<PAGE>
As filed with the Securities and Exchange Commission on June 3, 1998
Registration No. 333-
==================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VITAFORT INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 68-0110509
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
1800 AVENUE OF THE STARS, SUITE 480
LOS ANGELES, CALIFORNIA 90067
(Address of principal executive offices) (Zip Code)
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND KEITH BRASFIELD
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND JAMES CURLEY
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND ELOY ELLIS
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND PAUL ELLIS
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND DEAN ERICKSON
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND SHELDON HERMAN
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND REGINALD HITCHCOCK
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND JULIA HOLBERT
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND DONNA HUMMER
CONSULTING AGREEMENT BETWEEN THE REGISTRANT AND MICHAEL KELLY
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND JEFF KOSSACK
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND CRAIG LAZAR
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND FRED MASCIANGELO
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND PAULA PHILLIPS
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND JIM PILLOW
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND CHERYL WITHAM
CONSULTING AGREEMENT AND OPTION AGREEMENT BETWEEN THE
REGISTRANT AND ALLAN ZACKLER
(Full title of the plans)
MR. MARK BEYCHOK, PRESIDENT
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
<PAGE>
Copy to:
FRANK J. HARITON, ESQ.
THE EMPIRE STATE BUILDING
350 FIFTH AVENUE - SUITE 3000
NEW YORK, NEW YORK 10118
(212) 695-6000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Title of Securities to Amount to be Proposed Proposed Amount of
be registered Registered Maximum Maximum Registration
Price Aggregate Fee**
Per Share* Offering Price*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value
$.0001 per 339,500 $1.03 $351,187.50 $103.60
share
=======================================================================================================
</TABLE>
* Based upon the average of the closing bid and asked prices of the
Registrant's Common Stock as reflected on the Electronic Bulletin Board on May
31, 1998 in the case of stock grants and based on the exercise price of options
in the case of options in the case of per share data and based upon the
aggregate of the foregoing stock price and exercise price 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, 1997, 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, as amended, for the quarter
ended March 31, 1998.
(c) 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.
(d) 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
deregistering 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) 10,477 shares of the Company's common
stock; (ii) 800 of the Company's redeemable warrants; and (iii) 3,333 common
stock purchase options exercisable at $6.00.
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:
II-1
<PAGE>
(S) 145. Indemnification of officers, directors, employees and agents;
insurance
(a) A corporation shall have power to 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 the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person 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
the person's 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
the person 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 the person's conduct was
unlawful.
(b) A corporation shall have power to 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 the person 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 the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person 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.
II-2
<PAGE>
(c) To the extent that a present or former director or officer 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, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person 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 present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) 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 such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation 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 bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's 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 such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify
II-3
<PAGE>
such person 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, officers,
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 such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes 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 such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses
or indemnification brought under this section or under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
The Court of Chancery may summarily determine a corporation's obligation to
advance expenses (including attorneys' fees).
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.
II-4
<PAGE>
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. Incorporated by reference to Exhibit 4.1 to
the Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1996 (the "1996 10-KSB")
4.12 - Specimen Redeemable Common Stock Purchase Warrant*
4.13 - Form of Warrant Agreement*
4.14 - Warrant Extension Agreement, December 18, 1992**
II-5
<PAGE>
4.15 - Warrant Extension Agreement, December 18, 1994***
4.16 - Warrant Extension Agreement, January 18, 1995***
4.17 - Warrant Extension Agreement, April 3, 1995***
4.18 - Warrant Extension Agreement, May 3, 1995****
4.19 - Warrant Extension Agreement, June 15, 1995****
4.20 - Warrant Extension Agreement, July 17, 1995****
4.21 - Warrant Extension Agreement, August 16, 1995****
4.22 - Warrant Extension Agreement, December 31, 1995****
4.23 - Warrant Extension Agreement, April 30, 1996*****
4.24 - Certificate of Elimination for Series A Preferred Stock, April 26,
1996*****
4.25 - Certificate of Elimination for Series D Preferred Stock, May 6,
1996*****
4.26 - Warrant Extension Agreement, July 31, 1996. Incorporated by reference to
the like numbered Exhibit to the Registrant's Registration Statement on
Form S-8 filed December 12, 1996 (the "December 1996 S-8").
4.27 - Warrant Extension Agreement, September 30, 1996. Incorporated by
reference to the like numbered Exhibit to the December 1996 S-8.
4.28 - Warrant Extension Agreement, November 11, 1996. Incorporated by
reference to the like numbered Exhibit to the December 1996 S-8.
4.29 - Certificate of Amendment to the Certificate of Incorporation, dated
October 4, 1996. Incorporated by reference to the like numbered Exhibit
to the December 1996 S-8.
4.30 - Warrant Extension Agreement, November 15, 1996. Incorporated by
reference to the like numbered Exhibit to the December 1996 S-8.
4.31 - Warrant Extension Agreement, April 15, 1997. Incorporated by reference
to Exhibit 4.19 to the 1996 10-KSB.
4.32 - Amendment Certificate of Designation 1997 Series A Preferred Stock filed
May 1997. Incorporated by reference to Exhibit 4.32 to the Registrant's
Registration Statement on
II-6
<PAGE>
Form S-8 filed August 1997.
4.33 - Certificate of Amendment to the Registrant's Certificate of
Incorporation, July 1997. Incorporated by reference to Exhibit 4.33 to
the Registrant's Registration Statement on Form S-8 filed August 1997.
4.34 - Warrant Extension Agreement, October 31, 1997. Incorporated by
reference to Exhibit 4.20 to the Registrant's Registration Statement on
Form SB-2 filed January 1998.
4.35 - Amendment Certificate of Designation 1997 Series A Preferred Stock filed
March 1998. Incorporated by reference to Exhibit 3.15 to the
Registrant's Registration Statement on Form SB-2 filed January 1998.
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 BDO Seidman, LLP, Independent Certified Public Accountants.
24.01 - Power of Attorney (contained on signature page)
99.01 - Consulting Agreement between the Registrant and Keith Brasfield.
99.02 - Consulting Agreement between the Registrant and James Curley.
99.03 - Option Agreement Between the Registrant and James Curley.
99.04 - Consulting Agreement between the Registrant and Eloy Ellis.
99.05 - Consulting Agreement between the Registrant and Paul Ellis.
99.06 - Option Agreement Between the Registrant and Paul Ellis.
99.07 - Consulting Agreement between the Registrant and Dean Erickson.
99.08 - Option Agreement Between the Registrant and Dean Erickson.
99.09 - Consulting Agreement between the Registrant and Sheldon Herman
99.10 - Option Agreement Between the Registrant and Sheldon Herman.
