SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Coram Healthcare Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock (par value $0.001 per share)
- --------------------------------------------------------------------------------
(Title of Class of Securities)
218103109
-----------------------------------------------------------
(CUSIP Number)
Barbara Sherman, Esq.
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
(212) 902-1000
- --------------------------------------------------------------------------------
(Name, address and telephone number of person authorized
to receive notices and communications)
August 26, 1998
-----------------------------------------------------------
(Date of Event which requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
<PAGE>
- --------------------
CUSIP NO. 21810310
- --------------------
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman Sachs Credit Partners, L.P.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
OO [See Item 3.]
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 13,320,844
EACH ------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
13,320,844
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
13,320,844
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.4%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
-2-
<PAGE>
- --------------------
CUSIP NO. 21810310
- --------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman Sachs Global Holdings L.L.C.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
OO [See Item 3.]
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 13,320,844
EACH ------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
13,320,844
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
13,320,844
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.4%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
-3-
<PAGE>
- --------------------
CUSIP NO. 21810310
- --------------------
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Goldman Sachs Group, L.P.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF - OO [See Item 3.]
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES -------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 14,363,438
EACH -------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
14,363,438
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
14,363,438
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC-PN
- --------------------------------------------------------------------------------
-4-
<PAGE>
- --------------------
CUSIP NO. 297025108
- --------------------
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman, Sachs & Co.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF - OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ X ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 14,363,438
EACH --------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH --------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
14,363,438
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
14,363,438
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
BD-PN-IA
- --------------------------------------------------------------------------------
-5-
<PAGE>
AMENDMENT NO. 1
TO
SCHEDULE 13D
RELATING TO THE COMMON STOCK OF
CORAM HEALTHCARE CORPORATION
Goldman Sachs Credit Partners, L.P. ("GSCP"), Goldman Sachs Global Holdings
L.L.C. ("GSGH"), Goldman, Sachs & Co. ("GS&Co."), and The Goldman Sachs Group,
L.P. ("GS Group")1 hereby amend the statement on Schedule 13D dated July 14,
1998 relating to common stock, par value $0.001 per share (the "Common Stock"),
of Coram Healthcare Corporation (the "Company"). Items 3, 4, 5 and 6 are hereby
amended and supplemented to reflect the following:
On August 26, 1998 GS&Co. acquired warrants (the "New Warrants")
giving GS&Co. the right to acquire 863,588 shares (subject to antidilution
and other adjustments) of Common Stock of the Company (the "New Warrant
Shares"). The New Warrants were issued pursuant to the warrant agreement
dated as of August 26, 1998 to which GSCP and the Company were party (the
"New Warrant Agreement") in connection with the senior loan agreement dated
as of August 20, 1998 to which GSCP and the Company were party (the "Senior
Loan Agreement"). GSCP directed that the New Warrants be issued to GS&Co.
The New Warrants are exercisable on or before the earlier to occur of (i)
thirty months from the closing date of the Senior Loan Agreement and (ii)
such earlier date on which the revolving credit commitments of the Senior
Loan Agreement terminate at an exercise price equal to the par value of
such New Warrant Share (i.e., $0.001 per share). Upon exercise of the New
Warrants, the New Warrant Shares would represent approximately 1.7% of the
total outstanding shares of Common Stock of the Company after giving effect
to such exercise.
On August 26, 1998 the Board of Directors of the Company, pursuant
to the Stockholder Rights Agreement dated as of June 25, 1997 (the
"Stockholder Rights Agreement"), gave its express written approval to GSCP
and its affiliates to acquire an aggregate beneficial ownership of up to
25% of the outstanding Common Stock of the Company as a "Minority Investor"
under the Stockholder Rights Agreement including through the acquisition of
the New Warrants.
As of August 26, 1998, the aggregate of shares owned and shares
for which there is a right to acquire by GS&Co. and GS Group, except for
the shares for which GS&Co. and GS Group have disclaimed beneficial
ownership, is
--------------------
1 Neither the present filing nor anything contained herein shall be construed
as an admission that any Filing Person constitutes a "person" for any
purposes other than Section 13(d) of the Securities Exchange Act of 1934 or
that the Filing Persons constitute a "group" for any purpose.
-6-
<PAGE>
14,362,859 shares of Common Stock, representing approximately 22.7% of the
shares of Common Stock reported to be outstanding in the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1998.
Item 7 is hereby amended and restated as follows:
Item 7. Material to be filed as Exhibits.
(1) Not applicable.
(2) Not applicable.
(3) (a) The Securities Exchange Agreement, incorporated herein by
reference from the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1998;
(b) The Form of Series B Note of the Securities Exchange
Agreement, filed as Exhibit 99.1;
(c) The Amendment No.1 and Waiver to the Securities Exchange
Agreement, filed as Exhibit 99.2;
(d) The Risk Participation Agreement, filed as Exhibit 99.3;
(e) The Warrant for the Purchase of Shares of Common Stock
dated October 12, 1995, incorporated herein by reference
from the Company's Current Report on Form 8-K dated
October 24, 1995;
(f) The Warrant Agreement dated August 26, 1998, filed as
Exhibit 99.4.
(4) Powers of Attorney
-7-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: August 28, 1998
THE GOLDMAN SACHS GROUP, L.P.
By:
------------------------------------
Name: Hans-Linhard Reich
Title: Attorney-in-fact
GOLDMAN, SACHS & CO.
By:
------------------------------------
Name: Hans-Linhard Reich
Title: Attorney-in-fact
GOLDMAN SACHS CREDIT
PARTNERS, L.P.
By:
------------------------------------
Name: Hans-Linhard Reich
Title: Attorney-in-fact
GOLDMAN SACHS GLOBAL
HOLDINGS L.L.C.
By:
------------------------------------
Name: Hans-Linhard Reich
Title: Attorney-in-fact
-8-
WARRANT AGREEMENT
BETWEEN
CORAM HEALTHCARE CORPORATION
and
CERBERUS PARTNERS, L.P.
