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
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".
(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)
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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 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.
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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 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:-----------------------------------------
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:
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