99.11 - Consulting Agreement between the Registrant and Reginald Hitchcock.
99.12 - Option Agreement Between the Registrant and Reginald Hitchcock.
II-7
<PAGE>
99.13 - Consulting Agreement between the Registrant and Julia Holbert.
99.14 - Option Agreement Between the Registrant and Julia Holbert.
99.15 - Consulting Agreement between the Registrant and Donna Hummer.
99.16 - Option Agreement Between the Registrant and Donna Hummer.
99.17 - Consulting Agreement between the Registrant and Michael Kelly.
99.18 - Consulting Agreement between the Registrant and Jeff Kossack.
99.19 - Option Agreement Between the Registrant and James Kossack.
99.20 - Consulting Agreement between the Registrant and Craig Lazar.
99.21 - Option Agreement Between the Registrant and Craig Lazar.
99.22 - Consulting Agreement between the Registrant and Fred Masiangelo.
99.23 - Option Agreement Between the Registrant and Fred Masiangelo.
99.24 - Consulting Agreement between the Registrant and Paula Phillips.
99.25 - Option Agreement Between the Registrant and Paula Phillips.
99.26 - Consulting Agreement between the Registrant and Jim Pillow.
99.27 - Option Agreement Between the Registrant and Jim Pillow.
99.28 - Consulting Agreement between the Registrant and Cheryl Witham.
99.29 - Option Agreement Between the Registrant and Cheryl Witham.
99.30 - Consulting Agreement between the Registrant and Alan Zackler.
99.31 - Option Agreement Between the Registrant and Alan Zackler.
* 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.
II-8
<PAGE>
*** 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
Registration Statement on Form S-8 dated January 16, 1996.
***** Incorporated by reference to the Exhibits to the Registrant's
Registration Statement on Form S-8 dated May 22, 1996.
Item 9. Undertakings.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post- effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Company of expenses paid or incurred
by a director, officer or controlling person of the Company in the successful
defense of any action, suit, or
II-9
<PAGE>
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.
II-10
<PAGE>
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 3rd day
of June, 1998.
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 Jack B. Spencer, 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:
<TABLE>
<S> <C> <C>
/s/ Mark Beychok Director, Chief Operating Officer and President June 3, 1998
- --------------------------------
Mark Beychok (Principal Executive Officer)
/s/ Jack B. Spencer Chief Operating Officer and Chief Financial Officer June 3, 1998
- --------------------------------
Jack B. Spencer (Principal Financial and Accounting Officer)
/s/ Donald Wohl Director June 3, 1998
- --------------------------------
Donald Wohl
/s/ Benjamin Tabatchnick Director June 3, 1998
- --------------------------------
Benjamin Tabatchnick
/s/ Paul G. Cowen Director June 3, 1998
- --------------------------------
Paul G. Cowen
</TABLE>
II-11
<PAGE>
EXHIBIT 5.01
FRANK J. HARITON, ATTORNEY AT LAW
The Empire State Building, 350 Fifth Avenue - Suite 3000, New York, New York
10118 TEL (212) 695-6000 FAX (212) 695-6007
June 3, 1998
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 329,500
shares (the "Shares") of the Company's common stock, offered on behalf of the
Company in connection with: (A) a Consulting Agreement between the Registrant
and each of (i) Keith Brasfeild; (ii) Eloy Ellis; and Michael Kelley; and
(B) Consulting Agreements and Option Agreements between the Registrant and each
of (i) James Curley; (ii) Paul Ellis; (iii) Dean Erickson; (iv) Sheldon Herman;
(v) Reginald Hitchcock; (vi) Julia Holbert; (vii) Donna Hummer;
(viii) Jeff Kossack; (ix) Craig Lazar; (x) Fred Masiangelo; (xi) Paula Philips;
(xii) Jim Pillow; (xiii) Cheryl Witham and (xvi) Alan Zackler (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 (each as amended to
date), 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 issued 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
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
Vitafort International Corporation
Los Angeles, California
We hereby consent to the use in the Company's Registration Statements on
Form S-8 of our report dated March 25, 1998, relating to the audit of the
consolidated financial statements of Vitafort International Corporation, which
are contained in and incorporated by reference to the Annual Report on Form
10-KSB for the year ended December 31, 1997. Our report contains an explanatory
paragraph regarding the Company's ability to continue as a going concern.
BDO Seidman, LLP
Los Angeles, California
June 3, 1998
<PAGE>
EXHIBIT 99.01
May 28, 1998
Keith Brasfield
16017 River Pointe Drive
Charlotte, NC 28278
Re: Billing and Payments in Kind
Dear Keith:
This is to confirm that you have agreed to accept an option for 3,500 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Keith Brasfield shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Keith Brasfield may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Keith Brasfield will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Keith Brasfield shall hold Vitafort harmless for
any decline in the market price of the securities issued herein.
<PAGE>
5) Keith Brasfield will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ---------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Keith Brasfield
- ---------------------------
Keith Brasfield
<PAGE>
EXHIBIT 99.02
May 28, 1998
James Curley
1929 W. Estes Avenue
Chicago, IL 60626
Re: Billing and Payments in Kind
Dear James:
This is to confirm that you have agreed to accept an option for 2,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) James Curley shall have the option to dispose of the Shares in the open
market, in an orderly manner, during the ensuing 30 days from the date of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) James Curley may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, James Curley will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and James Curley shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) James Curley will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ James Curley
- ------------------------
James Curley
<PAGE>
EXHIBIT 99.03
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
2,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
JAMES CURLEY
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Two Thousand (2,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean JAMES CURLEY or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00)
per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 2,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered .
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ James Curley
- -----------------------------
James Curley
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ___________________________________________
Signature
_______________________________________________
Print Name and Title of Signatory
_______________________________________________
Name to whom certificates are to be issued if
different from above.
