EXHIBIT 4.12
This Note, and the securities issuable upon the conversion of this Note, have
not been registered under the Securities Act of 1933, as amended (the "Act") or
applicable state law and may not be sold, transferred or otherwise disposed of
unless registered under the Act and any applicable state act or unless the
Company receives an opinion from counsel for the holder and is satisfied that
this Note and the underlying securities may be transferred without registration
under the Act.
CONVERTIBLE NOTE
As of August 19, 1999
$1,700,000 Palm Beach, Florida
FOR VALUE RECEIVED, NATIONAL BOSTON MEDICAL, INC., a Nevada corporation (the
"Company"), hereby promises to pay to the order of THOMSON KERNAGHAN & CO.
LIMITED, as Agent, or any subsequent holder of this Note (the "Payee"), at 000
Xxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, or at such other place as may
be designated by the Payee from time to time by notice to the Company, the
principal sum of One Million Seven Hundred Thousand Dollars ($1,700,000) to be
funded $700,000 on or before August 19, 1999; the additional sum of $600,000 to
be funded on or before November 2, 1999; and the additional amount of $400,000
to be funded on or before November 29, 1999, together with simple interest from
the date hereof (the "Issuance Date") on the unpaid principal amount at an
annual rate equal to ten percent (10.0%) per annum. Such principal and interest
shall be paid in accordance with the terms of Section 1 below, in cash, or by
wire transfer to such account as the Payee shall direct, in immediately
available funds and in lawful currency of the United States of America.
1. PAYMENTS.
(a) Unless previously fully converted into Common Stock of the Company as herein
provided, the unpaid principal amount of this Note shall be payable to the Payee
in cash or Common Stock at the election of the Payee as provided herein on or
before November 1, 2000 (collectively the "Maturity Date").
(b) Interest on the unpaid principal balance of this Note at the rate of ten
percent (10.0%) per annum shall accrue from the date hereof and shall be payable
to the Payee in the event of conversion, in shares of Common Stock of the
Company, the number of which shall be equal to the product of such interest
payment divided by the Conversion Price, as defined herein, with the overage, if
any, payable in cash. Interest shall be calculated on the basis of a 365 day
year.
(c) In the event that any payment of principal and/or interest hereunder becomes
due and payable on a Saturday, Sunday or other day on which commercial banks in
the State of Florida are authorized or required by law to close, then the
maturity thereof shall be extended to the next succeeding "Business Day"
(defined as any days on which national banks in the United States are open for
business); and during any such extension, interest on principal amounts payable
shall accrue and be payable at the applicable rate.
(d) Company shall set aside in an escrow account to be maintained at the offices
of Thomson Kernaghan & Co., Ltd., Toronto 8,500,000 shares of the Restricted
Common Stock of the Company (the "Shares"). The Shares shall carry piggy-back
registration rights as defined in Section 4(k) herein. Upon closing and at all
times thereafter that any portion of the indebtedness is outstanding, Payee
shall have the right to convert the outstanding principal indebtedness to a
portion of the Shares which portion shall be determined as follows: the product
of the outstanding principal indebtedness divided by 1,700,000 shall be
multiplied by 8,500,000. Should the entire outstanding indebtedness be converted
to the corresponding number of the Shares, all obligations by the Company to
Payee shall terminate. In the event of such conversion, Payee shall immediately
refund and remit any royalties paid in connection herewith less any accrued
interest. Should the indebtedness be otherwise paid in full, the Shares shall be
immediately remitted to the Company by overnight mail and all obligations by the
Company to the Payee shall terminate.
2. RANKING OF NOTE.
Subject at all times to the subordination provisions set forth in
Section 9 hereof, this Note shall constitute senior securities of the Company
and, except as provided below, shall rank pari passu with all other indebtedness
for money borrowed by the Company and senior to any other indebtedness for money
borrowed by the Company which, by its terms shall be made expressly subject and
subordinated to this Note.
3. PREPAYMENT OF NOTE.
(a) Prior to November 1, 2000, the Company shall provide the Payee with
a notice that a prepayment event has occurred (the "Prepayment Notice"). The
Payee shall have thirty (30) days from the date of the Prepayment Notice to
elect (i) to take prepayment of the principal amount of the Note and any accrued
but unpaid interest in whole without premium or penalty or (ii) to convert in
accordance with Section 4 hereof; provided, however, that the Company may not
prepay the Note without the Payee's consent unless a registration statement
described in paragraph 4(k)(ii)(B) is effective at the time of the Prepayment
Notice and remains effective for not less than thirty (30) days thereafter.
(b) Subject at all times to the Payee's right to convert all or any
portion of this Note into Common Stock pursuant to Section 4 hereof, the
principal amount of this Note and any accrued and unpaid interest may be
prepaid, at the option of the Company, in whole or in part, without premium or
penalty, at any time or from time to time from and after that date which shall
be the earlier to occur of (i) November 1, 2000 or (ii) the date on which the
Company shall register for resale pursuant to the Securities Act of 1933, as
amended (the "Act") all "Conversion Shares" (as herein defined) issuable upon
conversion of the entire principal amount of this Note, pursuant to a
Registration Statement on the appropriate registration for ____ declared
effective by the Securities and Exchange Commission (the "SEC"). If either event
set forth in this Section 3(b) shall occur, the Company shall provide the Payee
with a Prepayment Notice.
(c) Each Prepayment Notice shall specify the principal amount of this
Note to be redeemed. Each prepayment of principal of this Note shall be
accompanied by the payment of all interest accrued and unpaid to the prepayment
date on the amount so prepaid. Each such prepayment shall be made by wire
transfer of immediately available funds or by bank cashier's check payable to
the Payee. Any partial prepayment of this Note, whether optional or mandatory,
shall be applied first to accrued and unpaid interest hereon, and then to the
outstanding principal amount of this Note in the inverse order of maturity.
