRANTS OR THE
SHARES MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER AND UNDER APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH
MUST BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
CLASS A COMMON STOCK
WARRANT AGREEMENT
THIS CLASS A COMMON STOCK WARRANT AGREEMENT is made as of January 8, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware
corporation ("Company"), in favor of Mark Beychok ("Warrant Holder" or
"Holder").
WHEREAS, the Company issued and sold in a non-public offering ("Offering")
pursuant to Section 4(2) of the Securities Act of 1933, as amended ("Securities
Act") approximately 300 Units ("Unit"), each Unit consisting of 100,000 shares
of the Company's Common Stock, $.0001 par value, 50,000 Class A Common Stock
Purchase Warrants ("A Warrants") and 50,000 Class B Common Stock Purchase
Warrants ("B Warrants"). Each A Warrant and each B Warrant entitles the holder
to purchase one share of the Company's common stock, $.0001 par value ("Common
Stock"); and
WHEREAS, the Company has agreed to convert your deferred fees (or wages)
into equity at the same rates and terms as the offering; and
WHEREAS, the Company deems it to be in the best interests of the Warrant
Holder that the Company establish the terms and conditions upon which the
Warrants may be issued, exercised and redeemed, and other matters as provided
herein.
NOW THEREFORE, to establish the terms and conditions of the Warrants, and
the rights and obligations of the Company and the Warrant Holder with respect
thereto, the Company hereby provides as follows:
Section 1. CERTIFICATION. For value received, the Warrant Holder or its
registered assign ("Holder") is entitled to purchase from the Company, subject
to the provisions of this Warrant Agreement, fully paid, validly issued and
nonassessable shares of the Company's Common Stock at the Exercise Price (as
defined herein) commencing one year after a registration statement covering the
Warrant Shares (as defined herein) under the Securities Act is declared
effective by the Securities and Exchange Commission
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("Effective Registration Date"), and terminating at 5:00 P.M. Los Angeles
time 15 months thereafter. The number of shares of Common Stock to be
received upon the exercise of the Warrant and the price to be paid for each
share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares."
Section 2. FORM OF WARRANT. The text of the Warrant and of the Purchase
Form shall be substantially as set forth in Exhibit A attached hereto
(collectively, the "Warrant Certificates"). The Exercise Price (as defined in
Section 8) and the number of shares issuable upon exercise of each Warrant are
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or one of its Vice Presidents, and
attested to by its Secretary or an Assistant Secretary. The signature of any
of such officers on the Warrant Certificates may be manual or facsimile.
Warrant Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrant Certificates or did not
hold such offices on the date of this Agreement.
Section 3. EXCHANGE OF WARRANT CERTIFICATES. Each Warrant Certificate
may be exchanged for another Certificate entitling the Holder thereof to
purchase a like aggregate number of shares as the Certificate surrendered then
entitled such Holder to purchase. Any Holder desiring to exchange a Warrant
Certificate shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the Certificate to be so exchanged.
Thereupon, the Company shall countersign and deliver to the person entitled
thereto a new Warrant Certificate as requested.
Section 4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
4.1 TERM OF WARRANTS. Subject to the terms of this Agreement,
each Holder shall have the right, which may be exercised commencing on the
Effective Registration Date and terminating at 5:00 PM. Los Angeles time 15
months thereafter, to purchase from the Company the number of fully paid and
nonassessable shares which the Holder may at the time be entitled to purchase
on exercise of such Warrants.
4.2 EXERCISE OF WARRANTS. A Warrant may be exercised upon
surrender to the Company ("Warrant Agent") at its office at Los Angeles,
California of the Certificate evidencing the Warrant to be exercised, together
with the Purchase Form attached hereto as Exhibit A, duly filled in and signed,
and upon payment to the Warrant Agent of the Aggregate Exercise Price (as
defined in and determined in accordance with the provisions of Sections 8 and
11 hereof) for the number of shares with respect to which such Warrant is then
exercised. Payment of the Aggregate Exercise Price shall be made in cash or by
check. Subject to Section 4 hereof, upon the surrender of the Warrant and
payment of the Aggregate Exercise Price, the Warrant Agent shall promptly issue
and cause to be delivered to or as directed by the Holder, and in such name or
names as the Holder may designate, a Certificate for the number of full shares
purchased upon the exercise of the Warrant, together with cash as provided in
Section 8 hereof; for any fractional shares otherwise issuable upon such
exercise. Such Certificate shall be deemed to have been issued, and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares, as of the date of the surrender of such Warrant and
payment of the Aggregate Exercise Price; provided, however, that if, at the
date of surrender of such Warrant and payment of such Aggregate Exercise Price,
the transfer books for the shares or other class of stock
2
<PAGE>
purchasable upon the exercise of such Warrant shall be closed, the
certificates for the shares with respect to which such Warrant is then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificate for such shares; provided further, however, that the transfer
books of record, unless otherwise required by law, shall not be closed at any
one time for a period longer than twenty (20) days. The rights of purchase
represented by the Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part, and in the
event that a Warrant Certificate is exercised to purchase less than all of
the shares purchasable on such exercise at any time prior to the date of
expiration of the Warrants, a new Certificate evidencing the remaining shares
available for purchase will be issued, and the Company is hereby irrevocably
authorized to sign and to deliver the new Warrant Certificate.
Section 5. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable with respect to any transfer involved in
the issue or delivery of any Warrants or certificates for shares in a name
other than that of the registered Holder of Warrants with respect to which such
shares are issued.
Section 6. MUTILATED OR MISSING WARRANTS. In case any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate mutilated, lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence to the
reasonable satisfaction of the Company of such mutilation, loss, theft or
destruction of such Certificate and indemnity, if requested, also to the
reasonable satisfaction of the Company. An applicant for such a substitute
Warrant Certificate shall also comply with such other reasonable regulations
and pay such other reasonable charges as the Company may prescribe.
Section 7. RESERVATION OF SHARES; PURCHASE OF WARRANTS; CALL OF
WARRANTS.
7.1 RESERVATION OF SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized Common Stock, a
number of shares of Common Stock sufficient to provide for the exercise of the
rights of purchase represented by the outstanding Warrants.
7.2 PURCHASE OF WARRANTS BY THE COMPANY. The Company shall
have the right, except as limited by law, other agreement or herein, to
purchase or otherwise acquire Warrants at such times, in such manner and for
such consideration as it may deem appropriate.
