DATED AS OF JANUARY 22, 2001
WARRANT AGREEMENT
The undersigned, being President of National Health and Safety
Corporation (the "COMPANY"), a corporation organized and existing under the
Revised Business Corporation Act of the State of Utah, hereby certifies
that, pursuant to the confirmed Debtors' Fourth Amended Joint Plan of
Reorganization, as amended, dated August 21, 2000, (the "PLAN") in the
matter styled IN RE NATIONAL HEALTH & SAFETY CORPORATION, Case No. 99-
18339-DWS, in the United States Bankruptcy Court for the Eastern District
of Pennsylvania, and Section 16-10a-1008 of the Revised Business
Corporation Act of the State of Utah, the Company hereby executes this
Warrant Agreement (the "AGREEMENT")establishing Warrants as described
below:
Pursuant to the terms and conditions of the Plan, the Company proposes
to issue to the holders of the Company's Series A Equity Units and Series B
Equity Units two classes of warrants, Class A Warrants and Class B Warrants
as hereinafter described (collectively, the "WARRANTS") to purchase up to
an aggregate of 8,000,000 shares of the Company's Common Stock, par value
$0.001 per share (the "COMMON STOCK"), subject to adjustment as provided in
Section 8 hereof (such 8,000,000 shares, as adjusted, being hereinafter
referred to as the "SHARES"). The 8,000,000 shares shall be comprised of
4,000,000 shares to be issued on exercise of 4,000,000 Class A Warrants and
4,000,000 shares to be issued on exercise of Class B Warrants, as adjusted.
Each Class A Warrant shall entitle the Holder thereof to purchase one share
of Common Stock along with one Class B Warrant for the price of $1.00.
Each Class B Warrant shall entitle the Holder thereof to purchase one share
of Common Stock for the price of $1.50. All capitalized terms used herein
and not otherwise defined herein shall have the same meanings as in the
Plan.
NOW THEREFORE, pursuant to the Plan and Sections 16-10a-602 and
1008 of the Revised Business Corporation Act of the State of Utah, the
Corporation hereby agrees to establish Class A and Class B Warrants to
purchase Common Stock, par value $0.001 per share, of the Corporation,
having the following rights, qualifications, limitations and
restrictions:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. On the Closing Date the
Company will issue and deliver the number of Class A Warrants required by
the Plan to the holders of each series of Preferred Stock. The Warrants
may be issued in either certificated or uncertificated form. The form of
the Class A Warrant certificate, the form of assignment thereof, and the
form of election to purchase Shares to be attached thereto shall be
substantially as set forth on Exhibit A attached hereto and incorporated
herein by reference. The form of the Class B Warrant certificate, the form
of assignment thereof, and the form of election to purchase Shares to be
attached thereto shall be substantially as set forth on Exhibit B attached
hereto and incorporated herein by reference. Warrant certificates shall be
executed on behalf of the Company by the manual or facsimile signature of
the present or any future Chairman, President or any Vice President of the
Company and attested by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
2. REGISTRATION. The Warrants shall be numbered and shall be registered
in a Warrant register (the "WARRANT REGISTER") to be kept by the Company or
a Warrant Agent appointed by the Company. The Company shall be entitled to
treat the registered Holder of any Warrant on the Warrant Register as the
owner in fact thereof for all purposes and shall not be bound to recognize
any equitable or other claim to or interest in such Warrant on the part of
any other person, and shall not be liable for any registration or transfer
of Warrants which are registered or are to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the Company's
actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration or transfer, or with such knowledge
of such facts that its participation therein amounts to bad faith.
3. TRANSFER OF WARRANTS. Warrant certificates may be exchanged for other
Warrant certificates representing an equal aggregate number of Warrants of
the same class or may be transferred in whole or in part. Warrant
certificates to be exchanged shall be surrendered to the Company or to its
Warrant Agent at its corporate office, and upon satisfaction of the terms
and provisions hereof, the Company shall execute, issue and deliver in
exchange therefor the Warrant certificate or certificates which the
registered holder making the exchange shall be entitled to receive. In all
cases of transfer by an attorney, the original power of attorney, duly
approved, or an official copy thereof, duly certified, shall be deposited
with the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated evidence of
their authority shall be produced, and may be required to be deposited with
the Company in its discretion. Upon any registration of transfer, the
Company shall deliver a new Warrant or Warrants to the persons entitled
thereto. The Company may require payment of a sum sufficient to cover all
taxes and other governmental charges that may be imposed in connection with
any voluntary transfer, exchange or other disposition of the Warrants.
