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EXHIBIT 1
AMENDMENT NO. 2
TO
SECURITIES EXCHANGE AGREEMENT
AMONG
CORAM, INC.
CORAM HEALTHCARE CORPORATION
AND
CERBERUS PARTNERS, X.X.
XXXXXXX XXXXX CREDIT PARTNERS L.P.
FOOTHILL CAPITAL CORPORATION
AS NOTEHOLDERS
DATED: APRIL 9, 1999
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Amendment No. 2 (this "Amendment"), dated as of April 9, 1999,
to the Securities Exchange Agreement dated as of May 6, 1998, as heretofore
amended (said Securities Exchange Agreement, as so amended, being the
"Securities Exchange Agreement", and the terms defined therein being used herein
as therein defined unless otherwise defined herein) among CORAM, INC., a
Delaware corporation (the "Company"), CORAM HEALTHCARE CORPORATION, a Delaware
corporation ("Holdings"), CERBERUS PARTNERS, L.P. ("Cerberus"), XXXXXXX XXXXX
CREDIT PARTNERS L.P. ("GSCP") and FOOTHILL CAPITAL CORPORATION ("Foothill")
(each a "Noteholder" and, together with any other holders from time to time of
interests in the Series A Notes or Series B Notes, collectively, the
"Noteholders).
W I T N E S S E T H :
WHEREAS, the Original Noteholders, the Company and Holdings
entered into the Securities Exchange Agreement, pursuant to which the Original
Noteholders received, among other things, Series A Notes and Series B Notes, as
the case may be, in exchange for the Original Noteholders' interests in the
Subordinated Rollover Notes and the Warrants; and
WHEREAS, as of the date hereof, the Original Noteholders own
in the aggregate 100% of the outstanding principal amount of the Series A Notes
and Series B Notes; and
WHEREAS, the Series B Notes are convertible into shares of
Common Stock at the option of the Noteholders; and
WHEREAS, the Noteholders have proposed and the Company and
Holdings have agreed to amend certain provisions in the Securities Exchange
Agreement relating to the calculation of the Conversion Price of the Series B
Notes; and
WHEREAS, as consideration for agreeing to such amendment, the
Company and Holdings have agreed to increase the Applicable Series A Rate on the
Series A Notes to 11 1/2% per annum with effect from the Amendment Date (as
hereinafter defined); and
WHEREAS, the Company, Holdings and the Noteholders have agreed
to amend the Securities Exchange Agreement and to enter into this Amendment upon
the terms and subject to the conditions contained herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments to the Securities Exchange Agreement.
Upon the satisfaction of the conditions in Section 4 of this Amendment relating
to the effectiveness of Section 1, the Securities Exchange Agreement is hereby
amended as follows:
(a) Section 1 is hereby amended by deleting the existing
definitions of "First Adjustment Date" and "Second Adjustment Date".
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(b) Section 1 is hereby amended by adding the definitions of
"Amendment Date" and "Amendment No. 2" as follows:
"Amendment Date" shall have the meaning ascribed to
it in Amendment No. 2.
"Amendment No. 2" shall mean Amendment No. 2 to the
Securities Exchange Agreement, dated April 9, 1999.
(c) The definition of "Applicable Series A Rate" set forth in
Section 1 of the Securities Exchange Agreement is hereby deleted in its entirety
and replaced with the following:
"Applicable Series A Rate" shall mean from the
Effective Date to the Amendment Date 9-7/8% per annum and
thereafter 11-1/2% per annum.
(d) Section 2.4(b) of the Securities Exchange Agreement is
hereby deleted in its entirety and replaced with the following:
(b) The Company will pay interest, accruing from and
after the Effective Date, on the Series A Notes to each
Noteholder quarterly in arrears on January 15, April 15, July
15 and October 15 of each year, commencing July 15, 1998 (each
an "Interest Payment Date") at the Applicable Series A Rate.
(e) Section 2 is hereby amended by deleting Section 2.13(a) in
its entirety and replacing it with the following:
2.13 Conversion of Series B Notes. (a) Subject to the
provisions for adjustment hereinafter set forth, the Series B
Notes shall be convertible, in whole or in part, at any time
and from time to time, at the option of the holder thereof (a
"Conversion"), up to the outstanding principal amount of
Series B Notes held by such holder thereof at the time of such
conversion into a number of fully paid and nonassessable
shares of Common Stock equal to the quotient obtained by
dividing (A) the principal amount of the Series B Notes to be
converted by (B) the Conversion Price (as hereinafter
defined). The Conversion Price shall be $2.00 per share of
Common Stock. The Conversion Price shall be subject to
adjustments from time to time pursuant to Section 2.13(f)
below.
