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FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
AND FIRST AMENDMENT TO SECURITY DOCUMENTS
DATED AS OF OCTOBER 13, 1995
This FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
AND FIRST AMENDMENT TO SECURITY DOCUMENTS dated as of October 13, 1995 (this
"AMENDMENT") to the Credit Agreement dated as of April 6, 1995, as amended by
that certain First Amendment and Waiver dated as of August 9, 1995 (the "FIRST
AMENDMENT"), that certain Second Amendment dated as of September 7, 1995 (the
"SECOND AMENDMENT") and that certain Third Amendment and Limited Waiver dated
as of September 29, 1995 (the "THIRD AMENDMENT") (as so amended, the "CREDIT
AGREEMENT"), is by and among CORAM HEALTHCARE CORPORATION, a Delaware
corporation ("CORAM"), CORAM, INC., a Delaware corporation (the "BORROWER") and
a wholly owned subsidiary of Coram, EACH SUBSIDIARY GUARANTOR (as defined in
the Credit Agreement) listed on Exhibit A hereto, THE FINANCIAL INSTITUTIONS
PARTY THERETO (the "LENDERS") and CHEMICAL BANK, as agent for the Lenders (in
such capacity the "ADMINISTRATIVE AGENT"), as collateral agent for the Lenders
(in such capacity, the "COLLATERAL AGENT") and as fronting bank (in such
capacity, the "FRONTING BANK"). Capitalized terms used herein without
definitions shall have the respective meanings assigned in the Credit
Agreement.
RECITALS
WHEREAS, Coram and Borrower have requested Lenders to, among
other things, (i) provide an additional revolving credit facility in an
aggregate principal amount of up to $25,000,000, (ii) modify the dates on which
certain principal payments on the Term Loans are due, (iii) amend certain
covenants and other provisions of the Credit Agreement and the Security
Documents as provided herein and (iv) waive certain existing defaults; and
WHEREAS, the Overline Lenders (as defined in the Credit
Agreement, as amended by this Amendment (as so amended, the "AMENDED
AGREEMENT")) have agreed to provide the Overline Loans (as defined in the
Amended Agreement) on the terms provided herein and the Lenders have agreed to
amend the Credit Agreement and grant the limited waiver as provided herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements, provisions and covenants herein contained, the Borrower,
Coram, the Subsidiary Guarantors and the Lenders hereby agree, on the terms and
subject to the conditions set forth herein, as follows:
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AGREEMENT
SECTION 1. LIMITED WAIVER
(a) Subject to the provisions of paragraph (b) of this
Section 1, the Lenders hereby waive any Event of Default resulting solely from
(i) Coram's and the Borrower's failure to comply with the provisions of Section
5.05(a) and 5.05(b) prior to the date the Third Amendment became effective in
accordance with its terms (the "THIRD AMENDMENT EFFECTIVE DATE"), (ii) Coram's
and the Borrower's failure to comply with the provisions of Section 5.05(c)
with respect to any Material Adverse Effect occurring prior to the Fourth
Amendment Effective Date (as hereinafter defined), (iii) Coram's and the
Borrower's failure to comply with the provisions of Sections 6.12 and 6.13 of
the Credit Agreement for the fiscal periods ended June 30, 1995 and September
30, 1995, (iv) Coram's and the Borrower's failure to comply with the provisions
of Section 6.14 for the fiscal period ended September 30, 1995, (v) Coram's and
the Borrower's failure to comply with the provisions of paragraph (a) of
Article VII prior to the Third Amendment Effective Date, but only to the extent
such failure relates to the representation contained in Section 3.06 and (vi)
the Borrower's failure to comply with the provisions of Section 3.11 of the
Third Amendment.
(b) Without limiting the generality of the provisions of
Section 9.08 of the Credit Agreement, the waiver set forth herein shall be
limited precisely as written and relates solely to the noncompliance by the
Borrower with the provisions of Sections 5.05, 6.12, 6.13, 6.14 and paragraph
(a) of Article VII of the Credit Agreement and Section 3.11 of the Third
Amendment (collectively, the "APPLICABLE SECTIONS") to the extent described
above and nothing in this Limited Waiver shall be deemed to (a) constitute a
waiver of compliance by Coram or the Borrower with respect to (i) any
Applicable Section in any other instance or (ii) any other term, provision or
condition of the Credit Agreement or any other instrument or agreement referred
to therein or (b) prejudice any right or remedy that Administrative Agent,
Collateral Agent or any Lender may now have (except to the extent such right or
remedy was based upon existing Events of Default that will not exist after
giving effect to this limited waiver) or may have in the future under or in
connection with the Credit Agreement or any other instrument or agreement
referred to therein. Except as expressly set forth herein, the terms,
provisions and conditions of the Credit Agreement and the other Loan Documents
shall remain in full force and effect and in all other respects are hereby
ratified and confirmed; provided that the limited waiver in this Section 1
shall supersede the limited waiver contained in Section 1 of the Third
Amendment in its entirety.
(c) Notwithstanding anything to the contrary contained in
the Credit Agreement or the Security Documents, (i) no Change of Control shall
be deemed to have occurred solely as a result of the issuance of the Warrants
(as hereinafter defined) or the exercise thereof and (ii) Coram shall not be
deemed to have breached any representation that it owns 100% of the stock of
the Borrower solely as a result of the issuance of the Warrants or the exercise
thereof.
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SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT
2.1 AMENDMENTS TO ARTICLE I: DEFINITIONS.
A. Section 1.01 of the Credit Agreement is hereby
amended by inserting the following definitions therein in proper alphabetical
order:
"`AGGREGATE OVERLINE EXPOSURE' shall mean the aggregate amount
of the Overline Lenders' Overline Exposures."
"`AMENDMENT FEE NOTES' shall mean those certain promissory
notes dated as of October 13, 1995 executed by the Borrower in favor
of the Lenders in substantially the form attached as Annex III to the
Fourth Amendment, as such promissory notes may be amended,
supplemented or otherwise modified from time to time."
"`APPLICABLE OVERLINE PERCENTAGE' of any Overline Lender at
any time shall mean the percentage of the Total Overline Commitment
represented by such Overline Lender's Overline Commitment. In the
event the Overline Commitments shall have expired or been terminated,
the Applicable Overline Percentages shall be determined on the basis
of the Applicable Overline Percentages most recently in effect."
"`FIRST AMENDMENT' shall mean that certain First Amendment and
Waiver dated as of August 9, 1995 by and among Coram, the Borrower,
the Subsidiary Guarantors, the Lenders, Administrative Agent,
Collateral Agent and Fronting Bank."
"`FOURTH AMENDMENT' shall mean that certain Fourth Amendment
and Limited Waiver to Credit Agreement and First Amendment to Security
Documents dated as of October 13, 1995 by and among Coram, the
Borrower, the Subsidiary Guarantors, the Lenders, Administrative
Agent, Collateral Agent and Fronting Bank."
"`FOURTH AMENDMENT EFFECTIVE DATE' shall mean the date
Sections 1, 2 and 3 of the Fourth Amendment became effective in
accordance with the terms of the Fourth Amendment."
"`FOURTH AMENDMENT PROJECTIONS' shall have the meaning
assigned to that term in Section 6.12 of this Agreement."
"`LITHOTRIPSY PARTNERSHIPS' shall mean the entities set forth
on Annex II to the Fourth Amendment."
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"`NET REVENUES' means, for any period, total revenues minus
contractual allowances, if any, measured on a consolidated basis for
Coram and its Subsidiaries for the applicable period."
"`OVERLINE BORROWING' shall mean a Borrowing comprised of
Overline Loans."
"`OVERLINE COMMITMENT' shall mean, with respect to each
Overline Lender, the commitment of such Overline Lender to make
Overline Loans hereunder as set forth in Section 2.01, or in the
Assignment and Acceptance pursuant to which such Overline Lender
assumed its Overline Commitment, as applicable, as the same may be
reduced from time to time pursuant to this Agreement and pursuant to
assignments by such Overline Lender pursuant to Section 9.04."
"`OVERLINE EXPOSURE' shall mean, with respect to any Overline
Lender at any time, the aggregate principal amount at such time of all
outstanding Overline Loans of such Overline Lender plus the aggregate
amount at such time of such Overline Lender's Overline L/C Exposure."
"`OVERLINE L/C EXPOSURE' shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Overline Letters of
Credit at such time plus (b) the aggregate principal amount of all L/C
Disbursements in respect of Overline Letters of Credit that have not
yet been reimbursed at such time. The Overline L/C Exposure of any
Overline Lender at any time shall mean its Applicable Percentage of
the aggregate Overline L/C Exposure at such time."
"`OVERLINE LENDER' shall mean a Lender with an Overline
Commitment."
"`OVERLINE LETTERS OF CREDIT' shall mean letters of credit
issued pursuant to subsection 2.21(a)(ii)."
"`OVERLINE LOANS' shall mean the revolving overline loans made
by the Overline Lenders to the Borrower pursuant to the last paragraph
of Section 2.01.
"`OVERLINE MATURITY DATE' shall mean December 31, 1996."
"`RECURRING EBITDA' shall mean, for any period, EBITDA
adjusted for severance and the anticipated special charge to the bad
debt provision in September 1995; provided that for the period from
September 1 through December 31, 1995, Recurring EBITDA shall mean
EBITDA, as adjusted for costs and charges for (a) non- cash charges
such as lease terminations and charges related to the disposal of
fixed assets and intangible assets associated with implementing the
business plan dated October 2, 1995 delivered to Lenders on
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September 28, 1995, (b) expenses not related to the period September 1
through December 31, 1995, and (c) expenses related to events and/or
transactions that are not expected to recur in an aggregate amount not
to exceed $2,500,000, in each case measured on a consolidated basis
for Coram and its Subsidiaries for the applicable period.
"`REVOLVING CREDIT L/C EXPOSURE' shall mean at any time the
sum of (a) the aggregate undrawn amount of all outstanding Revolving
Credit Letters of Credit at such time plus (b) the aggregate amount of
all L/C Disbursements in respect of Revolving Credit Letters of Credit
that have not yet been reimbursed at such time. The Revolving Credit
L/C Exposure of any Revolving Credit Lender at any time shall mean its
Applicable Percentage of the aggregate Revolving Credit L/C Exposure
at such time."
"`REVOLVING CREDIT LETTERS OF CREDIT' shall mean letters of
credit issued or maintained pursuant to subsection 2.21(a)(i)."
"`TOTAL OVERLINE COMMITMENT' shall mean, at any time, the
aggregate amount of the Overline Commitments, as in effect at such
time."
"`WARRANT AGREEMENT' shall mean that certain Warrant Agreement
dated as of October 13, 1995, substantially in the form attached as
Annex IV to the Fourth Amendment, as such Warrant Agreement may be
amended, supplemented or otherwise modified from time to time."
"`WARRANTS' shall mean the warrants issued to the Overline
Lenders pursuant to the Warrant Agreement, as such warrants may be
amended, supplemented or otherwise modified from time to time."
B. The definition of "ABR LOAN" contained in Section
1.01 of the Credit Agreement is hereby amended by inserting the term "Overline
Loan," immediately after the word "any" contained therein.
C. The definition of the term "APPLICABLE MARGIN"
contained in Section 1.01 of the Credit Agreement shall be amended by inserting
the phrase "(other than any Overline Borrowing)" immediately after the phrase
"ABR Borrowing" contained therein.
D. The definition of "APPLICABLE PERCENTAGE" contained
in Section 1.01 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"`APPLICABLE PERCENTAGE' of any Lender or Overline
Lender at any time shall mean the percentage of the Total Revolving
Credit Commitment or the Total Overline Commitment represented by
such Lender's Revolving Credit Commitment or Overline Lender's
Overline Commitment, as applicable. In the event the Revolving Credit
Commitments or Overline Commitments shall have
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expired or been terminated, the Applicable Percentages shall be
determined on the basis of the Revolving Credit Commitments or
Overline Commitments, as applicable, most recently in effect."
E. The definition of "COMMITMENT" contained in Section
1.01 of the Credit Agreement is hereby amended by inserting the phrase "and,
with respect to any Overline Lender, its Overline Commitment" at the end of
such definition.
F. The definition of "L/C EXPOSURE" contained in Section
1.01 of the Credit Agreement is hereby amended and restated in its entirety as
follows:
"`L/C EXPOSURE' shall mean at any time the sum of the
Revolving Credit L/C Exposure and the Overline Exposure."
G. The definition of "LETTERS OF CREDIT" contained in
Section 1.01 of the Credit Agreement is hereby amended by deleting the phrase
"any letter of credit issued pursuant to Section 2.21" therefrom and
substituting therefor the phrase "any Revolving Credit Letter of Credit or
Overline Letter of Credit."
H. The definition of "LOAN DOCUMENTS" contained in
Section 1.01 of the Credit Agreement is hereby amended by inserting the phrase
"each amendment to this Agreement, the Warrant Agreement, the Warrants, the
Amendment Fee Notes, any notes issued by the Borrower in favor of a Lender to
evidence all or any part of the Obligations," immediately after the phrase
"this Agreement" contained therein.
I. The definition of "LOANS" contained in Section 1.01
of the Credit Agreement is hereby amended by inserting the phrase "Overline
Loans," immediately after the phrase "Revolving Loans" contained therein.
J. The definition of "NET PROCEEDS" contained in Section
1.01 of the Credit Agreement is hereby amended by deleting the phrase "50% of"
from subsection (d) thereof.
K. The definition of "REVOLVING CREDIT EXPOSURE"
contained in Section 1.01 of the Credit Agreement is hereby amended by
inserting the phrase "Revolving Credit" immediately before the phrase "L/C
Exposure" contained therein.
L. The definition of the term "REVOLVING CREDIT MATURITY
DATE" contained in Section 1.01 of the Credit Agreement is hereby amended by
deleting the phrase "the fifth anniversary of the Closing Date" and
substituting "March 31, 1997" therefor.
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M. The definition of "TERM LOAN MATURITY DATE" is hereby
amended by deleting the phrase "the fifth anniversary of the Closing Date" and
substituting "March 31, 1997" therefor.
N. Section 1.02 of the Credit Agreement is hereby
amended by adding the following at the end thereof.
"The term "Lenders" when used with respect to the Overline Loans, the
Overline Commitments or the Overline Letters of Credit shall be a
reference to the Overline Lenders."
2.2 AMENDMENTS TO ARTICLE II: THE CREDITS.
A. Section 2.01 of the Credit Agreement is hereby
amended and restated in its entirety as follows:
"Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees,
severally and not jointly, (a) to maintain its Term Loans outstanding
hereunder on the Fourth Amendment Effective Date in an aggregate
principal amount not to exceed the amount set forth opposite its name
on Schedule 2.01, as the same shall be reduced from time to time in
accordance with the terms of this Agreement and (b) to maintain its
Revolving Loans outstanding hereunder on the Fourth Amendment
Effective Date in an aggregate principal amount not to exceed the
amount set forth opposite its name on Schedule 2.01, as the same shall
be reduced from time to time in accordance with the terms of this
Agreement.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Overline Lender
agrees, severally and not jointly, to make Overline Loans to the
Borrower, at any time and from time to time on or after the Fourth
Amendment Effective Date, and until the earlier of the Overline
Maturity Date and the termination of the Overline Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in (i) such
Overline Lender's Overline Exposure exceeding its Overline Commitment
or (ii) the sum of such Lender's Revolving Credit Exposure and such
Lender's Overline Exposure exceeding the lesser of (y) the sum of such
Lender's Revolving Credit Commitment and the Overline Commitment set
forth opposite its name on Schedule 2.01, in each case as reduced from
time to time, and (z) such Lender's pro rata share of the Borrowing
Base in effect at such time. Within the limits of the preceding
sentence, the Borrower may borrow, pay or prepay and reborrow Overline
Loans on or after the Fourth
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Amendment Effective Date and prior to the Overline Maturity Date,
subject to the terms, conditions and limitations set forth herein.
Any Overline Lender may, by notice to the Borrower, request that all
or part of the principal amount of the Borrower's Obligations to such
Overline Lender in respect of the Overline Commitments hereunder be
evidenced by a note. Within five (5) Business Days of the Borrower's
receipt of such notice, the Borrower shall execute and deliver to the
applicable Overline Lender a note in the applicable amount and
reasonably satisfactory in form and substance to such Overline Lender.
B. Section 2.02(b) of the Credit Agreement is hereby
amended by adding the phrase "; provided, further however that all Overline
Loans shall be ABR Loans" at the end of the first sentence thereof.
C. Section 2.03 of the Credit Agreement is hereby
amended by inserting the phrase "an Overline Borrowing," immediately after the
phrase "is to be" in clause (i) thereof.
D. Section 2.04(a) of the Credit Agreement is hereby
amended by (i) deleting the word "and" from clause (i) thereof and substituting
"," therefor and (ii) adding the phrase "and (iii) in the case of an Overline
Loan, on the Overline Maturity Date" at the end of the first sentence thereof.
E. Subsection 2.05(a) of the Credit Agreement is hereby
amended by inserting the phrase "(other than the Overline Commitments)"
immediately after the word "Commitments" in each place such word occurs.
F. Subsection 2.05(d) of the Credit Agreement is hereby
amended by inserting the phrase "(or, if applicable, Overline Lenders)"
immediately after the word "Lenders" contained in such subsection.
G. Subsection 2.05 of the Credit Agreement is hereby
amended by adding the following subsection at the end thereof:
"(e) The Borrower hereby agrees to pay to the Lenders and
Overline Lenders, as applicable, the fees provided for in the Fourth
Amendment at the time specified therein."
