EXHIBIT 2B
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Stockholder Agreement") is made and
entered into as of the 29th day of December, 2000, by and among CORAM, INC., a
Delaware corporation (the "Company"), CERBERUS PARTNERS, L.P., a New York
limited partnership ("Cerberus"), FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), and XXXXXXX XXXXX & CO., a New York corporation
("Goldman"). Cerberus, Foothill, and Goldman and each holder of the Company's
stock which becomes a party to this Agreement after the date hereof are
individually referred to herein as a "Stockholder," and collectively as the
"Stockholders."
W I T N E S S E T H
WHEREAS, pursuant to that certain Exchange Agreement (herein so
defined), of even date herewith, by and among the Company and the Stockholders,
(a) Cerberus has acquired 416.51 shares of the Company's Preferred Stock (as
hereinafter defined), (b) Foothill has acquired 169.71 shares of the Company's
Preferred Stock, and (c) Goldman has acquired 318.78 shares of the Company's
Preferred Stock;
WHEREAS, the Company's Preferred Stock held by Cerberus, Foothill, and
Goldman constitute all of the shares of the Preferred Stock outstanding of the
Company on the date hereof; and
WHEREAS, the parties hereto wish to state herein their mutual
understandings, agreements and obligations and to impose certain restrictions on
the rights and benefits with respect to the voting and disposition of the Shares
(as hereinafter defined) now or hereafter owned by the Stockholders.
NOW, THEREFORE, for and in consideration of the foregoing, the
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, and intending to be legally
bound hereby, the parties agree as follows:
1. DEFINITIONS.
The following capitalized terms are used in this Agreement with the
meanings thereafter ascribed:
"Affiliate" of a Person means any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with such
other Person. For purposes of the foregoing definition: (a) with respect to any
Person which is not an individual, "control" shall mean the direct or indirect
power to direct or cause the direction of the management of a Person, by
ownership of equity securities, by contract or otherwise, and shall be deemed to
exist with respect to any entity as to which the Person in question owns or is
the beneficiary of, directly or indirectly, fifty percent (50%) or more of the
outstanding voting rights or equity interests; and (b) with respect to any
Person who is an individual, the term "Person" shall include, in addition to
such individual, such individual's ancestors and descendants (including by
adoption), spouse, spouse's ancestors and descendants, and any other individual
as to whom there exists a family
relationship with the first individual which is close enough to indicate a
commonality of interest between such individual and the first individual.
"Agreement" means this Stockholder Agreement, together with any addenda
and amendments made in the manner described in this Agreement.
"Certificate of Designation" means the Certificate of Designation of
the Company filed with the Secretary of State of the state of Delaware on
December 29, 2000.
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the $1.00 par value per share common stock of the
Company.
"Disposition" means any transfer of all or any part of the rights and
incidents of ownership of the Shares, including the right to vote, and the right
to possession of the Shares as collateral for indebtedness, whether such
transfer is outright or conditional, inter vivos or testamentary, voluntary or
involuntary, or for or without consideration.
"Designated Health Services" shall have the meaning set forth under
Xxxxx II.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Impermissible Investor" means any Person who is not a Permissible
Investor.
"Non-Referral Agreement" means a written agreement in form and
substance acceptable to the Company, and executed and delivered by an
Impermissible Investor, pursuant to which such Impermissible Investor agrees
that it will not make any referral (as defined under Xxxxx II) of patients to
the Company for Designated Health Services during such period of time as the
Impermissible Investor is a Stockholder or Stockholder Owner hereunder.
"Permitted Disposition" means a Disposition effected by a Stockholder
to a Permissible Investor as to which the transferor shall have obtained and
delivered to the Company (a) the written agreement of the proposed transferee,
in form and substance reasonably satisfactory to the Company, that the proposed
transferee will be bound by, and that the Shares proposed to be transferred to
the proposed transferee will be subject to, this Agreement, and (b) (unless
waived by the Company in its discretion) an opinion of counsel, reasonably
satisfactory to the Company, (i) that such transfer of interest does not require
registration under the Securities Act or any applicable state securities laws
and (ii) that such proposed transferee is a Permissible Investor. Such written
agreement and opinion of counsel shall be attached as an addendum to this
Agreement and thereby incorporated as a part of this Agreement, whereupon the
proposed transferee shall have adopted this Agreement, and thereafter shall be a
party hereto, and the term "Stockholders" as used herein shall thereafter mean
and include such transferee.