No fractional shares shall be issued upon the
conversion of any Series B Notes. All shares of Common Stock
(including fractions thereof) issuable upon conversion of
Series B Notes by a holder thereof shall be aggregated for
purposes of determining whether conversion would result in the
issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, Holdings shall, in lieu
of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash
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equal to the Current Market Price of such fraction on the date
of conversion.
(f) Section 2 is hereby amended by deleting Section
2.13(f)(iv) in its entirety and replacing it with the following:
(iv) In case Holdings shall at any time or from time
to time after the Closing Date declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of Holdings or
any of its Subsidiaries by way of dividend or spinoff), on its
Common Stock, other than dividends or distributions of shares
of Common Stock which are referred to in clause (i) above and
cash dividends paid out of retained earnings, then the
Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying (A) the applicable Conversion
Price on the day immediately prior to the record date fixed
for the determination of stockholders entitled to receive such
dividend or distribution by (B) a fraction, the numerator of
which shall be the Current Market Price per share of Common
Stock at such record date less the Fair Market Value of such
dividend or distribution per share of Common Stock, and the
denominator of which shall be such Current Market Price per
share of Common Stock. No adjustment shall be made pursuant to
this clause (iv) in connection with any transaction to which
Section 2.13(g) applies.
SECTION 2. Representations and Warranties of the Company and
Holdings. Each of the Company and Holdings hereby represents and warrants as to
itself and the Coram Parties that (a) the execution, delivery and performance of
this Amendment have been duly authorized by all necessary corporate action on
the part of such Coram Party and this Amendment and the Securities Exchange
Agreement amended hereby each constitutes a legal, valid and binding obligation
of such Coram Party, enforceable against it in accordance with its terms, (b) no
event has occurred and is continuing on the date hereof that constitutes a
Default or Event of Default or would constitute a Default or Event of Default
after giving effect to this Amendment, and (c) the representations and
warranties of Holdings and the Company contained in Section 4 of the Securities
Exchange Agreement are true and correct both before and after giving effect to
this Amendment, except to the extent such representations and warranties are
stated to be true only as of a particular date, in which case such
representations and warranties were correct on and as of such date.
SECTION 3. Representations and Warranties of the Noteholders.
Each of the Noteholders hereby represents and warrants as to itself that the
execution, delivery and performance of this Amendment have been duly authorized
by all necessary corporate or partnership action on the part of such Noteholder.
SECTION 4. Conditions to Effectiveness. The amendments in
Section 1 of this Amendment shall become effective on the date (the "Amendment
Date") no later than April 9, 1999 when (a) counterparts hereof shall have been
executed by each of the Noteholders, Holdings and the Company, (b) Holdings
shall have amended its
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Stockholder Rights Agreement, dated as of June 25, 1997 with BankBoston, N.A.,
in substantially the form attached hereto as Exhibit A, and (c) Holdings and
each Subsidiary Guarantor shall have executed a consent and confirmation of
guaranty in the form attached hereto as Exhibit B.
SECTION 5. Effect on the Securities Exchange Agreement. Except
as amended hereby, the Securities Exchange Agreement and the other Note
Documents shall remain in full force and effect. Nothing in this Amendment shall
be deemed to (i) except as set forth herein, constitute a waiver of compliance
by any of the Coram Parties of any term, provision or condition of the
Securities Exchange Agreement or any other instrument or agreement referred to
therein or under the Note Documents or (ii) prejudice any right or remedy that
any Noteholder may now have or may have in the future under or in connection
with the Securities Exchange Agreement or any other Note Document.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together constitute one and the same agreement.
SECTION 7. Governing Law. The validity, interpretation and
enforcement of this Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to the conflict of laws
principles thereof.
SECTION 8. Headings. Section headings in this Amendment are
included herein for the convenience of reference only and shall not constitute
part of this Amendment for any other purpose.
SECTION 9. References. References herein and in the other Note
Documents to the "Securities Exchange Agreement", "this Agreement", "hereunder",
"hereof", or words of like import referring to the Securities Exchange
Agreement, shall mean and be a reference to the Securities Exchange Agreement as
amended hereby.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
CORAM, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
CORAM HEALTHCARE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, LLC
Its General Partner
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Partner
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By: /s/ XXXXXX X. MULE
------------------------------------------
Name: Xxxxxx X. Mule
Title: Managing Director
FOOTHILL CAPITAL CORPORATION
By: /s/ M.E. XXXXXXX
------------------------------------------
Name: M.E. Xxxxxxx
Title: Senior Vice President
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EXHIBIT B
CONSENT
Dated as of April 9, 1999
Each of the undersigned, in its capacity as a Guarantor under
the Securities Exchange Agreement referred to in the foregoing Amendment, hereby
consents to the said Amendment and hereby confirms and agrees that its guaranty
of the Guaranteed Obligations (as such term is defined in the Guarantee
Agreements) is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that, upon the effectiveness of,
and on and after the date of, the said Amendment, each reference in each
Guarantee Agreement to "this Agreement", "hereunder", "thereunder", "thereof" or
words of like import shall mean and be a reference to the Securities Exchange
Agreement as amended by said Amendment.
