EXHIBIT 99.5
AMENDMENT NO. 1 TO STOCKHOLDER AGREEMENT
AMENDMENT NO. 1 (this "Amendment") to the Stockholder
Agreement, dated as of December 29, 2000, (the "Stockholder Agreement"), is made
and entered into as of the 31st day of December, 2001, by and among CORAM, INC.,
a Delaware corporation (the "Company"), CERBERUS PARTNERS, L.P., a New York
limited partnership ("Cerberus"), FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), and XXXXXXX XXXXX & CO., a New York corporation
("Goldman"). Cerberus, Foothill, and Goldman and each holder of the Company's
stock which becomes a party to the Stockholder Agreement as amended hereby after
the date hereof are individually referred to herein as a "Stockholder," and
collectively as the "Stockholders."
WITNESSETH
WHEREAS, the parties have entered into an Exchange Agreement,
dated December 29, 2000 (the "December 2000 Exchange Agreement"), by and among
the Company, Cerberus, Foothill and Xxxxxxx Sachs Credit Partners, L.P., a
Bermuda limited partnership ("GSCP"), pursuant to which the Stockholders
exchanged certain indebtedness for their pro rata share of 905 shares of
Preferred Stock (such exchange being referred to herein as the "December 2000
Exchange");
WHEREAS, in connection with the December 2000 Exchange the
parties hereto have entered into the Stockholder Agreement which states therein
their mutual understandings, agreements and obligations and imposes certain
restrictions on the rights and benefits with respect to the voting and
disposition of the Shares now or hereafter owned by the Stockholders;
WHEREAS, pursuant to that certain Exchange Agreement, of even
date herewith (the "December 2001 Exchange Agreement"), by and among the
Company, Cerberus, Foothill and GSCP, (a) Cerberus has acquired an additional
67.8585 shares of Preferred Stock, (b) Foothill has acquired an additional
35.5481 shares of Preferred Stock, and (c) Goldman has acquired an additional
86.1639 shares of Preferred Stock;
WHEREAS, the Preferred Stock held by Cerberus, Foothill and
Goldman pursuant to the December 2000 Exchange Agreement and the December 2001
Exchange Agreement constitute all of the shares of Preferred Stock outstanding
on the date hereof; and
WHEREAS, in connection with entering into the December 2001
Exchange Agreement the parties wish to amend their mutual understandings,
agreements and obligations under the Stockholder Agreement as provided in this
Amendment.
NOW, THEREFORE, for and in consideration of the foregoing, the
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, and intending to be legally
bound hereby, the parties agree as follows:
1. Definitions. Capitalized terms used herein not otherwise
defined herein shall have the meaning ascribed thereto in the Stockholder
Agreement.
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2. Amendments to the Stockholder Agreement. The Stockholder
Agreement is hereby amended in accordance with the following provisions:
a. The definition of Certificate of Designation in
Section 1 of the Stockholder Agreement is hereby amended and restated
to read as follows:
"Certificate of Designation" means the Certificate of
Amendment of Certificate of Designation of the Company filed
with the Secretary of State of the State of Delaware on
December 31, 2001.
b. The following definitions are hereby added in
Section 1 of the Stockholder Agreement:
"CHC" means Coram Healthcare Corporation, a Delaware
Corporation.