Address: ______________________________________________________
Social Security No. or other identifying number: ______________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
_________________________________
(Please Print)
Address:_______________________________________________________
Social Security No. or other identifying number:_______________
Signature: ________________________________
_______________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.04
May 28, 1998
Eloy L. Ellis
635 No. Canyon Boulevard
Monrovia, CA 91016
Re: Billing and Payments in Kind
Dear Eloy:
This is to confirm that you have agreed to accept 30,000 shares of unrestricted,
tradable common stock of Vitafort ("Shares") as payment on account of Vitafort
for services rendered on our behalf. The terms under which the securities are
to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Eloy L. Ellis shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
<PAGE>
4) Eloy L. Ellis will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual
understanding between the two parties, please sign both copies of this document
and return one copy to the undersigned. Upon receipt of the signed copy, we will
arrange for the appropriate documentation and will issue the Shares in
accordance with the above, Vitafort International Corporation bylaws and
Articles of Incorporation, and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ----------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Eloy L. Ellis
- ----------------------------
Eloy L. Ellis
<PAGE>
EXHIBIT 99.05
May 28, 1998
Paul Ellis
P. O. Box 1272
La Canada, CA 91012
Re: Billing and Payments in Kind
Dear Paul:
This is to confirm that you have agreed to accept an option for 12,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Paul Ellis shall have the option to dispose of the Shares in the open
market, in an orderly manner, during the ensuing 30 days from the date of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Paul Ellis may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Paul Ellis will post a credit
to the account of Vitafort in an amount equal to the closing bid price as of the
date of issue less five percent (5%) for estimated sales costs. The date of
issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Paul Ellis shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Paul Ellis will continue to bill Vitafort for services and appropriate
fees on a periodic basis in the normal course of business. These billings will
clearly include notations and supporting documentation, such as broker
confirmations, pertaining to the net proceeds to be applied to the account of
Vitafort as a result of the sales of securities during the period since the last
billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ----------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Paul Ellis
- ----------------------------
Paul Ellis
<PAGE>
EXHIBIT 99.06
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
12,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
PAUL A. ELLIS
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Twelve Thousand (12,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean PAUL A. ELLIS or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Stock.
(b) The Common Stock issuable or previously issued on the exercise
of the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise
of the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 12,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ NMS, the
closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic Bulletin Board, if
the security is not quoted on NASDAQ SmallCap or the NASDAQ Electronic Bulletin
Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-----------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Paul A. Ellis
- --------------------------------
Paul A. Ellis
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ___________________________________________________
Signature
_______________________________________________________
Print Name and Title of Signatory
_______________________________________________________
Name to whom certificates are to be issued if different from above.
Address: ___________________________________________________________________
Social Security No. or other identifying number: ___________________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
___________________________________
(Please Print)
Address:____________________________________________________________
Social Security No. or other identifying number:____________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.07
May 28, 1998
Dean Erickson
15332 Antioch Street
Suite 507
Pacific Palisades, CA 90272
Re: Billing and Payments in Kind
Dear Dean:
This is to confirm that you have agreed to accept an option for 12,500 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Dean Erickson shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Dean Erickson may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Dean Erickson will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Dean Erickson shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Dean Erickson will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- --------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Dean Erickson
- --------------------------------
Dean Erickson
<PAGE>
EXHIBIT 99.08
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
12,500
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
DEAN ERICKSON
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Ten Thousand (10,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the
third (3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean Dean Erickson or her registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar
($1.00) per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 12,500 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section
2.2 (a) above, the Holder may elect to receive Shares equal to the
value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities , provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered .
7.4 Company's Continuing Efforts. The Company will keep each participating
----------------------------
Registrable Securities Holder advised in writing of the initiation and the
completion of each registration, qualification, and compliance effected by the
Company under Section 7.1. At the expense of the party or parties at the time
bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective for
six (6) months or until the Registrable Securities Holders have completed
the distribution described in the relevant registration statement,
whichever first occurs, provided that the each Registrable Securities
Holder of Registrable Securities included in such a registration,
qualification, or compliance shall use its best efforts to distribute those
Registrable Securities as promptly as practicable consistent with the
distribution described in the relevant registration statement and with
requirements for the orderly marketing of those securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant for the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Dean Erickson
--------------------------------
Dean Erickson
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: _________________________________
Signature
_____________________________________
Print Name and Title of Signatory
_____________________________________
Name to whom certificates are to be issued if
different from above.
Address: __________________________________________________
Social Security No. or other identifying number: __________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
____________________________
(Please Print)
Address:___________________________________________________
Social Security No. or other identifying number:___________
Signature: ____________________________________
____________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.09
May 28, 1998
Sheldon Herman
7605 West 83rd Street
Playa del Rey, CA 90293
Re: Billing and Payments in Kind
Dear Shel:
This is to confirm that you have agreed to accept an option for 25,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Sheldon Herman shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Sheldon Herman may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Sheldon Herman will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Sheldon Herman shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Sheldon Herman will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ---------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Sheldon Herman
- ---------------------------
Sheldon Herman
<PAGE>
EXHIBIT 99.10
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
____________________________
OPTION TO PURCHASE
25,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
SHELDON HERMAN
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Twenty Five Thousand (25,000) shares of the
Company's common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean SHELDON HERMAN or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 25,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option
at the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such
calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this Section
-----------
3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
--------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Sheldon Herman
- ------------------------------------
Sheldon Herman
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: _______________________________________
Signature
___________________________________________
Print Name and Title of Signatory
___________________________________________
Name to whom certificates are to be issued
if different from above.
Address: __________________________________________________
Social Security No. or other identifying number: __________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
________________________
(Please Print)
Address:___________________________________________________
Social Security No. or other identifying number:___________
Signature: ____________________________________
____________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.11
May 28, 1998
Reginald Hitchcock
2700 Henry Hudson Parkway
Suite 5-D
Riverdale, NY 10463
Re: Billing and Payments in Kind
Dear Reg:
This is to confirm that you have agreed to accept an option for 7,500 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Reginald Hitchcock shall have the option to dispose of the Shares in
the open market, in an orderly manner, during the ensuing 30 days from the date
of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Reginald Hitchcock may choose, at his own discretion, to keep the
Shares beyond the thirty (30) day period. In such case, Reginald Hitchcock will
post a credit to the account of Vitafort in an amount equal to the closing bid
price as of the date of issue less five percent (5%) for estimated sales costs.
The date of issue shall be defined as the date of the transmittal letter to you
from Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Reginald Hitchcock shall hold Vitafort harmless for
any decline in the market price of the securities issued herein.
<PAGE>
5) Reginald Hitchcock will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ---------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Reginald Hitchcock
- ------------------------
Reginald Hitchcock
<PAGE>
EXHIBIT 99.12
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
______________________________
OPTION TO PURCHASE
7,500
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
REGINALD HITCHCOCK
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Seven Thousand Five Hundred (7,500) shares of the
Company's common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the
third (3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean REGINALD HITCHCOCK or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 7,500 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ NMS, the
closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic Bulletin Board, if
the security is not quoted on NASDAQ SmallCap or the NASDAQ Electronic Bulletin
Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this Section
-----------
3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Reginald Hitchcock
--------------------------
Reginald Hitchcock
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ________________________________________________________
Signature
____________________________________________________________
Print Name and Title of Signatory
____________________________________________________________
Name to whom certificates are to be issued if different from
above.
