Exhibit 10.09
THIS WARRANT AND THE SHARES OF NON-VOTING COMMON STOCK PURCHASABLE HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
WARRANT AND THE SHARES OF NON-VOTING COMMON STOCK PURCHASABLE HEREUNDER ARE
SUBJECT TO AND HAVE THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF
JULY 15, 1998, AS AMENDED ON THE DATE HEREOF AND AS THE SAME MAY BE AMENDED FROM
TIME TO TIME, AMONG VISTACARE, INC. AND THE STOCKHOLDERS AND WARRANTHOLDERS
LISTED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH IS ON FILE WITH
VISTACARE, INC.
Dated: July 14, 1999
WARRANT
TO PURCHASE 840,000 SHARES OF NON-VOTING COMMON STOCK OF
VISTACARE, INC.
EXPIRING MARCH 30, 2008
THIS IS TO CERTIFY THAT, for value received, NATIONSCREDIT
COMMERCIAL CORPORATION or registered assigns ("HOLDER") is entitled to purchase
from VISTACARE, INC., a Delaware corporation (the "COMPANY"), at any time or
from time to time after 9:00 a.m., New York City time, on the date hereof and
prior to 5:00 p.m., New York City time, on the earlier of March 30, 2008, and
the Business Day preceding the date of redemption of this Warrant, at the place
where the Warrant Agency is located, at the Exercise Price, 840,000 shares of
Class B Common Stock, par value $.01 per share (the "NON-VOTING COMMON STOCK")
of the Company, all subject to adjustment and upon the terms and conditions
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described.
This Warrant is being issued, in part, in complete and full
exchange for that certain Warrant for 280,000 shares of Non-Voting Common Stock
of the Company, which was issued on July 15, 1998 in connection with the initial
closing of the Credit Agreement referred to below (the "ORIGINAL WARRANT") and
is one of one or more warrants (the "WARRANTS") of the same form and having the
same terms as this Warrant, entitling the holders initially to purchase up to an
aggregate of 840,000 shares of Non-Voting Common Stock without taking into
account any adjustment, pursuant to Section 1.6 hereof. The Warrants have been
issued pursuant to the Credit Agreement dated as of March 30, 1998 (as amended
and restated by that certain Amended and Restated Credit Agreement dated as of
July 15, 1998, as further amended by that certain First Amendment to Amended and
Restated Credit Agreement and Waiver dated as of the date
hereof, and as amended hereafter from time to time, the "CREDIT AGREEMENT")
among Vista Hospice Care, Inc., a Delaware corporation which is a wholly-owned
subsidiary of the Company (the "BORROWER"), the Lenders listed on the signature
pages thereof and NationsCredit Commercial Corporation ("NATIONSCREDIT"), as
Agent, and the Holder is entitled to certain benefits as set forth therein and
to certain benefits described in the Warrantholders Rights Agreement. The
Company shall keep a copy of the Credit Agreement and the Warrantholders Rights
Agreement, and any amendments thereto, at the Warrant Agency and shall furnish,
without charge, copies thereof to the Holder upon request.
Certain terms used in this Warrant are defined in Article VI.
ARTICLE I
EXERCISE OF WARRANTS
1.1. METHOD OF EXERCISE. To exercise this Warrant in whole or
in part, the Holder shall deliver on any Business Day to the Company, at the
Warrant Agency, (a) this Warrant, (b) a written notice of such Holder's election
to exercise this Warrant, which notice shall specify the number of shares of
Non-Voting Common Stock to be purchased (which shall be a whole number of shares
if for less than all the shares then issuable hereunder), the denominations of
the share certificate or certificates desired and the name or names in which
such certificates are to be registered, and (c) payment of the Exercise Price
with respect to such shares. Such payment may be made, at the option of the
Holder, either (a) by cash, certified or bank cashier's check or wire transfer
in an amount equal to the product of (i) the Exercise Price times (ii) the
number of Warrant Shares as to which this Warrant is being exercised or (b) by
receiving from the Company the number of Warrant Shares equal to (i) the number
of Warrant Shares as to which this Warrant is being exercised minus (ii) the
number of Warrant Shares having a value, based on the Closing Price on the
trading day immediately prior to the date of such exercise, equal to the product
of (x) the Exercise Price times (y) the number of Warrant Shares as to which
this Warrant is being exercised.
The Company shall, as promptly as practicable and in any event
within seven days after receipt of such notice and payment, execute and deliver
or cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of shares of
Non-Voting Common Stock specified in said notice together with cash in lieu of
any fractions of a share as provided in Section 1.3. The share certificate or
certificates so delivered shall be in such denominations as may be specified in
such notice, and shall be issued in the name of the Holder or such other name or
names as shall be designated in such notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and such Holder or any other Person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
shares, as of the date the aforementioned notice and payment is received by the
Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of such certificate or certificates, deliver to
the Holder a new Warrant evidencing the rights to purchase the remaining shares
of Non-Voting Common Stock called for by this Warrant, which new Warrant shall
in all
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other respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned to
the Holder. The Company shall pay all expenses, taxes and other charges payable
in connection with the preparation, issuance and delivery of share certificates
and new Warrants, except that, if share certificates or new Warrants shall be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall
be paid by the Holder at the time of delivery of the aforementioned notice of
exercise or promptly upon receipt of a written request of the Company for
payment.
