<PAGE> 1
SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CORAM HEALTHCARE CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LETTERHEAD]
Donald J. Amaral
Chief Executive Officer and President
August 15, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Coram Healthcare Corporation (the "Company"), which will be held on Tuesday,
September 16, 1997 at 2:00 p.m. local time, at The Westin Hotel, 1672 Lawrence
Street, Denver, Colorado. In addition to the matters to be acted upon at the
meeting, which are described in detail in the attached Notice of Annual Meeting
of Stockholders and Proxy Statement, there will be a report to the stockholders
on the operations of the Company. I hope that you will be able to attend.
Whether or not you plan to be at the meeting, please be sure to complete,
date, sign and return the proxy card enclosed with this letter and the
accompanying Proxy Statement as promptly as possible so that your shares may be
voted in accordance with your wishes. Your vote, whether given by proxy or in
person at the meeting, will be held in confidence by the Inspector of Election
for the meeting.
Sincerely,
/s/ DONALD J. AMARAL
--------------------------------------
DONALD J. AMARAL
Chief Executive Officer and President
<PAGE> 3
CORAM HEALTHCARE CORPORATION
1125 SEVENTEENTH STREET, SUITE 2100
DENVER, COLORADO 80202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 16, 1997
To the Stockholders of Coram Healthcare Corporation:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Coram Healthcare Corporation, a Delaware corporation ("Coram" or the "Company"),
will be held on Tuesday, September 16, 1997, at 2:00 p.m. local time, at The
Westin Hotel, 1672 Lawrence Street, Denver, Colorado (the "Meeting"), for the
following purposes:
(1) To elect six directors to serve until the 1998 Annual Meeting of
Stockholders and until their successors are duly elected and qualified;
(2) To approve an amendment to the Company's Certificate of
Incorporation to increase the number of shares of authorized common stock
from 75,000,000 to 100,000,000;
(3) To approve an amendment to the Coram Healthcare Corporation
Employee Stock Purchase Plan increasing the number of shares of common
stock available for issuance thereunder from 300,000 to 1,300,000;
(4) To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the Company's 1997 fiscal year; and
(5) To transact such other business as may properly come before the
meeting or any adjournments thereof.
These matters are more fully described in the accompanying Proxy Statement.
The Board of Directors of the Company has fixed the close of business on August
4, 1997 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Meeting. Only holders of
the Company's common stock, $.001 par value per share, at the close of business
on the Record Date are entitled to notice of, and to vote at, the Meeting. A
complete list of stockholders entitled to vote at the Meeting will be available
for examination during normal business hours by any stockholder, for purposes
related to the Meeting, for a period of ten days prior to the Meeting, at the
Company's corporate offices located at 1125 Seventeenth Street, Suite 2100,
Denver, Colorado 80202.
You are cordially invited to attend the Meeting. Whether or not you plan to
attend the Meeting in person, please complete, date and sign the accompanying
proxy card and return it promptly in the enclosed envelope to ensure that your
shares are represented and voted in accordance with your wishes. If you choose,
you may still vote in person at the Meeting even though you previously submitted
your proxy. You may revoke your proxy by following the procedures set forth in
the accompanying Proxy Statement.
By order of the Board of Directors
/s/ RICHARD M. SMITH
--------------------------------------
Richard M. Smith, Secretary
Denver, Colorado
August 15, 1997
<PAGE> 4
CORAM HEALTHCARE CORPORATION
1125 SEVENTEENTH STREET, SUITE 2100
DENVER, COLORADO 80202
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 16, 1997
---------------------
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors (the "Board of Directors") of Coram Healthcare Corporation, a Delaware
corporation ("Coram" or the "Company"), to be used at the 1997 Annual Meeting of
Stockholders of the Company to be held on Tuesday, September 16, 1997, at 2:00
p.m., local time, at the Westin Hotel, 1672 Lawrence Street, Denver, Colorado
and at any adjournment or postponement thereof (the "Meeting"). This Proxy
Statement and the accompanying proxy card are first being mailed to the holders
of the Company's common stock, $.001 par value per share (the "Common Stock"),
on or about August 15, 1997. The Company's Annual Report to Stockholders, which
includes financial statements for the fiscal year ended December 31, 1996, is
being concurrently mailed or delivered with this Proxy Statement to stockholders
entitled to vote at the Meeting.
Stockholders of the Company represented at the Meeting will consider and
vote upon (i) the election of six directors to serve until the 1998 Annual
Meeting of Stockholders of the Company and until their successors are duly
elected and qualified, (ii) to approve an amendment to the Company's Certificate
of Incorporation to increase the number of shares of authorized common stock
from 75,000,000 to 100,000,000; (iii) to approve an amendment to the Coram
Healthcare Corporation Employee Stock Purchase Plan increasing the number of
shares of common stock available for issuance thereunder from 300,000 to
1,300,000; (iv) the ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the year ending December 31, 1997 and (v)
such other business as may properly come before the Meeting. The Company is not
aware of any other business to be presented for consideration at the Meeting.
VOTING AND SOLICITATION OF PROXIES
The enclosed proxy provides that each stockholder may specify that his or
her shares be voted "FOR" the election of the named nominees to the Board of
Directors or that such shares be "WITHHELD" as to all nominees or any individual
nominee or nominees; and voted "FOR," "AGAINST" or "ABSTAIN" from voting with
respect to the amendment to the Company's Certificate of Incorporation, the
amendment to the Coram Employee Stock Purchase Plan and the ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for the
year ending December 31, 1997. In accordance with Delaware law, broker non-votes
will not be counted and will be treated as not present for purposes of
calculating the vote on a proposal for which no specification is made in the
proxy. Abstentions will be counted in tabulations of the votes cast on proposals
presented to stockholders. Therefore, an abstention is the equivalent of a vote
against a proposal. Execution of a proxy given in response to this solicitation
will not affect a stockholder's right to attend the Meeting and to vote in
person. Presence at the Meeting of a stockholder who has signed a proxy does not
alone revoke a proxy. Any proxy may be revoked by any stockholder who attends
the Meeting and gives oral notice of his or her intention to vote in person
without compliance with any other formalities. Any stockholder who executes and
returns a proxy may revoke it by executing a subsequent proxy or by giving
written notice of revocation to the Secretary of the Company at any time before
it is voted at the Meeting. The persons named in the proxies will have
discretionary authority to vote all proxies with respect to additional matters
that are properly presented for action at the Meeting.
<PAGE> 5
The Company has fixed the close of business on August 4, 1997 as the record
date for determining the holders of its Common Stock who will be entitled to
notice of and to vote at the Meeting. On that date, the Company had issued and
outstanding [ ] shares of its Common Stock which are the only outstanding
shares of capital stock of the Company having general voting rights. Holders of
the Company's Common Stock are entitled to one vote for each share owned of
record. Shares representing a majority of the votes entitled to be cast by the
holders of the outstanding shares of Common Stock must be represented in person
or by proxy at the Meeting in order for a quorum to be present.
Solicitation of proxies for use at the Meeting may be made in person or by
mail, telephone or telegram, by directors, officers and employees of the
Company. Such persons will receive no additional compensation for any
solicitation activities. The Company will request banks and brokers to solicit
their customers who beneficially own shares listed of record in names of
nominees, and will reimburse those banks and brokers for their reasonable
out-of-pocket expenses in connection with such solicitation. The Company will
bear the entire cost of preparing, assembling, printing and mailing this Proxy
Statement and the enclosed proxy card, and of soliciting proxies (including,
without limitation, costs, if any, related to advertising, printing, fees of
attorneys, financial advisors, proxy solicitors, accountants, public relations,
transportation, litigation and other costs relating to the solicitation).
Boston EquiServe, the transfer agent and registrar for the Common Stock,
has been appointed by the Board of Directors to serve as Inspector of Election
at the Meeting. All proxies and ballots delivered to Boston EquiServe shall be
kept confidential by Boston EquiServe.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected and qualified at the Meeting. In the
absence of written instructions to the contrary, proxies representing shares of
Common Stock will be voted FOR the election of each of the persons listed below
as directors of Coram for a term commencing on the date of the Meeting and
continuing until the 1998 Annual Meeting of Stockholders and until their
successors have been duly elected and qualified. In the event that any nominee
for director should become unavailable or declines to serve, it is intended that
votes will be cast, pursuant to the enclosed proxy, FOR an additional nominee
designated by the Nominating Committee. As of the date of this Proxy Statement,
the Board of Directors has no knowledge that any of the persons named will be
unavailable or will decline to serve. None of the nominees has any family
relationship among themselves or with any executive officer of Coram.
THE CORAM BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF ALL NOMINEES FOR DIRECTOR IDENTIFIED BELOW TO SERVE UNTIL
THE 1998 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR
SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED.