H. Section 2.06 of the Credit Agreement is hereby
amended by (i) inserting the phrase "(other than the Overline Loans)"
immediately after the word "Loans" in subsection (a) thereof and (ii) inserting
the follow subsection (d) at the end of such Section:
"(d) The Loans comprising each Overline Borrowing shall bear
interest (computed on the basis of the actual number of days lapsed
over a
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year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other
times) at a rate per annum equal to (i) the Alternate Base Rate plus
2%, with respect to Overline Loans with an aggregate outstanding
principal amount of up to $15,000,000 and (ii) the Alternate Base Rate
plus 3% with respect to the outstanding principal amount of Overline
Loans in excess of $15,000,000."
I. Section 2.10 of the Credit Agreement is hereby
amended by inserting the phrase "(other than an Overline Borrowing)"
immediately after the phrase "any ABR Borrowing" in clause (b) of such Section.
J. Subsection 2.11(a) of the Credit Agreement is hereby
amended and restated in its entirety as follows:
"(a) The Term Borrowings shall be payable as to principal
in consecutive installments payable on the dates (each, a "REPAYMENT
DATE") and in the amounts set forth below:
REPAYMENT DATE AMOUNT
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March 31, 1996 $10,300,000
April 30, 1996 10,300,000
June 30, 1996 10,600,000
September 30, 1996 10,600,000
December 31, 1996 20,600,000
March 31, 1997 137,600,000
K. Subsection 2.11(b) of the Credit Agreement is hereby
amended by (i) deleting the first sentence thereof and substituting "Each
prepayment of principal of the Term Borrowings pursuant to paragraph (a) or (d)
of Section 2.12 shall be applied in the order of maturity; provided that at
least $5,000,000 of each of the payments due on June 30, 1996, September 30,
1996 and December 31, 1996 shall be derived from cash flow from operations of
Coram and its Subsidiaries and shall not be derived from the proceeds of asset
sales" and (ii) by deleting the phrase "(d) or" from the second sentence
thereof.
L. Subsection 2.12(c) of the Credit Agreement is hereby
amended and restated in its entirety as follows:
"(c) If on any date the sum of the Aggregate Revolving
Credit Exposure and the Aggregate Overline Exposure shall exceed the
lesser of (i) the sum of the Total Revolving Credit Commitment and the
Total Overline Commitment (as each may be reduced from time to time in
accordance with the Agreement) and (ii) the Borrowing Base in effect
on such date, the Borrower shall on such date apply an amount equal to
such excess first, to prepay the then outstanding
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Overline Loans (if any), second, to the extent of any remaining excess
(after prepayment of the Overline Loans), to prepay the then
outstanding Revolving Loans (if any), and third, to the extent of any
remaining excess (after prepayment of the Overline Loans and Revolving
Loans), to replace outstanding Letters of Credit (provided that
Overline Letters of Credit shall be replaced before Revolving Credit
Letters of Credit) and/or deposit an amount in cash in the L/C
Collateral Amount."
M. Subsection 2.12(d) of the Credit Agreement is hereby
amended by inserting the following at the end of the first sentence contained
therein:
"; provided that, with the prior written consent of Required Lenders,
Coram or any of its Subsidiaries shall be permitted to keep all or any
specified portion of the Net Proceeds from any sale by Coram or any of
its Subsidiaries of accounts receivable; provided however, that it is
understood and agreed that no Lender shall have any obligation to
grant such consent and nothing in this subsection shall be deemed to
be a consent by any Lender to any release of Collateral."
N. Section 2.16 of the Credit Agreement is hereby
amended by inserting: the phrase "the Overline Commitments," immediately
before the phrase "the Term Loan Commitments" contained therein.
O. Section 2.17 of the Credit Agreement is hereby
amended by inserting the following at the end of the first sentence thereof:
"; provided further, however, that before making the purchases and
deemed purchases contemplated by the foregoing, such Lender shall be
deemed to have purchased from the applicable Overline Lenders, and
shall promptly pay to such Overline Lenders (to the extent of amounts
received by the applicable Lender) the purchase price for,
participations in the Overline Loans until the Overline Loans, and all
interest and fees in respect thereof, have been paid in full."
P. Subsections 2.21(a), (b) and (c) of the Credit
Agreement are hereby amended and restated in their entirety as follows:
"(a) General (i) Fronting Bank and Lenders hereby agree to
maintain the Letters of Credit outstanding on the Fourth Amendment
Effective Date and, upon the expiration of any such Letter of Credit
and subject to the terms and conditions hereof, to renew such Letters
of Credit; provided that in no event shall the stated amount of any
such Letter of Credit be increased nor shall any such renewed Letter
of Credit expire on any date after the date that is five Business Days
prior to the Revolving Credit Maturity Date.
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(ii) From and after the Fourth Amendment
Effective Date, the Borrower may request the issuance of any Overline
Letter of Credit for the purpose of supporting the Borrower's
workmen's compensation obligations in a form reasonably acceptable to
the Administrative Agent and the Fronting Bank, appropriately
completed, for the account of the Borrower, at any time and from time
to time while the Overline Commitments remain in effect; provided that
in no event shall the Aggregate Overline L/C Exposure exceed
$2,500,000.
(iii) This Section 2.21 shall not be construed to
impose an obligation upon the Fronting Bank to issue or renew any
Letter of Credit that is inconsistent with the terms of this
Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of
Credit (or to amend, renew or extend an existing Letter of Credit),
the Borrower shall hand deliver or telecopy to the Fronting Bank and
the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the
issuance of a Letter of Credit, or identifying the Letter of Credit to
be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare such
Letter of Credit. Following receipt of such notice and prior to the
issuance of the requested Letter of Credit or the applicable
amendment, renewal or extension, the Administrative Agent shall notify
the Borrower and the Fronting Bank of the amounts of the Aggregate
Revolving Credit Exposure and the Aggregate Overline Exposure,
respectively, after giving effect to (i) the issuance, amendment,
renewal or extension of such Letter of Credit, (ii) the issuance or
expiration of any other Letter of Credit that is to be issued or will
expire prior to the requested date of issuance of such Letter of
Credit and (iii) the borrowing or repayment of any Revolving Credit
Loans and Overline Loans, as applicable, that (based upon notices
delivered to the Administrative Agent by the Borrower) are to be
borrowed or repaid prior to the requested date of issuance of such
Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (A) the Revolving Credit L/C Exposure
shall not increase, (B) the Overline L/C Exposure shall not exceed
$2,500,000 and (C) the sum of the Aggregate Revolving Credit Exposure
and the Aggregate Overline Exposure shall not exceed the lesser of (x)
the sum of Total Revolving Credit Commitment and the Total Overline
Commitment and (y) the Borrowing Base in effect at such time.
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(c) Expiration Date. (i) Each Letter of Credit shall
expire at the close of business on the earlier of the date 12 months
after the date of issuance of such Letter of Credit and the date that
is five Business Days prior to the Revolving Credit Maturity Date or
the Overline Maturity Date, as applicable, unless such Letter of
Credit expires by its terms on an earlier date, provided that a Letter
of Credit shall not be issued (nor shall a Letter of Credit be
amended, renewed or extended) if that would result in the sum of the
Aggregate Revolving Credit Exposure and the Aggregate Overline
Exposure exceeding the lesser of (A) the sum of the Total Revolving
Credit Commitment and the Total Overline Commitment and (B) the
Borrowing Base in effect at such time. Compliance with the foregoing
proviso shall be determined based upon the assumption that (1) each
Letter of Credit remains outstanding and undrawn in accordance with
its terms until its expiration date (taking into account any rights of
renewal of extension that do not require written notice by or consent
of the Fronting Bank, in its sole discretion, in order to effect such
renewal or extension), (2) neither the Revolving Credit Commitments
nor the Overline Commitments will be reduced voluntarily pursuant to
Section 2.09(b) and (3) the Borrowing Base in effect on the proposed
date of issuance, amendment, renewal or extension will not change.
(ii) Each Letter of Credit may, in the absolute
discretion of the Fronting Bank, include a provision whereby such
Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less unless the Fronting Bank
notifies the beneficiary thereof at least 60 days prior to the then-
applicable expiry date that such Letter of Credit will not be renewed;
provided that in no event shall any Letter of Credit be renewed beyond
the date that is five Business Days prior to the Revolving Credit
Maturity Date or the Overline Maturity Date, as applicable."
2.3 AMENDMENTS TO ARTICLE III: REPRESENTATIONS AND
WARRANTIES.
Subsection 3.06 of the Credit Agreement is hereby amended by
deleting the date "December 31, 1994" therefrom and substituting "the Fourth
Amendment Effective Date" therefor.
2.4 AMENDMENTS TO ARTICLE V: AFFIRMATIVE COVENANTS.
Section 5.04 of the Credit Agreement is hereby amended by (i)
deleting the word "and" from the end of clause (j), (ii) deleting the
punctuations "." from clause (k) and substituting "; and" therefor and (iii)
inserting the following clause (l):
"(l) within (i) ten days after the end of each
calendar month, a statement of receipts and
disbursements (ii) 15 Business Days after the end of
each calendar month, a statement of estimated net
revenues and (iii) 30 days after the end of each
calendar month, a profit/loss statement, in each case
on a consolidated basis for
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Coram and its Subsidiaries (excluding, in the case of
the statement of receipts and disbursements, any
receipts required to be paid to Caremark) for the
immediately preceding month and substantially in the
form contained in the Fourth Amendment Projections;
provided that, commencing with the statements
delivered for the month ending March 31, 1996, the
statements delivered pursuant to clauses (ii) and
(iii) of this subsection shall be delivered within 20
days after the end of the applicable month."
2.5 AMENDMENTS TO ARTICLE VI: NEGATIVE COMMENTS.
A. Article VI of the Credit Agreement is hereby amended
by deleting Sections 6.12, 6.13, 6.14 and 6.15 therefrom in their entirety and
substituting the following therefor:
"Section 6.12 Net Revenues. Permit aggregate Net Revenues, as
reported in the consolidated statement of revenues delivered pursuant
to subsection 5.04(l) (iii) and calculated on the same basis as in the
projected financial statements contained in the Coram Healthcare
Business Plan Presentation to the Bank Syndicate dated October 2, 1995
and delivered to Lenders on September 28, 1995, including the Appendix
thereto (the "FOURTH AMENDMENT PROJECTIONS"), for any period set forth
below to be less than the corresponding amount set forth below:
PERIOD AMOUNT
------ ------
September 1, 1995 - October 31, 1995 $101,100,000
October 1, 1995 - November 30, 1995 93,600,000
November 1, 1995 - December 31, 1995 88,300,000
December 1, 1995 - January 31, 1996 89,400,000
January 1, 1996 - February 28, 1996 93,000,000
February 1, 1996 - March 31, 1996 93,300,000
March 1, 1996 - April 30, 1996 93,400,000
April 1, 1996 - May 31, 1996 93,500,000
May 1, 1996 - June 30, 1996 94,100,000
June 1, 1996 - July 31, 1996 94,100,000
July 1, 1996 - August 31, 1996 94,700,000
August 1, 1996 - September 30, 1996 94,800,000
September 1, 1996 - October 31, 1996 93,700,000
October 1, 1996 - November 30, 1996 93,000,000
November 1, 1996 - December 31, 1996 93,000,000
December 1, 1996 - January 31, 1997 93,000,000
January 1, 1997 - February 28, 1997 93,000,000
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; provided that upon the sale or other disposition by any Subsidiary
of the Borrower of its interest in any Lithotripsy Partnership, the
amounts set forth above in this Section 6.12 for the periods
subsequent to such sale or disposition shall be automatically reduced
by the applicable amounts set forth in Part I of Annex VI to the
Fourth Amendment for the corresponding periods to adjust for the
effect of such sale or other disposition.
Section 6.13 Recurring EBITDA. Permit Recurring EBITDA, as
reported in the consolidated profit/loss statements delivered pursuant
to Section 5.04(l) (iii) and calculated on the same basis as in the
Fourth Amendment Projections, for any period set forth below to be
less than the corresponding amount set forth below:
PERIOD AMOUNT
------ ------
September 1, 1995 - October 31, 1995 $(200,000)
October 1, 1995 - November 30, 1995 400,000
November 1, 1995 - December 31, 1995 (1,100,000)
December 1, 1995 - January 31, 1996 3,100,000
January 1, 1996 - February 28, 1996 8,400,000
February 1, 1996 - March 31, 1996 8,900,000
March 1, 1996 - April 30, 1996 9,000,000
April 1, 1996 - May 31, 1996 8,900,000
May 1, 1996 - June 30, 1996 9,000,000
June 1, 1996 - July 31, 1996 9,300,000
July 1, 1996 - August 31, 1996 9,800,000
August 1, 1996 - September 30, 1996 9,800,000
September 1, 1996 - October 31, 1996 9,200,000
October 1, 1996 - November 30, 1996 8,800,000
November 1, 1996 - December 31, 1996 8,700,000
December 1, 1996 - January 31, 1997 8,500,000
January 1, 1997 - February 28, 1997 8,500,000
; provided that if the consolidated profit/loss statement delivered
pursuant to Section 5.04(l)(iii) with respect to any period ending on
or before December 31, 1995 indicate that Recurring EBITDA for any
applicable period is less than the corresponding amount set forth
above, the Borrower shall have an additional period of 30 days after
delivery of such statement to review the calculation of Recurring
EBITDA and make any appropriate corrections or adjustments to such
consolidated profit/loss statement and provide such recalculation of
Recurring EBITDA to the Administrative Agent and the Lenders at the
end of such 30 day period and; provided further that upon the sale or
other disposition by any Subsidiary of the Borrower of its interest in
any Lithotripsy Partnership, the amounts set forth above in this
Section 6.13 for the periods subsequent to such sale or disposition
shall be automatically reduced by the applicable amounts set
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forth in Part II of Annex VI to the Fourth Amendment for the
corresponding periods to adjust for the effect of such sale or other
disposition.
Section 6.14 Operating Cash Flow Receipts. Permit the
aggregate operating cash flow receipts on a consolidated basis for
Coram and its Subsidiaries (excluding any amounts required to be paid
to Caremark), as reported in the statements of consolidated receipts
and disbursements delivered pursuant to Section 5.04(l) (i) and
calculated on the same basis as in the Fourth Amendment Projections,
for any period set forth below to be less than the corresponding
amount set forth below:
PERIOD AMOUNT
------ ------
September 1, 1995 - October 31, 1995 $81,600,000
October 1, 1995 - November 30, 1995 81,200,000
November 1, 1995 - December 31, 1995 81,200,000
December 1, 1995 - January 31, 1996 89,200,000
January 1, 1996 - February 28, 1996 100,100,000
February 1, 1996 - March 31, 1996 100,400,000
March 1, 1996 - April 30, 1996 97,800,000
April 1, 1996 - May 31, 1996 97,300,000
May 1, 1996 - June 30, 1996 97,600,000
June 1, 1996 - July 31, 1996 98,100,000
July 1, 1996 - August 31, 1996 98,500,000
August 1, 1996 - September 30, 1996 99,200,000
September 1, 1996 - October 31, 1996 99,400,000
October 1, 1996 - November 30, 1996 100,100,000
November 1, 1996 - December 31, 1996 100,100,000
December 1, 1996 - January 31, 1997 95,000,000
January 1, 1997 - February 28, 1997 95,000,000
; provided that, if management implements programs to accelerate the
collection of receivables, this subsection may, subject to the prior
written consent of the Required Lenders (it being understood and agreed
that no Lender shall have any obligation to grant such consent),
be adjusted to reflect reduced operating cash flow receipts in
subsequent months.
Section 6.15 Cash Disbursements. Permit the aggregate total
uses from operations on a consolidated basis for Coram and its
Subsidiaries, as reported in the statements of consolidated receipts
and disbursements delivered pursuant to Section 5.04(l) (i) and
calculated on the same basis as in the Fourth Amendment Projections,
for any period set forth below to exceed the corresponding amount set
forth below:
PERIOD AMOUNT
------ ------
October 1, 1995 - October 31, 1995 $ 64,700,000
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PERIOD AMOUNT
------ ------
October 1, 1995 - November 30, 1995 117,900,000
November 1, 1995 - December 31, 1995 106,500,000
December 1, 1995 - January 31, 1996 90,900,000
January 1, 1996 - February 28, 1996 85,200,000
February 1, 1996 - March 31, 1996 84,700,000
March 1, 1996 - April 30, 1996 83,800,000
April 1, 1996 - May 31, 1996 80,400,000
May 1, 1996 - June 30, 1996 79,100,000
June 1, 1996 - July 31, 1996 79,200,000
July 1, 1996 - August 31, 1996 79,900,000
August 1, 1996 - September 30, 1996 80,100,000
September 1, 1996 - October 31, 1996 79,900,000
October 1, 1996 - November 30, 1996 80,000,000
November 1, 1996 - December 31, 1996 79,700,000
December 1, 1996 - January 31, 1997 90,000,000
January 1, 1997 - February 28, 1997 90,000,000
; provided that, the maximum disbursements permitted pursuant to this Section
6.14 for the periods subsequent to any sale or disposition by any Subsidiary of
the Borrower of its interest in any Lithotripsy Partnership shall be
automatically reduced by the applicable amounts set forth in Part III of Annex
VI to the Fourth Amendment for the corresponding periods if, after giving
effect to such sale or other disposition, the aggregate percentage revenues
represented by such sold or disposed Lithotripsy Partnerships (calculated in
accordance with the percentages set forth in Part III of Annex VI) exceeds
33.3%; and provided further, that if net revenues are in excess of the base
plan contained in the Fourth Amendment Projections, this subsection may,
subject to the prior written consent of the Required Lenders (it being
understood and agreed that no Lender shall have any obligation to grant such
consent), be adjusted to the disbursement levels of the upside plan contained
in the Fourth Amendment Projections."
