AMENDMENT NO. 1 AND WAIVER
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: JUNE 30, 1998
Amendment No. 1 and Waiver (this "Amendment"), dated as of June 30,
1998, to the Securities Exchange Agreement dated as of May 6, 1998, 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"). Capitalized terms used herein shall have the respective meanings
assigned to them in the Securities Exchange Agreement.
W I T N E S S E T H :
WHEREAS, the condition precedent set forth in 7.1(l) of the Securities
Exchange Agreement (the "Financing Condition") has not as of the date hereof
been satisfied, and the Company and Holdings have not entered into the Senior
Loan Agreement;
WHEREAS, on June 30, 1998 the Original Noteholders offered to the
Company and Holdings to provide the senior loans contemplated by the Financing
Condition;
WHEREAS, the Original Noteholders have proposed and the Company and
Holdings have agreed to the Agreed Rate and the Agreed Terms (each as defined
below) with respect to such senior loans;
WHEREAS, on the date hereof the Board of Directors of Holdings approved
the Agreed Terms and the Agreed Rate and authorized the Company and Holdings to
agree to use their best efforts to negotiate in good faith towards definitive
documentation with respect to the Senior Loan Agreement as set forth below;
WHEREAS, on the basis of such agreement, the Noteholders have agreed to
waive the Financing Condition; 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 3 of this Amendment relating to the
effectiveness of Sections 1 and 2, the Securities Exchange Agreement is hereby
amended as follows:
(a) Section 1 is hereby amended by deleting the existing definitions of
"Home Healthcare Non Compete Agreement", "Initial Healthcare Non-Compete
Agreement", "New Healthcare Non-Compete Agreement", "Non-Compete Agreements",
"Note Documents", "Senior Loan Agreement", and "Stockholder Approval" and
replacing them with the following:
"Note Documents" shall mean this Agreement, the Notes, the
Registration Rights, the Holdings Guarantee and the Subsidiary
Guarantees.
"Senior Loan Agreement" shall mean the agreement to be entered
into among the Company as borrower, Holdings and the Subsidiaries named
therein as guarantors and the Original Noteholders as lenders (together
with any other financial institutions acceptable to the Original
Noteholders to which the credit provided for thereby may be syndicated
by them), providing for (i) senior secured loans to the Company bearing
interest at the Agreed Rate and having the other Agreed Terms and (ii)
the issuance to the Senior Lenders of the New Bank Warrants, such
senior secured loans to be used by the Company for acquisitions,
working capital, letters of credit and general corporate requirements.
"Stockholder Approval" and "Stockholder Approval Condition" shall
have the respective meanings set forth in Section 7.1(h).
(b)Section 1 is hereby amended by adding the following new definitions:
"Agreed Rate" shall mean, with respect to the Senior Loan
Agreement, an interest rate of the Chase Prime Rate plus 1.50% per
annum.
"Agreed Terms" shall mean, with respect to the Senior Loan
Agreement, (i) a final maturity date of 2 1/2 years from closing, (ii)
an upfront fee of 1.0% payable upon execution of the Senior Loan
Agreement (such upfront fee to replace the Advisory Fee and the
Arranger Fee referred to in the Chase Commitment Letter) and (iii)
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otherwise (other than with respect to the Agreed Rate) containing
substantially similar terms to the terms set forth in the Chase
Commitment Letter.
"Chase Commitment Letter" shall mean the commitment letter to
Holdings dated June 4, 1998 signed by The Chase Manhattan Bank and
includes the Outline of Terms and Fee Letter referred to therein.
"Chase Prime Rate" shall mean the rate defined as Chase's
Alternate Base Rate ("ABR") in the Chase Commitment Letter.
"New Bank Warrants" shall mean the warrants to purchase up to 2.0
million shares of Common Stock of Holdings, exerciseable at an exercise
price of $0.01, issued to the Senior Lenders pursuant to the Senior
Loan Agreement.
(c) Section 5 is hereby amended by deleting Section 5.12 and replacing
it with the following:
"5.12 Senior Loan Agreement. Use its best efforts to enter into
the Senior Loan Agreement as soon as practicable following the Closing
Date, and in any event on or prior to September 30, 1998."
(d) Section 6 is hereby amended by adding new Sections 6.11 as follows:
"6.11 New Xxxxxx Employment Agreement. Amend the terms of the New
Xxxxxx Employment Agreement without the consent of the Required
Noteholders and each Original Noteholder so long as it continues to be
a Noteholder."
(e) Section 7.1(e) is hereby deleted and replaced with the following:
"(e) A copy of the articles or certificates of incorporation and
all amendments thereto of each of Holdings, the Company and the
Significant Subsidiaries, certified as of a recent date by the
Secretary of State of such party's jurisdiction of organization, and
copies of each such party's by-laws, certified by the Secretary or
Assistant Secretary of such party as true and correct as of the Closing
Date."
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(f) Section 7.1(f) is hereby deleted and replaced with the following:
"(f) The New Xxxxxx Employment Agreement, duly executed by
Holdings, the Company and Xxxxxx Xxxxxx (the condition precedent in
this paragraph being the "Employment Agreement Condition")."
(g) Section 7.1(k) is hereby deleted and replaced with the following:
"(k) Copies of all documentation evidencing all Indebtedness of
the Company existing on the Closing Date, the terms of which shall be
satisfactory to the Noteholders."
(h) Section 7.1(g) is hereby deleted.
(i) Section 8.1(n) is hereby deleted and replaced with the following:
"(n) the New Xxxxxx Employment Agreement delivered pursuant to
Section 7.1(f) of this Agreement shall be terminated or shall otherwise
cease to be enforceable or in full force and effect or Xxxxxx Xxxxxx
shall cease to be the chief executive officer of the Company for any
reason (other than by reason of his incapacitation of death; or upon
expiration of the original term of such agreement; or upon his removal
by majority vote of the Board of Directors of the Company in which the
Board member appointed by the Noteholders pursuant to Section 10 hereof
voted in favor of such removal (or if no board member has been
appointed pursuant to Section 10, the Required Holders have approved
such removal)); or"
(j) A new Section 8.1(o) is added as follows:
"(o) the Senior Loan Agreement shall not have been entered into,
or all conditions to funding under thereunder shall not have been
satisfied, on or prior to September 30, 1998;"
(k) Schedule 4.9 to the Securities Exchange Agreement is hereby
replaced with the amended Schedule 4.9 attached hereto as Exhibit A.
SECTION 2. Waiver. The Noteholders hereby waive compliance by the
Company and Holdings with the condition precedent set forth in Section 7.1(l) of
the Securities Exchange Agreement.
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SECTION 3. Representations and Warranties. 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 4. Conditions to Effectiveness. The amendments and waiver in
Sections 1 and 2 of this Amendment shall become effective on the date (the
"Effective Date") no later than June 30, 1998 when counterparts hereof shall
have been executed by each of the Noteholders, Holdings and the Company.
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.
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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.
SECTION 10. Senior Loan Agreement. The parties hereto agree to
negotiate in good faith with a view to proceeding to definitive documentation
with respect to the Senior Loan Agreement as soon as is reasonably practicable
following the date hereof.
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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:
---------------------------------
Name:
Title:
CORAM HEALTHCARE CORPORATION
By:
---------------------------------
Name:
Title:
CERBERUS PARTNERS, L.P.
By:
---------------------------------
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By:
---------------------------------
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By:
---------------------------------
Name:
Title:
