<PAGE>
As filed with the Securities and Exchange Commission on May 21, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 DAVID LEVENE
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND JOFF POLLON
OPTION AGREEMENT BETWEEN THE REGISTRANT AND JOFF POLLON
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND ROBERT LUKE
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND JOHN BURCHETTE
CONSULTING AGREEMENT ADDENDUM BETWEEN THE REGISTRANT AND NICHOLAS KONSTANT
OPTION AGREEMENT BETWEEN THE REGISTRANT AND NICHOLAS KONSTANT
LETTER AGREEMENT BETWEEN THE REGISTRANT AND LARRY BRUCIA
OPTION AGREEMENTS BETWEEN THE REGISTRANT AND LARRY BRUCIA
LETTER AGREEMENT BETWEEN THE REGISTRANT AND ELOY ELLIS
OPTION AGREEMENTS BETWEEN THE REGISTRANT AND ELOY ELLIS
LETTER AGREEMENT BETWEEN THE REGISTRANT AND JOHN COPPOLINO
OPTIONS AGREEMENT BETWEEN THE REGISTRANT AND JOHN COPPOLINO
CONSULTING AGREEMENT ADDENDUM BETWEEN THE REGISTRANT AND ANDREW HARRISON
OPTION AGREEMENT BETWEEN THE REGISTRANT AND ANDREW HARRISON
STOCK OPTION AGREEMENT BETWEEN REGISTRANT AND DEDE LAUX
STOCK OPTION AGREEMENT BETWEEN REGISTRANT AND ALEXANDRA LERSEY
STOCK OPTION AGREEMENT BETWEEN REGISTRANT AND DALE DE MARCHI
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
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Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Price Aggregate Registration
To be registered Registered Per Share* Offering Price* Fee**
Common Stock,
par value
$.0001 per 3,157,000
share shares $0.30 $791,100 $272.79
* 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 May
15, 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).
<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) 159,533 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
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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 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
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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 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
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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*
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****
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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 2, 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 May 8, 1996.
99.02 - Letter Agreement between Registrant and Lee Sacks, dated May 20, 1996.
99.03 - Letter Agreement between Registrant and David Levene, dated May 9, 1996.
99.04 - Consulting Agreement, dated as of April 30, 1996, between the Registrant
and Joff Pollon.
99.05 - Option Agreement, dated as of May 1, 1996 between the Registrant and
Joff Pollon.
99.06 - Consulting Agreement, dated May 1, 1996 between the Registrant and
Robert Luke.
99.07 - Consulting Agreement, dated May 1, 1996 between the Registrant and John
Burchette.
99.08 - Strategic Services Consulting Agreement Addendum Letter, dated May 15,
1996, between the Registrant and Nicholas Konstant.
99.09 - Option Agreement, dated as of May 15, 1996, between the Registrant and
Nicholas Konstant.
99.10 - Conversion Agreement, dated as of March 26, 1996, between the Registrant
and Larry Brucia.
99.11 - Class A Option Agreement, dated as of March 26, 1996, between the
Registrant and Larry Brucia.
99.12 - Class B Option Agreement, dated as of March 26, 1996 between the
Registrant and Larry Brucia.
99.13 - Conversion Agreement, dated as of March 26, 1996, between the Registrant
and Eloy Ellis.
99.14 - Class A Option Agreement, dated as of March 26, 1996, between the
Registrant and Eloy Ellis.
99.15 - Class B Option Agreement, dated as of March 26, 1996 between the
Registrant and Eloy Ellis.
99.16 - Conversion Agreement, dated as of March 26, 1996, between the Registrant
and John Coppolino.
99.17 - Class A Option Agreement, dated as of March 26, 1996, between the
Registrant and John Coppolino.
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99.18 - Class B Option Agreement, dated March 26, 1996 between the Registrant
and John Coppolino.
99.19 - Consulting Agreement, dated August 15, 1996, between the Registrant and
Andrew Harrison (Incorporated by Reference to Exhibit 99.05 to the
Registration Statement of Form S-8 filed by the Registrant on September
22, 1995.)
99.20 - Letter Extension Agreement, dated January 16, 1996, to Consulting
Agreement between the Registrant and Andrew Harrison.
99.21 - Option Agreement, dated January 16, 1996, between the Registrant and
Andrew Harrison.
99.22 - Letter Agreement, dated May 11, 1996 between the Registrant and Dede
Laux.
99.23 - Option Agreement, dated May 16, 1996, between the Registrant and Dede
Laux.
99.24 - Letter Agreement, dated May 11, 1996, between the Registrant and
Alexandra Lersey.
99.25 - Option Agreement, dated May 16, 1996, between the Registrant and
Alexandra Lersey.
99.26 - Letter Agreement, dated May 11, 1996, between the Registrant and Dale
DeMarchi.
99.27 - Option Agreement, dated May 16, 1996, between the Registrant and Dale
DeMarchi.
99.28 - Letter Agreement Dated November 20, 199, between the Registrant and
Matheau Dakoske.
* 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.
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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 16th day
of May, 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
(Principal Executive, Accounting
and Financial Officer)
/S/ MARK BEYCHOK May 20, 1996
- -----------------------
Mark Beychok
Chairman of the Board and
a Director
/S/SHELDON SCHRAGER May 20, 1996
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Sheldon Schrager
/S/STANLEY J. PASARELL Director May 20, 1996
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Stanley J. Pasarell
/S/ DONALD WOHL Director May 20, 1996
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Donald Wohl
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TENTH EXTENSION AGREEMENT
TENTH EXTENSION AGREEMENT, dated as of April 30, 1996, by and between
VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation, and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY.
WHEREAS, the parties hereto are the parties to a Warrant Agency
Agreement (the "Warrant Agency Agreement"), dated as of December 19, 1989, as
amended by an Extension Agreement (the "Extension Agreement"), dated as of
December 18, 1992, as further amended by a Second Extension Agreement (the
"Second Extension Agreement"), dated as of December 18, 1994, as further
amended by a Third Extension Agreement, dated as of January 18, 1995 (the
"Third Extension Agreement"), as further amended by a Fourth Extension
Agreement, dated as of April 3, 1995 (the "Fourth Extension Agreement"), as
further extended by a Fifth Extension Agreement, dated as of May 3, 1995 (the
"Fifth Extension Agreement"), as further extended by a Sixth Extension
Agreement, dated as of June 15, 1995, as further extended by a Seventh
Extension Agreement, dated as of July 17, 1995 (the "Seventh Extension
Agreement"), as further extended by an Eighth Extension Agreement, dated as
of August 16, 1995 (the "Eighth Extension Agreement"), and as further
extended by a Ninth Extension Agreement, dated as of December 31, 1995 (the
"Ninth Extension Agreement") (the Warrant Agency Agreement, the Extension
Agreement, the Second Extension Agreement, the Third Extension Agreement, the
Fourth Extension Agreement, the Fifth Extension Agreement, the Sixth
Extension Agreement, the Seventh Extension Agreement, the Eighth Extension
Agreement and the Ninth Extension Agreement are collectively referred to as
the "Amended Warrant Agency Agreement") and now desire to further amend the
same;
NOW THEREFORE, it is agreed as follows:
1. All defined terms shall have the meaning given them in the Amended
Warrant Agency Agreement unless otherwise defined herein.
<PAGE>
2. Section 5 of the Warrant Agency Agreement is amended to provide that
the period during which the Warrants may be exercised shall expire at 5:00 P.M.
New York City Time on July 31, 1996. The period from May 1, 1996 to July 31,
1996 shall be referred to as the Tenth Extension Period. The Warrant Agent is
authorized to affix a stamp to certificates for the Warrants indicating the
Tenth Extension Period.
3. The Warrant Price during the Tenth Extension Period shall be $2.375,
subject to adjustment as set forth in Section 4 of the Extension Agreement.
4. This Tenth Extension Agreement may only be changed by an instrument
in writing executed by the parties hereto. This Tenth Extension Agreement shall
be governed by the laws of the State of New York as they are applied to
contracts to be performed entirely within the State of New York.
5. Except as specifically amended hereby the Amended Warrant Agency
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the day and year first above written.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Mark Beychok
---------------------------------
Mark Beychok, President and Chief
Executive Officer
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Steven Nelson
---------------------------
Steven Nelson, Chairman
- 2 -
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "VITAFORT INTERNATIONAL CORPORATION, FILED IN THIS OFFICE ON THE
TWENTY-SIXTH DAY OF APRIL, A.D., 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[Seal of the State of Delaware]
[Seal of the Secretary of State, Delaware] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2209042 8100 AUTHENTICATION: 7923429
960120932 DATE: 04-26-96
<PAGE>
CERTIFICATE OF ELIMINATION
OF SERIES A 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
VITAFORT INTERNATIONAL CORPORATION
VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation (the
"Corporation"), pursuant to Article Fourth of its Certificate of Incorporation
and Section 151(g) of the General Corporation Law of the State of Delaware (the
"GCL"), certifies that the Board of Directors of the Corporation by unanimous
written consent dated April 25, 1996, duly adopted the following preambles and
resolutions for the elimination of that series of preferred stock designated as
the Series A% Cumulative Convertible Preferred Stock, par value $.01 per share:
WHEREAS, pursuant to a Certificate of Designation filed by the
Corporation, the Corporation is authorized to issue a series of preferred
stock which has been designated Series A 8% Cumulative Convertible
Preferred Stock, par value $.01, and is comprised of 11,435 shares (the
"Series A Preferred Stock"); and
WHEREAS, all of the issued Series A Preferred Stock have been converted
into the Corporation's Common Stock, par value $.0001 per share, and
there are no shares of the Series A Preferred Stock issued and
outstanding; now therefore, be it
RESOLVED, that the Corporation shall issue no further shares of Series A
8% Preferred Stock; and it is further
RESOLVED, that the Series A Preferred Stock shall be eliminated as
provided in the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, VITAFORT INTERNATIONAL CORPORATION has caused this
Certificate of Elimination to be signed by Mark Beychok, its President and
attested to by Frank J. Hariton, its Assistant Secretary, this 25th day of
April, 1996.
VITAFORT INTERNATIONAL CORPORATION
/s/ Mark Beychok
-----------------------------------
Mark Beychok, President
ATTEST:
/s/ Frank J. Hariton
- --------------------------------------
Frank J. Hariton, Assistant Secretary
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "VITAFORT INTERNATIONAL CORPORATION", FILED IN THIS OFFICE ON
THE SECOND DAY OF MAY, A.D., 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[Seal of the State of Delaware]
[Seal of the Secretary of State, Delaware] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2209042 8100 AUTHENTICATION: 7934171
960129903 DATE: 05-06-96
<PAGE>
CERTIFICATE OF ELIMINATION
OF SERIES D 8% CONVERTIBLE PREFERRED STOCK
OF
VITAFORT INTERNATIONAL CORPORATION
VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation (the
"Corporation"), pursuant to Article Fourth of its Certificate of Incorporation
and Section 151(g) of the General Corporation Law of the State of Delaware (the
"GCL"), certifies that the Board of Directors of the Corporation at a meeting
duly called and held on April 24, 1996, duly adopted the following preambles and
resolutions for the elimination of that series of preferred stock designated as
the Series D% Convertible Preferred Stock, par value $.01 per share:
WHEREAS, pursuant to a Certificate of Designation filed by the
Corporation, the Corporation is authorized to issue a series of preferred
stock which has been designated Series D 8% Convertible Preferred Stock,
par value $.01, and is comprised of 2,000 shares (the "Series D Preferred
Stock"); and
WHEREAS, all of the issued Series D Preferred Stock have been converted
into the Corporation's Common Stock, par value $.0001 per share, and
there are no shares of the Series D Preferred Stock issued and
outstanding; now therefore, be it
RESOLVED, that the Corporation shall issue no further shares of Series D
8% Preferred Stock; and it is further
RESOLVED, that the Series D Preferred Stock shall be eliminated as
provided in the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, VITAFORT INTERNATIONAL CORPORATION has caused this
Certificate of Elimination to be signed by Mark Beychok, its President and
attested to by Frank J. Hariton, its Assistant Secretary, this 30th day of
April, 1996.
VITAFORT INTERNATIONAL CORPORATION
/s/ Mark Beychok
-----------------------------------
Mark Beychok, President
ATTEST:
/s/ Frank J. Hariton
- --------------------------------------
Frank J. Hariton, Assistant Secretary
<PAGE>
[LETTERHEAD FRANK J. HARITON]
May 20, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
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 3,157,000
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, Esq. (ii) a letter agreement between the Company and David Levene;
(iii) a Consulting Agreement and Stock Option Agreement between the Company
and Jeff Pollon; (iv) a Consulting Agreement between the Company and Robert
Luke; (v) a Consulting Agreement between the Company and John Burchette; (vi)
a Consulting Agreement addendum and Stock Option Agreement between the
Company and Nicholas Konstant; (vii) Letter Agreement and Stock Option
Agreement(s) between the Company and each of Larry Brucia, Eloy Ellis, John
Coppolino, Dede Laux, Alexandra Lersey and Dale DeMarchi; (viii) Consulting
Agreement and Stock Option Agreement between the Company and Andrew Harrison;
and (ix) 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 J. Hariton
Frank J. Hariton
<PAGE>
Exhibit 23.02
INDEPENDENT AUDITOR'S 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's 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.
KMPG PEAT MARWICK LLP
Los Angeles, California
May 20, 1996
<PAGE>
[SACKS & ZWEIG LETTERHEAD]
May 8, 1996
VIA FACSIMILE & U.S. MAIL
556 1227
Mr. Mark Beychok
Vitafort International Corporation
1800 Avenue of the Stars
Suite 480
Los Angeles, CA 90067
Re: PROFESSIONAL SERVICES
Dear Mark:
This will confirm our understanding and agreement that Vitafort
International Corporation will issue 200,000 shares of Vitafort's stock,
pursuant to an S-8 Registration as a retainer for work, labor and services
which Sacks & Zweig will perform for Vitafort. Please advise when the stock
certificate will be issued to Sacks & Zweig.
Thank you for your kind cooperation in this matter.
Very truly yours,
SACKS & ZWEIG
/s/ LEE SACKS
Lee Sacks
LS:pmc
cc: Mr. Eloy Ellis
Michael K. Zweig, Esq.
<PAGE>
[LETTERHEAD SACKS & ZWEIG]
May 20, 1996
VIA FACSIMILE & U.S. MAIL
- -------------------------
556 1227
Mr. Eloy Ellis
Vitafort International Corporation
1800 Avenue of the Stars
Suite 480
Los Angeles, CA 90067
Re: Issuance of Stock to Sacks & Zweig
----------------------------------
Dear Eloy:
This will confirm my authorization to issue 50,000 shares of Vitafort
stock to Lee Sacks instead of Sacks & Zweig. For reference purposes, my
social security No. is ###-##-####. Please file the S-8 registration
statement in connection with the stock forthwith. We anticipate the delivery
of stock by Friday, May 24, 1996.
Thank you for your kind cooperation in this matter.
Very truly yours,
Sacks & Zweig
/s/ Lee Sacks
Lee Sacks
<PAGE>
[LEVENE, NEALE & BENDER L.L.P. LETTERHEAD]
May 9, 1996
Joff Pollon
Vitafort International Corporation
1800 Avenue of the Stars Suite 480
Los Angeles, CA 90067
Re: Auburn Farms, Inc.
Nature's Warehouse
Dear Joff:
This is to confirm that the undersigned shall accept 60,000 shares of
unrestricted, tradable common stock of Vitafort as payment on account of the
enclosed invoice relating to the AFI transaction. The terms under which the
securities are to be received are as follows:
1. The undersigned shall have the option to dispose of the shares in the
open market, on an orderly basis, during the ensuing 30 days from the date of
issuance.