INFORMATION CONCERNING NOMINEES TO THE BOARD OF DIRECTORS
Information is set forth below concerning the nominees for election as
directors of Coram. With the exception of Messrs. Alsin and Casey, all of the
nominees for election as directors at the Meeting are incumbent directors of
Coram. Each nominee has furnished information as to his beneficial ownership of
Common Stock as of June 30, 1997, and, if not employed by Coram, the nominee's
principal occupation. Each nominee has consented to being named in this Proxy
Statement as a nominee for director of Coram and has agreed to serve as a
director of Coram if elected. None of the nominees for director entered into any
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<PAGE> 6
arrangement or understanding pursuant to which such person was to be selected as
a director or nominee for director.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH CORAM SINCE
---- --- ------------------- --------
<S> <C> <C> <C>
Donald J. Amaral.............. 44 Chairman, Chief Executive 1995
Officer and President
Richard A. Fink............... 42 Director 1994
Stephen G. Pagliuca........... 41 Director 1994
L. Peter Smith................ 48 Director 1994
Arne Alsin.................... 39 -- --
William J. Casey.............. 52 -- --
</TABLE>
Mr. Amaral was elected Chairman on and has served as director, President
and Chief Executive Officer of the Company since October 13, 1995. Previously,
he was President and Chief Operating Officer of OrNda Healthcorp ("OrNda") from
April 1994 to August 1995, and served in various executive positions with Summit
Health Ltd. ("Summit") from October 1989 to April 1994, including President and
Chief Executive Officer between October 1991 and April 1994. Summit was merged
into OrNda in April 1994. Prior to joining Summit, Mr. Amaral was President and
Chief Operating Officer of The Mediplex Group, Inc., a health care subsidiary of
Avon Products, Inc., from 1986 until October 1989. Mr. Amaral is also a member
of the Board of Directors of Summit Care Corporation.
Mr. Fink has served as a director of Coram since July 1994. Mr. Fink has
been a partner of the law firm of Brobeck, Phleger & Harrison LLP since October
1987 and is currently Chairman of that firm's Business & Technology Group.
Mr. Pagliuca has served as a director of Coram since July 1994. Mr.
Pagliuca founded Information Partners, a venture capital and management buyout
company based in Boston, Massachusetts, in 1989 and has been Managing Director
since that time, focusing on health care and information industry private-equity
investment opportunities. Prior to 1989, Mr. Pagliuca was a partner at Bain &
Company, a management consulting firm based in Boston, Massachusetts, where he
concentrated on the health care and information industries.
Mr. Smith has served as a director of Coram since July 1994. Between
November 1993 and July 1994, Mr. Smith was a director of Medisys, Inc.
("Medisys"). Mr. Smith served as the Managing Partner of AllCare Health
Services, Inc., which was acquired by Medisys in December of 1992. Mr. Smith is
also President and serves on the Board of Directors of Ralin Medical, Inc.
("Ralin"), a company specializing in cardiac disease management. Prior to
joining Ralin in 1990, Mr. Smith served in various capacities with Baxter
Healthcare. From 1984 through 1989 he was president of the home infusion therapy
division of Baxter Healthcare. Mr. Smith also serves on the Board of Directors
of Sabratek Corporation and AMSYS, Inc.
Mr. Alsin was nominated for election as a director of Coram in connection
with the Meeting. Mr. Alsin has served as President, Portfolio Manager of Alsin
Capital Management, Inc. since 1986. From 1984 to 1985, Mr. Alsin served in
various capacities with KPMG Peat Marwick LLP in the tax department.
Mr. Casey was nominated for election as a director of Coram in connection
with the Meeting. Since 1983, Mr. Casey has served as a consultant in the
healthcare industry, specializing in hospital management evaluation, hospital
planning, managed care contracting and turnaround services. From 1986 to the
present, Mr. Casey has also served as Contract Administrator for Emergency
Department Physicians' Medical Group, Inc. and affiliated medical groups, which
provide physician services to non-governmental facilities. From 1988 to the
present, Mr. Casey has served as Contract Administrator for NP Medical Group,
Inc., which provides physician services to government facilities. Mr. Casey also
serves as a director of Summit Care Corporation and TriCounties Bank.
3
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD DURING 1996
The Coram Board of Directors met 19 times during the fiscal year ended
December 31, 1996. Each director attended at least 75% of the aggregate of (i)
the total number of meetings of the Coram Board of Directors held subsequent to
the date of their election or appointment to the Board and (ii) the total number
of meetings held by all committees of the Board of Directors on which such
director served.
The Board of Directors has established an Audit Committee, a Compensation
Committee, a Nominating Committee and a Compliance and Quality Assurance
Committee. Coram does not have an executive or similar committee. The Board
generally acts in its entirety upon matters which might otherwise be the
responsibility of such a committee.
Coram Audit Committee. The Audit Committee consisted of Messrs. L. Peter
Smith and Pagliuca, each a non-employee director of Coram. The Audit Committee's
principal functions were: (i) to recommend to the Board of Directors the
independent public accountants to be engaged by Coram and to arrange or approve
the details of their engagement, including the remuneration to be paid; (ii) to
review with the independent public accountants Coram's general policies and
procedures with respect to audits and accounting and financial controls, the
general accounting and reporting principles and practices applied in preparing
the financial statements and conducting financial audits of Coram, and to
recommend to management changes or improvements therein; and (iii) to perform
such other functions as the Board of Directors may from time to time elect. The
Audit Committee met twice during the fiscal year ended December 31, 1996.
Coram Compensation Committee. The Compensation Committee consisted of
Messrs. Fink and Pagliuca, each a non-employee director of Coram. The
Compensation Committee's principal functions were: (i) to recommend to the Coram
Board of Directors the salaries and other terms of employment for the senior
executive officers of Coram and make recommendations to the Coram Board of
Directors with respect to proposals for new benefits, incentive plans or
programs and (ii) to administer the Company's 1994 Stock Option/Stock Issuance
Plan (the "Coram Option Plan") and grant stock options and stock issuances
thereunder to all eligible individuals, including members of the executive and
managerial group. The Compensation Committee took action by written consent five
times during the fiscal year ended December 31, 1996.
Coram Nominating Committee. The Board of Directors established a Nominating
Committee on April 13, 1996. The Nominating Committee consisted of Messrs.
Amaral and Sweeney (who is not standing for re-election at the meeting). The
Nominating Committee's principal function is to nominate persons for election to
the Board of Directors at Coram's annual stockholder meetings. The Nominating
Committee will consider nominations made by a stockholder provided that such
stockholder complies with certain procedures set forth in the Bylaws of the
Company. Such stockholder nominations must be made in writing to the Secretary
of the Company in a timely fashion. To be timely, notice must be delivered to or
mailed and received at the principal executive offices of the Company no less
than 30 days nor more than 60 days prior to the meeting to which such nomination
relates; provided, however, that if less than 40 days' notice or prior public
disclosure of the meeting is given or made to stockholders, to be timely, notice
by the stockholder must be so received not later than the close of business on
the tenth day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made. Such stockholder's written notice
must set forth: (a) as to each person whom the stockholder proposes to nominate,
(i) the name, age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the class and number
of shares of the Company which are beneficially owned by the person, and (iv)
any other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice, (i) the name and record address of the
stockholder and (ii) the class and number of shares of the Company which are
beneficially owned by the stockholder. The Company may require any proposed
nominee to furnish such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to serve as a
director of the Company.
Coram Compliance and Quality Assurance Committee. The Compliance and
Quality Assurance Committee, established by the Board of Directors in February
1995, consisted of Dr. Gail R. Wilensky (who is not
4
<PAGE> 8
standing for re-election at the meeting) and Richard A. Fink. The Compliance and
Quality Assurance Committee is responsible for overseeing and ensuring Coram's
compliance with applicable laws, regulations, and Coram's corporate code of
conduct, as well as providing oversight of Coram's corporate compliance program
as it relates to the conduct of its business to ensure that the highest
standards of business, professional, legal and personal ethics are being met by
Coram in the delivery of its services and products. The Compliance and Quality
Assurance Committee met twice during the fiscal year ended December 31, 1996.
COMPLIANCE WITH SECTION 16
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Coram's directors, executive officers and persons who
beneficially own greater than 10% of a registered class of Coram's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission") and the New York Stock
Exchange. Based solely upon its review of copies of the Section 16 reports Coram
has received and written representations from certain reporting persons, Coram
believes that during its fiscal year ended December 31, 1996, all of its
directors, executive officers and greater than 10% beneficial owners were in
compliance with their filing requirements, with the exception that (i) each of
the following individuals failed to file in a timely manner their Initial
Statements of Beneficial Ownership of Securities on Form 3; John Anderson,
(former officer) Daniel Frank, James Glynn, David McCormick, Joseph Smith,
Pamela Spaniac, Mark Werber, William W. Willis (former officer) and Christopher
York and (ii) Tommy Carter (former director) failed to file in a timely manner a
Statement of Changes in Beneficial Ownership of Securities on Form 4 for a
disposition of shares of Company Common Stock that occurred prior to the
cessation of his term on the Company's Board of Directors.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning each of the
executive officers of Coram. The executive officers serve at the pleasure of the
Board of Directors of Coram. Biographical information with respect to Donald J.
Amaral is set forth under the caption "Information Concerning Nominees to the
Board of Directors" above.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH CORAM
---- --- ----------------------
<S> <C> <C>
Donald J. Amaral..................... 44 Chairman, Chief Executive Officer and
President
Richard M. Smith..................... 38 Chief Financial Officer and Secretary
Christopher J. York.................. 36 Chief Operating Officer, West Area
Joseph D. Smith...................... 38 Chief Operating Officer, East Area
Paul J. Quiner....................... 38 Senior Vice President and General Counsel
Daniel L. Frank...................... 40 Lithotripsy Division President
</TABLE>
Richard M. Smith has been the Chief Financial Officer of Coram since August
1995 and has been serving as Secretary since July 1995. Mr. Smith also served as
Vice President, Tax and Treasury, from October 1994 to August 1995. Between
November 1993 and October 1994, Mr. Smith served as Vice President, Finance and
Treasurer, and Assistant Secretary, for CoreSource, Inc., a health care company
specializing in third party claims administration, workers compensation and
integrated health delivery systems. Mr. Smith served as Assistant Treasurer from
July 1990 to November 1993 and Director of Taxes from July 1985 to July 1990 of
Lane Industries, Inc., a holding company engaged in the manufacture of office
products, hotel ownership and management, radio stations, farming and ranching.
Prior to July 1985, Mr. Smith served in various capacities with KPMG Peat
Marwick LLP as tax accountant and tax manager.
Christopher J. York has been Chief Operating Officer of the West Area since
December 1996. Prior to that and since the Company's inception, Mr. York had
served as Area Vice President of the Midwest Area. From 1993 until Coram's
inception, Mr. York was the Vice President of Sales and Operations of Medisys,
Inc.
5
<PAGE> 9
Previously, he was General Manager and Regional Vice President for Critical Care
America. Formerly, he held various sales and management positions at Kendall
Healthcare.
Joseph D. Smith has been Chief Operating Officer of the East Area since
December 1996. Prior to that and since the Company's inception, Mr. Smith had
served as Area Vice President of the Northeast Area. From 1993 until Coram's
inception, Mr. Smith was the Eastern Area Vice President of H.M.S.S., Inc.
Previously, he served as Vice President, Sales, Alternate Sites division of
McGaw, Inc. During his twelve years at McGaw, Inc., he served in a number of
sales, sales management and marketing positions.
Paul J. Quiner has been Senior Vice President and General Counsel of Coram
since March 1996. Mr. Quiner also served as Assistant General Counsel from July
1994 to February 1996. Between September 1992 and July 1994, Mr. Quiner served
as Assistant General Counsel for T2 Medical. Previously, Mr. Quiner was a
partner at the law firm of Alston & Bird.
Daniel L. Frank has been President of the Lithotripsy Division since
December 1996 and since March 1996 had served as the Senior Vice President of
Business Development. Previously, Mr. Frank served as an outside consultant to
Coram from October 1995 to March 1996. Between October 1993 and October 1995,
Mr. Frank served as the Chief Executive Officer for Western Medical Center,
Orange County, California. Prior to October 1993, Mr. Frank served as President
of Summit Ambulatory Network and Vice President of Business Development for
Summit Health Ltd.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth as of June 30, 1997 the number of shares of
outstanding Coram Common Stock beneficially owned by (i) each person known to
Coram to be the owner of more than 5% of the outstanding Common Stock, (ii) each
Director and each person nominated to become a Director of the Company, (iii)
each of the Named Executive Officers and (iv) all Directors and executive
officers of Coram as a group. All information is taken from or based upon
ownership filings made by such persons with the Commission or upon information
provided by such persons to Coram.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NAME AND ADDRESS OF NUMBER OF SHARES OF COMMON STOCK
BENEFICIAL OWNER(1) OF COMMON STOCK(2) OUTSTANDING(2)
------------------- ------------------ --------------------
<S> <C> <C>
James M. Sweeney........................................ 5,000 *
Donald J. Amaral........................................ 815,676 1.82%
Richard A. Fink......................................... 5,000 *
Stephen G. Pagliuca..................................... 5,000 *
L. Peter Smith.......................................... 39,081 *
Dr. Gail R. Wilensky (3)................................ 5,000 *
Richard M. Smith........................................ 200,529 *
Paul J. Quiner.......................................... 51,641 *
Joseph Smith............................................ 65,813 *
Christopher York........................................ 76,604 *
Arne Alsin (4).......................................... 1,702,395 3.85%
William J. Casey........................................ 1,900 *
Daniel L. Frank......................................... 70,833 *
All executive officers, directors and nominees for
director, as a group (16 persons)..................... 3,311,367 7.27%
Fidelity Management and Research Company(5)............. 3,954,000 8.95%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise indicated, the address of each person named above is 1125
Seventeenth Street, Suite 2100, Denver, Colorado 80202.
6
<PAGE> 10
(2) Shares of Common Stock subject to options or warrants that are currently
exercisable or exercisable with 60 days are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants
but not for purposes of computing the percentage of any other person. The
aggregate ownership numbers presented include the following shares of common
stock subject to options for the following persons: Mr. Sweeney 5,000; Mr.
Amaral 733,306; Mr. Fink 5,000; Mr. Pagliuca 5,000; Mr. L.P. Smith 5,000;
Dr. Wilensky 5,000; Mr. R. Smith 200,529; Mr. Quiner 47,495; Mr. J. Smith
65,613; Mr. York 73,425; and all executive officers, directors and nominees
for director, as a group 1,398,641. Except as indicated by footnote, Coram
has been advised that the persons named in the table above have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage computations are based on 44,180,725
shares of Common Stock outstanding as of June 28, 1997.
(3) Dr. Gail Wilensky resigned from Coram's Board of Directors effective July
31, 1997.
(4) Includes 8,000 shares owned by Mr. Alsin, 3,100 owned by his spouse and
1,691,295 held in client accounts of Alsin Capital Management, Inc. ("ACM").
Mr. Alsin as President, Portfolio Manager of ACM has discretionary
investment and voting authority with respect to shares held in such
accounts. Mr. Alsin expressly disclaims beneficial ownership of securities
held in ACM client accounts.
(5) Fidelity Management and Research Company ("Fidelity")report shared
dispositive power with respect to the 3,954,000 shares of Common Stock
reported above. Fidelity reports sole voting power with respect to such
shares. The information with respect to Fidelity is as of March 31, 1997.
The address of Fidelity is 82 Devonshire Street, Boston, MA 02109.
There is no arrangement known to the Company, including any pledge by any
person of securities of the Company, the operation of which may at a subsequent
date result in a change in control of the Company.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Fees for Board Service. Directors who are employees of Coram receive no
additional compensation for service on the Board of Directors. Non-employee
directors of Coram earned the following compensation for Board meetings attended
during fiscal 1996.
<TABLE>
<S> <C>
James M. Sweeney.......................................... $250,000
Richard A. Fink........................................... $ 75,000
Andrew J. Nathanson....................................... $ 75,000
Stephen Pagliuca.......................................... $ 75,000
L. Peter Smith............................................ $ 75,000
Dr. Gail R. Wilensky...................................... $ 75,000
</TABLE>
In addition, all out-of-pocket expenses of directors related to meetings
attended are reimbursed by Coram. Future compensation is at the discretion of
the Board of Directors.
Outside Directors' Automatic Option Grant Program. Non-employee members of
the Board of Directors participate in the Automatic Option Grant Program in
effect under the Coram Option Plan. On the date of each Annual Meeting of
Coram's Stockholders, each individual who will continue to serve as a
non-employee Board member will receive a non-statutory stock option to purchase
2,500 shares of Common Stock at an exercise price equal to the fair market value
of the Common Stock on the automatic option grant date. Each individual who
served as a non-employee Board member on June 24, 1996, received an automatic
option grant under the program for 2,500 shares of Coram Common Stock at an
exercise price of $4.375 per share, the fair market value on such date. Each
option will be immediately exercisable for all of the option shares. However,
any shares purchased under the option will be subject to repurchase by Coram at
the original exercise price paid per share upon the optionee's cessation of
Board service prior to vesting in such shares. The optionee will vest in the
option shares in a series of equal monthly installments over twelve (12) months
of Board service measured from the automatic option grant date. However, the
shares subject to each automatic option grant
7
<PAGE> 11
under the Coram Option Plan will vest in full upon (i) the optionee's cessation
of Board service due to death or disability, (ii) an acquisition of Coram by
merger or asset sale or (iii) a change in control of Coram.
