WARRANT AGREEMENT
NATIONAL SCIENTIFIC CORPORATION
THIS AGREEMENT (the "Agreement"), dated as of 1998, is between NATIONAL
SCIENTIFIC CORPORATION (the "Company") and (the "Holder").
WHEREAS, in conjunction with an offering of up to fifty (50) units (the
("Units"), each Unit consisting of one thousand (1,000) shares of the Company's
convertible preferred stock, par value $0.10 par value, (the "Preferred Stock"),
and one hundred thousand (100,000) Class A Common Stock Purchase Warrants ("A
Warrants or Warrants"), the Company and the Holder desire to enter into this
Agreement governing the terms of the A Warrants.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set, the parties agree as follows:
SECTION 1. A WARRANTS AND FORM OF A WARRANT CERTIFICATES.
(A) Each A Warrant shall entitle the Holder of the certificate
representing such A Warrant to purchase upon the exercise thereof
one (1) share of Common Stock, subject to the adjustments
provided for in Section 8 hereof, at any time after issuance,
until December 31, 2000 ("A Expiration Date") with respect to the
A Warrants.
(B) The A Warrant certificates shall be in registered form only. The
text of the A Warrant certificate and the form of election to
exercise an A Warrant shall be substantially in the form of the
exhibit attached hereto. Each A Warrant certificate shall be
dated as of the date of issuance (whether upon initial issuance
or upon transfer or exchange), and shall be executed on behalf of
the Company by the manual or facsimile signature of its President
or a Vice President, and attested to by the manual or facsimile
signature of its Secretary or an Assistant Secretary.
SECTION 2. EXERCISE OF A WARRANTS, DURATION AND A WARRANT PRICE. Subject to
the provisions of this Agreement, each registered Holder of one or more A
Warrant certificates shall have the right, which may be exercised as in such A
Warrant certificates expressed, to purchase from the Company (and the Company
shall issue and sell to such registered Holder) the number of shares of Common
Stock to which the A Warrants represented by such certificates are at the time
entitled hereunder.
Each A Warrant not exercised by its A Expiration Date shall become void,
and all rights thereunder and all rights in respect thereof under this Agreement
shall cease on such date.
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A Warrants may be exercised by the surrender of the certificate
representing such A Warrants to the Company, at the office of the Company, with
the subscription farm set forth duly executed and properly endorsed with the
signatures properly guaranteed, and upon payment in full to the Company of the A
Warrant Price (as defined hereinafter) for the number of shares of Common Stock
as to which the A Warrant is exercised. Such A Warrant Price shall be paid in
full in cash, or by certified check of bank draft payable in United States
currency to the order of the Company.
The price per share of the Common Stack at which the A Warrants may be
exercised shall be $1.00 per share with no regard to the bid or ask price of the
stock on, before or after the date the Holder chooses to exercise the A
Warrants. The A Expiration Date will be, as previously stated in Section 1(A),
December 31, 2000.
Subject to the further provisions of this Section 2 and of Section 5
hereof, upon such surrender of A Warrant certificates and payment of the of the
A Warrant Price as aforesaid, the Company, shall issue and cause to be
delivered, with all reasonable dispatch to or upon the written order of the
registered Holder of such A Warrants and in such name or names as such
registered Holder may designate, a certificate or certificates for the number of
securities so purchased upon the exercise of such A Warrants, together with
cash, as provided in Section 9 of this Agreement, in respect of any fraction of
a share or security otherwise issuable upon such surrender. All shares of Common
Stock issued, upon the exercise of A Warrants shall be validly issued, fully
paid and non-assessable.