2. If the net proceeds received from the sale of the shares are less than
the outstanding balance of fees and costs owing by Vitafort to Levene, Neale &
Bender L.L.P. ("LNB"), Vitafort shall pay LNB the difference.
3. If the shares are sold for more than the balance due LNB, the proceeds
shall be retained in full satisfaction of the enclosed invoice and neither the
undersigned nor LNB shall have any obligation to Vitafort to refund any premium
realized.
4. If the undersigned elects not to dispose of all of the shares during
the 30 day period, the undersigned shall be deemed to have accepted the shares
in full satisfaction of the enclosed invoice.
<PAGE>
Mr. Joff Pollon
May 9, 1996
Page 2
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 and arrange for the shares to be issued.
Very truly yours,
/s/ DAVID W. LEVENE
David W. Levene
DWL:blc
cc: David L. Neale, Esq. (i/o)
Ron Bender, Esq. (i/o)
AGREED TO AND ACCEPTED:
VITAFORT INTERNATIONAL CORPORATION
By:
-------------------------------
Joff Pollon
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and executed as of the
30th day of April 1996, by and between VITAFORT INTERNATIONAL CORPORATION, a
Delaware corporation located at 1800 Avenue of the Stars, Suite 400, Los
Angeles, California, 90067("Company"), and JOFF POLLON of 2286 Betty Lane,
Beverly Hills, California 90210 ("Consultant"), and is made with respect to the
following facts:
A. Consultant represents that he possesses the knowledge and ability to
successfully assist the Company in its strategic planning, capitalization and
acquisition program.
B. The parties have entered into this Agreement for the purpose of setting
forth the terms of consultancy of Consultant to the Company.
C. Company and Consultant believe that it is in their mutual best
interests to enter into a consultant agreement pursuant to the terms
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. SCOPE OF REPRESENTATION. Company grants Consultant permission to
act on Company's behalf in assisting Company in its strategic planning,
capitalization and acquisition program. Consultant's services shall be provided
on a non-exclusive basis. Consultant shall provide his services on a best
efforts basis.
2. CONSULTANT'S EXPENSES. Subject to prior approval of the Company,
Consultant shall provide his services at the Company's expense and at his own
place of business. Consultant agrees that at the expense and prior approval of
the Company, he may be required to travel to assist and advise the Company with
respect to his efforts on behalf of the Company.
3. INDEPENDENT CONTRACTOR; NO POWER TO BIND. Consultant is not an
employee of Company for any purpose whatsoever, but is an independent
contractor. Company is interested only in the results obtained by the
Consultant, who shall have, subject to the terms of this Agreement, sole control
of the manner and means of performing under this Agreement. Consultant does not
have the right or authority to create a contract or obligation either express or
implied, on behalf of, in the name of or binding upon Company, or to pledge
Company's credit, or to extend credit in the Company's name
1
<PAGE>
unless otherwise agreed in writing. Consultant shall have no right or authority
to commit Company in any manner without the prior written consent of Company.
4. COMPENSATION.
(a) Fee.-- Company shall pay a monthly fee of two thousand
five hundred dollars ($2,500) per month payable in full on or before the
fifth day of each month. Company may pay Consultant an additional fee or
bonus at the sole and absolute discretion of Company's Board of Directors.
(b) Option.-- Consultant shall be granted a one year option to
purchase shares of the Company in the amount of four hundred thousand shares
(400,000) at an exercise price of twenty four ($.24) per share. The option
to purchase shares shall be registered under the Securities Act of 1933 or
pursuant to an exemption thereunder as soon as practicable but in no event
later than 30 days from the date of this agreement.
(c) Contingent Fee.-- Consultant shall receive a contingent fee
for materially assisting the Company in any transaction which is undertaken
during the term. The amount of the contingent fee shall be negotiated in good
faith on a case by case basis, may be paid in cash and registered securities and
based upon a "Lehman's Formula" (i.e. a fee of 5% of the first million dollars
of consideration paid or received pursuant to a transaction, 4% for the next
million dollars of the transaction, 3% for the next million, 2% for next million
and 1% for each million dollars thereafter). In connection with Consultant's
material assistance in the acquisition of the brands and trademarks of Auburn
Farms' and Nature's Warehouse, The Company and Consultant agree that Consultant
is entitled to receive three hundred and fifty thousand (350,000) shares as
Consultant's entire compensation for such advisory services.
5. TERM. This Agreement shall continue in full force and effect for a
period of six months from July 1, l996; provided that the provisions and
agreements relating to confidentiality and non-circumvention shall continue in
full force and effect for a period of two (2) years from the date of
termination.
6. WARRANTIES AND REPRESENTATIONS. Consultants' advisory services are
provided on a best efforts basis and are based on his personal experience and
expertise. There are no guarantees, warranties or representations of any kind
that Consultant's advise or services will produce any specific results for the
benefit of the Company. Actual results may substantially and materially differ
from those suggested by Consultant. Consultant represents and warrants to
Company that (a) he is under no contractual restriction or other restrictions or
obligations that are inconsistent with the execution of this Agreement, the
performance of his duties and the covenants hereunder, and (b) he is under no
physical or mental disability that would interfere with his keeping and
performing all of the agreements, covenants and conditions to be kept or
performed hereunder.
2
<PAGE>
7. NOTICE. Except as otherwise specifically provided, any notices to be
given hereunder shall be deemed given upon personal delivery, upon the next
business day immediately following the day sent if sent by overnight express
carrier, or upon the third business day following the day sent if sent postage
prepaid by certified or registered mail, return receipt requested, to the
following addresses (or to such other address or addresses as shall be specified
in any notice given):
In case of Company: Vitafort International Corporation
1800 Avenue of the Stars, Suite 400
Los Angeles, Ca. 90067
Attn.: Mark Beychok
In case of Consultant: Joff Pollon
2286 Betty Lane
Beverly Hills, California
90210
8. WAIVER OF BREACH. The waiver by a party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of this Agreement.
9. ASSIGNMENT. Except as otherwise provided herein, the rights and benefits
of the parties contained in this Agreement shall inure to the benefit of and be
binding upon the successors, assigns, administrators, and personal
representatives of the parties hereto.
10. COMPLIANCE WITH LAW. During the Term, Consultant shall comply with all
laws andregulations applicable to Consultant in the conduct of his business.
11. INCORPORATION BY REFERENCE. The Confidentiality Agreement attached
hereto as an exhibit is incorporated herein by reference in its entirety.
12. ARBITRATION. Any controversy or claim arising out of or relating
to any interpretation, breach or dispute concerning any of the terms or
provisions of this Agreement, which disagreement is not settled within thirty
days after it arises, shall be settled by binding arbitration in Los Angeles
California in accordance with the laws of the State of California and under
the rules then obtaining of the American Arbitration Association and judgment
upon the award rendered in said arbitration shall be final and may be entered
in any court of the State of California having jurisdiction thereof. Any
party hereto may apply for such arbitration. The parties incorporate the
provisions of California Code of Civil Procedure, Sections 1283.05 and 1283.1
(relating to discovery) into this agreement and make those provisions a part
of and applicable to any proceedings, including arbitration arising under the
terms of this Agreement.
3
<PAGE>
13. ATTORNEYS FEES. In the event that an action at law or in equity is
brought to enforce the provisions of this Agreement or to prevent a breach
thereof, the successful party in such action or arbitration proceeding shall be
entitled to an award of attorney's fees and other costs as shall be established
by the court or pursuant to a binding arbitration proceeding.
14. HOLD HARMLESS & INDEMNIFICATION.-- The Company shall hold Consultant
harmless from and against and shall indemnify the other for any liability, loss,
cost, expenses or damages howsoever caused by reason of any injury or loss
sustained by or to any person or property by reason of any alleged wrongful act,
misrepresentation or omission and it shall pay all sums to be paid or discharged
in case of any action or any such damages or injuries relating to the subject
matter of this Agreement or services or obligations rendered hereunder.
15. APPLICABLE LAW. This Agreement shall be construed as a whole and in
accordance with its fair meaning. This Agreement shall be interpreted in
accordance with the laws of the State of California.
16. ENTIRE AGREEMENT. This Agreement, together with the documents and
exhibits referred to herein, embodies the entire understanding among the
parties and merges all prior discussions or communications among them, and no
party shall be bound by any definitions, conditions, warranties, or
representations other than as expressly stated in this Agreement, or as
subsequently set forth in writing, signed by the duly authorized
representatives of all of the parties hereto.
17. NO ORAL CHANGE; WAIVER. This Agreement may only be changed, modified, or
amended in writing by the mutual consent of the parties hereto. The provisions
of this Agreement may only be waived in or by a writing signed by the party
against whom enforcement of any waiver is sought.
18. CONFLICT OF INTEREST. Company acknowledges that, in the course of
Consultant's non-exclusive services and the term, Consultant may now or in the
future have certain potential or actual conflicts of interest. Any such actual
or potential conflicts are hereby waived.
19. SEVERABILITY. If any provision of this Agreement shall be held or deemed
to be, or shall in fact be, inoperative or unenforceable as applied in any
particular case because it conflicts with any other provision or provisions
hereof, or any constitution or statute or rule of public policy, or for any
other reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable to any extent whatsoever.
The invalidity of any one or more phrases, sentences, clauses, sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
4
<PAGE>
20. INTERPRETATION. Each of the parties acknowledge that it has been
represented by independent counsel of its choice throughout all negotiations
that have preceded the execution of this Agreement, and that it has executed the
same with consent and upon the advice of said independent counsel. Each party
and its counsel cooperated in the drafting and preparation of this Agreement and
the documents referred to herein, and any and all drafts relating thereto shall
be deemed the work product of the parties and may not be construed against any
party by reason of its preparation. Accordingly, any rule of law, including but
not limited to any decision that would require interpretation of any ambiguities
in this Agreement against the party that drafted it, is of no application and is
hereby expressly waived. The provisions of this Agreement shall be construed as
a whole and in accordance with its fair meaning to affect the intentions of the
parties and this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the April 30, l996.
COMPANY: VITAFORT INTERNATIONAL CORPORATION
By /s/Mark Beychok
---------------------------
MARK BEYCHOK
CONSULTANT: JOFF POLLON
/s/Joff Pollon
----------------------------
5
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE MADE AT
ANY TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED WITH EVIDENCE
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION
OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF MAY 1, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: Joff Pollon
ADDRESS: 2286 Betty Lane
Beverly Hills, CA
90210
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and in the Consulting Contract between Mr. Pollon and Vitafort
executed in April, 1996 (incorporated by reference), to purchase from Vitafort
International Corporation (the "Company"), a Delaware corporation, having its
offices at Suite 480, 1800 Avenue of the Stars, Los Angeles, California 90067,
up to FOUR HUNDRED THOUSAND (400,000) shares of the Company's common stock
subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the Company's
common stock including Underlying Securities, as more fully set forth in
Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .24) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
(d) The options vest based upon mutual agreement based upon assigned
projects and approved time & expenses.
- 1 -
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until MAY 1, 1997 (the "Expiration Date"), by the
presentation of this Option, with the purchase form attached duly
executed, at the Company's office (or such office or agency of the
Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 14 hereof), specifying the number of Common Shares
as to which the Option is being exercised, and upon payment by the
Holder to the Company in cash or by certified check or bank draft, in an
amount equal to the Option Price times the number of Common Shares then
being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made for
such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after the
rights represented by this Option shall have been so exercised. If this
Option shall be exercised in part only or transferred in part subject to
the provisions herein, the Company shall, upon surrender of this Option
for cancellation or partial transfer, deliver a new Option evidencing
the rights of the Holder hereof to purchase the balance of the
Underlying Shares which such Holder is entitled to purchase hereunder.
Exercise in full of the rights represented by this Option shall not
extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as are
purchasable hereunder; and (ii) this Option may be divided or combined with
other Options which carry the same rights, in either case, upon presentation
hereof at the aforesaid office of the Company together with a written
notice, signed by the Holder hereof, specifying the names and denominations
in which new Options are to be issued, and the payment of any transfer tax
due in connection therewith.
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common Shares
by recapitalization, reclassification, stock dividend, or split-up
thereof or other means, the number of Common Shares subject to this
Option immediately prior to such subdivision shall be proportionately
increased and the Option Price shall be proportionately decreased, and
if the Company shall at any time combine the outstanding Common Shares
by recapitalization, reclassification or combination thereof or other
means, the number of Common Shares subject to this Option immediately
prior to such combination shall be proportionately decreased and the
Option Price shall be proportionately increased. Any such adjustment
and adjustment to the Option Price shall become effective at the close
of business on the record date for such subdivision or combination.
- 2 -
<PAGE>
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be required
to make such equitable adjustment in the Option Price and the type
and/or number of Underlying Securities in effect immediately prior to
the record date of such distribution as may be necessary to preserve to
the Holder of this Option rights substantially proportionate to and
economically equivalent to those enjoyed hereunder by such Holder
immediately prior to the happening of such distribution. Any such
adjustment made reasonably and in good faith by the Board of Directors
shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If the
Company shall make a record of the Holders of its Common Shares for the
purpose of entitling them to receive any dividend or distribution and
legally abandon its plan to pay or deliver such dividend or distribution
then no adjustment in the number of Common Shares subject to the Option
shall be required by reason of the making of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by Section
4(a) hereof or which solely affects the par value of such Common Shares)
or in the case of any merger or consolidation of the Company with or
into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in
any reclassification, change, capital reorganization or change in the
ownership of the outstanding Common Shares), or in the case of any sale
or conveyance or transfer of all or substantially all of the property of
the Company and in connection with which the Company is dissolved, the
Holder of this Option shall have the right thereafter (until the
expiration of the right of exercise of this Option) to receive upon the
exercise hereof, for the same aggregate Option Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock
or other securities or property receivable upon such reclassification,
change, capital reorganization, merger or consolidation, or upon the
dissolution following any sale or other transfer, by a holder of the
number of Common Shares of the Company equal to the number of common
shares obtainable upon exercise of this Option immediately prior to such
event; and if any reorganization, reclassification, change, merger,
consolidation, sale or transfer also results in a change in Common
Shares covered by Section 4(a), then such adjustment shall be made
pursuant to both this Section 4(d) and Section 4(a). The provisions of
this Section 4(d) shall similarly apply to successive reclassification,
or capital reorganizations, mergers or consolidations, changes, sales or
other transfers.
- 3 -
<PAGE>
(e) The Company shall not be required to issue fractional Common Shares upon
any exercise of this Option. As to any final fraction of a Common Share
which the Holder of this Option would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the
market value of a share of such stock on the business day preceding the
day of exercise or book value as determined by the Company's independent
public accountants if not publicly traded. The Holder of this Option,
by his acceptance hereof, expressly waives any right to receive any
fractional shares of stock upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape or
(B) if the principal market for such securities is the over-the-counter
market, the high bid price on such date as set forth by NASDAQ or
closing price if listed on NASDAQ NMS or, if the security is not quoted
on NASDAQ, the high bid price as set forth in the NATIONAL QUOTATION
BUREAU sheet listing such securities for such day. Notwithstanding the
foregoing, if there is no reported closing price or high bid price, as
the case may be, on a date prior to the event requiring an adjustment
hereunder, then the current market price shall be determined as of the
latest date prior to such day for which such closing price or high bid
price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the Option
Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of this Option, and without
impairing any such adjustment the certificate representing this Option
may continue to express the Option Price and the number of Common Shares
obtainable upon exercise at the same price and number of Common Shares
as are stated herein.
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions hereof.
(i) Upon any adjustment of this Option the Company shall give written notice
thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon exercise
of this Option and shall set forth in reasonable detail the events which
resulted in such adjustment.