"Permissible Investor" means any Person other than (a) a physician who
is in a position to make any referrals (as defined under Xxxxx II) of patients
to the Company for Designated Health Services for which payment may be made
under Title XVIII of the Social Security Act
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(42 U.S.C. ss.1395 et seq.) or under Title XIX of the Social Security Act (42
U.S.C. ss.1396 et seq.) (a "Referring Physician"), (b) a member of a Referring
Physician's immediate family (as defined under Xxxxx II) (a "Referring Physician
Family Member"), or (c) a Person in which a Referring Physician or a Referring
Physician Family Member, directly or indirectly, owns or holds any ownership or
equity interest (as a shareholder, partner, member, or otherwise); provided,
however, that a Person who would be deemed a Referring Physician under clause
(a) above shall not be deemed a Referring Physician and shall be a Permissible
Investor if such Person enters into a Non-Referral Agreement with the Company
and does not at any time breach such Non-Referral Agreement.
"Person" means an individual, corporation, partnership, joint venture,
trust, limited liability company, government, or other legal entity of any
nature whatsoever.
"Preferred Stock" means the $0.001 par value per share preferred stock
of the Company.
"Qualified Publicly Traded Company" means any legal entity whatsoever
the ownership of which by a Referring Physician or a Referring Physician Family
Member would not violate Xxxxx II by virtue of the fact that such ownership
would fall within the exception under Xxxxx II for the ownership of publicly
traded securities and mutual funds.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Shares" means and includes as to each Stockholder, all shares of the
equity securities of the Company, including without limitation the Common Stock
and the Preferred Stock, now or in the future owned of record or beneficially by
such Stockholder (including without limitation, all Common Stock, Preferred
Stock or other equity securities of the Company hereafter acquired pursuant to
the exercise of any option, warrant, or other right granted by the Company to
such Stockholder).
"Share Value" shall have the meaning ascribed to it in Section 3.3(d)
below.
"Xxxxx II" means the Medicare and Medicaid physician self-referral
statutory provisions at 42 U.S.C. ss.ss.1395nn and 1396b(s), as amended,
together with all rules and regulations promulgated thereunder, as the same may
be amended from time to time.
"Stockholder Owner" means any Person who, directly or indirectly, owns
or holds any ownership or equity interest (as a shareholder, partner, member, or
otherwise) in a Stockholder.
"Term Sheet" means that Term Sheet agreed to by the Company and the
Stockholders dated December 28, 2000, as approved by the United States
Bankruptcy Court for the District of Delaware.
2. STOCKHOLDER REPRESENTATIONS AND WARRANTIES.
2.1. Qualification as Permissible Investor. Each Stockholder hereby
represents and warrants that (a) it and each of its Stockholder Owners qualifies
as a Permissible Investor
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hereunder or (b) it is a Permissible Investor and it has duly promulgated to its
Stockholder Owners the notice attached hereto as Exhibit A.
2.2. Accredited Investor. Each Stockholder hereby represents and
warrants that (a) it satisfies the definition of "accredited investor" as set
forth in Rule 501(a) of Regulation D under the Securities Act and/or is a
"sophisticated investor"; and (b) it has acquired the Shares for its own
investment account and not (i) with a view to the resale or distribution of all
or any part thereof or (ii) on behalf of another Person who has not made the
foregoing representation.
3. SHARE CONTROL.
3.1. Restrictions Upon Transfer of Shares. Notwithstanding any
provision of this Agreement to the contrary and except as otherwise permitted in
this Agreement, during the Term (a) neither the Company nor any Stockholder
shall make any Disposition of its Shares, except for a Permitted Disposition,
and (b) each Stockholder shall at all times during its ownership of any Shares
maintain its status as a Permissible Investor.
