EXHIBIT 2
PROMISSORY NOTE WITH WARRANT
----------------------------
AND REGISTRATION RIGHTS
------------------------
$2,065,000.00 Los Angeles, California
December 31,1998
FOR VALUE RECEIVED, the undersigned, VITAFORT INTERNATIONAL CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay TERRA HEALTHY
LIVING (the "Lender") the principal amount of $2,065,000.00 in lawful money of
the United States of America in same day or other immediately available funds,
together with interest at the rate hereinafter set forth, payable on or before
January 22, 2004.
Interest on the principal balance of this Note from time to time
outstanding and unpaid shall be computed on the basis of a 360-day year for the
actual number of days elapsed at a simple interest rate per annum equal to six
percent (6%) commencing on January 22, 1999.
Principal and all accrued interest, at the rate of six percent (6%) per
annum, shall be payable annually ,without the necessity for demand or notice, on
January 22, of each year. All payments of principal and interest shall be paid
by wire transfer per the written instructions of Xxxxxx. As further
consideration for this loan, Xxxxxxxx agrees to issue to Lender a Warrant
("Warrant A") to purchase 500,000 shares of the Borrower's common stock, par
value $0.01 per share, exercisable at $.25 per share for a period of five (5)
years together with registration rights. On December 31, 1999, accumulated
interest on the promissory note shall be credited to Terra Healthy Living and
used to exercise as much of Warrant A as is possible. Warrant A and the
Registration Rights Agreement are attached hereto and made apart hereof.
In the event Borrower is unable to pay in cash anytime prior to October 22,
1999, the full amount of principal and interest on either the $300,000
promissory note issued by Borrower in favor of Sovereign Partners Limited
Partnership or the $300,000 promissory note issued by Borrower in favor of
Dominion Capital Fund, Ltd., then in such event, Terra Healthy Living shall have
a right of first refusal to buy out either or both of the then outstanding
balances owed on those promissory notes. This right of first refusal shall
exist for Terra Healthy Living up to October 22, 1999, but this right shall
expire after that date. In the event that Terra Healthy Living buys the then
outstanding balances owed on either of those promissory notes, then in such
event the Warrant being held in escrow by Xxxxxx X. XxXxxxx, Esq., in the name
of such noteholder ("Warrant B") will be transferred from escrow to Terra
Healthy Living.
Borrower hereby waives presentment, protest, notice of protest and notice
of dishonor of this Note. The non-exercise by the Lender of any rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any other subsequent instance.
1
Nothing contained herein shall be deemed to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by
applicable law. In the event that the rate of interest required to be paid
hereunder exceeds the maximum rate permitted by such law, such rate shall
automatically be reduced to the maximum rate permitted by such law.
The Borrower and any endorsers hereof, for themselves and their respective
representatives, successors and assigns expressly (a) waive presentment, demand,
protest, notice of dishonor, notice of non-payment, notice of maturity, notice
of protest, diligence in collection, and the benefit of any applicable
exemptions, including, but not limited to, exemptions claimed under insolvency
laws, and (b) consent that the Lender may release or surrender, exchange or
substitute any property or other collateral or security now held or which may
hereafter be held as security for the payment of this Promissory Note, or may
release any guarantor, or may extend the time for payment or otherwise modify
the terms of payment of any part or the whole of the debt evidenced hereby.
AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and agrees that from
the date hereof until payment and performance in full of the obligations
hereunder, unless Xxxxxx otherwise consents in writing:
(a) Use of Proceeds. The proceeds disbursed under the Note shall be used
solely for general corporate purposes.
(b) Borrower represents and warrants that there are no actions, suits,
investigations or proceedings pending or threatened against or affecting the
validity or enforceability of this Note and there are no outstanding orders or
judgments of any court or governmental authority or awards of any arbitrator or
arbitration board against the Borrower.