This Consent may be executed in any number of counterparts
each of which, when executed and delivered, shall constitute an original, but
all executed counterparts together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Consent by
telecopier shall be effective as delivery of a manually executed counterpart of
this Consent.
CORAM HEALTHCARE CORPORATION
By:
------------------------------------
Name:
Title:
FOR EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON ANNEX A HERETO
By:
------------------------------------
Name:
Title:
c/o Coram Healthcare Corporation
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
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ANNEX A
Subsidiaries
Coram International Holdings Ltd.
Coram Healthcare Limited
Coram, Inc.
Coram Independent Practice Association
Coram Physician Services, Inc.
Fairfax Hematology Oncology Associates, Inc.
Coram Resource Network, Inc.
Healthinfusion, Inc.
H.M.S.S., Inc.
Coram Homecare of Texas, Inc.
Infusion Affiliates of Dallas, Inc.
Medisys, Inc.
Coram Homecare of Illinois, Inc.
T2 Medical, Inc.
Columbia Home Therapeutics, Inc.
Coram Healthcare Corporation of Alabama
Coram Healthcare Corporation of Colorado
Coram Healthcare Corporation of Connecticut
Coram Healthcare Corporation of Delaware
Coram Healthcare Corporation of Florida
Coram Healthcare Corporation of Greater X.X.
Xxxxx Healthcare Corporation of Greater New York
Coram Healthcare Corporation of Illinois
Coram Healthcare Corporation of Indiana
Coram Healthcare Corporation of Iowa
Coram Healthcare Corporation of Kansas
Coram Healthcare Corporation of Kentucky
Coram Healthcare Corporation of Louisiana
Coram Healthcare Corporation of Michigan
Coram Healthcare Corporation of Minnesota
Coram Healthcare Corporation of Missouri
Coram Healthcare Corporation of Mississippi
Coram Healthcare Corporation of Nebraska
Coram Healthcare Corporation of Nevada
Coram Healthcare Corporation of New Hampshire
Coram Healthcare Corporation of New Jersey
Coram Healthcare Corporation of New Mexico
Coram Healthcare Corporation of North Carolina
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Coram Healthcare Corporation of Northern California
Coram Healthcare Corporation of Ohio
Coram Healthcare Corporation of Oklahoma
Coram Healthcare Corporation of Oregon
Coram Healthcare Corporation of Pennsylvania
Coram Healthcare Corporation of Rhode Island
Coram Healthcare Corporation of South Carolina
Coram Healthcare Corporation of Southern California
Coram Healthcare Corporation of Southern Florida
Coram Healthcare Corporation of Tennessee
Coram Healthcare Corporation of Texas
Coram Healthcare Corporation of Xxxxxxxx
Xxxxx Healthcare Corporation of Washington
Coram Healthcare Corporation of West Virginia
Coram Healthcare Corporation of Wisconsin
Coram Homecare of Arizona, Inc.
Coram Homecare of Kansas, Inc.
Coram Homecare of Michigan, Inc.
Coram Homecare of Minnesota, Inc.
Coram Homecare of Nebraska, Inc.
Coram Homecare of Northern California, Inc.
Coram Homecare of Ohio, Inc.
Coram Homecare of South Carolina, Inc.
Coram Homecare of South Carolina, L.L.C.
Coram Homecare of Virginia, Inc.
Coram Homecare of Wisconsin, Inc.
Coram Management of Hawaii, Inc.
Coram Service Corporation
Curaflex Health Services, Inc.
Caremark Pharmacy Services, Inc.
Comprehensive Pharmacy Home IV Services, Inc.
Coram Alternative Site Services, Inc.
Coram Healthcare Corporation of Massachusetts
Clinical Homecare Corporation Coram
Healthcare Corporation of New York Coram Healthcare
Corporation of North Texas Coram Healthcare
Corporation of Utah Coram Healthcare of Wyoming,
L.L.C.
Stratogen of Rhode Island, Inc.
Dallas Home Therapeutics, Inc.
Extendacare Health Systems, Inc.
Intracare Holdings Corporation
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