EXHIBIT 3
THIS WARRANT AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN REGISTERED PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. NEITHER
THIS WARRANT, NOR ANY PORTION THEREOF OR INTEREST THEREIN, MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED AND QUALIFIED
IN ACCORDANCE WITH SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
VITAFORT INTERNATIONAL CORPORATION
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of December 31, 1998
This certifies that, for value received
NAME: TERRA HEALTHY LIVING, LTD.
ADDRESS: XXXXX XXXXXX
X.X. XXX 000
XXXX XXXX XXXXXXX, BVI
or registered assigns (the "Holder") are 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, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Five Hundred Thousand (500,000) shares of
the Company's common stock subject to adjustment as set forth herein.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set forth
in Section 5 hereof.
(b) "Warrant Price" or "Common Share Price" shall be Twenty-five
Cents ($.25).
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(c) "Underlying Securities" or "Underlying Shares" or "Underlying
Stock" shall refer to the Common Shares or other securities or property issuable
or issued upon exercise of the Warrant.
2. (a) The purchase rights represented by this Warrant may be exercised
by the Holder hereof, in whole or in part (but not as to less than a whole
Common Share), at any time, and from time to time, during the period commencing
this date, until December 31, 2003 (the "Expiration Date"), by the presentation
of this Warrant, with the purchase form attached duly executed, at the Company's
office (or such office or agency of the Company as it may designate in writing
to the Holder hereof by notice pursuant to the terms hereof), specifying the
number of Common Shares as to which the Warrant is being exercised, and upon
payment by the Holder to the Company in cash or by certified check or bank
draft, in an amount equal to the Warrant Price times the number of Common Shares
then being purchased hereunder. Notwithstanding the foregoing, on December 31,
1999, all accrued interest on the $2,065,000 promissory note issued to Terra
Healthy Living by the Company shall be credited to Terra Healthy Living and used
to exercise as much of this Warrant as is possible based on the amount of
accrued interest through December 31, 1999.
(b) The Company agrees that the Holder hereof shall be deemed the
record owner of such Underlying Securities as of the close of business on the
date on which this Warrant shall have been presented and payment made for such
Underlying Securities as aforesaid. Certificates for the Underlying Securities
so obtained shall be delivered to the Holder hereof within a reasonable time,
not exceeding seven (7) days, after the rights represented by this Warrant shall
have been so exercised. If this Warrant shall be exercised in part only or
transferred in part subject to the provisions herein, the Company shall, upon
surrender of this Warrant for cancellation or partial transfer, deliver a new
Warrant evidencing the rights of the Holder hereof to purchase the balance of
the Underlying Shares which such Holder is entitled to purchase hereunder.
(c) Conversion. At any time after the expiration of the Registration
Period as defined in the Registration Rights Agreement dated as of December 31,
1998 between the Holder and the Company and provided that the shares of Warrant
Stock issuable upon the exercise of this Warrant are not then otherwise subject
to an effective registration statement under the Securities At of 1933, as
amended, the Holder may convert this Warrant (the "Conversion Right"), in whole
or in part, into the number of Warrant Shares (less the number of Warrant Shares
as to which this Warrant has previously been exercised or as to which the
Conversion Right has previously been exercised) calculated pursuant to the
following formula by surrendering this Warrant (with the notice of exercise form
attached hereto duly executed) at the principal office of the Company specifying
the number of Warrant Shares into which the Holder desires to convert this
Warrant:
Y (A-B)
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X = A
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where: X = the number of shares of Warrant Stock to be
issued to the Holder;
Y = the number of shares of Warrant Stock subject to this
Warrant for which the Conversion Right is being
exercised;
A = the Market Price of the Warrant Stock (as defined
below), determined as of the trading day immediately
preceding the date of exercise of the Conversion Right;
and
B = the Warrant Price.
For purposes hereof, the term "Market Price of the Warrant Stock"
means the average of the closing sales prices of the Warrant Stock on all
securities exchanges on which the Warrant may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day the Warrant Stock is not so listed, the average of the
representative bid and asked prices quoted in The Nasdaq Stock Market, Inc. as
of 4:00 P.M., New York time, or, if on any day the Common Stock is not quoted in
The Nasdaq Stock Market, Inc., the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which the Market Price of the Warrant Stock is being determined and the 20
consecutive business days prior to such day. If at any time the Warrant Stock is
not listed on any securities exchange , the Market Price of the Warrant Stock
shall be determined by agreement between the Company and the Holder.