7.3 CALL OF WARRANTS BY COMPANY. The Company may issue a call
of this Warrant ("Call Notice") at any time after the Effective Registration
Date, but prior to the expiration of this Warrant, by written notice to Warrant
Holder, provided only that the Closing Price (hereinafter defined) of the
Company's Common Stock has theretofore equalled or exceeded Thirty-Three and
three-fourths Cents ($0.3375) per Share for ten (10) consecutive Trading Days
after the Effective Registration Date. This Warrant shall expire and become
null and void thirty (30) days after the issuance of the Call Notice. The
Warrant Holder may exercise this Warrant and purchase some or all of the Shares
then subject to this Warrant within said thirty (30)-day period, but may not
thereafter exercise this Warrant or purchase any of the Shares. If the Warrant
is not exercised within said thirty (30) day period, the Company will have the
right to redeem any or all outstanding and unexercised Warrants at a redemption
price of $0.0001 per Warrant. For purposes of this Section 7.3, "Closing
Price" means (a) if the Common Stock is then listed
3
<PAGE>
on an established stock exchange or exchanges, the average bid and ask price
per share for each Trading Day on the principal exchange on which the Common
Stock is traded, as reported in The Wall Street Journal; or (b) if the Common
Stock is not then listed on an exchange, the price per share for the Common
Stock in the over-the-counter market as quoted on NASDAQ (either National
Market System or Small Cap Issues or the OTC Electronic Bulletin Board), for
each Trading Day, as reported in The Wall Street Journal. If the Common
Stock is not then listed on an exchange or quoted on NASDAQ or the OTC
Electronic Bulletin Board, the Common Stock shall be deemed to have a Closing
Price of less than Thirty-Three and three-fourths Cents ($0.3375) per share
on such Trading Day. For purposes of this Section 7.3, the term "Trading
Day" shall mean a day on which the New York Stock Exchange is open for
trading.
Section 8. EXERCISE PRICE. The price per share at which shares may be
purchased upon exercise of Warrants in effect at any time, and as adjusted from
time to time as provided in Section 11 of this Agreement, is referred to herein
as the "Exercise Price." Subject to adjustment,the Exercise Price shall be
Twenty Two and one-half Cents ($0.225) per share. The product of the Exercise
Price times the number of shares the Holder then elects to purchase is herein
referred to as the "Aggregate Exercise Price."
Section 9. FRACTIONAL SHARES. No fractional shares or script
representing fractional shares shall be issued upon the exercise of a Warrant.
Section 10. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at
law or in equity, and the rights of the Holder are limited to those expressed
herein and in the Warrant Certificate and are not enforceable against the
Company except to the extent set forth herein and therein.
Section 11. ADJUSTMENT OF WARRANT AND NUMBER OF SHARES. The number and
kind 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.
11.1 MECHANICAL ADJUSTMENTS. If the Company shall pay a
dividend in shares of its Common Stock (other than payments of Common Stock as
interest on preferred stock), subdivide (split) its outstanding shares of
Common Stock, combine (reverse split) its outstanding shares of Common Stock,
issue by reclassification of its shares of Common Stock any shares or other
securities of the Company, or distribute as a stock dividend to holders of its
Common Stock any securities of the Company or of another entity, the number of
shares of Common Stock or other securities the Holder hereof is entitled to
purchase pursuant to the Warrants immediately prior thereto shall be adjusted
so that the Holder shall be entitled to receive upon exercise the number of
shares of Common Stock or other securities which he, she or it would have owned
or would have been entitled to receive after the happening of any of the events
described above had the Warrant been exercised immediately prior to the
happening of such event, and the Exercise Price shall be correspondingly
adjusted; provided, however, that no adjustment in the number of shares and/or
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in such number and/or price;
and provided further, however, that any adjustments which by reason of this
Section 11 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. An adjustment made pursuant to this
Section 11 shall become effective immediately after the record date in the case
of a stock dividend or other distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. The Holder shall be entitled to participate in any
subscription or other rights offering made to holders of Common Stock as if he,
she or it had purchased the full number of shares as to which the Warrant
remains unexercised immediately prior to the record
4
<PAGE>
date for such rights offering.
11.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may
at its option at any time during the term of the Warrants, reduce the then
current Exercise Price to any amount deemed appropriate by the Board of
Directors of the Company.
11.3 NOTICE OF ADJUSTMENT. Whenever the number of shares
purchasable upon the exercise of each Warrant or the Exercise Price of such
shares is adjusted, as herein provided, the Company shall mail by first class
mail, postage prepaid, to each Holder notice of such adjustment or adjustments.
11.4 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in
subsection 11.1, no adjustment in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
11.5 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute an agreement that each Holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of shares and other securities and property which he, she or it
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The Company shall mail by first class mail,
postage prepaid, to each Holder, notice of the execution of any such agreement.
Such agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 11. The provisions of this subsection 11.5 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
11.6 STATEMENT ON WARRANTS. Irrespective of any
adjustments in the Exercise Price or the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in the Warrants initially issuable pursuant to this Agreement.
Section 12. SURVIVAL OF AGREEMENT. This Agreement and the rights and
obligations of the Company and the Warrant Holders hereunder shall not be
terminated by any of the following events:
Merger, reorganization or consolidation of the Company;
The transfer of all or substantially all of the assets of Company; or
The voluntary or involuntary dissolution of the Company.
In the event of any such merger, reorganization, consolidation or transfer of
assets, the surviving or resulting corporation or transferee of the assets of
the party affected shall be bound by and shall have the benefit of the
provisions of this Agreement, and the party affected shall take all actions
necessary to insure that such corporation or transferee is bound by the
provisions of this Agreement.
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Section 13. RESTRICTIONS ON TRANSFER. The provisions of this Section 13
shall be binding upon any transferee of the Warrants and upon each holder of
Warrant Shares. As used in this Section 13, the term "Warrant Shares" includes
any shares of the Company's Common Stock or other securities, issued in respect
of the Warrant Shares pursuant to any stock split, stock dividend,
recapitalization or otherwise; and the term "Warrant" includes any Warrant
Certificate or Certificates issued in exchange for the original Warrant
Certificate.
13.1 RESTRICTED SECURITIES. The Warrants and Warrant Shares
have not been registered under the Securities Act of 1933, as amended,
("Securities Act") or the securities laws of any states and will be offered and
sold in reliance on exemptions from the registration requirement of such laws.
The Warrants and Warrant Shares are deemed to be "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act,
because the Warrants will be issued and sold by the Company in private
transactions not involving a public offering. In general, under Rule 144 as
currently in effect, subject to the satisfaction of certain other conditions, a
person, including an affiliate of the Company (or persons whose shares are
aggregated), who has owned restricted shares of Common Stock beneficially for
at least two years is entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class or, if the Common Stock is quoted on
NASDAQ, the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has held the securities for at least three
years and who has not been an affiliate of the Company for at least three
months immediately prior to a proposed sale is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
13.2 LEGEND RESTRICTION. The Company shall cause the following
legend to be set forth on each Warrant Certificate and certificates
representing the Warrant Shares unless counsel for the Company is of the
opinion as to any such certificates that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER APPLICABLE
STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
13.3 NOTICE OF PROPOSED TRANSFER. Prior to any proposed
transfer of the Warrants or of the Warrant Shares, the Holder thereof shall
give written notice to the Company stating such Holder's intention to effect
such transfer and describing the circumstances of the proposed transfer in
sufficient detail, accompanied by either (i) an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act, or (ii) a "no action"
letter from the staff of the Securities and Exchange Commission ("Commission")
to the effect that the staff will not recommend that enforcement action be
taken if the proposed transfer is effected without registration. Subject to
evidence of compliance with any applicable state securities or "blue sky" law
or laws, the Company shall promptly notify the Holder in writing that such
Holder may
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proceed with its transfer as described, and, if the transfer is of Warrant
Shares, shall instruct its transfer agent to remove any stop-transfer
restrictions against the Warrant Shares when transferred as proposed.