(d) Notwithstanding anything to the contrary set forth in this Section
3, in the event and to the extent that the Company shall provide the Payee of
this Note with a Prepayment Notice, it shall simultaneously provide to the Payee
of this Note evidence of the availability of funds to effect such prepayment;
which evidence of availability of funds shall include, without limitation, (i)
confirmation of cash or cash equivalent bank balances, (ii) an irrevocable bank
letter of credit, or (iii) a written commitment from a recognized lending
institution to effect the financing of such prepayment.
4. CONVERSION.
Subject at all times to the Company's right to prepay this Note as
provided in Section 3 hereof, the Payees of this Note shall have the following
conversion rights (the "Conversion Rights"):
(a) Voluntary Conversion. At any time or from time to time following
the Issuance Date, the Payee of this Note may elect to convert up to one hundred
(100%) percent of the original principal amount of this Note and any accrued but
unpaid interest, into shares of Common Stock of the Company, by written notice
given to the Company in accordance with the provisions of Section 4(g) hereof
(the "Conversion Notice"). In no event may the Payee of this Note effect a
conversion of less than $10,000 principal amount of this Note. Such right of
Voluntary Conversion shall be effected by the surrender of this Note to the
Company for conversion at any time during normal business hours at the office of
the Company, accompanied (i) by the Conversion Notice, (ii) if so required by
the Company, by instruments of transfer, in a form satisfactory to the Company,
duly executed by the registered Payee or by his duly authorized attorney and
(iii) transfer tax stamps or funds therefore, if required pursuant to Section
4(f) herein.
(b) Automatic Conversion. Effective as of November 1, 2000, and
provided that a registration statement described in paragraph 4(k)(ii)(B) is
then effective, to the extent not previously converted by the Payee, all
remaining principal amount of this Note, together with all accrued interest
hereon, shall automatically and without further action on the part of such
Payee, at the election of Company, be paid in cash or converted into Common
Stock of the Company at the Conversion Price then in effect.
In the event that a Registration Statement described in paragraph
4(k)(ii)(B) is not effective as of November 1, 2000 and Payee has not
voluntarily converted pursuant to paragraph 4(a) herein, and also in the event
that the Company elects to pay the balance of the indebtedness in cash, a
premium equivalent to twenty-five percent (25%) of the outstanding principal
shall be applied to the balance due Payee.
(c) Conversion Price. Subject to adjustment from time to time as
provided in Section 4(d) below, the term "Conversion Price" shall mean either:
(i) 75% of the average closing bid price of the Common Stock for the three (3)
trading day preceding November 1, 2000 or (ii) $0.20, whichever is less.
(d) Adjustments of Conversion Price. The Conversion Price in effect
from time to time shall be, subject to adjustment in accordance with the
provisions of this Section 4(d).
(i) Adjustments for Stock Splits and Combinations. If the Company shall
at any time or from time to time after the Issuance Date, effect a stock split
of the outstanding Common Stock, the Conversion Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the Issuance Date, combine the
outstanding shares of Common Stock, the Conversion Price in effect immediately
prior to the combination shall be proportionately increased. Any adjustments
under this Section 4(d)(i) shall be effective at the close of business on the
date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the
Company shall at any time or from time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the Conversion Price in effect immediately prior to
such event shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a fraction;
(A) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustments for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the Payee of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 4(c)(iii) with
respect to the rights of the Payees of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or a different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 4(d)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 4(d)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall by made and provisions shall be made (by
adjustments of the Conversion Price of otherwise) so that the Payee of this Note
shall have the right thereafter to convert such Note into the kind and amount of
shares of stock and other securities receivable upon such reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock into which such Note might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all subject to
further adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section 4(d)(i), (ii) and (iii), or a reclassification, exchange or substitution
of shares provided for in Section 4(d)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the Payee of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale. In any such case, appropriate adjustment shall be made in the application
of the provisions of this Section 4(d)(v) with respect to the rights of the
Payees of this Note after the reorganization, merger, consolidation, or sale to
the end that the provisions of this Section 4(c)(v) (including any adjustment in
the Conversion Price then in effect and the number of shares of stock or other
securities deliverable upon conversion of this Note) shall be applied after that
event in as nearly an equivalent manner as may be practicable.
(e) No Impediment. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Payees of the Note
set forth in this Section 4 against impairment.
(f) Certificate as to Adjustments. Upon occurrence of each adjustment
or readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Note pursuant to this Section 4, the Company at
its expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish notice to the Payee of this Note, a
certificate setting forth such adjustment and readjustment, showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request of the Payee of this Note, at any time, furnish or
cause to be furnished to such Payee a like certificate setting forth such
adjustments and readjustments, the applicable Conversion Price in effect at the
time and the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the conversion
of such Note. Notwithstanding the foregoing, the Company shall not be obligated
to deliver a certificate unless such certificate would reflect an increase or
decrease of at least one percent (1%) of such adjusted amount.
(g) Issue Taxes. The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of this
Note pursuant hereto; provided, however, that the Company shall not be obligated
to pay any transfer taxes resulting from any transfer requested by any Payee in
connection with any such conversion.
(h) Notices and Delivery of Shares. All notices and other
communications hereunder shall be in writing and shall be deemed given (i) on
the same date, if delivered personally or by facsimile by not later than 7:00
p.m. Florida time (provided, that a copy of such facsimile shall be
simultaneously sent to Xxxxxx X. Xxxxxxxx, Esq. at (000)000-0000, or (ii) three
business days following being mailed by certified or registered mail, postage
prepaid, return-receipt requested, addressed to the party in accordance with
Section 7 hereof. Not later than seven (7) Business Days following receipt of
notice of conversion as provided herein (the "Delivery Date"), the Company shall
deliver to the Payees of this Note, against delivery of this Note surrendered
for conversion, certificates evidencing all shares of Common Stock into which
this Note shall be converted.