Notwithstanding the foregoing, the Company shall have no obligation to
cause Warrants to be transferred on its books to any person if such
transfer would violate the Securities Act of 1933, as amended (the "ACT"),
or applicable state securities laws.
4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(A) TERM OF WARRANTS. Each Class A Warrant entitles the Holder
thereof to purchase one Share and one Class B Warrant at a purchase price
of $1.00 per Share and Class B Warrant (as adjusted from time to time
pursuant to the provisions hereof, the "CLASS A EXERCISE PRICE") at any
time until 5:00p.m., Eastern Standard Time, on the second anniversary of
the Effective Date of the Plan (the "CLASS A WARRANT EXPIRATION DATE").
Each Class B Warrant entitles the Holder thereof to purchase one Share at a
purchase price of $1.50 per Share (as adjusted from time to time pursuant
to the provisions hereof, the "CLASS B EXERCISE PRICE") at any time until
5:00p.m., Eastern Standard Time, on the third anniversary of the Effective
Date of the Plan (the "CLASS B WARRANT EXPIRATION DATE"). Notwithstanding
any other provisions contained herein, the Board of Directors of the
Company may from time to time, by duly adopted resolution, extend the Class
A and/or Class B Warrant Expiration Dates. All shares of Common Stock
which may be issued upon the exercise of the Warrants will, upon issuance,
be validly issued, fully paid and nonassessable and, except as otherwise
set forth herein, free from all taxes, liens and charges with respect to
the issuance thereof.
(B) EXERCISE OF WARRANTS. The Class A Exercise Price, the Class B
Exercise Price, and the number of Shares issuable upon exercise of Warrants
are subject to adjustment upon the occurrence of certain events, pursuant
to the provisions of Section 8 of this Agreement. Subject to the
provisions of this Agreement, and in addition to the right to surrender
Warrants without any cash payment as set forth in subsection (c) below,
each Holder shall have the right, which may be exercised as set forth in
such Warrants, to purchase from the Company (and the Company shall issue
and sell to such Holder) the number of fully paid and nonassessable Shares
specified in such Warrants, upon surrender to the Company, or its duly
authorized agent, of such Warrants, with the form of election to purchase
attached thereto duly completed and signed, with signatures guaranteed by a
member firm of a national securities exchange, a commercial bank (not a
savings bank or savings and loan association) or trust company located in
the United States or a member of the NASD and upon payment to the Company
of the Exercise Price, as adjusted in accordance with the provisions of
Section 8 of this Agreement, for the number of Shares in respect of which
such Warrants are then exercised. No adjustment shall be made for any
dividends on any Shares issuable upon exercise of a Warrant. Upon each
surrender of Warrants and payment of the applicable Exercise Price, the
Company shall issue and cause to be delivered with all reasonable dispatch,
but in no event later than three trading days following such surrender and
payment, to or upon the written order of the Holder of such Warrants and in
such name or names as such Holder may designate, a certificate or
certificates for the number of full Shares so purchased upon the exercise
of such Warrants, together with Class B Warrant Certificates, if
applicable, as set forth herein. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares (and Class
B Warrants, if applicable) as of the date of the surrender of Warrants and
payment of the applicable Exercise Price as aforesaid; provided, however,
that if, at the date of surrender of such Warrants, the transfer books for
the Common Stock or other class of securities issuable upon the exercise of
such Warrants shall be closed, the certificates for the Shares (and Class B
Warrants, if applicable) shall be issuable as of the date on which such
books shall next be opened (whether before, on or after the Warrant
Expiration Date) and until such date the Company shall be under no duty to
deliver any certificate for such Shares or Class B Warrants; provided,
further, however, that the transfer books of record, unless otherwise
required by law, shall not be closed at any one time for an unreasonable
period. The rights of purchase represented by the Warrants shall be
exercisable, at the election of the Holder(s) thereof, either in full or
from time to time in part and, in the event that any Warrant is exercised
in respect of less than all of the Shares (and Class B Warrants, if
applicable) issuable upon such exercise at any time prior to the Warrant
Expiration Date, a new Warrant or Warrants will be issued for the remaining
number of Shares (and Class B Warrants, if applicable) specified in the
Warrant so surrendered.