Section 14. INDEMNIFICATION.
14.1 The Company will indemnify each Holder, each of its
officers, directors and partners, legal counsel, and accountants and each
person controlling such Holder within the meaning of Section 18 of the
Securities Act, with respect to which registration, qualification, or
compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls within the meaning of
Section 18 of the Securities Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular, or other document (including any related
registration statement, notification, or the like) incident to any such
registration, qualification or compliance, or based on 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 any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration,
qualification, or compliance, and will reimburse each such Holder, each of
its officers, directors, partners, legal counsel, and accountants and each
person controlling such Holder, each such underwriter, and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action, provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability, or expense arises out of or is based on any
untrue statement or omission in reliance upon written information furnished
to the Company by such Holder or underwriter and stated to be specifically
for use therein. It is agreed that the indemnity agreement contained in this
Section 16.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent has not been unreasonably withheld).
14.2 Each Holder will, if Warrant Shares held by him, her or it
are included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify the Company, each of its directors,
officers, partners, legal counsel, and accountants and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 18 of the Securities Act, each other such Holder and Other Stockholder,
and each of their officers, directors, and partners, and each person
controlling such Holder or Other Stockholder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular, or
other document, or 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, and will reimburse the Company and such Holders, Other
Stockholders, directors, officers, partners, legal counsel, and accountants,
persons, underwriters, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein provided, however, that the
obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions
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in respect thereof) if such settlement is effected without the consent of
such Holder (which consent shall not be unreasonably withheld); and provided
that in no event shall any indemnity under this Section 16 exceed the gross
proceeds from the offering received by such Holder.
14.3 Each party entitled to indemnification under this Section
16 ("Indemnified Party") shall give notice to the party required to provide
indemnification ("Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefor, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 16, to the extent such
failure is not prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
14.4 If the indemnification provided for in this Section 16 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred
to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statement or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided, however that in no event shall any contribution by a
Holder under this Section 16.4 exceed the gross proceeds from the offering
received from such Holder. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
14.5 Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
Section 15. RULE 144 REPORTING. With a view to making available the
benefits of certain provisions of the Securities Act or the rules and
regulations of the Commission that may permit the sale of the restricted
securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information regarding the Company
available as those terms are understood and defined in Rule 144 under the
Securities Act; and
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(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 at any time after it has become subject to such
reporting requirements.
Section 16. DELAY OF REGISTRATION. No Holder shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Agreement.
Section 17. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement, without the approval of any Holder, in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable and which shall not
be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interest of the Holders, or as provided herein. The
Company will notify Warrant Holder of any such supplement or amendment.
Section 18. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company and the Warrant Holder shall
bind and inure to the benefit of the Company and the Warrant Holders, and their
respective successors and assigns.
Section 19. NOTICES. Any notice pursuant to this Agreement by any Holder
to the Company, shall be in writing and shall be mailed or delivered to the
Company at its office at 1800 Avenue of the Stars, Suite 480, Los Angeles,
California 90067. Any notice mailed pursuant to this Agreement by the Company
to the Holders shall be in writing and shall be mailed or delivered to such
Holders at their respective addresses on the books of the Warrant Agent. Each
party hereto may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in writing to the other
party.
Section 20. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will not
merge or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall
expressly assume, by supplemental agreement satisfactory in form to the Warrant
Agent and executed and delivered to the Company, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
Section 21. APPLICABLE LAW. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to principles of conflict of laws.
Section 22. BENEFITS TO THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and
the Warrant Holders any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, and the Holders of the Warrants.
Section 23. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first
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above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
/s/ Eloy L. Ellis By /s/ Mark Beychok
- --------------------------------- ---------------------------------
Eloy L. Ellis Mark Beychok
Acting Chief Financial Officer 955 North Beverly Glen
Los Angeles, CA 90077
Tax Payer ID: ###-##-####
-----------------
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EXHIBIT A
CERTIFICATE NO. VECA-201
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER
APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
CLASS A COMMON STOCK WARRANT
TO PURCHASE 74,065 SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Mark Beychok or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to seventy four
thousand sixty five (74,065), fully paid and nonassessable shares of common
stock of the Company ("Common Stock"), at any time commencing one year after a
registration statement covering the Warrant Shares (as defined in the Warrant
Agreement referred to herein) under the Securities Act of 1933, as amended, has
been declared effective by the Securities and Exchange Commission and
terminating at 5:00 P.M. Los Angeles time 15 months thereafter, at the purchase
price of Twenty Two and one-half Cents ($0.225) per share ("Exercise Price")
(pending adjustment), as provided in Section 1 of a the Warrant Agreement.
This Warrant is issued pursuant to the Warrant Agreement made by the Company
dated November 30, 1995 in favor of all Warrant Holders ("Warrant Agreement")
and is subject to all the terms thereof, including the limitations on
transferability set forth in Section 13 thereof. The Holder accepts the terms
and provisions of the Warrant Agreement by acceptance of this Warrant
Certificate, and acknowledges receipt thereof.
The number of shares purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as set forth in
the Warrant Agreement.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Purchase Form on the last page hereof duly executed,
concurrently with payment of the Aggregate Exercise Price (as defined in
Section 8 of the Warrant Agreement) at the office of the Company ("Warrant
Agent"). Payment of the Aggregate Exercise Price shall be made at the option
of the Holder in cash or by check.
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EXHIBIT A
CONTINUED
Upon any partial exercise of this Warrant, there shall be countersigned
and issued to the Holder a new Warrant in respect of the shares of Common Stock
as to which this Warrant shall not have been exercised. This Warrant may be
exchanged at the office of the Warrant Agent by surrender of this Warrant
Certificate, properly endorsed either separately or in combination with one or
more other Warrants, for one or more new Warrants entitling the Holder thereof
to purchase the same aggregate number of shares as were purchased on exercise
of the Warrant or Warrants exchanged. No fractional shares will be issued upon
the exercise of this Warrant, but the Company shall pay the cash value of any
fraction upon the exercise of one or more Warrants. This Warrant is
transferable at the office of the Warrant Agent, in the manner and subject to
the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent, and
all other persons dealing with this Warrant, as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant shall not be valid or obligatory for any purpose until it
shall have been signed by the Company.
DATED: January 8, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
_______________________________________
Eloy L. Ellis
Acting Chief Financial Officer
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EXHIBIT A
CONTINUED
PURCHASE FORM
Dated ______________________
The undersigned hereby irrevocably elects to exercise the Warrant represented
by this Warrant Certificate No. VECA-201 to the extent of purchasing __________
shares of Common Stock of VITAFORT INTERNATIONAL CORPORATION and hereby makes
the payment of $_____________ in payment of the Aggregate Exercise Price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:_______________________________________________________________________
(please type or print in block letters)
Address:____________________________________________________________________
Signature:__________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________________, hereby sells, assigns
and transfers unto
Name:_______________________________________________________________________
Address:____________________________________________________________________
the right to purchase Common Stock of VITAFORT INTERNATIONAL CORPORATION
represented by this Warrant Certificate No. VECA-201 to the extent of ______
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _________________, Attorney, to transfer the same on the
books of the Company with full power of substitution.