(i) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Note. In lieu of any fractional shares to which
the Payee would otherwise be entitled, the Company shall pay cash equal to the
product of such fraction multiplied by the Conversion Price of one share of the
Company's Common Stock on the applicable Conversion Date.
(j) Retirement of Note. Conversion of this Note shall be deemed to have
been effected on the applicable Conversion Date. The converting holder shall be
deemed to have become a stockholder of record of the Common Stock on the
applicable Conversion Date. Upon conversion of only a portion of this Note, the
Company shall issue and deliver to such holder, at the expense of the Company,
against receipt of the original Note delivered for partial cancellation, a new
Note representing the unconverted portion of this Note so surrendered and Common
Stock equal to the portion converted.
(k) Regulatory Compliance.
(i) If the Shares of Common Stock to be reserved for the purpose of
conversion of this Note require registration or listing with or approval of any
government authority, stock exchange or other regulatory body under any federal
or state law or regulation or otherwise before such shares may be validly issued
or delivered upon conversion, the Company shall, at its sole cost and expense,
in good faith and as expeditiously as possible, endeavor to secure such
registration, listing or approval, as the case may be.
(ii) The shares of Common Stock issuable upon the election to convert
shall be Rule 144 restricted shares.
(iii) The holder of such shares shall have the following registration
rights:
(A) In the event the Company shall file a Registration
Statement under the Act, the Company shall include the Shares in such
Registration, subject to the limitations contained herein. The Company shall
cause the registration statement to remain effective until thirty (30) days
after the Debentures have been converted or repaid, whichever comes first.
(B) The Company's obligation to include Restricted Securities
in a Company's Registration Statement pursuant to Section 4(k)(iii)(A) shall be
subject to the following limitations:
(1) The Company shall not be obligated to file a
Registration Statement.
(2) In the event the Company files a Registration
Statement, the Company shall not be obligated to include any Restricted
Securities in a registration statement filed on Form X-0, Xxxx X-0 or such other
similar successor forms then in effect under the Securities Act.
(3) If a Company Registration Statement involves an
underwritten offering and the managing underwriter
advises the Company in writing that in its opinion, the number of securities
requested to be included in such Company Registration Statement exceeds the
number which can be sold in such offering without adversely affecting the
offering, the Company shall include in such Company Registration Statement the
number of such securities which the Company is so advised can be sold in such
offering without adversely affecting the offering, determined as follows:
(i) first, the securities proposed by the
Company to be sold for it own account, and (ii) second, any Restricted
Securities requested to be included in such registration and any other
securities of the Company in accordance with the priorities, if and then
existing among the holders of such securities pro rata among the holders thereof
requesting such registration on the basis of the number of shares of such
securities requested to be included by such holders.
(iii) The Company shall not be obligated to
include Restricted Securities in more than one (1)
Company Registration Statement.
(C) To the extent holder's Restricted Securities are intended
to be included in a Company Registration Statement, holder may include any of
its Restricted Securities in such Company Registration Statement pursuant to
this Agreement only if holder furnishes to the Company in writing, within ten
(10) business days after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Act or such other information
as the Company may reasonably request for use in connection with the Company
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to the NASD. Holder as to which the Company Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make all information previously
furnished to the Company by holder not materially misleading.
5. EVENTS OF DEFAULT.
The occurrence and continuance of any one or more of the following events
is herein referred to as an Event of Default:
(a) If the Company shall default in converting the applicable
principal amount of this Note into Common Stock and delivering stock
certificates in respect of such conversion within ten (10) Business Days from
the Company's receipt of the applicable notice of conversion pursuant to the
provisions hereof, whether on the Maturity Date or otherwise; or
(b) If the Company shall default in the payment of any
installment of interest on this Note when payable in accordance with the terms
thereof for more than ten (10) calendar days after the same shall become due if
the Payee has not elected to take such interest in Common Stock; and if the
Payee has elected to take such interest in Common Stock, if the Company shall
default in delivering stock certificates in respect of such election within ten
(10) Business Days from the Company's receipt of the notice of such election; or
(c) If the Company shall not, at the time of receipt of a
Conversion Notice hereunder, have a sufficient number of authorized and unissued
shares of its Common Stock available for issuance to the Payee of this Note upon
conversion of all or any portion of this Note in accordance with the terms
hereof, and such default shall not have been remedied within sixty (60) calendar
days from the date of such Conversion Notice; or
(d) If the Company shall default in the performance of or
compliance with any of its material covenants or agreements contained herein and
such default shall not have been remedied within thirty (30) calendar days after
written notice thereof shall have been delivered to the Company by the Payee of
this Note in accordance with the notice provisions herein; or
(e) If any representation or warranty made in writing by or on
behalf of the Company in connection with the transactions contemplated hereby
shall prove to have been false or incorrect in any material respect on the date
as of which made; or
(f) If the Company or any of its "Significant Subsidiaries"
(as defined herein) shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy or shall have an order for relief
under the Bankruptcy Act granted against it or them, or shall be adjudicated a
bankrupt or insolvent, or shall file any petition or answer seeking for itself
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting or not contesting the material
allegations of a petition filed against the Company or any of its Significant
Subsidiaries in any such proceeding, or shall seek or consent to or acquiesce in
the appointment of any trustee, custodian, receiver or liquidator of the Company
or of all or any substantial part of the properties of the Company or any of its
Significant Subsidiaries, or the Company or its directors shall take any action
looking to the dissolution or liquidation of the Company or any of its
Significant Subsidiaries. For purposes of this Section 5(f), the term
Significant Subsidiary shall mean and include any other person, firm or
corporation (i) more than 50% of the common stock or equity interests of which
are owned of record by the Company or any Subsidiary of the Company, and (ii)
the net income before taxes or total assets of which represent more than 15% of
the consolidated net income before taxes or consolidated assets of the Company
and all of its Subsidiaries; or
(g) If, within sixty (60) days after the commencement of any
proceeding against the Company or any Significant Subsidiary seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, such
proceeding shall not have been dismissed, or if, within sixty (60) days after
the appointment, without the consent or acquiescence of the Company or any
Significant Subsidiary, of any trustee, receiver or liquidator of the Company or
any Significant Subsidiary or of all or any substantial part of the properties
of the Company or any Significant Subsidiary, such appointment shall not have
been vacated.