- 4 -
<PAGE>
5. For the purposes of this Option, the terms "Common Shares" or "Common Stock"
shall mean (i) the class of stock designated as the common stock of the
Company on the date set forth on the first page hereof or (ii) any other
class of stock resulting from successive changes or reclassification of such
Common Stock consisting solely of changes from par value to no par value, or
from no par value to par value or changes in par value. If at any time, as
a result of an adjustment made pursuant to Section 4, the securities or
other property obtainable upon exercise of this Option shall include shares
or other securities of another corporation or other property, then
thereafter, the number of such other shares or other securities or property
so obtainable shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 4, and all other
provisions of this Option with respect to Common Shares shall apply on like
terms to any such other shares or other securities or property. Subject to
the foregoing, and unless the context requires otherwise, all references
herein to Common Shares shall, in the event of an adjustment pursuant to
Section 4, be deemed to refer also to any other shares or other securities
or property when obtainable as a result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option may
be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at its
expense will obtain the listing thereof on all quotation systems or
national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares shall
not be sufficient to effect the exercise of this Option, the Company
will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall
be sufficient for such purpose; the Company shall have analogous
obligations with respect to any other securities or property issuable
upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued, fully
paid, non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option shall
be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
- 5 -
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option Holder, provided only that the Closing
Price (hereinafter defined) of the Company's Common Stock has theretofore
equalled or exceeded FIFTY CENTS ($0.50) per Share for ten (10) consecutive
Trading Days after the Effective Registration Date. This Option shall
expire and become null and void thirty (30) days after the issuance of the
Call Notice. The Option Holder may exercise this Option and purchase some
or all of the Shares then subject to this Option within said thirty (30)-day
period, but may not thereafter exercise this Option or purchase any of the
Shares. If the Option is not exercised within said thirty (30) day period,
the Company will have the right to redeem any or all outstanding and
unexercised Options at a redemption price of $0.0001 per Option. For
purposes of this Section 7.3, "Closing Price" means (a) if the Common Stock
is then listed 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 FIFTY CENTS ($0.50) 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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities shall
be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10. If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11. Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
- 6 -
<PAGE>
12. Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be canceled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of a
transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13. This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors, legal
representatives and assigns.
14. All notices required hereunder shall be in writing and shall be deemed given
when telegraphed, delivered personally or within two (2) days after mailing
when mailed by certified or registered mail, return receipt requested, to
the party to whom such notice is intended, at the address of such other
party as set forth on the first page hereof, or at such other address of
which the Company or Holder has been advised by the notice hereunder.
15. In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16. The validity, interpretation and performance of this Option and of the terms
and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of MAY 1, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Mark Beychok
---------------------------------
Mark Beychok, Chief Executive Officer
- 7 -
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase __________ Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
------------------ --
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
------------------------------------------------------
Name to whom certificates are to be issued if different from above
--------------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
------------------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
------------------------------------------------------
(Please Print)
------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
- 8 -
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED _______________________________, hereby sells,
assigns and transfers to _______________________________,(Social
Security or I.D. No.______________________) the within Option, or that
portion of this Option purchasable for _______ common shares together
with all rights, title and interest therein, and does hereby irrevocably
constitute and appoint _____________________________________ attorney to
transfer such Option on the register of the within named Company, with
full power of substitution.
------------------------------------------------------------------
(Signature)
Dated: , 19
----------- -----
Signature Guaranteed:
------------------------------------------------------
(INTENTIONALLY BLANK)
- 9 -
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (Agreement), is made and entered into on this First
day of May, 1996 (Effective Date) by and between Vitafort International
Corporation, a Delaware corporation ("Company") and ROBERT LUKE("Consultant").
RECITALS:
Company desires to engage Consultant to perform certain consulting services for
it and Consultant desires, subject to the terms and conditions of this
Agreement, to perform consulting services for the Company.
THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND UNDERTAKINGS HEREIN
CONTAINED AND FOR OTHER GOOD AND MUTUAL CONSIDERATION, THE RECEIPT AND
SUFFICIENCY WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS FOLLOWS:
1. ENGAGEMENT BY CONSULTANT.
Company hereby engages Consultant and Consultant hereby agrees to hold himself
available to render, and to render at the request of the Company, independent
advisory and consulting services for the Company to the best of his ability,
upon the terms and conditions hereinafter set forth. Such consulting services
shall include, but not be limited to, consulting advice and performance of
services with respect to developing and exploiting the Auburn Farms' and
Nature's Warehouse brands
2. TERM.
The term of this Agreement shall be May 1, 1996 through July 31st l996, unless
terminated or extended in accordance with provisions of this Agreement.
3. COMPENSATION.
3.1) As compensation for all services rendered by Consultant under this
Agreement , Company agrees to pay Consultant the sum of six thousand five
hundred($6,500) dollars for one month, and to reimburse all reasonable pre-
approved out-of-pocket costs directly related to those services.
1
<PAGE>
3.2) Upon execution of this agreement, the Company shall issue to Consultant
111,000 shares ("Common Shares") of the Company's common stock as a supplemental
payment. The Company represents to Consultant that it will file a registration
statement for the Common Shares on Form S-8 within thirty (30) days of the
Effective Date. All expenses of registration and qualification incurred in
connection with a registration of the Shares shall be borne by the Company
except that the holder of the Shares shall bear the fees and expenses of own
counsel, if any.
4. INDEPENDENT CONTRACTOR.
It is expressly agreed that Consultant is acting as an independent contractor in
performing his services hereunder, and this Agreement is not intended to, nor
does it create, an employer-employee relationship nor shall it be construed as
creating any joint venture or partnership between the Company and Consultant.
Consultant shall be responsible for all applicable federal, state and other
taxes related to Consultant's consulting fee and Company shall not withhold or
pay any such taxes on behalf of Consultant, including without limitation social
security, federal, state and other local income taxes. Since Consultant is
acting solely as an independent contractor under this Agreement, Consultant
shall not be entitled to insurance or other benefits normally provided by
Company to its employees.
5. ASSIGNMENT.
This Agreement is a personal one being entered into in reliance upon and in
consideration of the singular personal skill and qualifications of
Consultant. Consultant shall not voluntarily, or by operation of law assign
or otherwise transfer the obligations incurred on his part pursuant to terms
of this Agreement without the prior written consent of the Company. Any
attempt at assignment or transfer by Consultant of his obligations hereunder,
without such consent, shall be null and void.
6. NON-COMPETITION.
Consultant agrees that during the Term he shall not, directly or indirectly
(whether for compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder, consultant or in
any other capacity own, manage, operate, join, control or participate in
The ownership, management, operation or control of, or furnish any capital to,
or be connected in any manner with, or provide any services as a consultant for
any business which has any activities or products directly competitive with the
activities and products of the Company.
2
<PAGE>
7. CONFIDENTIALITY
Consultant recognizes that during the course of Consultant's activities
on behalf of the Company, he will accumulate certain proprietary and
confidential information and trade secrets used in the Company's business and
will have divulged to him certain confidential and proprietary information and
trade secrets about the business, operations and prospects of the Company,
which constitute valuable business assets of the Company. Consultant hereby
acknowledges and agrees that such information ("Proprietary Information") is
confidential and proprietary and constitutes trade secrets and that the
Proprietary Information belongs to the Company and not to Consultant.
Consultant agrees, to the extent not prohibited by law, that he shall not, at
any time subsequent to the execution of this Agreement, whether during or after
the Term, disclose, divulge or make known, directly or indirectly, to any
person, or otherwise use or exploit in any manner any Proprietary Information
obtained by Consultant under this Agreement, except in connection with and to
the extent required by his performance of his duties hereunder for the Company.
Upon termination of this Agreement Consultant shall deliver to Company all
tangible displays and repositories of Proprietary Information.
8. TERMINATION
This Agreement may be terminated on the occurrence of any one of the following
events:
8.1 The expiration of the Term hereof;
8.2 The mutual agreement of the parties;
8.3 At the Company's option, on the last day of the month in which
Consultant dies or becomes permanently incapacitated. 'Permanent incapacity'
as used herein shall mean mental or physical incapacity, or both, reasonably
determined by the Company's Board of Directors based upon a certification of
such incapacity by, in the discretion of the Company's Board of Directors,
either Consultant's regularly attending physician or a duly licensed physician
selected by the company's Board of Directors, rendering Consultant unable to
perform substantially all of his duties hereunder and which appears reasonably
certain to continue for at least six consecutive months without substantial
improvement. Consultant shall be deemed to have 'become permanently
incapacitated' on the date the Company's Board of Directors has determined That
Consultant is permanently incapacitated and so notifies Consultant;
8.4 By the Company 'with cause," effective upon delivery of written notice to
Consultant given at any time (without any necessity for prior notice) if any of
the following shall occur:
3
<PAGE>
8.4 (a) a material breach of This Agreement by Consultant, which breach has
not been cured within thirty (30) days after a written demand for such
performance is delivered to Consultant by the Company that specifically
identifies the manner in which The Company believes That Consultant has breached
this Agreement;
(b) any material acts or events which inhibit Consultant from fully
performing his responsibilities to the Company in good faith, such as (i) a
felony criminal conviction; (ii) any other criminal conviction involving
Consultant's lack of honesty or Consultant's moral turpitude; (iii) drug or
alcohol abuse; or (iv) acts of dishonesty, gross carelessness or gross
misconduct.
8.5 Upon ninety days written notice from one party to the other.
9. DISCLAIMER OF RESPONSIBILITY FOR ACTS OF COMPANY.
The obligations of the Consultant described in this Agreement consist solely of
the furnishing of information and advice to the Company. In no event shall
Consultant be required by this Agreement to act as the agent of the Company or
otherwise to represent or make decisions for the Company. All final decisions
with respect to acts of the Company or its affiliates, whether or not made
pursuant to or in reliance on information or advice furnished by Consultant
hereunder, shall be those of the Company or such affiliates and Consultant shall
under no circumstances be liable for any expenses incurred or loss suffered by
Company as a consequence of such decisions.
10. GENERAL PROVISIONS.
10.1 Governing Law and Jurisdiction. This Agreement shall be governed by and
interpreted in accordance with The laws of the State of California. Each of the
Parties hereto consents to such jurisdiction for the enforcement of this
Agreement and matters pertaining to the transaction and activities
contemplated hereby.
10.2 Attorneys' Fees. In the event a dispute arises with respect to this
Agreement, the party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorneys' fees and
expenses incurred in ascertaining such party's rights, in preparing to enforce
or in enforcing such party's rights under this Agreement, whether or not it was
necessary for such party to institute suit.
10.3 Complete Agreement. This Agreement supersedes any and all of the other
agreements, either oral or in writing, between the Parties with respect to the
subject matter hereof and contains all of The covenants and agreements between
the Parties with respect to such subject matter in any manner whatsoever. Each
4
<PAGE>
Party to This Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any Party, or
anyone herein, and that no other agreement, statement or promise not contained
in this Agreement shall be valid or binding. This Agreement may be changed or
amended only by an amendment in writing signed by all of the Parties or their
respective successors-in-interest.
10.4 Binding. This Agreement shall be binding upon and inure to the benefit of
the successors-in-interest, assigns and personal representatives of the
respective Parties, except that this Agreement may not be assigned by Consultant
without the prior written consent of the Company.
10.5 Notices. All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, first class mail, telex or telecopied,
addressed as follows:
Party: Company:
Vitafort International Corporation
1800 Avenue of the Stars, Suite 480
Los Angeles, CA 90067
Attn: Mark Beychok, President
Fax: (310) 556-1227
Consultant:
Robert Luke
9740 Wexford Circle
Granite Bay, California
95746
Fax (916) 791-5094
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five (5) business days
after deposit in any "United States Post Office in the continental United
States, postage prepaid, if mailed; when answered back, if telexed; and when
receipt is acknowledged or confirmed, if telecopied.
10.6 Unenforceable Terms. Any provision hereofprohibited by law or
unenforceable under the law of any jurisdiction in which such provision is
applicable shall as to such jurisdiction only be ineffective without affecting
any other provision of this Agreement. To the full extent, however, that such
applicable law way be waived to the end that this Agreement be deemed to be a
valid and binding agreement enforceable in accordance with its terms, the
Parties hereto hereby waive such applicable law knowingly and understanding the
effect of such waiver.
10.7 Execution in Counterparts. This Agreement may be executed in several
counterparts and when so executed shall constitute one agreement binding on all
5
<PAGE>
the Parties, notwithstanding that all the Parties are not signatory to the
original and same counterpart.
10.8 Further Assurance. From time to time each Party will execute and deliver
such further instruments and will take such other action as any other Party may
reasonable request in order to discharge and perform their obligations and
agreements hereunder and to give effect to the intentions expressed in this
Agreement.
10.9 Incorporation bv Reference. All exhibits referred to 'in this Agreement
are incorporated herein in their entirety by such reference.
10.10 Miscellaneous Provisions. The various headings and numbers herein and
the grouping of provisions of this Agreement into separate articles and
paragraphs are for the purpose of convenience only and shall not be considered a
party hereof. The language in all parts of this agreement shall in all cases by
construed in accordance with its fair meaning as if repared by all Parties to
the Agreement and not strictly for or against any of the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.
"COMPANY" "CONSULTANT"
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
By: /S/ MARK BEYCHOK /S/ ROBERT LUKE
------------------------------- ---------------------
Mark Beychok, Robert Luke
President Consultant
6
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (Agreement), is made and entered into on this 1st day
of May 1, 1996 (Effective Date) by and between Vitafort International
Corporation, a Delaware corporation ("Company") and John
Burchette("Consultant").
RECITALS:
Company desires to engage Consultant to perform certain consulting services for
it and Consultant desires, subject to the terms and conditions of this
Agreement, to perform consulting services for the Company.
THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND UNDERTAKINGS HEREIN
CONTAINED AND FOR OTHER GOOD AND MUTUAL CONSIDERATION, THE RECEIPT AND
SUFFICIENCY WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS FOLLOWS:
1. ENGAGEMENT BY CONSULTANT.
Company hereby engages Consultant and Consultant hereby agrees to hold himself
available to render, and to render at the request of the Company, independent
advisory and consulting services for the Company to the best of his ability,
upon the terms and conditions hereinafter set forth. Such consulting services
shall include, but not be limited to, consulting advice and performance of
services with respect to developing and exploiting the Auburn Farms' and
Nature's Warehouse brands
2. TERM.
This Agreement shall expire May 1, 1995 through July 31st l996, unless
terminated or extended in accordance with provisions of this Agreement.
3. COMPENSATION.
3.1) As compensation for all services rendered by Consultant under this
Agreement , Company agrees to pay Consultant the sum of five thousand dollars
($5,000) per month, and to reimburse all reasonable pre-approved out-of-pocket
costs directly related to those services.
1
<PAGE>
3.2) Upon execution of this agreement, the Company shall issue to Consultant
sixty thousand common shares ("Common Shares") of the Company's common stock as
a supplemental payment. The Company represents to Consultant that it will file a
registration statement for the Common Shares on Form S-8 within thirty (30) days
of the Effective Date. All expenses of registration and qualification incurred
in connection with a registration of the Shares shall be borne by the Company
except that the holder of the Shares shall bear the fees and expenses of own
counsel, if any.
4. INDEPENDENT CONTRACTOR.
It is expressly agreed that Consultant is acting as an independent contractor in
performing his services hereunder, and this Agreement is not intended to, nor
does it create, an employer-employee relationship nor shall it be construed as
creating any joint venture or partnership between the Company and Consultant.
Consultant shall be responsible for all applicable federal, state and other
taxes related to Consultant's consulting fee and Company shall not withhold or
pay any such taxes on behalf of Consultant, including without limitation social
security, federal, state and other local income taxes. Since Consultant is
acting solely as an independent contractor under this Agreement, Consultant
shall not be entitled to insurance or other benefits normally provided by
Company to its employees.