Address: ___________________________________________________________
Social Security No. or other identifying number: ___________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
__________________________
(Please Print)
Address:____________________________________________________________
Social Security No. or other identifying number:____________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.13
May 28, 1998
Julia Holbert
62510 Stenkamo Road
Bend, OR 97701
Re: Billing and Payments in Kind
Dear Julia:
This is to confirm that you have agreed to accept an option for 10,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Julia Holbert shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Julia Holbert may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Julia Holbert will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Julia Holbert shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Julia Holbert will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ----------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Julia Holbert
- ----------------------------
Julia Holbert
<PAGE>
EXHIBIT 99.14
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
10,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
JULIA HOLBERT
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Ten Thousand (10,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean JULIA HOLBERT or her registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00)
per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Stock.
(b) The Common Stock issuable or previously issued on the exercise
of the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise
of the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 10,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period commencing
on the Effective Date and terminating on the Expiration Date. An Option may
be exercised by the Holder upon presentation of this Option, with the
Purchase Form 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 the terms hereof), specifying the number of Common Shares
as to which the Option is being exercised, and upon payment by the Holder to
the Company of the Option Price. Such payment shall be made by cash,
certified check, bank draft or confirmed wire transfer, in an amount equal
to the Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares equal
to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option
at the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such
calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this Option for cancellation or
partial transfer, upon request by the Holder the Company shall 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 any rights
granted related to registration of the Underlying shares under the Securities
Act of 1933, as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if at
----------------------
any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing with
the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section 7.1
(c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities Holders
as part of the written notice under that section. In that event, the right
of any Registrable Securities Holder to registration under such section
shall be conditioned on the participation in the underwriting of that
Registrable Securities Holder and the inclusion of that Registrable Security
Holder's Registrable Securities in the underwriting to the extent provided
in this section. All Registrable Securities Holders proposing to distribute
their securities through the underwriting shall, together with the Company,
enter into an underwriting agreement in customary form with the underwriter
or underwriters selected by the Company. Notwithstanding any other provision
of this section, if the underwriter determines in good faith that the
inclusion of such Registrable Securities would jeopardize the successful
sale of such other securities proposed to be sold by such underwriter, the
underwriter may exclude all Common Stock except that being sold on behalf of
the Company or limit the amount of non-Company Common Stock, in which case
the Registrable Securities Holders shall be entitled to participate in such
registration in proportion to their relative holdings of Registrable
Securities, provided, if it is not the first registered offering the
--------
underwriter may limit the number of Registrable Securities to be included in
the registration and underwriting unless (and except and to the extent that)
there is included (or has previously been included) in a registration under
this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in Section
7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order to
permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each participating
----------------------------
Registrable Securities Holder advised in writing of the initiation and the
completion of each registration, qualification, and compliance effected by the
Company under Section 7.1. At the expense of the party or parties at the time
bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration statement,
whichever first occurs, provided that the each Registrable Securities Holder
of Registrable Securities included in such a registration, qualification, or
compliance shall use its best efforts to distribute those Registrable
Securities as promptly as practicable consistent with the distribution
described in the relevant registration statement and with requirements for
the orderly marketing of those securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain in
Company's Employ, and to continue performing services to Company pursuant to the
Agreement. Therefore, this Option is not transferable in whole or in part
without the express consent of Company, which consent may be withheld for any
reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying
Securities shall be made at any time unless such transfer is registered under
the Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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
certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the old Option
certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of Los
Angeles, State of California shall have exclusive jurisdiction over any dispute
arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-----------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Julia Holbert
- ---------------------------------------
Julia Holbert
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ______________________________________________________________
Signature
__________________________________________________________________
Print Name and Title of Signatory
__________________________________________________________________
Name to whom certificates are to be issued if different from above.
Address: ______________________________________________________________
Social Security No. or other identifying number: ______________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
__________________________________
(Please Print)
Address:________________________________________________________________
Social Security No. or other identifying number:________________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.15
May 28, 1998
Donna C. Hummer
800 Wilshire Boulevard #1475
Los Angeles, CA 90017
Re: Billing and Payments in Kind
Dear Donna:
This is to confirm that you have agreed to accept an option for 10,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Donna Hummer shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Donna Hummer may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Donna Hummer will post a credit
to the account of Vitafort in an amount equal to the closing bid price as of the
date of issue less five percent (5%) for estimated sales costs. The date of
issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Donna Hummer shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Donna Hummer will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Donna Hummer
- -----------------------
Donna Hummer
<PAGE>
EXHIBIT 99.16
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
10,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
DONNA C. HUMMER
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Ten Thousand (10,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the
third (3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean DONNA C. HUMMER or her registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00)
per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Stock.
(b) The Common Stock issuable or previously issued on the exercise
of the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise
of the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 10,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option
at the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange
or system (or the exchange with the greatest volume of trading in
the Company's Common Stock) on the last market trading day prior to
the day of determination, as reported in the Wall Street Journal or
such other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ,
but not the national market thereof, or regularly quoted by a
recognized securities dealer by selling prices are not quoted, the
mean between the high and low asked prices for the Company's Common
Stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal, or (iii) as
otherwise reasonably determined by the Board of Directors of the
Company, acting in good faith. The rights granted under this section
2.2(b) shall not be available (a) for a period of six months after
the Holder has requested inclusion of the Underlying Securities in
any registration statement to be filed by the Company or (b) at any
time when the Underlying Securities may be sold under an effective
registration statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if at
----------------------
any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under Section
7.1 (a) is for a registered public offering involving an underwriting, the
Company shall so advise the Registrable Securities Holders as part of the
written notice under that section. In that event, the right of any
Registrable Securities Holder to registration under such section shall be
conditioned on the participation in the underwriting of that Registrable
Securities Holder and the inclusion of that Registrable Security Holder's
Registrable Securities in the underwriting to the extent provided in this
section. All Registrable Securities Holders proposing to distribute their
securities through the underwriting shall, together with the Company, enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected by the Company. Notwithstanding any other provision
of this section, if the underwriter determines in good faith that the
inclusion of such Registrable Securities would jeopardize the successful
sale of such other securities proposed to be sold by such underwriter, the
underwriter may exclude all Common Stock except that being sold on behalf
of the Company or limit the amount of non-Company Common Stock, in which
case the Registrable Securities Holders shall be entitled to participate in
such registration in proportion to their relative holdings of Registrable
Securities, provided, if it is not the first registered offering the
--------
underwriter may limit the number of Registrable Securities to be included
in the registration and underwriting unless (and except and to the extent
that) there is included (or has previously been included) in a registration
under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective for
six (6) months or until the Registrable Securities Holders have completed
the distribution described in the relevant registration statement,
whichever first occurs, provided that the each Registrable Securities
Holder of Registrable Securities included in such a registration,
qualification, or compliance shall use its best efforts to distribute those
Registrable Securities as promptly as practicable consistent with the
distribution described in the relevant registration statement and with
requirements for the orderly marketing of those securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-------------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Donna C. Hummer
- ----------------------------------------
Donna C. Hummer
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: _____________________________________________________________
Signature
_________________________________________________________________
Print Name and Title of Signatory
_________________________________________________________________
Name to whom certificates are to be issued if different from above.
Address: ___________________________________________________________
Social Security No. or other identifying number: ___________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
___________________________________
(Please Print)
Address:____________________________________________________________
Social Security No. or other identifying number:____________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.17
May 28, 1998
Michael L. Kelly
1900 Avenue of the Stars
26th Floor
Los Angeles, CA 90067
Re: Billing and Payments in Kind
Dear Michael:
This is to confirm that you have agreed to accept 60,000 shares of unrestricted,
tradable common stock of Vitafort ("Shares") as payment on account of Vitafort
for services rendered on our behalf. The terms under which the securities are
to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Michael L. Kelly shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Michael L. Kelly may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Michael L. Kelly will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Michael L. Kelly shall hold Vitafort harmless for
any decline in the market price of the securities issued herein.
<PAGE>
5) Michael L. Kelly will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ---------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Michael L. Kelly
- ---------------------------
Michael L. Kelly
<PAGE>
EXHIBIT 99.18
May 28, 1998
Jeff Kossack
5940 East Washington Boulevard
Los Angeles, CA 90040
Re: Billing and Payments in Kind
Dear Jeff:
This is to confirm that you have agreed to accept an option for 10,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Jeff Kossack shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Jeff Kossack may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Jeff Kossack will post a credit
to the account of Vitafort in an amount equal to the closing bid price as of the
date of issue less five percent (5%) for estimated sales costs. The date of
issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Jeff Kossack shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Jeff Kossack will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Jeff Kossack
- ------------------------------
Jeff Kossack
<PAGE>
EXHIBIT 99.19
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
10,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
JEFF KOSSACK
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Ten Thousand (10,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean JEFF KOSSACK or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 10,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ NMS, the
closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic Bulletin Board, if
the security is not quoted on NASDAQ SmallCap or the NASDAQ Electronic Bulletin
Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this Section
-----------
3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the
underwriter may limit the number of Registrable Securities to be included
in the registration and underwriting unless (and except and to the extent
that) there is included (or has previously been included) in a registration
under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant for the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
----------------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Jeff Kossack
- -------------------------------------------
Jeff Kossack
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By:___________________________________________
Signature
______________________________________________
Print Name and Title of Signatory
______________________________________________
Name to whom certificates are to be issued if
different from above.
Address: _________________________________________________________
Social Security No. or other identifying number: _________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
_________________________
(Please Print)
Address:__________________________________________________________
Social Security No. or other identifying number:__________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.20
May 28, 1998
Craig Lazar
3575 Cahuenga Blvd. West
Suite 330
Los Angeles, CA 90068
Re: Billing and Payments in Kind
Dear Craig:
This is to confirm that you have agreed to accept an option for 100,000 shares
of unrestricted, tradable common stock of Vitafort ("Shares") as payment on
account of Vitafort for services rendered on our behalf. The terms under which
the securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Craig Lazar shall have the option to dispose of the Shares in the open
market, in an orderly manner, during the ensuing 30 days from the date of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Craig Lazar may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Craig Lazar will post a credit
to the account of Vitafort in an amount equal to the closing bid price as of the
date of issue less five percent (5%) for estimated sales costs. The date of
issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Craig Lazar shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Craig Lazar will continue to bill Vitafort for services and appropriate
fees on a periodic basis in the normal course of business. These billings will
clearly include notations and supporting documentation, such as broker
confirmations, pertaining to the net proceeds to be applied to the account of
Vitafort as a result of the sales of securities during the period since the last
billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Craig Lazar
- -------------------------
Craig Lazar
<PAGE>
EXHIBIT 99.21
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
100,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
CRAIG LAZAR
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 One Hundred Thousand (100,000) shares of the
Company's common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the
third (3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean CRAIG LAZAR or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar
($1.00) per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 100,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective for
six (6) months or until the Registrable Securities Holders have completed
the distribution described in the relevant registration statement,
whichever first occurs, provided that the each Registrable Securities
Holder of Registrable Securities included in such a registration,
qualification, or compliance shall use its best efforts to distribute those
Registrable Securities as promptly as practicable consistent with the
distribution described in the relevant registration statement and with
requirements for the orderly marketing of those securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant for the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Craig Lazar
- ---------------------------------
Craig Lazar
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ____________________________________
Signature
________________________________________
Print Name and Title of Signatory
________________________________________
Name to whom certificates are to be issued if
different from above.
Address: ________________________________________________________
Social Security No. or other identifying number: ________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
___________________________________
(Please Print)
Address:____________________________________________________________
Social Security No. or other identifying number:____________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.22
May 28, 1998
Frederick Masciangelo
6 Fox Run Drive
Falmouth, ME 04105
Re: Billing and Payments in Kind
Dear Fred:
This is to confirm that you have agreed to accept an option for 2,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Frederick Masciangelo shall have the option to dispose of the Shares
in the open market, in an orderly manner, during the ensuing 30 days from the
date of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Frederick Masciangelo may choose, at his own discretion, to keep the
Shares beyond the thirty (30) day period. In such case, Frederick Masciangelo
will post a credit to the account of Vitafort in an amount equal to the closing
bid price as of the date of issue less five percent (5%) for estimated sales
costs. The date of issue shall be defined as the date of the transmittal letter
to you from Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Frederick Masciangelo shall hold Vitafort harmless
for any decline in the market price of the securities issued herein.
<PAGE>
5) Frederick Masciangelo will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Frederick Masciangelo
- ------------------------------
Frederick Masciangelo
<PAGE>
EXHIBIT 99.23
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
2,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
FRED MASCIANGELO
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Two Thousand (2,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean FRED MASCIANGELO or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 2,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-----------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Fred Masciangelo
- ---------------------------------
Fred Masciangelo
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ___________________________________________________
Signature
_______________________________________________________
Print Name and Title of Signatory
_______________________________________________________
Name to whom certificates are to be issued if different
from above.
