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Exhibit 10.82
THIS WARRANT AND SHARES ISSUABLE ON EXERCISE OF THIS WARRANT MAY NOT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
WARRANT
No. W-2 Exercisable Only On or after
March 15, 1997 and
Before November 14, 2006
NEXTHEALTH, INC.
This certifies that, for value received, AP NH LLC, a Delaware
limited liability company, or its registered assigns, is entitled to subscribe
for and purchase, at any time and from time to time during the Effective Period,
a number of shares of duly authorized, validly issued, fully paid and
non-assessable Common Stock, including fractional shares, equal to the Initial
Number of Shares at an initial exercise price of $1.50 per share, subject to
adjustment as hereinafter provided, upon the terms and subject to the conditions
hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation after the date hereof other than (i)
Common Stock issued to AP NH LLC or any Person controlling, controlled by or
under common control with it, (iii) Common Stock issued upon conversion of the
Corporation's Series A Preferred Stock or Series B Preferred Stock initially
issued on or about the date hereof, and (ii) Common Stock issued upon exercise
of options granted prior to the date hereof pursuant to the Corporation's
Employee Stock Option Plan and Non-Employee Director Stock Option Plan.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in New York, New York are required
by law to close.
"Common Stock" shall mean the Corporation's Common Stock, par
value $0.01 per share, and, in the case of a reclassification, recapitalization
or other similar change in such Common Stock or in the case of a consolidation
or merger of the Corporation with or into
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another Person, such consideration to which a holder of a share of Common Stock
would have been entitled upon the occurrence of such event.
"Common Stock Equivalent" shall mean any Convertible Security
or warrant, option or other right to subscribe for or purchase any shares of
Common Stock or any Convertible Security.
"Convertible Securities" shall mean evidences of indebtedness,
shares of Stock or other securities which are or may be at any time convertible
into or exchangeable for shares of Common Stock, including without limitation
any shares of the Corporation's preferred stock which are convertible into or
exchangeable for shares of Common Stock. The term "Convertible Security" shall
mean one of the Convertible Securities.
"Corporation" shall mean NextHealth, Inc., a Delaware
corporation, and its successors and assigns.
"Effective Period" shall mean the period beginning on March
15, 1997 at 9:00 a.m. Pacific/Mountain Standard Time and ending on November 12,
2006 at 5:00 p.m. Pacific/Mountain Standard Time.
"Exercise Date" shall mean the date on which an exercising
Holder has submitted to the Corporation this Warrant and the subscription form
attached hereto as Exhibit A and, if applicable, has paid the exercise price as
required by Section 3.3.1 hereof.
"Fair Market Value" of a share of Common Stock as of any date
shall mean, as of any date, the average of the closing prices of Common Stock
for the twenty (20) consecutive Trading Days next preceding the date five (5)
days prior to the date in question. The closing price for each day shall be:
(i) the average of the closing sale price or, in the
absence of a closing sale price, the highest bid and
lowest asked prices of one share of Common Stock
quoted in the NASDAQ National Market System or any
similar system of automated dissemination of
quotations of securities prices then in common use,
if so quoted; or
(ii) if not quoted as described in clause (i), the average
of the highest bid and lowest offered quotations for
one share of Common Stock as reported by the National
Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and offered
quotations for Common Stock on at least five (5) of
the twenty (20) consecutive Trading Days next
preceding the date five (5) days prior to the date in
question; or
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(iii) if the Common Stock is listed or admitted for trading
on any national securities exchange, the last sale
price, or the closing bid price if no sale occurred,
of one share of Common Stock on the principal
securities exchange on which the Common Stock is
listed or admitted for trading.
If none of the conditions set forth above is met, the closing price of one share
of Common Stock on any day or the average of such closing prices for any period
shall be the Fair Market Value of Common Stock for such day or period as
determined by a member firm of the New York Stock Exchange selected by the
Corporation and approved by the Holder. If the Corporation and the Holder are
unable to agree on the selection of a member firm, then the issue of selection
of a member firm shall be submitted to the American Arbitration Association.