6. REMEDIES ON DEFAULT; ACCELERATION.
Upon the occurrence and during the continuance of an Event of
Default, the entire unpaid balance of principal and accrued interest on this
Note may be accelerated and declared to be immediately due and payable by the
Payee. Unless waived by the written consent of the Payee, such Payee may proceed
to protect and enforce its rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein, or for an injunction against a violation of any of the terms
hereof, or in aid of the exercise of any power granted hereby or by law. Upon
the occurrence of an Event of Default, the Company agrees to pay to the Payee of
this Note such further amount as shall be sufficient to cover the cost and
expense of collection, including, without limitation, reasonable attorneys' fees
and expenses. No course of dealing and no delay on the part of the Payee of this
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such Payee's rights, powers and remedies. No right, power
or remedy conferred hereby upon the Payee hereof shall be exclusive of any other
right, power or remedy referred to herein nor now or hereafter available at law,
in equity, by statute or otherwise.
7. ROYALTY.
The Company shall pay a royalty of $2.50 per unit sold of the Backstroke(R) Back
Massager for a period of one (1) year and thereafter a royalty of $1.25 for the
life of the product. The Company shall also pay a $2.50 royalty per unit on all
sales of the Body Rocker for a period of one (1) year and thereafter a royalty
of $1.25 for the life of the product. The following products: Cactus Jack's One
Shot cleaner, Xxxx Tornebene's Fat Fighting System, Stop Snoring Tonight System,
One Shot Catch-A-Lot Fishing Lure, 3 in 1 Ladder, Spud Wizz, Facial Flex, and
our Cosmo Cooler Bag shall have a $0.75 royalty per unit sold for the life of
each product. In addition, if the Company fails to reach a combined royalty of
$6,000,000, the Company will continue to add products with $0.50 royalty until
such time $6,000,000 is achieved, at which time all royalties shall terminate.
8. ROYALTY PAYMENT TERMS.
The second Friday of each month, the Company shall, through a separate credit
agency, distribute to Payee payment for all royalties on all units shipped and
paid for by any party. The Company will provide a monthly accounting statement
which will include purchase orders for the month and an Account Receivable
Journal providing an indication all payments received.
9. NOTICES.
All notices, requests, demands or other communications hereunder shall be in
writing and personally addressed or sent by telecopier or by registered or
certified mail, return receipt requested, postage pre-paid, addressed or
telecopied as follows or to such other address or telecopier number of which
notice has been given pursuant hereto:
If to the Company: National Boston Medical, Inc.
00 Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copy to: Mintmire & Associates
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone (000) 000-0000
Fax (000) 000-0000
If to the Payee: Thomson Kernaghan & Co. Ltd., as Agent
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Attention: Xxxx X. Xxxxxxxxx
Telephone (000) 000-0000
Fax (000) 000-0000, or
to such Payee at the address set forth on the records of the Company.
In addition, copies of all such notices or other communications shall be
concurrently delivered by the person giving the same to each person who has been
identified to the Company by such Payee as a person who is to receive copies of
such notices.
10. GOVERNING LAW.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Florida, without giving effect to conflict of law
principles; provided, however that if any provision of this Note is
unenforceable under Florida law but is enforceable under the laws of the state
of Delaware, then that provision shall be governed by, and construed and
interpreted in accordance with, the laws of the state of Delaware.
11. SUBORDINATION TO SENIOR DEBT.
(a) Payment of the principal of and interest on this Note is subordinated, to
the extent and in the manner provided herein, to the prior payment of all
indebtedness of the Company and/or all Subsidiaries of the Company, for money
borrowed or other obligations which is now or may hereafter be owed
(collectively, "A Senior Debt") to any bank, commercial finance company, factor,
insurance company or other institution the lending activities of which are
regulated by law (individually, a "Senior Lender" and collectively, "Senior
Lenders"), which may, hereafter on any one or more occasions provide financing
to the Company or any of its Subsidiaries, secured by liens on any of the assets
and properties of the Company and/or any of its Subsidiaries (individually and
collectively, an "Institutional Borrower").
(b) Upon any payment or distribution of assets or securities of the
Institutional Borrower, as the case may be, of any kind or character, whether in
cash, property or securities, upon any dissolution or winding up or total or
partial liquidation or reorganization of the Institutional Borrower, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts payable under Senior Debt shall first be paid in full
in cash, or payment provided for in cash or cash equivalents, before the Payee
hereof shall be entitled to receive any payment on account of principal of or
interest on this Note. Before any payment may be made by the Institutional
Borrower of the principal of or interest on this Note upon any such dissolution
or winding up or liquidation or reorganization, any payment or distribution of
assets or securities of the Institutional Borrower of any kind of character,
whether in cash, property or securities, to which the Payee hereof would be
entitled, except for the provisions of this Section 9, shall be made by the
Institutional Borrower or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, directly to
the holders of Senior Debt or their representatives to the extent necessary to
pay all such Senior Debt in full after giving effect to any concurrent payment
or distribution to the holders of such Senior Debt.