Address: _____________________________________________________________
Social Security No. or other identifying number: _____________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
___________________________________
(Please Print)
Address:______________________________________________________________
Social Security No. or other identifying number:______________________
Signature:________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.24
May 28, 1998
Paula R. Phillips
7336 Santa Monica Boulevard
Suite 784
West Hollywood, CA 90046
Re: Billing and Payments in Kind
Dear Paula:
This is to confirm that you have agreed to accept an option for 12,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Paula R. Phillips shall have the option to dispose of the Shares in
the open market, in an orderly manner, during the ensuing 30 days from the date
of issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Paula R. Phillips may choose, at his own discretion, to keep the
Shares beyond the thirty (30) day period. In such case, Paula R. Phillips will
post a credit to the account of Vitafort in an amount equal to the closing bid
price as of the date of issue less five percent (5%) for estimated sales costs.
The date of issue shall be defined as the date of the transmittal letter to you
from Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Paula R. Phillips shall hold Vitafort harmless for
any decline in the market price of the securities issued herein.
<PAGE>
5) Paula R. Phillips will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- --------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Paula R. Phillips
- --------------------------------
Paula R. Phillips
<PAGE>
EXHIBIT 99.25
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
12,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
PAULA R. PHILLIPS
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Twelve Thousand (12,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean PAULA R. PHILLIPS or her registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 12,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this Section
-----------
3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
--------------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Paula R. Phillips
- -----------------------------------------
Paula R. Phillips
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By:________________________________________________
Signature
___________________________________________________
Print Name and Title of Signatory
___________________________________________________
Name to whom certificates are to be issued if
different from above.
Address:___________________________________________________________
Social Security No. or other identifying number: __________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
__________________________
(Please Print)
Address:___________________________________________________________
Social Security No. or other identifying number:___________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.26
May 28, 1998
James Pillow
5902 172nd Place SE
Bellevue, WA 98006
Re: Billing and Payments in Kind
Dear Jim:
This is to confirm that you have agreed to accept an option for 2,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) James Pillow shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) James Pillow may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, James Pillow will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and James Pillow shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) James Pillow will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ James Pillow
- ------------------------------
James Pillow
<PAGE>
EXHIBIT 99.27
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
2,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
JAMES PILLOW
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Two Thousand (2,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean JAMES PILLOW or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00)
per Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 2,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ
NMS, the closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic
Bulletin Board, if the security is not quoted on NASDAQ SmallCap or the NASDAQ
Electronic Bulletin Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered .
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
--------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ James Pillow
- -----------------------------------
James Pillow
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: _________________________________________________
Signature
_____________________________________________________
Print Name and Title of Signatory
_____________________________________________________
Name to whom certificates are to be issued if different from above.
Address: _________________________________________________________
Social Security No. or other identifying number: _________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
___________________________________
(Please Print)
Address:__________________________________________________________
Social Security No. or other identifying number:__________________
Signature: ____________________________________________
____________________________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.28
May 28, 1998
Cheryl Witham
514 Hanna Road
Bel Air, MD 21014
Re: Billing and Payments in Kind
Dear Cheryl:
This is to confirm that you have agreed to accept an option for16,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Cheryl Witham shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Cheryl Witham may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Cheryl Witham will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Cheryl Witham shall hold Vitafort harmless for any
decline in the market price of the securities issued herein.
<PAGE>
5) Cheryl Witham will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Cheryl Witham
- ------------------------
Cheryl Witham
<PAGE>
EXHIBIT 99.29
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
16,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
CHERYL WITHAM
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Sixteen Thousand (16,000) shares of the Company's
common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
-----------
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean CHERYL WITHAM or her registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common Shares
pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Stock.
(b) The Common Stock issuable or previously issued on the exercise of
the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise of
the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of,
the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 16,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this Option at
the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. 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 Company 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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ NMS, the
closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic Bulletin Board, if
the security is not quoted on NASDAQ SmallCap or the NASDAQ Electronic Bulletin
Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this Section
-----------
3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be deemed to refer also to any other shares or other
securities or property when obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered.
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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 certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
--------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Cheryl Witham
- -----------------------------------
Cheryl Witham
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By:______________________________________________
Signature
_________________________________________________
Print Name and Title of Signatory
_________________________________________________
Name to whom certificates are to be issued if
different from above.
Address:___________________________________________________________
Social Security No. or other identifying number: __________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
____________________________
(Please Print)
Address:____________________________________________________________
Social Security No. or other identifying number:____________________
Signature: ________________________________________
________________________________________
Print Name of Signatory
-11-
<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:
- -----
Signature Guaranteed:
-12-
<PAGE>
EXHIBIT 99.30
May 28, 1998
Allan I. Zackler
3824 Grand Avenue, Suite 100
Oakland, CA 94610
Re: Billing and Payments in Kind
Dear Allan:
This is to confirm that you have agreed to accept an option for 25,000 shares of
unrestricted, tradable common stock of Vitafort ("Shares") as payment on account
of Vitafort for services rendered on our behalf. The terms under which the
securities are to be accepted and calculated are as follows:
1) Vitafort will issue, at the earliest practical time, the Shares to
fully cover the outstanding amounts due.
2) Allan I. Zackler shall have the option to dispose of the Shares in the
open market, in an orderly manner, during the ensuing 30 days from the date of
issue.
3) The net proceeds received from the sale of the Shares shall be
considered as payment for the account of Vitafort and shall be applied against
open valid invoices for services rendered. Net proceeds is defined as the sale
price of the securities less the sales commission cost and sundry fees charged
by the stock broker (such costs should not exceed approximately 6% of the gross
sales price).
4) Allan I. Zackler may choose, at his own discretion, to keep the Shares
beyond the thirty (30) day period. In such case, Allan I. Zackler will post a
credit to the account of Vitafort in an amount equal to the closing bid price as
of the date of issue less five percent (5%) for estimated sales costs. The date
of issue shall be defined as the date of the transmittal letter to you from
Vitafort sending the securities to you.
Vitafort shall bear no interest in the future sale proceeds of the
above Shares in question and Allan I. Zackler shall hold Vitafort harmless for
any decline in the market price of the securities issued herein.
<PAGE>
5) Allan I. Zackler will continue to bill Vitafort for services and
appropriate fees on a periodic basis in the normal course of business. These
billings will clearly include notations and supporting documentation, such as
broker confirmations, pertaining to the net proceeds to be applied to the
account of Vitafort as a result of the sales of securities during the period
since the last billing.
If the above clearly and explicitly sets forth the mutual understanding
between the two parties, please sign both copies of this document and return one
copy to the undersigned. Upon receipt of the signed copy, we will arrange for
the appropriate documentation and will issue the Shares in accordance with the
above, Vitafort International Corporation bylaws and Articles of Incorporation,
and S.E.C. rules and regulations.