1.2. SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of
Non-Voting Common Stock issued upon the exercise of this Warrant and all shares
of Voting Common Stock issued upon the conversion of such Non-Voting Common
Stock shall be validly issued, fully paid and nonassessable and, if such class
of Common Stock is then listed on any national securities exchange (as defined
in the Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted
thereon, as the case may be.
1.3. NO FRACTIONAL SHARES REQUIRED TO BE ISSUED. The Company
shall not be required to issue fractions of shares of Non-Voting Common Stock
upon exercise of this Warrant. If any fraction of a share would, but for this
Section, be issuable upon final exercise of this Warrant, in lieu of such
fractional share the Company shall pay to the Holder, in cash, an amount equal
to the same fraction of the Fair Market Value of the Company per share of
outstanding Common Stock on the Business Day immediately prior to the date of
such exercise.
1.4. SHARE LEGEND. Each certificate for shares of Non-Voting
Common Stock issued upon exercise of this Warrant, unless at the time of
exercise such shares are registered under the Securities Act, shall bear the
following legend:
"This security has not been registered under the Securities Act of 1933
and may not be sold or offered for sale unless registered under said Act and any
applicable state securities laws or unless an exemption from such registration
is available. This security is also subject to and has the benefit of a
Warrantholders Rights Agreement dated as of July 15, 1998, as amended on the
date hereof and as the same may be amended from time to time, among VistaCare,
Inc. and the Stockholders and Warrantholders listed on the signature pages
thereof, copies of which are on file with VistaCare, Inc."
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public offering pursuant to a registration statement under the
Securities Act) shall also bear such legend unless, in the opinion of counsel
selected by the holder of such certificate (who may be an employee of such
holder) and reasonably acceptable to the Company, the securities represented
thereby need no longer be subject to restrictions on resale under the Securities
Act.
1.5. RESERVATION; AUTHORIZATION; CAPITALIZATION. The Company
has duly reserved, and will keep available for issuance upon exercise of the
Warrants, the total number of Warrant Shares deliverable from time to time upon
exercise of all Warrants from time to time
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outstanding and the total number of shares of Voting Common Stock deliverable
upon conversion of such Warrant Shares to Voting Common Stock. The Company will
not take any actions during the term of this Warrant that would result in any
adjustment of the number of shares of Common Stock issuable upon the exercise of
the Warrant if (i) the total number of shares of Common Stock issuable after
such action upon exercise of this Warrant, (ii) all shares of Common Stock
issued and outstanding and (iii) all shares then issuable (x) upon the exercise
of all Options and (y) upon the conversion or exchange of all Convertible
Securities, would exceed the total number of shares of Common Stock then
authorized for issuance by the Company. The Company will not change the
Non-Voting Common Stock from par value $.01 per share to any higher par value
which exceeds the Exercise Price then in effect, and will reduce the par value
of the Non-Voting Common Stock upon any event described in Article IV that
provides for an increase in the number of shares of Non-Voting Common Stock
subject to purchase upon exercise of this Warrant, in inverse proportion to and
effective at the same time as such number of shares is increased. As of the date
of this Warrant, and after giving effect hereto and the events to occur on such
date, the Company had outstanding (i) 9,454,606 shares of Voting Common Stock,
(ii) 0 shares of Non-Voting Common Stock, (iii) options and warrants to acquire
an additional 1,695,000 shares of Voting Common Stock and an additional 840,000
shares of Non-Voting Common Stock, (iv) 375,000 shares of Series A-1 Preferred
Stock, (v) 29,500 shares of Series A-2 Preferred Stock, (vi) 485,000 shares of
Series B Convertible Preferred Stock, (vii) 402,500 shares of Series C
Convertible Preferred Stock, and (viii) no other shares of capital stock or any
securities convertible into or exchangeable for shares of capital stock or any
rights, options or warrants to purchase any shares of capital stock or any
securities convertible into or exchangeable for shares of capital stock. Neither
the issuance of this Warrant nor the issuance of Warrant Shares upon exercise of
this Warrant violates or conflicts with the Company's certificate of
incorporation or bylaws or any agreement to which the Company is a party.
1.6. REDUCTION OF WARRANT SHARES. In the event that for the
fiscal quarter ended December 31, 1999, the ratio of Consolidated Total Debt to
EBITDA as determined pursuant to Section 6.16 of the Credit Agreement shall be
less than or equal to 7.25:1.00, and no Default or Event of Default shall have
occurred on or after the date hereof and through the date that the financial
statements for such quarter are delivered, the number of Warrant Shares issuable
hereunder shall be reduced to 560,000, and if such ratio for such quarter shall
be less than 4.00:1.00 and no Default or Event of Default shall have occurred on
or after the date hereof and through the date that the financial statements for
such quarter are delivered, such number of Warrant Shares shall be reduced to
500,000.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1. WARRANT AGENCY. As long as any of the Warrants remain
outstanding, the Company shall perform the obligations of and be the warrant
agency with respect to the
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Warrants (the "WARRANT AGENCY") at the Borrower's address set forth in Section
10.03 of the Credit Agreement or at such other address as the Company shall
specify by notice to all Warrantholders.
2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until due presentment of this Warrant for registration of
transfer as provided in this Article II.
2.3. TRANSFER OF WARRANT. The Company agrees to maintain at
the Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant Agency,
together with a written assignment of this Warrant duly executed by the Holder
or its duly authorized agent or attorney, with (if the Holder is a natural
person) signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in the instrument of assignment
(which shall be whole numbers of shares only) and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled.
2.4. DIVISION OR COMBINATION OF WARRANTS. This Warrant may be
divided or combined with other Warrants upon presentment hereof and of any
Warrant or Warrants with which this Warrant is to be combined at the Warrant
Agency, together with a written notice specifying the names and denominations
(which shall be whole numbers of shares only) in which the new Warrant or
Warrants are to be issued, signed by the holders hereof and thereof or their
respective duly authorized agents or attorneys. Subject to compliance with
Section 2.3 as to any transfer or assignment which may be involved in the
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
2.5. LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon
receipt of evidence satisfactory to the Company of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction, upon receipt of indemnity or security
satisfactory to the Company (it being understood and agreed that if the holder
of such Warrant is NationsCredit, then a written agreement of indemnity given by
NationsCredit alone shall be satisfactory to the Company and no further security
shall be required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of
Non-Voting Common Stock.
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2.6. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1. RIGHTS AND OBLIGATIONS UNDER THE WARRANTHOLDERS RIGHTS
AGREEMENT. This Warrant is entitled to the benefits and subject to the terms of
the Warrantholders Rights Agreement dated as of July 15, 1998, among the Company
and the Stockholders and Warrantholders listed on the signature pages thereof,
as amended by that certain First Amendment to Warrantholders Rights Agreement
dated as of July 14, 1999, (as may be further amended from time to time, the
"WARRANTHOLDERS RIGHTS AGREEMENT"). The Company shall keep or cause to be kept a
copy of the Warrantholders Rights Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish, without charge, copies thereof to the Holder
upon request.
3.2. DETERMINATION OF FAIR MARKET VALUE. Subject to Section
3.3 hereof, each determination of Fair Market Value hereunder shall be made in
good faith by the Company. Upon each determination of Fair Market Value by the
Company hereunder, the Company shall promptly give notice thereof to all
Warrantholders, setting forth in reasonable detail the calculation of such Fair
Market Value and the method and basis of determination thereof (the "COMPANY
DETERMINATION").
3.3. CONTEST AND APPRAISAL RIGHTS. (a) If the holders of
Warrants entitling such holders to purchase a majority of the Non-Voting Common
Stock subject to purchase upon exercise of Warrants at the time outstanding
(exclusive of Warrants then owned by the Company or any Subsidiary (as defined
in the Credit Agreement) or Affiliate (as defined in the Credit Agreement)
thereof) (the "REQUIRED INTEREST") shall disagree with the Company Determination
and shall by notice to the Company given within 30 days after the Company's
notice of the Company Determination (an "APPRAISAL NOTICE") elect to dispute the
Company Determination, such dispute shall be resolved as set forth in subsection
(b) of this Section.
(b) The Company shall within 30 days after an Appraisal Notice
shall have been given pursuant to subsection (a) of this Section engage an
investment bank or other qualified appraisal firm acceptable to the Required
Interest (the "APPRAISER") to make an independent determination of Fair Market
Value (the "APPRAISER DETERMINATION"). The Appraiser Determination shall be
final and binding on the Company and all Warrantholders. If the Company
Determination and the Appraiser Determination differ by an amount of 15% or less
of the Company Determination, then the costs of conducting the appraisal shall
be borne equally by the Company and the Warrantholders; if the Company
Determination is greater than the Appraiser Determination by more than 15% of
the Company Determination, then the costs of conducting the appraisal shall be
borne entirely by the Warrantholders; and if the Appraiser Determination is
greater than the Company Determination by more than 15% of the Company
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Determination, then the costs of conducting the appraisal shall be borne
entirely by the Company; provided that in each case costs separately incurred by
the Company and any Warrantholders shall be separately borne by them.
3.4 FINANCIAL STATEMENTS AND OTHER INFORMATION. Promptly upon
transmission thereof, the Company will deliver to the Holder copies of any and
all financial statements, proxy statements, notices and other reports as it may
send to its public stockholders and copies of all registration statements and
all reports which it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to its functions).
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1. ADJUSTMENT GENERALLY. The Exercise Price and the number
of shares of Non-Voting Common Stock (or other securities or property) issuable
upon exercise of this Warrant shall be subject to adjustment from time to time
upon the occurrence of certain events as provided in this Article IV; provided
that notwithstanding anything to the contrary contained herein, the Exercise
Price shall not be less than the par value of the Non-Voting Common Stock, as
such par value is reduced from time to time in accordance with Section 1.5.
4.2. COMMON STOCK REORGANIZATION. If the Company shall
subdivide its outstanding shares of Common Stock (or any class thereof) into a
greater number of shares or consolidate its outstanding shares of Common Stock
(or any class thereof) into a smaller number of shares (any such event being
called a "COMMON STOCK REORGANIZATION"), then (a) the Exercise Price shall be
adjusted, effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such
effective date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (b) the number of
shares of Non-Voting Common Stock subject to purchase upon exercise of this
Warrant shall be adjusted, effective at such time, to a number determined by
multiplying the number of shares of Non-Voting Common Stock subject to purchase
immediately before such Common Stock Reorganization by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding after giving
effect to such Common Stock Reorganization and the denominator of which shall be
the number of shares of Common Stock outstanding immediately before such Common
Stock Reorganization.
4.3. COMMON STOCK DISTRIBUTION. (a) If the Company shall
issue, sell or otherwise distribute any shares of Common Stock (other than
Excluded Shares), other than pursuant to a Common Stock Reorganization (which is
governed by Section 4.2 hereof) (any such event, including any event described
in paragraphs (b) and (c) below, being herein called a "COMMON STOCK
DISTRIBUTION"), for a consideration per share less than the Fair Market Value of
the Company per share of outstanding Common Stock on a Fully Diluted Basis on
the date of
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such Common Stock Distribution (before giving effect to such Common Stock
Distribution), then, effective upon such Common Stock Distribution, the Exercise
Price shall be reduced, if such consideration per share shall be less than such
Fair Market Value per share, to the lowest of the prices (calculated to the
nearest one-thousandth of one cent) determined as provided in clauses (i) and
(ii) below:
(i) by dividing (A) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such Common
Stock Distribution multiplied by the then existing Exercise Price, plus (2) the
consideration, if any, received by the Company upon such Common Stock
Distribution by (B) the total number of shares of Common Stock outstanding
immediately after such Common Stock Distribution; and
(ii) by multiplying the Exercise Price in effect immediately
prior to such Common Stock Distribution by a fraction, the numerator of which
shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such Common Stock Distribution multiplied by such Fair
Market Value per share on the date of such Common Stock Distribution, plus (B)
the consideration, if any, received by the Company upon such Common Stock
Distribution, and the denominator of which shall be the product of (1) the total
number of shares of Common Stock outstanding immediately after such Common Stock
Distribution multiplied by (2) such Fair Market Value per share on the date of
such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment
to the Exercise Price pursuant to the foregoing provisions of this paragraph
(a), including by operation of paragraph (b) or (c) below, then, effective at
the time such adjustment is made, the number of shares of Non-Voting Common
Stock subject to purchase upon exercise of this Warrant shall be increased to a
number determined by multiplying the number of shares of Non-Voting Common Stock
subject to purchase immediately before such Common Stock Distribution by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately after giving effect to such Common Stock Distribution
and the denominator of which shall be the sum of the number of shares
outstanding immediately before giving effect to such Common Stock Distribution
(both calculated on a Fully Diluted Basis) plus the number of shares of Common
Stock which the aggregate consideration received by the Company with respect to
such Common Stock Distribution would purchase at the Fair Market Value of the
Company per share of outstanding Common Stock on a Fully Diluted Basis on the
date of such Common Stock Distribution (before giving effect to such Common
Stock Distribution). In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
The provisions of this paragraph (a), including by operation
of paragraph (b) or (c) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Non-Voting Common Stock subject to purchase
upon exercise of this Warrant.
(b) If the Company shall issue, sell, distribute or otherwise
grant in any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or
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options for the purchase of Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (other than Excluded Shares) (such rights,
warrants or options being herein called "OPTIONS" and such convertible or
exchangeable stock or securities being herein called "CONVERTIBLE SECURITIES"),
whether or not such Options or the rights to convert or exchange any such
Convertible Securities in respect of such Options are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities in
respect of such Options (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the granting of
such Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus, in the case
of Options to acquire Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issuance or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Fair Market Value of the Company per share of outstanding Common Stock on a
Fully Diluted Basis on the date of granting such Options (before giving effect
to such grant), then, for purposes of paragraph (a) above, the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to have
been issued as of the date of granting of such Options and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraph (d) below, no additional adjustment of
the Exercise Price shall be made upon the actual exercise of such Options or
upon conversion or exchange of such Convertible Securities.
(c) If the Company shall issue, sell or otherwise distribute
(including by assumption) any Convertible Securities (other than Excluded
Shares), whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
aggregate amount received or receivable by the Company as consideration for the
issuance, sale or distribution of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Fair Market Value of the Company
per share of outstanding Common Stock on a Fully Diluted Basis on the date of
such issuance, sale or distribution (before giving effect to such issuance, sale
or distribution), then, for purposes of paragraph (a) above, the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued as of the date
of the issuance, sale or distribution of such Convertible Securities and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d) below, no
additional adjustment of the Exercise Price shall be made upon the actual
conversion or exchange of such Convertible Securities.
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(d) If (i) the purchase price provided for in any Option
referred to in paragraph (b) above or the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in paragraph (b) or (c) above or the rate at which any Convertible Securities
referred to in paragraph (b) or (c) above are convertible into or exchangeable
for Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution upon an event which results in a
related adjustment pursuant to this Article IV), or (ii) any of such Options or
Convertible Securities shall have terminated, lapsed or expired, the Exercise
Price then in effect shall forthwith be readjusted (effective only with respect
to any exercise of this Warrant after such readjustment) to the Exercise Price
which would then be in effect had the adjustment made upon the issuance, sale,
distribution or grant of such Options or Convertible Securities been made based
upon such changed purchase price, additional consideration or conversion rate,
as the case may be (in the case of any event referred to in clause (i) of this
paragraph (d)) or had such adjustment not been made (in the case of any event
referred to in clause (ii) of this paragraph (d)).
(e) If the Company shall pay a dividend or make any other
distribution upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of paragraph (a) above,
such Common Stock, Options or Convertible Securities shall be deemed to have
been issued or sold without consideration.