5. ASSIGNMENT.
This Agreement is a personal one being entered into in reliance upon and in
consideration of the singular personal skill and qualifications of
Consultant. Consultant shall not voluntarily, or by operation of law
assign or otherwise transfer the obligations incurred on his part pursuant to
terms of this Agreement without the prior written consent of the Company. Any
attempt at assignment or transfer by Consultant of his obligations hereunder,
without such consent, shall be null and void.
6. NON-COMPETITION.
Consultant agrees that during the Term he shall not, directly or indirectly
(whether for compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder, consultant or in
any other capacity own, manage, operate, join, control or participate in
The ownership, management, operation or control of, or furnish any capital to,
or be connected in any manner with, or provide any services as a consultant for
any business which has any activities or products directly competitive with the
activities and products of the Company.
2
<PAGE>
7. CONFIDENTIALITY
Consultant recognizes that during the course of Consultant's activities
on behalf of the Company, he will accumulate certain proprietary and
confidential information and trade secrets used in the Company's business and
will have divulged to him certain confidential and proprietary information and
trade secrets about the business, operations and prospects of the Company,
which constitute valuable business assets of the Company. Consultant hereby
acknowledges and agrees that such information ("Proprietary Information") is
confidential and proprietary and constitutes trade secrets and that the
Proprietary Information belongs to the Company and not to Consultant.
Consultant agrees, to the extent not prohibited by law, that he shall not, at
any time subsequent to the execution of this Agreement, whether during or after
the Term, disclose, divulge or make known, directly or indirectly, to any
person, or otherwise use or exploit in any manner any Proprietary Information
obtained by Consultant under this Agreement, except in connection with and to
the extent required by his performance of his duties hereunder for the Company.
Upon termination of this Agreement Consultant shall deliver to Company all
tangible displays and repositories of Proprietary Information.
8. TERMINATION
This Agreement My be terminated on the occurrence of any one of the following
events:
8.1 The expiration of the Term hereof;
8.2 The mutual agreement of the parties;
8.3 At the Company's option, on the last day of the month in which
Consultant dies or becomes permanently incapacitated. 'Permanent incapacity'
as used herein shall mean mental or physical incapacity, or both, reasonably
determined by the Company's Board of Directors based upon a certification of
such incapacity by, in the discretion of the Company's Board of Directors,
either Consultant's regularly attending physician or a duly licensed physician
selected by the company's Board of Directors, rendering Consultant unable to
perform substantially all of his duties hereunder and which appears reasonably
certain to continue for at least six consecutive months without substantial
improvement. Consultant shall be deemed to have 'become permanently
incapacitated' on the date the Company's Board of Directors has determined That
Consultant is permanently incapacitated and so notifies Consultant;
8.4 By the Company 'with cause," effective upon delivery of written notice to
Consultant given at any time (without any necessity for prior notice) if any of
the following shall occur:
3
<PAGE>
8.4(a) a material breach of This Agreement by Consultant, which breach has not
been cured within thirty (30) days after a written demand for such
performance is delivered to Consultant by the Company that specifically
identifies the manner in which The Company believes That Consultant has
breached this Agreement;
(b) any material acts or events which inhibit Consultant from fully
performing his responsibilities to the Company in good faith, such as
(i) a felony criminal conviction; (ii) any other criminal conviction
involving Consultant's lack of honesty or Consultant's moral turpitude;
(iii) drug or alcohol abuse; or (iv) acts of dishonesty, gross
carelessness or gross misconduct.
8.5 Upon ninety days written notice from one party to the other.
9. DISCLAIMER OF RESPONSIBILITY FOR ACTS OF COMPANY.
The obligations of the Consultant described in this Agreement consist solely of
the furnishing of information and advice to the Company. In no event shall
Consultant be required by this Agreement to act as the agent of the Company or
otherwise to represent or make decisions for the Company. All final decisions
with respect to acts of the Company or its affiliates, whether or not made
pursuant to or in reliance on information or advice furnished by Consultant
hereunder, shall be those of the Company or such affiliates and Consultant shall
under no circumstances be liable for any expenses incurred or loss suffered by
Company as a consequence of such decisions.
10. GENERAL PROVISIONS.
10.1 Governing Law and Jurisdiction. This Agreement shall be governed by and
interpreted in accordance with The laws of the State of California. Each of the
Parties hereto consents to such jurisdiction for the enforcement of this
Agreement and matters pertaining to the transaction and activities
contemplated hereby.
10.2 Attorneys' Fees. In the event a dispute arises with respect to this
Agreement, the party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorneys' fees and
expenses incurred in ascertaining such party's rights, in preparing to enforce
or in enforcing such party's rights under this Agreement, whether or not it was
necessary for such party to institute suit.
10.3 Complete Agreement. This Agreement supersedes any and all of the other
agreements, either oral or in writing, between the Parties with respect to the
subject matter hereof and contains all of The covenants and agreements between
the Parties with respect to such subject matter in any manner whatsoever. Each
Party to This Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any Party, or
anyone herein, and that no other agreement, statement or promise not contained
in this Agreement shall be valid or binding. This Agreement may be changed or
amended only by an amendment in writing signed by all of the Parties or their
respective successors-in-interest.
4
<PAGE>
10.4 Binding. This Agreement shall be binding upon and inure to the benefit of
the successors-in-interest, assigns and personal representatives of the
respective Parties, except that this Agreement may not be assigned by Consultant
without the prior written consent of the Company.
10.5 Notices. All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, first class mail, telex or telecopied,
addressed as follows:
Party: Company:
Vitafort International Corporation
1800 Avenue of the Stars, Suite 480
Los Angeles, CA 90067
Attn: Mark Beychok, President
Telecopier No: (310) 556-1227
Consultant:
John Burchette
129 La Venta Dr.
Santa Barbara, Ca. 93110
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five (5) business days
after deposit in any "United States Post Office in the continental United
States, postage prepaid, if mailed; when answered back, if telexed; and when
receipt is acknowledged or confirmed, if telecopied.
10.6 Unenforceable Terms. Any provision hereof prohibited by law or
unenforceable under the law of any jurisdiction in which such provision is
applicable shall as to such jurisdiction only be ineffective without affecting
any other provision of this Agreement. To the full extent, however, that such
applicable law way be waived to the end that this Agreement be deemed to be a
valid and binding agreement enforceable in accordance with its terms, the
Parties hereto hereby waive such applicable law knowingly and understanding the
effect of such waiver.
10.7 Execution in Counterparts. This Agreement may be executed in several
counterparts and when so executed shall constitute one agreement binding on
all the Parties, notwithstanding that all the Parties are not signatory to
the original and same counterpart.
10.8 Further Assurance. From time to time each Party will execute and deliver
such further instruments and will take such other action as any other Party may
reasonable request in order to discharge and perform their obligations and
agreements hereunder and to give effect to the intentions expressed in this
Agreement.
5
<PAGE>
10.9 Incorporation bv Reference. All exhibits referred to 'in this Agreement
are incorporated herein in their entirety by such reference.
10.10 Miscellaneous Provisions. The various headings and numbers herein and
the grouping of provisions of this Agreement into separate articles and
paragraphs are for the purpose of convenience only and shall not be considered a
party hereof. The language in all parts of this agreement shall in all cases by
construed in accordance with its fair meaning as if repared by all Parties to
the Agreement and not strictly for or against any of the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.
"COMPANY" "CONSULTANT"
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
By: /S/ MARK BEYCHOK /S/ JOHN BURCHETTE
----------------- ------------------------
Mark Beychok, John Burchette,
President Consultant
6
<PAGE>
May 15, 1996
Nicholas Konstant
400 N. MC Clurg Court, #3810
Chicago, IL 60611 FAX: (312) 670-2476
Re: Auburn Farms Acquisition Fees
Dear Mr. Konstant
Please accept this letter as confirmation of the your discussions with Mark
Beychok and Joff Pollon today. Specifically;
1) You are due a Finder's Fee for identifying the Auburn Farms acquisition
opportunity, and performing the initial due diligence, and providing the
eventual introductions of Vitafort and Auburn Farms Management.
2) In recognition of our current desire to conserve cash assets, and as a
demonstration of your belief in the value of transaction to Vitafort, you
had agreed to accept equity in Vitafort as remuneration for Finder's Fees,
subject to the approval of the Board of Directors of Vitafort. The
negotiated and agreed equity consideration was the grant 150,000 common
shares of Vitafort International Corporation, and 1,350,000 stock purchase
options, to be granted and valued as of the date of the acquisition. The
form of the option would be comparable to that previously issued under your
Strategic Services Consulting Agreement.
3) Your existing Strategic Services Consulting Agreement provides remuneration
for your additional services of assisting management in identifying,
exploring, and evaluating alternative acquisition structures/techniques for
the benefit of Vitafort.
4) The Board of Directors considered and approved the stock and option grant
as described above, including registration of the granted shares (and the
shares underlying the options) in the next applicable SEC registration
statement.
If the foregoing agrees with your understanding of the events and terms,
please indicate your acceptance below. We have begun the preparation of an S-8
registration for submission in the very near future, and will attempt to include
you in same.
Very truly yours,
/S/ ELOY L. ELLIS
---------------------
Eloy Ellis
AGREED & ACCEPTED
/S/ NICHOLAS KONSTANT
---------------------------
Nicholas Konstant
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE MADE AT
ANY TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED WITH EVIDENCE
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION
OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF MAY 15, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: Nicolas Konstant
ADDRESS: 400 North McClurg Court, #3810
Chicago, IL
60611
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and in the Consulting Contract, as amended in January 1996
(incorporated by reference), to purchase from Vitafort International Corporation
(the "Company"), a Delaware corporation, having its offices at Suite 480, 1800
Avenue of the Stars, Los Angeles, California 90067, up to ONE MILLION THREE
HUNDRED FIFTY Thousand (1,350,000) shares of the Company's common stock subject
to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully
set forth in Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .24) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
(d) The options vest based upon mutual agreement based upon assigned
projects and approved time & expenses.
-1-
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until NOVEMBER 15, 1997 (the "Expiration Date"),
by the presentation of this Option, with the purchase form attached
duly executed, at the Company's office (or such office or agency of
the Company as it may designate in writing to the Holder hereof by
notice pursuant to Section 14 hereof), specifying the number of Common
Shares as to which the Option is being exercised, and upon payment by
the Holder to the Company in cash or by certified check or bank draft,
in an amount equal to the Option Price times the number of Common
Shares then being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made
for such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after
the rights represented by this Option shall have been so exercised.
If this Option shall be exercised in part only or transferred in part
subject to the provisions herein, the Company shall, upon surrender of
this Option for cancellation or partial transfer, deliver a new Option
evidencing the rights of the Holder hereof to purchase the balance of
the Underlying Shares which such Holder is entitled to purchase
hereunder. Exercise in full of the rights represented by this Option
shall not extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as
are purchasable hereunder; and (ii) this Option may be divided or combined
with other Options which carry the same rights, in either case, upon
presentation hereof at the aforesaid office of the Company together with a
written notice, signed by the Holder hereof, specifying the names and
denominations in which new Options are to be issued, and the payment of any
transfer tax due in connection therewith.
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common
Shares by recapitalization, reclassification, stock dividend, or
split-up thereof or other means, the number of Common Shares subject
to this Option immediately prior to such subdivision shall be
proportionately increased and the Option Price shall be
proportionately decreased, and if the Company shall at any time
combine the outstanding Common Shares by recapitalization,
reclassification or combination thereof or other means, the number of
Common Shares subject to this Option immediately prior to such
combination shall be proportionately decreased and the Option Price
shall be proportionately increased. Any such adjustment and
adjustment to the Option Price shall become effective at the close of
business on the record date for such subdivision or combination.
-2-
<PAGE>
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be
required to make such equitable adjustment in the Option Price and the
type and/or number of Underlying Securities in effect immediately
prior to the record date of such distribution as may be necessary to
preserve to the Holder of this Option rights substantially
proportionate to and economically equivalent to those enjoyed
hereunder by such Holder immediately prior to the happening of such
distribution. Any such adjustment made reasonably and in good faith
by the Board of Directors shall be final and binding upon the Holders
and shall become effective as of the record date for such
distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If
the Company shall make a record of the Holders of its Common Shares
for the purpose of entitling them to receive any dividend or
distribution and legally abandon its plan to pay or deliver such
dividend or distribution then no adjustment in the number of Common
Shares subject to the Option shall be required by reason of the making
of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by
Section 4(a) hereof or which solely affects the par value of such
Common Shares) or in the case of any merger or consolidation of the
Company with or into another corporation (other than a consolidation
or merger in which the Company is the continuing corporation and which
does not result in any reclassification, change, capital
reorganization or change in the ownership of the outstanding Common
Shares), or in the case of any sale or conveyance or transfer of all
or substantially all of the property of the Company and in connection
with which the Company is dissolved, the Holder of this Option shall
have the right thereafter (until the expiration of the right of
exercise of this Option) to receive upon the exercise hereof, for the
same aggregate Option Price payable hereunder immediately prior to
such event, the kind and amount of shares of stock or other securities
or property receivable upon such reclassification, change, capital
reorganization, merger or consolidation, or upon the dissolution
following any sale or other transfer, by a holder of the number of
Common Shares of the Company equal to the number of common shares
obtainable upon exercise of this Option immediately prior to such
event; and if any reorganization, reclassification, change, merger,
consolidation, sale or transfer also results in a change in Common
Shares covered by Section 4(a), then such adjustment shall be made
pursuant to both this Section 4(d) and Section 4(a). The provisions
of this Section 4(d) shall similarly apply to successive
reclassification, or capital reorganizations, mergers or
consolidations, changes, sales or other transfers.
-3-
<PAGE>
(e) The Company shall not be required to issue fractional Common Shares
upon any exercise of this Option. As to any final fraction of a
Common Share which the Holder of this Option would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the
same fraction of the market value of a share of such stock on the
business day preceding the day of exercise or book value as determined
by the Company's independent public accountants if not publicly
traded. The Holder of this Option, by his acceptance hereof,
expressly waives any right to receive any fractional shares of stock
upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape
or (B) if the principal market for such securities is the over-the-
counter market, the high bid price on such date as set forth by NASDAQ
or closing price if listed on NASDAQ NMS or, if the security is not
quoted on NASDAQ, the high bid price as set forth in the NATIONAL
QUOTATION BUREAU sheet listing such securities for such day.
Notwithstanding the foregoing, if there is no reported closing price
or high bid price, as the case may be, on a date prior to the event
requiring an adjustment hereunder, then the current market price shall
be determined as of the latest date prior to such day for which such
closing price or high bid price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the
Option Price or in the number, or kind, or class of shares or other
securities or other property obtainable upon exercise of this Option,
and without impairing any such adjustment the certificate representing
this Option may continue to express the Option Price and the number of
Common Shares obtainable upon exercise at the same price and number of
Common Shares as are stated herein.
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions
hereof.
(i) Upon any adjustment of this Option the Company shall give written
notice thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon
exercise of this Option and shall set forth in reasonable detail the
events which resulted in such adjustment.