Sincerely,
/s/ Jack B. Spencer
- ------------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
Agreed and Accepted:
/s/ Allan I. Zackler
- ------------------------------------
Allan I. Zackler
<PAGE>
EXHIBIT 99.31
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 "SECURITIES ACT").
VITAFORT INTERNATIONAL CORPORATION
_____________________________
OPTION TO PURCHASE
25,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of May 28, 1998
This certifies that, for value received
ALLAN I. ZACKLER
or registered assigns (the "Holder") is entitled, subject to the terms set forth
herein, to purchase from VITAFORT INTERNATIONAL CORPORATION (the "Company"), a
Delaware corporation having its offices at 1800 Avenue of the Stars, Suite 480,
Los Angeles, California 90067 Twenty Five Thousand (25,000) shares of the
Company's common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall be
-----------
defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 4 hereof.
1.2 "Company" shall mean VITAFORT INTERNATIONAL CORPORATION, its
successors and assigns.
1.3 "Effective Date" shall mean May 28, 1998.
1.4 "Expiration Date" shall mean the day immediately preceding the third
(3rd) anniversary date of the date of the Effective Date.
1.5 "Holder" shall mean ALLAN I. ZACKLER or his registered assigns.
1.6 "Option" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Option Price" or "Common Share Price" shall be One Dollar ($1.00) per
Share subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
<PAGE>
1.9 "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 the Options.
1.10 "Registrable Securities" means:
(a) The Stock and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Stock.
(b) The Common Stock issuable or previously issued on the exercise
of the Option and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
(c) The Common Stock issuable or previously issued on the exercise
of the Options and any Common Stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement
of, the Common Stock issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Option shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF OPTION.
---------------
2.1 VESTING OF OPTION
-----------------
(a) Holder shall have the right to exercise this Option as follows:
(i) Upon the Effective Date, Holder shall have the right to
exercise the Option for up to 25,000 shares.
2.2 EXERCISE OF OPTION.
------------------
(a) Exercise by Payment. Subject to the terms of this Option, 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 1,000 Common Share
multiples), at any time, and from time to time, during the period
commencing on the Effective Date and terminating on the Expiration Date. An
Option may be exercised by the Holder upon presentation of this Option,
with the Purchase Form 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 the terms hereof), specifying the
number of Common Shares as to which the Option is being exercised, and upon
payment by the Holder to the Company of the Option Price. Such payment
shall be made by presentation of open unpaid invoices, by cash, certified
check, bank draft or confirmed wire transfer, in an amount equal to the
Option Price times the number of Common Shares then being purchased
hereunder.
(b) Cashless Exercise. Notwithstanding the payment provisions set
-----------------
forth in Section 2.2 (a) above, the Holder may elect to receive Shares
equal to the value of this Option (or any
-2-
<PAGE>
portion thereof vested but unexercised) by surrender of this Option at the
principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder that number of Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to Holder;
Y = the number of Shares purchasable under this
Option at the time of such calculation;
A = the Fair Market Value of one Share, and
B = the Exercise Price at the date of such
calculation.
For purposes of this Section 2.2 (b), the Fair Market Value of
one Share shall mean (i) if the Company's Common Stock is listed on
any established stock exchange or national market system, including,
without limitation, the national market quotation system of NASDAQ,
the closing price of one share of the Company's Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system (or the exchange with the greatest volume of trading in the
Company's Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Board of Directors of the Company may deem
reliable; (ii) if the Company's Common Stock is quoted on NASDAQ, but
not the national market thereof, or regularly quoted by a recognized
securities dealer by selling prices are not quoted, the mean between
the high and low asked prices for the Company's Common Stock on the
last market trading day prior to the day of determination, as reported
in the Wall Street Journal, or (iii) as otherwise reasonably
determined by the Board of Directors of the Company, acting in good
faith. The rights granted under this section 2.2(b) shall not be
available (a) for a period of six months after the Holder has
requested inclusion of the Underlying Securities in any registration
statement to be filed by the Company or (b) at any time when the
Underlying Securities may be sold under an effective registration
statement filed by the Company.
(c) Effect of Exercise. 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 fourteen (14) 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 by this
Option for cancellation or partial transfer, upon request by the Holder the
Company shall 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 any rights granted related
to registration of the Underlying shares under the Securities Act of 1933,
as amended (the "Act"), as may be set forth elsewhere herein.
-3-
<PAGE>
2.2. EXCHANGE OF OPTION. Subject to the provision of restrictions on
------------------
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (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. ADJUSTMENT OF OPTION AND NUMBER OF SHARES. Subject and pursuant to the
-----------------------------------------
provisions of this Section 3, 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 3.
3.1 SUBDIVISION OF SHARES. 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.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. If the Company after the
------------------------------------------
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 Company 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 rightd
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
Company shall be final and binding upon the Holders and shall become effective
as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
------------------
subject to this Option or the Option Price shall be required under this Section
3 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
adjustment in the number of Common Shares subject to the Option shall be
required by reason of the making of such record.
-4-
<PAGE>
3.4 REORGANIZATION. In case of any capital reorganization or
--------------
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 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 consolidated 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 3.1, then such adjustment shall
be made pursuant to both this Section 3.4 and Section 3.1. The provisions of
this Section 3.4 shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
3.5 FRACTIONAL SHARES. 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. As used herein, the current 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 or NASDAQ NMS, the
closing price on such exchange or NASDAQ NMS 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 SmallCap or the NASDAQ Electronic Bulletin Board, if
the security is not quoted on NASDAQ SmallCap or the NASDAQ Electronic Bulletin
Board, 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.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
-----------
Section 3 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, this 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.
-5-
<PAGE>
3.7 DETERMINATION OF SHARES AND OPTION PRICE. Until this Option is
----------------------------------------
exercised, the Underlying Shares, and the Option Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. 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. COMMON STOCK. 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 Effective Date 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 3, 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 3, 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 3, be
deemed to refer also to any other shares or other securities or property when
obtainable as a result of such adjustments.
5. OBLIGATIONS OF THE COMPANY. 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 it
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,
nonassessable 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.