GOLDMAN SACHS CREDIT PARTNERS L.P.
FOOTHILL INCOME TRUST, L.P.
------------------------------
Dated as of August 26, 1998
------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Warrant Certificates 1
SECTION 2. Execution of Warrant Certificates 1
SECTION 3. Registration 2
SECTION 4. Registration of Transfers and Exchanges 2
SECTION 5. Warrants; Exercise of Warrants 3
SECTION 6. Payment of Taxes 4
SECTION 7. Mutilated or Missing Warrant Certificates 5
SECTION 8. Reservation of Warrant Shares 5
SECTION 9. Obtaining Stock Exchange Listings 5
SECTION 10. Adjustment of Exercise Price and Number of
Warrant Shares Issuable 5
(a) Adjustment for Change in Capital Stock 6
(b) Adjustment for Rights Issue 6
(c) Adjustment for Other Distributions 7
(d) Adjustment for Common Stock Issue 8
(e) Adjustment for Convertible Securities Issue 10
(f) Current Market Price 11
(g) Consideration Received 12
(h) When De Minimis Adjustment May Be Deferred 12
(i) When No Adjustment Required 12
(j) Notice of Adjustment 13
(k) Voluntary Reduction 13
(l) Notice of Certain Transactions 13
(m) Reorganization of Company 14
(n) Company Determination Final 14
(o) When Issuance or Payment May Be Deferred 14
(p) Adjustment in Number of Shares 14
(q) Form of Warrants 15
SECTION 11. No Impairment 15
SECTION 12. Fractional Interests 15
SECTION 13. Notices to Warrant Holders 16
i
<PAGE>
SECTION 14. Registration Rights 17
(a) Demand Registration 17
(b) Piggy-Back Registration 18
(c) Registration Procedures 19
(d) Indemnification 21
(1) Indemnification by Holdings 21
(2) Indemnification by Holder of Registrable
Securities 22
(3) Contribution 22
(e) Certain Definitions 23
SECTION 15. Holders' Representations 24
(a) Investment Intention 24
(b) Accredited Investor 24
SECTION 16. Notices to Company and Warrant Holder 24
SECTION 17. Warrant Agent 25
SECTION 18. Supplements and Amendments 25
SECTION 19. Successors 25
SECTION 20. Termination 25
SECTION 21. Governing Law 26
SECTION 22. Benefits of This Agreement 26
SECTION 23. Counterparts 26
ii
<PAGE>
WARRANT AGREEMENT dated as of August 26, 1998 between CORAM HEALTHCARE
CORPORATION, a Delaware corporation ("Holdings"), CERBERUS PARTNERS, L.P.,
GOLDMAN SACHS CREDIT PARTNERS L.P. and FOOTHILL INCOME TRUST, L.P.
(collectively, the "Initial Holders" and including their respective successors
and assigns, the "Holders" or "Warrant Holders").
Terms defined in the Credit Agreement (the "Credit Agreement") dated as of
August 20, 1998 between Coram, Inc. (the "Borrower"), Holdings, the Guarantors
named therein, the Initial Holders and Foothill Capital Corporation, as Agent,
unless defined herein are used as therein defined.
WHEREAS, it is a condition precedent to the Initial Holders' obligation to
make loans to and to incur Letter of Credit Obligations on behalf of the
Borrower under the Credit Agreement that Holdings issue Warrants, as hereinafter
described (the "Warrants"), to purchase up to 1,900,000 shares of Common Stock
(the "Common Stock") of Holdings, subject to adjustment as provide herein (the
Common Stock issuable on exercise of the Warrants being referred to herein as
the "Warrant Shares"), each Warrant entitling the holder thereof to purchase one
Warrant Share.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The certificates evidencing the Warrants
(the "Warrant Certificates") to be delivered pursuant to this Agreement shall be
in registered form only and shall be substantially in the form set forth in
Exhibit A attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of Holdings by its Chairman of the Board or its President or a
Vice President and by its Secretary or an Assistant Secretary under its
corporate seal. Each such signature upon the Warrant Certificates may be in the
form of a facsimile signature of the present or any future Chairman of the
Board, President, Vice President, Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose Holdings may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of he or she shall have ceased to
hold such office. The seal of Holdings may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
In case any officer of Holdings who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been disposed of by Holdings, such Warrant Certificates
nevertheless may be delivered or disposed of as though such person had not
ceased to be such officer of Holdings; and any Warrant Certificate may be signed
on behalf of Holdings by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of Holdings to sign such
<PAGE>
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
SECTION 3. Registration. Holdings shall number and register the Warrant
Certificates in a register as they are issued. Holdings may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone), for all purposes, and shall not be affected by any notice to the
contrary. Holdings shall act as the registrar for the Warrants.
SECTION 4. Registration of Transfers and Exchanges. Holdings shall from
time to time register the transfer of any outstanding Warrant Certificates in a
Warrant register to be maintained by Holdings upon surrender thereof accompanied
by a written instrument or instruments of transfer in form satisfactory to
Holdings, duly executed by the registered holder or holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee(s) and the surrendered Warrant Certificate shall be
cancelled and disposed of by Holdings.
The Warrant Holders agree that prior to any proposed transfer of the
Warrant or of the Warrant Shares, if such transfer is not made pursuant to an
effective Registration Statement under the Securities Act, pursuant to Rule 144
or Rule 144A under the Securities Act, or an opinion of counsel, reasonably
satisfactory in form and substance to Holdings, that the Warrant or Warrant
Shares may be sold publicly without registration under the Securities Act, the
Warrant holder will, if requested by Holdings, deliver to Holdings:
(1) an investment covenant reasonably satisfactory to Holdings signed
by the proposed transferee;
(2) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the Warrant
Shares;
(3) an agreement by such transferee that Holdings may place a notation
in the stock books of Holdings or a "stop transfer order" with any transfer
agent or registrar with respect to the Warrant Shares; and
(4) an agreement by such transferee to be bound by the provisions of
this Section 4 relating to the transfer of such Warrant or Warrant Shares.