DEFAULT. If any of the following events occur (a "default") the entire
principal balance plus accrued interest shall be due and payable, and the
Borrower shall be liable for reasonable attorneys fees, costs and expenses:
(a) Borrower fails to pay when due any principal or interest under this
Note;
(b) Borrower fails to observe or perform any covenant or agreement set
forth in this Note;
(c) Xxxxxxxx makes a general assignment for the benefit of its creditors,
files a petition in bankruptcy, for an arrangement with its creditors or for
reorganization under any federal or state bankruptcy or other insolvency law;
(d) Borrower files or becomes the subject of a petition, which is not
dismissed or stayed within 90 days in bankruptcy or for the appointment of a
2
receiver, custodian, trustee or liquidator of the party or of all or
substantially all of its assets under any federal or state bankruptcy or other
insolvency law;
(e) Borrower is voluntarily or involuntarily terminated or dissolved;
(f) Borrower or any accommodation maker, endorser or guarantor enters into
any merger or consolidation, or sale, lease, liquidation or other disposition of
all or substantially all of its assets; or
(g) Any judgment is entered against Borrower or any attachment upon or
garnishment of any property of Borrower is issued in an amount in excess of
$250,000.
LITIGATION.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based on
or arising out of, under, or in connection with, this Promissory Note shall be
brought and maintained exclusively in the courts of New York. The parties
hereby expressly and irrevocably submit to the jurisdiction of the state and
federal courts of New York for the purpose of any such litigation as set forth
above and irrevocably agree to be bound by any final judgment rendered thereby
in connection with such litigation. The Borrower further irrevocably consents
to the service of process by registered mail, postage prepaid, or by personal
service within or without New York. The Borrower hereby expressly and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent that the
Borrower has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Borrower hereby irrevocably waives such immunity in
respect of its obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Lender and the Borrower hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Lender or the Borrower.
The Borrower acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Lender entering into this agreement.
MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
3
(b) Neither this Promissory Note nor any provision hereof shall be waived,
modified, changed, discharged, terminated, revoked or canceled, except by an
instrument in writing signed by the party effecting the same against whom any
change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered or sent
by registered mail, return receipt requested, addressed: (i) if to the
Borrower, Xxxx Xxxxxxx, CEO at Vitafort International Corporation, 0000 Xxxxxx
xx xxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000 and (ii) if to Lender to
________________________________________________________________.
(d) This Promissory Note shall be enforced, governed and construed in all
respects in accordance with the laws of Delaware, as such laws are applied by
Delaware courts to agreements entered into, and to be performed in, Delaware by
and between residents of Delaware, and shall be binding upon the Borrower, the
Borrower's successors and assigns and shall inure to the benefit of the Lender,
its successors and assigns. If any provision of this Promissory Note is invalid
or unenforceable under any applicable statue or rule of law, then such
provisions shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof that may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
THE BORROWER ACKNOWLEDGES THAT THE TRANSACTIONS IN CONNECTION WITH WHICH
THIS NOTE WAS EXECUTED AND DELIVERED AND WHICH ARE CONTEMPLATED BY THE TERMS OF
THE AGREEMENT ARE, IN ALL CASES, COMMERCIAL TRANSACTIONS; AND THE BORROWER
HEREBY EXPRESSLY WAIVES ANY AND ALL CONSTITUTIONAL RIGHTS IT MAY HAVE AS NOW
CONSTITUTED OR HEREAFTER AMENDED, WITH REGARD TO NOTICE, ANY JUDICIAL PROCESS
AND ANY AND ALL OTHER RIGHTS IT MAY HAVE, AND THE LENDER MAY INVOKE ANY
PREJUDGMENT REMEDY AVAILABLE TO IT OR ITS SUCCESSORS OR ASSIGNS.
VITAFORT INTERNATIONAL CORPORATION
By /s/ Xxxx Xxxxxxx
_________________________________
Xxxx Xxxxxxx its CEO duly authorized
4