(f) If any shares of Common Stock, Options or Convertible
Securities shall be issued, sold or distributed for cash, the consideration
received therefor shall be deemed to be the amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities shall
be issued sold or distributed for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be deemed to be
the Fair Market Value of such consideration. If any shares of Common Stock,
Options or Convertible Securities shall be issued in connection with any merger
in which the Company is the surviving corporation, the amount of consideration
therefor shall be deemed to be the Fair Market Value of such portion of the
assets and business of the non-surviving corporation as shall be attributable to
such Common Stock, Options or Convertible Securities, as the case may be. If any
Options shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction in which
no specific consideration is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued without consideration for the
grant of such Options.
4.4. SPECIAL DIVIDENDS. If the Company shall issue or
distribute to any holder or holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or other
assets (excluding a Common Stock Reorganization or a Common Stock Distribution
and cash dividends payable solely out of earnings or earned surplus), whether or
not accompanied by a purchase, redemption or other acquisition of shares of
Common Stock (any such nonexcluded event being herein called a "SPECIAL
DIVIDEND"), (a) the Exercise Price shall be decreased, effective immediately
after the effective date of such Special Dividend, to a price determined by
multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be the Fair Market Value of the Company per share of outstanding
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Common Stock as of such effective date less any cash and the then Fair Market
Value of any evidences of indebtedness, securities or property or other assets
issued or distributed in such Special Dividend with respect to one share of
Common Stock, and the denominator of which shall be such Fair Market Value per
share and (b) the number of shares of Non-Voting Common Stock subject to
purchase upon exercise of this Warrant shall be increased to a number determined
by multiplying the number of shares of Non-Voting Common Stock subject to
purchase immediately before such Special Dividend by a fraction, the numerator
of which shall be the Exercise Price in effect immediately before such Special
Dividend and the denominator of which shall be the Exercise Price in effect
immediately after such Special Dividend. A reclassification of Common Stock
(other than a change in par value, or from par value to no par value or from no
par value to par value) into shares of Common Stock and shares of any other
class of stock shall be deemed a distribution by the Company to the holders of
such Common Stock of such shares of such other class of stock and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as part of such reclassification, a Common
Stock Reorganization.
4.5. CAPITAL REORGANIZATIONS. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger of which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a Common
Stock Reorganization) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, or any recapitalization of the Company (any such event being called a
"CAPITAL REORGANIZATION"), then, effective upon the effective date of such
Capital Reorganization, the Holder shall no longer have the right to purchase
Non-Voting Common Stock, but shall have instead the right to purchase, upon
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property (including cash) which the Holder would have owned or
have been entitled to receive pursuant to such Capital Reorganization if this
Warrant had been exercised immediately prior to the effective date of such
Capital Reorganization. As a condition to effecting any Capital Reorganization,
the Company or the successor or surviving corporation, as the case may be, shall
(a) execute and deliver to each Warrantholder and to the Warrant Agency an
agreement as to the Warrantholders' rights in accordance with this Section 4.5,
providing, to the extent of any right to purchase equity securities hereunder,
for subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Article IV and (b) provide each Regulation Y
Holder with an opinion of counsel reasonably satisfactory to such Regulation Y
Holder and such other assurances as any Regulation Y Holder may reasonably
request to the effect that the ownership and exercise by any Regulation Y Holder
of this Warrant after giving effect to such Capital Reorganization shall not be
prohibited by the BHC Act or the regulations thereunder. The provisions of this
Section 4.5 shall similarly apply to successive Capital Reorganizations.
4.6. ADJUSTMENT RULES. Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein shall
occur, except that, notwithstanding any other provision of this Article IV, no
adjustment shall be made to the number of shares of Non-Voting Common Stock to
be delivered to each Warrantholder (or to the Exercise Price) if such adjustment
represents less than 1% of the number of shares previously required to be so
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delivered, but any lesser adjustment shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to 1% or more of the number of
shares to be so delivered. No adjustment shall be made pursuant to this Article
IV in respect of the issuance from time to time of shares of Common Stock upon
the exercise of any of the Warrants. If the Company shall take a record of the
holders of its Common Stock for any purpose referred to in this Article IV, then
(i) such record date shall be deemed to be the date of the issuance, sale,
distribution or grant in question and (ii) if the Company shall legally abandon
such action prior to effecting such action, no adjustment shall be made pursuant
to this Article IV in respect of such action.
4.7. PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT. As
a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article IV, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that (a) the Company may thereafter validly and legally issue as fully
paid and nonassessable all shares of Non-Voting Common Stock which any
Warrantholder is entitled to receive upon exercise thereof and (b) the ownership
and exercise of any Warrant by any Regulation Y Holder shall not be prohibited
by the BHC Act or the regulations thereunder.
4.8. NOTICE OF ADJUSTMENT. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action which requires or might require an adjustment or readjustment pursuant to
this Article IV, the Company shall give notice to each Warrantholder of such
event, describing such event in reasonable detail and specifying the record date
or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to each
Warrantholder of such adjustment and computation promptly after such adjustment
becomes determinable.
ARTICLE V
PURCHASE, REDEMPTION AND CANCELLATION OF WARRANTS
5.1. PURCHASE OF WARRANTS BY THE COMPANY. The Company shall
have the right or obligation to purchase or otherwise acquire Warrants at such
times, in such manner and for such consideration as set forth below.
