WARRANT TO PURCHASE SHARES OF COMMON STOCK
FROM
INTEGRATED HEALTH SERVICES, INC.
JULY 1, 1992
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND, MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT,
OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
INTEGRATED HEALTH SERVICES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT, for value received, Driftwood Health Care
Managers, Inc., a South Carolina corporation ("Driftwood"), is entitled to
purchase, pursuant to the terms hereof, three thousand (3,000) shares of Common
Stock, par value $.001 per share (the "Common Stock") of Integrated Health
Services, Inc., a Delaware corporation (the "Company"), at a purchase price of
$20.00 per share. As partial consideration for the execution and delivery of
this Warrant, Driftwood has delivered and paid to the Company an aggregate of
$3.00 ($.001 per share of Common Stock).
1. EXERCISE OF WARRANT
The terms and conditions upon which this Warrant may be
exercised, and the Common Stock covered hereby (the "Warrant Shares") may be
purchased, are as follows:
1.1. Exercise. This Warrant may be exercised in whole or in
part at any time after July 1, 1994, but in no case may this Warrant be
exercised at any time after the earliest to occur of the following: (a) July 1,
1999 or (b) the closing of the Company's sale of all or substantially all of its
assets or the acquisition of the Company by another entity or group by means of
a merger, sale or exchange of shares, or other transaction as a result of which
shareholders of the Company immediately prior to such acquisition possess a
minority of the voting power of the acquiring entity or the Company (if it is
the surviving entity).
1.2. Purchase Price. The purchase price for the Warrant Shares
to be issued upon exercise of this Warrant shall be $20.00 per Warrant Share,
subject to adjustments as set forth below.
1.3. Method of Exercise. The exercise of the purchase rights
evidenced by this Warrant shall be effected by (a) the surrender of the Warrant,
together with a duly executed copy of the form of subscription attached hereto
as Exhibit A, to the Company at its principal offices and (b) the delivery of
the purchase price by certified check or bank draft payable to the Company's
order, in immediately available funds for the number of shares for which the
purchase rights hereunder are being exercised, or delivery of the purchase price
by any other form of consideration approved by the Company's Board of Directors.
1.4. Issuance of Warrant Shares. In the event the purchase
rights evidenced by this Warrant are exercised, in whole or in part, a
certificate or certificates for the purchased shares shall be issued to
Driftwood as soon as practicable. In the event the purchase rights evidenced by
this Warrant are exercised in part, the Company shall also issue to Driftwood a
new warrant representing the unexercised purchase rights.
2. CERTAIN ADJUSTMENTS
2.1. Stock Dividends; Split or Subdivision of Shares. If at
any time while this Warrant remains outstanding and unexpired, the Company
should effect a split or subdivision of the outstanding shares of Common Stock
or pay a dividend with respect to the Common Stock payable in shares of Common
Stock, then:
(a) the purchase price shall be reduced, concurrently
with such issuance, to a price determined by (i) multiplying such price by the
number of shares of Common Stock outstanding immediately prior to such issuance,
and (ii) dividing the result by the sum of the number of shares of Common Stock
outstanding immediately prior to such issuance and the actual number of such
additional shares of Common Stock so issued, in the case of any such dividend,
immediately after the close of business on the record date for determining the
holders of any class of securities entitled to receive such dividend, or in the
case of any such subdivision, at the close of business on the date immediately
prior to the date upon which such corporate action becomes effective. In either
case the number of additional shares of Common Stock deemed to have been issued
shall be the difference between the number of outstanding shares of Common Stock
outstanding immediately before such dividend or subdivision and the number of
shares of Common Stock outstanding immediately thereafter; and
(b) the number of shares of Common Stock issuable
upon exercise of this Warrant shall be increased to the product obtained by
multiplying the number of Warrant Shares purchasable immediately prior to such
purchase price adjustment by a fraction (i) the numerator of which shall be the
purchase price immediately prior to such
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adjustment, and (ii) the denominator of which shall be the purchase price
immediately after such adjustment.
2.2. Mergers, Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization of the Company (other than a
combination, reclassification, exchange or subdivision of Warrant Shares
otherwise provided for herein), or a merger or consolidation of the Company with
or into another corporation in which the Company is not the surviving
corporation, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person or entity, then, as a part of
such reorganization, merger, consolidation or sale, lawful provision shall be
made so that Driftwood shall be entitled to receive upon exercise of this
Warrant, during the period specified in this Warrant and upon payment of the
purchase price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation or sale, to which a holder of the Warrant Shares
deliverable upon exercise of this Warrant would have been entitled under the
provisions of the agreement in such reorganization, merger, consolidation or
sale if this Warrant had been exercised immediately before that reorganization,
merger, consolidation or sale.
2.3. Reclassification. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the Warrant Shares into the same or a different number of securities of
any other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, reclassification or other change.