(C) PAYMENT OF EXERCISE PRICE. Payment of the applicable Exercise
Price may be made in cash or by certified check or official bank check
payable to the order of the Company.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance of Shares (and Class B Warrants, if
applicable) upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue or delivery of any
certificates for Shares (and Class B Warrants, if applicable) in a name
other than that of the Holder of Warrants in respect of which such Shares
(and Class B Warrants, if applicable) are issued.
6. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right
or interest, but only upon receipt of evidence reasonably satisfactory to
the Company of such mutilation, loss, theft or destruction of such Warrant
and indemnity, if requested, reasonably satisfactory to the Company. An
applicant for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges and expenses
as the Company may prescribe.
7. RESERVATION OF SHARES. There have been reserved, and the Company
shall at all times keep reserved, out of the authorized and unissued Common
Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the outstanding Warrants.
The Company or the transfer agent for the Common Stock (including every
subsequent transfer agent, if any) for the Company's securities issuable
upon the exercise of the Warrants will be irrevocably authorized and
directed at all times until the Warrant Expiration Date to reserve such
number of authorized and unissued shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
transfer agent for any shares of the Company's securities issuable upon the
exercise of the Warrants. Upon request, the Company will supply the
transfer agent with duly executed certificates for such purpose and will
itself provide or otherwise make available any cash which may be
distributable as provided in Section 9 of this Agreement. All Warrants
surrendered in the exercise of the rights thereby evidenced shall be
canceled, and such canceled Warrants shall constitute sufficient evidence
of the number of Shares that have been issued upon the exercise of such
Warrants. No shares of Common Stock shall be subject to reservation in
respect of unexercised Warrants subsequent to the Warrant Expiration Date.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The Class A
Exercise Price, the Class B Exercise Price, and the number and kind of
securities issuable upon exercise of each Warrant shall be subject to
adjustment from time to time upon the happening of certain events, as
follows:
(A) In case the Company shall subdivide or combine its outstanding
shares of Common Stock into a greater or lesser number of shares, the
number of Shares (and Class B Warrants, if applicable) purchasable upon
exercise of each Warrant immediately prior thereto shall be adjusted so
that the Holder of each Warrant shall be entitled to receive the kind and
number of Shares (and Class B Warrants, if applicable) or other securities
of the Company which he would have owned or have been entitled to receive
after the happening of any of the events described above, had such Warrant
been exercised immediately prior to the happening of such subdivision or
combination or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to immediately after the record
date, if any, for such event.
(B) In case the Company shall at any time after the date hereof pay a
dividend in shares of Common Stock or make a distribution in shares of
Common Stock, then upon such dividend or distribution the Exercise Price in
effect immediately prior to such dividend or distribution shall forthwith
be reduced to a price determined by dividing:
(1) an amount equal to the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution
multiplied by the Exercise Price in effect immediately prior to such
dividend or distribution, by
(2) the total number of shares of Common Stock outstanding
immediately after such dividend or distribution.
For the purposes of any computation to be made in
accordance with the provisions of this subsection, the following provisions
shall be applicable: Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the date following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution.
(C) In case of a capital reorganization or a reclassification of the
Common Stock (except as provided in Subsection (a) above or Subsection (l)
below), any Warrant Holder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities
or property of the Company (or cash) that he would have been entitled to
receive at the same aggregate Exercise Price upon such reorganization or
reclassification if such Warrants had been exercised immediately prior to
the record date with respect to such event; and in any such case,
appropriate provision (as determined by the Board of Directors of the
Company, whose determination shall be conclusive if made in good faith and
shall be evidenced by a certified Board resolution filed with the Warrant
Agent) shall be made for the application of this Section with respect to
the rights and interests thereafter of the Warrant Holders (including but
not limited to the allocation of the Exercise Price between or among shares
of classes of capital stock), to the end that this Section (including the
adjustments of the number of shares of Common Stock or other securities
purchasable and the Exercise Price thereof) shall thereafter be reflected,
as nearly as reasonably practicable, in all subsequent exercises of the
Warrants for any shares or securities or other property (or cash)
thereafter deliverable upon the exercise of the Warrants. The above
provisions of this Subsection shall similarly apply to successive
reorganizations or reclassifications.