(c) Upon the happening of any default in payment of the principal of or interest
on any Senior Debt, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment in cash,
property or securities, by set-off or otherwise, shall be made or agreed to be
made by the Institutional Borrower on account of the principal of or interest on
this Note.
(d) Upon the happening of an event of default (other than under circumstances
when the terms of Section 9(c) above are applicable) with respect to any Senior
Debt pursuant to which the Payee thereof is entitled under the terms of such
Senior Debt to accelerate the maturity thereof, and upon written notice thereof
given to each of the Institutional Borrower and the Payee of this Note by such
holder of Senior Debt (A Payment Notice), then, unless and until such event of
default shall have been cured or waived or shall have ceased to exist, no action
shall or may be taken for collection of any amounts under this Note, and no
direct or indirect payment in cash, property or securities, by set-off or
otherwise, shall be made or agreed to be made by the Institutional Borrower an
account of the principal of or interest on this Note until such Senior Debt has
been paid in full accordance with its terms.
(e) In the event that, notwithstanding the provisions of this Section 9, any
payment shall be made on account of the principal of or interest on this Note in
contravention of such provisions, then such payment shall be held for the
benefit of, and shall be paid over and delivered to, the holders of such Senior
Debt remaining unpaid to the extent necessary to pay in full in cash or cash
equivalents the principal of and interest on such Senior Debt in accordance with
its terms after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
(f) Nothing contained in this Section 9 shall
(i) impair the conversion rights of the Payee hereof referred to in
Section 4 above,
(ii) impair, as between the Company and the Payee of this Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
Payee hereof principal and interest as the same shall become due and payable, or
(iii) prevent the Payee hereof from exercising all rights, powers and
remedies otherwise provided herein or by applicable law, all subject to the
express limitations provided herein.
(g) Upon the occurrence of an Event of Default, if any Senior Debt shall then be
outstanding, no acceleration of the maturity of this Note shall be effective
until the earlier of (i) ten (10) days shall have passed following the date of
delivery to the Institutional Borrower by a Senior Lender(s) of written notice
of acceleration of any Senior Debt, or (ii) the maturity of any then outstanding
Senior Debt shall have been accelerated by reason of a default hereon. The
Company may pay the Payee hereof any defaulted payment and all other amounts due
following any such acceleration of the maturity of this Note if this Section 9
would not prohibit such payment to be made at that time.
(h) Upon payment in full of all Senior Debt, the Payee of this Note shall be
subrogated to the rights of the holder or holders of Senior Debt to receive all
payments or distributions applicable on such Senior Debt to the extent of the
prior application thereto of moneys or other assets which would have been
received in respect of this Note, but for these subordination provisions, until
the principal of, and interest on, this Note shall have been paid in full.
(i) The Payee, by accepting this Note
(i) shall be bound by all of the foregoing subordination provisions;
(ii) agrees expressly for the benefit of the present and future holders
of Senior Debt that this Note is subject to the foregoing subordination
provisions;
(iii) authorizes such persons as shall be designated by all holders of
Senior Debt at any given time, on his or its benefit to execute and deliver such
agreements, assignments, proofs of claim and other documents appropriate to
effectuate the foregoing subordination provisions; and
(iv) hereby appoints the person so designated his or its
attorney-in-fact for such purpose.
(j) The foregoing subordination provisions shall be for the benefit of
all holders of Senior Debt from time to time outstanding, and each of such
holders may proceed to enforce such provisions either directly against the Payee
hereof or in any other manner provided by law.
12. PERMITTED PAYMENTS.
Notwithstanding the provisions of Section 9 of this Note, and provided
that no default or event of default (or event which, with the passage of time or
giving of notice or both) has occurred, will occur as a result of the "Permitted
Payment" (herein defined), or will occur with the passage of time or giving of
notice or both, under any document or instrument evidencing such Senior Debt,
the Company may pay to the Payee, and the Payee may accept from the Company, the
principal payments of, and/or interest payments on, the outstanding principal
amount of this Note when due on an unaccelerated basis (herein, "Permitted
Payments"); it being understood and agreed by the Payee by accepting this Note
that neither:
(a) the payment terms set forth in Section l of this Note;
(b) the subordination provisions contained in Section 9 of this Note, nor
(c) the provisions of this Section 10 of this Note, may be modified or amended
without the prior written consent of each and every holder of Senior Debt.
13. SUCCESSORS AND ASSIGNS.
This Note shall be binding upon and inure to the benefit of the Company and the
Payee hereof and their respective successors and permitted assigns; provided,
however, that the Company may not transfer or assign any of its rights or
obligations hereunder without the prior written consent of the Payee hereof; and
provided, further, that transfer or assignment by the Payee is in accordance
with the rules governing Restricted Securities.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly
authorized officers as of the date first set forth above.
NATIONAL BOSTON MEDICAL, INC.
