SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 1, 1998
NATIONAL HEALTH & SAFETY CORPORATION
(Exact Name of Registrant as Specified in Charter)
UTAH 0-24778 87-0505222
(State or Other Jurisdiction (Commission (IRS Employer
Of Incorporation) File Number) Identification No.)
730 LOUIS DRIVE, WARMINSTER, PENNSYLVANIA 18974
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 215-442-0926
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FORM S-8
Item 5. Other Events.
In a Schedule 13D filed on June 9, 1998 (the "Schedule 13D"),
Premium Holdings, Inc. ("Premium"), Dennis J. Hawk ("Hawk") and
Mitchell J. Stein ("Stein"), claimed the right to ownership of
18,000,000 shares of Common Stock of National Health & Safety
Corporation, a Utah corporation (the "Company"), pursuant to three
Stock Purchase Agreements entered into on or about April 20, 1998
(the "Agreements"). At the time the Schedule 13D was filed
8,000,000 shares of the Company's Common Stock had already been
issued and delivered to Premium. Premium, Hawk and Stein asserted
the right to receive an additional 10,000,000 shares which had not
yet been issued.
As reported July 13, 1998 on Form 8-K by the Company, the
Company disputed the Common Stock ownership assertions made by
Premium, Hawk and Stein, and contended that the Agreements were
unenforceable for a number of reasons. The reasons include the
alleged failure of HealthMed, Inc. ("HealthMed") to enter into a
satisfactory receivables financing agreement covering up to
$20,000,000 of Company receivables, which the Company claimed was
a condition to its obligation to deliver any shares of its Common
Stock. The Company believes HealthMed and Premium to be owned or
controlled by Stein. HealthMed, Premium, Hawk and Stein are
referred to herein as the "Stein Group."
On July 16, 1998, Premium filed an action in the Superior
Court of the State of California, County of Los Angeles (the
"California State Court"), entitled Premium Holdings, Inc. v.
National Health and Safety Corporation, el al. (Case No. BC
194301; the "Premium State Action"), against the Company and
others. The Premium State Action alleged breach of contract for
failure to deliver the remaining shares and sought damages and
injunctive relief to prevent the Company from canceling shares of
the Company's Common Stock already issued and delivered pursuant to
the Agreements. The Company had in fact already canceled the
subject shares. On July 16, 1998, the California State Court
issued a Temporary Restraining Order prohibiting the Company from
taking any further action to cancel, dilute or otherwise interfere
with the shares issued to Premium. The California State Court also
issued an Order to Show Cause why a Preliminary Injunction should
not be granted for the duration of the Premium State Action
incorporating the Temporary Restraining Order and granting
additional relief. On August 24, 1998, a hearing was held on the
Order to Show Cause, after which the California State Court denied
Premium's application for a Preliminary Injunction and dissolved
the Temporary Restraining Order.
On July 16, 1998, HealthMed also filed an action in the
California State Court, entitled HealthMed, Inc. v. National Health
and Safety Corporation, et al. (Case No. BC194405; the "HealthMed
Action"), against the Company and others. The HealthMed Action
sought damages and other relief arising out of the alleged failure
of the Company timely to repay a $250,000 loan evidenced by a
demand note in favor of HealthMed (the "HealthMed Loan"). The
Company contended that the HealthMed Loan was not yet due because,
according to the Company, it was to be repaid out of the proceeds
of the receivables financing.
On August 17, 1998, Premium filed a second action against the
Company, in the United States District Court for the Central
District of California (the "Federal Court"), entitled Premium
Holdings, Inc. v. National Health and safety Corporation, et al.
(Case No98-6720-DDP; the "Premium Federal Action"), which also
named as defendants Dr. R. Dennis Bowers (a shareholder, officer
and director of the Company), and Barton Peck and Al Simon (both
shareholders). The Premium Federal Action sought damages for
alleged securities fraud under Section 10(b) of the Securities
Exchange Act of 1934, as amended, and Rule, l0b-5 promulgated
thereunder.
Following lengthy negotiations, on September 1, 1998, the
Company entered into a written settlement agreement with the Stein
Group resolving all disputes between the Company and the Stein
Group (the "Settlement Agreement"), subject to the parties'
compliance with two sets of conditions. The Settlement Agreement
provides that upon satisfaction of the first set of conditions,
including payment by the Company of $150,000 in partial
satisfaction of the HealthMed Loan, (i) all three lawsuits (the
Premium State Action, the HealthMed Action and the Premium Federal
Action, collectively the "Litigation") would be dismissed without
prejudice; (ii) the stock certificate evidencing the 8,000,000
shares of Common Stock would be deposited in escrow; and (iii)
Stein and Hawk would immediately disclaim any position as directors
of the Company, as they had previously asserted. The Company has
already complied with all of the first set of conditions;
accordingly, the Litigation has been dismissed without prejudice by
the Courts in which The Litigation was pending, and will not be
refiled unless the Company fails to comply in a timely manner with
the second set of conditions.
The most significant of the second set of conditions is that
the Company has agreed to pay an additional $100,000 in
satisfaction of the HealthMed Loan and to pay an additional
$200,000 in consideration for the dismissal of all litigation and
releases of all claims of the Stein Group against the Company and
its shareholders, officers and directors. The $300,000 still due
is to be paid in twelve installments of $25,000 in principal plus
accrued interest, commencing on November 1, 1998. Upon payment in
full by the Company, (i) the mutual general releases given in the
Settlement Agreement will become effective; (ii) the certificate
for 8,000,000 shares of the Company's Common Stock will be returned
to the Company; (iii) the Agreements will be rescinded based upon
the parties' disagreement as to their terms; and (iv) all other
agreements between the parties will be terminated. The foregoing
is not intended to be a complete recitation of the terms of the
Settlement Agreement, which is lengthy and complex.
The Company disputed the allegations made by the Stein Group
in the Litigation and neither side admitted any wrongdoing in
connection with the Settlement Agreement. The Company believes
that the settlement is in the Company's best interests because the
payment of $200,000 in addition to the amount acknowledged to be
owing under the HealthMed Loan is probably only slightly more than
the cost of litigating the disputes. Further, the immediate
dismissal of all of the Litigation is essential to enable the
Company to pursue other avenues as an alternative to the proposed
relationship with the Stein Group.
As a result of the Settlement, the Stein Group will relinquish
any claim to be shareholders of the Company, effective upon
satisfaction of both sets of conditions. The Company believes that
the Stein Group will not be obligated to file a Schedule 13D to
reflect the rescission of the Agreements by which they were to
acquire 18,000,000 shares of the Company's Common Stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: October 9, 1998 NATIONAL HEALTH & SAFETY CORPORATION
By: /S/ R. Dennis Bowers
(Signature)
R. Dennis Bowers, President