Date:___________________________
Signature:______________________
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EXHIBIT 99.07
THE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND NEITHER
THE WARRANTS NOR THE SHARES NOR ANY INTEREST IN THE WARRANTS OR THE
SHARES MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER AND UNDER APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH
MUST BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
CLASS B COMMON STOCK
WARRANT AGREEMENT
THIS CLASS B COMMON STOCK WARRANT AGREEMENT is made as of January 8, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware
corporation ("Company"), in favor of Mark Beychok ("Warrant Holder" or
"Holder").
WHEREAS, the Company issued and sold in a non-public offering ("Offering")
pursuant to Section 4(2) of the Securities Act of 1933, as amended ("Securities
Act") approximately 300 Units ("Unit"), each Unit consisting of 100,000 shares
of the Company's Common Stock, $.0001 par value, 50,000 Class A Common Stock
Purchase Warrants ("A Warrants") and 50,000 Class B Common Stock Purchase
Warrants ("B Warrants"). Each A Warrant and each B Warrant entitles the holder
to purchase one share of the Company's common stock, $.0001 par value ("Common
Stock"); and
WHEREAS, the Company has agreed to convert your deferred fees (or wages)
into equity at the same rates and terms as the offering; and
WHEREAS, the Company deems it to be in the best interests of the Warrant
Holder that the Company establish the terms and conditions upon which the
Warrants may be issued, exercised and redeemed, and other matters as provided
herein.
NOW THEREFORE, to establish the terms and conditions of the Warrants, and
the rights and obligations of the Company and the Warrant Holder with respect
thereto, the Company hereby provides as follows:
Section 1. CERTIFICATION. For value received, the Warrant Holder or its
registered assign ("Holder") is entitled to purchase from the Company, subject
to the provisions of this Warrant Agreement, fully paid, validly issued and
nonassessable shares of the Company's Common Stock at the Exercise Price (as
defined herein) commencing one year after a registration statement covering the
Warrant Shares (as defined herein) under the Securities Act is declared
effective by the Securities and Exchange Commission
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("Effective Registration Date"), and terminating at 5:00 P.M. Los Angeles
time 24 months thereafter. The number of shares of Common Stock to be
received upon the exercise of the Warrant and the price to be paid for each
share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares."
Section 2. FORM OF WARRANT. The text of the Warrant and of the Purchase
Form shall be substantially as set forth in Exhibit A attached hereto
(collectively, the "Warrant Certificates"). The Exercise Price (as defined in
Section 8) and the number of shares issuable upon exercise of each Warrant are
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or one of its Vice Presidents, and
attested to by its Secretary or an Assistant Secretary. The signature of any
of such officers on the Warrant Certificates may be manual or facsimile.
Warrant Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrant Certificates or did not
hold such offices on the date of this Agreement.
Section 3. EXCHANGE OF WARRANT CERTIFICATES. Each Warrant Certificate
may be exchanged for another Certificate entitling the Holder thereof to
purchase a like aggregate number of shares as the Certificate surrendered then
entitled such Holder to purchase. Any Holder desiring to exchange a Warrant
Certificate shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the Certificate to be so exchanged.
Thereupon, the Company shall countersign and deliver to the person entitled
thereto a new Warrant Certificate as requested.
Section 4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
4.1 TERM OF WARRANTS. Subject to the terms of this Agreement,
each Holder shall have the right, which may be exercised commencing on the
Effective Registration Date and terminating at 5:00 PM. Los Angeles time 24
months thereafter, to purchase from the Company the number of fully paid and
nonassessable shares which the Holder may at the time be entitled to purchase
on exercise of such Warrants.
4.2 EXERCISE OF WARRANTS. A Warrant may be exercised upon
surrender to the Company ("Warrant Agent") at its office at Los Angeles,
California of the Certificate evidencing the Warrant to be exercised, together
with the Purchase Form attached hereto as Exhibit A, duly filled in and signed,
and upon payment to the Warrant Agent of the Aggregate Exercise Price (as
defined in and determined in accordance with the provisions of Sections 8 and
11 hereof) for the number of shares with respect to which such Warrant is then
exercised. Payment of the Aggregate Exercise Price shall be made in cash or by
check. Subject to Section 4 hereof, upon the surrender of the Warrant and
payment of the Aggregate Exercise Price, the Warrant Agent shall promptly issue
and cause to be delivered to or as directed by the Holder, and in such name or
names as the Holder may designate, a Certificate for the number of full shares
purchased upon the exercise of the Warrant, together with cash as provided in
Section 8 hereof; for any fractional shares otherwise issuable upon such
exercise. Such Certificate shall be deemed to have been issued, and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares, as of the date of the surrender of such Warrant and
payment of the Aggregate Exercise Price; provided, however, that if, at the
date of surrender of such Warrant and payment of such Aggregate Exercise Price,
the transfer books for the shares or other class of stock
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purchasable upon the exercise of such Warrant shall be closed, the
certificates for the shares with respect to which such Warrant is then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificate for such shares; provided further, however, that the transfer
books of record, unless otherwise required by law, shall not be closed at any
one time for a period longer than twenty (20) days. The rights of purchase
represented by the Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part, and in the
event that a Warrant Certificate is exercised to purchase less than all of
the shares purchasable on such exercise at any time prior to the date of
expiration of the Warrants, a new Certificate evidencing the remaining shares
available for purchase will be issued, and the Company is hereby irrevocably
authorized to sign and to deliver the new Warrant Certificate.
Section 5. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable with respect to any transfer involved in
the issue or delivery of any Warrants or certificates for shares in a name
other than that of the registered Holder of Warrants with respect to which such
shares are issued.
Section 6. MUTILATED OR MISSING WARRANTS. In case any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate mutilated, lost, stolen or destroyed,
a new Warrant Certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence to the reasonable satisfaction of
the Company of such mutilation, loss, theft or destruction of such Certificate
and indemnity, if requested, also to the reasonable satisfaction of the
Company. An applicant for such a substitute Warrant Certificate shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
Section 7. RESERVATION OF SHARES; PURCHASE OF WARRANTS; CALL OF
WARRANTS.
7.1 RESERVATION OF SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized Common Stock, a
number of shares of Common Stock sufficient to provide for the exercise of the
rights of purchase represented by the outstanding Warrants.
7.2 PURCHASE OF WARRANTS BY THE COMPANY. The Company shall
have the right, except as limited by law, other agreement or herein, to
purchase or otherwise acquire Warrants at such times, in such manner and for
such consideration as it may deem appropriate.