"Holder" shall mean AP NH LLC, as the original registered
holder of this Warrant, and any registered transferee of a Holder.
"Initial Number of Shares" shall initially mean Five Hundred
Thousand (500,000) shares of Common Stock and thereafter such number of shares
of Common Stock as shall result from the adjustments specified in Section 5
hereof.
"Person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization, limited liability company,
limited liability partnership, government organization or agency or political
subdivision thereof, association, sole proprietorship or any other form of
entity not specifically listed herein.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute then in effect.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Subsidiary" shall mean any corporation at least 50% of whose
outstanding capital stock shall at the time be owned directly or indirectly by
the Corporation or by one or more Subsidiaries or by the Corporation and one or
more Subsidiaries.
"Trading Day" shall mean, with respect to the Common Stock:
(i) if the Common Stock is quoted on the NASDAQ National Market System, any
similar system of automated dissemination or quotations of securities prices, or
the National Quotation Bureau Incorporated, each day on which quotations may be
made on such system; or (ii) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business; or (iii) if shares of the Common Stock
are not quoted on any system or listed or admitted for trading on any securities
exchange, a Business Day.
"Warrant" shall mean this Warrant.
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"Warrant Price" shall initially mean $1.50 per share of Common
Stock and thereafter such other prices as shall result from the adjustments
specified in Section 5 hereof.
"Warrant Spread" as of any date shall mean the difference
between (i) the Fair Market Value of a share of Common Stock as of that date and
(ii) the Warrant Price.
2. DURATION. The right to exercise this Warrant to subscribe for
and purchase shares of Common Stock represented hereby shall commence on date
hereof and shall expire at the end of the Effective Period.
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE.
3.1 The purchase right represented by this Warrant may be
exercised at any time during the Effective Period.
3.2 The Holder hereof may exercise this Warrant, in whole
or in part, by delivery to the Corporation at its office at 0000 Xxxxx Xxxx xxx
Xxx Xxxxxxx, Xxxxxx, Xxxxxxx 00000, Attention: Chief Executive Officer (or such
other address as the Corporation may specify to Holder from time to time), of
(i) a written notice of Holder's election to exercise this Warrant, which notice
shall specify the number of shares of Common Stock to be purchased, (ii) payment
of the Warrant Price in the manner provided in Section 3.3 and (iii) this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. In the event of any exercise of the rights represented by
this Warrant, (i) certificates for the shares of Common Stock so purchased shall
be dated the date of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding 15 days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the Holder of the shares of Common
Stock so purchased as of the date of such exercise, and (ii) unless this Warrant
has expired, a new Warrant representing the number of shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof within such time. Any such warrant shall be dated
the date hereof and shall be identical with this Warrant except as to the number
of shares of Common Stock issuable pursuant thereto.
3.3 Subject to the provisions of this Warrant, this
Warrant may be exercised in the manner set forth in either Section 3.3.1 or
Section 3.3.2 below:
3.3.1 Upon presentation to the Corporation at the
office specified in Section 3.2 of this Warrant with the subscription form
appearing at the end of this Warrant as Exhibit A duly completed, indicating a
cash exercise and signed by the Holder, and upon payment of an amount equal to
the product of the Warrant Price and the number of shares of Common Stock to be
purchased, by, at the option of Holder, (i) wire transfer to an account in a
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bank located in the United States designated for such purpose by the Corporation
or (ii) certified or official bank check, the Corporation shall issue and cause
to be delivered to or upon the written order of the Holder and in such name or
names as Holder may designate, a certificate for the shares of Common Stock
issued upon such exercise.
3.3.2 Upon presentation to the Corporation at the
office specified in Section 3.2 of this Warrant with the subscription form
appearing at the end of this Warrant as Exhibit A duly completed, indicating a
non-cash exercise and signed by the Holder, the Corporation shall issue and
cause to be delivered to or upon the written order of the Holder and in such
name or names as Holder may designate, a certificate for a number of shares of
Common Stock equal to the result of dividing (i) the product of (A) the number
of shares of Common Stock for which this Warrant may be exercised and (B) the
Warrant Spread on the Exercise Date, by (ii) the Fair Market Value of a share of
Common Stock on the Exercise Date.