Each automatic option granted to the non-employee Board members includes a
limited stock appreciation right which will allow the optionee, upon the
successful completion of a hostile tender offer for more than 50% of Coram's
outstanding securities, to surrender that option to Coram, in return for a cash
distribution in an amount per surrendered option share equal to the highest
price per share of Coram Common Stock paid in the tender offer less the exercise
price payable per share.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation earned
by the Named Executive Officers for services rendered in all capacities to the
Company and its subsidiaries for the year ended December 31, 1996. Information
with respect to fiscal years prior to the year ended December 31, 1994 is not
provided because Coram was not a reporting company pursuant to Section 13(a) or
15(d) of the Exchange Act at any time prior to July 8, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
------------------------------------------ -------------
NAME AND OTHER ANNUAL STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (#) COMPENSATION
------------------ ---- -------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Donald J. Amaral
Director, Chief Executive 1996 $600,000 $600,000(1) $ -- -- --
Officer and President 1995 120,834(2) -- -- 2,200,000 --
Richard M. Smith 1996 201,458 205,500(3) -- -- --
Chief Financial Officer 1995 145,178 156,250 -- 300,000 --
Christopher York 1996 161,501 117,375(3) -- 50,000 --
Chief Operating Officer,
West
Paul Quiner 1996 180,270 83,750(3) -- 25,000 --
Senior Vice President and
General Counsel
Joseph Smith 1996 148,425 116,750(3) -- 25,000 --
Chief Operating Officer,
East
John T. Gallatin 1996 130,321 -- 112,500(5) -- --
Former Executive Vice
President 1995 208,333 200,000 -- 300,000 --
Kelly J. McCrann 1996 165,625 112,500(3) -- -- --
Former Executive Vice
President 1995 225,088 92,250 139,780(6) 150,000 --
</TABLE>
- ---------------
(1) Fifty percent of Mr. Amaral's 1996 bonus was paid in cash in April 1997 and
fifty percent shall be payable in shares of Common Stock of the Company
based on the average closing price of the Company's Common Stock on the New
York Stock Exchange in the 30-day period immediately preceding the issuance
of such shares of Common Stock. Such shares have not yet been issued as of
July 28, 1997.
(2) Reflects salary, bonus and other compensation earned by Mr. Amaral during
1995.
(3) Includes retention bonuses paid in January 1997 and performance bonuses paid
in April 1997 for service to the Company during 1996.
(4) Does not include perquisites aggregating in dollar value less than the
lesser of $50,000 or 10% of the individual's annual salary and bonus
reported for such individual for the year presented.
8
<PAGE> 12
(5) Represents amounts paid to Mr. Gallatin in connection with a severance
agreement. See "Employment Contracts, Termination of Employment and Change
of Control Arrangements."
(6) Consists of reimbursed expenses in connection with the respective
individual's relocation to Denver, Colorado.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted to
each of the Named Executive Officers during the year ended December 31, 1996. In
addition, in accordance with the rules of the Commission, there are shown
hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term. No stock appreciation rights were granted to the Named Executive
Officers during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
--------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(1)
OPTIONS EMPLOYEES IN PER -----------------------
NAME GRANTED FISCAL YEAR SHARE EXPIRATION DATE 5% 10%
---- ---------- ------------ -------- ------------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Christopher J. York... 25,000 1.87% $5.1250 May 9, 2006 $80.577 $204,198
25,000 1.87 3.8750 September 13, 2006 60,924 154,394
Paul J. Quiner........ 25,000 1.87 5.1250 March 19, 2006 80,577 204,198
Joseph D. Smith....... 25,000 1.87 3.8750 September 13, 2006 60,924 154,394
</TABLE>
- ---------------
(1) Potential realizable value is determined by taking the exercise price per
share and applying the stated annual appreciation rate compounded annually
for the term of the option, subtracting the exercise price per share at the
end of the period and multiplying the remaining number by the number of
options granted. Actual gains, if any, on stock option exercises and Coram
Common Stock holdings are dependent on the future performance of the Coram
Common Stock and overall stock market conditions. Does not reflect changes
in the market price of Coram Common Stock subsequent to December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning the aggregate number
of options exercised during the year ended December 31, 1996 by each of the
Named Executive Officers and outstanding options held by each such officer at
December 31, 1996. None of the Named Executive Officers exercised any stock
appreciation rights during the 1996 fiscal year. No stock appreciation rights
were held by the Named Executive Officers at the end of the 1996 fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996(1)
ON VALUE --------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald J. Amaral............ -- -- 733,306 1,466,694 $1,044,961 $2,090,039
Richard M. Smith............ -- -- 163,028 161,972 220,750 93,750
John T. Gallatin............ -- -- 286,974 197,917 220,750 93,750
Kelly J. McCrann............ -- -- 172,916 77,084 197,313 23,438
Christopher J. York......... -- -- 44,785 130,215 11,719 60,156
Paul J. Quiner.............. -- -- 30,308 57,292 3,906 11,719
Joseph D. Smith............. -- -- 44,785 105,215 11,719 60,156
</TABLE>
- ---------------
(1) Value is determined by subtracting the exercise price from the fair market
value (the closing price for the
9
<PAGE> 13
Common Stock as reported by the New York Stock Exchange) as of December 31, 1996
($5.00) and multiplying the resulting number by the number of underlying shares
of Common Stock. For the purpose of such calculation, the
exercise price per share is the applicable exercise price as of December 31,
1996 and does not reflect market price changes subsequent to December 31, 1996.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Except for its agreement with Donald J. Amaral, Coram does not presently
have any employment contracts in effect with any of the Named Executive
Officers.
On October 13, 1995, Coram entered into an employment agreement with its
President and Chief Executive Officer, Donald J. Amaral, for a three-year term
commencing on such date, unless otherwise terminated. Mr. Amaral was extended
the agreement by the Company to attract and retain his services in light of the
downturn in the Company's business, and its uncertain prospects as he is
considered critical to Coram's future success in the Company's turn-around
period. Under the agreement, Mr. Amaral received a base salary of $600,000 per
annum, and the right to receive a performance bonus. If Mr. Amaral's employment
is terminated by the Company other than for cause or by Mr. Amaral in the event
that the Company fails to comply with any material provision of the agreement,
Mr. Amaral will be entitled to receive his base salary through the longer of (i)
the remaining term of the agreement or (ii) twelve months, plus a bonus payable
after the end of each of the Company's fiscal years thereafter through 1998 in
an amount equal to the average bonus earned by Mr. Amaral during the employment
period. Under the agreement, Mr. Amaral was also granted options to purchase
2,200,000 shares of Common Stock at $3.45 per share. The options will vest and
become exercisable in three equal annual installments upon Mr. Amaral's
completion of each year of service over the three-year period measured from the
October 13, 1995 grant date. The options will immediately vest and become
exercisable in full upon (i) a change in control of the Company; (ii) any
termination by the Company of the employment agreement other than for cause;
(iii) any termination by Mr. Amaral as a result of a material breach of the
employment agreement by the Company; or (iv) termination of the employment
agreement as a result of Mr. Amaral's death or permanent disability. Mr. Amaral
is also eligible to receive all other benefits generally made available by the
Company to its senior executives.
In May, 1997, the Board of Directors approved an amendment to Mr. Amaral's
employment agreement which was executed on , 1997, and is effective
May 16, 1997, increasing his base salary from $600,000 per annum to $650,000 per
annum and extending the term of the agreement until May 15, 2000. The amendment
provided for the granting to Mr. Amaral, as of June 2, 1997, of options to
purchase an additional 300,000 shares of Coram Common Stock at a price of $2.625
per share. Such options will vest and become exercisable in three equal annual
installments on each of the first, second and third anniversaries of their grant
date and will immediately vest and become exercisable in full upon the
occurrence of any event resulting in the full vesting of the original options
granted under the employment agreement. The amendment also provides for the
payment to Mr. Amaral of a $3,000,000 bonus for his success in completing the
financial turnaround of Coram. Such bonus is payable upon the earlier of (i) the
successful restructuring of Coram's debt obligations originally payable to an
affiliate of Donaldson, Lufkin & Jenrette Securities Corporation (the "Rollover
Note") on terms acceptable to the Board of Directors of Coram or (ii) an
acquisition of the Company, as defined therein.