2.6 AMENDMENTS TO ARTICLE VII: EVENTS OF DEFAULT.
Article VII of the Credit Agreement is hereby amended by (i)
deleting the word "or" from the end of clause (n) contained therein, (ii)
inserting the word "or" at the end of clause (o) and (iii) inserting the
following clause (p) immediately after clause (o) contained therein:
"(p) the employment contract delivered pursuant to Section 5.L
of the Fourth Amendment shall cease to be in full force and effect or
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to be the chief executive officer of the
Borrower for any reason;"
2.7 AMENDMENTS TO ARTICLE IX: MISCELLANEOUS.
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Subsection 9.08(b) of the Credit Agreement is hereby amended
by (i) deleting the phrase "Subordinated Bridge Note, Subordinated Rollover
Note, Refinancing Note or Subordinated Guarantee or any extension, renewal or
refinancing of any thereof" from clause (iv) thereof and substituting therefor
the phrase "any Indebtedness other than the Obligations and (ii) inserting the
phrase "amend Section 4.B of the Fourth Amendment," at the beginning of clause
(v) contained therein.
2.8 AMENDMENTS TO THE CREDIT AGREEMENT SCHEDULES.
The Credit Agreement is hereby amended by deleting the
existing Schedule 2.01 therefrom and substituting therefor the Schedule
attached as Annex I hereto.
SECTION 3. AMENDMENTS TO SECURITY DOCUMENTS
3.1 AMENDMENTS TO THE PLEDGE AGREEMENT.
A. Article III of the Pledge Agreement is hereby amended
by (i) deleting the word "and" from the end of clause (g) thereof, (ii)
deleting the punctuation "." from the end of clause (h) thereof and adding the
following clause (i) at the end of such Article"
"(i) each Pledgor shall cause each Issuer of any Pledged
Securities not to issue any stock or other equity securities
(including without limitation all securities convertible into
and warrants, options and other rights to purchase stock)
unless such stock or other securities and the proceeds thereof
are pledged hereunder (or pursuant to a pledge agreement
satisfactory in form and substance to Collateral Agent) to
secure the Obligations.
B. Section 4.02 of the Pledge Agreement is hereby
amended by adding the following immediately after the phrase "owed to the
Secured Parties" in clause SECOND thereof:
"; provided that such amounts shall be applied to the satisfaction of
Obligations relating to the Overline Loans before application to the
other Obligations."
3.2 AMENDMENTS TO THE SECURITY AGREEMENT.
Section 7.2 of the Security Agreement is hereby amended by
adding the following immediately after the phrase "owed to the Secured Parties"
in clause SECOND thereof:
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"; provided that such amounts shall be applied to the satisfaction of
Obligations relating to the Overline Loans before application to the
other Obligations."
3.3 AMENDMENTS TO THE INTELLECTUAL PROPERTY SECURITY
AGREEMENT.
Section 5.03 of the Intellectual Property Security Agreement
is hereby amended by adding the following immediately after the phrase "owed to
the Secured Parties" in clause SECOND thereof:
"; provided that such amounts shall be applied to the satisfaction of
Obligations relating to the Overline Loans before application to the
other Obligations."
SECTION 4. OTHER AGREEMENTS
A. REVOLVING CREDIT COMMITMENT. Notwithstanding any of
the terms or provisions of the Credit Agreement, the Borrower agrees (i) that
any unused Revolving Credit Commitments hereby terminate and (ii) that the
aggregate principal amount of Revolving Loans outstanding and the total L/C
Exposure shall not exceed an amount equal to $35,835,600 minus the aggregate
amount of principal payments and reductions in L/C Exposure subsequent to the
Fourth Amendment Effective Date. In addition, the Borrower hereby affirms its
obligations to make all prepayments required pursuant to subsection 2.12(c) of
the Amended Agreement.
B. PRIORITY OF OVERLINE LOANS. The Lenders hereby agree
that, except as expressly provided in the Amended Agreement, all payments of
principal, interest and other amounts due under the Credit Agreement shall be
applied first to amounts due in respect of the Overline Loans before
application to amounts due in respect of the Term Loans, Revolving Loans or the
Letters of Credit; provided however, that upon the occurrence and during the
continuance of an Event of Default, notwithstanding anything to the contrary
contained in the Amended Agreement, all payments of principal, interest and
other amounts shall be applied first to amounts due in respect of the Overline
Loans. Moreover, to the extent amounts have been received after the Fourth
Amendment Effective Date in respect of the principal of the Term Loans and the
Revolving Loans or reimbursement obligations in respect of the Letters of
Credit, Lenders shall, in proportion to their respective Applicable Percentages
or pro rata share of the Term Loans, as applicable, purchase participations in
the Overline Loans from the Overline Lenders, (and pay the Overline Lenders in
cash for such participations) to the extent that, upon termination of the
Overline Commitments in accordance with the Credit Agreement, all principal of,
interest on and other amounts due in respect of the Overline Loans have not
been paid in full in cash. The provisions of this Section 4.B are solely for
the benefit of the Overline Lenders and none of Coram, the Borrower or the
Subsidiary Guarantors shall have any rights hereunder.
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C. TAX REFUNDS. Coram, the Borrower, each Subsidiary
Guarantor and the Lenders hereby agree that the Borrower shall prepay the
Overline Loans on each date any Loan Party receives a tax refund in an amount
equal to the amount of such tax refund; provided that the Overline Commitments
shall not be reduced on account of such prepayment; provided further that the
Loan Parties may retain, and shall not be required to make prepayments with,
tax refunds (other than amounts received in respect of the federal tax refund
claim filed for the period ending September 30, 1995) in an aggregate amount
not to exceed $500,000, measured on a cumulative basis from the Fourth
Amendment Effective Date.
D. LITHOTRIPSY PARTNERSHIP PROCEEDS; RELEASES OF
CERTAIN COLLATERAL. Notwithstanding anything to the contrary contained in the
Credit Agreement, including Section 2.12(d) thereof, upon a sale or other
disposition by any Subsidiary of the Borrower of all of such Subsidiary's
interest in any of the entities set forth on Annex II hereto (each a
"LITHOTRIPSY PARTNERSHIP") , a portion of the Net Proceeds from such sale or
other disposition in an amount equal to the amount set forth on Annex II
corresponding to the applicable Lithotripsy Partnership shall be deposited in
the Special Collateral Account (as defined in the First Amendment) as
collateral for the Obligations and applied as provided in Section 4(f) of the
First Amendment and the remaining portion of such Net Proceeds shall be applied
in payment of the Obligations in accordance with the Amended Agreement;
provided that in no event shall the aggregate amount of Net Proceeds deposited
in the Special Collateral Account pursuant to this Section 4.D exceed
$20,000,000; provided further that any of such Net Proceeds released to the
Borrower in accordance with the provisions of Section 4(f) of the First
Amendment may be applied by the Borrower to the principal payments required to
be made from cash flow from operations pursuant to subsection 2.11(b).
Notwithstanding anything to the contrary contained in the
Credit Agreement, the Collateral Agent shall not release any Collateral (other
than a release from the Special Collateral Account in accordance with the terms
of the First Amendment) in connection with a sale or other disposition of any
asset or property by a Loan Party (whether in one transaction or a series of
related transactions) if the Net Proceeds of such Collateral exceeds
$10,000,000 without the prior written consent of all Lenders.
E. CERTAIN OTHER INDEBTEDNESS. The Borrower has revised
its estimate of the aggregate amount of payments required to be made by Coram
and its Subsidiaries on a consolidated basis in respect of Earn-out Obligations
and notes representing the deferred purchase price of prior acquisitions
(collectively, the "SPECIFIED OTHER INDEBTEDNESS") from the estimate included
in the Fourth Amendment Projections (as defined in the Amended Agreement) such
that the amount the Borrower now estimates to be paid in connection with such
Specified Other Indebtedness, measured on a cumulative basis from the Fourth
Amendment Effective Date to the Revolving Maturity Date, is $3,700,000 and
hereby covenants and agrees that the aggregate amount of cash payments (whether
for principal, interest or otherwise) in respect of all such Specified
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Other Indebtedness, measured on a cumulative basis from the Fourth Amendment
Effective Date to the Revolving Maturity Date, shall not exceed such sum.
SECTION 5. CONDITIONS TO EFFECTIVENESS
Sections 1, 2 and 3 of this Amendment shall become effective
only upon the satisfaction of all of the following conditions (the date of
satisfaction of such conditions being referred to herein as the "FOURTH
AMENDMENT EFFECTIVE DATE"):
A. AMENDMENT DOCUMENTS. The Administrative Agent shall
have received (i) a counterpart of this Amendment, duly executed and delivered
by an authorized officer of Coram, the Borrower, each Subsidiary Guarantor,
each Lender and the Fronting Bank and (ii) a promissory note duly executed by
the Borrower in favor of each Lender (collectively, the "AMENDMENT FEE NOTES")
substantially in the form attached hereto as Annex III.
B. WARRANT AGREEMENT. The Borrower shall have executed
and delivered the warrant agreement (the "WARRANT AGREEMENT") substantially in
the form attached hereto as Annex IV and satisfactory in all respects to the
Administrative Agent and the Warrant Agreement shall have become effective in
accordance with its terms. The warrants provided for thereunder (the
"WARRANTS") shall have been issued to the Lenders pursuant to the Warrant
Agreement in the respective amounts provided therein.
C. CORPORATE PROCEEDINGS OF THE LOAN PARTIES. The
Administrative Agent shall have received a copy of the resolutions, in form and
substance satisfactory to the Administrative Agent, of the Board of Directors
of each Loan Party authorizing (i) the execution, delivery and performance of
each of this Amendment, the Amendment Fee Notes, the Warrant Agreement and the
Warrants (collectively, the "AMENDMENT DOCUMENTS") to which such Loan Party is
a party and (ii) with respect to the Borrower, the borrowings contemplated
hereunder, certified by the Secretary or an Assistant Secretary of the
applicable Loan Party as of the Fourth Amendment Effective Date, which
certificate shall be in form and substance satisfactory to the Administrative
Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
D. INCUMBENCY CERTIFICATE. The Administrative Agent
shall have received a Certificate of each Loan Party, dated as of the Fourth
Amendment Effective Date, as to the incumbency and signature of the officers of
the applicable Loan Party executing any Amendment Document satisfactory in form
and substance to the Administrative Agent.
E. CORPORATE DOCUMENTS. The Administrative Agent shall
have received either (i) true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Fourth
Amendment Effective Date as
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complete and correct copies thereof by the Secretary or an Assistant Secretary
of the applicable Loan Party or (ii) a certificate executed by an officer of
the applicable Loan Party, dated as of the Fourth Amendment Effective Date,
certifying that the certificate of incorporation and bylaws of such Loan Party
have not been amended, supplemented or otherwise modified subsequent to the
Closing Date.
F. GOOD STANDING CERTIFICATES. The Administrative Agent
shall have received copies of good standing certificates (together with
verification of tax status) dated as of a recent date prior to the Fourth
Amendment Effective Date, and certified by the Secretary of State of Delaware
with respect to Coram and the Borrower .
G. CONSENTS, LICENSES, APPROVALS, ETC. The
Administrative Agent shall have received, a certificate of an officer of the
Borrower either (i) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by the Loan
Parties, and the validity and enforceability against the Borrower of, the
Amendment Documents and such consents, licenses and approvals shall be in full
force and effect, or (ii) stating that no such consents, licenses or approvals
are so required.
H. LEGAL OPINION. The Administrative Agent shall have
received, with a counterpart for each Lender, the executed legal opinions of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. and Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to the Loan Parties, substantially in the forms of Annex VA and V-B
hereto, respectively.
I. PAYMENT OF FEES AND EXPENSES. The Borrower shall
have paid to the Administrative Agent (i) for distribution to the Overline
Lenders pro rata in accordance with their respective Overline Commitments, a
facility fee in an aggregate amount equal to $625,000 and (ii) for distribution
to the applicable parties, all other fees and expenses required to be paid by
it on or prior to the Fourth Amendment Effective Date.
J. ASSIGNMENT OF TAX REFUND. Coram and the Borrower
shall have executed a separate assignment of all tax refunds claimed by either
Coram and the Borrower and such assignment shall (i) acknowledge Collateral
Agent's existing security interest in all such tax refunds and (ii) be
satisfactory in form and substance to Collateral Agent.
K. EMPLOYMENT AGREEMENT. The Lenders shall have
received copies of an executed employment agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
such agreement shall be satisfactory in form and substance to the
Administrative Agent.
L. SUBORDINATED DEBT AMENDMENT. The Lenders shall have
received a copy of an executed amendment to the Securities Purchase Agreement
which amendment shall, among other things, defer all cash payments (whether for
interest, principal or otherwise) in respect of the Subordinated Bridge Notes
until March 31, 1997
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and such amendment shall be satisfactory in form and substance to the
Administrative Agent.
M. SPECIAL COLLATERAL ACCOUNT. All amounts on deposit
in the Special Collateral Account (as defined in the First Amendment) shall be
applied in payment of the Term Loans and credited against the scheduled
principal payments in forward order of maturity.
N. NOTES RECEIVABLE. The Loan Parties shall have
delivered to Collateral Agent, properly endorsed to the order of Collateral
Agent, all notes or other instruments issued by any employee in favor of any
Loan Party and any other debt instruments held by any Loan Party (other than
that certain promissory note executed by ▇▇▇▇ ▇▇▇▇▇ in the original principal
amount of $50,000) and the applicable Loan Parties shall have executed any
amendments necessary to the Pledge Agreement to pledge such notes thereunder to
secure the Obligations.
O. SUBSIDIARY GUARANTORS. The Administrative Agent
shall have received evidence that each Subsidiary Guarantor as of the Closing
Date that is not a Subsidiary Guarantor named on Exhibit A hereto shall have
been merged into another Loan Party or shall have otherwise ceased to exist,
and all such evidence shall be satisfactory in form and substance to the
Administrative Agent.
P. REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in the Amended Agreement shall be true, correct and
complete in all material respects on and as of the Fourth Amendment Effective
Date to the same extent as though made on and as of such date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier date.
SECTION 6. REPRESENTATIONS AND WARRANTIES
Each of Coram, the Borrower and each of the Subsidiary
Guarantors represents and warrants to each of the Lenders that:
A. The execution, delivery and performance of the
Amendment Documents by each of the Loan Parties party thereto (a) have been
duly authorized by all requisite corporate and, if required, stockholder action
and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Coram, the Borrower or any other Loan
Party, (B) any order of any Governmental Authority or (C) any provisions of any
indenture, agreement or other instrument to which any Loan Party is a party or
by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a
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default under any such indenture, agreement or other instrument or (iii) result
in the creation or imposition of any Lien upon or with respect to any property
or assets of any Loan Party.
B. Each Loan Party has all requisite corporate power and
authority to enter into each Amendment Document to which it is a party and to
carry out the transactions contemplated by, and perform its obligations under,
the Amendment Documents to which it is a party and, with respect to Coram and
the Borrower, the Amended Agreement. Each Amendment Document has been duly
executed and delivered by each Loan Party party thereto and each Amendment
Document and the Amended Agreement constitutes a legal, valid and binding
obligation of each Loan Party party thereto enforceable against each such Loan
Party in accordance with its terms.
SECTION 7. APPLICABLE LAW
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. NO NOVATION
Except as expressly set forth herein, this Amendment shall not
by implication or otherwise limit, impair, constitute a waiver of or otherwise
affect the rights and remedies of any party under the Credit Agreement, the
First Amendment, the Second Amendment or the Third Amendment (including,
without limitation, rights under the access letter delivered pursuant to
Section 4.A of the Third Amendment), nor alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements
contained in the Credit Agreement, the First Amendment, the Second Amendment or
the Third Amendment, all of which are ratified and affirmed in all respects and
shall continue in full force and effect. This Amendment shall apply and be
effective only with respect to the provisions of the Credit Agreement
specifically referred to herein.
Each Loan Party acknowledges and agrees that (i) each of the
Guarantee Agreements and Security Documents to which it is a party or otherwise
bound shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution and effectiveness of this Amendment , (ii) that the term
"Obligations" as used in the Guarantee Agreements and the Security Documents
shall include all obligations under the Amended Agreement in respect of the
Overline Loans and (iii) all Obligations outstanding under the Amended
Agreement on the date hereof are owing without defense, offset or counterclaim
of any kind.
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SECTION 9. RELEASE
Although Coram, the Borrower and the Subsidiary Guarantors do
not believe that they have any claims against Administrative Agent, Collateral
Agent, the Fronting Bank, or any of the Lenders, each is willing to provide
such parties with a general and total release of all such claims in
consideration of the extensions and other benefits which the Loan Parties will
receive pursuant to this Amendment. Accordingly, each Loan Party, for itself,
each of its Subsidiaries and any successor of such Loan Party or such
Subsidiary, hereby knowingly, voluntarily, intentionally and irrevocably
releases and discharges Administrative Agent, Collateral Agent, the Fronting
Bank, each Lender (including each Overline Lender) and each of their respective
officers, directors, agents, affiliates and counsel (each a "RELEASEE") from
any and all actions, causes of action, suits, sums of money, controversies,
variances, trespasses, damages, judgments, extents, executions, losses,
liabilities, costs, expenses, debts, dues, demands, obligations or other claims
of any kind whatsoever, in law, admiralty or equity, which such Loan Party or
any of its Subsidiaries ever had, now have or hereafter can, shall or may have
against any Releasee for, upon or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the Fourth Amendment Effective
Date; provided however, that nothing contained in this release shall be
construed to waive or alter any right of the Loan Parties to claims that may
arise hereafter under sections 542, 543, 544, 545, 547, 548 and 551 of the
Federal Bankruptcy Code.