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------
Name: Xxxxx X. XxXxxxxxx
Title Chief Financial Officer
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 19, 1999, between National Boston
Medical, Inc., a Nevada corporation (the "Company"), and THOMSON KERNAGHAN &
COMPANY LIMITED, ("THOMSON")
W I T N E S S E T H:
WHEREAS, THOMSON wishes to acquire certain warrants of the Company more
particularly described below; and
WHEREAS, the Company wishes to issue such warrants to Thomson pursuant to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
The Company hereby grants THOMSON, (the "Holder") the following:
a. The right to purchase, at any time from the date of the
issuance until the later of 5:00 PM Eastern Standard Time on November 1, 2000,
or the thirtieth (30th) day following the effective date of a registration
statement under the Securities Act of 1933, as amended (the "Act") registering
the shares of Common Stock underlying this Warrant (the "Warrant Exercise
Term"), 2,500,000 shares of the Common Stock of the Company (the "Common Stock")
(subject to adjustment as provided in Section 11 hereof) upon payment of $0.25
per Share in lawful funds of the United States of America, plus warrants to
purchase an additional 333,333 shares of the Common Stock of the Company at an
exercise price of $0.30 per share.
2. Warrant Certificates.
The warrant certificates for the Warrant (the "Warrant
Certificate) to be delivered pursuant to this Agreement shall be in the forms
set forth as Exhibit A and Exhibit B, attached hereto and made a part hereof,
with such appropriate insertions, omissions, substitutions and other variations
as required or permitted by this Agreement.
3. Exercise of Warrants.
In case the Holder of the warrants granted herein shall desire to
exercise the Warrant in whole or in part, the Holder shall surrender the
appropriate warrant, with the form of exercise notice on the last pages hereof
(the "Form of Exercise") duly executed by the Holder, to the Company,
accompanied by payment of the applicable Exercise Price.
(a) The warrant granted herein may be exercised in whole or in
part but not for fractional Shares. In case of the exercise in part only, the
Company will deliver to the Holder a new warrant of like tenor in the name of
the Holder evidencing the right to purchase the number of Shares as to which the
applicable warrant has not been exercised.
(b) As used herein "Date of Exercise" shall mean the date that
the advance copy of the Form of Exercise set forth herein is sent by facsimile
to the Company, provided that the original warrant and original Form of Exercise
are received by the Company within three (3) business days. If the Holder has
not sent advance notice by facsimile, the Date of Exercise shall be the date the
original Form of Exercise is received by the Company.
4. Covenants of the Company.
The Company hereby covenants and agrees that prior to the
expiration of the Warrant by exercise or by their respective terms:
(a) The Company shall at all times reserve and keep available,
out of its authorized and unissued share capital, solely for the purpose of
providing for the exercise, forthwith upon the request of the Holder of the
warrants then outstanding and in effect, such number of shares of Common Stock,
as shall, from time to time, be sufficient for the exercise of the warrants
granted by this Agreement. The Company shall, from time to time, in accordance
with the laws of the State of Florida, increase the authorized amount of its
share capital if at any time the number of shares of Common Stock remaining
unissued and unreserved for other purposes shall not be sufficient to permit the
exercise of the warrants then outstanding and in effect.
(b) The Company covenants and agrees that all shares that may
be issued upon the exercise of the rights represented by the Warrant will, upon
issuance, be validly issued, fully paid and non-assessable, and free from all
taxes, liens and charges with respect to the issue thereof.
5. Loss, Theft, Destruction or Mutilation.
In case the Warrant shall become mutilated or defaced or be
destroyed, lost or stolen, the Company shall execute and deliver a new warrant
(i) in exchange for and upon surrender and cancellation of such mutilated or
defaced warrant or (ii) in lieu of and in substitution for such warrant so
destroyed, lost, or stolen, upon the Holder of such warrant filing with the
Company such evidence satisfactory to it that such warrant has been so lost or
stolen and of the ownership thereof by the Holder; provided, however, that, in
either case, the Company shall be entitled, as a condition to the execution and
delivery of such new warrant, to demand indemnity satisfactory to it and payment
of expenses and charges incurred in connection with the delivery of such new
warrant, and may demand a bond from the Holder. Any warrant so surrendered to
the Company shall be canceled.
6. Record Owner.
At the time of the surrender of the Warrant, together with the
Form of Exercise properly executed and payment of the applicable Exercise Price,
the person exercising such warrant shall be deemed to be the Holder of record of
the Common Stock deliverable upon such exercise, in whole or in part,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such securities shall not then be
actually delivered to such person.
7. Mailing of Notices, etc.
All notices and other communications from the Company to the
Holder of the Warrant shall be mailed by first-class registered or certified
mail, return receipt requested, postage prepaid, to the Holder at the address
set forth in the records of the Company, or to such other address furnished to
the Company in writing from time to time by the Holder of such warrants in
accordance with this Section 7.
8. Registration Under the Securities Act of 1933, as amended, and
Transfers.
(a) Neither the Warrant nor the Shares underlying each of them
have been registered under the Act. Unless and until registered under the Act,
such warrants and all replacement warrants shall bear the following legend:
This Warrant, and the securities issuable upon the exercise of
this Warrant, have not been registered under the Securities
Act of 1933, as amended (the "Act") or applicable state law
and may not be sold, transferred or otherwise disposed of
unless registered under the Act and any applicable state act
or unless the Company receives an opinion of counsel for the
holder and is satisfied that this Warrant and the underling
securities may be transferred without registration under the
Act.
The Shares issuable upon exercise of such warrants shall be Rule 144
restricted shares (the "Restricted Securities"). After issuance of the Shares,
Company agrees to use its best efforts to assist Holder in registering the
Shares or to register the Shares under the Act subject to the rules,
regulations, and other provisions of said Act.
The Company shall use its best efforts to file a Registration Statement
under the Act as soon as possible, registering the shares of Common Stock
underlying this Warrant. The Company shall cause the registration statement to
remain effective until the this Warrant has expired, or until thirty (30) days
after this Warrant has been fully exercised, whichever comes first.