The Warrant Holders agree that each Warrant Certificate and any
certificate representing the Warrant Shares will bear the following legend:
"THE SECURITY REPRESENTED BY THIS CERTIFICATE (AND ANY PREDECESSOR)
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD
2
<PAGE>
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF CORAM HEALTHCARE CORPORATION THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) (W) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT, OR PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF CORAM HEALTHCARE CORPORATION HOLDINGS, INC. SO REQUESTS),
(X) TO CORAM HEALTHCARE CORPORATION, (Y) OUTSIDE THE UNITED STATES TO
A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (Z) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Subject to the foregoing provisions, Warrant Certificates may be exchanged
at the option of the holder(s) thereof, when surrendered to Holdings at its
office for another Warrant Certificate or other Warrant Certificates of like
tenor and representing in the aggregate a like number of Warrants. Warrant
Certificates surrendered for exchange shall be cancelled and disposed of by
Holdings.
Each Warrant holder will have registration rights with respect to the
Warrant Shares set forth in Section 14 hereof.
SECTION 5. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Warrant Holder shall have the right, which may be exercised
commencing on the Closing Date and until the Revolving Credit Termination Date
(as defined in the Credit Agreement) to receive from Holdings the number of
fully paid and nonassessable Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares. Each Warrant not exercised prior
to the Revolving Credit Termination Date, shall become void and all rights
thereunder and all rights in respect thereof under this agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
3
<PAGE>
A Warrant may be exercised upon surrender to Holdings at its office
designated for such purpose the address of which is set forth in Section 15
hereof of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and upon payment to Holdings of the
exercise price (the "Exercise Price") which is set forth in the form of Warrant
Certificate attached hereto as Exhibit A, as adjusted as herein provided, for
the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of the aggregate Exercise Price shall be made in cash or by
certified or official bank check to the order of Holdings. In lieu of exercising
the Warrants represented by the Warrant Certificates by paying in full the
Exercise Price of such Warrants exercised plus transfer taxes (if applicable
pursuant to Section 6), if any, the holder of such Warrants may, from time to
time, convert such Warrants, in whole or in part, into a number of shares of
Common Stock determined by dividing (a) the aggregate Current Market Price of
the number of shares represented by the Warrants converted, minus the aggregate
Exercise Price for such shares, plus transfer taxes, if any, by (b) the Current
Market Price of one Share. The Current Market Price shall be determined pursuant
to Section 10(f).
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, Holdings shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 12;
The Warrants shall be exercisable, at the election of the holders thereof,
either in full or from time to time in part (provided that Warrants shall be
exercisable in multiples of 100 Warrants unless all of the Warrants evidenced by
a particular certificate are being exercised) and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by Holdings. Holdings shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the holders during normal business hours at its office.
SECTION 6. Payment of Taxes. Holdings will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that Holdings shall not be required to pay any tax
or taxes which may be payable in respect of any transfer involved in the issue
of any Warrant Certificates or any certificates for Warrant Shares in a name
other than that of the registered holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and Holdings shall not be required to issue or
deliver such Warrant Certificates unless or until the person or persons
requesting the
4
<PAGE>
issuance thereof shall have paid to Holdings the amount of such
tax or shall have established to the satisfaction of Holdings that such tax has
been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, Holdings may
in its discretion issue, in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to Holdings of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to it. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as Holdings may prescribe.
SECTION 8. Reservation of Warrant Shares. Holdings will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
Holdings or, if appointed, the transfer agent for the Common Stock (the
"Transfer Agent") and every subsequent transfer agent for any shares of
Holdings' capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
Holdings will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of Holdings' capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. Holdings will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each holder
pursuant to Section 15 hereof.
Holdings covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings. Holdings will from time to
time use its best efforts to take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of Warrants,
will be listed on the principal securities exchanges and markets within the
United States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section. For purposes of this
Section 10, "Common Stock" means shares now or hereafter authorized of any class
of common stock of Holdings and any other stock of Holdings, however designated,
that has the right (subject to any prior rights of any class or
5
<PAGE>
series of preferred stock) to participate in any distribution of the assets or
earnings of Holdings without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
--------------------------------------
If Holdings:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock or preferred stock; or
(5) issues by reclassification of its Common Stock any shares of
its capital stock;
then the Exercise Price and the number and kind of shares of capital stock of
Holdings issuable upon the exercise of a Warrant as in effect immediately prior
to such action shall be proportionately adjusted so that the holder of any
Warrant thereafter exercised may receive the aggregate number and kind of shares
of capital stock of Holdings which he or she would have owned immediately
following such action if such Warrant had been exercised immediately prior to
such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If, after an adjustment, a Warrant Holder upon exercise may receive shares
of two or more classes of capital stock of Holdings, Holdings shall determine
the allocation of the adjusted Exercise Price between the classes of capital
stock. After such allocation, the exercise privilege and the Exercise Price of
each class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 10.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Adjustment for Rights Issue.
---------------------------
If Holdings distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring
within 60 days after the record date
6
<PAGE>
mentioned below to purchase shares of Common Stock at a price per
share less than the current market price per share on that record
date, the Exercise Price shall be adjusted in accordance with the
formula:
O + N x P
-----
E' = E x M
-----
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock
outstanding on the record date.
N = the number of additional shares of Common
Stock offered pursuant to such rights
issuance.
P = the offering price per share of the additional
shares.
M = the current market price per share of
Common Stock on the record date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If
at the end of the period during which such rights, options or warrants
are exercisable, not all rights, options or warrants shall have been
exercised, the Exercise Price shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions.
----------------------------------
If Holdings distributes to all holders of its Common Stock any of
its assets (including but not limited to cash, but excluding ordinary
dividends), debt securities, preferred stock, or any rights or
warrants to purchase debt securities, preferred stock, assets or other
securities of Holdings, the Exercise Price shall be adjusted in
accordance with the formula:
E' = E x M - F
-----
M
7
<PAGE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of
Common Stock on the record date mentioned
below.