7.3 CALL OF WARRANTS BY COMPANY. The Company may issue a call
of this Warrant ("Call Notice") at any time after the Effective Registration
Date, but prior to the expiration of this Warrant, by written notice to Warrant
Holder, provided only that the Closing Price (hereinafter defined) of the
Company's Common Stock has theretofore equalled or exceeded Forty Five Cents
($0.45) per Share for ten (10) consecutive Trading Days after the Effective
Registration Date. This Warrant shall expire and become null and void thirty
(30) days after the issuance of the Call Notice. The Warrant Holder may
exercise this Warrant and purchase some or all of the Shares then subject to
this Warrant within said thirty (30)-day period, but may not thereafter
exercise this Warrant or purchase any of the Shares. If the Warrant is not
exercised within said thirty (30) day period, the Company will have the right
to redeem any or all outstanding and unexercised Warrants at a redemption price
of $0.0001 per Warrant. For purposes of this Section 7.3, "Closing Price"
means (a) if the Common Stock is then listed on an established stock
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exchange or exchanges, the average bid and ask price per share for each
Trading Day on the principal exchange on which the Common Stock is traded, as
reported in The Wall Street Journal; or (b) if the Common Stock is not then
listed on an exchange, the price per share for the Common Stock in the
over-the-counter market as quoted on NASDAQ (either National Market System or
Small Cap Issues or the OTC Electronic Bulletin Board), for each Trading Day,
as reported in The Wall Street Journal. If the Common Stock is not then
listed on an exchange or quoted on NASDAQ or the OTC Electronic Bulletin
Board, the Common Stock shall be deemed to have a Closing Price of less than
Thirty-Three and three-fourths Cents ($0.3375) per share on such Trading Day.
For purposes of this Section 7.3, the term "Trading Day" shall mean a day on
which the New York Stock Exchange is open for trading.
Section 8. EXERCISE PRICE. The price per share at which shares may be
purchased upon exercise of Warrants in effect at any time, and as adjusted from
time to time as provided in Section 11 of this Agreement, is referred to herein
as the "Exercise Price." Subject to adjustment,the Exercise Price shall be
Thirty Cents ($0.30) per share. The product of the Exercise Price times the
number of shares the Holder then elects to purchase is herein referred to as
the "Aggregate Exercise Price."
Section 9. FRACTIONAL SHARES. No fractional shares or script
representing fractional shares shall be issued upon the exercise of a Warrant.
Section 10. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at
law or in equity, and the rights of the Holder are limited to those expressed
herein and in the Warrant Certificate and are not enforceable against the
Company except to the extent set forth herein and therein.
Section 11. ADJUSTMENT OF WARRANT AND NUMBER OF SHARES. The number and
kind 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.
11.1 MECHANICAL ADJUSTMENTS. If the Company shall pay a
dividend in shares of its Common Stock (other than payments of Common Stock as
interest on preferred stock), subdivide (split) its outstanding shares of
Common Stock, combine (reverse split) its outstanding shares of Common Stock,
issue by reclassification of its shares of Common Stock any shares or other
securities of the Company, or distribute as a stock dividend to holders of its
Common Stock any securities of the Company or of another entity, the number of
shares of Common Stock or other securities the Holder hereof is entitled to
purchase pursuant to the Warrants immediately prior thereto shall be adjusted
so that the Holder shall be entitled to receive upon exercise the number of
shares of Common Stock or other securities which he, she or it would have owned
or would have been entitled to receive after the happening of any of the events
described above had the Warrant been exercised immediately prior to the
happening of such event, and the Exercise Price shall be correspondingly
adjusted; provided, however, that no adjustment in the number of shares and/or
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in such number and/or price;
and provided further, however, that any adjustments which by reason of this
Section 11 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. An adjustment made pursuant to this
Section 11 shall become effective immediately after the record date in the case
of a stock dividend or other distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. The Holder shall be entitled to participate in any
subscription or other rights offering made to holders of Common Stock as if he,
she or it had purchased the full number of shares as to which the Warrant
remains unexercised immediately prior to the record
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date for such rights offering.
11.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may
at its option at any time during the term of the Warrants, reduce the then
current Exercise Price to any amount deemed appropriate by the Board of
Directors of the Company.
11.3 NOTICE OF ADJUSTMENT. Whenever the number of shares
purchasable upon the exercise of each Warrant or the Exercise Price of such
shares is adjusted, as herein provided, the Company shall mail by first class
mail, postage prepaid, to each Holder notice of such adjustment or adjustments.
11.4 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in
subsection 11.1, no adjustment in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
11.5 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute an agreement that each Holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of shares and other securities and property which he, she or it
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The Company shall mail by first class mail,
postage prepaid, to each Holder, notice of the execution of any such agreement.
Such agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 11. The provisions of this subsection 11.5 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
11.6 STATEMENT ON WARRANTS. Irrespective of any
adjustments in the Exercise Price or the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in the Warrants initially issuable pursuant to this Agreement.
Section 12. SURVIVAL OF AGREEMENT. This Agreement and the rights and
obligations of the Company and the Warrant Holders hereunder shall not be
terminated by any of the following events:
Merger, reorganization or consolidation of the Company;
The transfer of all or substantially all of the assets of Company; or
The voluntary or involuntary dissolution of the Company.
In the event of any such merger, reorganization, consolidation or transfer of
assets, the surviving or resulting corporation or transferee of the assets of
the party affected shall be bound by and shall have the benefit of the
provisions of this Agreement, and the party affected shall take all actions
necessary to insure that such corporation or transferee is bound by the
provisions of this Agreement.
5
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Section 13. RESTRICTIONS ON TRANSFER. The provisions of this Section
13 shall be binding upon any transferee of the Warrants and upon each holder of
Warrant Shares. As used in this Section 13, the term "Warrant Shares" includes
any shares of the Company's Common Stock or other securities, issued in respect
of the Warrant Shares pursuant to any stock split, stock dividend,
recapitalization or otherwise; and the term "Warrant" includes any Warrant
Certificate or Certificates issued in exchange for the original Warrant
Certificate.
13.1 RESTRICTED SECURITIES. The Warrants and Warrant Shares
have not been registered under the Securities Act of 1933, as amended,
("Securities Act") or the securities laws of any states and will be offered and
sold in reliance on exemptions from the registration requirement of such laws.
The Warrants and Warrant Shares are deemed to be "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act,
because the Warrants will be issued and sold by the Company in private
transactions not involving a public offering. In general, under Rule 144 as
currently in effect, subject to the satisfaction of certain other conditions, a
person, including an affiliate of the Company (or persons whose shares are
aggregated), who has owned restricted shares of Common Stock beneficially for
at least two years is entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class or, if the Common Stock is quoted on
NASDAQ, the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has held the securities for at least three
years and who has not been an affiliate of the Company for at least three
months immediately prior to a proposed sale is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
13.2 LEGEND RESTRICTION. The Company shall cause the following
legend to be set forth on each Warrant Certificate and certificates
representing the Warrant Shares unless counsel for the Company is of the
opinion as to any such certificates that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER APPLICABLE
STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
13.3 NOTICE OF PROPOSED TRANSFER. Prior to any proposed
transfer of the Warrants or of the Warrant Shares, the Holder thereof shall
give written notice to the Company stating such Holder's intention to effect
such transfer and describing the circumstances of the proposed transfer in
sufficient detail, accompanied by either (i) an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act, or (ii) a "no action"
letter from the staff of the Securities and Exchange Commission ("Commission")
to the effect that the staff will not recommend that enforcement action be
taken if the proposed transfer is effected without registration. Subject to
evidence of compliance with any applicable state securities or "blue sky" law
or laws, the Company shall promptly notify the Holder in writing that such
Holder may
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proceed with its transfer as described, and, if the transfer is of Warrant
Shares, shall instruct its transfer agent to remove any stop-transfer
restrictions against the Warrant Shares when transferred as proposed.
Section 14. INDEMNIFICATION.
14.1 The Company will indemnify each Holder, each of its
officers, directors and partners, legal counsel, and accountants and each
person controlling such Holder within the meaning of Section 18 of the
Securities Act, with respect to which registration, qualification, or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls within the meaning of Section 18 of the
Securities Act any underwriter, against all expenses, claims, losses, damages,
and liabilities (or actions, proceedings, or settlements in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular, or other
document (including any related registration statement, notification, or the
like) incident to any such registration, qualification or compliance, or based
on 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 any violation by the Company of the Securities Act or any rule
or regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification, or compliance, and will reimburse each such Holder, each of its
officers, directors, partners, legal counsel, and accountants and each person
controlling such Holder, each such underwriter, and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating and defending or settling any such claim,
loss, damage, liability, or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based on any untrue statement or
omission in reliance upon written information furnished to the Company by such
Holder or underwriter and stated to be specifically for use therein. It is
agreed that the indemnity agreement contained in this Section 16.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent has not been unreasonably withheld).
14.2 Each Holder will, if Warrant Shares held by him, her or it
are included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify the Company, each of its directors,
officers, partners, legal counsel, and accountants and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 18 of the Securities Act, each other such Holder and Other Stockholder,
and each of their officers, directors, and partners, and each person
controlling such Holder or Other Stockholder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular, or
other document, or 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, and will reimburse the Company and such Holders, Other
Stockholders, directors, officers, partners, legal counsel, and accountants,
persons, underwriters, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein provided, however, that the
obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions
7
<PAGE>
in respect thereof) if such settlement is effected without the consent of
such Holder (which consent shall not be unreasonably withheld); and provided
that in no event shall any indemnity under this Section 16 exceed the gross
proceeds from the offering received by such Holder.
14.3 Each party entitled to indemnification under this
Section 16 ("Indemnified Party") shall give notice to the party required to
provide indemnification ("Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefor, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 16, to the extent such
failure is not prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
14.4 If the indemnification provided for in this Section 16 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred
to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statement or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided, however that in no event shall any contribution by a
Holder under this Section 16.4 exceed the gross proceeds from the offering
received from such Holder. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
14.5 Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
Section 15. RULE 144 REPORTING. With a view to making available the
benefits of certain provisions of the Securities Act or the rules and
regulations of the Commission that may permit the sale of the restricted
securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information regarding the Company
available as those terms are understood and defined in Rule 144 under the
Securities Act; and
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<PAGE>
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 at any time after it has become subject to such
reporting requirements.
Section 16. DELAY OF REGISTRATION. No Holder shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Agreement.
Section 17. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement, without the approval of any Holder, in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable and which shall not
be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interest of the Holders, or as provided herein. The
Company will notify Warrant Holder of any such supplement or amendment.
Section 18. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company and the Warrant Holder shall
bind and inure to the benefit of the Company and the Warrant Holders, and their
respective successors and assigns.
Section 19. NOTICES. Any notice pursuant to this Agreement by any Holder
to the Company, shall be in writing and shall be mailed or delivered to the
Company at its office at 1800 Avenue of the Stars, Suite 480, Los Angeles,
California 90067. Any notice mailed pursuant to this Agreement by the Company
to the Holders shall be in writing and shall be mailed or delivered to such
Holders at their respective addresses on the books of the Warrant Agent. Each
party hereto may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in writing to the other
party.
Section 20. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will not
merge or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall
expressly assume, by supplemental agreement satisfactory in form to the Warrant
Agent and executed and delivered to the Company, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
Section 21. APPLICABLE LAW. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to principles of conflict of laws.
Section 22. BENEFITS TO THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and
the Warrant Holders any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, and the Holders of the Warrants.
Section 23. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
/s/ Eloy L. Ellis By /s/ Mark Beychok
- ---------------------------------- --------------------------------
Eloy L. Ellis Mark Beychok
Acting Chief Financial Officer 955 North Beverly Glen
Los Angeles, CA 90077
Tax Payer ID: ###-##-####
----------------
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<PAGE>
EXHIBIT A
CERTIFICATE NO. VECB-201
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER
APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
CLASS B COMMON STOCK WARRANT
TO PURCHASE 74,065 SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Mark Beychok or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to seventy four
thousand sixty five (74,065), fully paid and nonassessable shares of common
stock of the Company ("Common Stock"), at any time commencing one year after a
registration statement covering the Warrant Shares (as defined in the Warrant
Agreement referred to herein) under the Securities Act of 1933, as amended, has
been declared effective by the Securities and Exchange Commission and
terminating at 5:00 P.M. Los Angeles time 24 months thereafter, at the purchase
price of Thirty Cents ($0.30) per share ("Exercise Price") (pending
adjustment), as provided in Section 1 of a the Warrant Agreement. This Warrant
is issued pursuant to the Warrant Agreement made by the Company dated November
30, 1995 in favor of all Warrant Holders ("Warrant Agreement") and is subject
to all the terms thereof, including the limitations on transferability set
forth in Section 13 thereof. The Holder accepts the terms and provisions of
the Warrant Agreement by acceptance of this Warrant Certificate, and
acknowledges receipt thereof.
The number of shares purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as set forth in
the Warrant Agreement.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Purchase Form on the last page hereof duly executed,
concurrently with payment of the Aggregate Exercise Price (as defined in
Section 8 of the Warrant Agreement) at the office of the Company ("Warrant
Agent"). Payment of the Aggregate Exercise Price shall be made at the option
of the Holder in cash or by check.
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<PAGE>
EXHIBIT A
CONTINUED
Upon any partial exercise of this Warrant, there shall be countersigned
and issued to the Holder a new Warrant in respect of the shares of Common Stock
as to which this Warrant shall not have been exercised. This Warrant may be
exchanged at the office of the Warrant Agent by surrender of this Warrant
Certificate, properly endorsed either separately or in combination with one or
more other Warrants, for one or more new Warrants entitling the Holder thereof
to purchase the same aggregate number of shares as were purchased on exercise
of the Warrant or Warrants exchanged. No fractional shares will be issued upon
the exercise of this Warrant, but the Company shall pay the cash value of any
fraction upon the exercise of one or more Warrants. This Warrant is
transferable at the office of the Warrant Agent, in the manner and subject to
the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent, and
all other persons dealing with this Warrant, as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant shall not be valid or obligatory for any purpose until it
shall have been signed by the Company.