3. Subject to the provisions of the various restrictions contained or
incorporated herein, (i) this Warrant is exchangeable at the option of the
Holder at the aforesaid office of the Company for other Warrants 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 Warrant may
be divided or combined with other Warrants 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 Warrants are to be issued, and the payment
of any transfer tax due in connection therewith.
4. Subject and pursuant to the provisions of this Section 4, the Warrant
Price and number of Common Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter in this Section 4.
(a) If the Company shall at any time subdivide its outstanding Common
Shares by recapitalization, reclassification, stock dividend, or split-up
thereof or other
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means, the number of Common Shares subject to this Warrant
immediately prior to such subdivision shall be proportionately increased and the
Warrant 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 Warrant immediately prior to such combination shall be
proportionately decreased and the Warrant Price shall be proportionately
increased. Any such adjustment and adjustment to the Warrant Price shall become
effective at the close of business on the record date for such subdivision or
combination.
(b) If the Company after the date hereof shall distribute to all of
the holders of its Common Shares any securities including, but not limited to
Common Shares, or other assets (other than a cash distribution made as a
dividend payable out of earnings or out of any earned surplus legally available
for dividends under the laws of the jurisdiction of incorporation of the
Company), the Board of Directors shall be required to make such equitable
adjustment in the Warrant 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 Warrant rights
substantially proportionate to and economically equivalent to those enjoyed
hereunder by such Holder immediately prior to the happening of such
distribution. Any such adjustment made reasonably and in good faith by the
Board of Directors shall be final and binding upon the Holders and shall become
effective as of the record date for such distribution.
(c) No adjustment in the number of Common Shares subject to this
Warrant or the Warrant Price shall be required under this Section 4 unless such
adjustment would require an increase or decrease in such number of shares of at
least 1% of the then adjusted number of Common Shares issuable upon exercise of
the Warrant, provided, however, that any adjustments which by reason of the
foregoing are not required at the time to be made shall be carried forward and
taken into account and included in determining the amount of any subsequent
adjustment. If the Company shall make a record of the Holders of its Common
Shares for the purpose of entitling them to receive any dividend or distribution
and legally abandon its plan to pay or deliver such dividend or distribution
then no adjustment in the number of Common Shares subject to the Warrant shall
be required by reason of the making of such record.
(d) In case of any capital reorganization or reclassification or
change of the outstanding Common Shares (exclusive of a change covered by
Section 4(a) hereof or which solely affects the par value of such Common Shares)
or in the case of any merger or consolidation of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
change, capital reorganization or change in the ownership of the outstanding
Common Shares), or in the case of any sale or conveyance or transfer of all or
substantially all of the property of the Company and in connection with which
the Company is dissolved, the Holder of this Warrant shall have the right
thereafter (until the expiration of the right of exercise of this Warrant) to
receive upon the exercise hereof, for the same aggregate Warrant Price payable
hereunder immediately
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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
Warrant immediately prior to such event; and if any reorganization,
reclassification, change, merger, consolidation, sale or transfer also results
in a change in Common Shares covered by Section 4(a), then such adjustment shall
be made pursuant to both this Section 4(d) and Section 4(a). The provisions of
this Section 4(d) shall similarly apply to successive reclassification, or
capital reorganizations, mergers or consolidations, changes, sales or other
transfers.
(e) The Company shall not be required to issue fractional Common
Shares upon any exercise of this Warrant. As to any final fraction of a Common
Share which the Holder of this Warrant 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 Warrant, by his acceptance hereof,
expressly waives any right to receive any fractional shares of stock upon
exercise of this Warrant.
(f) As used herein, the current market price ("Market Price") per
share at any date shall be the price of Common Shares on the business day
immediately preceding the event requiring an adjustment hereunder and shall be
(A) if the principal trading market for such securities is an exchange or the
NASDAQ National Market, the closing price on such exchange or the NASDAQ
National Market 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 the
NASDAQ Small Cap Market or the NASDAQ Electronic Bulletin Board or, if the
security is not quoted on either the NASDAQ Small Cap Market 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.
(g) Irrespective of any adjustments pursuant to this Section 4 in the
Warrant Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of this Warrant, and without
impairing any such adjustment the certificate representing this Warrant may
continue to express the Warrant Price and the number of Common Shares obtainable
upon exercise at the same price and number of Common Shares as are stated
herein.
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(h) Until this Warrant is exercised, the Underlying Shares, and the
Warrant Price shall be determined exclusively pursuant to the provisions hereof.