SECTION 10. COUNTERPARTS; EFFECTIVENESS
This Amendment may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract. Delivery of an executed counterpart of a
signature page of this Amendment by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Amendment.
This Amendment (other than the provisions of Sections 1, 2 and 3 which shall
become effective as provided in Section 5 hereof) shall become effective upon
execution of a counterpart hereof by the Borrower, Coram, each Subsidiary
Guarantor, each Lender and authorization of delivery of such counterparts.
SECTION 11. MISCELLANEOUS
A. The Borrower acknowledges that all costs, fees and
expenses as described in subsection 9.05 of the Credit Agreement, or otherwise
provided for under the Loan Documents, incurred with respect to this Amendment
and the documents and transactions contemplated hereby shall be for the account
of the Borrower.
B. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.
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[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
CORAM HEALTHCARE CORPORATION
By:______________________________
Name:
Title:
CORAM, INC.
By:______________________________
Name:
Title:
EACH SUBSIDIARY GUARANTOR LISTED
ON EXHIBIT A
By:______________________________
Name:
Title:
CHEMICAL BANK, individually and as
Administrative Agent, Collateral
Agent and Fronting Bank
By:______________________________
Name:
Title:
S-1
27
BANK OF IRELAND GRAND CAYMAN
By:______________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:______________________________
Name:
Title:
BANK POLSKA KASA OPIEKI, S.A.
By:______________________________
Name:
Title:
BHF - BANK AKTIENGESELLSCHAFT
(F/K/A Berliner Handels-Und
Frankfurter Bank Grand Cayman Branch)
By:______________________________
Name:
Title:
CERBERUS PARTNERS, L.P.
By:______________________________
Name:
Title:
▇-▇
▇▇
▇▇▇ HIGH YIELD LOAN PORTFOLIO
(a Unit of Chemical Bank),
By:______________________________
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:______________________________
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:______________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________________
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:______________________________
Name:
Title:
S-3
29
THE MITSUBISHI BANK, LIMITED
CHICAGO BRANCH
By:______________________________
Name:
Title:
NBD BANK
By:______________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.
By:______________________________
Name:
Title:
NOMURA HOLDING AMERICA, INC.
By:______________________________
Name:
Title:
S-4
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
By:______________________________
Name:
Title:
THE SUMITOMO TRUST & BANKING
COMPANY, LTD., NEW YORK BRANCH
By:______________________________
Name:
Title:
S-5
31
***************************************************************************
* *
* THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE *
* NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR *
* ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, UNLESS THEY *
* HAVE BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES *
* LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN *
* ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN *
* THIS WARRANT OR IN A TRANSFER UPON THE EXERCISE OF CERTAIN "TAG-ALONG *
* RIGHTS" SET FORTH IN THE WARRANT AGREEMENT DATED AS OF OCTOBER 13, *
* 1995, A COPY OF WHICH MAY BE OBTAINED FROM COMPANY AT ITS PRINCIPAL *
* EXECUTIVE OFFICE. THE HOLDER OF THIS WARRANT IS ALSO OBLIGATED TO *
* SELL THE COMMON STOCK ISSUED UPON THE EXERCISE HEREOF IN ACCORDANCE *
* WITH CERTAIN "DRAG-ALONG" RIGHTS HELD BY CORAM HEALTHCARE *
* CORPORATION, AS SET FORTH HEREIN. THE NUMBER OF WARRANT SHARES *
* ISSUABLE UPON THE EXERCISE HEREOF SHALL BE REDUCED UPON THE EXERCISE *
* BY THE HOLDER OF CERTAIN WARRANTS ISSUED BY CORAM HEALTHCARE *
* CORPORATION, AS SET FORTH HEREIN. *
* *
***************************************************************************
CORAM, INC.
Warrant for the Purchase of Shares of Common Stock
No. R- [ ] Warrant Shares
FOR VALUE RECEIVED, CORAM, INC. ("Company"), a Delaware
corporation, hereby certifies that __________ ("Purchaser"), or its registered
assigns (the "Holder"), is entitled, subject to the provisions of this Warrant,
to purchase from Company, at any time or from time to time during the Exercise
Period, as hereinafter defined, an aggregate of [_________________ ____
([________])] fully paid and nonassessable Warrant Shares, as hereinafter
defined, at a purchase price per share equal to the Exercise Price as
hereinafter defined. The number of Warrant Shares to be received upon the
exercise of this Warrant is subject to adjustment from time to time as
hereinafter set forth.
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Section 1. Definitions. Terms defined in the Warrant
Agreement dated as of October 13, 1995 among Company, Coram Healthcare
Corporation, a Delaware corporation ("Holdings"), and the other purchasers
(including Purchaser) of Warrants and Holdings Warrants named therein, (as in
effect from time to time, the "Warrant Agreement") unless otherwise defined
herein are used herein as therein defined. The following additional terms as
used herein, have the following respective meanings:
"Additional Shares" means any shares of Common Stock other
than Common Stock issued upon the exercise of any Warrant.
"Appraiser" has the meaning set forth in Section 7(d)(iii).
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law to close.
"Common Stock" means the authorized Common Stock, par value
$1.00 per share of Company, and any stock into which such Common Stock may
hereafter be converted or changed.
"Convertible Securities" means rights to subscribe for, or any
rights or options to purchase, shares of Common Stock, or any stock or other
securities convertible into or exchangeable for shares of Common Stock.
"Current Market Price" means for shares of Common Stock the
current market price of such Common Stock as determined in accordance with
section 7(d).
"Exercise Period" means the period from and including the date
hereof to and including the earliest to occur of (i) 5:00 p.m. (New York City
time) on the fifth anniversary of the date hereof (or if such day is not a
Business Day, the next succeeding Business Day), (ii) reduction of the number
of Warrant Shares to 0.0 pursuant to the operation of Section 7(i), (iii)
receipt by Holder of a notice delivered by Holdings pursuant to Section 13,
provided, that if the sale and purchase of the Holder's Common Stock described
in such notice shall not occur for any reason (other than the willful failure
or refusal of Holder to consummate such sale and purchase), the purchase rights
evidenced by this Warrant shall be reinstated until the expiration of the
Exercise Period (determined as if no such notice pursuant to Section 13 had
ever been given), and (iv) the effective date of a Reorganization Transaction
(as defined in Section 9 of the Holdings Warrant) provided that (A) notice of
the record date of the meeting of stockholders entitled to vote on such
transaction shall have been given to the Holder in accordance with Section 7(f)
of the Holdings Warrant, (B) on such effective date, either (I) the Holdings
Warrant shall remain exercisable or (II) provision for the exercise of the
Holdings
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33
Warrants after such date shall have been made in accordance with Section 9 of
the Holdings Warrants and (C) Holdings shall have satisfied the requirements of
Section 4.11 of the Warrant Agreement to the extent applicable to such Holder.
"Exercise Price" means, with respect to any Warrant Share, an
amount equal to the par value of such Warrant Share on the date hereof.
"Fully-Diluted" means, at any time, with reference to the
Common Stock, all shares of such Common Stock outstanding on the date hereof
plus all shares of such Common Stock issuable upon exercise of the Warrants, as
such number of shares may be adjusted from time to time pursuant to the terms
of Section 7 hereof.
"Holdings Common Stock" means the common stock, $.001 par
value, of Holdings, and any stock into which such common stock may hereafter be
converted or changed.
"Holdings Warrants" means the warrants dated October 13, 1995
issued to the Purchaser by Holdings entitling the Purchaser or its registered
assigns to purchase from Holdings shares of Holdings Common Stock.
"Warrant Shares" means the shares of Common Stock deliverable
upon exercise of this Warrant, as adjusted from time to time.
Section 2. Exercise of Warrant. This Warrant may be
exercised in whole or in part, at any time or from time to time, during the
Exercise Period, by presentation and surrender hereof to Company at its
principal office at the address set forth on the signature page hereof (or at
such other address as Company may hereafter notify the Holder in writing), or
at the office of its stock transfer agent or warrant agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by proper payment of
the Exercise Price applicable to the number of Warrant Shares specified in such
form being exercised. Such payment may be made, at the option of the Holder,
either (a) by cash, certified or bank cashier's check or wire transfer in an
amount equal to the product of (i) the Exercise Price times (ii) the number of
Warrant Shares as to which this Warrant is being exercised or (b) by receiving
from Company the number of Warrant Shares equal to (i) the number of Warrant
Shares as to which this Warrant is being exercised minus (ii) the number of
Warrant Shares having a value, based on the Current Market Price on the trading
day immediately prior to the date of such exercise, equal to the product of (x)
the Exercise Price times (y) the number of Warrant Shares as to which this
Warrant is being exercised. If this Warrant should be exercised in part only,
Company shall, upon surrender of this Warrant, execute and deliver a new
Warrant of like tenor and date evidencing the rights of the Holder
3
34
thereof to purchase the balance of the Warrant Shares purchasable hereunder.
Upon receipt by Company of this Warrant and such Purchase Form, together with
the applicable Exercise Price, at such office, in proper form for exercise, the
Holder shall be deemed to be the holder of record of the Warrant Shares,
notwithstanding that the stock transfer books of Company shall then be closed
or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder. Company shall pay any and all documentary
stamp or similar issue taxes payable in respect of the issue of the Warrant
Shares. Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance or delivery of
certificates representing Warrants or Warrant Shares in a name other than that
of the Holder at the time of surrender for exercise, and, until the payment of
such tax, shall not be required to issue such Warrant Shares.
Section 3. Due Authorization; Reservation of Shares. (a)
Company represents and warrants that this Warrant has been duly authorized,
executed and delivered by it and is its valid and binding agreement and
entitles the Holder hereof or its assignees to purchase shares of Common Stock
upon payment of the Exercise Price applicable to such shares. Company hereby
agrees that at all times there shall be reserved for issuance and delivery upon
exercise of this Warrant all shares of its Common Stock or other shares of
capital stock of Company from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free and clear
of all liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights.
(b) Company represents and warrants that the execution
and delivery by it of this Warrant do not require any action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene or constitute a default under or violation of (i) any provision of
applicable law or regulation, (ii) the certificate of incorporation or bylaws
of Company, or (iii) any material agreement, judgment, injunction, order,
decree or other instrument binding upon Company.
Section 4. Fractional Shares. Company agrees that fractional
shares shall be issued upon the exercise of this Warrant.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender hereof to Company for other Warrants of like
tenor and date of different denominations, entitling the Holder or Holders
thereof to purchase in the aggregate the same number of Warrant Shares as such
Holder was then entitled to purchase. Subject to Section 10
4
35
hereof and the provisions of paragraph (b) of this Section 5, the Holder of
this Warrant shall be entitled to assign its interest in this Warrant in whole
or in part to any person or persons. Upon surrender of this Warrant to
Company, with the Assignment Form annexed hereto duly executed and funds
sufficient to pay any transfer tax, Company shall, without charge, execute and
deliver a new Warrant or Warrants of like tenor and date in the name of the
assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants of like tenor and date that carry the same rights
upon presentation hereof at the office of Company, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or for which it
may be exchanged. Upon receipt by Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, Company shall
execute and deliver a new Warrant of like tenor and date.
(b) Simultaneously with any assignment of this Warrant,
in whole or in part, Holder shall assign to the same assignee an interest in
the Holder's Holdings Warrant such that the assignee shall acquire, in addition
to this Warrant or an interest therein, a Holdings Warrant entitling such
assignee to purchase a number of shares of Holdings Common Stock equal to the
product of (i) the number of shares of Holdings Common Stock issuable upon
exercise of the Holdings Warrant immediately prior to such assignment, and (ii)
a fraction, the numerator of which is the number of shares of Common Stock
issuable to such assignee upon exercise of the interest in this Warrant
acquired by the assignee and the denominator of which is the number of shares
of Common Stock issuable upon exercise of this Warrant immediately prior to
such assignment.
(c) Simultaneously with any assignment, in whole or in
part, of Holder's Holdings Warrant, Holder shall assign to the same assignee an
interest in this Warrant entitling such assignee to purchase a number of
Warrant Shares equal to the product of (i) the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to such assignment and
(ii) a fraction, the numerator of which is the number of shares of Holdings
Common Stock issuable to such assignee upon exercise of the interest in the
Holdings Warrant acquired by such assignee and the denominator of which is the
number of shares of Holdings Common Stock issuable upon exercise of the
Holder's Holdings Warrant immediately prior to such assignment. In connection
with any assignment required by this Section 5(c), Holder shall surrender this
Warrant to Company, with the Assignment Form annexed hereto
5
36
duly executed and funds sufficient to pay any transfer tax, Company shall,
without charge, execute and deliver a new Warrant or Warrants like tenor and
date in the name of the assignee or assignees named in such instrument of
assignment and, if the Holder's entire interest is not being assigned, in the
name of the Holder, and this Warrant shall promptly be cancelled, provided,
however, notwithstanding any failure to surrender this Warrant for transfer
when required by this Section 5(c), Company shall be entitled to treat such
assignee as the Holder hereof for all purposes of this Warrant to the extent,
but only to the extent of such required assignment.
Section 6. Rights of the Holder. The Holder shall not, by
virtue hereof, be entitled to any rights of a stockholder in Company, either at
law or equity, and the rights of the Holder are limited to those expressed in
this Warrant.
Section 7. Anti-dilution Provisions and Other Adjustments;
Purchase Right. The number of Warrant Shares which may be purchased upon the
exercise hereof shall be subject to change or adjustment as follows:
(a) Stock Dividends, Splits, Combinations,
Reclassifications, etc. If Company at any time (i) shall declare a dividend or
make a distribution on its common stock payable in shares of its capital stock
(whether shares of Common Stock or of capital stock of any other class), (ii)
shall subdivide shares of its Common Stock into a greater number of shares,
(iii) shall combine or have combined its outstanding Common Stock into a
smaller number of shares or (iv) shall issue by reclassification of its Common
Stock (including any such reclassification in connection with a consolidation
or merger in which Company is the continuing corporation), other securities of
Company the Holder shall be entitled to purchase the aggregate number and kind
of shares of capital stock and other securities which, if the Warrant had been
exercised immediately prior to such event, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) Additional Issuances. If Company at any time shall
issue any Additional Shares at a price less than the Current Market Price per
share of Common Stock or any Convertible Securities (excluding any such
issuance for which the number of Warrant Shares purchasable hereunder shall
have been adjusted pursuant to subsection (a) of this Section 7 and excluding
any issuance or exercise of Warrants), which are exercisable or convertible for
Additional Shares at an exercise or conversion price less than the Current
Market Price per share of Common Stock, the number of Warrant Shares
purchasable hereunder after such issuance shall be determined by multiplying
the number of Warrant Shares purchasable hereunder immediately prior to such
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37
issuance by a fraction, (i) the denominator of which shall be the number of
shares of Fully Diluted Common Stock immediately prior to such issuance plus
the number of shares that the aggregate consideration for the total number of
such Additional shares (including the issue price of any such Convertible
Securities) would purchase at the Current Market Price per share of Common
Stock and (ii) the numerator of which shall be the number of shares of Fully
Diluted Common Stock immediately after such issuance. Shares of Common Stock
owned by or held for the account of Company or any Subsidiary on such date
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall become effective immediately after such issuance. Such
adjustment shall be made successively whenever any such event shall occur.
If Company at any time shall issue two or more securities as a
unit and one or more of such securities shall be Additional Shares or
Convertible Securities subject to this subsection (b), the consideration
allocated to each such security shall be determined in good faith by the board
of directors of Company; provided that if the aggregate issue price of all such
units exceeds $10,000,000, then such allocation shall be determined by an
independent nationally recognized investment banking firm experienced in
valuing securities.
(c) Distribution of Evidences of Indebtedness or Assets.
If Company at any time shall fix a record date for the making of a distribution
to all holders of its Common Stock (including any such distribution to be made
in connection with a consolidation or merger in which Company is to be the
continuing corporation) of evidences of its indebtedness or assets (excluding
dividends paid in or distributions of Company capital stock for which the
number of Warrant Shares purchasable hereunder shall have been adjusted
pursuant to subsection (a) of this Section 7 or regular cash dividends or
distributions payable out of earnings or surplus and made in the ordinary
course of business) the number of Warrant Shares purchasable hereunder after
such record date shall be determined by multiplying the number of Warrant
Shares purchasable hereunder immediately prior to such record date by a
fraction, of which the denominator shall be the Current Market Price per share
of Common Stock on such record date, less the fair market value (as determined
in the reasonable judgment of the Board of Directors of Company and described
in a statement mailed by certified mail to the Holder) of the portion of the
assets or evidences of indebtedness so to be distributed to a holder of one
share of Common Stock, and the numerator shall be such Current Market Price per
share of Common Stock. Such adjustment shall become effective immediately
after such record date. Such adjustment shall be made whenever such a record
date is fixed; and in the event that such distribution is not so made, the
number of Warrant Shares purchasable hereunder shall again be adjusted to be
the number that was in effect immediately prior to such record date.
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38
(d) Determination of Market Price. For the purpose of
any computation under subsection (b) or (c) of this Section 7, the Current
Market Price per share of Common Stock on any record date shall be the average
of the current market value, determined as set forth below, of Common Stock for
the 20 Business Days prior to the date in question.
(i) If the Common Stock is listed on a
national securities exchange or admitted to unlisted trading
privileges on such an exchange, the current market value shall be the
last reported sale price of the Common Stock on such exchange on such
Business Day or if no such sale is made on such day, the mean of the
closing bid and asked prices for such day on such exchange; or
(ii) If the Common Stock is not so listed
or admitted to unlisted trading privileges, the current market value
shall be the mean of the last bid and asked prices reported on such
Business Day (A) by the National Association of Securities Dealers,
Inc. Automatic Quotation System or (B) if reports are unavailable
under clause (A) above by the National Quotation Bureau Incorporated;
or
(iii) If the Common Stock is not so listed
or admitted to unlisted trading privileges and bid and asked prices
are not so reported, the current market value shall be such value as
agreed upon by Company and the Holder or, if Company and the Holder
cannot otherwise agree, the current market value shall be determined
by an independent nationally recognized investment banking firm
experienced in valuing businesses (an "Appraiser") jointly chosen by
the Holder and Company or, if the Holder and Company cannot agree on
the selection of an Appraiser within 10 Business Days, then each of
Company and the Holder shall choose an Appraiser within 10 Business
Days of the end of such first 10-day period, and the current market
value shall be the value agreed upon by such Appraisers or, if the two
Appraisers cannot so agree, the value of a third Appraiser, which
third Appraiser shall be chosen by the two Appraisers; provided that
if neither Purchaser nor any of its affiliates is a Holder, then
Company shall have the sole right to select an Appraiser. If there is
only one Appraiser, all expenses of the Appraiser shall be paid by
Company. If there are two Appraisers, the Holder and Company shall
pay all expenses of the Appraiser chosen by it.
(e) Stock Other Than Common Stock. In the event that at
any time, as a result of an adjustment made pursuant to subsection (a) of this
Section 7, the Holder shall become entitled to receive any shares of the
capital stock of Company other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms
8
39
as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section 7, and the provisions of this Warrant
with respect to the Common Stock shall apply on like terms to any such other
shares.
(f) Notice of Certain Actions. In the event that at any
time:
(A) Company shall authorize the issuance to all holders
of its Common Stock of Convertible Securities; or
(B) Company shall authorize the distribution to all
holders of its Common Stock of evidences of its indebtedness or assets
(other than dividends paid in or distributions of Company capital
stock for which the number of Warrant Shares purchasable hereunder
shall have been adjusted pursuant to subsection (a) of this Section 7
or regular cash dividends or distributions payable out of earnings or
surplus and made in the ordinary course of business); or
(C) Company shall authorize any capital reorganization or
reclassification of the Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in
par value of the Common Stock) or any consolidation or merger to which
Company is a party and for which approval of any stockholders of
Company is required (other than a consolidation or merger in which
Company is the continuing corporation and that does not result in any
reclassification or change of the Common Stock outstanding), or of the
conveyance or transfer of the properties and assets of Company
substantially as an entirety; or
(D) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of Company; or
(E) Company shall propose to take any other action that
would require an adjustment of the number of Warrant Shares
purchasable hereunder pursuant to this Section 7;
then Company shall cause to be mailed by certified mail to the Holder, at least
30 days (or 20 days in any case specified in clause (A) or (B) above) prior to
the applicable record or effective date hereinafter specified, a notice
describing such issuance, distribution, reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation,
winding-up or other action and stating (x) the date as of which the holders of
Common Stock of record entitled to receive any such Convertible Securities or
distributions are to be determined or (y) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall
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40
be entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up.
(g) Common Stock Defined. Whenever reference is made in
this Section 7 to the issue of shares of Common Stock, the term "Common Stock"
shall include any equity securities of any class of Company hereinafter
authorized which shall not be limited to a fixed or determinable amount in
respect of the right of the holders thereof to participate in dividends or
distributions of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of Company. However, subject to the provisions of
Section 9 hereof, shares issuable upon exercise hereof shall include only
Warrant Shares as of the date hereof or shares of any class or classes
resulting from any reclassification or reclassifications thereof or as a result
of any corporate reorganization as provided for in Section 9 hereof.
(h) Increase to Achieve 6% of Fully Diluted Shares. This
Warrant is one of a series of warrants of like tenor (collectively with this
Warrant, the "Warrants") issued by Company to Purchaser and the parties (other
than Holdings) pursuant to the Warrant Agreement (collectively "Purchasers").
The intention of the parties is that the Warrants issued to the Purchasers
shall entitle the Purchasers to purchase, in the aggregate, up to 6% of the
total number of Fully Diluted shares of Common Stock on the date of issuance of
this Warrant and, on such date, the Warrants are exercisable to purchase, in
the aggregate, 6.38 shares of Common Stock. Company represents and warrants to
the Holder that the aggregate number of Warrant Shares issuable upon the
exercise of all Warrants represents 6% of the total number of Fully Diluted
shares of Common Stock on the date of issuance of this Warrant. If the
foregoing representation shall be untrue in any respect whatsoever, the number
of Warrant Shares issuable upon exercise of this Warrant shall be increased
(but in no event decreased) by a number of Warrant Shares equal to the product
of (i) the actual number of Fully Diluted shares of Common Stock on the date of
issuance of this Warrant minus the number of Fully Diluted shares of Common
Stock erroneously represented to be such number on such date times (ii) a
fraction, the numerator of which is the number of Warrant Shares issuable upon
the exercise of this Warrant on the date of issuance and the denominator of
which is the number of Warrant Shares issuable upon exercise of all Warrants on
such date. Upon any increase in the number of Warrant Shares issuable pursuant
to this Section 7(h), Company shall execute and deliver to the Holder an
additional Warrant evidencing the rights of the Holder to purchase such
additional Warrant Shares.
(i) Reduction Upon Exercise of Holdings Warrant. If the
Holder shall exercise the Holdings Warrant held by Holder, at any time or from
time to time, the number of Warrant Shares that
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41
may be purchased upon the exercise hereof shall be reduced to the product of
(i) the number of Warrant Shares issuable upon the exercise hereof immediately
prior to such exercise of the Holdings Warrant, and (ii) a fraction, the
numerator of which is the number of shares of Holdings Common Stock which
remain issuable pursuant to the Holdings Warrant immediately following such
exercise and the denominator of which is the number of shares of Holdings
Common Stock issuable pursuant to the Holdings Warrant immediately prior to
such exercise. Upon any such reduction, Holder shall deliver this Warrant to
Company and Company shall, at its option but without charge to Holder, either
(x) make an appropriate notation on this Warrant setting forth the reduction in
the number of Warrant Shares issuable hereunder or (y) execute and deliver a
new Warrant exercisable for such lesser number of Warrant Shares, provided that
any failure by Holder to surrender this Warrant for notation or replacement
pursuant to this Section 7(i) shall not affect the reduction required by this
Section.
Section 8. Officers' Certificate. Whenever the number of
Warrant Shares purchasable hereunder shall be adjusted as required by the
provisions of Section 7, Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office an officers'
certificate showing the adjusted number of Warrant Shares purchasable hereunder
determined as herein provided, setting forth in reasonable detail the facts
requiring such adjustment and the manner of computing such adjustment. Each
such officers' certificate shall be signed by the chairman, president or chief
financial officer of Company and by the secretary or any assistant secretary of
Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant
executed and delivered pursuant to Section 5 hereof and Company shall,
forthwith after each such adjustment, mail a copy, by certified mail, of such
certificate to the Holder or any such holder.
Section 9. Reclassification, Reorganization, Consolidation or
Merger. In case of any Reorganization Transaction (as hereinafter defined),
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization Transaction
by a holder of the number of shares of Common Stock that might have been
received upon exercise of this Warrant immediately prior to such Reorganization
Transaction. Any such provision shall include provision for adjustments in
respect of such shares of stock and other securities and property that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 9 shall similarly apply
to successive Reorganization Transactions. For
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42
purposes of this Section 9, "Reorganization Transaction" shall mean (excluding
any transaction covered by Section 7 and any transaction pursuant to or in
connection with any bankruptcy, insolvency or similar proceeding with respect
to Company) any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or any consolidation or merger of Company with or
into another corporation (other than a merger with a subsidiary in which
Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or any
sale, lease, transfer or conveyance to another corporation of all or
substantially all of the assets of Company.
Section 10. Transfer Restrictions. The Holder by its
acceptance hereof, represents and warrants that it is acquiring the Warrants
and any Warrant Shares issuable hereunder for its own account and not with an
intent to sell or distribute the Warrants or any Warrant Shares issuable
hereunder except in compliance with applicable United States federal and state
securities law in a manner which would not result in the issuance of the
Warrants or the Warrant Shares being treated as a public offering. Neither
this Warrant nor any of the Warrant Shares issuable hereunder, nor any interest
in either, may be sold, assigned, pledged, hypothecated, encumbered or in any
other manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws and
the applicable terms and conditions of this Warrant and the Warrant Agreement.
Section 11. Listing on Securities Exchanges. Company shall
use all reasonable efforts to list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance upon the exercise of this Warrant, and shall use its reasonable
efforts to maintain such listing, so long as any other shares of Common Stock
shall be so listed, all shares of Common Stock from time to time issuable upon
the exercise of this Warrant; and Company shall use all reasonable efforts to
so list on each national securities exchange, and shall use all reasonable
efforts to maintain such listing of, any other shares of capital stock of
Company issuable upon the exercise of this Warrant if and so long as any shares
of capital stock of the same class shall be listed on such national securities
exchange. Any such listing shall be at Company's expense.
Section 12. Availability of Information. (a) Company shall
comply with the reporting requirements of Sections 13 and 15(d) of the Exchange
Act to the extent it is required to do so under the Exchange Act. Company shall
also cooperate with each
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Holder of any Warrants and holder of any Warrant Shares issuable hereunder in
supplying such information as may be necessary for such holder to complete and
file any information reporting forms currently or hereafter required by the
Securities and Exchange Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrants or Warrant
Shares issuable hereunder. The provisions of this Section 12 shall survive
termination of this Warrant, whether upon exercise of this Warrant in full or
otherwise.
(b) If at any time Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, Company will promptly
furnish at its expense, upon request, for the benefit of Holders from time to
time of Warrants and holders from time to time of Warrant Shares issuable
hereunder, to Holders of Warrants and holders of Warrant Shares issuable
hereunder and prospective purchasers of Warrants and Warrant Shares issuable
hereunder information satisfying the requirements of subsection (d)(4)(i) of
Rule 144A under the Securities Act.
Section 13. Drag-Along. With respect to any proposed
transfer by Holdings and its Subsidiaries of all of the Common Stock held by
them to a proposed purchaser that is not an Affiliate of Holdings, Holdings
shall have the right to require the Holder, together with the holders of all
other Warrants (the "Drag-Along Investors") to sell all (but not less than all)
of their Subject Securities in the proposed transfer to the proposed purchaser.
Any Subject Securities purchased from the Drag-Along Investors pursuant to this
Section 13 shall be paid for in cash, at the same cash price or the same face
value per share or other Subject Security and upon the same terms and
conditions as such proposed transfer by Holdings and its Subsidiaries, it being
agreed, however, that such terms and conditions shall not include the making of
any representations and warranties, indemnities or other similar agreements
other than with respect to the title of each Drag-Along Investor to the Subject
Securities to be sold by it. Company or Holdings shall, not less than 30 nor
more than 90 days prior to any such proposed transfer, notify, or cause to be
notified, each Drag-Along Investor in writing of such proposed transfer. Such
notice shall set forth: (i) a statement that Holdings and its Subsidiaries
desire to sell all of their Common Stock in the proposed transfer, (ii) the
name and address of the proposed purchaser, (iii) the proposed amount and form
of consideration and terms and conditions of payment offered by such proposed
purchaser and (iv) that the proposed purchase has been informed of the
provisions of this Section 13 and desires to purchase the Subject Securities
held by the Drag-Along Investors in accordance with the terms hereof. For
purposes of this Section 13, "Subject Securities" means any shares of Common
Stock issued upon exercise of the Warrants.
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Section 14. Governing Law. THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 15. Warrant Agreement. This Warrant is issued
pursuant to, and is subject to, the Warrant Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, Company has duly caused this Warrant to be
executed by and attested by its duly authorized officer and to be dated as of
October 13, 1995.
CORAM, INC.
By ___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
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PURCHASE FORM
Dated _____________, _____
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing _________ shares of Common Stock and
hereby makes payment of _________ in payment of the exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name __________________________________________________________________
(please typewrite or print in block letters)
Address _______________________________________________________________
Signature _____________________________________________________
_______________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ___________________________________________
hereby sells, assigns and transfers unto
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
its right to purchase ___________________shares of Common Stock represented by
this Warrant and does hereby irrevocably constitute and appoint
_________________ Attorney, to transfer the same on the books of Company, with
full power of substitution in the premises.
Date _______________, ____
Signature_____________________________
47
***************************************************************************
* *
* THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE *
* NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR *
* ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, UNLESS THEY *
* HAVE BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES *
* LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN *
* ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN *
* THIS WARRANT OR IN THE WARRANT AGREEMENT DATED AS OF OCTOBER 13, *
* 1995, A COPY OF WHICH MAY BE OBTAINED FROM HOLDINGS AT ITS PRINCIPAL *
* EXECUTIVE OFFICE. THE NUMBER OF WARRANT SHARES ISSUABLE UPON THE *
* EXERCISE HEREOF SHALL BE REDUCED UPON THE EXERCISE BY THE HOLDER OF *
* CERTAIN WARRANTS ISSUED BY CORAM, INC. AS SET FORTH HEREIN. *
* *
***************************************************************************
CORAM HEALTHCARE CORPORATION
Warrant for the Purchase of Shares of Common Stock
No. ____ [ ] Warrant Shares
FOR VALUE RECEIVED, CORAM HEALTHCARE CORPORATION ("Holdings"),
a Delaware corporation, hereby certifies that __________ ("Purchaser"), or its
registered assigns (the "Holder"), is entitled, subject to the provisions of
this Warrant, to purchase from Holdings, at any time or from time to time
during the Exercise Period, as hereinafter defined, an aggregate of
[_________________ ____ ([________])] fully paid and nonassessable Warrant
Shares, as hereinafter defined, at a purchase price per share equal to the
Exercise Price as hereinafter defined. The number of Warrant Shares to be
received upon the exercise of this Warrant is subject to adjustment from time
to time as hereinafter set forth.
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Section 1. Definitions. Terms defined in the Warrant
Agreement dated as of October 13, 1995 among Holdings, Coram, Inc., a Delaware
corporation ("Company") and the other purchasers (including Purchaser) of
Warrants and Company Warrants named therein (as in effect from time to time,
the "Warrant Agreement") unless otherwise defined herein are used herein as
therein defined. The following additional terms as used herein, have the
following respective meanings:
"Additional Shares" means any shares of Common Stock other
than Common Stock issued upon the exercise of any Warrant.
"Appraiser" has the meaning set forth in Section 7(d)(iii).
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law to close.
"Common Stock" means the authorized Common Stock, par value
$.001 per share, of Holdings, and any stock into which such Common Stock may
hereafter be converted or changed.
"Company Common Stock" means the common stock, $1.00 par
value, of Company, and any stock into which such common stock may hereafter be
converted or changed.
"Company Warrants" means the warrants dated October 13, 1995
issued to the Purchaser by Company entitling the Purchaser or its registered
assigns to purchase from Company shares of Company Common Stock.
"Convertible Securities" means rights to subscribe for, or any
rights or options to purchase, shares of Common Stock, or any stock or other
securities convertible into or exchangeable for shares of Common Stock.
"Current Market Price" means for shares of Common Stock the
current market price of such Common Stock as determined in accordance with
section 7(d).
"Exercise Period" means the period from and including the date
hereof to and including the earlier to occur of (i) 5:00 p.m. (New York City
time) on the fifth anniversary of the date hereof (or if such day is not a
Business Day, the next succeeding Business Day), and (ii) reduction of the
number of Warrant Shares to 0.0 pursuant to the operation of Section 7(i).
"Exercise Price" means, with respect to any Warrant Share, an
amount equal to the par value of such Warrant Share on the date hereof.
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49
"Fully-Diluted" means, at any time, with reference to the
Common Stock, all shares of such Common Stock outstanding on the date hereof
plus all shares of such Common Stock issuable upon exercise of the Warrants, as
such number of shares may be adjusted from time to time pursuant to the terms
of Section 7 hereof.
"Warrant Shares" means the shares of Common Stock deliverable
upon exercise of this Warrant, as adjusted from time to time.
Section 2. Exercise of Warrant. This Warrant may be
exercised in whole or in part, at any time or from time to time, during the
Exercise Period, by presentation and surrender hereof to Holdings at its
principal office at the address set forth on the signature page hereof (or at
such other address as Holdings may hereafter notify the Holder in writing), or
at the office of its stock transfer agent or warrant agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by proper payment of
the Exercise Price applicable to the number of Warrant Shares specified in such
form being exercised. Such payment may be made, at the option of the Holder,
either (a) by cash, certified or bank cashier's check or wire transfer in an
amount equal to the product of (i) the Exercise Price times (ii) the number of
Warrant Shares as to which this Warrant is being exercised or (b) by receiving
from Holdings the number of Warrant Shares equal to (i) the number of Warrant
Shares as to which this Warrant is being exercised minus (ii) the number of
Warrant Shares having a value, based on the Current Market Price on the trading
day immediately prior to the date of such exercise, equal to the product of (x)
the Exercise Price times (y) the number of Warrant Shares as to which this
Warrant is being exercised. If this Warrant should be exercised in part only,
Holdings shall, upon surrender of this Warrant, execute and deliver a new
Warrant of like tenor and date evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt
by Holdings of this Warrant and such Purchase Form, together with the
applicable Exercise Price, at such office, in proper form for exercise, the
Holder shall be deemed to be the holder of record of the Warrant Shares,
notwithstanding that the stock transfer books of Holdings shall then be closed
or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder. Holdings shall pay any and all documentary
stamp or similar issue taxes payable in respect of the issue of the Warrant
Shares. Holdings shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance or delivery of
certificates representing Warrants or Warrant Shares in a name other than that
of the Holder at the time of surrender for exercise, and, until the payment of
such tax, shall not be required to issue such Warrant Shares.