DATED: January 8, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
_______________________________________
Eloy L. Ellis
Acting Chief Financial Officer
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<PAGE>
EXHIBIT A
CONTINUED
PURCHASE FORM
Dated ______________________
The undersigned hereby irrevocably elects to exercise the Warrant represented
by this Warrant Certificate No. VECB-201 to the extent of purchasing __________
shares of Common Stock of VITAFORT INTERNATIONAL CORPORATION and hereby makes
the payment of $_____________ in payment of the Aggregate Exercise Price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:_____________________________________________________________________
(please type or print in block letters)
Address:__________________________________________________________________
Signature:________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________________, hereby sells, assigns
and transfers unto
Name:_____________________________________________________________________
Address:__________________________________________________________________
the right to purchase Common Stock of VITAFORT INTERNATIONAL CORPORATION
represented by this Warrant Certificate No. VECB-201to the extent of ______
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _________________, Attorney, to transfer the same on the
books of the Company with full power of substitution.
Date:____________________________
Signature:_______________________
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<PAGE>
[LETTERHEAD] EXHIBIT 99.08
July 1, 1996
Eloy Ellis
635 North Canyon Boulevard
Monrovia, CA 91016
RE: Billing and Retainer Payments in Kind
Dear Eloy,
This is to confirm that the you have agreed to accept up to 100,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for approved and budegeted business expenses (primarily travel &
entertainment) incurred on behalf of Vitafort in accordance with Vitafort
reimbursement practices. The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the amounts budegeted and approved for the
coming month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Eloy Ellis shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for expense reimbursement, or applied to your account for future expenses
incurred as noted in the opening paragraph.
4) Eloy Ellis may choose, at her sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Eloy Ellis, via Vitafort Employee Expense Reports, will continue to bill for
approved services and related fees in accordance with Vitafort's approved
practices, in the ordinary course of business. These Expense reports will
clearly include the both the credits earned via stock issuance, and support
for the method of valuation (net proceeds stock transaction receipt of
comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ MARK BEYCHOK /s/ ELOY ELLIS / 7/1/96 / ###-##-####
--------------------------------------------
Mark Beychok Eloy Ellis / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.09
July 1, 1996
Allan Zackler
Zackler & Associates
3824 Grand Avenue, Suite 100 TEL: (510) 834-4400
Oakland, CA 94610 FAX: (510) 834-9185
RE: Billing and Retainer Payments in Kind
Dear Allan,
This is to confirm that the you have agreed to accept up to 200,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
(you are the sole proprietor of Zackler & Associates). The terms under which the
securities are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Allan Zackler shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Allan Zackler may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, Zackler & Associates will
post a credit on the Vitafort account in an amount equal to the closing bid
price on the Nasdaq Electronic Bulletin Board as of the date of issuance,
less estimated selling costs (not to exceed 6%). Such credit shall be
applied against valid open invoices and your retainer for future services in
the same manner as a cash payment, and shall be considered payment in full
for the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Allan Zackler, via Zackler and Associates, will continue to bill for
approved services and related fees on a monthly basis, in the ordinary
course of business. These monthly billings will clearly include the both
the credits earned via stock issuance, and support for the method of
valuation (e.g.; net transaction proceeds via broker confirmation).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ ALLAN ZACKLER / 7/1/96 / ###-##-####
--------------------------------------------
Eloy L. Ellis Allan Zackler / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.10
July 1, 1996
Andrew Harrison
5280 Miramar TEL: (541) 687-7846
Eugene, OR 97405 FAX: (541) 345-1144
RE: Billing and Retainer Payments in Kind
Dear Andy,
This is to confirm that the you have agreed to accept up to 90,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("Exposure Sales & Marketing"). The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Andrew Harrison shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Andrew Harrison may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Andrew Harrison, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned via
stock issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ ANDREW HARRISON / 7/1/96 / ###-##-####
---------------------------------------------
Eloy L. Ellis Andrew Harrison / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.11
July 1, 1996
Karyne Bozarjian
100 Elm Street TEL: (617) 639-8407
Marblehead, MA FAX: (617) 639-8258
RE: Billing and Retainer Payments in Kind
Dear Karyne,
This is to confirm that the you have agreed to accept up to 240,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for approved and budgeted business expenses (primarily travel &
entertainment) incurred on behalf of Vitafort in accordance with Vitafort
reimbursement practices. The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the amounts budgeted and approved for the
coming month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Karyne Bozarjian shall have the option to dispose of the shares in the
open market, in an orderly basis, during the ensuing 30 days from the date
of issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Karyne Bozarjian may choose, at her sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Karyne Bozarjian, via Vitafort Employee Expense Reports, will continue to
bill for approved services and related fees in accordance with Vitafort's
approved practices, in the ordinary course of business. These Expense
reports will clearly include the both the credits earned via stock issuance,
and support for the method of valuation (net proceeds stock transaction
receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ KARYNE BOZARJIAN / 7/1/96 / ###-##-####
-----------------------------------------------
Eloy L. Ellis Karyne Bozarjian / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.12
July 1, 1996
Bruce Barren
EMCO/Hanover Group
11099 Sunset Boulevard TEL: (310) 207-4300
Los Angeles, CA 90049-3224 FAX: (310) 478-3988
RE: Billing and Retainer Payments in Kind
Dear Bruce,
This is to confirm that the you have agreed to accept up to 120,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("EMCO/Hanover Group"). The terms under which the securities are to be accepted
are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Bruce Barren shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Bruce Barren may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Bruce Barren, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned
via stock issuance, and support for the method of valuation (net proceeds
stock transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ BRUCE BARREN / 3/2/96 / ###-##-####
----------------------------------------------
Eloy L. Ellis Bruce Barren / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.13
June 26, 1996
FRANK HARITON, ESQUIRE
485 Madison Avenue TEL: (212) 752-7200
New York, NY 10022 FAX: (212) 758-7072
RE: Billing and Retainer Payments in Kind
Dear Frank,
This is to confirm that the you have agreed to accept up to 135,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf. The terms under
which the securities are to be accepted are as follows:
1) Vitafort will issue all the shares at the earliest practicable time, as
near to July 1, 1996 as is possible.
2) At the time of issuance, or within 15 days thereafter, the shares shall be
included in a Regiostration on Form S-8.
3) Frank Hariton shall sell the shares in the open market, in an orderly
basis, during the ensuing 30 days from the date of issuance.
4) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services
(the "Credit").
5) Frank will issue monthly statements for fees and services in the normal
course of business, and these statements shall reflect the current status of
the Credit.
6) Vitafort acknowledges that the Credit may not be applied to fees relating
to capital raising transactions.
If the foregoing. correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the Vitafort
International Corporation by laws and SEC regulations.