-4-
<PAGE>
5. For the purposes of this Option, the terms "Common Shares" or "Common
Stock" shall mean (i) the class of stock designated as the common stock of
the Company on the date set forth on the first page hereof or (ii) any
other class of stock resulting from successive changes or reclassification
of such Common Stock consisting solely of changes from par value to no par
value, or from no par value to par value or changes in par value. If at
any time, as a result of an adjustment made pursuant to Section 4, the
securities or other property obtainable upon exercise of this Option shall
include shares or other securities of another corporation or other
property, then thereafter, the number of such other shares or other
securities or property so obtainable shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained in Section 4,
and all other provisions of this Option with respect to Common Shares shall
apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires
otherwise, all references herein to Common Shares shall, in the event of an
adjustment pursuant to Section 4, be deemed to refer also to any other
shares or other securities or property when obtainable as a result of such
adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option
may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at
its expense will obtain the listing thereof on all quotation systems
or national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares
shall not be sufficient to effect the exercise of this Option, the
Company will take such corporate action as may be necessary to
increase its authorized but unissued Common Shares to such number of
shares as shall be sufficient for such purpose; the Company shall have
analogous obligations with respect to any other securities or property
issuable upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued,
fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option
shall be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
-5-
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option Holder, provided only that the Closing
Price (hereinafter defined) of the Company's Common Stock has theretofore
equalled or exceeded FIFTY CENTS ($0.50) per Share for ten (10) consecutive
Trading Days after the Effective Registration Date. This Option shall
expire and become null and void thirty (30) days after the issuance of the
Call Notice. The Option Holder may exercise this Option and purchase some
or all of the Shares then subject to this Option within said thirty (30)-
day period, but may not thereafter exercise this Option or purchase any of
the Shares. If the Option is not exercised within said thirty (30) day
period, the Company will have the right to redeem any or all outstanding
and unexercised Options at a redemption price of $0.0001 per Option. For
purposes of this Section 7.3, "Closing Price" means (a) if the Common Stock
is then listed 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 FIFTY CENTS ($0.50) 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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10. If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11. Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
-6-
<PAGE>
12. Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be cancelled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of
a transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13. This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors,
legal representatives and assigns.
14. All notices required hereunder shall be in writing and shall be deemed
given when telegraphed, delivered personally or within two (2) days after
mailing when mailed by certified or registered mail, return receipt
requested, to the party to whom such notice is intended, at the address of
such other party as set forth on the first page hereof, or at such other
address of which the Company or Holder has been advised by the notice
hereunder.
15. In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16. The validity, interpretation and performance of this Option and of the
terms and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of MAY 15, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /S/MARK BEYCHOK
---------------
Mark Beychok, Chief Executive Officer
-7-
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
--------------------------------
Signature
--------------------------------
Print Name of Signatory
--------------------------------
Name to whom certificates are to be issued if different from above
--------------------------------
(Street Address)
--------------------------------
(City, State Zipcode)
--------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
--------------------------------
(Please Print)
--------------------------------
(Street Address)
--------------------------------
(City, State Zipcode)
--------------------------------
(Tax Payer I.D. Number)
--------------------------------
Signature
--------------------------------
Print Name of Signatory
-8-
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED , hereby sells, assigns
and transfers to ,(Social Security or I.D.
No. ) the within Option, or that portion of this
Option purchasable for _______ common shares together with all rights,
title and interest therein, and does hereby irrevocably constitute and
appoint attorney to transfer such
Option on the register of the within named Company, with full power of
substitution.
--------------------------------
(Signature)
Dated: , 19
Signature Guaranteed:
--------------------------------
(INTENTIONALLY BLANK)
<PAGE>
AGREEMENT
THIS AGREEMENT is made as of this twenty-sixth day of March 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 Larry Brucia, an individual.
RECITALS
WHEREAS, Larry Brucia is employed as an executive of Vitafort in the normal
course of business (hereinafter the "Employment Relationship") ; and
WHEREAS, Larry Brucia has voluntarily deferred a portion of his salary
since April 1995, the accrued total of deferred wages as of January 31, 1996
being $8,850.00 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 221/2 CENTS and 1/2
warrant to purchase a share of common stock at 30 CENTS).
WHEREAS, Larry Brucia and Vitafort desire to pay the deferred fees by
offsetting the amount due Larry Brucia 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 fifty nine thousand (59,000) shares
of common stock, twenty nine thousand five hundred (29,500) A warrants, and
twenty nine thousand five hundred (29,500) 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
Larry Brucia as of January 31, 1996, and (b) Larry Brucia 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 Larry Brucia acknowledges that he has been paid an
equal amount to be applied against fees owed Larry Brucia for 1995.
Vitafort releases and discharges Larry Brucia 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 this paragraph
Page 1 of 4
<PAGE>
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.
Larry Brucia 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, Larry Brucia, 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.
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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 Larry Brucia shall be to:
287 Crescent Road
San Anselmo, CA 94960
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 LARRY BRUCIA
By /S/ MARK BEYCHOK /S/ LARRY BRUCIA
---------------- ----------------
Mark Beychok, President Larry Brucia
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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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of Larry Brucia ("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
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defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
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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 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
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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 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
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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 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.
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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.
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
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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
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,
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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 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.
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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
(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.
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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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /S/ MARK BEYCHOK _____ /S/ LARRY BRUCIA
-------------------- ----------------------
Mark Beychok Larry Brucia
President & CEO 287 Crescent Road
San Anselmo, CA 94960
Tax Payer ID: ###-##-####
-----------
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EXHIBIT A
CERTIFICATE NO. VECA-203
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 29,500SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Larry Brucia or registered assigns
("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL CORPORATION,
INC. a Delaware corporation, ("Company"), up to twenty nine thousand five
hundred (29,500), 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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
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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-203 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-203 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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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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of Larry Brucia ("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
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defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
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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 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
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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 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
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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 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.
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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.
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
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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
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,
7
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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 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.
8
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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
(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.
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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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /s/ Mark Beychok /s/ Larry Brucia
--------------------------- -------------------------
Mark Beychok Larry Brucia
President & CEO 287 Crescent Road
San Anselmo, CA 94960
Tax Payer ID: ###-##-####
10
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EXHIBIT A
CERTIFICATE NO. VECB-203
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 29,500SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Larry Brucia or registered assigns
("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL CORPORATION,
INC. a Delaware corporation, ("Company"), up to twenty nine thousand five
hundred (29,500), 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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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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
2
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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. VECB-203 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-203 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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AGREEMENT
THIS AGREEMENT is made as of this twenty-sixth day of March 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 Eloy L. Ellis, an individual.
RECITALS
WHEREAS, Eloy L. Ellis is employed as an executive of Vitafort in the
normal course of business (hereinafter the "Employment Relationship") ; and
WHEREAS, Eloy L. Ellis has voluntarily deferred a portion of his salary
since April 1995, the accrued total of deferred wages as of January 31, 1996
being $3,300.00 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 221/2 CENTS and 1/2
warrant to purchase a share of common stock at 30 CENTS).
WHEREAS, Eloy L. Ellis and Vitafort desire to pay the deferred fees by
offsetting the amount due Eloy L. Ellis 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 twenty two thousand (22,000)
shares of common stock, eleven thousand (11,000) A warrants, and
eleven thousand (11,000) 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 Eloy L.
Ellis as of January 31, 1996, and (b) Eloy L. Ellis 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 Eloy L. Ellis acknowledges that he has been paid
an equal amount to be applied against fees owed Eloy L. Ellis for
1995. Vitafort releases and discharges Eloy L. Ellis 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 this
paragraph extends to all claims, whether known or unknown or
suspected. Vitafort hereby waives the provisions of Civil Code Section
1542 which provides:
Page 1 of 4
<PAGE>
"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.
Eloy L. Ellis 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, Eloy L. Ellis, 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 Eloy L. Ellis shall be to:
635 North Canyon Boulevard
Monrovia, CA 91016-1709
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 ELOY L. ELLIS
By By /S/ MARK BEYCHOK /S/ ELOY L. ELLIS
---------------------- -------------------
Mark Beychok, President Eloy L. Ellis
Page 4 of 4
<PAGE>
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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of Eloy L. Ellis ("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
1
<PAGE>
defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
2
<PAGE>
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 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
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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 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
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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 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.
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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.
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
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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
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,
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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 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.
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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
(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.
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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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /S/ MARK BEYCHOK /S/ ELOY L. ELLIS
----------------------- ----------------------------
Mark Beychok Eloy L. Ellis
President & CEO 635 North Canyon Boulevard
Monrovia, CA 91016-1709
Tax Payer ID: ###-##-####
-----------
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EXHIBIT A
CERTIFICATE NO. VECA-204
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 11,000SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Eloy L. Ellis or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to eleven thousand
(11,000), 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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
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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-204 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-204 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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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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of Eloy L. Ellis ("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
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defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
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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 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
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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 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
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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 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.
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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.
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
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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
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,
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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 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.
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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
(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.
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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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /S/ MARK BEYCHOK /S/ ELOY L. ELLIS
--------------------------- -----------------------------
Mark Beychok Eloy L. Ellis
President & CEO 635 North Canyon Boulevard
Monrovia, CA 91016-1709
Tax Payer ID: ###-##-####
-----------
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EXHIBIT A
CERTIFICATE NO. VECB-204
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 11,000SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, Eloy L. Ellis or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to eleven thousand
(11,000), 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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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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
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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. VECB-204 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-204to 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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AGREEMENT
THIS AGREEMENT is made as of this twenty-sixth day of March 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 John Coppolino, an individual.
RECITALS
WHEREAS, John Coppolino is employed as an executive of Vitafort in the
normal course of business (hereinafter the "Employment Relationship") ; and
WHEREAS, John Coppolino has voluntarily deferred a portion of his salary
since April 1995, the accrued total of deferred wages as of January 31, 1996
being $8,250.00 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 221/2 CENTS and 1/2
warrant to purchase a share of common stock at 30 CENTS).
WHEREAS, John Coppolino and Vitafort desire to pay the deferred fees by
offsetting the amount due John Coppolino 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 fifty five thousand (55,000)
shares of common stock, twenty seven thousand five hundred (27,500) A
warrants, and twenty seven thousand five hundred (27,500) 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 John Coppolino as of January 31, 1996,
and (b) John Coppolino 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 John Coppolino acknowledges that he has been paid
an equal amount to be applied against fees owed John Coppolino for
1995. Vitafort releases and discharges John Coppolino 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.
John Coppolino 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, John Coppolino, 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 John Coppolino shall be to:
10960 Wellworth, Apartment 101
Los Angeles, CA 90024
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 JOHN COPPOLINO
By /S/ MARK BEYCHOK /S/ JOHN COPPOLINO
------------------------- ---------------------
Mark Beychok, President John Coppolino
Page 4 of 4
<PAGE>
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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of John Coppolino ("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
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defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
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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 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
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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 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
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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 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.
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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.
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
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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
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,
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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 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.
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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
(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.
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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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /S/ MARK BEYCHOK /S/ JOHN COPPOLINO
---------------------- ----------------------------
Mark Beychok John Coppolino
President & CEO 10960
Wellworth, Apartment 101
Los Angeles, CA 90024
Tax Payer ID: ###-##-####
-----------
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EXHIBIT A
CERTIFICATE NO. VECA-202
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 27,500SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, John Coppolino or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to twenty seven
thousand five hundred (27,500), 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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
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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-202 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-202 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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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 March 26, 1996
("Effective Date") by VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company"), in favor of John Coppolino ("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
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defined herein) under the Securities Act is declared effective by the Securities
and Exchange Commission ("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
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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 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
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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 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
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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 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.
5
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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.
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
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<PAGE>
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
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,
7
<PAGE>
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 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.
8
<PAGE>
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
(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.
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<PAGE>
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 above written.
VITAFORT INTERNATIONAL CORPORATION Accepted as of the date written above:
a Delaware Corporation WARRANT HOLDER
By /s/ Mark Beychok /s/ John Coppolino
-------------------------- ---------------------------------
Mark Beychok John Coppolino
President & CEO 10960
Wellworth, Apartment 101
Los Angeles, CA 90024
Tax Payer ID: ###-##-####
-----------
10
<PAGE>
EXHIBIT A
CERTIFICATE NO. VECB-202
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 27,500SHARES OF COMMON STOCK OF
VITAFORT INTERNATIONAL CORPORATION
A Delaware Corporation
THIS CERTIFIES that, for value received, John Coppolino or registered
assigns ("Holder"), is entitled to purchase from VITAFORT INTERNATIONAL
CORPORATION, INC. a Delaware corporation, ("Company"), up to twenty seven
thousand five hundred (27,500), 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.
1
<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: March 26, 1996 VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
------------------------------
Mark Beychok
President & CEO
2
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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. VECB-202 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-202to 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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January 16,1996
Andrew Harrsion
5280 Miramar
Eugene, OR 97405 FAX: (541) 345-1144
Re: Consulting Contract Extension and Stock Option Incentive
Dear Andy,
Please accept this letter as confirmation of our discussions regarding your
consultancy to Vitafort International Corporation. Specifically:
1. You would like to revisit your agreement with Vitafort International
Corporation to increase both the scope of your assignment, and the monthly
cash remuneration. While the Company gives no assurances of the continued
use of your services, nor does it agree to any change in scope of
assignment, we do acknowledge receipt of your request.
2. While we consider the terms and conditions of continued or expanded
services to be provided and the related remuneration, we will extend your
existing contract (originally executed in August of 1996) on a month to
month basis, leaving all other terms unchanged.
3. Subject to the approval of the Board of Directors, Vitafort International
Corporation will grant you two year stock purchase options allowing you to
purchase up to 180,000 common shares of Vitafort International Corporation
at 15 CENTS per share. The options will be subject to performance and time
vesting criteria to be agreed to as part of your new contract negotiations.
However, 10% of the options shall irrevocably vest immediately, and another
10% shall vest on July 1, 1996 provided you are still providing
satisfactory independent consulting services to the Company on those dates.
Absent the formal creation of performance criteria before each date,
another 20% of the options shall vest on December 31, 1996, 1997, 1998,
and 1999.
If the foregoing meets with your approval, please sign this letter in the
appropriate place below.
Very truly yours,
/S/ ELOY L. ELLIS
--------------------
Eloy Ellis
AGREED AND ACCEPTED:
/S/ ANDREW HARRISON
------------------------
Andrew Harrison
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE MADE AT ANY
TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED WITH EVIDENCE REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF JANUARY 16, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: ANDREW HARRISON
ADDRESS: 5280 Miramar
Eugene, OR 97405
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and in the Consulting Contract Extension Letter between Mr.
Harrison and Vitafort dated January 16, 1996 (incorporated by reference), to
purchase from Vitafort International Corporation (the "Company"), a Delaware
corporation, having its offices at Suite 480, 1800 Avenue of the Stars, Los
Angeles, California 90067, up to ONE HUNDRED EIGHTY Thousand (180,000) shares of
the Company's common stock subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully
set forth in Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .15) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
-1-
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until JANUARY 31, 2001 (the "Expiration Date"),
by the presentation of this Option, with the purchase form attached
duly executed, at the Company's office (or such office or agency of
the Company as it may designate in writing to the Holder hereof by
notice pursuant to Section 14 hereof), specifying the number of Common
Shares as to which the Option is being exercised, and upon payment by
the Holder to the Company in cash or by certified check or bank draft,
in an amount equal to the Option Price times the number of Common
Shares then being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made
for such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after
the rights represented by this Option shall have been so exercised.
If this Option shall be exercised in part only or transferred in part
subject to the provisions herein, the Company shall, upon surrender of
this Option for cancellation or partial transfer, deliver a new Option
evidencing the rights of the Holder hereof to purchase the balance of
the Underlying Shares which such Holder is entitled to purchase
hereunder. Exercise in full of the rights represented by this Option
shall not extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as
are purchasable hereunder; and (ii) this Option may be divided or combined
with other Options which carry the same rights, in either case, upon
presentation hereof at the aforesaid office of the Company together with a
written notice, signed by the Holder hereof, specifying the names and
denominations in which new Options are to be issued, and the payment of any
transfer tax due in connection therewith.
3. a) These options are subject to performance vesting requirements to be
determined on or before June 30, 1996. These performance vesting
requirements shall confirm the following minimum vesting at the
following dates:
i. (18,000 option shares) irrevocably vest upon execution of
this option.
ii. (18,000 option shares) irrevocably vest as of June 30,
1996 provided Mr. Harrison is still performing
satisfactory consultant services for Vitafort
International Corporation.