(b) No sale, transfer, assignment or other disposition of the
warrants granted herein shall be effective unless the Payee or any subsequent
permitted assignee shall provide the Company with (i) an original form of
assignment (the "Form of Assignment") set forth on the last pages hereof, (ii)
the original warrant and (iii) an opinion of counsel for the Payee or such
subsequent permitted assignee, in a form reasonably satisfactory to the Company,
stating that the warrant and the underlying securities may be transferred
without registration under the Act. Upon acceptance of same for transfer, the
Company shall execute and deliver a new warrant in exchange for the one
surrendered or like tenor in the name of the permitted assignee and enter such
permitted assignee on the books of the Company as the registered holder.
9. Piggyback Registration.
(a) At any time that the Company proposes to file a Company
registration statement on Form S-1, or other appropriate registration form, the
Company shall cause to be included in such registration statement any securities
issued or subject to issuance in this transaction; provided, however, that if,
at any time after giving written notice of its intention to register any
securities, the Company shall determine for any reason not to register or to
delay registration of holder's Restricted Securities, the Company may, at its
election, give written notice of such determination to Holder and, thereupon:
(i) in the case of a determination not to register
such other securities, shall be relieved of its obligation to register Holder's
Restricted Securities in connection with such registration (but not from its
obligation to pay the registration expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be
permitted to delay registering Holder's Restricted Securities for the same
period as the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities
in a Company's Registration Statement pursuant to Section 10(a) shall be subject
to the following limitations:
(i) The Company may elect, at its sole option and
for any reason, not to register Holder's Restricted Shares, provided however,
that this right is limited to one (1) time and relative to one (1) particular
Company Registration Statement.
(ii) The Company shall not be obligated to include
any Restricted Securities in a registration statement filed on Form X-0, Xxxx
X-0 or such other similar successor forms then in effect under the Securities
Act.
(iii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company in
writing that in its opinion, the number of securities requested to be included
in such Company Registration Statement exceeds the number which can be sold in
such offering without adversely affecting the offering, the Company shall
include in such Company Registration Statement the number of such securities
which the Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(A) first,the securities proposed by the Company
to be sold for it own account, and
(B) second, any Restricted Securities requested
to be included in such registration and any other securities of the Company in
accordance with the priorities, if and then existing among the holders of such
securities pro rata among the holders thereof requesting such registration on
the basis of the number of shares of such securities requested to be included by
such holders.
(iv) The Company shall not be obligated to include
Restricted Securities in more than one (1) Company Registration Statement.
(c) To the extent Holder's Restricted Securities are intended
to be included in a Company Registration Statement, Holder may include any of
its Restricted Securities in such Company Registration Statement pursuant to
this Agreement only if Holder furnishes to the Company in writing, within ten
(10) business days after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Act or such other information
as the Company may reasonably request for use in connection with the Company
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to the NASD. Holder as to which the Company Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make all information previously
furnished to the Company by Holder not materially misleading.
10. Antidilution Provision.
The applicable Exercise Price in effect from time to time
shall be, subject to adjustment in accordance with the provisions of this
Section 11.
(a) Adjustments for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the date hereof, effect a
stock split of the outstanding Common Stock, the applicable Exercise Price in
effect immediately prior to the stock split shall be proportionately decreased.
If the Company shall at any time or from time to time after the date hereof,
combine the outstanding shares of Common Stock, the applicable Exercise Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section 11(a) shall be effective at the close of
business on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If
the Company shall at any time or from time after the date hereof, make or issue
or set a record date for the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the applicable Exercise Price in effect immediately
prior to such event shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the applicable Exercise Price then in effect
by a fraction;
(i) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution.
(c) Adjustments for Other Dividends and Distributions. If the
Company shall at any time or from time to time after the date hereof, make or
issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Exercise Price shall be made and provision shall be made (by
adjustments of the Exercise Price or otherwise) so that the Holder of the
warrants shall receive upon exercise thereof, in addition to the number of
shares of Common Stock receivable thereon, the number of securities of the
Company which they would have received had the warrant been exercised into
Common Stock on the date of such event and had thereafter, during the period
from the date of such event to and including the date hereof, retained such
securities (together with any distributions payable thereon during such period),
giving application to all adjustments called for during such period under this
Section 11(c) with respect to the rights of the holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon exercise of Warrant at any time
or from time to time after the date hereof shall be changed into the same or a
different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or otherwise (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections
11(a), (b) and (c), or a reorganization, merger, consolidation, or sale of
assets provided for in Section 11(e)), then, and in each event, an appropriate
revision to the applicable Exercise Price shall by made and provisions shall be
made (by adjustments of the Exercise Price of otherwise) so that the Holder of
the Warrant shall have the right thereafter to exercise such warrants into the
kind and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which such warrant might have been
exercised immediately prior to such reclassification, exchange, substitution or
other change, all subject to further adjustment as provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or
Sales of Assets. If at any time or from time to time after the date hereof there
shall be a capital reorganization of the Company (other than by way of a stock
split or combination of shares or stock dividends or distributions provided for
in Section 11(a), (b), and (c), or a reclassification, exchange or substitution
of shares provided for in Section 11(d)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the applicable Exercise Price shall be made and provision shall be made (by
adjustments of the Exercise Price or otherwise) so that the holder of The
Warrant shall have the right thereafter to exercise such warrants into the kind
and amount of shares of stock and other securities or property of the Company or
any successor corporation resulting from such reorganization, merger,
consolidation, or sale, to which a holder of Common Stock deliverable upon
exercise of such shares would have been entitled upon such reorganization,
merger, consolidation, or sale. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section 11(e) with respect
to the rights of the holders of The Warrant after the reorganization, merger,
consolidation, or sale to the end that the provisions of this Section 11(e)
(including any adjustment in the applicable Exercise Price then in effect and
the number of shares of stock or other securities deliverable upon exercise of
such warrant) shall be applied after that event in as nearly an equivalent
manner as may be practicable.