Certificates representing such securities 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 securities as of the date of the surrender of
such A Warrants and payment of the A Warrant Price as aforesaid; provided,
however, that is, at the date of surrender of such A Warrants and payment of
such A Warrant Price, the transfer books for the Common Stock or other
securities purchasable upon the exercise of such A Warrants are then exercised
shall he issuable as of the date on which such books shall next be opened and
until such date the Company shall be under no duty to deliver any certificate
for such securities, The rights of purchase represented by each A Warrant
certificate shall be exercisable, at the election of the registered Holders
thereof, either as an entirety or from time to time for part of the number of
securities specified therein and, in the event that any A Warrant certificate is
exercised in respect of less that all of the securities specified therein at any
time prior to the A Expiration Date of the A Warrant certificate, a flew A
Warrant certificate or certificates will be issued to such registered Holder for
the remaining number securities specified in the A Warrant certificate so
surrendered.
SECTION 3. COUNTERSIGNATURE AND RESIGNATION The Company shall maintain
books (the "A Warrant Register) for the registration and the registration of
transfer of the A Warrants. Upon the initial issuance of the A Warrants, the
Company shall issue and register the A Warrants in the names of the respective
Holders thereof. The A Warrant certificates shall be countersigned manually or
by facsimile by an officer of the Company and attested to by an officer of the
Company.
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Prior to due presentment for registration of transfer of any Warrant
certificate the Company may deem and treat the person in whose name such Warrant
certificate shall be registered upon the Warrant Register (the "registered
Holder") as the absolute owner of such Warrant certificate and of each Warrant
represented thereby (notwithstanding any flotation of ownership or other writing
on the Warrant certificate made by anyone other than the Company or the Warrant
Agent), for the purpose of any exercise thereof, of any distribution or notice
to the Holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
SECTION 4. TRANSFER AND EXCHANGE OF WARRANTS. The Company shall register
the transfer, from time to time, of any outstanding Warrant upon the warrant
Register, upon surrender of the certificate evidencing such Warrant for
transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
certificate representing an equal aggregate number of Warrants shall be issued
to the transferee and the surrendered Warrant certificate shall be canceled by
the Company.
Warrant certificates may he surrendered to the Company together with a
written request for exchange, and thereupon the Company shall issue in exchange
therefor one or more new Warrant certificates as requested by the registered
Holder of the Warrant certificate or certificates so surrendered, representing
an equal aggregate number of Warrants.
SECTION 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of Warrants; provided, however, the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for shares of
Common Stock in a name other than registered Holder of Warrants in respect of
which are issued, and in such case the Company shall not be required to issue or
deliver any for shares of Common Stock or any Warrant until the person
requesting the same has paid the amount of such tax or has established to the
Company's satisfaction that such tax has been paid.
SECTION 6. MUTILATED OR MISSING WARRANTS. in case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue a new Warrant certificate, and THE COMPANY IN EXCHANGE AND
SUBSTITUTION THEREFOR AND UPON CANCELLATION OF THE MUTILATED WARRANT
CERTIFICATE, OR IN LIEU OF AND SUBSTITUTION FOR THE WARRANT CERTIFICATE LOST
STOLEN OR DESTROYED, shall countersign and deliver a new Warrant certificate
representing an equal aggregate number of Warrants, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant certificate and reasonable indemnity, it requested, also satisfactory to
them. Applicants for such substitute Warrant certificates shall also comply with
such other reasonable conditions and pay such reasonable charges as the Company
may prescribe.
SECTION 7. RESERVATION OF COMMON STOCK. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrants then outstanding,
and the transfer agent for the Common Stock, and every subsequent transfer agent
for any shares of the Company's capital stock issuable upon the exercise of any
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of the rights of purchase aforesaid, are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued shares
as shall be requisite for such purpose.