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or
before June 30, 1996. However, should the Company fail to
establish specific criteria for any reason, an additional
20% (36,000 option shares) shall vest on December 31 of
1996, 1997, 1998, and 1999.
-2-
<PAGE>
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common
Shares by recapitalization, reclassification, stock dividend, or
split-up thereof or other means, the number of Common Shares subject
to this Option immediately prior to such subdivision shall be
proportionately increased and the Option Price shall be
proportionately decreased, and if the Company shall at any time
combine the outstanding Common Shares by recapitalization,
reclassification or combination thereof or other means, the number of
Common Shares subject to this Option immediately prior to such
combination shall be proportionately decreased and the Option Price
shall be proportionately increased. Any such adjustment and
adjustment to the Option Price shall become effective at the close of
business on the record date for such subdivision or combination.
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be
required to make such equitable adjustment in the Option Price and the
type and/or number of Underlying Securities in effect immediately
prior to the record date of such distribution as may be necessary to
preserve to the Holder of this Option rights substantially
proportionate to and economically equivalent to those enjoyed
hereunder by such Holder immediately prior to the happening of such
distribution. Any such adjustment made reasonably and in good faith
by the Board of Directors shall be final and binding upon the Holders
and shall become effective as of the record date for such
distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If
the Company shall make a record of the Holders of its Common Shares
for the purpose of entitling them to receive any dividend or
distribution and legally abandon its plan to pay or deliver such
dividend or distribution then no adjustment in the number of Common
Shares subject to the Option shall be required by reason of the making
of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by
Section 4(a) hereof or which solely affects the par value of such
Common Shares) or in the case of any merger or consolidation of the
Company with or into another corporation (other than a consolidation
or merger in which the Company is the continuing corporation and which
does not result in any reclassification, change, capital
reorganization or change in the ownership of the outstanding Common
Shares), or in the case of any sale or conveyance or transfer of all
or substantially
-3-
<PAGE>
all of the property of the Company and in connection with which the
Company is dissolved, the Holder of this Option shall have the right
thereafter (until the expiration of the right of exercise of this
Option) to receive upon the exercise hereof, for the same aggregate
Option Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property
receivable upon such reclassification, change, capital reorganization,
merger or consolidation, or upon the dissolution following any sale or
other transfer, by a holder of the number of Common Shares of the
Company equal to the number of common shares obtainable upon exercise
of this Option immediately prior to such event; and if any
reorganization, reclassification, change, merger, consolidation, sale
or transfer also results in a change in Common Shares covered by
Section 4(a), then such adjustment shall be made pursuant to both this
Section 4(d) and Section 4(a). The provisions of this Section 4(d)
shall similarly apply to successive reclassification, or capital
reorganizations, mergers or consolidations, changes, sales or other
transfers.
(e) The Company shall not be required to issue fractional Common Shares
upon any exercise of this Option. As to any final fraction of a
Common Share which the Holder of this Option would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the
same fraction of the market value of a share of such stock on the
business day preceding the day of exercise or book value as determined
by the Company's independent public accountants if not publicly
traded. The Holder of this Option, by his acceptance hereof,
expressly waives any right to receive any fractional shares of stock
upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape
or (B) if the principal market for such securities is the over-the-
counter market, the high bid price on such date as set forth by NASDAQ
or closing price if listed on NASDAQ NMS or, if the security is not
quoted on NASDAQ, the high bid price as set forth in the NATIONAL
QUOTATION BUREAU sheet listing such securities for such day.
Notwithstanding the foregoing, if there is no reported closing price
or high bid price, as the case may be, on a date prior to the event
requiring an adjustment hereunder, then the current market price shall
be determined as of the latest date prior to such day for which such
closing price or high bid price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the
Option Price or in the number, or kind, or class of shares or other
securities or other property obtainable upon exercise of this Option,
and without impairing any such adjustment the certificate representing
this Option may continue to express the Option Price and the number of
Common Shares obtainable upon exercise at the same price and number of
Common Shares as are stated herein.
-4-
<PAGE>
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions
hereof.
(i) Upon any adjustment of this Option the Company shall give written
notice thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon
exercise of this Option and shall set forth in reasonable detail the
events which resulted in such adjustment.
5. For the purposes of this Option, the terms "Common Shares" or "Common
Stock" shall mean (i) the class of stock designated as the common stock of
the Company on the date set forth on the first page hereof or (ii) any
other class of stock resulting from successive changes or reclassification
of such Common Stock consisting solely of changes from par value to no par
value, or from no par value to par value or changes in par value. If at
any time, as a result of an adjustment made pursuant to Section 4, the
securities or other property obtainable upon exercise of this Option shall
include shares or other securities of another corporation or other
property, then thereafter, the number of such other shares or other
securities or property so obtainable shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained in Section 4,
and all other provisions of this Option with respect to Common Shares shall
apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires
otherwise, all references herein to Common Shares shall, in the event of an
adjustment pursuant to Section 4, be deemed to refer also to any other
shares or other securities or property when obtainable as a result of such
adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option
may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at
its expense will obtain the listing thereof on all quotation systems
or national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares
shall not be sufficient to effect the exercise of this Option, the
Company will take such corporate action as may be necessary to
increase its authorized but unissued Common Shares to such number of
shares as shall be sufficient for such purpose; the Company shall have
analogous obligations with respect to any other securities or property
issuable upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued,
fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option
shall be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
-5-
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option 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
Option shall expire and become null and void thirty (30) days after the
issuance of the Call Notice. The Option Holder may exercise this Option
and purchase some or all of the Shares then subject to this Option within
said thirty (30)-day period, but may not thereafter exercise this Option or
purchase any of the Shares. If the Option is not exercised within said
thirty (30) day period, the Company will have the right to redeem any or
all outstanding and unexercised Options at a redemption price of $0.0001
per Option. For purposes of this Section 7.3, "Closing Price" means (a) if
the Common Stock is then listed 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 FORTY-FIVE
CENTS ($0.45) 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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10. If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11. Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
-6-
<PAGE>
12. Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be cancelled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of
a transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13. This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors,
legal representatives and assigns.
14. All notices required hereunder shall be in writing and shall be deemed
given when telegraphed, delivered personally or within two (2) days after
mailing when mailed by certified or registered mail, return receipt
requested, to the party to whom such notice is intended, at the address of
such other party as set forth on the first page hereof, or at such other
address of which the Company or Holder has been advised by the notice
hereunder.
15. In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16. The validity, interpretation and performance of this Option and of the
terms and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of JANUARY 16, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Mark Beychok
----------------------------------
Mark Beychok, Chief Executive Officer
-7-
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase __________ Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
----------------------- -----
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
-------------------------------------------------------
Name to whom certificates are to be issued if different from above
---------------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
-----------------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
------------------------------------------------------
(Please Print)
------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
-8-
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ____________________________________, hereby sells,
assigns and transfers to __________________________________,(Social
Security or I.D. No. ____________________) the within Option, or that
portion of this Option purchasable for _______ common shares together
with all rights, title and interest therein, and does hereby
irrevocably constitute and appoint _________________________________
attorney to transfer such Option on the register of the within named
Company, with full power of substitution.
------------------------------------------------------------------
(Signature)
Dated: , 19
---------- ----
Signature Guaranteed:
------------------------------------------------------
(INTENTIONALLY BLANK)
-9-
<PAGE>
May 11, 1996
Dede Laux
Apartment 1705
2625 North Clark Street
Chicago, IL 60614
RE: Option Agreement
Dear Dede,
This letter confirms the formal approval by the Board of Directors of
the options proposed as part of your employment with Vitafort. These options
will be issued in form comparable to those of fellow employees under the
following general terms:
a) TERM OF OPTIONS: 5 Years from issue date
b) EXERCISE PRICE OF OPTIONS: 24 cents per share
c) TOTAL STOCK OPTIONS APPROVED: 125,000
d) PERFORMANCE VESTING REQUIREMENTS: These options are subject to
performance vesting requirements to be determined on or before June 30,
1996. These performance vesting requirements shall confirm the
following minimum vesting at the following dates:
i. (13,500 option shares) irrevocably vest upon execution of
this option.
ii. (20,050 option shares) irrevocably vest as of June 30, 1996
provided Ms. Laux is employed full time by Vitafort
International Corporation at that time (no right of proration
is granted or inferred).
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or before
June 30, 1996. However, should the Company fail to establish
specific criteria for any reason, an additional 25% (33,750
option shares) shall vest on January 1 of 1997, 1998, and
1999.
Please signify your agreement and acceptance of these terms by signing a
copy of the letter and returning same directly to me at your earliest
convenience. Upon receipt of your acceptance, we will endeavor to include
the underlying shares in the next appropriate registration effort.
Sincerely,
/s/ Eloy L. Ellis
------------------------------
Eloy L. Ellis
CONFIRMED, AGREED, & ACCEPTED:
/s/ Dede Laux
------------------------------
Dede Laux
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE MADE AT ANY
TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED WITH EVIDENCE REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF MAY 16, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: DEDE LAUX
ADDRESS: Apartment 1705
2625 North Clark Street
Chicago, IL 60614
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and as a result of her employment full time by Vitafort, to
purchase from Vitafort International Corporation (the "Company"), a Delaware
corporation, having its offices at Suite 480, 1800 Avenue of the Stars, Los
Angeles, California 90067, up to ONE HUNDRED THIRTY FIVE THOUSAND (135,000)
shares of the Company's common stock subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully
set forth in Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .24) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
-1-
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until DECEMBER 31, 2000 (the "Expiration Date"),
by the presentation of this Option, with the purchase form attached
duly executed, at the Company's office (or such office or agency of
the Company as it may designate in writing to the Holder hereof by
notice pursuant to Section 14 hereof), specifying the number of Common
Shares as to which the Option is being exercised, and upon payment by
the Holder to the Company in cash or by certified check or bank draft,
in an amount equal to the Option Price times the number of Common
Shares then being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made
for such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after
the rights represented by this Option shall have been so exercised.
If this Option shall be exercised in part only or transferred in part
subject to the provisions herein, the Company shall, upon surrender of
this Option for cancellation or partial transfer, deliver a new Option
evidencing the rights of the Holder hereof to purchase the balance of
the Underlying Shares which such Holder is entitled to purchase
hereunder. Exercise in full of the rights represented by this Option
shall not extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as
are purchasable hereunder; and (ii) this Option may be divided or combined
with other Options which carry the same rights, in either case, upon
presentation hereof at the aforesaid office of the Company together with a
written notice, signed by the Holder hereof, specifying the names and
denominations in which new Options are to be issued, and the payment of any
transfer tax due in connection therewith.
3. a) These options are subject to performance vesting requirements to be
determined on or before June 30, 1996. These performance vesting
requirements shall confirm the following minimum vesting at the following
dates:
i. (13,500 option shares) irrevocably vest upon execution of this
option.
ii. (20,050 option shares) irrevocably vest as of June 30, 1996
provided Ms. Laux is employed full time by Vitafort
International Corporation at that time (no right of pro-ration
is granted or inferred).
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or before
June 30, 1996. However, should the Company fail to establish
specific criteria for any reason, an additional 25% (33,750
option shares) shall vest on January 1 of 1997, 1998, and
1999.
-2-
<PAGE>
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common
Shares by recapitalization, reclassification, stock dividend, or
split-up thereof or other means, the number of Common Shares subject
to this Option immediately prior to such subdivision shall be
proportionately increased and the Option Price shall be
proportionately decreased, and if the Company shall at any time
combine the outstanding Common Shares by recapitalization,
reclassification or combination thereof or other means, the number of
Common Shares subject to this Option immediately prior to such
combination shall be proportionately decreased and the Option Price
shall be proportionately increased. Any such adjustment and
adjustment to the Option Price shall become effective at the close of
business on the record date for such subdivision or combination.
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be
required to make such equitable adjustment in the Option Price and the
type and/or number of Underlying Securities in effect immediately
prior to the record date of such distribution as may be necessary to
preserve to the Holder of this Option rights substantially
proportionate to and economically equivalent to those enjoyed
hereunder by such Holder immediately prior to the happening of such
distribution. Any such adjustment made reasonably and in good faith
by the Board of Directors shall be final and binding upon the Holders
and shall become effective as of the record date for such
distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If
the Company shall make a record of the Holders of its Common Shares
for the purpose of entitling them to receive any dividend or
distribution and legally abandon its plan to pay or deliver such
dividend or distribution then no adjustment in the number of Common
Shares subject to the Option shall be required by reason of the making
of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by
Section 4(a) hereof or which solely affects the par value of such
Common Shares) or in the case of any merger or consolidation of the
Company with or into another corporation (other than a consolidation
or merger in which the Company is the continuing corporation and which
does not result in any reclassification, change, capital
reorganization or change in the ownership of the outstanding Common
Shares), or in the case of any sale or conveyance or transfer of all
or substantially all of the property of the Company and in connection
with which the Company is dissolved,
-3-
<PAGE>
the Holder of this Option shall have the right thereafter (until the
expiration of the right of exercise of this Option) to receive upon
the exercise hereof, for the same aggregate Option Price payable
hereunder immediately prior to such event, the kind and amount of
shares of stock or other securities or property receivable upon such
reclassification, change, capital reorganization, merger or
consolidation, or upon the dissolution following any sale or other
transfer, by a holder of the number of Common Shares of the Company
equal to the number of common shares obtainable upon exercise of this
Option immediately prior to such event; and if any reorganization,
reclassification, change, merger, consolidation, sale or transfer also
results in a change in Common Shares covered by Section 4(a), then
such adjustment shall be made pursuant to both this Section 4(d) and
Section 4(a). The provisions of this Section 4(d) shall similarly
apply to successive reclassification, or capital reorganizations,
mergers or consolidations, changes, sales or other transfers.
(e) The Company shall not be required to issue fractional Common Shares
upon any exercise of this Option. As to any final fraction of a
Common Share which the Holder of this Option would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the
same fraction of the market value of a share of such stock on the
business day preceding the day of exercise or book value as determined
by the Company's independent public accountants if not publicly
traded. The Holder of this Option, by his acceptance hereof,
expressly waives any right to receive any fractional shares of stock
upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape
or (B) if the principal market for such securities is the over-the-
counter market, the high bid price on such date as set forth by NASDAQ
or closing price if listed on NASDAQ NMS or, if the security is not
quoted on NASDAQ, the high bid price as set forth in the NATIONAL
QUOTATION BUREAU sheet listing such securities for such day.
Notwithstanding the foregoing, if there is no reported closing price or
high bid price, as the case may be, on a date prior to the event
requiring an adjustment hereunder, then the current market price shall
be determined as of the latest date prior to such day for which such
closing price or high bid price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the
Option Price or in the number, or kind, or class of shares or other
securities or other property obtainable upon exercise of this Option,
and without impairing any such adjustment the certificate representing
this Option may continue to express the Option Price and the number of
Common Shares obtainable upon exercise at the same price and number of
Common Shares as are stated herein.
-4-
<PAGE>
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions
hereof.
(i) Upon any adjustment of this Option the Company shall give written
notice thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon
exercise of this Option and shall set forth in reasonable detail the
events which resulted in such adjustment.