5.2. MANDATORY REDEMPTION OF WARRANTS. The Holder may (a) at
any time and from time to time on or after the fifth anniversary of the Closing
Date, (b) at any time and from time to time on or after the repayment in full of
all principal of and premium and interest on the Notes (as defined in the Credit
Agreement) and the termination of the Commitments under the Credit Agreement and
(c) on or within 30 days after the date on which the Company shall have
delivered a Refinancing Notice, by notice to the Company (any such redemption
pursuant to this clause (c), a "REFINANCING REDEMPTION"), demand a determination
of the Redemption Price (a "DETERMINATION NOTICE") for purposes of this Section
5.2. Within 30 days (or, in the case of a Refinancing Redemption, 5 days) after
the receipt of any Determination Notice from
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the Holder, the Company shall give to the Holder notice of the Redemption Price,
including a reasonably detailed description of the method of calculation
thereof, determined as of the day preceding such notice of the Redemption Price.
At any time within 30 days (or, in the case of a Refinancing Redemption, 10
days) after receipt of notice of the Redemption Price the Holder may demand
redemption of this Warrant, in whole or in part, at the Redemption Price by
notice to the Company, payable on the 20th Business Day after receipt of notice
of such demand (or, in the case of a Refinancing Redemption, on the closing date
of such refinancing) (any such date, the "REDEMPTION DUE DATE") in immediately
available funds to the Holder upon surrender of this Warrant at the Warrant
Agency or, if requested by the Holder, without surrender of this Warrant, by
wire transfer to any account in New York City specified by notice to the
Company. Thereupon, the right to purchase shares of Non-Voting Common Stock
theretofore represented by this Warrant as to which the Holder has demanded (and
the Company may effect) redemption shall terminate, and this Warrant shall
represent the right of the Holder to receive the full Redemption Price from the
Company in accordance with this Section. The Holder's right to demand redemption
of this Warrant pursuant to this Section 5.2 shall be referred to hereinafter as
the Holder's "MANDATORY REDEMPTION RIGHT".
5.3. OPTIONAL REDEMPTION. At any time and from time to time
after the later to occur of (a) the sixth anniversary of the Closing Date and
(b) the date on which all amounts outstanding under the Credit Agreement have
been paid in full and the Commitments thereunder have been terminated, the
Company shall have the right to redeem all, but not less than all, of the
outstanding Warrants at the Optional Redemption Price, determined as of the day
preceding the notice of redemption. Irrevocable notice of such right of
redemption shall be given by the Company to all Warrantholders not more than 30
days nor less than 15 days prior to the date scheduled for redemption, stating
the date and price, including a reasonably detailed description of the method of
calculation thereof, of redemption. Warrantholders may exercise Warrants until
5:00 p.m., New York City time, on the Business Day preceding the date of
redemption set forth in a valid notice of redemption, at which time the right to
purchase shares of Non-Voting Common Stock theretofore represented by this
Warrant shall terminate, and this Warrant shall represent the right of the
Holder to receive the Optional Redemption Price from the Company in immediately
available funds upon surrender of this Warrant at the Warrant Agency. If the
Optional Redemption Price shall be disputed pursuant to Section 3.3, the Company
shall pay to the affected Warrantholders on the redemption date the Optional
Redemption Price initially determined by it and shall thereafter make
supplemental payment of any increase (and the affected Warrantholder shall remit
to the Company any decrease) in the Optional Redemption Price upon resolution of
such dispute.
5.4. CANCELLATION OF WARRANTS. All Warrants purchased,
redeemed or otherwise acquired by the Company shall thereupon be canceled and
retired. The Warrant Agency shall cancel any Warrant surrendered for exercise or
registration of transfer or exchange and deliver such canceled Warrants to the
Company.
5.5. NOTICE OF REFINANCING. The Company shall give notice to
each of the Warrantholders of any intent by the Company to refinance in their
entirety the Notes (as defined in the Credit Agreement) not less than 45 days
prior to the proposed closing date of such
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refinancing, setting forth such proposed closing date and notifying each
Warrantholder of its rights under Section 5.2 (such notice, the "REFINANCING
NOTICE").
ARTICLE VI
DEFINITIONS
The following terms, as used in this Warrant, have the
following meanings:
"APPRAISAL NOTICE" has the meaning set forth in Section
3.3(a).
"APPRAISER" has the meaning set forth in Section 3.3(b).
"APPRAISER DETERMINATION" has the meaning set forth in Section
3.3(b).
"BHC ACT" means the Bank Holding Company Act of 1956, as
amended.
"BORROWER" means Vista Hospice Care, Inc., a Delaware
corporation, and its successors.
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day on which banking institutions located in New York are authorized by law
or other governmental action to be closed, unless there shall have been an
offering of Common Stock registered under the Securities Act, in which case
"Business Day" means (a) if Common Stock is listed or admitted to trading on a
national securities exchange, a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business or (b) if Common Stock is not so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"CAPITAL REORGANIZATION" has the meaning set forth in
Section 4.5.
"CLOSING DATE" has the meaning specified in the Credit
Agreement.