3.2. Restriction on Ownership of Stockholder. Except as otherwise
provided in this Section 3.2, during the Term all Stockholders shall at all
times ensure that all of their respective Stockholder Owners are Permissible
Investors; provided, however, that a Person who would otherwise be an
Impermissible Investor hereunder shall not be prohibited from directly or
indirectly owning or holding an ownership or equity interest (as a shareholder,
partner, member, or otherwise) in a Stockholder Owner which is Qualified
Publicly Traded Company. Notwithstanding the foregoing, if any Stockholder or
any of its Affiliates desires to enter into a transaction pursuant to which an
Impermissible Investor would become a Stockholder Owner with respect to such
Stockholder in a manner which is prohibited under the immediately preceding
sentence, such Stockholder shall first either (a) have such Person enter into a
Non-Referral Agreement with the Company or (b) submit to the Company's Board of
Directors a written opinion of legal counsel describing the proposed transaction
in detail and setting forth a legal opinion to the effect that the proposed
transaction would not result in a violation of Xxxxx II. In the event a written
opinion of counsel is submitted as provided in part (b) of the preceding
sentence, and the Company's Board of Directors agrees, in its discretion, that
the proposed transaction would not result in a violation of Xxxxx II (which such
agreement by the Company's Board of Directors shall include the approval of at
least one (1) of each of the Cerberus Directors, the Foothill Directors, and the
Goldman Directors), such Stockholder or its Affiliate, as the case may be, may
consummate the proposed transaction but only in the manner described in the
applicable opinion of counsel approved by the Company's Board of Directors.
3.3. Company Option to Purchase Shares.
(A) In the event any Shares are at any time legally or
beneficially owned by any Impermissible Investor, the Company shall at all times
thereafter have the option to (i) require that the Impermissible Investor
immediately enter into a Non-Referral Agreement with the Company or (ii) if the
Impermissible Investor fails to immediately enter into such a Non-Referral
Agreement of if the Company otherwise elects in its discretion, purchase such
Shares in accordance with this Section 3.3. Such option shall be exercised by
the Company providing written notice (the "Election Notice") to the
Impermissible Investor. In the event the Company
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elects to purchase the Shares, the exercise of such purchase option shall be at
a price equal to the Share Value and shall be payable as set forth in Section
3.3(d) below.
(B) In the event a Stockholder Owner is at any time an
Impermissible Investor, the Company shall at all times thereafter have the
option to (i) require such Stockholder Owner to immediately enter into a
Non-Referral Agreement with the Company or (ii) if such Stockholder Owner fails
to immediately enter into such a Non-Referral Agreement, or if the Company
otherwise elects in its discretion, purchase all Shares owned by the Stockholder
in question in accordance with this Section 3.3. Such option shall be exercised
by the Company providing an Election Notice (x) to the Impermissible Investor in
the event of the exercise of the option set forth in clause (i) of the preceding
sentence or (y) to the Stockholder in question in the event of the exercise of
the option set forth in clause (ii) of the preceding sentence. In the event the
Company elects to purchase the Shares, the exercise of such purchase option
shall be at a price equal to the Share Value and shall be payable as set forth
in Section 3.3(d) below.
(C) The total purchase price for Shares purchased under Sections
3.3(a) and (b) above (the "Purchase Price") shall be paid in cash or by
certified check, except that at the option of the Company, and to the extent
permissible under Xxxxx II, up to ninety percent (90%) of the total Purchase
Price may be paid by the unsecured promissory note of the Company (the "Note"),
with principal payable in equal annual installments over a period of not more
than three (3) years, and with simple interest at the lowest rate which would
result in there being no unstated interest for purposes of Section 483 of the
Internal Revenue Code of 1986, payable upon each anniversary of the Note. The
Company shall have the right to repay the principal and accrued interest
outstanding under the Note without penalty at any time and from time to time.
(D) The "Share Value" at any time shall be the fair market value
price per Share at such time as determined by the Board. The Board shall agree
on a value according to such criteria as it deems relevant, which may include
any valuation of Shares made in connection with any investment in the Company,
the restricted nature of the Shares, book value, earnings and earnings prospects
of the Company and a comparison to other companies in the same industry as the
Company. If the Board of Directors is unable to approve any determination of the
Share Value, then the Share Value shall be the fair market value of a Share as
determined by an independent appraiser selected and approved by the Board of
Directors.
(E) The closing of any purchase and sale of Shares under this
Section 3.3 shall be held not more than one hundred twenty (120) days after the
Company's issuance of an Election Notice with respect to a purchase of Shares
and shall take place at the principal office of the Company (or such other
location as may be agreed to by all parties involved). At the closing, the
Person selling Shares shall deliver the certificates for the Shares being sold,
duly endorsed for transfer and free and clear of any lien, claim, charge,
pledge, security interest, or encumbrance whatsoever.