Shares subject to options granted under the Coram Option Plan to the
Company's executive officers will immediately vest in full upon (i) an
acquisition of the Company by merger or asset sale in which such options are not
to be assumed by the acquiring entity or, (ii) if such options are so assumed,
the subsequent termination of the optionee's employment (whether involuntarily
or through a forced resignation) within eighteen (18) months following such
acquisition. In addition, the Compensation Committee, as the Coram Option Plan
administrator, has the authority to provide for the accelerated vesting of the
shares of the Company's Common Stock subject to outstanding options held by the
Company's executive officers, or any unvested shares actually held by those
individuals under the Coram Option Plan, in connection with a hostile take-over
of the Company effected through a successful tender offer for more than 50% of
the Company's
10
<PAGE> 14
outstanding securities or through a change in the majority of the Board as a
result of one or more contested elections for Board membership or in the event
such individual's employment were to be terminated (whether involuntarily or
through a forced resignation) following such hostile take-over.
In April 1997, the Board approved certain (i) retention bonuses payable
contingent on active employment with Coram through December 31, 1998, (ii)
change in control of Coram's payments payable on the earlier of the first
anniversary of a change of control contingent on continued employment with the
new entity, or involuntary termination following a change of control and (iii)
minimum severance payable upon termination by Coram other than for cause or
involuntary termination following a change of control for the Named Executive
Officers as follows:
<TABLE>
<CAPTION>
RETENTION CHANGE IN MINIMUM
BONUS CONTROL PAYMENT SEVERANCE
--------- --------------- ---------
<S> <C> <C> <C>
Richard M. Smith.............................. $187,500 $375,000 12 months
Christopher J. York........................... 187,500 375,000 12 months
Joseph D. Smith............................... 187,500 375,000 12 months
Paul J. Quiner................................ 138,750 185,000 12 months
Daniel L. Frank............................... 157,500 210,000 12 months
</TABLE>
In connection with the resignation of John T. Gallatin as the Company's
Executive Officer on May 3, 1996, the Company entered into a separation
agreement with Mr. Gallatin pursuant to which the Company continued to pay his
salary through June 30, 1997. The Company also entered into a consulting
agreement with Mr. Gallatin under which Mr. Gallatin rendered consulting
services to the Company on an as needed basis through July 1, 1997. As
compensation for Mr. Gallatin's consulting services, the Company agreed to pay
Mr. Gallatin a consulting fee of $1,500 for each day on which Mr. Gallatin
devoted a material amount of time to rendering such consulting services.
In connection with the resignation of Kelly J. McCrann as the Company's
Executive Officer on December 31, 1996, the Company entered into a separation
agreement with Mr. McCrann pursuant to which the Company will continue to pay
his salary until December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard A. Fink and Stephen G. Pagliuca were the only two members of the
Compensation Committee of Coram during the last completed fiscal year. Messrs.
Fink and Pagliuca are both non-employee directors of Coram who have not
previously been in Coram's employ. Mr. Fink is a partner in a law firm that
rendered various legal services to Coram in 1996. No executive officer of Coram
serves as a member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as a member of Coram's
Board of Directors or Compensation Committee.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Coram's Board of Directors sets the base salary of executive officers each
fiscal year and approves, after consideration of recommendations of the
Compensation Committee, the individual bonus programs to be in effect for those
individuals. The Board of Directors has delegated to the Compensation Committee
the authority to award stock options under the Coram Option Plan to Coram's
executive officers and other key employees and may delegate authority with
respect to other compensation issues from time to time. The following is a
summary of the policies which governed our decisions concerning the compensation
paid to Coram's executive officers for the fiscal year ended December 31, 1996,
including the compensation reflected in the tables which appear elsewhere in
this Proxy Statement, and have continued to govern such decisions during the
current fiscal year except where noted.
General Compensation Policy
Introduction. Our major objectives for the 1996 fiscal year were to
continue a compensation structure which would retain the services of those
executive officers of Coram who we identified as essential to the
11
<PAGE> 15
Company's long-term financial success and to attract additional executive
officers to the Company. Accordingly, we developed a compensation policy with
three principal objectives: (i) to maintain key executive compensation
consistent with the healthcare industry, (ii) in light of the difficulties
encountered in Coram's business beginning in 1995 and the turn-around efforts
initiated then, to offer base salary levels and annual incentive compensation
sufficient to attract new executives and induce certain existing management to
remain with the Company to continue to lead and participate in the Company's
turnaround efforts and (iii) to provide a significant equity component in the
form of stock option grants which would serve to strengthen the mutuality of
interests between management and Coram's shareholders.
Factors. The primary factors which we considered in establishing the
components of each executive officer's (including the CEO's) compensation
package for the 1996 fiscal year are summarized below. We may, however, apply
entirely different factors, particularly different measures of performance, in
setting executive compensation for future fiscal years.
- BASE SALARY. As indicated, the base salary of each executive officer for
the 1996 fiscal year was based on salary levels we believed were necessary to
retain and attract certain executive officers. On the basis of our knowledge of
the alternate site health care industry and turn-around situations, we believe
that these base salary levels are competitive with the companies with which
Coram competes for executive talent. However, during 1996 we did not, through
one or more external compensation surveys for the industry, independently
confirm the specific percentiles at which the base salary levels in effect for
Coram's executive officers stood in relation to other companies in the industry.
We felt that the most appropriate vehicle to retain and attract executive
officers and to contribute to Coram's financial success was to have a
substantial portion of their total compensation package be in the form of the
long-term equity component described below.
Because it was not our intent for the 1996 fiscal year to target the base
salary levels in effect for the executive officers at a designated percentile of
the salary levels in effect for other companies in the alternate site health
care industry, there is no meaningful correlation between Coram's salary levels
and the rates of base salary in effect for those companies which are taken into
account in the Industry Index utilized for purposes of the stock price
performance graph which follows this report.
- ANNUAL INCENTIVE COMPENSATION. Incentive compensation is awarded based
upon the Company's financial performance and improvement, as well as the Board
of Director's discretion regarding current position, specific accomplishments
and personal performances of executive officers. All executive officers have the
opportunity to earn cash awards. The Board of Directors believes that
significant accomplishments have been made in the current year to stabilize the
Company and form a foundation for the future. As a result, discretionary awards
were approved by the Board of Directors for certain executive officers'
performance in the current fiscal year.
- LONG-TERM INCENTIVE COMPENSATION. The option grants which we make under
the Coram Option Plan to the executive officers are intended to advance our
overall objective in subjecting a substantial portion of each officer's
compensation package to Company performance measured in terms of stock price
appreciation. Accordingly, the option grants were designed to align the
interests of Coram's executive officers with those of the shareholders and
provide each officer with a significant incentive to manage Coram from the
perspective of an owner with an equity stake in the business. Each grant allows
the executive officer to acquire shares of Coram Common Stock at a fixed price
per share (the market price on the grant date) over a specified period of time
(up to ten years). The option shares vest in periodic installments over a
specified period (generally four years), contingent upon the executive officer's
continued employment with Coram. Accordingly, the options will provide a return
to the executive officer only if he or she remains with Coram, and then only if
the price of Coram's Common Stock appreciates.
The size of the option grant to each executive officer was set at a level
which we felt was appropriate to create a meaningful opportunity for stock
ownership based upon the executive officer's current position with Coram,
internal comparability with option grants made to other Company executives, the
executive officer's current level of performance and his or her potential for
future responsibility and promotion over the option term.
12
<PAGE> 16
We have established certain general guidelines by which we seek to target a
fixed number of unvested option shares for each executive officer based upon his
or her current position with Coram and his or her potential for growth within
Coram, i.e., future responsibilities and possible promotions over the option
term. However, we do not strictly adhere to these guidelines in making stock
option grants, and the relative weight which we give to the various factors
varies from individual to individual, as the circumstances warrant.
CEO Compensation
Mr. Amaral's compensation was set pursuant to the terms of the employment
agreement between Mr. Amaral and Coram entered into in October 1995. As
disclosed in the Summary Compensation Table on page 8, Mr. Amaral received a
bonus of $600,000 for services performed during fiscal 1996, 50% of which was
paid in cash in April 1997 and 50% of which was paid in stock. The amount of
such bonus was determined pursuant to the terms of Mr. Amaral's employment
agreement, based on the Company's exceeding certain EBITDA goals set by the
Board of Directors for fiscal 1996.
In May 1997, the Board of Directors approved an amendment to Mr. Amaral's
agreement providing for, among other things, an increase in his base salary to
$650,000 and an extension of the term of such agreement until May 2000. In
approving the terms of such amendment we relied in part on an executive
compensation review and recommendations prepared for Coram by the Human Capital
Services Practice Group of Arthur Andersen (the "Compensation Review"). Other
factors relevant to the Board's approval of the amendment, in addition to the
factors described above applicable to all executive officers, include the
critical role Mr. Amaral has played in the Company's turn-around efforts and the
Company's need to insure continuity of management in the chief executive officer
position.
See "Employment Contracts, Termination of Employment and Change of Control
Arrangements" for a description of compensation relating to Mr. Amaral,
including a description of an amendment to Mr. Amaral's employment agreement
effective May 16, 1997.