Sincerely,
/s/ ELOY ELLIS
-----------------------------------
Eloy L. Ellis
AGREED AND ACCEPTED:
/s/ FRANK HARITON / 6/30/96 / ###-##-####
-----------------------------------------------
Frank Hariton / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.14
July 1, 1996
Theo Bradford
5982 Birdie Drive
LaVerne, CA 91750
RE: Billing and Retainer Payments in Kind
Dear Theo,
This is to confirm that the you have agreed to accept up to 60,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("Exposure Sales & Marketing"). The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Theo Bradford shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Theo Bradford may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Theo Bradford, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned via
stock issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ THEO BRADFORD / 7/3/96 / ###-##-####
---------------------------------------------
Eloy L. Ellis Theo Bradford / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.15
July 1, 1996
Don B. Finkelstein, Attorney at Law
30045 Via Borica TEL: (310) 377-9760
Rancho Palos Verdes, CA 90275 FAX: (310) 377-9969
RE: Billing and Retainer Payments in Kind
Dear Don,
This is to confirm that the you have agreed to accept up to 50,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("The Law Offices of Don B. Finkelstein"). The terms under which the securities
are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Don Finkelstein shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Don Finkelstein may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Don Finkelstein, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned via
stock issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ DON FINKELSTEIN / 7/2/96 / ###-##-####
----------------------------------------------
Eloy L. Ellis Don Finkelstein / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.16
July 1, 1996
Dana Perlman
Stein, Perlman & Hawk
9000 Sunset Boulevard, Suite 500 TEL: (310) 247-9500
Los Angeles, CA 90069 FAX: (310) 247-0115
RE: Billing and Retainer Payments in Kind
Dear Dana,
This is to confirm that the you have agreed to accept up to 120,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("Stein, Perlman & Hawk"). The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Dana Perlman shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Dana Perlman may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Dana Perlman, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned via
stock issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ DANA PERLMAN / 7/2/96 / ###-##-####
---------------------------------------------
Eloy L. Ellis Dana Perlman / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.17
July 1, 1996
Thomas Richard Myers
15 Hudson Street TEL: (415) 368-4053
Redwood City, CA 94062 FAX: (415) 368-3233
RE: Billing and Retainer Payments in Kind
Dear Tom,
This is to confirm that the you have agreed to accept up to 230,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm ("TYS
Enterprises"). The terms under which the securities are to be accepted are as
follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Thomas R. Myers shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Thomas R. Myers may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Thomas R. Myers, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned via
stock issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ THOMAS R. MYERS / 7/5/96 / ###-##-####
-----------------------------------------------
Eloy L. Ellis Thomas R. Myers / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.18
July 1, 1996
Rene Lidle
723 Camino Plaza #131 TEL: (415) 589-0163
San Bruno, CA 94066 FAX: (415) 952-3000
RE: Billing and Retainer Payments in Kind
Dear Mr. Lidle,
This is to confirm that the you have agreed to accept up to 80,000 of
shares of unrestricted, tradable common stock of Vitafort as payment on account
of Vitafort for agreed services and fees rendered on our behalf by your firm
("Rene Lidle/Bakery Consulting Services"). The terms under which the securities
are to be accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Rene Lidle shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Rene Lidle may choose, at his sole discretion, to keep the shares of stock
beyond the thirty days noted. In such case, his firm will post a credit on
the Vitafort account in an amount equal to the closing bid price on the
Nasdaq Electronic Bulletin Board as of the date of issuance, less estimated
selling costs (not to exceed 6%). Such credit shall be applied against
valid open invoices and your retainer for future services in the same manner
as a cash payment, and shall be considered payment in full for the stock
issued. Vitafort shall bear no interest in the future sales proceeds of
such stock, regardless of any difference between the actual proceeds and the
credit given.
5) Rene Lidle, via his firm, will continue to bill for approved services and
related fees on a monthly basis, in the ordinary course of business. These
monthly billings will clearly include the both the credits earned via stock
issuance, and support for the method of valuation (net proceeds stock
transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ RENE LIDLE / 7/2/96 / ###-##-####
------------------------------------------
Eloy L. Ellis Rene Lidle / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.19
July 1, 1996
Scott Sanders
Creative Food Consultants
5502 Drakes Court TEL: (510) 634-1806
Byron, CA 94514 FAX: (510) 634-1806
RE: Billing and Retainer Payments in Kind
Dear Scott,
This is to confirm that the you have agreed to accept up to 125,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for agreed services and fees rendered on our behalf by your firm
("Creative Food Consultants"). The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the retainer necessary to cover the coming
month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Scott Sanders shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for services, or applied to your retainer for future services.
4) Scott Sanders may choose, at his sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Scott Sanders, via his firm, will continue to bill for approved services
and related fees on a monthly basis, in the ordinary course of business.
These monthly billings will clearly include the both the credits earned
via stock issuance, and support for the method of valuation (net proceeds
stock transaction receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ SCOTT SANDERS / 7/2/96 / ###-##-####
---------------------------------------------
Eloy L. Ellis Scott Sanders / Date / Taxpayer ID
<PAGE>
[LETTERHEAD] EXHIBIT 99.20
July 1, 1996
Matheau Dakoske
4240 Lost Hills Road, Unit 201
Calabasas, CA 91301
RE: Billing and Retainer Payments in Kind
Dear Matheau,
This is to confirm that the you have agreed to accept up to 70,000 shares
of unrestricted, tradable common stock of Vitafort as payment on account of
Vitafort for approved and budgeted business expenses (primarily travel &
entertainment) incurred on behalf of Vitafort in accordance with Vitafort
reimbursement practices. The terms under which the securities are to be
accepted are as follows:
1) Vitafort will issue, at the earliest practicable time, sufficient shares
(as near to July 1, 1996 as possible) to fully cover all outstanding amounts
due and a reasonable estimate of the amounts budgeted and approved for the
coming month's planned activity. This reconciliation/issue process will be
repeated monthly (at or near month end) until the full number of shares has
been issued.
2) Matheau Dakoske shall have the option to dispose of the shares in the open
market, in an orderly basis, during the ensuing 30 days from the date of
issuance.
3) The net proceeds received from the sale of the shares shall be considered
as payment on account of Vitafort, and applied against open valid invoices
for expense reimbursement, or applied to your account for future expenses
incurred as noted in the opening paragraph.
4) Matheau Dakoske may choose, at her sole discretion, to keep the shares of
stock beyond the thirty days noted. In such case, his firm will post a
credit on the Vitafort account in an amount equal to the closing bid price
on the Nasdaq Electronic Bulletin Board as of the date of issuance, less
estimated selling costs (not to exceed 6%). Such credit shall be applied
against valid open invoices and your retainer for future services in the
same manner as a cash payment, and shall be considered payment in full for
the stock issued. Vitafort shall bear no interest in the future sales
proceeds of such stock, regardless of any difference between the actual
proceeds and the credit given.
5) Matheau Dakoske, via Vitafort Employee Expense Reports, will continue to
bill for approved services and related fees in accordance with Vitafort's
approved practices, in the ordinary course of business. These Expense
reports will clearly include the both the credits earned via stock issuance,
and support for the method of valuation (net proceeds stock transaction
receipt of comparable document).
If the foregoing correctly sets forth our agreement and understanding,
please sign a counterpart of this letter in the space provided below and return
a copy to the undersigned. Upon return, we will arrange for the appropriate
documentation to approve and issue the shares in accordance with the foregoing,
Vitafort International Corporation by laws and SEC regulations.
Sincerely, AGREED AND ACCEPTED:
/s/ ELOY ELLIS /s/ MATHEAU DAKOSKE / 7/2/96 / ###-##-####
-----------------------------------------------
Eloy L. Ellis Matheau Dakoske / Date / Taxpayer ID