2.4. Combination of Shares. If at any time while this Warrant
remains outstanding and unexpired, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock, then:
(a) the purchase price shall be correspondingly
increased to a price determined by (i) multiplying such purchase price by the
number of shares of Common Stock outstanding immediately prior to such issuance,
and (ii) dividing the result by the number of shares of Common Stock outstanding
immediately after such combination; and
(b) the number of shares of Common Stock issuable
upon exercise of this Warrant shall be decreased to the product obtained by
multiplying the number of Warrant Shares purchasable immediately prior to such
purchase price adjustment by a fraction (i) the numerator of which shall be the
purchase price immediately prior to such adjustment, and (ii) the denominator of
which shall be the purchase price immediately after such adjustment.
2.5. Certificate as to Adjustments. In the case of each
adjustment or readjustment of the purchase price pursuant to this Section 2, the
Company will promptly compute such adjustment or readjustment in accordance with
the terms hereof and cause a
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certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based to be delivered to
the holder of this Warrant. The Company shall, upon the written request at any
time of the holder of this Warrant, furnish or cause to be furnished to such
holder a certificate setting forth:
(a) such adjustments and readjustments;
(b) the purchase price at the time in effect; and
(c) the number of shares of Warrant Shares and the
amount, if any, of other property at the time receivable upon the exercise of
this Warrant.
3. FRACTIONAL SHARES
No fractional shares shall be issued in connection with any
exercise of this Warrant. In lieu of the issuance of such fractional share, the
Company shall make a cash payment equal to the then fair market value of such
fractional share as determined by the Company's Board of Directors.
4. RESERVATION OF COMMON STOCK
The Company shall at all times during the period within which
the rights represented by this Warrant may be exercised, reserve and keep
available a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
5. PRIVILEGE OF STOCK OWNERSHIP
Prior to the exercise of this Warrant, Driftwood shall not be
entitled, by virtue of holding this Warrant, to any rights of a shareholder of
the Company, including (without limitation) the right to vote, receive dividends
or other distributions, exercise preemptive rights or be notified of shareholder
meetings, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company, except as
required by applicable law.
6. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
the holder hereof to purchase the Warrant Shares, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the purchase price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
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7. TRANSFERS AND EXCHANGES
7.1. Transfer of this Warrant. Subject to compliance with
applicable securities laws, this Warrant and all rights hereunder are
transferrable in whole or in part by Driftwood upon the prior written consent of
the Company. Any such transfer shall be recorded on the books of the Company
upon the surrender of this Warrant, properly endorsed, to the Company at its
principal offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer. In the event of a partial
transfer, the Company shall issue to the several holders one or more appropriate
new warrants.
7.2. Endorsement of this Warrant. Each holder agrees that this
Warrant when endorsed in blank shall be negotiable and that when so endorsed the
holder may be treated by the Company and all other persons dealing with this
Warrant as the absolute owner for all purposes and as the person entitled to
exercise the purchase rights evidenced hereby; provided, however, that until
such time as the transfer is recorded on the books of the Company, the Company
may treat the registered holder of this Warrant as the absolute owner.
7.3. New Warrants. All new warrants issued in connection with
transfers, exchanges or partial exercises shall be identical in form and
provision to this Warrant except as to the number of shares.
8. PAYMENT OF TAXES
The Company shall pay all expenses in connection with, and all
taxes and other governmental charges (other than any thereof on, based on, or
measured by, the net income of the holder thereof) that may be imposed in
respect of, the issue or delivery of the Warrant Shares. The Company shall not
be required, however, to pay any tax or other charge imposed in connection with
any transfer involved in the issue of any certificate for shares of the Warrant
Shares in any name other than that of Driftwood, and in such case, the Company
shall not be required to issue or deliver any stock certificate until such tax
or other charge has been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
9. SUCCESSORS AND ASSIGNS
The terms and provisions of this Warrant shall be binding upon
the Company and Driftwood and their respective successors and assigns.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS WARRANT
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction,
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of indemnity or security reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
11. RESTRICTED SECURITIES
The holder understands that this Warrant and the Warrant
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are, or will be, acquired from the
Company in transactions not involving a public offering and accordingly may not,
under such laws and applicable regulations, be resold or transferred without
registration under the Securities Act of 1933 or an applicable exemption from
registration. In this connection, the holder acknowledges that Rule 144 of the
Securities and Exchange Commission is not now, and may not in the future be,
available for resales of this Warrant and the Warrant Shares purchased
hereunder.
12. SATURDAYS, SUNDAYS, HOLIDAYS
If the last or appointed day for the taking of any action or
the expiration of any right required or granted herein shall be a Saturday or
Sunday or shall be a legal holiday, then such action may be taken or such right
may be exercised, except as to the purchase price, on the next succeeding day
not a legal holiday.
IN WITNESS WHEREOF, the parties have caused this Warrant to be
duly executed on this 1st day of July, 1992.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ William J. Krystopowicz
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Name: William J. Krystopowicz
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Title: Senior Vice President
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RECEIVED AND ACKNOWLEDGED this
1st day of July, 1992
DRIFTWOOD HEALTH CARE MANAGERS, INC.
By: /s/ Calvin D. Lipscomb
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Name: Calvin D. Lipscomb
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Title: President
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