"CLOSING PRICE" on any day means (a) if Common Stock is listed
or admitted for trading on a national securities exchange, the reported last
sales price regular way or, if no such reported sale occurs on such day, the
average of the closing bid and asked prices regular way on such day, in each
case on the principal national securities exchange on which Common Stock is
listed or admitted to trading, or (b) if Common Stock is not listed or admitted
to trading on any national securities exchange, the average of the closing bid
and asked prices in the over-the-counter market on such day as reported by
NASDAQ or any comparable system or, if not so reported, as reported by any New
York Stock Exchange member firm selected by the Company for such purpose.
"COMMITMENT TERMINATION DATE" has the meaning specified in the
Credit Agreement.
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"COMMON STOCK" means the Voting Common Stock or the Non-Voting
Common Stock, or both, as the context may require.
"COMMON STOCK DISTRIBUTION" has the meaning set forth in
Section 4.3(a).
"COMMON STOCK REORGANIZATION" has the meaning set forth in
Section 4.2.
"COMPANY" means VistaCare, Inc., a Delaware corporation, and
its successors.
"CONVERTIBLE SECURITIES" has the meaning set forth in Section
4.3(b).
"CREDIT AGREEMENT" has the meaning set forth in the second
paragraph of this Warrant.
"DETERMINATION NOTICE" has the meaning set forth in Section
5.2.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"EXCLUDED SHARES" means (i) shares of Common Stock issued in
connection with acquisitions by the Company or its Subsidiaries permitted under
Section 6.07 of the Credit Agreement, (ii) shares of Common Stock (or options
therefor) issued to employees, officers, directors or consultants as a part of
incentive or compensation packages pursuant to a plan adopted by the Board of
Directors of the Company, provided that the number of such shares or options
issued shall not in the aggregate exceed 2,000,000 shares at any time prior to
the Commitment Termination Date, (iii) shares of Common Stock issued upon the
exercise or conversion of currently outstanding Options and Convertible
Securities (and any replacements or reissuances thereof), and (iv) shares of
Common Stock issued pursuant to any equipment leasing arrangement provided such
shares, in the aggregate, represent (on a Common Stock equivalent basis) less
than 1% of the outstanding Common Stock. "EXERCISE PRICE" means $0.01 per share
of the Non-Voting Common Stock, subject to adjustment pursuant to Article IV.
"FAIR MARKET VALUE" as at any date of determination means the
fair market value of the business or property or services in question as of such
date, as determined in good faith by the Board of Directors of the Company or
otherwise in accordance with Section 3.3 hereof. The Fair Market Value of the
Company as at any date of determination shall be the greatest of (i) the Fair
Market Value at such date of the Company and its Subsidiaries as a going
concern, (ii) the liquidation value at such date of the Company and its
Subsidiaries, or (iii) the consolidated net worth of the Company and its
Subsidiaries as shown on its latest available consolidated balance sheet of the
Company. Notwithstanding the foregoing, if, at any date of determination of the
Fair Market Value of the Company, the Common Stock shall then be publicly
traded, the Fair
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Market Value of the Company on such date shall be the Market Price on such date
multiplied by the number of shares of Common Stock then outstanding.
Determination of the Fair Market Value of the Company per share of Common Stock,
shall be made without giving effect to any discount for (i) minority interest,
(ii) any lack of liquidity of the Common Stock due to the fact that there may be
no public market for the Common Stock, or (iii) the voting status of the
Non-Voting Common Stock.
"FULLY DILUTED BASIS" means, with respect to any determination
or calculation, that such determination or calculation is performed on a fully
diluted basis determined in accordance with generally accepted accounting
principles as in effect from time to time.
"HOLDER" has the meaning set forth in the first paragraph of
this Warrant.
"COMPANY DETERMINATION" has the meaning set forth in Section
3.2(a).
"MANDATORY REDEMPTION RIGHT" has the meaning set forth in
Section 5.2.
"MARKET PRICE" as at any date of determination means the
average of the daily Closing Prices of a share of Common Stock for the shorter
of (i) the 20 consecutive Business Days ending on the most recent Business Day
prior to the Time of Determination and (ii) the period commencing on the date
next succeeding the first public announcement of the issuance, sale,
distribution, grant or exercise in question through such most recent Business
Day prior to the Time of Determination. "TIME OF DETERMINATION" means the time
and date of the earliest of (x) the determination of the stockholders entitled
to receive such issuance, sale, distribution or grant, (y) the determination of
the Holders or the Company to exercise their respective rights set forth in
Sections 5.2 or 5.3 hereof and (z) the commencement of "ex-dividend" trading in
respect thereof.
"NASD" means The National Association of Securities Dealers,
Inc.
"NASDAQ" means The National Association of Securities Dealers,
Inc. Automated Quotation System.
"NATIONSCREDIT" has the meaning set forth in the second
paragraph of this Warrant.
"NON-VOTING COMMON STOCK" has the meaning set forth in the
first paragraph of this Warrant, subject to change pursuant to Article IV.
"OPTIONAL REDEMPTION PRICE" means, as of any date of
determination, a price for each share of Non-Voting Common Stock issuable upon
exercise of the Warrants equal to 110% of the Redemption Price, determined as of
such date.
"OPTIONS" has the meaning set forth in Section 4.3(b).
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"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust or
other organization, whether or not a legal entity, and any government agency or
political subdivision thereof.
"REDEMPTION DUE DATE" has the meaning set forth in Section 5.2
hereof.