3.4 Subject to compliance with Section 7 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with Section 7 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for warrants for the purchase of
the same aggregate number of shares of Common Stock, each new warrant to
represent the right to purchase such number of shares of Common Stock as the
Holder hereof shall designate at the time of such exchange. All warrants issued
on transfers or exchanges shall be dated the date hereof and shall be identical
with this Warrant except as to the number of shares of Common Stock issuable
pursuant hereto.
3.5 The Corporation will, at its own expense, from time to
time take all action which may be necessary to obtain and keep effective any and
all permits, consents, orders and approvals of governmental agencies and
authorities which are or become required or necessary so that any Common Stock,
immediately upon its issuance upon the exercise of this Warrant, will be listed
on each securities exchange or listing or quotation services, if any, on which
Common Stock of the Corporation is then listed.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
4.1 The Corporation covenants and agrees that all shares
of Common Stock which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be fully paid and non-assessable and free
from all taxes, liens and charges with respect to issuance. The Corporation
further covenants and agrees that during the Exercise Period, the Corporation
will at all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant. If the
Warrant Price is at any time less than the par value of the Common Stock, the
Corporation also covenants and agrees to cause to be
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taken such action (whether by decreasing the par value of the Common Stock, the
conversion of the Common Stock from par value to no par value, or otherwise) as
will permit the exercise of this Warrant and the issuance of the Common Stock
without any additional payment by the Holder hereof (other than payment of the
Warrant Price and applicable transfer taxes, if any), which Common Stock, upon
such issuance, will be fully paid and non-assessable.
4.2 The Corporation shall not by any action, including,
without limitation, amending 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation will (a) not increase the par value of any
shares of Common Stock above the amount payable therefor upon the exercise of
this Warrant immediately prior to such increase in par value and (b) take all
such action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable upon the exercise of this Warrant and the
amount of the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events as follows:
5.1 RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION OR MERGER. In case of any recapitalization or reorganization of
the Corporation or any reclassification or change of outstanding Stock issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value or as a result of a
subdivision of combination), or in case of any consolidation or merger of the
Corporation with or into another corporation (other than a merger with another
corporation in which the Corporation is the surviving corporation and which does
not result in any reclassification or change (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) of outstanding Stock issuable upon
exercise of this Warrant), the Holder of this Warrant shall be entitled to
receive, upon exercise of this Warrant, the kind and the highest amount of
shares of Stock, other securities, money and property receivable upon such
recapitalization, reorganization, reclassification, change, consolidation or
merger by a Holder of one share of Common Stock as if this Warrant had been
exercised immediately prior to such recapitalization, reorganization,
reclassification, change, consolidation or merger. The provisions of this
Section 5.1 shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, changes, consolidations and mergers.
5.2 SUBDIVISION OR COMBINATION OF SHARES. If the
Corporation, at any time while this Warrant is outstanding, shall subdivide or
combine any class or classes of its Common
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Stock, the Warrant Price shall be proportionately reduced, in case of
subdivision of shares, to reflect the increase in the total number of shares of
Common Stock outstanding as a result of such subdivision, as at the effective
date of such subdivision, or if the Corporation shall take a record of holders
of any class or classes of its Common Stock for the purpose of so subdividing,
as at the applicable record date, whichever is earlier, or shall be
proportionately increased, in the case of combination of shares, to reflect the
reduction in the total number of shares of Common Stock outstanding as a result
of such combination, as at the effective date of such combination or, if the
Corporation shall take a record of holders of any class or classes of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier.
5.3 STOCK DIVIDENDS. If the Corporation, at any time
while this Warrant is outstanding, shall pay a dividend in, or make any other
distribution of, Common Stock, the Warrant Price shall be adjusted, as at the
date the Corporation shall take a record of the holders of such class or classes
of Common Stock, for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment on
other distribution), to that price determined by multiplying the Warrant Price
in effect immediately prior to the record date (or if no such record is taken,
then immediately prior to such payment or other distribution), by a fraction (i)
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (plus in the event
that the Corporation paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Corporation issued fractional
shares in connection with said dividends).
5.4 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If the
Corporation, at any time while this Warrant is outstanding, shall issue any
Additional Shares of Common Stock (otherwise than as provided in the foregoing
Sections 5.1 through 5.3), at a price per share less than the Warrant Price or
without consideration, then the Warrant Price upon each such issuance shall be
adjusted to that issuance price. The provisions of this Section 5.4 shall not
apply under any of the circumstances for which an adjustment is provided in
Sections 5.1, 5.2 or 5.3. No adjustment of the Warrant Price shall be made under
this Section 5.4 upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to any Common Stock Equivalent if upon the issuance of
such Common Stock Equivalent (a) any adjustment shall have been made pursuant to
Section 5.5 or (b) no adjustment was required pursuant to Section 5.5.
5.5 ISSUANCE OF COMMON STOCK EQUIVALENTS. If the
Corporation shall, at any time while this Warrant is outstanding, issue any
Common Stock Equivalent, and the price per share for which Additional Shares of
Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent
shall be less than the current Warrant Price then in effect, or if, after any
such issuance of Common Stock Equivalents, the price per share for which
Additional Shares of Common Stock may be issuable thereafter is amended, and
such price as so amended shall be less than the current Warrant Price in effect
at the time of such amendment, then the Warrant Price upon each such issuance or
amendment shall be adjusted as provided in the first
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sentence of Section 5.4 on the basis that Additional Shares of Common Stock
issuable pursuant to such Common Stock Equivalents shall be deemed to have been
issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (a) the date on which the Corporation shall enter into a firm contract for
the issuance of such Common Stock Equivalent, or (b) the date of actual issuance
of such Common Stock Equivalent. No adjustment of the Warrant Price shall be
made under this Section 5.5 upon the issuance of any Convertible Security which
is issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any adjustment shall previously have been made in
the Warrant Price then in effect upon the issuance of such warrants or other
rights pursuant to this Section 5.5.
5.6 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION 5. The following provisions shall be applicable to the making of
adjustments in the Warrant Price hereinbefore provided in this Section 5:
5.6.1 COMPUTATION OF CONSIDERATION. The consideration
received by the Corporation shall be deemed to be the following: to the extent
that any Additional Shares of Common Stock or any Common Stock Equivalents shall
be issued for a cash consideration, the consideration received by the
Corporation therefor; or, if such Additional Shares of Common Stock or Common
Stock Equivalents are offered by the Corporation for subscription, the
subscription price; or, if such Additional Shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price, in any such
case excluding any amounts paid or receivable for accrued interest or accrued
dividends and without deduction of any compensation, discounts, commissions, or
expenses paid or incurred by the Corporation for or in connection with the
underwriting thereof or otherwise in connection with the issue thereof. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
Common Stock Equivalents shall be the consideration received by the Corporation
for issuing such Common Stock Equivalents, plus the additional consideration
payable to the Corporation upon the exercise, conversion or exchange of such
Common Stock Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or satisfaction of
any dividend upon any class of Stock other than Common Stock, the Corporation
shall be deemed to have received for such Additional Shares of Common Stock or
Common Stock Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be received or paid
shall be other than cash, the Board of Directors of the Corporation shall
determine in good faith the fair market value of such consideration and promptly
notify the Holder of its determination of the fair market value of such
consideration prior to payment or accepting receipt thereof. If, within thirty
(30) days after receipt of said notice, the Holder shall notify the Board of
Directors of the Corporation in writing of its objection to such determination,
a determination of fair market value of such consideration shall be made by an
appraiser selected by the Corporation and approved by the Holder. If the
Corporation and the Holder are unable to agree on the selection of an appraiser,
the issue of selection of an appraiser shall be submitted to the American
Arbitration Association.