(D) Within a reasonable time after the close of each quarterly fiscal
period of the Company during which the Exercise Price has been adjusted as
herein provided, the Company shall:
(1) file with the Warrant Agent a certificate signed by the
President or Vice President of the Company and by the Treasurer or
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, showing in detail the facts requiring all such adjustments
occurring during such period and the Exercise Price after each such
adjustment; and
(2) the Warrant Agent shall have no duty with respect to any
such certificate filed with it except to keep the same on file and
available for inspection by Warrant Holders during reasonable business
hours, and the Warrant Agent may conclusively rely upon the latest
certificate furnished to it hereunder. The Warrant Agent shall not at any
time be under any duty or responsibility to any Warrant Holder to determine
whether any facts exist which may require any adjustment of the Exercise
Price, or with respect to the nature or extent of any adjustment of the
Exercise Price when made, or with respect to the method employed in making
any such adjustment, or with respect to the nature or extent of the
property or securities deliverable hereunder. In the absence of a
certificate having been furnished, the Warrant Agent may conclusively rely
upon the provisions of the Warrants with respect to the Common Stock
deliverable upon the exercise of the Warrants and the applicable Exercise
Price thereof.
(E) Notwithstanding anything contained herein to the contrary, no
adjustment of the Exercise Price shall be made if the amount of such
adjustment shall be less than $.05 per Warrant, but in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment so carried
forward, shall amount to not less than $.05.
(G) For the purpose of this Section 8, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of
the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from no par value to par
value, or from par value to no par value. In the event that at any time,
as a result of an adjustment made pursuant to paragraph (a) above, the
Holders shall become entitled to purchase any shares of capital stock of
the Company other than shares of Common Stock, thereafter the number of
such other shares so purchasable upon exercise of each Warrant and the
Exercise Price of such shares 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 Shares (and Class B Warrants, if applicable)
contained in paragraphs (a) through (f), inclusive, and paragraphs (h)
through (m), inclusive, of this Section 8, and the provisions of Sections
4, 5, and 7, with respect to the Shares (and Class B Warrants, if
applicable), shall apply on like terms to any such other shares.
(H) Upon the expiration of any rights, options, warrants or
conversion rights or exchange privileges, if any, thereof shall not have
been exercised, the applicable Exercise Price and the number of shares of
Common Stock (and Class B Warrants, if applicable) purchasable upon the
exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as each would have been had it originally been
adjusted (or had the original adjustment not been required, as the case may
be) as if (i) the only shares of Common Stock (and Class B Warrants, if
applicable) so issued were the shares of Common Stock (and Class B
Warrants, if applicable), if any, actually issued or sold upon the exercise
of such rights, options, warrants or conversion rights or exchange
privileges and (ii) such shares of Common Stock (and Class B Warrants, if
applicable), if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance,
sale or grant of all of such rights, options, warrants or conversion rights
or exchange privileges whether or not exercised; provided, however, that no
such readjustment shall have the effect of decreasing the number of Shares
(and Class B Warrants, if applicable) issuable upon the exercise of each
Warrant or increasing the applicable Exercise Price by an amount in excess
of the amount of the adjustment initially made in respect of the issuance,
sale or grant of such rights, options, warrants or conversion rights or
exchange privileges.
(I) The Company may, at its option and in its sole discretion at any
time during the term of the Warrants, reduce the then current Class A
and/or Class B Exercise Price to any amount deemed appropriate by the Board
of Directors of the Company.
(J) Whenever the number of Shares (and Class B Warrants, if
applicable) issuable upon the exercise of each Warrant or the applicable
Exercise Price of such Shares (and Class B Warrants, if applicable) is
adjusted, as herein provided, the Company shall promptly mail by first
class mail, postage prepaid, to each Holder notice of such adjustment or
adjustments.
(K) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the
exercise of a Warrant.