"Triggering Event" means, at any time (from and after January
1, 2002), the earliest to occur of the following:
(i) a plan of reorganization for the Company and/or CHC is
substantially consummated (as defined in 11 U.S.C. Section
1101(2));
(ii) the giving of a notice for a stockholders meeting (other
than a stockholders meeting of CHC called by Xxxxxx Xxxxxxx,
in his capacity as the Chairman of the Board and/or as the
Chief Executive Officer of CHC), or the distribution of a
stockholders written consent, of either the Company or CHC
(provided that, with respect to a stockholders meeting or a
stockholders written consent of the Company, such stockholders
meeting or stockholders written consent has been approved in
writing by a majority of the independent members of the board
of directors of CHC prior to the giving of a notice for such
stockholders meeting or the distribution of such stockholders
written consent), in which it would be proposed to approve or
be approved (a) any change in the identity of the members of
the board of directors of either the Company or CHC or the
rights of any stockholder, director or other person to appoint
or remove any of the directors of either the Company or CHC,
(b) the appointment, removal or termination of office of any
of the directors of either the Company or CHC, or (c) any
change, which relates to the subject matter of the preceding
clauses (a) and (b), in the Certificate of Incorporation or
by-laws of either the Company or CHC or the Certificate of
Designation of the Company;
(iii) the giving of a notice for a meeting of the board of
directors (other than a board of directors meeting of CHC
called by Xxxxxx Xxxxxxx, in his capacity as the Chairman of
the Board and/or as the Chief Executive Officer of CHC), or
the distribution of a
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written consent of the board of directors, of either the
Company or CHC (provided, that, with respect to a board of
directors meeting or a board of directors written consent of
the Company, such board of directors meeting or board of
directors written consent has been approved in writing by a
majority of the independent members of the board of directors
of CHC prior to the giving of a notice for such board of
directors meeting or the distribution of such board of
directors written consent), in which it would be proposed to
approve or be approved (a) any change in the identity of the
members of the board of directors of either the Company or CHC
or the rights of any stockholder, director or other person to
appoint or remove any of the directors of either the Company
or CHC, (b) the appointment, removal or termination of office
of any of the directors of either the Company or CHC or (c)
any change, which relates to the subject matter of the
preceding clauses (a) and (b), in the Certificate of
Incorporation or by-laws of either the Company or CHC or the
Certificate of Designation of the Company; and
(iv) entry of an order of a court of competent jurisdiction
(other than an order resulting from a motion of Cerberus,
Foothill, Goldman or any of their Affiliates) compelling a
stockholders meeting or a board of directors meeting of the
Company or CHC, in which it would be proposed to approve or be
approved (a) any change in the identity of the members of the
board of directors of either the Company or CHC or the rights
of any stockholder, director or other person to appoint or
remove any of the directors of either the Company or CHC, (b)
the appointment, removal or termination of office of any of
the directors of either the Company or CHC or (c) any change,
which relates to the subject matter of the preceding clauses
(a) and (b), in the Certificate of Incorporation or by-laws of
either the Company or CHC or the Certificate of Designation of
the Company.
c. Section 4 of the Stockholder Agreement is hereby
amended and restated in its entirety to read as follows:
4. GOVERNANCE PROVISIONS
4.1. Voting Rights. The holders of the shares of
Preferred Stock hereby acknowledge and agree that the
voting rights set forth in Section 5 of the
Certificate of Designation shall not be effective
(and shall not be exercised by the holders of the
shares of Preferred Stock) prior to the occurrence of
a Triggering Event. Prior to such Triggering Event,
the holders of the shares of Preferred Stock shall
have the following voting rights in lieu of the
voting rights set forth in Section 5 of the
Certificate of Designation:
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(a) The holders of shares of Preferred Stock
shall have the exclusive right, voting
separately as a single class, to elect two
directors of the Company; provided, however,
that if the holders of the shares of
Preferred Stock do not elect any directors
to the Board of Directors, such holders will
have the right to appoint up to three
observers to the Board of Directors.
(b) Any vacancy occurring in the office of
director elected by the holders of the
shares of Preferred Stock or any additional
director to be elected pursuant to Section
4.1(a) above may be filled by the remaining
director(s) elected by the holders of the
shares of Preferred Stock unless and until
such vacancy shall be filled by the holders
of the shares of Preferred Stock. The term
of office of the directors elected by the
holders of the shares of Preferred Stock
shall terminate upon the election of their
successors at any meeting of the holders of
the shares of Preferred Stock held for the
purpose of electing directors elected by the
holders of the shares of Preferred Stock.
(c) The directors elected by the holders of
the shares of Preferred Stock voting
separately as a single class may only be
removed from office with or without cause by
the vote of the holders of at least a
majority of the outstanding shares of
Preferred Stock.
(d) From and after the occurrence of a
Triggering Event, the foregoing rights of
the holders of the shares of Preferred Stock
to elect directors of the Company in
accordance with this Section 4.1 shall no
longer be effective (and shall not be
exercised by the holders of the shares of
Preferred Stock) and shall be replaced with
the rights of the holders of shares of
Preferred Stock to elect directors of the
Company in accordance with Section 5 of the
Certificate of Designation.
d. Section 8.3 of the Stockholder Agreement is hereby
amended and restated in its entirety to read as follows:
8.3 Notices. All notices, requests, consents, and other
communications required or permitted hereunder shall be in
writing and shall be effective when delivered in person or by
"confirmed" facsimile transmission or one day after deposit
with a nationally recognized overnight delivery carrier
properly addressed and deposited prior to the applicable
deadline for receipt of overnight packages, or five days after
deposit in the U.S. Mail, certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as
follows (or at such other address for the parties as shall be
specified by like notice):
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if to the Company: Coram, Inc.
0000 Xxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy Number: 000-000-0000
with a copy (which shall
not constitute notice) to: Xxxx Xxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxx 0000 - Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopy Number: 000-000-0000
If to Stockholders: Cerberus Partners, L.P.