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5.6.2 READJUSTMENT OF WARRANT PRICE. Upon the
expiration of the right to convert, exchange or exercise any Common Stock
Equivalent the issuance of which effected an adjustment in the Warrant Price, if
such Common Stock Equivalent shall not have been converted, exercised or
exchanged, the number of shares of Common Stock deemed to be issued and
outstanding by reason of the fact that they were issuable upon conversion,
exchange or exercise of any such Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant Price shall forthwith be readjusted
and thereafter be the price which it would have been (but reflecting any other
adjustments in the Warrant Price made pursuant to the provisions of this Section
5 after the issuance of such Common Stock Equivalent) had the adjustment of the
Warrant Price been made in accordance with the issuance or sale of the number of
Additional Shares of Common Stock actually issued upon conversion, exchange or
issuance of such Common Stock Equivalent and thereupon only the number of
Additional Shares of Common Stock actually so issued shall be deemed to have
been issued and only the consideration actually received by the Corporation
(computed as in Section 5.6.1) shall be deemed to have been received by the
Corporation.
5.7 TREASURY SHARES. In making any adjustments in the Warrant
Price hereinbefore provided in this Section 5, the number of shares of Common
Stock at any time outstanding shall not include any shares thereof then directly
or indirectly owned or held by or for the account of the Corporation or any of
its Subsidiaries.
5.8 OTHER ACTION AFFECTING COMMON STOCK. In case after the date
hereof the Corporation shall take any action affecting its Common Stock, other
than an action described in any of the foregoing Sections 5.1 through 5.6,
inclusive, and the failure to make any adjustment would not fairly protect the
purchase rights represented by this Warrant in accordance with the essential
intent and principals of this Section 5, then the Warrant Price shall be
adjusted in such manner as the Board of Directors of the Corporation shall in
good faith determine to be equitable in the circumstances.
5.9 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price pursuant to any provision of this Section 5, the number of shares
of Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of such shares
purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter. If the Corporation shall be in default under any
provision contained in the last sentence of Section 4.2 of this Warrant so that
such shares, upon issuance, would not be validly issued under applicable law at
the Warrant Price adjusted in accordance with this Section 5, the adjustment of
shares provided in the foregoing sentence shall nonetheless be made and the
Holder of this Warrant shall be entitled to purchase such greater number of
shares at the lowest price at which such shares may be validly issued under
applicable law. Such exercise shall not constitute a
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waiver of any claim arising against the Corporation by reason of its default
under Section 4.2 of this Warrant.
6. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or number of
shares of Common Stock purchasable upon exercise of this Warrant shall be
adjusted pursuant to Section 5 hereof, the Corporation shall cause the
independent accounting firm then regularly engaged by it to report on its
financial statements to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the Corporation made
any determination hereunder), and the Warrant Price and number of shares of
Common Stock purchasable hereunder after giving effect to such adjustment, and
shall cause copies of such certificate to be mailed (by first class mail postage
prepaid) to the Holder of this Warrant promptly after each adjustment.
7. RESTRICTIONS ON TRANSFERABILITY. The Warrant and the Common
Stock issued upon exercise of the Warrant shall not be transferred, hypothecated
or assigned before satisfaction of the conditions specified in this Section 7
(unless transferred or assigned pursuant to Section 8), which conditions are
intended to ensure compliance with the provisions of the Securities Act and
state securities or "blue sky" laws with respect to the transfer, hypothecation
or assignment of any Warrant or Common Stock issued upon exercise of any
Warrant. Holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this Section 7.
Prior to any transfer, hypothecation or assignment or
attempted transfer, hypothecation or assignment of the Warrant or any Common
Stock issued upon exercise of the Warrant, the Holder of such Warrant or Common
Stock shall give ten (10) days prior written notice (a "Transfer Notice") to the
Corporation of such Holder's intention to effect such transfer, hypothecation or
assignment, describing the manner and circumstances of the proposed transfer,
hypothecation or assignment, and provide the Corporation with a written opinion
of counsel addressed to the Corporation that the proposed transfer,
hypothecation or assignment of the Warrant or such Common Stock may be effected
without registration under the Securities Act and applicable state securities or
"blue sky" laws. After receipt of the Transfer Notice and written opinion, the
Corporation shall, within five (5) days thereof, so notify the Holder of the
Warrant or such Common Stock in writing and such Holder shall thereupon be
entitled to transfer, hypothecate or assign the Warrant or Common Stock, in
accordance with the terms of the Transfer Notice. The Holder of the Warrant or
such Common Stock, as the case may be, giving the Transfer Notice shall not be
entitled to transfer the Warrant or such Common Stock until receipt of notice
from the Corporation under this Section 7.2.
8. REGISTRATION RIGHTS. The Holder of this Warrant shall be
entitled to the rights, privileges and benefits set forth in the Registration
and Pre-Emptive Rights Agreement dated as of the date hereof between the initial
Holder of this Warrant and the Corporation.
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9. AMENDMENT AND WAIVER. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
11. REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement or bond reasonably satisfactory in form and amount to the Corporation
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Corporation, at its expense, will execute and deliver in lieu of this
Warrant, a new warrant of like tenor.
12. SPECIFIC PERFORMANCE. The Holder shall have the right to
specific performance by the Corporation of the provisions of this Warrant. The
Corporation hereby irrevocably waives, to the extent that it may do so under
applicable law, any defense based on the adequacy of a remedy at law which may
be asserted as a bar to the remedy of specific performance in any action brought
against the Corporation for specific performance of this Warrant by the Holder.
Dated: November 14, 1996 NEXTHEALTH, INC.
ATTEST: BY: /S/ XXXXXXX X X'XXXXXXX, XX
-----------------------------
NAME: XXXXXXX X X'XXXXXXX, XX
TITLE: PRESIDENT
/S/ XXXXXX X XXXXX
SECRETARY
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
CASH EXERCISE METHOD
The undersigned registered owner of the attached Warrant
irrevocably exercises, by the Cash Exercise Method in accordance with Section
3.3.1 of the Warrant, the attached Warrant for the purchase of ________ shares
of Common Stock, $0.01 par value, of NextHealth, Inc. and herewith makes payment
therefor, to the order of the Corporation in the amount of $_________________ as
payment of the Exercise Price in accordance with the terms set forth in Section
3.3.1.
NON-CASH EXERCISE METHOD
The undersigned registered owner of the attached Warrant
irrevocably exercises, by the Non-cash Exercise Method in accordance with
Section 3.3.2 of the Warrant, the attached Warrant for the purchase of _______
shares of Common Stock, $0.01 par value, of NextHealth, Inc., calculated as
follows:
(a) Number of shares of Common Stock for which the
Warrant may be exercised: _____________________
(b) The Warrant Spread on the Exercise Date:
__________________
(c) The Fair Market Value of a share of Common Stock on
the Exercise Date: _____________________________
(d) Number of shares of Common Stock to be purchased
(line (a) times line (b) divided by line (c)):
_________________________________
ISSUANCE INSTRUCTIONS
The undersigned requests that a certificate for such Common
Stock be registered in the name of __________________________________________
whose address is ____________________________________________________________
and that such certificate be delivered to ___________________________________
whose address is ____________________________________________________________.
If such number of shares of Common Stock is less than all of the shares of
Common Stock which may
13
be purchased upon the exercise of the Warrant, the undersigned hereby requests
that a new Warrant representing the remaining balance of this Warrant be
registered in the name of
___________________________________________________________ whose address is
___________________________________________________________ and that such
Warrant be delivered to _______________________________________ whose address is
__________________________________________.
________________________________
Name of Registered Owner
________________________________
Signature of Registered Owner
________________________________
________________________________
Address
________________________________
Federal ID Number