5. For the purposes of this Option, the terms "Common Shares" or "Common
Stock" shall mean (i) the class of stock designated as the common stock of
the Company on the date set forth on the first page hereof or (ii) any
other class of stock resulting from successive changes or reclassification
of such Common Stock consisting solely of changes from par value to no par
value, or from no par value to par value or changes in par value. If at
any time, as a result of an adjustment made pursuant to Section 4, the
securities or other property obtainable upon exercise of this Option shall
include shares or other securities of another corporation or other
property, then thereafter, the number of such other shares or other
securities or property so obtainable shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained in Section 4,
and all other provisions of this Option with respect to Common Shares shall
apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires
otherwise, all references herein to Common Shares shall, in the event of an
adjustment pursuant to Section 4, be deemed to refer also to any other
shares or other securities or property when obtainable as a result of such
adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option
may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at
its expense will obtain the listing thereof on all quotation systems
or national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares
shall not be sufficient to effect the exercise of this Option, the
Company will take such corporate action as may be necessary to
increase its authorized but unissued Common Shares to such number of
shares as shall be sufficient for such purpose; the Company shall have
analogous obligations with respect to any other securities or property
issuable upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued,
fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option
shall be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
-5-
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option Holder, provided only that the Closing
Price (hereinafter defined) of the Company's Common Stock has theretofore
equalled or exceeded FIFTY CENTS ($0.50) per Share for ten (10) consecutive
Trading Days after the Effective Registration Date. This Option shall
expire and become null and void thirty (30) days after the issuance of the
Call Notice. The Option Holder may exercise this Option and purchase some
or all of the Shares then subject to this Option within said thirty (30)-
day period, but may not thereafter exercise this Option or purchase any of
the Shares. If the Option is not exercised within said thirty (30) day
period, the Company will have the right to redeem any or all outstanding
and unexercised Options at a redemption price of $0.0001 per Option. For
purposes of this Section 7.3, "Closing Price" means (a) if the Common Stock
is then listed 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 FIFTY CENTS ($0.50)
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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10. If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11. Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
-6-
<PAGE>
12. Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be canceled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of
a transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13. This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors,
legal representatives and assigns.
14. All notices required hereunder shall be in writing and shall be deemed
given when telegraphed, delivered personally or within two (2) days after
mailing when mailed by certified or registered mail, return receipt
requested, to the party to whom such notice is intended, at the address of
such other party as set forth on the first page hereof, or at such other
address of which the Company or Holder has been advised by the notice
hereunder.
15. In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16. The validity, interpretation and performance of this Option and of the
terms and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of MAY 16, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Mark Beychok
---------------------------------------------------------
Mark Beychok, Chief Executive Officer
-7-
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase ___________ Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
-------------------------- -----
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
--------------------------------------------------------
Name to whom certificates are to be issued if different from above
--------------------------------------------------------
(Street Address)
--------------------------------------------------------
(City, State Zipcode)
--------------------------------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
--------------------------------------------------------
(Please Print)
--------------------------------------------------------
(Street Address)
--------------------------------------------------------
(City, State Zipcode)
--------------------------------------------------------
(Tax Payer I.D. Number)
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
-8-
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED _______________________________, hereby sells,
assigns and transfers to _______________________________,(Social
Security or I.D. No.______________________) the within Option, or that
portion of this Option purchasable for _______ common shares together
with all rights, title and interest therein, and does hereby
irrevocably constitute and appoint ___________________________________
attorney to transfer such Option on the register of the within named
Company, with full power of substitution.
--------------------------------------------------------
(Signature)
Dated: , 19
Signature Guaranteed:
--------------------------------------------------------
(INTENTIONALLY BLANK)
-9-
<PAGE>
May 11, 1996
Alexandra Lersey
Apartment 202
646 South Barrington
Los Angeles, CA 90049
RE: Option Agreement
Dear Alex,
This letter confirms the formal approval by the Board of Directors of
the options proposed as part of your employment with Vitafort. These options
will be issued in form comparable to those of fellow employees under the
following general terms:
a) TERM OF OPTIONS: 5 Years from issue date
b) EXERCISE PRICE OF OPTIONS: 24 cents per share
c) TOTAL STOCK OPTIONS APPROVED: 80,000
d) PERFORMANCE VESTING REQUIREMENTS: These options are subject to
performance vesting requirements to be determined on or before June 30,
1996. These performance vesting requirements shall confirm the
following minimum vesting at the following dates:
i. (8,000 option shares) irrevocably vest upon execution of
this option.
ii. (12,000 option shares) irrevocably vest as of June 30, 1996
provided Ms. Lersey is employed full time by Vitafort
International Corporation at that time (no right of proration
is granted or inferred).
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or before
June 30, 1996. However, should the Company fail to establish
specific criteria for any reason, an additional 25% (20,000
option shares) shall vest on January 1 of 1997, 1998, and
1999.
Please signify your agreement and acceptance of these terms by signing a
copy of the letter and returning same directly to me at your earliest
convenience. Upon receipt of your acceptance, we will endeavor to include
the underlying shares in the next appropriate registration effort.
Sincerely,
/s/ Eloy L. Ellis
------------------------------
Eloy L. Ellis
CONFIRMED, AGREED, & ACCEPTED:
/s/ Alexandra Lersey
------------------------------
Alexandra Lersey
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE MADE AT
ANY TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED WITH EVIDENCE
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION
OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF MAY 16, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: ALEXANDRA LERSEY
ADDRESS: Apartment 202
646 South Barrington
Los Angeles, CA 90049
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and as a result of her employment full time by Vitafort, to
purchase from Vitafort International Corporation (the "Company"), a Delaware
corporation, having its offices at Suite 480, 1800 Avenue of the Stars, Los
Angeles, California 90067, up to EIGHTY THOUSAND (80,000) shares of the
Company's common stock subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the Company's
common stock including Underlying Securities, as more fully set forth in
Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .24) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
- 1 -
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until DECEMBER 31, 2000 (the "Expiration Date"),
by the presentation of this Option, with the purchase form attached duly
executed, at the Company's office (or such office or agency of the
Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 14 hereof), specifying the number of Common Shares
as to which the Option is being exercised, and upon payment by the
Holder to the Company in cash or by certified check or bank draft, in an
amount equal to the Option Price times the number of Common Shares then
being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made for
such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after the
rights represented by this Option shall have been so exercised. If this
Option shall be exercised in part only or transferred in part subject to
the provisions herein, the Company shall, upon surrender of this Option
for cancellation or partial transfer, deliver a new Option evidencing
the rights of the Holder hereof to purchase the balance of the
Underlying Shares which such Holder is entitled to purchase hereunder.
Exercise in full of the rights represented by this Option shall not
extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as are
purchasable hereunder; and (ii) this Option may be divided or combined with
other Options which carry the same rights, in either case, upon presentation
hereof at the aforesaid office of the Company together with a written
notice, signed by the Holder hereof, specifying the names and denominations
in which new Options are to be issued, and the payment of any transfer tax
due in connection therewith.
3. a) These options are subject to performance vesting requirements to
be determined on or before June 30, 1996. These performance vesting
requirements shall confirm the following minimum vesting at the
following dates:
i (8,000 option shares) irrevocably vest upon execution of
this option.
ii. (12,000 option shares) irrevocably vest as of June 30, 1996
provided Ms. Lersey is employed full time by Vitafort
International Corporation at that time (no right of pro-
ration is granted or inferred).
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or before
June 30, 1996. However, should the Company fail to
establish specific criteria for any reason, an additional
25% (20,000 option shares) shall vest on January 1 of 1997,
1998, and 1999.
- 2-
<PAGE>
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common Shares
by recapitalization, reclassification, stock dividend, or split-up
thereof or other means, the number of Common Shares subject to this
Option immediately prior to such subdivision shall be proportionately
increased and the Option Price shall be proportionately decreased, and
if the Company shall at any time combine the outstanding Common Shares
by recapitalization, reclassification or combination thereof or other
means, the number of Common Shares subject to this Option immediately
prior to such combination shall be proportionately decreased and the
Option Price shall be proportionately increased. Any such adjustment
and adjustment to the Option Price shall become effective at the close
of business on the record date for such subdivision or combination.
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be required
to make such equitable adjustment in the Option Price and the type
and/or number of Underlying Securities in effect immediately prior to
the record date of such distribution as may be necessary to preserve to
the Holder of this Option rights substantially proportionate to and
economically equivalent to those enjoyed hereunder by such Holder
immediately prior to the happening of such distribution. Any such
adjustment made reasonably and in good faith by the Board of Directors
shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If the
Company shall make a record of the Holders of its Common Shares for the
purpose of entitling them to receive any dividend or distribution and
legally abandon its plan to pay or deliver such dividend or distribution
then no adjustment in the number of Common Shares subject to the Option
shall be required by reason of the making of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by Section
4(a) hereof or which solely affects the par value of such Common Shares)
or in the case of any merger or consolidation of the Company with or
into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in
any reclassification, change, capital reorganization or change in the
ownership of the outstanding Common Shares), or in the case of any sale
or conveyance or transfer of all or substantially
- 3 -
<PAGE>
all of the property of the Company and in connection with which the
Company is dissolved, the Holder of this Option shall have the right
thereafter (until the expiration of the right of exercise of this
Option) to receive upon the exercise hereof, for the same aggregate
Option Price payable hereunder immediately prior to such event, the kind
and amount of shares of stock or other securities or property receivable
upon such reclassification, change, capital reorganization, merger or
consolidation, or upon the dissolution following any sale or other
transfer, by a holder of the number of Common Shares of the Company
equal to the number of common shares obtainable upon exercise of this
Option immediately prior to such event; and if any reorganization,
reclassification, change, merger, consolidation, sale or transfer also
results in a change in Common Shares covered by Section 4(a), then such
adjustment shall be made pursuant to both this Section 4(d) and Section
4(a). The provisions of this Section 4(d) shall similarly apply to
successive reclassification, or capital reorganizations, mergers or
consolidations, changes, sales or other transfers.
(e) The Company shall not be required to issue fractional Common Shares upon
any exercise of this Option. As to any final fraction of a Common Share
which the Holder of this Option would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the
market value of a share of such stock on the business day preceding the
day of exercise or book value as determined by the Company's independent
public accountants if not publicly traded. The Holder of this Option,
by his acceptance hereof, expressly waives any right to receive any
fractional shares of stock upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape or
(B) if the principal market for such securities is the over-the-counter
market, the high bid price on such date as set forth by NASDAQ or
closing price if listed on NASDAQ NMS or, if the security is not quoted
on NASDAQ, the high bid price as set forth in the NATIONAL QUOTATION
BUREAU sheet listing such securities for such day. Notwithstanding the
foregoing, if there is no reported closing price or high bid price, as
the case may be, on a date prior to the event requiring an adjustment
hereunder, then the current market price shall be determined as of the
latest date prior to such day for which such closing price or high bid
price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the Option
Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of this Option, and without
impairing any such adjustment the certificate representing this Option
may continue to express the Option Price and the number of Common Shares
obtainable upon exercise at the same price and number of Common Shares
as are stated herein.
- 4 -
<PAGE>
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions hereof.
(i) Upon any adjustment of this Option the Company shall give written notice
thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon exercise
of this Option and shall set forth in reasonable detail the events which
resulted in such adjustment.
5. For the purposes of this Option, the terms "Common Shares" or "Common Stock"
shall mean (i) the class of stock designated as the common stock of the
Company on the date set forth on the first page hereof or (ii) any other
class of stock resulting from successive changes or reclassification of such
Common Stock consisting solely of changes from par value to no par value, or
from no par value to par value or changes in par value. If at any time, as
a result of an adjustment made pursuant to Section 4, the securities or
other property obtainable upon exercise of this Option shall include shares
or other securities of another corporation or other property, then
thereafter, the number of such other shares or other securities or property
so obtainable shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 4, and all other
provisions of this Option with respect to Common Shares shall apply on like
terms to any such other shares or other securities or property. Subject to
the foregoing, and unless the context requires otherwise, all references
herein to Common Shares shall, in the event of an adjustment pursuant to
Section 4, be deemed to refer also to any other shares or other securities
or property when obtainable as a result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option may
be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at its
expense will obtain the listing thereof on all quotation systems or
national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares shall
not be sufficient to effect the exercise of this Option, the Company
will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall
be sufficient for such purpose; the Company shall have analogous
obligations with respect to any other securities or property issuable
upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued, fully
paid, non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option shall
be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
- 5 -
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option Holder, provided only that the Closing
Price (hereinafter defined) of the Company's Common Stock has theretofore
equalled or exceeded FIFTY CENTS ($0.50) per Share for ten (10) consecutive
Trading Days after the Effective Registration Date. This Option shall
expire and become null and void thirty (30) days after the issuance of the
Call Notice. The Option Holder may exercise this Option and purchase some
or all of the Shares then subject to this Option within said thirty (30)-day
period, but may not thereafter exercise this Option or purchase any of the
Shares. If the Option is not exercised within said thirty (30) day period,
the Company will have the right to redeem any or all outstanding and
unexercised Options at a redemption price of $0.0001 per Option. For
purposes of this Section 7.3, "Closing Price" means (a) if the Common Stock
is then listed 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 FIFTY CENTS ($0.50) 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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities shall
be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10.If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11.Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
- 6 -
<PAGE>
12.Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be canceled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of a
transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13.This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors, legal
representatives and assigns.
14.All notices required hereunder shall be in writing and shall be deemed given
when telegraphed, delivered personally or within two (2) days after mailing
when mailed by certified or registered mail, return receipt requested, to
the party to whom such notice is intended, at the address of such other
party as set forth on the first page hereof, or at such other address of
which the Company or Holder has been advised by the notice hereunder.
15.In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16.The validity, interpretation and performance of this Option and of the terms
and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of MAY 16, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /S/ MARK BEYCHOK
---------------------------------------
Mark Beychok, Chief Executive Officer
- 7 -
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase __________ Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
---------------- ----
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
------------------------------------------------------
Name to whom certificates are to be issued if different from above
--------------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
------------------------------------------------------
(Please Print)
------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
- 8 -
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ________________, hereby sells, assigns and transfers
to _________________,(Social Security or I.D. No. _____________________)
the within Option, or that portion of this Option purchasable for
_____________ common shares together with all rights, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________________ attorney to transfer such Option on the
register of the within named Company, with full power of substitution.
------------------------------------------------------------------
(Signature)
Dated: , 19
------------ -----
Signature Guaranteed:
------------------------------------------------------
(INTENTIONALLY BLANK)
- 9 -
<PAGE>
May 11, 1996
Dale DeMarchi
2419 20th Street, Unit 1
Santa Monica, CA 90405
RE: Option Agreement
Dear Alex,
This letter confirms the formal approval by the Board of Directors of
the options proposed as part of your employment with Vitafort. These options
will be issued in form comparable to those of fellow employees under the
following general terms:
a) TERM OF OPTIONS: 5 Years from issue date
b) EXERCISE PRICE OF OPTIONS: 24 cents per share
c) TOTAL STOCK OPTIONS APPROVED: 100,000
d) PERFORMANCE VESTING REQUIREMENTS: These options are subject to
performance vesting requirements to be determined on or before June 30,
1996. These performance vesting requirements shall confirm the
following minimum vesting at the following dates:
i. (10,000 option shares) irrevocably vest upon execution of
this option.
ii. (15,000 option shares) irrevocably vest as of June 30, 1996
provided Mr. DeMarchi is employed full time by Vitafort
International Corporation at that time (no right of proration
is granted or inferred).
iii. The balance of the options will vest in accordance with
specific performance criteria to be determined on or before
June 30, 1996. However, should the Company fail to establish
specific criteria for any reason, an additional 25% (25,000
option shares) shall vest on January 1 of 1997, 1998, and
1999.
Please signify your agreement and acceptance of these terms by signing a
copy of the letter and returning same directly to me at your earliest
convenience. Upon receipt of your acceptance, we will endeavor to include
the underlying shares in the next appropriate registration effort.