SECTION 8. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 ADJUSTMENTS. The number of shares of Common Stock purchasable upon
the exercise of each Warrant arid the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stuck into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common
stock, other securities of the Company, the number of shares of Common
Stock purchasable upon exercise of a Warrant immediately prior thereto
shall be adjusted so that the Holder of a Warrant shall be entitled to
receive the kind and number of shares of Common Stock or other securities
of the Company which such Holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall issue rights, options, Warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for
or purchase Common Stock at a price per share which is lower at the record
date mentioned below than the then Current Market Price (as defined in
Section 9 hereof), the number of shares of Common Stock thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of shares of Common Stock theretofore purchasable
upon exercise of a Warrant by a fraction, of which the numerator shall be
the number of shares of Common Stock outstanding immediately prior to the
issuance of such rights, options. Warrants or convertible securities plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, Warrants or convertible securities plus the number of shares which
the aggregate offering price of the total number of shares offered would
purchase at such Current Market Price. Such adjustment shall be made
whenever such rights, options. Warrants or convertible securities are
issued, and shall become effective immediately and retroactive to the
record date for the determination of stockholders entitled to receive such
rights, options, Warrants or convertible securities.
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(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock, evidences of its indebtedness or assets
(excluding cash dividends or distributions cut of earnings) or rights,
options, Warrants or convertible securities containing the right to
subscribe for or purchase Common Stock (excluding those referred to in
subsection 8.1(b) above), then in each case the number of shares of Common
Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Common Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the
numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market
Price on such date minus the then fair value of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights,
options, Warrants or convertible securities applicable to one share. Such
adjustment shall be made whenever any such distribution is made and shall
become effective on the date of distribution retroactive to the record date
for the determination of stockholders entitled to receive such
distribution.
(d) No adjustment in the number of shares of Common Stock purchasable
pursuant to the Warrants shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of
shares of Common Stock then purchasable upon the exercise of the Warrants;
provided, however, that any adjustments which by reason of this subsection
8.1(d) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Common Stock purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which
the numerator shall he the number of shares of Common Stock purchasable
upon the exercise of such Warrant immediately prior to such adjustment, and
of which the denominator shall be the number of shares of Common Stock so
purchasable immediately thereafter.
8.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 8.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
8.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Company an
agreement that the registered holders of the Warrants shall have the right
thereafter, upon payment of the Warrant Price in effect immediately prior to
such action, to purchase, upon exercise of each Warrant, the kind and amount of
shares and other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had each Warrant been exercised immediately prior to such action. In
the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, in which the Company is the surviving corporation, the
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right to purchase shares of Common Stock under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrants which entitle the holders thereof to purchase upon this
exercise the kind and amount of shares and other securities and property which
they could have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to in
this subsection 8.3 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in section 9
hereof. The provisions of this subsection 8.3 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional shares of common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 9,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company shall in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and flat in the NASDAQ National Market System nor on any
national securities exchange, the average of the per share closing bid prices of
the Common Stock on the thirty (30) consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded in the NASDAQ
National Market System or on a national securities exchange, the average for the
thirty (30) consecutive trading days immediately preceding the date in question
of the daily per share closing prices of the Common Stock in the NASDAQ National
Market system or on the principal stock exchange on which it is listed, as the
case may be. For purposes of clause (i) above, if trading in the Common Stock is
not reported by NASDAQ, the bid price referred to in said clause shall be the
lowest bid price as reported by National Quotation Bureau, Incorporated. The
closing price referred to in clause (ii) above shall be the last reported sale
price or, in the case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case in the NASDAQ
National Market System or on the national securities exchange on which the
Common Stock is then listed.
SECTION 10. RIGHTS AS WARRANTHOLDERS. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the holders
thereof, as such, any of the rights of stockholders of the Company, including,
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter. Anything herein to the contrary
notwithstanding, the Company shall cause copies of all financial statements and
reports, proxy statements and other documents as it shall send to its
stockholders to be sent by the same class mail as sent to its stockholders,
postage prepaid, on the date of the mailing to such stockholders, to each
registered holder of Warrants at his address appearing on the Warrant Register
as of the record date for the determination of the stockholders entitled to such
documents.
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SECTION 11. NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made when delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(A) if to the Company:
National Scientific Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: President
(B) if to the registered holder of a Warrant, to the address of such
holder as shown in the Warrant Register.
SECTION 12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Warrants 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, or
which shall not adversely affect the interests of the holders of Warrants
(including reducing the Warrant Price or extending the redemption or expiration
date).