5. For the purposes of this Warrant, the terms "Common Shares" or "Common
Stock" shall mean (i) the class of stock designated as the common stock of the
Company on the date set forth on the first page hereof or (ii) any other class
of stock resulting from successive changes or reclassification of such Common
Stock consisting solely of changes from par value to no par value, or from no
par value to par value or changes in par value. If at any time, as a result of
an adjustment made pursuant to Section 4, the securities or other property
obtainable upon exercise of this Warrant shall include shares or other
securities of another corporation or other property, then thereafter, the
number of such other shares or other securities or property so obtainable shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 4, and all other provisions of this Warrant with respect to
Common Shares shall apply on like terms to any such other shares or other
securities or property. Subject to the foregoing, and unless the context
requires otherwise, all references herein to Common Shares shall, in the event
of an adjustment pursuant to Section 4, be deemed to refer also to any other
shares or other securities or property when obtainable as a result of such
adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by this
Warrant 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 Warrant, such number of its Common Shares as
shall be issuable upon the exercise of this Warrant 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 Warrant, the Company will take such corporate action as may be
necessary to increase its authorized but unissued Common Shares to such number
of shares as shall be sufficient for such purpose; the Company shall have
analogous obligations with respect to any other securities or property issuable
upon exercise of this Warrant;
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid,
non-assessable and free from all taxes, liens and charges with respect to the
issuance thereof; and
(c) All original issue taxes payable in respect of the issuance of
Common Shares upon the exercise of the rights represented by this Warrant 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 Warrants.
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7. Until exercised, this Warrant shall not entitle the Holder hereof to
any voting rights or other rights as a shareholder of the Company.
8. No transfer of all or a portion of the Warrant or Underlying
Securities shall be made at any time unless the Company shall have been supplied
with evidence reasonably satisfactory to it that such transfer is not in
violation of the Securities Act of 1933, as amended (the "Act"). Subject to the
satisfaction of the aforesaid condition and upon surrender of this Warrant or
certificates for any Underlying Securities at the office of the Company, the
Company shall deliver a new Warrant or Warrants or new certificate or
certificates for Underlying Securities to and in the name of the assignee or
assignees named therein. Any such certificate may bear a legend reflecting the
restrictions on transfer set forth herein.
9. If this Warrant 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 Warrant of like denomination, tenor and date. Any such new
Warrant shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.
10. Any Warrant issued pursuant to the provisions hereof as a replacement
Warrant, or upon transfer, exchange, division or partial exercise of this
Warrant or combination thereof with another Warrant or Warrants, shall set forth
each provision set forth in this Warrant as each such provision is set forth
herein, and shall be duly executed on behalf of the Company by its chief
executive officer.
11. Upon surrender of this Warrant for transfer or exchange or upon the
exercise hereof, this Warrant shall be canceled by the Company, and shall not be
reissued by the Company and, except as provided in Section 2 in case of a
partial exercise, Section 3 in case of an exchange or in case of mutilation.
Any new Warrant certificate shall be issued promptly but not later than fifteen
(15) days after receipt of the old Warrant certificate.
12. This Warrant 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. All notices required hereunder shall be in writing and shall be deemed
given when telegraphed, delivered personally or within two (2) days after
delivery to a recognized air carrier, 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.
14. 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
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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. The validity, interpretation and performance of this Warrant 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.
16. This Warrant shall not be assigned by Holder without the express
written permission of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of December 31, 1998.
VITAFORT INTERNATIONAL CORPORATION
By: /s/ Xxxx Xxxxxxx
-------------------------------
Xxxx Xxxxxxx, Chief Executive
Officer duly authorized
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PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned record holder of the within Warrant hereby irrevocably
elects to exercise the right to purchase Common Shares evidenced by
----------
the within Warrant, 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 warrants
shall be issued in the name set forth below:
Dated:
NAME OF HOLDER:
Signature
Print Name and Title of Signatory
Name and address to whom certificates are to be issued if different from
above
Social Security No. or other identifying number of transferee
If said number of shares and warrants shall not be all the shares
purchasable under the within Warrant, the undersigned requests that a new
Warrant for the unexercised portion shall be registered in the name of:
(Please Print Name and Address)
Social Security No. or other identifying number
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED , hereby sells, assigns and transfers to
(Social Security or I.D. No. ) the within Warrant, or that
portion of this Warrant purchasable for common shares together with all
-----
rights, title and interest therein, and does hereby irrevocably constitute and
appoint attorney to transfer such Warrant on the register
-----------
of the within named Company, with full power of substitution.
Name of Holder
(Signature)
(Print Name and Title of Signatory)
Dated:
Signature Guaranteed:
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