Actions Subsequent to 1996 Fiscal Year End
In light of the policies described above governing the Board of Directors'
actions, particularly our desire to induce existing management to remain with
the Company, we have taken several actions during the current fiscal year to
provide additional compensation to those officers playing a significant role in
the Company's turn-around efforts and to better align certain officers equity
compensation to the Company's current market position. Certain of the actions
described below were based in part on recommendations made in the Compensation
Review. This review was commissioned in connection with considerations raised
following the termination of the proposed merger of the Company with Integrated
Health Services. The use of the Compensation Review should not be considered
indicative of a general change in the Board's policy regarding external
compensation surveys.
In April 1997, based on recommendations set forth in the Compensation
Review and other relevant considerations, we awarded bonuses, in an aggregate
amount of $709,000, to certain Coram officers in recognition of performance
during the 1996 fiscal year. In June 1997, we approved certain retention bonuses
in an aggregate amount of $1,749,750 payable to 13 key executives contingent on
active employment with Coram though December 31, 1998, and minimum severance
arrangements of 6 months or 12 months salary. In addition, we approved change in
control payments in the aggregate amount of $1,885,000 to 8 key executives
payable upon the first anniversary of a change of control of Coram, contingent
on continued employment with the new entity, or earlier involuntary termination
following a change of control. Further, in June 1997, we awarded additional
options to purchase an aggregate of 786,250 shares of Coram Common Stock to 12
key executives. Such options contain terms substantially similar to prior grants
received by such officers, including vesting over a four-year period contingent
on continued employment with the Company.
In May 1997, it was recognized that certain options held by executive
officers were substantially out of the money as a result of recent changes in
Coram's stock price. To better align such options with the current fair market
value of Coram Common Stock, and thus better achieve the goal of aligning the
interests of such executive officers with those of the shareholders, we repriced
options to purchase in the aggregate
13
<PAGE> 17
2,800,250 shares of Coram Common Stock to reflect an exercise price equal to the
fair market value of Coram Common Stock on the date of such repricing.
Compliance with Internal Revenue Code Section 162(m)
As a result of Section 162(m) of the Internal Revenue Code, Coram is
allowed a federal income tax deduction for compensation paid to certain
executive officers, to the extent that compensation does not exceed $1 million
per officer in any one year. This limitation applies to all compensation paid to
the covered executive officers which is not considered to be performance based.
However, any payments which qualify as performance-based compensation are not
taken into account for purposes of this limitation. On the basis of this
distinction, the Coram Option Plan has been specifically designed to assure that
any compensation deemed paid in connection with the exercise of stock options
granted under that plan with an exercise price equal to the fair market value of
the option shares on the grant date will qualify for performance-based
treatment.
We do not expect that the non-exempt compensation to be paid to Coram's
executive officers for the 1997 fiscal year will exceed the $1 million limit per
officer. However, we will defer any decision on whether or not to restructure
one or more components of the compensation paid to the executive officers so as
to qualify
those components as performance-based compensation that will not be subject to
the $1 million limitation.
The foregoing report has been submitted by the undersigned in our capacity
as members of Coram's Board of Directors.
James M. Sweeney
Donald J. Amaral
Richard A. Fink
Stephen G. Pagliuca
L. Peter Smith
Dr. Gail R. Wilensky
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total stockholder
returns assuming reinvestment of dividends for (i) Coram, (ii) the companies
included in the Standard & Poor 500 Stock Index, (iii) Apria Healthcare Group,
Inc., Olsten Corporation, American Homepatient, Inc., and Option Care, Inc.,
which comprise the Company's New Peer Group and (iv) Apria Healthcare Group,
Inc. and Rotech Medical Corp., which comprise the Company's Old Peer Group, for
the period commencing July 11, 1994, the date the Common Stock was first
publicly traded, through December 31, 1996. The Company has constructed the New
Peer Group for purposes of this Proxy Statement as a result of the acquisition
of certain of the companies included in the Old Peer Group and to more closely
align the peer group entities with the Company in terms of size and nature of
business. The stockholder returns are based upon an assumed $100 investment made
on July 11, 1994 in each of four charted alternatives. The chart does not
reflect changes in Coram's stock price subsequent to December 31, 1996.
14
<PAGE> 18
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG CORAM HEALTHCARE CORPORATION, THE S&P 500 INDEX,
THE DOW JONES HEALTH CARE PROVIDERS INDEX AND TWO PEER GROUPS
CRH
<TABLE>
<CAPTION>
CORAM
MEASUREMENT PERIOD HEALTHCARE NEW PEER OLD PEER
(FISCAL YEAR COVERED) CORPORATION GROUP GROUP S&P
<S> <C> <C> <C> <C>
7/11/94 100 100 100 100
12/94 115 103 153 104
12/95 30 130 148 143
12/95 34 90 125 176
</TABLE>
- ---------------
* $100 invested on July 11, 1994 in stock or on June 30, 1994 in
index -- including reinvestment of dividends. Fiscal year ending December
31, 1996.
15
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Fink, a director of Coram since July 1994, is a partner in a law firm
that rendered various legal services to Coram in 1996 and is continuing to
render such services in 1997. The legal fees paid by Coram to such firm
approximated $1.7 million in the fiscal year ended December 31, 1996.
Mr. Nathanson, a director of Coram from December 1995 to May 1997, is a
Managing Director of Donaldson, Lufkin & Jenrette Securities Corporation (DLJ),
an investment banking firm that rendered various financial services to Coram in
1996. DLJ provided a $150 million bridge loan to Coram in April 1995 in
connection with Coram's acquisition of the business of Caremark Inc. pursuant to
the terms of the Purchase Agreement and held the Rollover Note issued in
connection therewith until May 1997, at which time DLJ sold the Rollover Note to
Cerberus Partners, L.P., Goldman Sachs Credit Partners, L.P. and Foothill
Capital Corporation. The Purchase Agreement provided that DLJ had the right to
appoint a director to Coram's Board of Directors if an event of default occurred
and so long as it is continuing provided however, that the right terminated at
such time that DLJ is no longer the holder of at least fifty percent of the
aggregate principal amount of the outstanding bridge notes. DLJ was granted the
right to appoint a director in September 1995 in exchange for certain waivers
under the Purchase Agreement which right expired upon the sale of the Rollover
Note referenced above. Fees for financial advisory and investment banking
services to DLJ approximated $6.5 million in 1995. On October 4, 1996, DLJ was
engaged by Coram to act as a financial advisor to Coram in connection with the
possible sale, merger, consolidation or other business combination involving
Coram. By letter dated July 17, 1997, DLJ has agreed to the termination of such
engagement, together with all other prior engagement agreements between Coram
and DLJ, effective upon payment by Coram of approximately $503,000 to DLJ in
reimbursement of out-of-pocket expenses incurred by DLJ pursuant thereto. No
other amounts have been paid, or are owed, to DLJ pursuant to such engagement.
L. Peter Smith serves on the Board of Directors of Sabratek Corporation. On
February 26, 1997, the Company agreed to purchase up to $13.0 million of
multi-therapy infusion pumps and related proprietary telemedicine technology
over the next six to nine months from Sabratek Corporation. The pricing schedule
applicable to the infusion pumps and related technology to be purchased was
negotiated by Coram's Chief Executive Officer, Chief Financial Officer and Vice
President of Materials Management, Robert Roose after proposals from other
manufacturers for comparable equipment had been solicited. Prior to entering
into the agreement with Sabratek, the Company's area clinical and operations
staffs conducted field level trials and tests on infusion pumps made by several
different manufacturers, including Sabratek.
PROPOSAL 2
AUTHORIZATION OF ADDITIONAL SHARES OF COMPANY COMMON STOCK
The Board of Directors recommends that the stockholders approve an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock from 75,000,000 to 100,000,000. As of July
28, 1997, 44,180,725 of the 75,000,000 shares of Common Stock authorized for
issuance were issued and outstanding. In addition, 22,918,669 shares were
reserved for issuance pursuant to the Company's current obligations under
warrants held by certain lenders and former lenders to the Company, the
Company's current employee benefit plans and under other obligations of the
Company. As a result, the Company is left with very few shares of its Common
Stock for the raising of additional capital, the funding of acquisitions or
other corporate purposes.
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<PAGE> 20
The chart that follows summarizes the numbers of shares of Common Stock
issued and outstanding as well as the shares currently reserved for issuance or
estimated to be needed under its various commitments, all as of July 28, 1997.