(L) In case of any consolidation of the Company with or merger of the
Company with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the
right thereafter upon payment of the applicable Exercise Price in effect
immediately prior to such action to purchase upon exercise of each Warrant
the kind and amount of shares and other Warrants, securities and property
(including cash) which he would have owned or have been entitled to receive
after the happening of such consolidation, merger, sale or conveyance had
such Warrant been exercised immediately prior to such action. The
provisions of this paragraph (1) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(M) Notwithstanding any adjustment in the Class A or Class B Exercise
Price or the number or kind of shares and warrants purchasable upon the
exercise of the Warrants pursuant to this Agreement, certificates for
Warrants issued prior or subsequent to such adjustment may continue to
express the same price and number and kind of Shares (and Class B Warrants,
if applicable) as are initially issuable pursuant to this Agreement.
9. NO RIGHTS AS STOCKHOLDERS; NOTICES OF CORPORATE ACTION.
(A) Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the Holders thereof the right to vote
or to receive dividends or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or the election of directors of
the Company or any other matter, or any rights whatsoever as shareholders
of the Company; provided, however, that in the event that a meeting of
shareholders shall be called to consider and take action on a proposal for
the voluntary dissolution of the Company, other than in connection with a
consolidation, merger or sale of all, or substantially all, of its
property, assets, business and good will as an entirety, then and in that
event the Company shall cause a notice thereof to be sent by first-class
mail, postage prepaid, at least twenty (20) days prior to the date fixed as
a record date or the date of closing the transfer books in relation to such
meeting, to each registered Holder of Warrants at such Holder's address
appearing on the Warrant Register; but failure to mail or to receive such
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such voluntary dissolution.
(B) In the event the Company intends to make any distribution on its
Common Stock (or other securities which may be issuable in lieu thereof
upon the exercise of Warrants), including, without limitation, any such
distribution to be made in connection with a consolidation or merger in
which the Company is the continuing corporation, or to issue subscription
rights or warrants to holders of its Common Stock, the Company shall cause
a notice of its intention to make such distribution to be sent by first-
class mail, postage prepaid, at least twenty (20) days prior to the date
fixed as a record date or the date of closing the transfer books in
relation to such distribution, to each registered Holder of Warrants at
such Holder's address appearing on the Warrant Register, but failure to
mail or to receive such notice or any defect therein or in the mailing
thereof shall not affect the validity of any action taken in connection
with such distribution.
10. NOTICES. Any notice pursuant to this Agreement by any Holder to the
Company, shall be in writing, shall be given by registered or certified
mail, and shall be deemed given upon receipt by the Company at its offices
at 0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, or to such other
address as the Company may designate by notice given in accordance with
this Section 10.
Notices or demands authorized by this Agreement to be given or made by
the Company to the Holder of any Warrant and/or the holder of any Share
shall be sufficiently given or made (except as otherwise provided in this
Agreement) if sent by first-class mail, postage prepaid, addressed to such
Holder or such holder of Shares at the address of such Holder or such
holder of Shares as shown on the Warrant Register or the books of the
Company, as the case may be.
11. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement, without the approval of any Holder in
order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or
desirable and which shall not be inconsistent with the provisions of the
Warrants and which shall not adversely affect the interests of the Holders.
Any supplement or amendment which would adversely affect the interests of
the Holders may be made by the Company only with the approval of the
holders of a majority of the outstanding Warrants. Upon such approval,
such supplement or amendment shall be binding on all Holders.
12. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement.
This Agreement shall be for the sole and exclusive benefit of the Company
and its Holders
13. GOVERNING LAW. This Agreement and each Warrant issued hereunder shall
be governed by and construed in accordance with the substantive laws of the
State of Utah. The Company hereby agrees to accept service of process by
notice given to it pursuant to the provisions of Section 10.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
COMPANY: NATIONAL HEALTH AND SAFETY CORPORATION
By: ____________________________________
____________________________________
President
ATTEST:
____________________________________
____________________________________
Secretary
WARRANT AGREEMENT Page 1
EXHIBIT A
CLASS A WARRANT CERTIFICATE
To Be Attached
WARRANT AGREEMENT Page 1
EXHIBIT B
CLASS B WARRANT CERTIFICATE
TO BE ATTACHED
WARRANT AGREEMENT Page 1