Sincerely,
/s/ Eloy L. Ellis
------------------------------
Eloy L. Ellis
CONFIRMED, AGREED, & ACCEPTED:
/s/ Dale DeMarchi
------------------------------
Dale DeMarchi
<PAGE>
EXCEPT AS PERMITTED BY SECTION 8 HEREOF, NO TRANSFER SHALL BE
MADE AT ANY TIME UNLESS THE COMPANY SHALL HAVE BEEN SUPPLIED
WITH EVIDENCE REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER
IS NOT IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT").
VITAFORT INTERNATIONAL CORPORATION
----------------------
OPTION TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
DATED: AS OF MAY 16, 1996
THIS CERTIFIES THAT, FOR VALUE RECEIVED
NAME: DALE DE MARCHI
ADDRESS: 2419 20th Street, Unit 1
Santa Monica, CA 90405
or registered assigns (the "Holder") are entitled, subject to the terms set
forth herein and as a result of his employment full time by Vitafort, to
purchase from Vitafort International Corporation (the "Company"), a Delaware
corporation, having its offices at Suite 480, 1800 Avenue of the Stars, Los
Angeles, California 90067, up to ONE HUNDRED THOUSAND (100,000) shares of the
Company's common stock subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the Company's
common stock including Underlying Securities, as more fully set forth in
Section 5 hereof.
(b) "Option Price" or "Common Share Price" shall be "EXERCISE PRICE" Cents
($ .24) per share.
(c) "Underlying Securities" or "Underlying Shares"or "Underlying Stock"
shall refer to the Common Shares or other securities or property
issuable or issued upon exercise of this Option.
- 1 -
<PAGE>
2. (a) The purchase rights represented by this Option may be exercised by the
Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period
commencing this date, until DECEMBER 31, 2000 (the "Expiration Date"),
by the presentation of this Option, with the purchase form attached duly
executed, at the Company's office (or such office or agency of the
Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 14 hereof), specifying the number of Common Shares
as to which the Option is being exercised, and upon payment by the
Holder to the Company in cash or by certified check or bank draft, in an
amount equal to the Option Price times the number of Common Shares then
being purchased hereunder.
(b) The Company agrees that the Holder hereof shall be deemed the record
owner of such Underlying Securities as of the close of business on the
date on which this Option shall have been presented and payment made for
such Underlying Securities as aforesaid. Certificates for the
Underlying Securities so obtained shall be delivered to the Holder
hereof within a reasonable time, not exceeding seven (7) days, after the
rights represented by this Option shall have been so exercised. If this
Option shall be exercised in part only or transferred in part subject to
the provisions herein, the Company shall, upon surrender of this Option
for cancellation or partial transfer, deliver a new Option evidencing
the rights of the Holder hereof to purchase the balance of the
Underlying Shares which such Holder is entitled to purchase hereunder.
Exercise in full of the rights represented by this Option shall not
extinguish the rights granted under Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this Option is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Options of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as are
purchasable hereunder; and (ii) this Option may be divided or combined with
other Options which carry the same rights, in either case, upon presentation
hereof at the aforesaid office of the Company together with a written
notice, signed by the Holder hereof, specifying the names and denominations
in which new Options are to be issued, and the payment of any transfer tax
due in connection therewith.
3. a) These options are subject to performance vesting requirements to be
determined on or before June 30, 1996. These performance vesting requirements
shall confirm the following minimum vesting at the following dates:
i. (10,000 option shares) irrevocably vest upon execution of this
option.
ii. (15,000 option shares) irrevocably vest as of June 30, 1996
provided Mr. De Marchi is employed full time by Vitafort
International Corporation at that time (no right of pro-ration is
granted or inferred).
iii. The balance of the options will vest in accordance with specific
performance criteria to be determined on or before June 30, 1996.
However, should the Company fail to establish specific criteria for
any reason, an additional 25% (25,000 option shares) shall vest on
January 1 of 1997, 1998, and 1999.
- 2 -
<PAGE>
4. Subject and pursuant to the provisions of this Section 4, the Option Price
and number of Common Shares subject to this Option shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common Shares
by recapitalization, reclassification, stock dividend, or split-up
thereof or other means, the number of Common Shares subject to this
Option immediately prior to such subdivision shall be proportionately
increased and the Option Price shall be proportionately decreased, and
if the Company shall at any time combine the outstanding Common Shares
by recapitalization, reclassification or combination thereof or other
means, the number of Common Shares subject to this Option immediately
prior to such combination shall be proportionately decreased and the
Option Price shall be proportionately increased. Any such adjustment
and adjustment to the Option Price shall become effective at the close
of business on the record date for such subdivision or combination.
(b) If the Company after the date hereof shall distribute to all of the
holders of its Common Shares any securities including, but not limited
to Common Shares, or other assets (other than a cash distribution made
as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdiction of
incorporation of the Company), the Board of Directors shall be required
to make such equitable adjustment in the Option Price and the type
and/or number of Underlying Securities in effect immediately prior to
the record date of such distribution as may be necessary to preserve to
the Holder of this Option rights substantially proportionate to and
economically equivalent to those enjoyed hereunder by such Holder
immediately prior to the happening of such distribution. Any such
adjustment made reasonably and in good faith by the Board of Directors
shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
(c) No adjustment in the number of Common Shares subject to this Option or
the Option Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of
shares of at least 1% of the then adjusted number of Common Shares
issuable upon exercise of the Option, provided, however, that any
adjustments which by reason of the foregoing are not required at the
time to be made shall be carried forward and taken into account and
included in determining the amount of any subsequent adjustment. If the
Company shall make a record of the Holders of its Common Shares for the
purpose of entitling them to receive any dividend or distribution and
legally abandon its plan to pay or deliver such dividend or distribution
then no adjustment in the number of Common Shares subject to the Option
shall be required by reason of the making of such record.
(d) In case of any capital reorganization or reclassification or change of
the outstanding Common Shares (exclusive of a change covered by Section
4(a) hereof or which solely affects the par value of such Common Shares)
or in the case of any merger or consolidation of the Company with or
into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in
any reclassification, change, capital reorganization or change in the
ownership of the outstanding Common Shares), or in the case of any sale
or conveyance or transfer of all or substantially all of the property of
the Company and in connection with which the Company is dissolved,
- 3 -
<PAGE>
the Holder of this Option shall have the right thereafter (until the
expiration of the right of exercise of this Option) to receive upon the
exercise hereof, for the same aggregate Option Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock
or other securities or property receivable upon such reclassification,
change, capital reorganization, merger or consolidation, or upon the
dissolution following any sale or other transfer, by a holder of the
number of Common Shares of the Company equal to the number of common
shares obtainable upon exercise of this Option immediately prior to such
event; and if any reorganization, reclassification, change, merger,
consolidation, sale or transfer also results in a change in Common
Shares covered by Section 4(a), then such adjustment shall be made
pursuant to both this Section 4(d) and Section 4(a). The provisions of
this Section 4(d) shall similarly apply to successive reclassification,
or capital reorganizations, mergers or consolidations, changes, sales or
other transfers.
(e) The Company shall not be required to issue fractional Common Shares upon
any exercise of this Option. As to any final fraction of a Common Share
which the Holder of this Option would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the
market value of a share of such stock on the business day preceding the
day of exercise or book value as determined by the Company's independent
public accountants if not publicly traded. The Holder of this Option,
by his acceptance hereof, expressly waives any right to receive any
fractional shares of stock upon exercise of this Option.
(f) As used herein, the current market price ("Market Price") per share at
any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and
shall be (A) if the principal trading market for such securities is an
exchange, the closing price on such exchange on such day provided if
trading of such Common Shares is listed on any consolidated tape, the
price shall be the closing price set forth on such consolidated tape or
(B) if the principal market for such securities is the over-the-counter
market, the high bid price on such date as set forth by NASDAQ or
closing price if listed on NASDAQ NMS or, if the security is not quoted
on NASDAQ, the high bid price as set forth in the NATIONAL QUOTATION
BUREAU sheet listing such securities for such day. Notwithstanding the
foregoing, if there is no reported closing price or high bid price, as
the case may be, on a date prior to the event requiring an adjustment
hereunder, then the current market price shall be determined as of the
latest date prior to such day for which such closing price or high bid
price is available.
(g) Irrespective of any adjustments pursuant to this Section 4 in the Option
Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of this Option, and without
impairing any such adjustment the certificate representing this Option
may continue to express the Option Price and the number of Common Shares
obtainable upon exercise at the same price and number of Common Shares
as are stated herein.
- 4 -
<PAGE>
(h) Until this Option is exercised, the Underlying Shares, and the Option
Price shall be determined exclusively pursuant to the provisions hereof.
(i) Upon any adjustment of this Option the Company shall give written notice
thereof to the Holder which notice shall include the number of
Underlying Securities purchasable and the price per share upon exercise
of this Option and shall set forth in reasonable detail the events which
resulted in such adjustment.
5. For the purposes of this Option, the terms "Common Shares" or "Common Stock"
shall mean (i) the class of stock designated as the common stock of the
Company on the date set forth on the first page hereof or (ii) any other
class of stock resulting from successive changes or reclassification of such
Common Stock consisting solely of changes from par value to no par value, or
from no par value to par value or changes in par value. If at any time, as
a result of an adjustment made pursuant to Section 4, the securities or
other property obtainable upon exercise of this Option shall include shares
or other securities of another corporation or other property, then
thereafter, the number of such other shares or other securities or property
so obtainable shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 4, and all other
provisions of this Option with respect to Common Shares shall apply on like
terms to any such other shares or other securities or property. Subject to
the foregoing, and unless the context requires otherwise, all references
herein to Common Shares shall, in the event of an adjustment pursuant to
Section 4, be deemed to refer also to any other shares or other securities
or property when obtainable as a result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this Option may
be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes
of issuance upon exercise of this Option, such number of its Common
Shares as shall be issuable upon the exercise of this Option and at its
expense will obtain the listing thereof on all quotation systems or
national securities exchanges on which the Common Shares are then
listed; and if at any time the number of authorized Common Shares shall
not be sufficient to effect the exercise of this Option, the Company
will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall
be sufficient for such purpose; the Company shall have analogous
obligations with respect to any other securities or property issuable
upon exercise of this Option;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Option will, upon issuance, be validly issued, fully
paid, non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of Common
Shares upon the exercise of the rights represented by this Option shall
be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the
transfer of any Options.
- 5 -
<PAGE>
7. The Company may issue a call of this Option ("Call Notice") at any time
after the Effective Registration Date, but prior to the expiration of this
Option, by written notice to Option Holder, provided only that the Closing
Price (hereinafter defined) of the Company's Common Stock has theretofore
equalled or exceeded FIFTY CENTS ($0.50) per Share for ten (10) consecutive
Trading Days after the Effective Registration Date. This Option shall
expire and become null and void thirty (30) days after the issuance of the
Call Notice. The Option Holder may exercise this Option and purchase some
or all of the Shares then subject to this Option within said thirty (30)-day
period, but may not thereafter exercise this Option or purchase any of the
Shares. If the Option is not exercised within said thirty (30) day period,
the Company will have the right to redeem any or all outstanding and
unexercised Options at a redemption price of $0.0001 per Option. For
purposes of this Section 7.3, "Closing Price" means (a) if the Common Stock
is then listed 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 FIFTY CENTS ($0.50) 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.
8. Until exercised, this Option shall not entitle the Holder hereof to any
voting rights or other rights as a shareholder of the Company.
9. No transfer of all or a portion of the Option or Underlying Securities shall
be made at any time unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to
the satisfaction of the aforesaid condition and upon surrender of this
Option or certificates for any Underlying Securities at the office of the
Company, the Company shall deliver a new Option or Options or new
certificate or certificates for Underlying Securities to and in the name of
the assignee or assignees named therein. Any such certificate may bear a
legend reflecting the restrictions on transfer set forth herein.
10.If this Option is lost, stolen, mutilated or destroyed, the Company shall,
on such terms as to indemnity or otherwise as the Company may reasonably
impose, issue a new Option of like denomination, tenor and date. Any such
new Option shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Option shall be at any time enforceable by anyone.
11.Any Option issued pursuant to the provisions of Section 9 hereof, or upon
transfer, exchange, division or partial exercise of this Option or
combination thereof with another Option or Options, shall set forth each
provision set forth in Sections 1 through 15, inclusive, of this Option as
each such provision is set forth herein, and shall be duly executed on
behalf of the Company by its chief executive officer or chief operating
officer.
- 6 -
<PAGE>
12.Upon surrender of this Option for transfer or exchange or upon the exercise
hereof, this Option shall be canceled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or Section 8 in case of a
transfer, or Section 9 in case of mutilation. Any new Option certificate
shall be issued promptly but not later than fifteen (15) days after receipt
of the old Option certificate.
13.This Option shall inure to the benefit of and be binding upon the Holder
hereof, the Company and their respective successors, heirs, executors, legal
representatives and assigns.
14.All notices required hereunder shall be in writing and shall be deemed given
when telegraphed, delivered personally or within two (2) days after mailing
when mailed by certified or registered mail, return receipt requested, to
the party to whom such notice is intended, at the address of such other
party as set forth on the first page hereof, or at such other address of
which the Company or Holder has been advised by the notice hereunder.
15.In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
16.The validity, interpretation and performance of this Option and of the terms
and provisions hereof shall be governed by the laws of the State of
California applicable to agreements entered into and performed entirely in
such state.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of MAY 16, 1996.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Mark Beychok
-----------------------------------------
Mark Beychok, Chief Executive Officer
- 7 -
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably elects to
exercise the right to purchase __________ Common Shares evidenced by the within
Option, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and options shall be issued in the name set forth
below.
, 19
---------------- ----
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
------------------------------------------------------
Name to whom certificates are to be issued if different from above
--------------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
If said number of shares and options shall not be all the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion shall be registered in the name of:
------------------------------------------------------
(Please Print)
------------------------------------------------------
(Street Address)
----------------------------------------------------------------
(City, State Zipcode)
----------------------------------------
(Tax Payer I.D. Number)
--------------------------------------------------------
Signature
--------------------------------------------------------
Print Name of Signatory
- 8 -
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ________________, hereby sells, assigns and transfers
to _________________,(Social Security or I.D. No. _____________________)
the within Option, or that portion of this Option purchasable for
_____________ common shares together with all rights, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________________ attorney to transfer such Option on the
register of the within named Company, with full power of substitution.
------------------------------------------------------------------
(Signature)
Dated: , 19
------------ -----
Signature Guaranteed:
------------------------------------------------------
(INTENTIONALLY BLANK)
- 9 -
<PAGE>
November 20, 1996
Matheau Dakoske
4240 Lost Hills Road, Unit 201
Calabasas, CA 91301
Re: PowerCup Package Design Project
Dear Mr. Dakoske,
Please accept this letter as confirmation of your discussions with Mark
Beychok and I regarding your assistance with the design of the package graphics
for our proposed new product tentatively named "PowerCup". Specifically, you
are willing to provide full package graphic design services, including:
1. Creation and mockup of at least three package design concepts for review and
discussion with Vitafort International Corporation management.
2. Based upon discussion in item 1 (above), the revision and mock-up of the
designs.
3. Based upon final selection of design submissions, preparation of computer
graphics submission to printers for color separation and printing.
4. Upon satisfactory completion of the services described above, and subject to
appropriate approval of the Board of Directors, you will be issued 25,000
shares of Vitafort International Corporation common stock as payment in
full. Said stock will be included in the first registration subsequent to
Board of Director approval. Alternatively, if Board approval is denied, or
shares are not issued prior to June 30, 1996, you will receive cash payment
of $5,000.
We look forward to seeing your first design mock-ups in the very near
future.
Very truly yours,
/s/ Eloy L. Ellis
-------------------------
Eloy Ellis
AGREED & ACCEPTED
/s/ Matheau Dakoske
----------------------------
Matheau Dakoske