<TABLE>
<CAPTION>
DESCRIPTION NO. OF SHARES
----------- -------------
<S> <C>
Shares issued of record..................................... 44,180,725
Warrants issued under Bridge Note........................... 4,710,186
Warrants issued under the Fourth Amendment to the Senior
Credit Facility........................................... 2,569,342
Warrants under litigation settlements....................... 2,520,000
Shares reserved under Coram shareholder litigation.......... 3,500,000
Options reserved under 1994 Option Plan..................... 7,213,851
Options reserved under other employee options(1)............ 1,053,353
Shares reserved for Stock Purchase Plan(2).................. 1,035,969
Other share issuance commitments(3)......................... 315,968
----------
Total....................................................... 67,099,394
</TABLE>
- ---------------
(1) Includes options to purchase 800,000 shares of Common Stock issued to Donald
J. Amaral, the Company's President and Chief Executive Officer. See
"Compensation of Directors and Executive Officers."
(2) Assumes that Proposal 3 is approved. See "Proposal 3 -- Amendment to the
Coram Healthcare Corporation Employee Stock Purchase Plan."
(3) Includes estimates of the numbers of shares that may be required to satisfy
certain contingent obligations incurred by the Company's predecessors.
The terms of the Rollover Notes require the Company to issue warrants to
purchase shares in specified amounts at various times. Under the present terms
of such arrangements, the Company would be required
to issue additional warrants to purchase approximately 2.7 million shares of
Common Stock through
December 31, 1997. In light of this obligation and the shares reserved for the
various purposes described above, as of July 28, 1997, the Company had only
7,900,606 shares of authorized Common Stock remaining for future issuance and
not reserved for a specific purpose.
The Board of Directors of the Company believes that it is in the best
interest of the Company and its stockholders that there be a greater number of
authorized and unissued shares available to give the Company the flexibility it
needs to conduct its business and accommodate future growth. The proposed
increase in authorized shares of Common Stock is desirable to enhance the
Company's flexibility in structuring its future capitalization, to meet
financing needs for expansion and growth, in structuring funding for future
acquisitions in a timely manner and for other corporate purposes which the Board
may deem desirable. The Board of Directors believes that the remaining available
unissued shares would not provide sufficient flexibility for corporate action in
the future.
The purpose of the proposed increase in the number of shares of authorized
Common Stock is to ensure that additional shares of Common Stock will be
available, if needed, for issuance in connection with any future transactions
approved by the Board of Directors, including, among others, acquisitions,
future stock splits, stock dividends, financings and other corporate purposes.
The Board of Directors believes that the availability of the additional shares
of Common Stock for such purposes without delay or the necessity for a special
stockholders meeting (except as may be required by applicable law or regulatory
authorities or by the policies, rules and regulations of the New York Stock
Exchange or any other stock exchange on which the Company's securities may then
be listed) will be beneficial to the Company by providing it with the
flexibility required to consider and promptly respond to future business
opportunities and needs as they arise. If the proposed amendment is approved by
the stockholders, no future authorization for the issuance if newly authorized
Common Stock will be solicited prior to such issuance (except as may be required
by applicable law or
17
<PAGE> 21
regulatory authorities or by the policies, rules or regulations of the New York
Stock Exchange or any other stock exchange on which the Company's securities may
then be listed).
Other than as described above with respect to shares reserved for issuance
for specific purposes, the Company has no current plans to issue additional
shares of Common Stock.
It is possible that shares of Common Stock may be issued at a time and
under circumstances which may increase or decrease earnings per share and
increase or decrease the book value per share of shares presently held. Further,
although the proposed increase in authorized shares of Common Stock is not
proposed for the purpose of any anti-takeover effect, the issuance of additional
shares of Common Stock authorized pursuant thereto may have an anti-takeover
effect and may delay or prevent a tender offer or takeover attempt that a
stockholder may consider in its best interest, including those attempts that
might result in a premium over the market price of shares held by such
stockholder. The proposed amendment will enable the Board of Directors to issue
shares of Common Stock to third parties which could render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise.
The Company's Certificate of Incorporation presently authorizes the
issuance of 10,000,000 shares of Preferred Stock. However, none of such shares
is outstanding and the Company presently has no plans for the issuance of
Preferred Stock.
PROPOSED RESOLUTION
A resolution substantially in the following form will be submitted to the
stockholders at the Meeting:
RESOLVED, that the Certificate of Incorporation be amended by deleting
Article FOURTH, Section A, in its entirety and inserting in its place the
following new Article FOURTH, Section A which shall read in full as follows:
"FOURTH. A. AUTHORIZED CAPITAL STOCK. The total number of shares that the
Corporation shall have authority to issue shall be 110,000,000 shares, of which
100,000,000 shares shall be Common Stock, $.001 par value, and 10,000,000 shares
shall be Preferred Stock, $.001 par value."
APPRAISAL RIGHTS
Stockholders of the Company have no rights of appraisal in connection with
the proposed amendment to the Company's Certificate of Incorporation and will
have no preemptive rights in connection with the issuance of new shares of
Common Stock.
VOTE REQUIRED
Approval of the proposed amendment to the Company's Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
shares of Common Stock entitled to notice of and to vote at the Meeting. If the
proposal is approved by the stockholders, the amendment to the Certificate of
Incorporation would become effective upon the filing of a Certificate of
Amendment to the Certificate of Incorporation with the Secretary of State of
Delaware, which would occur as soon as practicable following approval of the
proposal by the stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
18
<PAGE> 22
PROPOSAL 3
AMENDMENT TO THE CORAM HEALTHCARE
CORPORATION EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
On July 10, 1997, the Company's Board of Directors adopted resolutions
approving an amendment to the Coram Healthcare Corporation Employee Stock
Purchase Plan (the "Stock Purchase Plan") increasing the number of shares of
Common Stock available for issuance under the Stock Purchase Plan from 300,000
to 1,300,000. As of June 28, 1997, 264,031 shares of the Company Common Stock
had been issued pursuant to the Stock Purchase Plan since its inception in 1994.
In October 1996, the operation of the Stock Purchase Plan was suspended because
the number of shares of Common Stock then available for issuance under the Stock
Purchase Plan would have been insufficient to satisfy the anticipated level of
purchases during the Fourth Quarter of 1996.
The Board of Directors has determined that continuing the operation of the
Stock Purchase Plan is in the best interests of the Company and its
stockholders. Accordingly, the Board voted to approve the amendment to the Stock
Purchase Plan to increase the number of shares available under the Stock
Purchase Plan, subject to approval by the Company's stockholders. A copy of the
Stock Purchase Plan is attached to this Proxy Statement as Appendix I and the
description of the Stock Purchase Plan appearing in this Proxy Statement is
qualified in its entirety by reference to applicable provisions of the Stock
Purchase Plan.
The Stock Purchase Plan was adopted in 1994 and approved by the Company's
stockholders on July 8, 1994. The purpose of the Stock Purchase Plan is to offer
eligible employees of the Company an opportunity to purchase shares of Common
Stock on a more advantageous basis than would otherwise be available, thereby
increasing their interest in the Company. The Plan will remain in effect until
all of the shares of Common Stock reserved for issuance under the Stock Purchase
Plan have been issued and distributed, unless terminated by the Board.
TERMS OF THE STOCK PURCHASE PLAN
Each full-time employee who is customarily employed by the Company on a
basis requiring more than twenty hours of service per week for more than five
months per calendar year will be eligible to participate in the Stock Purchase
Plan for one or more offering periods. However, no executive officers of the
Company will be eligible to participate in the Stock Purchase Plan.
The Stock Purchase Plan is implemented in a series of successive offering
periods, each with a maximum duration of twenty-four months. The next offering
period will begin on or about January 1, 1998 assuming approval of this
Proposal. An individual who is eligible to participate in the Stock Purchase
Plan on the start date of a particular offering period may join the offering
period on that date. An individual who first becomes eligible to participate in
the Stock Purchase Plan after the start date of a particular offering period may
join that offering period on the next quarterly entry date (the first business
day of each calendar quarter).
At the time the participant joins the offering period, he or she will be
granted a purchase right to acquire shares of Coram Common Stock at quarterly
intervals over the remainder of that offering period. The purchase dates will
occur on the last business day of each calendar quarter within the offering
period, and all payroll deductions collected from the participant for the period
ending with each such quarterly purchase date will automatically be applied to
the purchase of Coram Common Stock.
The purchase price per share will be 85% of the lower of (i) the fair
market value per share of Coram Common Stock on the participant's entry date
into the offering period or (ii) the fair market value per share on the
quarterly purchase date. However, for a participant who joins the offering
period after the start date, the clause (i) amount will not be less than the
fair market value per share on such start date. The fair market value per share
of Coram Common Stock on any relevant date under the Stock Purchase Plan will be
the closing selling price per share on that date on the New York Stock Exchange
or the exchange on which shares of Coram Common Stock are then currently traded.