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50
Section 3. Due Authorization; Reservation of Shares. (a)
Holdings represents and warrants that this Warrant has been duly authorized,
executed and delivered by it and is its valid and binding agreement and
entitles the Holder hereof or its assignees to purchase shares of Common Stock
upon payment of the Exercise Price applicable to such shares. Holdings hereby
agrees that at all times there shall be reserved for issuance and delivery upon
exercise of this Warrant all shares of its Common Stock or other shares of
capital stock of Holdings from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free and clear
of all liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights.
(b) Holdings represents and warrants that the execution
and delivery by it of this Warrant do not require any action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene or constitute a default under or violation of (i) any provision of
applicable law or regulation, (ii) the certificate of incorporation or bylaws
of Holdings, or (iii) any material agreement, judgment, injunction, order,
decree or other instrument binding upon Holdings.
Section 4. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any exercise
hereof, Holdings shall pay to the Holder an amount in cash equal to such
fraction multiplied by the Current Market Price of such fractional share.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender hereof to Holdings for other Warrants of like
tenor and date of different denominations, entitling the Holder or Holders
thereof to purchase in the aggregate the same number of Warrant Shares as such
Holder was then entitled to purchase. Subject to Section 10 hereof and the
provisions of paragraph (b) of this Section 5, the Holder of this Warrant shall
be entitled to assign its interest in this Warrant in whole or in part to any
person or persons. Upon surrender of this Warrant to Holdings, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, Holdings shall, without charge, execute and deliver a new Warrant
or Warrants of like tenor and date in the name of the assignee or assignees
named in such instrument of assignment and, if the Holder's entire interest is
not being assigned, in the name of the Holder, and this Warrant shall promptly
be cancelled. This Warrant may be divided or combined with other Warrants of
like tenor and date that carry the same rights upon presentation hereof at the
office of Holdings, together with a written notice specifying the names and
denominations in which
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51
new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into which this Warrant may be
divided or for which it may be exchanged. Upon receipt by Holdings of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, Holdings shall execute and deliver a new Warrant of like
tenor and date.
(b) Simultaneously with any assignment of this Warrant,
in whole or in part, Holder shall assign to the same assignee an interest in
the Holder's Company Warrant such that the assignee shall acquire, in addition
to this Warrant or an interest therein, a Company Warrant entitling such
assignee to purchase a number of shares of Company Common Stock equal to the
product of (i) the number of shares of Company Common Stock issuable upon
exercise of the Company Warrant immediately prior to such assignment, and (ii)
a fraction, the numerator of which is the number of shares of Common Stock
issuable to such assignee upon exercise of the interest in this Warrant
acquired by the assignee and the denominator of which is the number of shares
of Common Stock issuable upon exercise of this Warrant immediately prior to
such assignment.
(c) Simultaneously with any assignment, in whole or in
part, of Holder's Company Warrant, Holder shall assign to the same assignee an
interest in this Warrant entitling such assignee to purchase a number of
Warrant Shares equal to the product of (i) the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to such assignment and
(ii) a fraction, the numerator of which is the number of shares of Company
Common Stock issuable to such assignee upon exercise of the interest in the
Company Warrant acquired by such assignee and the denominator of which is the
number of shares of Company Common Stock issuable upon exercise of the Holder's
Company Warrant immediately prior to such assignment. In connection with any
assignment required by this Section 5(c), Holder shall surrender this Warrant
to Holdings, with the Assignment Form annexed hereto duly executed and funds
sufficient to pay any transfer tax, Holdings shall, without charge, execute and
deliver a new Warrant or Warrants of like tenor and date in the name of the
assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be cancelled, provided, however, notwithstanding
any failure to surrender this Warrant for transfer when required by this
Section 5(c), Holdings shall be entitled to treat such assignee as the Holder
hereof for all purposes of this Warrant to the extent, but only to the extent
of such required assignment.
Section 6. Rights of the Holder. The Holder shall not, by
virtue hereof, be entitled to any rights of a stockholder
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52
in Holdings, either at law or equity, and the rights of the Holder are limited
to those expressed in this Warrant.
Section 7. Anti-dilution Provisions and Other Adjustments;
Purchase Right. The number of Warrant Shares which may be purchased upon the
exercise hereof shall be subject to change or adjustment as follows:
(a) Stock Dividends, Splits, Combinations,
Reclassifications, etc. If Holdings at any time (i) shall declare a dividend
or make a distribution on its common stock payable in shares of its capital
stock (whether shares of Common Stock or of capital stock of any other class),
(ii) shall subdivide shares of its Common Stock into a greater number of
shares, (iii) shall combine or have combined its outstanding Common Stock into
a smaller number of shares or (iv) shall issue by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which Holdings is the continuing corporation), other
securities of Holdings the Holder shall be entitled to purchase the aggregate
number and kind of shares of capital stock and other securities which, if the
Warrant had been exercised immediately prior to such event, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) Additional Issuances. If Holdings at any time shall
issue any Additional Shares at a price less than the Exercise Price per share
of Common Stock or any Convertible Securities (excluding any such issuance for
which the number of Warrant Shares purchasable hereunder shall have been
adjusted pursuant to subsection (a) of this Section 7 and excluding any
issuance or exercise of Warrants), which are exercisable or convertible for
Additional Shares at an exercise or conversion price less than the Exercise
Price per share of Common Stock, the number of Warrant Shares purchasable
hereunder after such issuance shall be determined by multiplying the number of
Warrant Shares purchasable hereunder immediately prior to such issuance by a
fraction, (i) the denominator of which shall be the number of shares of Fully
Diluted Common Stock immediately prior to such issuance plus the number of
shares that the aggregate consideration for the total number of such Additional
shares (including the issue price of any such Convertible Securities) would
purchase at the Exercise Price per share of Common Stock and (ii) the numerator
of which shall be the number of shares of Fully Diluted Common Stock
immediately after such issuance. Shares of Common Stock owned by or held for
the account of Holdings or any Subsidiary on such date shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
become effective immediately after such
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53
issuance. Such adjustment shall be made successively whenever any such event
shall occur.
If Holdings at any time shall issue two or more securities as
a unit and one or more of such securities shall be Additional Shares or
Convertible Securities subject to this subsection (b), the consideration
allocated to each such security shall be determined in good faith by the board
of directors of Holdings; provided that if the aggregate issue price of all
such units exceeds $10,000,000, then such allocation shall be determined by an
independent nationally recognized investment banking firm experienced in
valuing securities.
(c) Distribution of Evidences of Indebtedness or Assets.
If Holdings at any time shall fix a record date for the making of a
distribution to all holders of its Common Stock (including any such
distribution to be made in connection with a consolidation or merger in which
Holdings is to be the continuing corporation) of evidences of its indebtedness
or assets (excluding dividends paid in or distributions of Holdings capital
stock for which the number of Warrant Shares purchasable hereunder shall have
been adjusted pursuant to subsection (a) of this Section 7 or regular cash
dividends or distributions payable out of earnings or surplus and made in the
ordinary course of business) the number of Warrant Shares purchasable hereunder
after such record date shall be determined by multiplying the number of Warrant
Shares purchasable hereunder immediately prior to such record date by a
fraction, of which the denominator shall be the Current Market Price per share
of Common Stock on such record date, less the fair market value (as determined
in the reasonable judgment of the Board of Directors of Holdings and described
in a statement mailed by certified mail to the Holder) of the portion of the
assets or evidences of indebtedness so to be distributed to a holder of one
share of Common Stock, and the numerator shall be such Current Market Price per
share of Common Stock. Such adjustment shall become effective immediately
after such record date. Such adjustment shall be made whenever such a record
date is fixed; and in the event that such distribution is not so made, the
number of Warrant Shares purchasable hereunder shall again be adjusted to be
the number that was in effect immediately prior to such record date.
(d) Determination of Market Price. For the purpose of
any computation under Section 4 or subsection (c) of this Section 7, the
Current Market Price per share of Common Stock on any record date shall be the
average of the current market value, determined as set forth below, of Common
Stock for the 20 Business Days prior to the date in question.
(i) If the Common Stock is listed on a
national securities exchange or admitted to unlisted trading
privileges on such an exchange, the current market value shall be the
last reported sale price of the Common Stock on
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54
such exchange on such Business Day or if no such sale is made on such
day, the mean of the closing bid and asked prices for such day on such
exchange; or
(ii) If the Common Stock is not so listed
or admitted to unlisted trading privileges, the current market value
shall be the mean of the last bid and asked prices reported on such
Business Day (A) by the National Association of Securities Dealers,
Inc. Automatic Quotation System or (B) if reports are unavailable
under clause (A) above by the National Quotation Bureau Incorporated;
or
(iii) If the Common Stock is not so listed
or admitted to unlisted trading privileges and bid and asked prices
are not so reported, the current market value shall be such value as
agreed upon by Holdings and the Holder or, if Holdings and the Holder
cannot otherwise agree, the current market value shall be determined
by an independent nationally recognized investment banking firm
experienced in valuing businesses (an "Appraiser") jointly chosen by
the Holder and Holdings or, if the Holder and Holdings cannot agree on
the selection of an Appraiser within 10 Business Days, then each of
Holdings and the Holder shall choose an Appraiser within 10 Business
Days of the end of such first 10-day period, and the current market
value shall be the value agreed upon by such Appraisers or, if the two
Appraisers cannot so agree, the value of a third Appraiser, which
third Appraiser shall be chosen by the two Appraisers; provided that
if neither Purchaser nor any of its affiliates is a Holder, then
Holdings shall have the sole right to select an Appraiser. If there is
only one Appraiser, all expenses of the Appraiser shall be paid by
Holdings. If there are two Appraisers, the Holder and Holdings shall
pay all expenses of the Appraiser chosen by it.
(e) Stock Other Than Common Stock. In the event that at
any time, as a result of an adjustment made pursuant to subsection (a) of this
Section 7, the Holder shall become entitled to receive any shares of the
capital stock of Holdings other than Common Stock, thereafter the number of
such other shares so receivable upon exercise of this Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common Stock contained in
this Section 7, and the provisions of this Warrant with respect to the Common
Stock shall apply on like terms to any such other shares.
(f) Notice of Certain Actions. In the event that at any
time:
(A) Holdings shall authorize the issuance to all holders
of its Common Stock of Convertible Securities; or
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(B) Holdings shall authorize the distribution to all
holders of its Common Stock of evidences of its indebtedness or assets
(other than dividends paid in or distributions of Holdings capital
stock for which the number of Warrant Shares purchasable hereunder
shall have been adjusted pursuant to subsection (a) of this Section 7
or regular cash dividends or distributions payable out of earnings or
surplus and made in the ordinary course of business); or
(C) Holdings shall authorize any capital reorganization
or reclassification of the Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in
par value of the Common Stock) or any consolidation or merger to which
Holdings is a party and for which approval of any stockholders of
Holdings is required (other than a consolidation or merger in which
Holdings is the continuing corporation and that does not result in any
reclassification or change of the Common Stock outstanding), or of the
conveyance or transfer of the properties and assets of Holdings
substantially as an entirety; or
(D) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of Holdings; or
(E) Holdings shall propose to take any other action that
would require an adjustment of the number of Warrant Shares
purchasable hereunder pursuant to this Section 7;
then Holdings shall cause to be mailed by certified mail to the Holder, at
least 30 days (or 20 days in any case specified in clause (A) or (B) above)
prior to the applicable record or effective date hereinafter specified, a
notice describing such issuance, distribution, reorganization,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding-up or other action and stating (x) the date as of which
the holders of Common Stock of record entitled to receive any such Convertible
Securities or distributions are to be determined or (y) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
(g) Common Stock Defined. Whenever reference is made in
this Section 7 to the issue of shares of Common Stock, the term "Common Stock"
shall include any equity securities of any class of Holdings hereinafter
authorized which shall not be limited to a fixed or determinable amount in
respect of the right of the holders thereof to participate in dividends or
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56
distributions of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of Holdings. However, subject to the provisions of
Section 9 hereof, shares issuable upon exercise hereof shall include only
Warrant Shares as of the date hereof or shares of any class or classes
resulting from any reclassification or reclassifications thereof or as a result
of any corporate reorganization as provided for in Section 9 hereof.
(h) Increase to Achieve 6% of Fully Diluted Shares. This
Warrant is one of a series of warrants of like tenor (collectively with this
Warrant, the "Warrants") issued by Holdings to Purchaser and the parties (other
than Company) pursuant to the Warrant Agreement (collectively "Purchasers").
The intention of the parties is that the Warrants issued to the Purchasers
shall entitle the Purchasers to purchase, in the aggregate, up to 6% of the
total number of Fully Diluted shares of Common Stock on the date of issuance of
this Warrant and on such date, the Warrants are exercisable to purchase, in the
aggregate, 2,569,342 shares of Common Stock. Holdings represents and warrants
to the Holder that the aggregate number of Warrant Shares issuable upon the
exercise of all Warrants represents 6% of the total number of Fully Diluted
shares of Common Stock on the date of issuance of this Warrant. If the
foregoing representation shall be untrue in any respect whatsoever, the number
of Warrant Shares issuable upon exercise of this Warrant shall be increased
(but in no event decreased) by a number of Warrant Shares equal to the product
of (i) the actual number of Fully Diluted shares of Common Stock on the date of
issuance of this Warrant minus the number of Fully Diluted shares of Common
Stock erroneously represented to be such number on such date times (ii) a
fraction, the numerator of which is the number of Warrant Shares issuable upon
the exercise of this Warrant on the date of issuance and the denominator of
which is the number of Warrant Shares issuable upon exercise of all Warrants on
such date. Upon any increase in the number of Warrant Shares issuable pursuant
to this Section 7(h), Holdings shall execute and deliver to the Holder an
additional Warrant evidencing the rights of the Holder to purchase such
additional Warrant Shares.
(i) Reduction Upon Exercise of Company Warrant. If the
Holder shall exercise the Company Warrant held by Holder, at any time or from
time to time, the number of Warrant Shares that may be purchased upon the
exercise hereof shall be reduced to the product of (i) the number of Warrant
Shares issuable upon the exercise hereof immediately prior to such exercise of
the Company Warrant, and (ii) a fraction, the numerator of which is the number
of shares of Company Common Stock which remain issuable pursuant to the Company
Warrant immediately following such exercise and the denominator of which is the
number of shares of Company Common Stock issuable pursuant to the Company
Warrant immediately prior to such exercise. Upon any such reduction, Holder
shall deliver this Warrant to Company and Company shall, at its option but
without charge to Holder, either (x) make an
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appropriate notation on this Warrant setting forth the reduction in the number
of Warrant Shares issuable hereunder or (y) execute and deliver a new Warrant
exercisable for such lesser number of Warrant Shares, provided that any failure
by Holder to surrender this Warrant for notation or replacement pursuant to
this Section 7(i) shall not affect the reduction required by this Section.
Section 8. Officers' Certificate. Whenever the number of
Warrant Shares purchasable hereunder shall be adjusted as required by the
provisions of Section 7, Holdings shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office an officers'
certificate showing the adjusted number of Warrant Shares purchasable hereunder
determined as herein provided, setting forth in reasonable detail the facts
requiring such adjustment and the manner of computing such adjustment. Each
such officers' certificate shall be signed by the chairman, president or chief
financial officer of Holdings and by the secretary or any assistant secretary
of Holdings. Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant
executed and delivered pursuant to Section 5 hereof and Holdings shall,
forthwith after each such adjustment, mail a copy, by certified mail, of such
certificate to the Holder or any such holder.
Section 9. Reclassification, Reorganization, Consolidation or
Merger. In case of any Reorganization Transaction (as hereinafter defined),
Holdings shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization Transaction
by a holder of the number of shares of Common Stock that might have been
received upon exercise of this Warrant immediately prior to such Reorganization
Transaction. Any such provision shall include provision for adjustments in
respect of such shares of stock and other securities and property that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 9 shall similarly apply
to successive Reorganization Transactions. For purposes of this Section 9,
"Reorganization Transaction" shall mean (excluding any transaction covered by
Section 7 and any transaction pursuant to or in connection with any bankruptcy,
insolvency or similar proceeding with respect to Holdings) any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of Holdings (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par value of the Common
Stock) or any consolidation or merger of Holdings with or into another
corporation (other than a merger with a subsidiary in which Holdings is the
continuing corporation and that does not result in any reclassification,
capital reorganization or other change
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of outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or any sale, lease, transfer or conveyance to another corporation
of all or substantially all of the assets of Holdings.
Section 10. Transfer Restrictions. The Holder by its
acceptance hereof, represents and warrants that it is acquiring the Warrants
and any Warrant Shares issuable hereunder for its own account and not with an
intent to sell or distribute the Warrants or any Warrant Shares issuable
hereunder except in compliance with applicable United States federal and state
securities law in a manner which would not result in the issuance of the
Warrants or the Warrant Shares being treated as a public offering. Neither
this Warrant nor any of the Warrant Shares issuable hereunder, nor any interest
in either, may be sold, assigned, pledged, hypothecated, encumbered or in any
other manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws and
the applicable terms and conditions of this Warrant and the Warrant Agreement.