11. Laws of the State of Florida.
The Warrant shall be governed by, interpreted under and
construed in all respects in accordance with, the laws of the State of Florida,
irrespective of the place of domicile or residence of any party; provided,
however that if any provision of this Warrant is unenforceable under the laws of
the state of Florida but is enforceable under the laws of the state of Delaware,
then that provision shall be governed by, interpreted under and construed in all
respect in accordance with, the laws of the state of Delaware.
12. Entire Agreement and Modification.
The Company and the Holder hereby represent and warrant that
this Warrant Agreement and the Warrant issued hereunder are intended to and do
contain and embody all of the understandings and agreements, both written and
oral, of the parties hereto with respect to the subject matter of the warrants
granted herein, and that there exists no oral agreement or understanding,
express or implied, whereby the absolute, final and unconditional character and
nature of this Warrant Agreement or the Warrant shall be in any way invalidated,
empowered or affected. A modification or waiver of any of the terms, conditions
or provisions of this Warrant Agreement and the Warrant shall be effective only
if made in writing and executed with the same formality as these documents.
13. Controlling Document.
Notwithstanding anything contained herein, in the event of
conflict between any provision contained herein and those contained in the
Warrant, the provisions contained in this Agreement shall control.
The Warrant will become wholly void and of no effect and the
rights evidenced hereby will terminate unless exercised in accordance with the
terms and provisions hereof at or before 5:00 p.m., Eastern Time, on the
Expiration Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------
Name: Xxxxx X. XxXxxxxxx
Title Chief Financial Officer
THOMSON KERNAGHAN & COMPANY LIMITED
By: /s/ Xxxxxxxx XxXxxxxx
------------------------------
Name: Xxxxxxxx XxXxxxxx
Title: Agent
EXHIBIT A
This Warrant, and the securities issuable upon the exercise of this Warrant,
have not been registered under the Securities Act of 1933, as amended (the
"Act") or applicable state law and may not be sold, transferred or otherwise
disposed of unless registered under the Act and any applicable state act or
unless the Company receives an opinion of counsel for the holder and is
satisfied that this Warrant and the underling securities may be transferred
without registration under the Act.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
2,500,000 WARRANTS
WARRANT CERTIFICATE
This Warrant Certificate certifies that THOMSON KERNAGHAN & COMPANY
LIMITED ("THOMSON") or registered assigns, is the registered holder of Warrants
to purchase, at any time from the 19th of August, 1999, until 5:00 P.M. Eastern
Standard Time on the earlier of November 1, 2000, or the thirtieth day following
the effective date of a registration statement under the Act registering the
shares of Common Stock underlying this Warrant, whichever comes first
("Expiration Date"), up to 2,500,000 shares ("Shares") of fully-paid and
non-assessable common stock ("Common Stock"), of National Boston Medical, Inc.,
a Nevada corporation (the "Company"), at the Initial Exercise Price, subject to
adjustment in certain events, of $0.25 per Share (the "Exercise Price"), upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Warrant Agreement dated as of August 19, 1999, between the Company
and Thomson (the "Warrant Agreement"). Payment of the Exercise Price may be made
in cash, or by certified or official bank check in New York Clearing House funds
payable to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement and in compliance with the rules governing restricted securities,
without any charge except for any tax, or other governmental charge imposed in
connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: September , 1999
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------
Name: Xxxxx X. XxXxxxxxx
Title Chief Financial Officer
EXHIBIT B
This Warrant, and the securities issuable upon the exercise of this Warrant,
have not been registered under the Securities Act of 1933, as amended (the
"Act") or applicable state law and may not be sold, transferred or otherwise
disposed of unless registered under the Act and any applicable state act or
unless the Company receives an opinion of counsel for the holder and is
satisfied that this Warrant and the underling securities may be transferred
without registration under the Act.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
333,333 WARRANTS
WARRANT CERTIFICATE
This Warrant Certificate certifies that THOMSON KERNAGHAN & COMPANY LIMITED
("THOMSON") or registered assigns, is the registered holder of Warrants to
purchase, at any time from the 19th of August, 1999, until 5:00 P.M. Eastern
Standard Time on November 1, 2000 ("Expiration Date"), up to 333,333 shares
("Shares") of fully-paid and non-assessable common stock ("Common Stock"), of
National Boston Medical, Inc., a Nevada corporation (the "Company"), at the
Initial Exercise Price, subject to adjustment in certain events, of $0.30 per
Share (the "Exercise Price"), upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Warrant Agreement dated as of
August 19, 1999, between the Company and Thomson (the "Warrant Agreement").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events, the
Exercise Price and/or number of the Company's securities issuable thereupon may,
subject to certain conditions, be adjusted. In such event, the Company will, at
the, request of the holder, issue a new Warrant Certificate evidencing the
adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant Certificate at
an office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement and in compliance with the rules governing restricted securities,
without any charge except for any tax, or other governmental charge imposed in
connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated: September , 1999 NATIONAL BOSTON MEDICAL, INC.
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------
Name: Xxxxx X. XxXxxxxxx
Title Chief Financial Officer
[FORM OF EXERCISE]
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase ____________ Shares and herewith tenders
in payment for such Shares cash or a certified or official bank check payable in
New York Clearing House Funds to the order of NATIONAL BOSTON MEDICAL, INC., in
the amount of $_______________, all in accordance with the terms hereof. The
undersigned requests that a certificate for such Shares be registered in the
name of ________________________whose address is _____________________________,
and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
------------------------------------
------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby sells,
assigns and transfers unto______________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:_________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate)
-------------------------------------
-------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
