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EXHIBIT 10.04
AMENDMENT NO. 1
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 dated as of the 30th day of June, 1998 (this
"Amendment"), amends that certain Employment Agreement dated as of October 13,
1995 (the "Employment Agreement"), between Coram Healthcare Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx ("Executive"), and is
made and entered into with reference to the following facts (all capitalized
terms not otherwise defined herein have the respective meanings set forth in the
Employment Agreement):
WHEREAS, the Company and Executive desire to extend the Employment
Period and to increase the Base Salary payable to Executive; and
WHEREAS, the Company and Executive desire to amend the Employment
Agreement to provide for the payment of a success bonus upon the successful
consummation of a refinancing of the Company's outstanding subordinated debt or
an acquisition of the Company, all on the terms and conditions hereinafter set
forth; and
WHEREAS, the Company and Executive desire to amend the Employment
Agreement to provide for the payment of an acquisition bonus upon the
consummation of certain transactions; and
WHEREAS, the Company and Executive desire to amend the Covenant not to
Compete; and
WHEREAS, the Company has determined to grant Executive options to
purchase an additional 300,000 shares of the Company's Common Stock.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. Amendments to Employment Agreement.
1.1. The first sentence of paragraph 3(a) is hereby amended in its
entirety to read as follows:
(a) Executive's base salary (the "Base Salary") shall
initially be $600,000 per annum, shall be increased to
$650,000 per annum on and as of May 16, 1997, and shall be
payable in cash and in accordance with the Company's general
payroll practices.
1.2. Paragraph 3(a) is hereby further amended by changing the date
"June 30" to "April 30" in both places where it appears.
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1.3. The first grammatical paragraph of paragraph 3(c) is hereby
amended in its entirety to read as follows:
(c) Executive shall be granted options as of October
13, 1995 to purchase 2,200,000 shares of Common Stock of the
Company (the "Option Shares") at a price equal to the average
closing price of the Common Stock on the New York Stock
Exchange in the five days immediately preceding October 12,
1995. An aggregate of 1,400,000 of the Option Shares shall be
granted to Executive under the Company's 1994 Stock
Option/Stock Issuance Plan (the "Plan") and the remaining
800,000 Option Shares shall be granted to Executive outside of
the Plan. In addition, Executive shall be granted additional
options (the "Additional Options") as of June 2, 1997 to
purchase an additional 300,000 shares of the Company's Common
Stock (the "Additional Option Shares") at a price of $2.625
per share. The Additional Options shall be granted to
Executive under the Plan. The Options and the Additional
Options (collectively, the `Options") will vest if Executive
is then employed by the Company and become exercisable by
Executive as to 33-1/3% of each of the Option Shares and the
Additional Option Shares (collectively, the "Shares") covered
thereby respectively on each of the first, second and third
anniversaries of the respective grant dates thereof, and will
vest as to 100% of the Shares upon: (i) a Change in Control
(as defined below); (ii) any termination by the Company of
this Agreement other than a termination by the Company for
Cause (as defined below); (iii) any termination by Executive
pursuant to paragraph 5(a)(ii) hereof; or (iv) if the
Employment Period is terminated as a result of Executive's
death or permanent Disability (as defined below).
1.4. Paragraph 3(c) is hereby further amended by deleting the entire
paragraph following the words "For purposes of this Agreement, a Change in
Control of the Company shall be deemed to have occurred if" and substituting the
following:
(i) any person or group (within the meaning of Rule
13d-5 of the SEC as in effect on the date hereof) other than
the Senior Subordinated Noteholders pursuant to the SEA (as
hereinafter defined) or a group composed principally thereof
shall own directly or indirectly, beneficially or of record,
shares representing 30% or more of the aggregate ordinary
voting power represented by the issued and outstanding capital
stock of the Company;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new
directors whose election to the Company's Board of Directors
or whose nomination for election to the Company's Board of
Directors by the Company's shareholders was approved by a vote
of at least two-thirds of the Company's directors then still
in office who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved) together with any individual serving
during such period as a member of the Company's Board of
Directors designated pursuant to the Security Exchange
Agreement dated May 6, 1998 (the "SEA") cease for any reason
to constitute a majority of the Company's directors then in
office;
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(iii) any change in control with respect to the
Company, Coram, Inc. or any subsidiary (or similar event,
however denominated) shall occur under and as defined in any
agreement in respect of indebtedness other than capital lease
obligations (as defined in the SEA) to which the Company,
Coram, Inc. or any subsidiary is party;
(iv) the Company shall cease to own and control
directly, of record and beneficially, 100% of each class of
outstanding capital stock of Coram, Inc. free and clear of all
liens, other than as a result of the exercise of the warrants
issued to the lenders under the Credit Agreement dated April
6, 1995; or
(v) Coram, Inc. shall cease to own and control
directly, of record and beneficially, 100% of each class of
outstanding capital stock of each of T2 Medical, Inc.,
Curaflex Health Services, Inc. and Coram Resource Network,
other than as a result of the exercise of the warrants issued
to the lenders under the Credit Agreement dated April 6, 1995.
1.5. New paragraph 3(d) which reads as follows is hereby added:
(d) In addition to the Base Salary and any bonuses
payable to Executive, Executive shall be entitled to receive a
success bonus ("Success Bonus") of $1,000,000 upon the
consummation of a Refinancing (as hereinafter defined) of the
Company's outstanding subordinated debt originally payable to
an affiliate of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ") pursuant to that certain Securities
Purchase Agreement dated as of April 6, 1995 among Coram,
Inc., as Issuer, Coram Funding, Inc., as Purchaser, and the
Company, as amended (the "DLJ Debt"). The Company shall pay
the Success Bonus to Executive in two equal $500,000
installments, the first of which shall be payable concurrently
with the consummation of the Refinancing and the second of
which shall be payable on the six month anniversary of
consummation; provided, however, that if prior to such six
month anniversary, this Agreement is terminated by the Company
for Cause (as defined below) or as a result of Executive's
resignation other than pursuant to Paragraph 5(a)(ii) hereof,
Executive shall not be entitled to receive the second
installment of the Success Bonus. The parties acknowledge that
the payment of a Success Bonus upon consummation of a
Refinancing is required by actions of the Board taken on
August 8, 1996 and October 18, 1996. For purposes of this
Agreement, the term "Refinancing" shall mean the replacement
of the DLJ Debt with new debt which has terms acceptable to
the Board. The SEA with the present holders of the DLJ Debt,
if consummated, shall constitute a Refinancing.
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1.6. New paragraph 3(e) which reads as follows is hereby added:
(e) In addition to the Base Salary and any bonuses
payable to Executive hereunder, Executive shall be entitled to
receive an acquisition bonus ("Acquisition Bonus") of
$4,000,000 to be paid as provided below upon the consummation
of any transaction where the shareholders of the Company
approve a merger or consolidation which would result in the
holders of voting securities of the Company outstanding
immediately prior thereto failing to continue to represent
(either by remaining outstanding, or being converted into
voting securities of the surviving entity) at least 50% of the
combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, or any transaction having similar effect,
other than a liquidation of the Company (an "Acquisition").
The Company shall pay the Acquisition Bonus to Executive in
two equal $2,000,000 installments, the first of which shall be
payable concurrently with the consummation of the Acquisition
and the second of which shall be payable on the one year
anniversary of consummation; provided, however, that if prior
to such one year anniversary, this Agreement is terminated by
the Company for Cause (as defined below), or as a result of
Executive's resignation other than pursuant to Paragraph
5(a)(ii) hereof, Executive shall not be entitled to receive
the second installment of the Acquisition Bonus.
1.7. Existing paragraphs 3(d) and 3(e) are hereby redesignated as
Sections 3(f) and 3(g), respectively.
1.8. Paragraph 5(a) is hereby amended by deleting the words "the third
anniversary hereof" in the first line thereof and substituting the words "May
15, 2000" therefor.
1.9. Paragraphs 7(c) and 7(d) are hereby amended by changing the
references to paragraph "8" therein to references to paragraph "7".
1.10. The addresses for notices set forth in paragraph 10 hereof are
hereby amended in their entirety to read as follows:
Notices to Executive:
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Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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with a copy to:
Xxxxx, Xxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Notices to the Company:
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Coram Healthcare Corporation
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
2. Notices. All notices, requests, demands and other communications under this
Amendment shall be in writing and shall be deemed to have been delivered and
received five business days after having been deposited in the United States
mail and enclosed in a certified or registered post-paid envelope; one business
day after having been sent by overnight courier; and when personally delivered
or sent by facsimile communications equipment of the sending party on a business
day, or otherwise on the next succeeding business day thereafter; and in each
case addressed to the respective party at its address set forth in the
Employment Agreement (as amended by Section 1.6 above) or to such other changed
addresses as the parties may have fixed by notice as provided therein.
3. Jurisdiction and Integration. This Amendment shall be governed by the
internal law, and not the laws of conflicts, of the State of Colorado. The
preceding choice of law provision shall apply to all claims, under any theory
whatsoever, arising out of the parties' relationship (as such relationship is
contemplated by, or related to, this Amendment or the Employment Agreement).
This Amendment, the Agreement, those documents expressly referred to herein or
in the Agreement and other documents of even date herewith or therewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
some way.
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4. Binding Agreement; Counterparts. This Amendment shall be binding upon the
parties hereto, their successors, assigns and legal representatives. This
Amendment may be executed in several counterparts, each of which is deemed to be
an original and all of which taken together constitute one and the same
agreement.
5. Full Force and Effect. Except as expressly amended by this Amendment, the
Employment Agreement shall continue in full force and effect in accordance with
the provisions thereof. As used in the Employment Agreement, "hereinafter,"
"hereto," "hereof," and other words of similar import shall, unless the context
otherwise requires, mean the Employment Agreement as amended by this Amendment.
In the event of any conflict or inconsistency between the terms and conditions
of the Employment Agreement and the terms and conditions of this Amendment, the
terms and conditions of this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
THE COMPANY:
CORAM HEALTHCARE CORPORATION
By: \s\
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EXECUTIVE
\s\
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Xxxxxx X. Xxxxxx
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