F = the fair market value on the record date of the
assets, securities, rights or warrants
applicable to one share of Common Stock. The
Board of Directors shall determine the
fair market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
the distribution.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 10.
(a) Adjustment for Common Stock Issue.
---------------------------------
If Holdings issues shares of Common Stock for a consideration per
share less than the current market price per share on the date
Holdings fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:
E' = E x O + P
-
M
-----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding
immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
M = the current market price per share on the
date of issuance of such additional shares.
8
<PAGE>
A = the number of shares outstanding immediately
after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and (c) of
this Section 10,
(2) the exercise of Warrants, or the conversion or exchange of other
securities convertible or exchangeable for Common Stock,
(3) Common Stock issued (i) pursuant to earn-out obligations (or other
obligations relating to the deferred purchase price of property) existing
on the date hereof or (ii) to Holdings employees under bona fide employee
benefit plans (being employee benefit plans in respect of which employees
of Holdings generally are able to participate) adopted by the Board of
Directors and approved by the holders of Common Stock when required by law,
if such Common Stock would otherwise be covered by this subsection (d),
(4) Common Stock issued upon the exercise of rights or warrants issued
to the holders of Common Stock,
(5) Common Stock issued to shareholders of any person which merges
into Holdings in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(6) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting or
(7) Common Stock issued in a bona fide private placement through a
placement agent which is a member firm of the National Association of
Securities Dealers, Inc. (except to the extent that any discount from the
current market price attributable to restrictions on transferability of the
Common Stock, as determined in good faith by the Board of Directors and
described in a Board resolution, shall exceed 20%).
(8) Common Stock issued upon the exercise of any Series B Senior
Subordinated Convertible Note of the Borrower issued pursuant to that
certain Securities Exchange Agreement dated May 6, 1998 by and between the
Borrower, Holdings, Cerberus Partners, L.P., Goldman Sachs Credit Partners
L.P. and Foothill Capital Corporation.
9
<PAGE>
(e) Adjustment for Convertible Securities Issue.
-------------------------------------------
If Holdings issues any securities convertible into or exchangeable for
Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 10) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share on the date of issuance
of such securities, the Exercise Price shall be adjusted in accordance with this
formula:
E' = E x O + P
-
M
-----
O + D
where:
E = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding
immediately prior to the issuance
of such securities.
P = the aggregate consideration received for
the issuance of such securities.
M = the current market price per share on the
date of issuance of such securities.
D = the maximum number of shares deliverable
upon conversion or in exchange for such
securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of such
securities have not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Common Stock issued
upon conversion or exchange of such securities;
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of any person which
merges into Holdings, or with a subsidiary of Holdings, in proportion to
their stock holdings of such person immediately prior to such merger, upon
such merger,
(2) convertible securities issued in a bona fide public offering
pursuant to a firm commitment underwriting or
(3) convertible securities issued in a bona fide private placement
through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of Common Stock issuable upon conversion, as determined in
good faith by the Board of Directors and described in a Board resolution,
shall exceed 20% of the then current market price).
(f) Current Market Price.
--------------------
In subsections (b), (c), (d) and (e) of this Section 10 the current market
price per share of Common Stock on any date shall be the average of the current
market value, determined as set forth below, of the 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 unlimited
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
Warrant Holder or, if Holdings and the Warrant 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 Warrant Holder and
Holdings or, if the Warrant Holder and Holdings cannot agree on the
selection of an Appraiser within 10 Business Days, then each of Holdings
and the Warrant 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 an Initial Holder
nor any of its affiliates is a Holder of such Warrant, 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
11
<PAGE>
Holdings. If there are two Appraisers, the Holders and Holdings shall pay
all expenses of the Appraiser chosen by it.
(g) Consideration Received.
----------------------
For purposes of any computation respecting consideration received pursuant
to subsections (d) and (e) of this Section 10, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by Holdings for any underwriting
of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors, (irrespective of
the accounting treatment thereof), whose determination shall be
conclusive, and described in a Board resolution;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by Holdings for the
issuance of such securities plus the additional minimum consideration,
if any, to be received by Holdings upon the conversion or exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred.
------------------------------------------
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment.
All calculations under this Section shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to in subsections
(a), (b), (c), (d) or (e) of this Section 10 if Warrant Holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.
12
<PAGE>
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the
cash.
(j) Notice of Adjustment.
--------------------
Whenever the Exercise Price is adjusted, Holdings shall provide the notices
required by Section 13 hereof.
(k) Voluntary Reduction.
-------------------
Holdings from time to time may reduce the Exercise Price by any amount for
any period of time if the period is at least 20 days and if the reduction is
irrevocable during the period; provided, however, that in no event may the
Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, Holdings shall mail to Warrant
Holders a notice of the reduction. Holdings shall mail the notice at least 15
days before the date the reduced Exercise Price takes effect. The notice shall
state the reduced Exercise Price and the period it will be in effect.
A reduction of the Exercise Price does not change or adjust the Exercise
Price otherwise in effect for purposes of subsections (a), (b), (c), (d) and (e)
of this Section 10.
(l) Notice of Certain Transactions.
------------------------------
If:
(1) Holdings takes any action that would require an adjustment in the
Exercise Price pursuant to subsections (a), (b), (c), (d) or (e) of this
Section 10 and if Holdings does not arrange for Warrant Holders to
participate pursuant to subsection (i) of this Section 10;
(2) Holdings takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (m) of this Section 10; or
(3) there is a liquidation or dissolution of Holdings,
Holdings shall mail to Warrant Holders a notice stating the proposed record date
for a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. Holdings shall mail the notice at least 15 days
before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
13
<PAGE>
(m) Reorganization of Company.
-------------------------
If Holdings consolidates or merges with or into, or transfers or leases all
or substantially all its assets to, any person, upon consummation of such
transaction Holdings shall as a condition precedent to such transaction, cause
effective provisions to be made so that the Warrants shall be exercisable for
the kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than Holdings, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Section.