SECTION 18. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the registered holders of the Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 19. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under the laws of the State of Texas and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall he
construed to give to any person or corporation other than the Company and the
registered holders of the Warrants 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 the registered Holders of the Warrants.
SECTION 21. COUNTERPARTS. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute hut one and the
same instrument.
SECTION 22. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the moaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
NATIONAL SCIENTIFIC CORPORATION
By:
------------------------------------
President
By:
------------------------------------
Secretary
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WARRANT CERTIFICATE NO.__________
CLASS A WARRANT TO PURCHASE SHARES OF COMMON STOCK
NATIONAL SCIENTIFIC CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
This certifies that, for value received ________________________________
the registered holder hereof or assigns (the "Holder"), is entitled to purchase
from NATIONAL SCIENTIFIC CORPORATION, a Texas corporation (the "Company"), at
any time after the date of this Warrant Certificate and before 5:00 p.m.,
Arizona time, on December 31, 2001, at a purchase price of one dollar and fifty
cents ($1.50) (the "Warrant Price") per share, fifty thousand (50,000) shares of
Common Stack of the Company (the "Shares"). The number of Shares purchasable
upon exercise of each Warrant evidenced hereby and the Warrant Price per Share
shall be subject to adjustment from time to time as set forth in the Warrant
Agreement referred to below.
The Warrants evidence hereby may be exercised in whole or in part by
presentation of the Warrant Certificate with the Purchase Form duly executed
(with a signature guarantee) and simultaneous payment of the Warrant Price
(subject to adjustment) at the principal office in Phoenix, Arizona. Payment of
such price shall be made at the option of the Holder in cash or by certified
check or bank draft, all as provided in the Warrant Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of Common
Stock Purchase Warrants and are issued under and in accordance with a Warrant
Agreement dated __________________________, 1999 and are subject to terms and
provisions contained in such Warrant Agreement, to all of which the Holder of
the Warrant Certificate by acceptance hereof consents. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Company.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
countersigned and issued to the Holder a new Warrant Certificate in respect of
the Shares as to which the Warrants evidenced hereby shall not have been
exercised. This Warrant Certificate may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed (with a
signature guarantee) either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number of
Shares as here evidenced by the Warrant or Warrants exchanged. No fractional
Shares will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of one or
more Warrants. The Warrants evidenced hereby are transferable at the office of
the Company in the manner and subject to the limitations set forth in the
Warrant Agreement.
The Holder hereof may be treated by the Company all other xxxxxxx dealing
with this Warrant Certificate as the absolute owner hereof for all purposes and
as the person entitled to exercise the rights represented hereby, any notice to
the contrary notwithstanding, and until such transfer is entered an such books,
the Company may treat the Holder hereof as the owner for all purposes.
This Warrant Certificate does not entitle the Holder hereof to any of the
rights of a stockholder of the Company.
Dated: NATIONAL SCIENTIFIC CORPORATION
-----------------------
By:
------------------------------------
President
ATTEST:
-----------------------------
Secretary
NATIONAL SCIENTIFIC CORPORATION
PURCHASE FORM
National Scientific Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx Xx XX
Xxxxxxx, Xxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
______________ Shares of Common Stock provided for therein, and requests that
certificates for such Shares be issued in the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
and, if said number of Shares shall riot be all the Shares purchasable
hereunder. that a new Warrant Certificate for the balance of the Shares
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder or his Assignee as below indicated and delivered to the
address stated below.
Dated: __________________
Name of Holder or Assignee:
___________________________________
(Please Print)
Address:
________________________________________________________________________________
________________________________________________________________________________
Signature:
___________________________________
Note: The above signature must correspond with the name as it appears upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, unless these Warrants
have been assigned.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
ASSIGNMENT
(To Be Signed Only Upon Assignment Of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
_____________________, Attorney, to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated: ____________________________
___________________________________
Signature of Registered Holder
Note: The signature on this Assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change whatever.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