000 Xxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Telecopy Number: (000) 000-0000
Xxxxxxx Xxxxx & Co.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Telecopy Number: (000) 000-0000
Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Telecopy Number: (000) 000-0000
With a copy (which shall
not constitute notice) to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
e. Exhibit A to the Stockholder Agreement is hereby
amended and restated in its entirety as set forth in Exhibit A-2001 to
this Amendment.
3. Effect on the Stockholder Agreement. Except as amended
hereby, the Stockholder Agreement shall remain in full force and effect.
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4. Governing Law. This Amendment shall be construed and
enforced in accordance with the internal laws of the State of
Delaware,
irrespective of the choice of law provisions thereof.
5. Facsimile Signature; Counterparts. This Amendment may be
executed by facsimile signature and in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
6. References. References herein to the Stockholder
Agreement," "this Amendment," "hereunder," "hereof," or words of like import
referring to the Stockholder Agreement, shall mean and be a reference to the
Stockholder Agreement as amended hereby.
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IN WITNESS WHEREOF, this Amendment has been executed as of the
date and year first above written.
CORAM, INC.
By: /s/ XXXXX XXXXXX
---------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
Chief Financial Officer
CERBERUS PARTNERS, L.P.
By Cerberus Associates LLC, its General
Partner
By: /s/ XXXX X. NEPORENT
---------------------------------------
Name: Xxxx X. Neporent
Title: Managing Director
FOOTHILL CAPITAL CORPORATION
By: /s/ XXXXXX X. XXXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
XXXXXXX XXXXX & CO.
By: /s/ XXXXX X. BOOK
---------------------------------------
Name: Xxxxx X. Book
Title: Authorized Signatory
[Signature Page to Amendment No. 1 to the Stockholder Agreement]
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EXHIBIT A - 2001
Based on a recent transaction converting pre-existing debt to preferred stock,
[name of stockholder] (the "Stockholder") holds an equity interest in Coram,
Inc. (the "Company"). The Stockholder continues to hold debt issued by the
Company as well. This Notice addresses certain requirements of federal law which
prohibit an individual with a direct or indirect ownership or investment
interest in a health care provider from making Medicare or Medicaid referrals to
that provider for certain services. The purpose of this Notice is to assure that
you are aware of these requirements so that the Company and its investors can
maintain compliance with this law.
The federal law, referred to as "Xxxxx II," prohibits physicians from making
Medicare and Medicaid referrals to an entity in which they have an ownership or
investment interest (subject to certain exceptions not applicable here). See
generally 42 U.S.C. Section 1395nn. These prohibitions apply to physician
ownership or investment in the Company because the Company and its subsidiaries
provide (i) parenteral and enteral nutrients, equipment, and supplies, (ii)
outpatient prescription drugs, (iii) durable medical equipment, including
infusion pumps, and (iv) home health services and supplies. These items and
services are Designated Health Services which trigger the Xxxxx II prohibitions.
Violations of the statute could result in payment denials, refund obligations,
and certain penalties against the party making or receiving a prohibited
referral.
As noted, Xxxxx II also prohibits referrals by physicians whose "immediate
family members" have an ownership or investment interest in a company that
provides Designated Health Services. The Xxxxx II regulations define "immediate
family member" to include the following:
[H]usband or wife; birth or adoptive parent, child, or
sibling; stepparent, stepchild, stepbrother, or stepsister;
father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild;
and spouse of a grandparent or grandchild.
66 Fed. Reg. at 856,954 (2001) (42 C.F.R. Section 411.351). Thus, a physician
who refers patients to the Company for Designated Health Services and who has an
immediate family member who has an ownership or investment interest in the
Company would be making an improper referral under Xxxxx II, absent exceptions
which are not applicable here.
Xxxxx II potentially applies to your indirect interest in the Company in two
ways.
First, if you are a physician who is in a position to make Medicare or Medicaid
referrals of Designated Health Services to the Company, such referrals would be
prohibited. If you are in a position to make such referrals and wish to continue
as an investor in the Stockholder, you will need to enter into an agreement that
you will not make Medicare or Medicaid referrals of Designated Health Services
to the Company.
Second, if you have an immediate family member who is a physician who is in a
position to make Medicare or Medicaid referrals of Designated Health Services to
the Company, such referrals would also be prohibited. If you have an immediate
family member who is in a position
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to make such referrals and you wish to continue as an investor in the
Stockholder, you need to promptly advise the family member that it would be
improper for him/her to make Medicare or Medicaid referrals of Designated Health
Services to the Company.
If you have an questions regarding Xxxxx II or the issues addressed in this
Notice, please contact [name, title, phone number]
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