"REDEMPTION PRICE" means, as of any date of determination, a
price for each share of Non-Voting Common Stock issuable upon exercise of the
Warrants equal to the excess of (a)(i) the Fair Market Value of the Company plus
the aggregate Exercise Price of all Warrants either being redeemed or then
outstanding and not being redeemed divided by (ii) the number of shares of
Common Stock outstanding on a Fully Diluted Basis over (b) the Exercise Price
then in effect.
"REFINANCING NOTICE" has the meaning set forth in Section 5.5
hereof.
"REGULATION Y HOLDER" means the Holder or a holder of Warrant
Shares, if such Holder or holder of Warrant Shares is a bank holding company
within the meaning of the BHC Act or a subsidiary thereof subject to Regulation
Y under the BHC Act.
"REQUIRED INTEREST" has the meaning set forth in Section
3.3(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and rules and regulations of the Securities and Exchange Commission thereunder.
"SPECIAL DIVIDEND" has the meaning set forth in Section 4.4.
"SUBSIDIARY" of any Person means any corporation, partnership,
joint venture, association or other business entity of which more than 50% of
the total voting power of shares of stock or other interests therein entitled to
vote in the election of members of the board of directors, partnership
committee, board of managers or trustees or other managerial body thereof is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company and
"Subsidiaries" means all Subsidiaries of the Company.
"VOTING COMMON STOCK" means the Class A common stock, par
value $.01 per share, of the Company.
"WARRANT AGENCY" has the meaning set forth in Section 2.1.
"WARRANT SHARES" means the shares of Non-Voting Common Stock
issuable upon the exercise of the Warrants.
"WARRANTHOLDER" means a holder of a Warrant.
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"WARRANTHOLDERS RIGHTS AGREEMENT" has the meaning set forth in
Section 3.1.
"WARRANTS" has the meaning set forth in the second paragraph
of this Warrant.
All references herein to "DAYS" shall mean calendar days
unless otherwise specified.
ARTICLE VII
MISCELLANEOUS
7.1. NOTICES. Notices and other communications provided for
herein shall be in writing and may be given by mail, courier, confirmed telex or
facsimile transmission and shall, unless otherwise expressly required, be deemed
given when received or, if mailed, four Business Days after being deposited in
the United States mail with postage prepaid and properly addressed. In the case
of the Holder, such notices and communications shall be addressed to its address
as shown on the books maintained by the Warrant Agency, unless the Holder shall
notify the Warrant Agency that notices and communications should be sent to a
different address (or telex or facsimile number), in which case such notices and
communications shall be sent to the address (or telex or facsimile number)
specified by the Holder.
7.2. WAIVERS; AMENDMENTS. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on the Company in any case shall entitle the
Company to any other or future notice or demand in similar or other
circumstances. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants entitling
such holders to purchase a majority of the Non-Voting Common Stock subject to
purchase upon exercise of such Warrants at the time outstanding (exclusive of
Warrants then owned by the Company or any Subsidiary (as defined in the Credit
Agreement) or Affiliate (as defined in the Credit Agreement) thereof); provided,
however, that no such amendment, modification or waiver shall, without the
written consent of the holders of all Warrants at the time outstanding, (a)
change the number of shares of Non-Voting Common Stock subject to purchase upon
exercise of this Warrant, the Exercise Price or provisions for payment thereof
or (b) amend, modify or waive the provisions of this Section or Article III or
IV or Section 1.5, 5.2, 5.3 or 5.5. The provisions of the Credit Agreement and
the Warrantholders Rights Agreement may be amended, modified or waived only in
accordance with the respective provisions thereof.
Any such amendment, modification or waiver effected pursuant
to and in accordance with the provisions of this Section or the applicable
provisions of the Credit Agreement or the Warrantholders Rights Agreement shall
be binding upon the holders of all
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Warrants and Warrant Shares, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the Company
shall give prompt notice thereof to all holders of Warrants and Warrant Shares
and, if appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
7.3. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW).
7.4. TRANSFER; COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All
covenants, stipulations, promises and agreements in this Warrant contained by or
on behalf of the Company or the Holder shall bind its successors and assigns,
whether so expressed or not. This Warrant shall be transferable and assignable
by the Holder hereof in whole or from time to time in part to any other Person
and the provisions of this Warrant shall be binding upon and inure to the
benefit of the Holder hereof and its successors and assigns.
7.5. SEVERABILITY. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
7.6. SECTION HEADINGS. The section headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
7.7. TAX BASIS. The Company and the Holder agree pursuant to
Treasury Regulation Section 1.1273-2 that, for Federal income tax purposes, the
aggregate issue price of the Loans (as defined in the Credit Agreement) and the
aggregate purchase price for the Warrants are those set forth in Section 2.10 of
the Credit Agreement. Neither the Company nor the Holder hereof shall
voluntarily take (nor shall the Company permit the Borrower voluntarily to take)
any action inconsistent with the agreement set forth in this Section 7.7.
7.8. AMENDMENT AND RESTATEMENT OF PRIOR WARRANT. This Warrant
amends and restates, and supersedes and replaces, that certain Warrant, dated
July 15, 1998, issued by the Company to Holder for the purchase of 280,000
shares of Non-Voting Common Stock.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its corporate name by one of its officers thereunto duly authorized,
all as of the day and year first above written.
VISTACARE, INC.
By: /s/ Barry M. Smith
---------------------
Barry M. Smith
President
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