19
<PAGE> 23
The purchase price is to be paid through periodic payroll deductions not to
exceed 10% of the participant's base salary. However, no participant may
purchase more than $25,000 worth of Coram Common Stock (based on the fair market
value of the common stock on his or her entry date into the offering period) for
each calendar year his or her purchase right remains outstanding. In addition,
no participant may purchase more than 100 shares of Coram Common Stock on any
quarterly purchase date.
In the event any change in the outstanding shares of Coram Common Stock is
effected without Coram's receipt of consideration, whether by reason of any
stock split, stock dividend, recapitalization or other similar change in capital
structure, appropriate adjustments will be made to (i) the maximum number and/or
class of securities issuable over the term of the Stock Purchase Plan, (ii) the
number and/or class of securities and the purchase price per share in effect
under each outstanding purchase right in order to preclude the dilution or
enlargement of benefits thereunder, and (iii) the maximum number and/or class of
securities purchasable per participant on any one quarterly purchase date.
The participant will not have any stockholder rights with respect to the
shares subject to his or her outstanding purchase right, until such right is
exercised on each quarterly purchase date. An outstanding purchase right is
exercisable only by the participant, and purchase rights are not assignable or
transferable other than by will or the laws of inheritance following the
participant's death.
In the event Coram is acquired by merger or asset sale, all outstanding
purchase rights will automatically be exercised immediately prior to the
effective date of such acquisition at a purchase price per share equal to 85% of
the lower of (i) the fair market value per share of Coram Common Stock on the
participant's entry date into the offering period or (ii) the fair market value
per share immediately prior to such acquisition. A similar automatic exercise of
outstanding purchase rights will occur should Coram dispose of its equity
holdings in one or more of its operating subsidiaries (including T2, Curaflex,
HealthInfusion and Medisys after the Merger) by a merger or consolidation
involving that subsidiary, a sale of substantially all of the assets of that
subsidiary or Coram's sale of substantially all of the outstanding capital stock
of such subsidiary, but only the purchase rights of the participants in the
employ of the subsidiary involved in such transaction will be so exercised.
A participant may withdraw from an offering period at any time prior to the
quarterly purchase date and may elect to have his or her payroll deductions for
the quarterly period in which such withdrawal occurs either refunded immediately
or applied to the purchase of Coram Common Stock on the next quarterly purchase
date. The participant's purchase right will terminate automatically in the event
the participant ceases to remain an eligible employee for any reason, and any
payroll deductions collected from such individual during the quarterly period in
which such cessation of status occurs will be refunded.
The Coram Board of Directors may amend or terminate the Stock Purchase Plan
immediately after any quarterly purchase date. However, the Board may not,
without stockholder approval, (i) materially increase the number of shares of
Coram Common Stock available for issuance under the Stock Purchase Plan, (ii)
alter the purchase price formula so as to reduce the purchase price payable for
the issued shares or (iii) materially modify the eligibility requirements for
participation or the benefits available to participants. The Stock Purchase Plan
will in all events terminate on the last business day of December 2003.
The Stock Purchase Plan is intended to be an "employee Stock Purchase Plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to Coram, upon either the grant or the exercise
of the purchase rights. Taxable income will not be recognized until there is a
sale or other disposition of the shares acquired under the Stock Purchase Plan
or in the event the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the purchased shares
within two years after his or her entry date into the offering period or within
one year after the actual purchase date, the participant will recognize ordinary
income in the year of sale or disposition equal to the amount by which the fair
market value of the shares on the purchase date exceeded the purchase price of
those shares. If the participant sells or disposes of the purchased shares more
than two years after entry into the offering period and more than one year after
the
20
<PAGE> 24
actual purchase date, then the participant will recognize ordinary income in the
year of sale or disposition equal to the lesser of (i) the amount by which the
fair market value of the shares on the sale or disposition date exceeded the
purchase price paid for those shares or (ii) 15% of the fair market value of the
shares on the date the participant entered the offering period. Any additional
gain upon the disposition will be taxed as a long-term capital gain.
If the participant still owns the purchased shares at the time of death,
the lesser of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) 15% of the fair market value of
the shares on the date the participant entered the offering period will
constitute ordinary income in the year of death.
If the purchased shares are sold or otherwise disposed of within two years
after the participant's entry date into the offering period or within one year
after the actual purchase date, then Coram will be entitled to a deduction in
the year of sale or disposition equal to the amount of ordinary income
recognized by the participant as a result of such sale or disposition. In all
other cases, no deduction will be allowed.
Under current accounting rules, the issuance of Coram Common Stock under
the Stock Purchase Plan will not result in a compensation expense chargeable
against Coram's reported earnings. However, the accounting principles applicable
to employee stock purchase plans such as the Stock Purchase Plan are currently
under review by the Financial Accounting Standards Board, and substantial
revisions to those governing principles may be implemented in the future.
VOTE REQUIRED
Approval of the proposed amendment to the Stock Purchase Plan requires the
affirmative vote of at least a majority of the outstanding shares of Common
Stock present or represented and entitled to vote at the Meeting, provided a
quorum is present.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE STOCK PURCHASE PLAN.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP, served as independent auditors of
the Company for the years ended December 31, 1996, 1995 and 1994. Subject to
stockholder ratification at the Annual Meeting, the Board of Directors has
selected Ernst & Young LLP as the Company's independent auditors for the fiscal
year ending December 31, 1997. The affirmative vote of a majority of the shares
of the Company's voting stock represented and voted at the Annual Meeting is
required for ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors.
Representatives of Ernst & Young LLP are expected to attend the Meeting.
They will have an opportunity to make statements and will be available to
respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
OTHER MATTERS
Management does not know of any other matters to be brought before the
Annual Meeting. If any other matter is properly presented for consideration at
the Annual Meeting, it is intended that the proxies will be voted by the persons
named therein in accordance with their discretion on such matters.
21
<PAGE> 25
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual stockholder meetings, consistent with rules
adopted by the Commission. Proposals for the 1998 Annual Meeting of Stockholders
must be received by the Company not less than 30 days nor more than 60 days
prior to the scheduled date of the meeting (or, if less than 40 days' notice or
prior public disclosure of the date of the meeting is given, the 10th day
following the earlier of (i) the day such notice was mailed or (ii) the day such
public disclosure was made) to be considered for inclusion in the proxy
statement and form of proxy relating to the 1998 Annual Meeting of Stockholders.
Any such proposals should be addressed to: Corporate Secretary, Coram Healthcare
Corporation, 1125 Seventeenth Street, Suite 2100, Denver, Colorado 80202.
Under Rule 14a-8 adopted by the Commission under the Exchange Act,
proposals of stockholders must conform to certain requirements as to form and
may be omitted from the proxy statement and proxy under certain circumstances.
In order to avoid unnecessary expenditures of time and money by stockholders,
stockholders are urged to review this rule and, if questions arise, to consult
legal counsel prior to submitting a proposal.
ANNUAL REPORT TO STOCKHOLDERS
The 1996 Annual Report of the Company, as filed with the Commission, is
being mailed to the stockholders with this Proxy Statement. The Annual Report is
not to be considered part of the proxy soliciting material.
CORAM HEALTHCARE CORPORATION
Denver, Colorado
August 15, 1997
22
<PAGE> 26
PROXY
CORAM HEALTHCARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen G. Pagliuca and Donald J.
Amaral, or any of them, the proxies and attorneys-in-fact for the undersigned,
with full power of substitution and revocation, to represent and vote on behalf
of the undersigned, at the 1996 annual meeting of stockholders of Coram
Healthcare Corporation (the "Company") to be held at The Westin Hotel, 1672
Lawrence Street, Denver, Colorado on September 16, 1997, at 2:00 p.m. local
time, and any adjournments or postponements thereof, all shares of the common
stock, $.001 par value per share, of the Company standing in the name of the
undersigned or which the undersigned may be entitled to vote as follows on the
reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE SEE REVERSE SIDE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned. If no direction is made, this proxy will be voted FOR Items
1 and 2.
1. Election of Directors
NOMINEES: Donald J. Amaral, Richard A. Fink, Stephen G. Pagliuca, L.
Peter Smith, Arne Alsin and William J. Casey.
[ ] FOR [ ] WITHHELD
[ ] MARK HERE FOR
ADDRESS CHANGE [ ]
For all nominees except as noted above AND NOTE BELOW
2. To approve an amendment to the Company's Amended Certificate of
Incorporation to increase the number of shares of authorized common
stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Employee Stock Purchase plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Election of Ernst & Young LLP as independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote for the
election of such substitute nominee(s) as such proxies may select in
the event that one or more of the nominees named in Item 1 above
becomes unable to serve, and upon such other business as may properly
come before the meeting or any adjournment or postponement thereof.
<PAGE> 27
The submission of this proxy if properly executed revokes all prior proxies
given by the undersigned.
Receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement is hereby acknowledged.
Please sign exactly as name appears on this card. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Signature: Date:
Signature: Date:
