November 13, 1996
Xxxxx X. Xxxxxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxxx:
Reference is made to the Employment Agreement between Health Management,
Inc. ("HMI") and Xxxxx X. Xxxxxxxx ("Xxxxxxxx") entered into as of September 9,
1996 (the "Employment Agreement").
This will confirm our agreement that the merger (the "Merger") and other
transactions contemplated by (i) the Merger Agreement dated as of the date
hereof between HMI, Transworld Home HealthCare, Inc. ("Transworld") and a
wholly-owned subsidiary of Transworld, (ii) the Stock Purchase Agreement (the
"Stock Purchase Agreement") dated the date hereof between HMI and Transworld and
(iii) the Debt Purchase Agreement dated the date hereof between Transworld and
HMI's senior lenders will not constitute a "Change in Control" as such term is
used in the Employment Agreement and will not constitute a material reduction in
the scope and/or authority of Xxxxxxxx'x duties with HMI within the meaning of
the Employment Agreement, provided that notwithstanding all other agreements and
understandings, including those contained in the above documents, the following
conditions are met (all payments specified in clauses (i)-(iv) below are subject
to the requirement that Xxxxxxxx'x employment shall not have been terminated
prior to the scheduled date of the payment by HMI for "cause" (as defined in the
Employment Agreement) or voluntarily by Xxxxxxxx and are in lieu of any
severance payments to which Xxxxxxxx would otherwise be entitled under the
Employment Agreement): (i) on January 2, 1997, HMI shall pay Xxxxxxxx $50,000 by
check; (ii) upon consummation of the Merger, Transworld shall issue to Xxxxxxxx
stock options for 50,000 shares of Transworld common stock at an exercise price
equal to the fair market value of Transworld's common stock on the effective
date of the Merger, which options will vest (provided that Xxxxxxxx is employed
by HMI on the applicable vesting date) one-third upon issuance, one-third on the
first anniversary of issuance and one-third on the second anniversary of
issuance; (iii) on June 30, 1997, HMI shall pay Xxxxxxxx $50,000 by check; (iv)
on January 2, 1998, HMI shall pay Xxxxxxxx $225,000 by check; (v) after
termination of Xxxxxxxx'x employment, the provisions of paragraph 17(a)(1) of
the Employment Agreement shall be deemed null and void and shall not be
enforceable against Xxxxxxxx; (vi) Xxxxxxxx shall continue to receive during his
employment with HMI through June 30, 1998 the same base salary, bonus
eligibility and employee benefits as set
Xxxxx X. Xxxxxxxx Page 2
forth in the Employment Agreement; (vii) if Xxxxxxxx is employed by HMI through
June 30, 1998, and thereafter Xxxxxxxx'x employment with HMI is terminated by
HMI or Xxxxxxxx voluntarily elects to terminate his employment with HMI, HMI
shall continue to pay Xxxxxxxx an amount equal to Xxxxxxxx'x base salary for a
period of twelve months (in lieu of and not in addition to other amounts payable
under the Employment Agreement), payable in periodic installments in accordance
with HMI's regular payroll practices (it being understood that Xxxxxxxx shall
have no obligation to seek or accept other work during this period and his
acceptance of other work shall not cause his payments to be reduced); (viii) the
employment situs provisions as set forth in paragraph 3 of the Employment
Agreement shall not be changed; (ix) Transworld and HMI shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
Transworld or HMI to expressly assume and agree to perform its obligations under
this Agreement; and (x) Xxxxxxxx will continue to serve as Chief Operating
Officer of HMI with the same duties and responsibilities such position had prior
thereto, and such duties and responsibilities shall not be reduced in scope or
authority. Any payments to which Xxxxxxxx is entitled hereunder shall be subject
to withholding, social security, payroll and other applicable taxes and
deductions.
Except as set forth above, the Employment Agreement shall remain in full
force and effect.
Very truly yours,
Health Management, Inc.
By: /s/ W. Xxxxx Xxxxx
Name: W. Xxxxx Xxxxx
Title: Chief Executive Officer
Accepted and agreed to:
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx Page 3
Guaranty
Transworld agrees that if the Merger occurs, Transworld will guarantee the
payment of all monies due or that may become due to Xxxxxxxx from HMI hereunder.
Transworld Home HealthCare, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