Section 11. Listing on Securities Exchanges. Holdings shall
use all reasonable efforts to list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance upon the exercise of this Warrant, and shall use its reasonable
efforts to maintain such listing, so long as any other shares of Common Stock
shall be so listed, all shares of Common Stock from time to time issuable upon
the exercise of this Warrant; and Holdings shall use all reasonable efforts to
so list on each national securities exchange, and shall use all reasonable
efforts to maintain such listing of, any other shares of capital stock of
Holdings issuable upon the exercise of this Warrant if and so long as any
shares of capital stock of the same class shall be listed on such national
securities exchange. Any such listing shall be at Holdings's expense.
Section 12. Availability of Information. (a) Holdings shall
comply with the reporting requirements of Sections 13 and 15(d) of the Exchange
Act to the extent it is required to do so under the Exchange Act. Holdings
shall also cooperate with each Holder of any Warrants and holder of any Warrant
Shares issuable hereunder in supplying such information as may be necessary for
such holder to complete and file any information reporting forms currently or
hereafter required by the Securities and Exchange Commission as a condition to
the availability of an exemption from the Securities Act for the sale of any
Warrants or Warrant Shares issuable hereunder. The provisions of this Section
12 shall survive termination of this Warrant, whether upon exercise of this
Warrant in full or otherwise.
(b) If at any time Holdings is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, Holdings
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will promptly furnish at its expense, upon request, for the benefit of Holders
from time to time of Warrants and holders from time to time of Warrant Shares
issuable hereunder, to Holders of Warrants and holders of Warrant Shares
issuable hereunder and prospective purchasers of Warrants and Warrant Shares
issuable hereunder information satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Securities Act.
Section 13. Governing Law. THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 14. Warrant Agreement. This Warrant is issued
pursuant to, and is subject to, the Warrant Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, Holdings has duly caused this Warrant to
be executed by and attested by its duly authorized officer and to be dated as
of October 13, 1995.
CORAM HEALTHCARE CORPORATION
By ___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
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PURCHASE FORM
Dated _____________, _____
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing _________ shares of Common Stock and
hereby makes payment of _________ in payment of the exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name __________________________________________________________________
(please typewrite or print in block letters)
Address _______________________________________________________________
Signature _____________________________________________________
_______________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ___________________________________________
hereby sells, assigns and transfers unto
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
its right to purchase ___________________shares of Common Stock represented by
this Warrant and does hereby irrevocably constitute and appoint
_________________ Attorney, to transfer the same on the books of Holdings, with
full power of substitution in the premises.
Date _______________, ____
Signature ______________________________
62
ANNEX IV
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of October 13, 1995 among Coram,
Inc., a Delaware corporation (together with its successors, "the Company"),
Coram Healthcare Corporation, a Delaware corporation (together with its
successors, "Holdings") and the other parties specified on the signature page
hereto (together with their respective successors and assigns, the "Holders").
WHEREAS, Company proposes to issue Company Warrants (as
defined herein), to purchase up to 6% of the total number of Fully-Diluted (as
defined herein) shares of Company Common Stock (as defined herein) to certain
of the lenders that are parties to the Credit Agreement dated as of April 6,
1995 among the Company, Holdings, the financial institutions named therein and
Chemical Bank, as Agent, Collateral Agent and Fronting Bank (as amended and as
in effect from time to time, the "Credit Agreement");
WHEREAS, Holdings proposes to issue to such lenders Holdings
Warrants (as defined herein), to purchase up to 6% of the total number of
Fully-Diluted shares of Holdings Common Stock (as defined herein); and
WHEREAS, the Company Warrants and Holdings Warrants include
provisions requiring that (i) any assignment of a Company Warrant or a Holdings
Warrant be accompanied by an assignment of a like pro rata interest in a
Holdings Warrant or a Company Warrant, as applicable, and (ii) any exercise of
a Company Warrant or a Holdings Warrant shall reduce, by the same pro rata
amount, the number of shares issuable upon exercise of the Holdings Warrant or
the Company Warrant, as the case may be.
NOW THEREFORE the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Terms defined in the Credit
Agreement, unless defined herein, are used as therein defined. The following
terms used in this Agreement shall have the meanings specified below.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law to close.
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"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company Common Stock or the Holdings
Common Stock, or both, as the context may require.
"Company" has the meaning set forth in the introductory
paragraph.
"Company Common Stock" means the authorized common stock, par
value $1.00 per share, of the Company, and any stock into which such common
stock may thereafter be converted or changed.
"Company Conversion Shares" means (i) any shares of Company
Common Stock or other securities of the Company issued upon the exercise of any
Company Warrants and (ii) any securities issued with respect to any of such
shares or other securities referred to in clause (i) upon the conversion
thereof into other securities or by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise; provided that any of such
securities shall cease to be Company Conversion Shares when such securities
shall have (x) been disposed of pursuant to a Public Sale or (y) ceased to be
outstanding.
"Company Warrants" means the warrant or warrants to purchase
Company Common Stock in the form annexed hereto as Exhibit B originally issued
to the Holders, as such Company Warrants may be transferred or otherwise
assigned, but only to the extent not theretofore exercised, redeemed or expired
in accordance with their respective terms.
"Company Warrant Securityholder" means at any time any holder
of any Company Warrants or Company Conversion Shares.
"Conversion Shares" means Company Conversion Shares or
Holdings Conversion Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fully-Diluted" means, at any time, with reference to the
Common Stock of Holdings or Company, all shares of such common stock
outstanding on the date hereof plus all shares of such common stock issuable
upon exercise of the Holdings Warrants or Company Warrants, as the case may be,
as such number of shares may be adjusted from time to time pursuant to the
terms of Section 7 of the Holdings Warrants or Company Warrants, as the case
may be.
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"Holdings" has the meaning set forth in the introductory
paragraph.
"Holdings Common Stock" means the authorized common stock of
Holdings, par value $.001 per share, and any stock into which such common stock
may thereafter be converted or changed.
"Holdings Conversion Shares" means (i) any shares of Holdings
Common Stock or other securities of Holdings issued upon the exercise of any
Holdings Warrants and (ii) any securities issued with respect to any of such
shares or other securities referred to in clause (i) upon the conversion
thereof into other securities or by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise; provided that any of such
securities shall cease to be Holdings Conversion Shares when such securities
shall have (x) been disposed of pursuant to a Public Sale or (y) ceased to be
outstanding.
"Holdings Warrants" means the warrant or warrants to purchase
Holdings Common Stock in the form annexed hereto as Exhibit A originally issued
to the Holders, as such Holdings Warrants may be transferred or otherwise
assigned, but only to the extent not theretofore exercised, redeemed or expired
in accordance with their respective terms.
"Holdings Warrant Securityholder" means at any time any holder
of any Holdings Warrants or Holdings Conversion Shares.
"Initiating Holders" has the meaning set forth in Section 3.1
hereof.
"Other Shares" has the meaning set forth in Section 3.1.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.
"Public Sale" means any sale of securities of the Company or
Holdings (as applicable) to the public pursuant to an offering registered under
the Securities Act or to the public through a broker, dealer or market maker
pursuant to the provisions of Rule 144 (or any successor provision then in
effect) adopted under the Securities Act.
"Registrable Securities" means any Holdings Conversion Shares
until the date (if any) on which such Holdings Conversion Shares shall have
been transferred or exchanged and new certificates for them not bearing a
legend restricting further transfer shall have been delivered by Holdings and
subsequent
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disposition of them shall not require registration or qualification of them
under the Securities Act or any similar state law then in force.
"Registration Expenses" means all expenses incident to
Holdings's performance of or compliance with Sections 3.1 through 3.5 hereof,
including (i) all registration, filing and NASD fees, (ii) all fees and
expenses of complying with securities or blue sky laws, (iii) all word
processing, duplicating and printing expenses, (iv) all messenger and delivery
expenses, (v) the fees and disbursements of counsel for Holdings and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of any one counsel (or,
in the case of any registration effected pursuant to Section 3.1, as the
Initiating Holders shall have selected to represent all holders of the
Registrable Securities being registered), (vii) premiums and other costs of
policies of insurance (if any) against liabilities arising out of the public
offering of the Registrable Securities being registered if Holdings desires
such insurance and (viii) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but not including
underwriting discounts and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not to be borne by Holdings,
such expenses shall not include (i) salaries of the personnel of or general
overhead expenses of the Company or Holdings, (ii) auditing fees, (iii)
premiums or other expenses relating to liability insurance required by
underwriters of Holdings or (iv) other expenses for the preparation of
financial statements or other data, to the extent that any of the foregoing
either is normally prepared by the Company or Holdings in the ordinary course
of its business or would have been incurred by the Company or Holdings had no
public offering taken place.
"Securities Act" means the Securities Act of 1933, as amended.
"Title Representations" has the meaning set forth in Section
2.1.
ARTICLE II
TAG-ALONG RIGHTS
SECTION 2.1 Company Level Tag-Along Rights. If Holdings or
any of its Affiliates (any such Person for purposes of this Section 2.1, the
"Transferor") wishes to transfer its shares of Company Common Stock or any
portion thereof to any Person (the "Transferee"), the Transferor shall first
give to the Company and each Company Warrant Securityholder (pursuant to a list
provided by the Company) a written notice (a "Transfer
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Notice"), executed by it and the Transferee and containing (i) the number of
shares of Company Common Stock that the Transferee proposes to acquire from the
Transferor, (ii) the name and address of the Transferee, (iii) the proposed
purchase price, terms of payment and other material terms and conditions of
such proposed transfer, (iv) an estimate, in the Transferor's reasonable
judgment, of the fair market value of any non-cash consideration offered by the
Transferee and (v) an offer by the Transferee or Transferor to purchase, upon
the purchase by the Transferee of any shares of Company Common Stock owned by
the Transferor and for the same per share consideration, that number of Company
Conversion Shares (or if such number is not an integral number, the next
integral number which is greater than such number) of each Company Warrant
Securityholder which shall be the product of (x) the aggregate number of
Company Conversion Shares either then owned, or issuable upon exercise of
Company Warrants then owned, by such Company Warrant Securityholder and (y) a
fraction, the numerator of which shall be the number of shares of Company
Common Stock indicated in the Transfer Notice as subject to purchase by the
Transferee from the Transferor and the denominator of which shall be the sum of
(A) the total number of shares of Company Common Stock then owned by the
Transferor and its Affiliates plus (B) the total number of Company Conversion
Shares either then owned, or issuable upon exercise of Company Warrants then
owned, by each Company Warrant Securityholder. Each Company Warrant
Securityholder shall have the right, for a period of 20 days after the Transfer
Notice is given, to accept such offer in whole or in part, exercisable by
delivering a written notice to the Transferor within such 20-day period,
stating therein the number of shares of Company Common Stock (which may be the
number of shares set forth in the offer by the Transferor or Transferee, as the
case may be, or a portion thereof) to be sold by such Company Warrant
Securityholder to the Transferor or Transferee, as the case may be. If any
Company Warrant Securityholder shall elect to accept the offer set forth in the
Transfer Notice, such election shall also be deemed an irrevocable agreement by
such Company Warrant Securityholder to pay upon and subject to consummation of
such transaction its pro rata share of the out-of-pocket expenses incurred by
the Transferor and its Affiliates in connection with the Transferee's offer
(including the fees and expenses of counsel to the Transferor and its
Affiliates), it being understood that this sentence does not require such
Company Warrant Securityholder to make any representations and warranties,
indemnities or other similar agreements other than representations and
warranties with respect to title to the Company Common Stock being sold and
authority to sell such Company Common Stock and indemnities related thereto
("Title Representations"). Prior to the earlier of (x) the end of such 20-day
period or (y) the acceptance or rejection by each Company Warrant
Securityholder of the Transferee's or Transferor's offer, as the case may be,
neither the Transferor nor its Affiliates will complete any sale of shares of
Company Common Stock to the Transferee. Thereafter, for
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a period of 120 days after the prohibition under the preceding sentence shall
have terminated, the Transferor may sell to the Transferee for the
consideration stated and on the terms set forth in the Transfer Notice the
shares of Company Common Stock stated in the Transfer Notice as subject to
purchase by the Transferee, provided that the Transferor or Transferee, as the
case may be, shall simultaneously purchase the number of shares of Company
Common Stock as calculated above from those Company Warrant Securityholders who
have accepted the Transferor's or Transferee's offer, as the case may be.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1 Registration on Request. (a) At any time or from
time to time after the date three (3) months from the date hereof, upon the
written request of the holder or holders of a majority of the Holdings
Conversion Shares and Holdings Warrants outstanding at the time of such request
(such majority determined, for purposes of this Section 3.1, by calculating the
number of Holdings Conversion Shares for which such Holdings Warrants are then
exercisable) (the "Initiating Holders"), requesting that Holdings effect the
registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities and specifying the intended method of
disposition thereof, Holdings will promptly give written notice of such
requested registration to all holders of Holdings Warrants and Registrable
Securities, and thereupon Holdings will use its best efforts to effect the
registration under the Securities Act of:
(i) the Registrable Securities which Holdings has
been so requested to register by such Initiating Holders for
disposition in accordance with the intended method of disposition
stated in such request;
(ii) all other Registrable Securities the holders
of which shall have made a written request to Holdings for
registration thereof within 30 days after the giving of such written
notice by Holdings (which request shall specify the intended method of
disposition of such Registrable Securities); and
(iii) all shares of Holdings Common Stock which
Holdings may elect to register in connection with the offering of
Registrable Securities pursuant to this Section 3.1, whether for its
own account or for the account of a holder of Holdings Common Stock;
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the
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Registrable Securities and the additional shares of Holdings Common Stock, if
any, to be so registered, provided that the Holdings Warrant Securityholders as
a class shall be entitled to not more than one registration upon request
pursuant to this Section 3.1.
(b) Registration under this Section 3.1 shall be on such
appropriate registration form of the Commission (i) as shall be selected by
Holdings and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in their request for such registration. Holdings agrees to include
in any such registration statement all information which is required under the
Securities Act to effect any such registration.
(c) Holdings will pay all Registration Expenses in
connection with the one registration which may be requested pursuant to this
Section 3.1, provided that, in addition, Holdings shall pay all Registration
Expenses in connection with any registration upon request pursuant to which
less than all of the Registrable Securities requested to be registered by such
Initiating Holders are registered, but no such registration shall be counted as
a requested registration for purposes of this Section 3.1.
(d) A registration requested pursuant to this Section 3.1
shall not be deemed to have been effected (i) unless a registration statement
with respect thereto has become effective; provided that a registration which
does not become effective after Holdings has filed a registration statement
with respect thereto solely by reason of the refusal to proceed by the
Initiating Holders (other than a refusal to proceed based upon the advice of
counsel relating to a matter with respect to Holdings) shall be deemed to have
been effected by Holdings at the request of the Initiating Holders unless the
Initiating Holders shall have elected to pay all Registration Expenses in
connection with such registration (including Registration Expenses of the type
described in the proviso contained in the definition of the term Registration
Expenses), (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason, other than
by reason of some act or omission by any Holdings Warrant Securityholder, or
(iii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by any Holdings
Warrant Securityholder.
(e) If a requested registration pursuant to this Section
3.1 involves an underwritten offering, the underwriter or underwriters thereof
shall be selected by Holdings subject to the consent of the holders of at least
a majority (by a number of
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shares) of the Registrable Securities as to which registration has been
requested (which consent shall not be unreasonably withheld or delayed).
(f) If a requested registration pursuant to this Section
3.1 involves an underwritten offering, and the managing underwriter shall
advise Holdings (with a copy of any such notice to each holder of Registrable
Securities requesting registration) that, in its opinion, the number of
securities requested to be included in such registration (including securities
proposed to be sold for the account of Holdings) exceeds the number which can
be sold in such offering within a price range acceptable to the Initiating
Holders, Holdings will include in such registration, to the extent of the
number which Holdings is so advised can be sold in such offering, (i) first,
Registrable Securities requested to be included in such registration by the
holder or holders of Registrable Securities, pro rata among such holders
requesting such registration on the basis of the number of such securities
requested to be included by such holders, (ii) second, all shares proposed to
be included by Holdings in such registration and (iii) third, all shares other
than Registrable Shares (any such shares with respect to any registration,
"Other Shares") requested to be included in such registration by the holder or
holders thereof.
(g) Holdings may postpone for up to 120 days (without the
possibility of extension) the filing or the effectiveness of a registration
statement for a requested registration pursuant to this Section 3.1 (i) if
Holdings in good faith determines that such requested registration would
reasonably be expected to have a material adverse effect on (A) any merger,
consolidation, tender offer, or similar transaction involving Holdings, the
preparation for which has then commenced or is then contemplated or (B) a
public offering or private placement of securities under the Securities Act,
the preparation for the offering of which has then commenced or is then
contemplated, or (ii) if the Board of Directors of Holdings determines in good
faith that the filing or effectiveness of such registration statement could
require the disclosure of any other material non-public corporate development
not otherwise required to be disclosed at such time and that such disclosure is
not in the best interest of Holdings; provided, however, that Holdings shall
not defer its obligations in this manner more than once.
SECTION 3.2 Incidental Registration. (a) If Holdings at any
time after the date hereof proposes to register any of its securities under the
Securities Act (other than (x) by a registration on Form S-4 or S-8 or any
successor or similar forms or (y) pursuant to Section 3.1) whether for its own
account or for the account of the holder or holders of any Other Shares, it
will each such time give prompt written notice to all Holdings Warrant
Securityholders of its intention to do so and of such holders' rights under
this Section 3.2. Upon the written request
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of any such holder made within 10 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), Holdings
will use its best efforts to effect the registration under the Securities Act
of all Registrable Securities which Holdings has been so requested to register
by the holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the securities which Holdings proposes
to register; provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, Holdings
shall determine for any reason either not to register or to delay registration
of such securities, Holdings may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the then existing rights
(if any) of any Holdings Warrant Securityholder or Holdings Warrant
Securityholders entitled to do so to request that such registration be effected
as a registration under Section 3.1, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this Section 3.2 shall relieve
Holdings of its obligation to effect any registration upon request under
Section 3.1, nor shall any such registration hereunder be deemed to have been
effected pursuant to Section 3.1. Holdings will pay all Registration Expenses
in connection with each registration of Registrable Securities pursuant to this
Section 3.2.