4. GOVERNANCE PROVISIONS.
4.1. Voting Rights. The holders of the shares of Preferred Stock hereby
acknowledge and agree that the voting rights set forth in Section 5 of the
Certificate of Designation shall not be effective (and shall not be exercised by
the holders of the shares of Preferred Stock) prior to
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the effective date of a Chapter 11 plan of reorganization with respect to the
Company. Prior to such date, the holders of the shares of Preferred Stock shall
have the following voting rights in lieu of the voting rights set forth in
Section 5 of the Certificate of Designation:
(a) The holders of shares of Preferred Stock shall have the exclusive
right, voting separately as a single class, to elect two directors of the
Company; provided, however, that if the holders of shares of Preferred Stock do
not elect any directors to the Board of Directors, such holders will have the
right to appoint an observer to the Board of Directors.
(b) Any vacancy occurring in the office of director elected by the
holders of Preferred Stock or any additional director to be elected pursuant to
Section 4.1(a) or 4.1(b) above may be filled by the remaining director(s)
elected by the holders of Preferred Stock unless and until such vacancy shall be
filled by the holders of the shares of Preferred Stock. The term of office of
the directors elected by the holders of the shares of Preferred Stock shall
terminate upon the election of their successors at any meeting of stockholders
held for the purpose of electing directors.
(c) The directors elected by the holders of the shares of Preferred
Stock voting separately as a single class may be removed from office with or
without cause by the vote of the holders of at least a majority of the
outstanding shares of Preferred Stock.
(d) From and after the effective date of a Chapter 11 plan or
reorganization with respect to the Company, the foregoing rights of the holders
of the shares of Preferred Stock to elect directors of the Company in accordance
with this Section 4.1 shall no longer be effective (and shall not be exercised
by the holders of the shares of Preferred Stock) and shall be replaced with the
rights of the holders of shares of Preferred Stock to elect directors of the
Company in accordance with Sections 5 of the Certificate of Designation.
5. COMPANY COVENANTS
5.1. Further Assurances. The Company agrees to negotiate, execute and
deliver such amendments, supplements or other modifications of this Stockholder
Agreement as shall be deemed by the Stockholders to be necessary, desirable or
advisable to reflect the terms set forth in the Term Sheet.
6. STOCKHOLDERS' COVENANTS
6.1. Further Assurances. Each Stockholder agrees to negotiate, execute
and deliver such amendments, supplements or other modifications of this
Stockholder Agreement as shall be deemed by the Company to be necessary,
desirable or advisable to reflect the terms set forth in the Term Sheet.
7. INDEMNIFICATION
7.1. Indemnification by Stockholders. Each Stockholder (the
"Stockholder Indemnitor") hereby agrees to defend, indemnify, and hold the
Company and all other Stockholders, and their respective officers, directors,
agents, representatives, Affiliates, successors and assigns (collectively, the
"Indemnitees"), harmless from and against any claim, liability, obligation,
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expense, loss, or other damage (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Claims") asserted against, imposed
upon, or incurred by any of them in respect of:
(A) Any and all Claims resulting from any misrepresentation or
breach of warranty or violation of any covenant made by such Stockholder
Indemnitor hereunder, or in any certificate or agreement furnished or to be
furnished by the Stockholder Indemnitor or any Stockholder Owner or Affiliate
with respect to such Stockholder Indemnitor hereunder (including, without
limitation, any Non-Referral Agreement). It is hereby expressly understood and
agreed that for the purposes of the foregoing indemnification, the term Claim
shall include the full amount of the Purchase Price paid by the Company, and all
other costs and expenses whatsoever which the Company incurs, in connection with
the Company's purchase of any Shares pursuant to Section 3.3 above;
(B) Any and all Claims arising from or in connection with any act,
omission, or status of the Stockholder Indemnitor creating liability for
violations of Xxxxx II; and
(C) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses incident to any item to which the
foregoing indemnity relates.
7.2. Claims Process. As soon as is reasonably practicable after any
party entitled to indemnification pursuant to Section 6.1 above (the
"Indemnified Party") becomes aware of any Claim that it has and which is covered
under Section 6.1 above, such Indemnified Party shall notify the party obligated
to provide indemnification under such sections (the "Indemnifying Party") in
writing, which notice shall describe the Claim in reasonable detail, and shall
indicate the amount (estimated, if necessary to the extent feasible) of the
Claim. The failure of any Indemnified Party to promptly give any Indemnifying
Party such notice shall not preclude such Indemnified Party from obtaining
indemnification under Section 6.1 above, except to the extent that such
Indemnified Party's failure has prejudiced the Indemnifying Party's rights or
increased its liabilities and obligations hereunder. In the event of a third
party Claim which is subject to indemnification under Section 6.1 above, the
Indemnifying Party shall promptly defend such Claim by counsel of its own
choosing, subject to the approval of the Indemnified Party, which approval shall
not unreasonably be withheld, and the Indemnified Party shall cooperate with the
Indemnifying Party in the defense of such Claim including the settlement of the
matter on the basis stipulated by the Indemnifying Party (with the Indemnifying
Party being responsible for all costs and expenses of such settlement). Any such
settlement shall include a complete and unconditional release of the Indemnified
Party from the Claim. If the Indemnifying Party within a reasonable time after
notice of a Claim fails to defend the Indemnified Party, or if the Indemnifying
Party is, or at any time during the Term of this Agreement was, an Impermissible
Investor, the Indemnified Party shall be entitled to undertake the defense,
compromise, or settlement of such Claim at the expense of and for the account
and risk of the Indemnifying Party.
8. GENERAL PROVISIONS.
8.1. Term. The term of this Agreement ("Term") shall commence upon the
date hereof and shall terminate on the first to occur of (a) a single Person or
a Person and its Affiliates
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becoming the holder of all Shares, (b) the effective date of a written agreement
signed by all Stockholders providing for the termination of this Agreement, (c)
a Sale of the Company, (d) the voluntary dissolution of the Company, or (e) the
date upon which the Company is a Qualified Publicly Traded Company.
8.2. Legend. During the Term, each certificate representing the Shares
shall bear the following legend, or a similar legend reasonably deemed by the
Company to constitute an appropriate notice of the provisions hereof and the
applicable securities laws (any such certificate not having such legend shall be
surrendered upon demand by the Company and so endorsed):
On the face of the certificate:
TRANSFER OF THIS STOCK IS RESTRICTED IN ACCORDANCE WITH CONDITIONS
PRINTED ON THE REVERSE OF THIS CERTIFICATE.
On the reverse:
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND
TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN STOCKHOLDER AGREEMENT (THE
"AGREEMENT") BY AND AMONG CORAM, INC. (THE "COMPANY") AND CERTAIN STOCKHOLDERS
THEREOF, DATED DECEMBER 29, 2000, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND MAY BE INSPECTED DURING NORMAL BUSINESS HOURS. NO
TRANSFER OR PLEDGE OF THE SHARES EVIDENCED HEREBY MAY BE MADE EXCEPT IN
ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF SAID AGREEMENT. IN ADDITION,
THE COMPANY IS ENTITLED UNDER THE AGREEMENT TO ACQUIRE THE SHARES OF THE
COMPANY'S STOCK OWNED BY A STOCKHOLDER, OR HELD BY A TRANSFEREE OF SUCH SHARES,
IN THE EVENT OF CERTAIN VIOLATIONS OF THE AGREEMENT. BY ACCEPTANCE OF THIS
CERTIFICATE, ANY HOLDER, TRANSFEREE, OR PLEDGEE HEREOF AGREES TO BE BOUND BY ALL
OF THE PROVISIONS OF SAID AGREEMENT.
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY
THE HOLDER FOR INVESTMENT PURPOSES ONLY AND NOT FOR RESALE, TRANSFER OR
DISTRIBUTION, HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE STATE AND FEDERAL SECURITIES LAWS, AND MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO EFFECTIVE
REGISTRATION UNDER SUCH LAWS, OR IN TRANSACTIONS OTHERWISE IN COMPLIANCE WITH OR
EXEMPT FROM SUCH LAWS, AND UPON EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY
OF COMPLIANCE WITH OR EXEMPTION FROM SUCH LAWS, AS TO WHICH THE COMPANY MAY RELY
UPON AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.
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Each Stockholder shall promptly surrender the certificates
representing its Shares to the Company so that the Company may affix the
foregoing legends thereto. A copy of this Agreement shall be kept on file in the
principal office of the Company. Upon termination of all applicable restrictions
set forth herein and upon tender to the Company of the appropriate stock
certificates, the Company shall reissue to the holder of such stock certificates
new stock certificates which shall contain only the second paragraph of the
restrictive legend set forth above. This legend may be modified from time to
time by the Board of Directors of the Company to conform to applicable law or to
this Agreement.
8.3. Specific Enforcement. The Stockholders expressly agree that they
will be irreparably damaged if this Agreement is not specifically enforced. Upon
a breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by any Stockholder, any other Stockholder shall, in addition to all
other remedies available with respect to such breach, be entitled to a temporary
or permanent injunction, without showing any actual damage, and/or a decree for
specific performance, in accordance with the provisions hereof.
8.4. Notices. All notices, requests, consents, and other communications
required or permitted hereunder shall be in writing and shall be effective when
delivered in person or by "confirmed" facsimile transmission or one day after
deposit with a nationally recognized overnight delivery carrier properly
addressed and deposited prior to the applicable deadline for receipt of
overnight packages, or five days after deposit in the U.S. Mail, certified or
registered mail, return receipt requested, postage prepaid, in each case
addressed as follows (or at such other address for the parties as shall be
specified by like notice):
if to the Company: Coram, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
with a copy (which shall
not constitute notice) to: Xxxx Xxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxx 0000 - Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Esquire
Facsimile: 000-000-0000
Phone: 000-000-0000
If to Stockholders:
Cerberus Partners, L.P.
000 Xxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
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Attn: Xxxxxx Xxxxxxxx
Telecopy Number: (000) 000-0000
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx Xxxx
Telecopy Number: (000) 000-0000
Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Telecopy Number: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
8.5. Assignment. Except as specifically provided herein, this Agreement
shall not be assignable by any of the parties hereto without the written consent
of the other parties.
8.6. Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Delaware, irrespective of the
choice of law provisions thereof.
8.7. Amendment. Except as otherwise provided herein, this Agreement may
be amended, supplemented, or interpreted at any time, but only by a written
instrument executed by the Company and by Stockholders holding a majority of the
Shares, so long as such Stockholders also include Cerberus, Foothill, and
Goldman.
8.8. Facsimile Signature; Counterparts. This Agreement may be executed
by facsimile signature and in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
8.9. Entire Agreement. This Agreement, together with the other
documents delivered pursuant hereto or incorporated by reference herein, contain
the entire agreement between the parties hereto concerning the transactions
contemplated herein and supersede all prior agreements or understandings between
the parties hereto relating to the subject matter hereof. No oral
representation, agreement, or understanding made by any party hereto shall be
valid or binding upon such party or any other party hereto.
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8.10. Effect of Other Laws and Agreements. The rights and obligations
of the parties under this Agreement shall be subject to any restrictions on the
purchase of stock which may be imposed by the General Corporation Law of the
State of Delaware or any agreement now or hereafter entered into between the
Company and any financial institution with respect to loans or other financial
accommodations made to the Company. Nothing contained herein shall be deemed to
limit the obligations and duties imposed upon officers and directors in
accordance with state and federal laws.
8.11. Further Assurance. Each party hereto shall do and perform, or
cause to be done and performed, all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
8.12. Captions and Section Headings. Except as used in Section 1,
captions and section headings used herein are for convenience only and are not a
part of this Agreement and shall not be used in construing it.
8.13. Waiver. Any waiver by any party hereto of any of his or its
rights hereunder shall be without prejudice of his or its future assertion of
any such rights, and any delay in exercising any rights shall not operate as a
waiver thereof.
8.14. Severability of Provisions. If any one or more of the provisions
of this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions of this
Agreement shall not be impaired in any way.
8.15. Specific Performance. In any action or proceeding to specifically
enforce the provisions of this Agreement, any Person (including the Company)
against whom such action or proceeding is brought hereby waives the claim or
defense therein that the plaintiff or claimant has an adequate remedy at law,
and such Person shall not urge in any such action or proceeding the claim or
defense that such remedy at law exists. The provisions of this paragraph shall
not prevent any party from seeking a remedy at law in connection with any breach
of this Agreement.
8.16. Stockholder Obligations. The obligations of the Stockholders
hereunder are several and not joint.
8.17. Interpretation. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that consequently any rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party is not applicable in the interpretation of this Agreement or
any exhibits hereto.
8.18. Material Change In Law. In the event that, after the date of this
Agreement, there is a material change in law which results in this Agreement or
the parties' performance of their obligations hereunder being in violation of
applicable law, the parties shall negotiate in good faith with one another to
amend this Agreement so as to eliminate such violation, provided, that such
amendment shall conform as closely as possible to the original terms of this
Agreement. If
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the parties are unable to agree upon either: (a) whether there has been a
material change in law which results in this Agreement or the parties'
performance of their obligations hereunder being in violation of applicable law;
or (b) the terms or form of such amendment, then either party may submit the
matter to binding arbitration before a single arbitrator in Denver, Colorado in
accordance with the rules and regulations of the American Arbitration
Association then in effect, and judgment upon the award of the arbitrator may be
entered in any court having jurisdiction. If the arbitrator determines that it
is more likely than not that a material change in law after the date of this
Agreement has resulted in this Agreement or the parties' performance of their
obligations hereunder is in violation of applicable law, such arbitrator shall
either: (a) draft and require the parties to enter into an amendment to this
Agreement which eliminates the violation of law and conforms as closely as
possible to the original terms of this Agreement; or (b) if the arbitrator
determines that no such amendment is feasible, order the termination of this
Agreement. Until any such matter is resolved through mutual agreement or binding
arbitration, each party shall continue to observe all other terms of this
Agreement. This Section 7.18 shall not be construed to require that the parties
arbitrate any matter under this Agreement other than as expressly described in
this Section 7.18.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written. CORAM, INC.
CORAM, INC.
By:
-------------------------------------
Its:
------------------------------------
CERBERUS PARTNERS, L.P.
By:
--------------------------------------
Its: General Partner
By:
-------------------------------------
Its:
------------------------------------
FOOTHILL CAPITAL CORPORATION
By:
-------------------------------------
Its:
------------------------------------
XXXXXXX XXXXX & CO.
By:
-------------------------------------
Its:
------------------------------------
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EXHIBIT A
Based on a recent transaction converting pre-existing debt to preferred stock,
[name of partnership] (the "Partnership") holds an equity interest in Coram,
Inc. (the "Company"). The Partnership continues to hold debt issued by the
Company as well. This Notice addresses certain requirements of federal law which
prohibit an individual with a direct or indirect ownership or investment
interest in a health care provider from making Medicare or Medicaid referrals to
that provider for certain services. The purpose of this Notice is to assure that
you are aware of these requirements so that the Company and its investors can
maintain compliance with this law.
The federal law, referred to as "Xxxxx II," prohibits physicians from making
Medicare and Medicaid referrals to an entity in which they have an ownership or
investment interest (subject to certain exceptions not applicable here). See
generally 42 U.S.C. ss. 1395nn. These prohibitions apply to physician ownership
or investment in the Company because the Company and its subsidiaries provide
(i) parenteral and enteral nutrients, equipment, and supplies, (ii) outpatient
prescription drugs, (iii) infusion pumps (durable medical equipment), and (iv)
home health services and supplies. These items and services are Designated
Health Services which trigger the Xxxxx II prohibitions. Violations of the
statute could result in payment denials, refund obligations, and certain
penalties against the party making or receiving a prohibited referral.
As noted, Xxxxx II also prohibits referrals by physicians whose "immediate
family members" have an ownership or investment interest in a company that
provides Designated Health Services. The proposed Xxxxx II regulations define
"immediate family member" to include the following:
[H]usband or wife; natural or adoptive parent, child, or
sibling; stepparent, stepchild, stepbrother, or stepsister;
father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild;
and spouse of a grandparent or grandchild.
63 Fed. Reg. at 1721-22 (1998) (proposed 42 C.F.R.ss.411.351). Thus, a physician
who refers patients to the Company for Designated Health Services and who has an
immediate family member who has an ownership or investment interest in the
Company would be making an improper referral under Xxxxx II, absent exceptions
which are not applicable here.
Xxxxx II potentially applies to your indirect interest in the Company in two
ways.
First, if you are a physician who is in a position to make Medicare or Medicaid
referrals of Designated Health Services to the Company, such referrals would be
prohibited. If you are in a position to make such referrals and wish to continue
as an investor in the Partnership, you will need to enter into an agreement that
you will not make Medicare or Medicaid referrals of Designated Health Services
to the Company.
Second, if you have an immediate family member who is a physician who is in a
position to make Medicare or Medicaid referrals of Designated Health Services to
the Company, such
referrals would also be prohibited. If you have an immediate family member who
is in a position to make such referrals and you wish to continue as an investor
in the Partnership, you need to promptly advise the family member that it would
be improper for him/her to make Medicare or Medicaid referrals of Designated
Health Services to the Company.
If you have an questions regarding Xxxxx II or the issues addressed in this
Notice, please contact [name, title, phone number].
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