The successor Company shall mail to Warrant Holders a notice describing the
supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and (e) of
this Section 10 do not apply.
(n) Company Determination Final.
---------------------------
Any determination that Holdings or the Board of Directors must make
pursuant to subsection (a), (c), (d), (e), (f), (g) or (i) of this Section 10 is
conclusive.
(o) When Issuance or Payment May Be Deferred.
----------------------------------------
In any case in which this Section 10 shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
Holdings may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of Holdings, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of Holdings, if any,
issuable upon such exercise on the basis of the Exercise Price and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 12; provided, however, that Holdings shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
------------------------------
Upon each adjustment of the Exercise Price pursuant to this Section 10,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter
14
<PAGE>
evidence the right to receive upon payment of the adjusted Exercise Price that
number of shares of Common Stock (calculated to the nearest hundredth) obtained
from the following formula:
N'= N x E
-
E'
where:
N' = the adjusted number of Warrant Shares
issuable upon exercise of a Warrant by payment of
the adjusted Exercise Price.
N = the number or Warrant Shares previously
issuable upon exercise of a Warrant by payment of
the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
SECTION 11. No Impairment. Holdings will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants, but will at all times in reasonable good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holders of the Warrants against impairment. Without limiting the generality of
the foregoing, Holdings (1) will take all such action as may be necessary or
appropriate in order that Holdings may validly and legally issue fully paid and
nonassessable shares of Common Stock on the exercise of the Warrants from time
to time outstanding, including taking such action as is necessary for the then
Exercise Price to be not less than the par value of the Warrant Shares and (2)
will not take any action which results in any adjustment of the Exercise Price
if the total number of Warrant Shares issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by Holdings' certificate of incorporation and
available for the purposes of issue upon such exercise.
SECTION 12. Fractional Interests. Holdings shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the
15
<PAGE>
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the provisions
of this Section 12, be issuable on the exercise of any Warrants (or specified
portion thereof), Holdings shall pay an amount in cash equal to the Exercise
Price on the day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
SECTION 13. Notices to Warrant Holders. Upon any adjustment of the Exercise
Price pursuant to Section 10, Holdings shall promptly thereafter (i) cause to be
filed with Holdings a certificate setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting forth the number of
Warrant Shares (or portion thereof) issuable after such adjustment in the
Exercise Price, upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at his or her address appearing on the
Warrant register written notice of such adjustments by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included as
a part of the notice required to be mailed under the other provisions of this
Section 13.
In case:
(a) Holdings shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants; or
(b) Holdings shall authorize the distribution to all holders of shares of
Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in shares of Common Stock or distributions referred
to in subsection (a) of Section 10 hereof); or
(c) of any consolidation or merger to which Holdings is a party and for
which approval of any shareholders of Holdings is required, or of the conveyance
or transfer of the properties and assets of Holdings substantially as an
entirety, or of any reclassification or change of Common Stock issuable upon
exercise of the Warrants (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or a tender offer or exchange offer for shares of Common Stock;
or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of Holdings; or
(e) Holdings proposes to take any action (other than actions of the
character described in Section 10(a)) which would require an adjustment of the
Exercise Price pursuant to Section 10; then Holdings shall cause to be given to
each of the registered holders of the Warrant Certificates at his address
appearing on the Warrant register, at least 30 days (or 20 days in any case
specified in clauses (a) or (b) above) prior to the applicable record date
16
<PAGE>
hereinafter specified, or promptly in the case of events for which there is no
record date, by first class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 13 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of Holdings or any other matter, or
any rights whatsoever as shareholders of Holdings.
SECTION 14. Registration Rights.
-------------------
(a) Demand Registration.
-------------------
(1) Request for Registration. If a Shelf Registration with respect to
the Warrant Shares is not effective under the Securities Act, the Holder or
Holders of 25% of the then outstanding Warrant Shares may make a written
request for registration under the Securities Act ("Demand Registration")
of all or part of its or their Registrable Securities; provided that
Holdings shall not be obligated to effect more than one Demand Registration
in respect of the Warrants. Such request will specify the aggregate
principal amount of Registrable Securities proposed to be sold and will
also specify the intended method of disposition thereof. Within 10 days
after receipt of such request, Holdings will give written notice of such
registration request to all other Holders of the Warrants and include in
such registration all Registrable Securities with respect to which Holdings
has received written requests for inclusion therein from the Holders
thereof within 15 Business Days after receipt by the applicable Holder of
Holdings' notice. Each such request will also specify the aggregate
principal amount of Registrable Securities to be registered and the
intended method of disposition thereof.
(2) Effective Registration and Expenses. A registration will not count
as a Demand Registration until it has become effective (unless the Holders
demanding such registration withdraw the Registrable Securities, in which
case such demand will count as a Demand Registration unless the Holders of
such Warrants agree to pay all Registration Expenses (as hereinafter
defined)). Except as provided above, Holdings will pay all Registration
Expenses in connection with the one registration initiated as a Demand
Registration, whether or not it becomes effective.
17
<PAGE>
(b) Piggy-Back Registration.
(1) If Holdings proposes to file a registration statement under the
Securities Act with respect to an offering by Holdings for its own account
or for the account of any of its security holders (provided that, in the
case of a registration on demand of such security holders, the holders of a
majority in aggregate principal amount or number of shares of any such debt
securities or equity securities, as the case may be, consent in writing) of
any class of equity security (other than a registration statement on Form
S-4 or S-8 (or any substitute form that may be adopted by the Commission)
or a registration statement in connection with an exchange offer or
offering to Holdings existing security holders), then Holdings shall give
written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event less than ten days
before the anticipated filing date), and such notice shall offer such
Holders the opportunity to register such principal amount of Registrable
Securities as each such Holder may request (a "Piggy-Back Registration").