-6-
<PAGE>
6. VOTING RIGHTS. Until exercised, this Option shall not entitle the Holder
-------------
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Option shall be deemed to be a shareholder of the
company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware General
Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
------------------------------
7.1 Piggyback Registration. Subject to the provisions of section 7.2, if
----------------------
at any time or from time to time prior to the period which ends one (1) year
following the exercise period of this Option, as specified in Section 1.4 the
Company shall determine to file a registration statement under the Securities
Act for any sales of Shares of the Common Stock (or any warrants, units,
convertible securities, rights or other securities linked or bundled with any
shares of Common Stock register any of its securities), either for its own
account or otherwise, other than registrations relating solely to securities to
be issued by the Company in connection with any acquisition, employee stock
option or employee stock purchase or savings plan on Form S-4 or S-8 (or
successor forms) under the Securities Act, the Company will:
(a) Give to each Holder written notice of its determination (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws) no later then thirty (30) days before its filing
with the Securities and Exchange Commission; and
(b) Include in such registration and any related qualification under
blue sky laws or other compliance, and in any underwriting in connection
with the registrations, all the Registrable Securities specified in a
written request or requests, made within such thirty (30) day period by
Holder or Registrable Securities Holders, except as set forth in Section
7.1 (c) and 7.2 below
(c) If the registration of which the Company gives notice under
Section 7.1 (a) is for a registered public offering involving an
underwriting, the Company shall so advise the Registrable Securities
Holders as part of the written notice under that section. In that event,
the right of any Registrable Securities Holder to registration under such
section shall be conditioned on the participation in the underwriting of
that Registrable Securities Holder and the inclusion of that Registrable
Security Holder's Registrable Securities in the underwriting to the extent
provided in this section. All Registrable Securities Holders proposing to
distribute their securities through the underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. Notwithstanding
any other provision of this section, if the underwriter determines in good
faith that the inclusion of such Registrable Securities would jeopardize
the successful sale of such other securities proposed to be sold by such
underwriter, the underwriter may exclude all Common Stock except that being
sold on behalf of the Company or limit the amount of non-Company Common
Stock, in which case the Registrable Securities Holders shall be entitled
to participate in such registration in proportion to their relative
holdings of Registrable Securities, provided, if it is not the first
--------
registered offering the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting unless (and
except and to the extent that) there is included (or has previously been
included) in a registration under this
-7-
<PAGE>
Section 7, Shares representing at least 33-1/3% of the sum of (i) the
Underlying Shares obtained pursuant to a previous exercise of this Option,
and (ii) the Underlying Shares then obtainable upon exercise of this
Option.
7.2 Rights Not Applicable. Notwithstanding the provisions of Section 7.1,
---------------------
the right of any Registrable Securities Holder to participate in a registration
as provided for in such section shall not exist under the following
circumstances:
(a) If at the time Company would otherwise be required to give the
notice to Registrable Securities Holders under Section 7.1(a), any
Registrable Securities Holder is then a holder of Underlying Shares which
have been acquired pursuant to exercise of the Option, and if such
Registrable Securities Holder is then permitted to sell or transfer the
Underlying Shares under Rule 144 of the Securities and Exchange Commission,
then as to such shares only, the registration rights provided for in
Section 7.1 shall not apply.
(b) The right of Registrable Securities Holders to participate in a
registration as provided for in Section 7.1 shall expire one (1) year
following the period in which this Option can be exercised, as specified in
Section 1.4.
7.3 Expenses. All expenses (which term does not include underwriting
--------
discounts or commissions) incurred in connection with any registration,
qualification, or compliance under Section 7.1, including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and accounting fees incidental to or
required by such registration shall be borne by the Company; provided, however,
that:
(a) The Company shall be required to pay the fees in connection with
registrations, filings, and qualifications under state securities laws only
with regard to such registrations, filings, and qualifications as the
initiating Registrable Securities Holders may reasonably request in order
to permit adequate distribution and orderly marketing of its securities;
(b) If registration is effected under Section 7.1, any such expenses
which the Company is not required to pay shall be borne by the holders of
the securities so registered, pro-rata on the basis of the number of shares
so registered .
7.4 Company's Continuing Efforts. The Company will keep each
----------------------------
participating Registrable Securities Holder advised in writing of the initiation
and the completion of each registration, qualification, and compliance effected
by the Company under Section 7.1. At the expense of the party or parties at the
time bearing the expenses under Section 7.3 (b) the Company will:
(a) Keep such registration, qualification, or compliance effective
for six (6) months or until the Registrable Securities Holders have
completed the distribution described in the relevant registration
statement, whichever first occurs, provided that the each Registrable
Securities Holder of Registrable Securities included in such a
registration, qualification, or compliance shall use its best efforts to
distribute those Registrable Securities as promptly as practicable
consistent with the distribution described in the relevant registration
statement and with requirements for the orderly marketing of those
securities; and
-8-
<PAGE>
(b) Furnish as many prospectuses and other documents incident to the
registration, qualification, and compliance as Holder from time to time may
reasonably request.
8. TRANSFERS.
---------
8.1 This Option is granted to Holder as an incentive to remain a
consultant to the Company, and to continue performing services to Company
pursuant to the Agreement. Therefore, this Option is not transferable in whole
or in part without the express consent of Company, which consent may be withheld
for any reason in Company's sole discretion.
8.2 No transfer of all or a portion of the Option or Underlying Securities
shall be made at any time unless such transfer is registered under the
Securities Act and registered or qualified pursuant to applicable state
securities laws or exemptions from such requirements are available and the
Company shall have been supplied with evidence reasonably satisfactory to it
that such transfer is not in violation of the Act and applicable state
securities laws. 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
certificates 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.
9. LOST, STOLEN OR MUTILATED OPTION. 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.
10. ISSUANCE OF SUCCESSOR OPTION. Any Option issued pursuant to the provisions
----------------------------
of Section 9, 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 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.
11. SURRENDER OF OPTION. 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 or 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 fourteen (14) days after receipt of the
old Option certificate.
12. SUCCESSORS. 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.
13. NOTICES. All notices required hereunder shall be in writing and shall be
-------
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, 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.
-9-
<PAGE>
14. SEVERABILITY. 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.
15. APPLICABLE LAW. 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. The Federal and State Courts which sit in the County of
Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by
its duly authorized officer as of May 28, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Jack B. Spencer
-------------------------------
Jack B. Spencer
Chief Operating Officer
Chief Financial Officer
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Allan I. Zackler
- ----------------------------------
Allan I. Zackler
-10-
<PAGE>
EXHIBIT "A"
-----------
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.
Dated:_____________________
By: ___________________________________________________
Signature
_______________________________________________________
Print Name and Title of Signatory
_______________________________________________________
Name to whom certificates are to be issued if different from above.
Address: ________________________________________________________
Social Security No. or other identifying number: ________________
If said number of shares and Options shall not be all of the shares purchasable
under the within Option, the undersigned requests that a new Option for the
unexercised portion be registered in the name of:
________________________
(Please Print)
Address:_________________________________________________________
Social Security No. or other identifying number:_________________
Signature: ___________________________
___________________________
Print Name of Signatory
-11-
<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:
Signature Guaranteed:
-12-