(b) If Holdings at any time proposes to register any of
its securities under the Securities Act as contemplated by Section 3.2 and such
securities are to be distributed by or through one or more underwriters,
Holdings will, if requested by any holder of Registrable Securities as provided
in this Section 3.2, use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters, provided that if
the managing underwriter of such underwritten offering shall inform Holdings
and holders of the Registrable Securities requesting such registration and all
other holders of any other shares of Common Stock of Holdings which shall have
exercised, in respect of such underwritten offering, registration rights
comparable to the rights under this Section 3.2 by letter of its belief that
inclusion in such distribution
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of all or a specified number of such securities proposed to be distributed by
such underwriters would interfere with the successful marketing of the
securities being distributed by such underwriters (such letter to state the
approximate number of such Registrable Securities and such Other Shares
proposed so to be registered which may be distributed without such effect, if
any), then Holdings may, upon written notice to all holders of such Registrable
Securities and holders of such Other Shares, reduce pro rata (if and to be
extent stated by such managing underwriter to be necessary to eliminate such
effect) the number of such Registrable Securities and Other Shares the
registration of which shall have been requested by each holder thereof so that
the resultant aggregate number of such Registrable Securities and Other Shares
(if any) so included in such registration, together with the number of
securities to be included in such registration for the account of Holdings,
shall be equal to the number of shares stated in such managing underwriter's
letter.
SECTION 3.3 Registration Procedures. (a) If and whenever
Holdings is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 and 3.2, Holdings shall,
as expeditiously as possible under the then existing facts and circumstances:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration
(including such audited financial statements as may be required by the
Securities Act) and thereafter use its best efforts to cause such
registration statement to become and remain effective; provided
further that Holdings may discontinue any registration of its
securities which are not Registrable Securities being registered
pursuant to Section 3.1 at any time prior to the effective date of the
registration statement relating thereto; provided further that before
filing such registration statement or any amendments thereto, Holdings
will furnish to the counsel selected by the holders of Registrable
Securities which are to be included in such registration copies of all
such documents proposed to be filed;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until the
earliest of (x) in the case of a registration pursuant to Section 3.1,
the expiration of 120 days after such registration statement becomes
effective, or (y) in the case of a registration pursuant to Section
3.2, the expiration of 90 days after such registration statement
becomes effective, or (z) in either
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case, the date on which all of such securities have been disposed of
in a public offering;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and each
underwriter, if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller and
underwriter, if any, may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities owned
by such seller;
(iv) use its best efforts to register or qualify
all Registrable Securities and other securities covered by such
registration statement under blue sky or similar laws of such
jurisdictions as any seller thereof and any underwriter of the
securities being sold by such seller shall reasonably request, to keep
such registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such seller
and underwriter to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that Holdings shall not
for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this subdivision (iv) be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction or
to consent to general service of process in any such jurisdiction or
take any unreasonable action in any jurisdiction not material to the
disposition of such Registrable Securities;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable securities except that Holdings
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (v) be obligated to
be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction or take
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any unreasonable action in any jurisdiction not material to the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable
Securities a signed counterpart, addressed to such seller and the
underwriters, if any, of
(x) an opinion of counsel for Holdings, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting
agreement), reasonably satisfactory in form and substance to
such seller, and
(y) a "comfort" letter, dated the effective date
of such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified the
financial statements of Holdings included in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountant's letters delivered
to the underwriters in underwritten public offerings of securities;
(vii) notify each seller of Registrable Securities
covered by such registration statement and the managing underwriter or
underwriters, if any, promptly and confirm such advice in writing
promptly thereafter:
(A) when the registration statement, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has
been filed, and, with respect to the registration statement or
any post-effective amendment thereto, when the same has become
effective;
(B) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information;
(C) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration or the
initiation of any proceedings by any Person for that purpose;
and
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(D) of the receipt by Holdings of any
notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction or the
initiation or threat of any proceeding for such purpose;
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon Holdings's discovery that, or upon the happening of any event as
a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to such seller
and each underwriter, if any, a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing;
(ix) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
(x) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(xi) make available to representatives of the
holders of Registrable Securities participating in the offering, any
underwriter participating in any disposition pursuant to the
registration and any attorney or accountant retained by such selling
holders or underwriter the opportunity to conduct reasonable due
diligence customarily conducted with respect to an issuer in
connection with an underwritten public offering;
(xii) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered
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by such registration statement from and after a date not later than
the effective date of such Registration Statement;
(xiii) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the Common Stock of Holdings is then listed;
and
(xiv) use its best efforts to provide a CUSIP
number for the Registrable Securities, not later than the effective
date of the registration.
It shall be a condition precedent to the obligation of Holdings to take any
action pursuant to this Article III that each seller of Registrable Securities
as to which any registration is being effected to furnish Holdings such
information regarding such seller and the distribution of such securities as
Holdings may from time to time reasonably request in writing for purposes of
preparing the relevant registration statement and amendments and supplements
thereto.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt of any notice
from Holdings of the occurrence of any event of the kind described in clauses
(C) or (D) of subdivision (vii) of Section 3.3(a) or in subdivision (viii) of
Section 3.3(a), such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of
notification of the withdrawal or termination of any stop order or suspension
referred to in subdivision (vii) or of the copies of the supplemented or
amended prospectus contemplated by subdivision (viii) of Section 3.3(a), as
applicable. In the event Holdings shall give any such notice, the periods
specified in subdivision (ii) of Section 3.3(a) shall be extended by the length
of the period from and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received such
initial notice to the date on which each such seller has received notice that
the holder's disposition of Registrable Securities may be resumed or the copies
of the supplemented or amended prospectus contemplated by subdivision (viii) of
Section 3.3(a), as the case may be.
(c) If any such registration or comparable statement
refers to any holder of Registrable Securities by name or otherwise as the
holder of any securities of Holdings, then such holder shall have the right to
require, in the event that such reference to such holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force, the deletion of the reference to such holder.
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SECTION 3.4 Underwritten Offerings. (a) If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 3.1, Holdings and each such
holder will enter into an underwriting agreement with such underwriters for
such offering, such agreement to be customary and otherwise satisfactory in
substance and form to Holdings, each such holder and the underwriters, and to
contain such representations and warranties by Holdings and such holder and
such other terms as are generally prevailing in agreements of such type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 3.5. The holders of the Registrable Securities will
cooperate with Holdings in the negotiation of the underwriting agreement.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of any equity securities of Holdings,
during the ten days prior to and the 180 days (or such lesser period as is
applicable to officers, directors or other insiders or affiliates of Holdings)
after any underwritten registration pursuant to Section 3.1 or 3.2 has become
effective, except as part of such underwritten registration, whether or not
such holder participates in such registration, and except as otherwise
permitted by the managing underwriter of such underwriting (if any). Each
holder of Registrable Securities agrees that Holdings may instruct its transfer
agent to place stop transfer notations in its records to enforce this Section
3.4(b).
(c) Holdings agrees (x) not to sell, make any short sale
of, loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of its equity securities or securities
convertible into or exchangeable or exercisable for any of such securities
during the ten days prior to and the 120 days after any registration pursuant
to Section 3.1 or 3.2 has become effective, except (i) as part of such
registration, (ii) pursuant to registrations on Form S-4 or S-8 or any
successor or similar forms thereto or (iii) as otherwise permitted by the
managing underwriter of such offering (if any), and (y) to use all commercially
reasonable efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of such
securities purchased from Holdings at any time after the date of this Agreement
(other than in a public offering) to agree not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of such securities during such period
except as part of such underwritten registration.
(d) No Person may participate in any underwritten
offering hereunder unless such Person (i) agrees to sell such
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Person's securities on the basis provided in any underwriting arrangements as
approved, subject to the terms and conditions hereof, by the Person or a
majority of the Persons entitled to approve such arrangements and (ii)
completes and executes all agreements, questionnaires, indemnities and other
documents (other than powers of attorney) required under the terms of such
underwriting arrangements.
SECTION 3.5 Indemnification. (a) Holdings agrees to
indemnify and hold harmless each holder of Registrable Securities whose
Registrable Securities are covered by any registration statement, its directors
and officers and each other Person, if any, who controls such holder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any such indemnified party may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
Holdings will reimburse each such indemnified party for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
Holdings shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to Holdings by or on behalf of (x) such indemnified party
or (y) any underwriter specifically for use in the preparation thereof. In
addition, Holdings shall indemnify any underwriter of such offering and each
other Person, if any, who controls any such underwriter within the meaning of
the Securities Act in substantially the same manner and to substantially the
same extent as the indemnity herein provided to each indemnified party. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder, provided, however, that the indemnification contained in this Section
shall not inure to the benefit of any Person (or any Person controlling such
Person) on account of any losses, claims, damages or liabilities arising out of
any claim by any purchaser of
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Registrable Securities based on any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in any
preliminary prospectus if the final prospectus, as amended or supplemented,
shall not have been delivered or sent to such purchaser within the time
required by the Securities Act and the untrue statement or alleged untrue
statement or omission or alleged omission contained in such preliminary
prospectus was corrected in such final prospectus, as amended or supplemented,
provided that Holdings had delivered the final prospectus as amended or
supplemented to the holders of Registrable Securities and the underwriters on a
timely basis to permit such delivery or sending.
(b) Each prospective seller of Registrable Securities
hereunder shall indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 3.5) Holdings, each
director of Holdings, each officer of Holdings and each other person, if any,
who controls Holdings within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereof, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to Holdings
by or on behalf of such seller specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. In addition, each prospective seller of
Registrable Securities hereunder shall indemnify any underwriter of any
offering contemplated thereby and each other Person, if any, who controls any
such underwriter within the meaning of the Securities Act in substantially the
same manner and to substantially the same extent as the indemnity herein
provided to Holdings. Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of Holdings or any
such director, officer or controlling person or underwriter and shall survive
the transfer of such securities by such seller.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 3.5, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 3.5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless counsel to
such indemnified party has advised it that in such counsel's
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reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) If the indemnification provided for in the preceding
subdivisions of this Section 3.5 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability (i) in such proportion
as is appropriate to reflect the relative benefits received by Holdings on the
one hand and the holder or underwriter, as the case may be, on the other from
the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of Holdings on the one hand
and of the holder or underwriter, as the case may be, on the other in
connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by Holdings on the one hand and
the holder or underwriter, as the case may be, on the other in connection with
the distribution of the Registrable Securities shall be deemed to be in the
same proportion as the total net proceeds received by Holdings from the initial
sale of the Registrable Securities by Holdings to the purchaser bear to the
gain realized by the selling holder or the underwriting discounts and
commissions received by the underwriter, as the case may be. The relative
fault of Holdings on the one hand and of the holder or underwriter, as the case
may be, on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
to state
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a material fact relates to information supplied by Holdings, by the holder or
by the underwriter and parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided that the foregoing contribution agreement shall not inure to the
benefit of any indemnified party if indemnification would be unavailable to
such indemnified party by reason of the proviso contained in the first sentence
of subdivision (a) of this Section 3.5, and in no event shall the obligation of
any indemnifying party to contribute under this subdivision (d) exceed the
amount that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions (a) or
(b) of this Section 3.5 had been available under the circumstances.
Holdings and the holders of Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this subdivision
(d) were determined by pro rata allocation (even if the holders and any
underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph and subdivision (c) of this
Section 3.5. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this subdivision (d), no
holder of Registrable Securities or underwriter shall be required to contribute
any amount in excess of the amount such Person would have been required to pay
to an indemnified party if the above indemnity was available. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
SECTION 3.6 Rule 144; Rule 144A. (a) If the Company or
Holdings shall have filed a registration statement pursuant to Section 12 of
the Exchange Act or a registration statement pursuant to the Securities Act,
the Company or Holdings, as the case may be, will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder and will take such further
action as any holder of Conversion Shares may reasonably request, all to the
extent required from time to time to enable such holder to sell Conversion
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the
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request of any holder of Conversion Shares, the Company or Holdings, as the
case may be, will deliver to such holder a written statement as to whether it
has complied with such requirements.
(b) The Company and Holdings represent and warrant that
as of the date hereof, the Company Common Stock is not, and is not part of a
class of securities that is, listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in an automated
inter-dealer quotation system. For so long as any Conversion Shares are
restricted securities within the meaning of Rule 144(a)(3) under the Securities
Act, Holdings and the Company covenant and agree that they shall, during any
period in which it is not subject to Section 13 or 15(d) of the Exchange Act,
make available to any holder of Conversion Shares in connection with the sale
of such holder's Conversion Shares and any prospective purchaser of Conversion
Shares from such holder, in each case upon request, the information specified
in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act
relating to Holdings and the Company, respectively.
SECTION 3.7 Certain Limitations on Registration Rights.
Notwithstanding any other provision in this Agreement to the contrary, Holdings
shall not be obligated to register the Registrable Securities of any holder if
Holdings shall deliver to such holder an opinion addressed to such holder of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, or such other counsel to Holdings reasonably
satisfactory to such holder and its counsel, in form and substance reasonably
satisfactory to such holder, to the effect that the sale or other disposition
by such holder of its Registrable Securities in the manner proposed by such
holder may be effected without registering such Registrable Securities under
the Securities Act.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Notices. All notices and other communications
provided for hereunder shall be dated and in writing and shall be deemed to
have been given (i) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified in this Section and telephonic confirmation of
receipt thereof is obtained or (ii) if given by mail, prepaid overnight courier
or any other means, when received at the address specified in this Section or
when delivery at such address is refused. Such notices shall be addressed to
the appropriate party to the attention of the person who executed this
Agreement at the address or telecopy number set forth under such party's
signature below (or to the attention of such other person or to such other
address or telecopy number as such party
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shall have furnished to each other party in accordance with this Section 4.1).
SECTION 4.2 Binding Nature of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto or their successors in interest, except as expressly otherwise
provided herein.
SECTION 4.3 Descriptive Headings. The descriptive headings
of the several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 4.4 Specific Performance. Without limiting the
rights of each party hereto to pursue all other legal and equitable rights
available to such party for the other parties' failure to perform their
obligations under this Agreement, the parties hereto acknowledge and agree that
the remedy at law for any failure to perform their obligations hereunder would
be inadequate and that each of them, respectively, shall be entitled to
specific performance, injunctive relief or other equitable remedies in the
event of any such failure.
SECTION 4.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 4.1. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
SECTION 4.6 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 4.7 Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other
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respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent permitted by
law.
SECTION 4.8 Entire Agreement. This Agreement is intended by
the parties hereto as a final and complete expression of their agreement and
understanding in respect to the subject matter contained herein. This
Agreement supersedes all prior agreement and understandings, written or oral,
between the parties with respect to such subject matter.
SECTION 4.9 Amendment and Waiver. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by Holdings, the Company, Company Warrant Securityholders owning, or
having Company Warrants exercisable for, at least a majority of shares of
Company Common Stock either then outstanding or issuable upon the exercise of
all outstanding Company Warrants and Holdings Warrant Securityholders owning,
or having Holdings Warrants exercisable for, at least a majority of the shares
of Holdings Common Stock either then outstanding or issuable upon the exercise
of all outstanding Holdings Warrants, provided that no such amendment may
adversely affect the rights of any Company Warrant Securityholder or any
Holdings Warrant Securityholder, unless signed by such Company Warrant
Securityholder or Holdings Warrant Securityholder (as applicable). Any
provision may be waived if, but only if, such waiver is in writing and is
signed by the party or parties waiving such provision and for whose benefit
such provision is intended.
SECTION 4.10 No Third Party Beneficiaries. Nothing in this
Agreement shall convey any rights upon any person or entity which is not a
party or an assignee of a party to this Agreement, other than the indemnified
parties specified in Section 3.5.
SECTION 4.11 Holdings Repurchase. Immediately prior to
the consummation of any Reorganization Transaction (as defined in Section 9 of
the Holdings Warrant), Holdings shall repurchase, and each applicable Holder
shall sell, all Company Common Stock issued pursuant to the Company Warrant of
such Holder outstanding as of such date in exchange for (i) an aggregate number
of shares of Holdings Common Stock that such Holder would have been holding as
of such date, if such Holder (or any predecessor to such Holder, as the case
may be), on each date such Company Common Stock was issued, exercised its right
to purchase Holdings Common Stock under its Holdings Warrant instead of Company
Common Stock under the Company Warrant and (ii) cash in an amount equal to the
difference between the Exercise Price (as defined in the Company Warrant)
actually paid for such Company Common Stock and the Exercise Price (as defined
in the Holdings Warrant) that would have been paid pursuant to such Holdings
Warrant, had the purchases referred to in the preceding clause (i) actually
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occurred. Holdings shall (x) at all times reserve for issuance all shares of
Holdings Common Stock issuable hereunder in accordance with Section 3 of the
Holdings Warrant, and (y) accomplish such purchase in a manner so as to afford
such Holder all rights as a holder of Holdings Common Stock applicable to or
arising out of such Reorganization Transaction including, without limitation,
taking all action within its power that Holder may reasonably request to ensure
that the substantive effect of such Reorganization Transaction to such Holder
is substantially equivalent to its substantive effect to each other stockholder
of Holdings at such time.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date first above written.
CORAM, INC.
By ___________________________________
Title: Chief Financial Officer
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CORAM HEALTHCARE CORPORATION
By ___________________________________
Title: Chief Financial Officer
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