(2) Holdings shall use its reasonable best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in the
registration statement for such offering to be included on the same terms
and conditions as any similar securities of Holdings or of such other
security holders included therein. Notwithstanding the foregoing, if the
managing Underwriter or Underwriters of such offering deliver a written
opinion to Holdings that either because of (i) the kind or combination of
securities which the Holders, Holdings and any other persons or entities
intend to include in such offering or (ii) the size of the offering which
the Holders, Holdings and such other persons intend to make, are such that
the success of the offering would be materially and adversely affected by
inclusion of the Registrable Securities requested to be included, then (a)
in the event that the size of the offering is the basis of such managing
Underwriter's opinion, the amount of securities to be offered for the
accounts of Holders shall be reduced pro rata (according to the Registrable
Securities proposed for registration) to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing Underwriter or Underwriters; provided that if
securities are being offered for the account of other persons or entities
as well as Holdings, then with respect to the Registrable Securities
intended to be offered by Holders, the proportion by which the amount of
such class of securities intended to be offered by Holders is reduced shall
not exceed the proportion by which the amount of such class of securities
intended to be offered by such other persons or entities is reduced; and
(b) in the event that the kind (or combination) of securities to be offered
is the basis of such managing Underwriter's opinion, (x) the Registrable
Securities to be included in such offering shall be reduced as described in
clause (a) above (subject to the proviso in clause (a)) or, (y) if the
actions described in clause (x) would, in the judgment of the managing
Underwriter, be insufficient to substantially eliminate the adverse effect
that inclusion of the Registrable Securities requested to be included would
have on such offering, such Registrable Securities will be excluded from
such offering.
Holdings will pay all Registration Expenses (as defined herein) in
connection with each registration of Registrable Securities.
18
<PAGE>
(c) Registration Procedures.
If and whenever Holdings is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities Act. Holdings
will promptly:
(1) prepare and file with the Commission a registration statement with
respect to such securities, make all required filings with the NASD and use
its best efforts to cause such registration statement to become effective;
(2) 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 such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement, but in
no event for a period of more than six months after such registration
statement becomes, effective;
(3) furnish to counsel (if any) elected by holders of a majority (by
number of shares) of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed with
the Commission in connection with such registration, which documents will
be subject to the review of such counsel;
(4) furnish to each seller of such securities such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits, except that
Holdings shall not be obligated to furnish any seller of securities with
more than two copies of such exhibits), such number of copies of the
prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of the
securities owned by such seller;
(5) use its best efforts to register or qualify such securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as each seller shall request, and do any and
all other acts and things which may be necessary or advisable to enable
such seller 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 is not so qualified, or to
consent to general service of process in any such jurisdiction;
(6) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for Holdings, dated the effective date
of the registration statement, and
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<PAGE>
(ii) subject to the accountants obtaining the necessary
representations as specified in Statement on Auditing Standards No.
72, a "comfort" letter signed by the independent public accountants
who have certified Holdings' financial statements included in the
registration statement, covering substantially the same matters with
respect to the registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
changes subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten
public offerings of securities;
(7) notify each seller of any securities covered by such registration
statement, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of 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 light of the circumstances then
existing, and at the request of any such seller prepare and furnish to such
seller 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 light of the circumstances then existing;
(8) 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 month after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(9) use its best efforts to list such securities on any securities
exchange on which the Common Stock is then listed, if such securities are
not already so listed and if such listing is then permitted under the rules
of such exchange, and to provide a transfer agent and registrar for such
Registrable Securities not later than the effective date of such
registration statement.
Holdings may require each seller of any securities as to which any registration
is being effected to furnish to Holdings such information regarding such seller
and the distribution of such securities as Holdings may from time to time
reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to Holdings all
information required to be disclosed in order to make the information previously
furnished to Holdings by such holder not materially misleading.
By acquisition of Registrable Securities, each holder of such Registrable
Securities shall be deemed to have agreed that upon receipt of any notice from
Holdings of the happening of any event of the kind described in Section 14(c)(7)
hereof, such holder will promptly discontinue such holder's disposition of
Registrable Securities pursuant to the
20
<PAGE>
registration statement covering such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 14(c)(7) hereof. If so directed by Holdings, each holder of Registrable
Securities will deliver to Holdings (at Holdings' expense) all copies, other
than permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event Holdings shall give any such notice, the period mentioned
in Section 14(c)(2) hereof shall be extended by the number of days during the
period from and including the date of the giving of such notice to and excluding
the date when each seller of any Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 14(c)(7) hereof.
(d) Indemnification.
---------------
(1) Indemnification by Holdings.
Holdings agrees to indemnify and hold harmless each holder of
Registrable Securities (a "Holder"), its officers, directors, employees and
agents and each Person who controls such Holder within the meaning of
either Section 15 of the Securities Act or Section 20(a) of the Exchange
Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
legal expenses) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or allegation thereof
based upon information relating to such Indemnified Holder and furnished in
writing to Holdings by such Indemnified Holder expressly for use therein.
This indemnity will be in addition to any liability which Holdings may
otherwise have.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from Holdings, such Indemnified
Holder shall promptly notify Holdings in writing, and Holdings shall assume
the defense thereof, including the employment of counsel satisfactory to
such Indemnified Holder and the payment of all expenses. Such Indemnified
Holder shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder unless (a)
Holdings has agreed to pay such fees and expenses or (b) Holdings shall
have failed to assume the defense of such action or proceeding and has
failed to employ counsel satisfactory to such Indemnified Holder in any
such action or proceeding or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both such Indemnified
Holder and Holdings, and there are one or more legal defenses available to
such Indemnified Holder which are different from or additional to those
available to Holdings (in which case, if such Indemnified Holder notifies
Holdings in writing that it elects to employ separate counsel at the
expense of Holdings, Holdings shall not have the
21
<PAGE>
right to assume the defense of such action or proceeding on behalf of such
Indemnified Holder, it being understood, however, that Holdings shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate
firm of attorneys at any time for such Indemnified Holder and any other
Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders). Holdings shall not be liable for any settlement of
any such action or proceeding effected without its written consent, but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, Holdings agrees to indemnify
and hold harmless such Indemnified Holders from and against any loss or
liability by reason of such settlement or judgment.
(2) Indemnification by Holder of Registrable Securities.
Each Holder of Registrable Securities agrees to indemnify and hold
harmless Holdings, its directors and officers and each Person, if any, who
controls Holdings within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from Holdings to such Holders, but only with respect to
information relating to such Holders furnished in writing by such Holders
expressly for use in any registration statement or prospectus, or any
amendment or supplement thereto, or any preliminary prospectus. In case
any action or proceeding shall be brought against Holdings or its directors
officers or any such controlling person, in respect of which indemnity may
or be sought against a Holder of Registrable Securities, such Holder shall
have the rights and duties given to Holdings and Holdings or its directors
or officers or such controlling person shall have the rights and duties
given to each Holder by the preceding paragraph. In no event shall the
liability of any Holder of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(3) Contribution.
If the indemnification provided for in this Section 14(f) is
unavailable to an indemnified party under Section 14(f)(1) or Section
14(f)(2) hereof (other than by reason of exceptions provided in those
Sections) in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each applicable 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 losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by Holdings on the
one hand and the Holders on the other hand from their sale of Registrable
Securities or if such allocation is not permitted by applicable law, the
relative fault of Holdings on the one hand and of the Indemnified Holder on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of Holdings on the
one hand and of the Indemnified Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Holdings or by the
Indemnified Holder and the
22
<PAGE>
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 14(f)(1), any
legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
Holdings and each Holder of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this Section 14(f)(3)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this
Section 14(f)(3), an Indemnified Holder shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities sold by such Indemnified Holder or its affiliated
Indemnified Holders and distributed to the public were offered to the
public exceeds the amount of any damages which such Indemnified Holder, or
its affiliated Indemnified Holder, has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. 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.
(e) Certain Definitions.
-------------------
(1) The term "Registrable Securities" shall mean the Warrant Shares
and any securities issued or issuable upon exercise of the Warrants. As to
any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (A) a registration statement with
respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (B) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (C) they shall have been otherwise transferred,
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by Holdings and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (D) they shall
have ceased to be outstanding.
(2) The term "Registration Expenses" shall mean all expenses incident
to Holdings' performance of or compliance with Section 14 hereof,
including, without limitation, all registration and filing fees, all fees
and expenses of complying with securities or blue sky laws, fees and other
expenses associated with filings with the NASD (including, if required, the
fees and expenses of any "qualified independent underwriter" and its
counsel), all printing expenses, the fees and disbursements of counsel for
Holdings and of its independent public accountants, the fees and
disbursements of one counsel retained by the holders of Registrable
Securities, the expenses of any special audits made by such accountants
required by or incident to such performance and compliance, but not
including (a) fees and disbursements of more than one counsel retained by
the holders of Registrable Securities, or (b) such holders' proportionate
share of underwriting discounts and commissions.
23
<PAGE>
SECTION 15. Holders' Representations
Each Initial Holder severally makes the following representations and
warranties as to itself only to Holdings:
(a) Investment Intention. Each Initial Holder is holding the Warrants or
the Warrant Shares for its own account, for investment purposes and not with a
view to the distribution thereof. Each Initial Holder will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of the Warrants or the Warrant Shares (or solicit any offers to buy,
purchase, or otherwise acquire the Warrants or the Warrant Shares), except in
compliance with the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder (the "Securities Act").
(b) Accredited Investor. Each Initial Holder is an "accredited investor"
(as that term is defined in Rule 501 of Regulation D under the Securities Act)
and by reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and is able to afford a complete loss
of such investment.
SECTION 16. Notices to Company and Warrant Holder. Any notice or demand
authorized by this Agreement to be given or made by the registered holder of any
Warrant Certificate to or on Holdings shall be sufficiently given or made when
and if deposited in the mail, first class or registered, postage prepaid,
addressed to the office of Holdings expressly designated by Holdings at its
office for purposes of this Agreement (until the Warrant Holders are otherwise
notified in accordance with this Section by Holdings), as follows:
Coram Healthcare Corporation
Bank One Building
1125 Seventeenth Street, Suite 1500
Denver, Colorado 80202
Attention: Wendy L. Simpson
Telecopy: (303) 672-8799
with a copy to:
General Counsel
Telecopy: (303) 298-0047
Any notice pursuant to this Agreement to be given by Holdings to the
registered holder(s) of any Warrant Certificate shall be sufficiently
given when and if deposited in the mail, first class or registered, postage
prepaid, addressed (until Holdings is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing on the Warrant
register of Holdings.
24
<PAGE>
SECTION 17. Warrant Agent. (a) Each Holder and Holdings hereby agree that
Holdings shall serve as warrant agent under this agreement (the "Warrant
Agent"). Upon 30 days' notice to holders of Warrants, Holdings and the Holders
may appoint a new warrant agent. Such new warrant agent shall be a corporation
doing business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than $50,000,000.
The combined capital and surplus of any such new Warrant Agent shall be deemed
to be the combined capital and surplus as set forth in the most recent annual
report of its condition published by such Warrant Agent prior to its
appointment, provided that such reports are published at least annually pursuant
to law or to the requirements of a federal or state supervising or examining
authority. After acceptance in writing of such appointment by the new Warrant
Agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of Holdings and
shall be legally and validly executed and delivered by Holdings.
(b) Any corporation into which Holdings or any new Warrant Agent may be
merged or any corporation resulting from any consolidation to which Holdings or
any new warrant agent shall be a party or any corporation to which Holdings
transfers substantially all of its corporate trust or shareholders series
business shall be a successor Warrant Agent under this Agreement without any
further act, provided that such corporation (i) would be eligible for
appointment as successor to the Warrant Agent under the provisions of this
Section 16 or (ii) is a wholly owned subsidiary of the Warrant Agent. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be mailed (by first class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Warrant Agent
pursuant to this Agreement.
SECTION 18. Supplements and Amendments. Holdings may from time to time
supplement or amend this Agreement without the approval of any holders of
Warrant Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which Holdings may deem necessary or desirable and
which shall not in any way adversely affect the interests of the holders of
Warrant Certificates.
SECTION 19. Successors. All the covenants and provisions of this Agreement
by or for the benefit of Holdings shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 20. Termination. This Agreement shall terminate at 5:00 p.m., New
York City time on the Revolving Credit Termination Date. Notwithstanding the
foregoing, this Agreement will terminate on any earlier date if all Warrants
have been exercised.
25
<PAGE>
SECTION 21. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE.
SECTION 22. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than Holdings and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of Holdings and the registered holders of the Warrant
Certificates.
SECTION 23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Signature Page Follows]
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
CORAM HEALTHCARE CORPORATION
By:
---------------------------------
Name:
Title:
CERBERUS PARTNERS, L.P.
By:
---------------------------------
Name:
Title:
GOLDMAN SACHS CREDIT
PARTNERS L.P.
By:
---------------------------------
Name:
Title:
FOOTHILL INCOME TRUST, L.P.
By:
---------------------------------
Name:
Title:
27
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE (AND ANY PREDECESSOR) WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF CORAM
HEALTHCARE CORPORATION THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (A) INSIDE THE UNITED STATES TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR
PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF CORAM HEALTHCARE
CORPORATION SO REQUESTS), (B) TO CORAM HEALTHCARE CORPORATION, (C) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
No._____ _________ Warrants
Warrant Certificate
Coram Healthcare Corporation
This Warrant Certificate certifies that ___________, or registered assigns,
is the registered holder of Warrants expiring on the Revolving Credit
Termination Date as defined in the Warrant Agreement referred to on the reverse
hereof (the "Warrants") to purchase Common Stock, $.001 par value (the "Common
Stock"), of Coram Healthcare Corporation, a
A-1
<PAGE>
<PAGE>
Delaware corporation ("Holdings"). Each Warrant entitles the holder upon
exercise to receive from Holdings on or before 5:00 p.m. New York City Time on
the Revolving Credit Termination Date, one fully paid and nonassessable share of
Common Stock (a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $0.01 per share payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office of Holdings designated for such purpose, but only subject to
the conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. In lieu of exercising the Warrants evidenced by this Warrant
Certificate by paying in full the Exercise Price of each Warrant exercised plus
transfer taxes (if applicable pursuant to Section 6 of the Warrant Agreement),
if any, the holder of such Warrant may, from time to time, convert this Warrant,
in whole or in part, into a number of shares of Common Stock determined by
dividing (a) the aggregate Current Market Price of the number of Warrant Shares
represented by the Warrants converted, minus the aggregate Exercise Price for
such shares, plus transfer taxes, if any, by (b) the Current Market Price of one
Share. The Current Market Price shall be determined pursuant to Section 10(f) of
the Warrant Agreement.
The Exercise Price and number of Warrant Shares issuable upon exercise of
the Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time on the
Revolving Credit Termination Date, and to the extent not exercised by such time
such Warrants shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless countersigned by
Holdings, as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, Coram Healthcare Corporation has caused this Warrant
Certificate to be signed by its Vice President and by its Secretary, each by a
facsimile of his signature, and has caused a facsimile of its corporate seal to
be affixed hereunto or imprinted hereon.
Dated:
CORAM HEALTHCARE CORPORATION
By:
------------------------------
Vice President
By:
------------------------------
A-2
<PAGE>
Secretary
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Revolving Credit Termination Date,
entitling the holder on exercise to receive shares of Common Stock, $.001 par
value, of Holdings (the "Common Stock"), and are issued or to be issued pursuant
to a Warrant Agreement dated as of _____, 1998 (the "Warrant Agreement"), duly
executed and delivered by Holdings, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of Holdings and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to Holdings.
Warrants may be exercised at any time on or before the Revolving Credit
Termination Date. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash at the office of Holdings designated
for such purpose. In lieu of exercising such Warrants by paying in full the
Exercise Price for each such Warrant plus transfer taxes (if applicable pursuant
to Section 6 of the Warrant Agreement), if any, the holder of such Warrants may,
from time to time, convert such Warrants, in whole or in part, into a number of
shares of Common Stock determined by dividing (a) the aggregate Current Market
Price of the number of Warrant Shares represented by the Warrants converted,
minus the aggregate Exercise Price for such shares, plus transfer taxes, if any,
by (b) the Current Market Price of one Share. The Current Market Price shall be
determined pursuant to Section 10(f) of the Warrant Agreement. In the event that
upon any exercise of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby, there shall be
issued to the holder hereof or his assignee a new Warrant Certificate evidencing
the number of Warrants not exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but Holdings will pay the
cash value thereof determined as provided in the Warrant Agreement.
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<PAGE>
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in Section 14 of the Warrant Agreement.
Warrant Certificates, when surrendered at the office of Holdings by the
registered holder thereof in person or by its legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of Holdings a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
Holdings may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other purposes, and
Holdings shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of Holdings.
A-4
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ___________ shares of
Common Stock and herewith (check item)
(i) tenders payment for such shares to the order of Coram Healthcare
Corporation in the amount of $_______ in accordance with the terms hereof; or
(ii) converts this Warrant, in whole or in part, into a number of shares of
Common Stock determined by dividing (a) the aggregate Current Market Price of
the number of shares represented by this Warrant, minus the aggregate Exercise
Price for such shares, plus transfer taxes, if any, by (b) the Current Market
Price of one Share.
The undersigned requests that a certificate for such shares be registered
in the name of _________________________, whose address is
_____________________________ and that such shares be delivered to
____________________ whose address is _______________________________________
_________________________________________.
A-5
<PAGE>
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_________________, whose address is _______________________________, and that
such Warrant Certificate be delivered to _________________________, whose
address is ____________________.
Signature:
Date:
Signature Guaranteed:
A-6
