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EXHIBIT 10.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is made
as of April 6, 2000, by and between Coram Healthcare Corporation, a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxx ("Executive").
RECITALS
A. The parties previously made and executed that certain Employment
Agreement, effective November 30, 1999, that was subsequently amended effective
as of November 30, 1999 (collectively, the "Employment Agreement").
B. Each of the parties desires to amend the Employment Agreement as set
forth herein.
NOW THEREFORE, in consideration of the premises set forth above and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. Amendment. The Employment Agreement is hereby amended as follows:
(a) Section 3(b) of the Employment Agreement is hereby amended by
deleting such paragraph in its entirety and replacing it with the following:
In addition to the Base Salary, Executive shall be entitled to a
performance bonus (the "Incentive Bonus") payable within 90 days of the
end of each fiscal year based upon the Company's operating results
measured against a target level of earnings established by the
Executive and the Compensation Committee of Coram's Board of Directors
before the beginning of each of the Company's fiscal years during the
Employment Term. With respect to the Company's fiscal year ending
December 31, 2000, the Incentive Bonus shall be, as follows: if
earnings before interest, taxes, depreciation and amortization (EBITDA)
of the Company for such year, as measured by the audited financial
statements of the Company for its fiscal year ending December 31, 2000,
equals or exceeds $14,000,000 (the "2000 Incentive Target"), the
Incentive Bonus to which the Executive shall be entitled shall be an
amount equal to 25% of the Company's EBITDA that exceeds the 2000
Incentive Target. The Incentive Bonus shall be paid in cash from
Coram's available Free Cash (as defined below) or from the Revolving
Credit Facility (as that term is defined below).
In addition to the Incentive Bonus, in the event that the EBITDA of the
Company as measured by the audited financial statements of the Company
equals or exceeds $35,000,000, for its fiscal year ending December 31,
2000, the Company shall pay an additional bonus (the "EBITDA Bonus") of
$5,000,000 to the Executive or others as designated by Executive, if
any.
Any Incentive Bonus, EBITDA Bonus, Success Bonus (as defined below) or
other bonus earned by the Executive under any provision of this
Employment Agreement
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shall be payable by the Company in cash out of funds derived from the
Company's excess available cash flow ("Free Cash") or from amounts
drawn on the Company's Credit Facility, dated August 20, 1998, among
the Company, Coram, Inc. and the Guarantors named therein, the Lenders
named therein and Foothill Capital Corporation, as Agent, or any
subsequent credit facility that replaces such facility (the "Revolving
Credit Facility"); provided, however, that in the event that the amount
drawn on the Revolving Credit Facility at the time any of such bonuses
are due is an amount that is greater than 65% (the percentage drawn as
of April 6, 2000) of the maximum funds available to the Company under
such credit facility (for example, the maximum amount available under
the Revolving Credit Facility is $60,000,000 and as of April 6, 2000
the amount drawn was $38.5 Million), the Company shall pay such to the
Executive (or the designated individual recipient) as follows: 50% in
cash on the due date and 50% in monthly installments over the next
eleven (11) months. In the event that the Executive or the designated
recipient is terminated for any reason whatsoever other than for Cause,
any unpaid amount of such bonus shall be paid immediately in a lump
sum.
(b) Section 3 of the Employment Agreement is hereby amended by adding
the following provision to such Section as a new Section 3(j):
In addition to the Base Salary and any other bonuses payable under this
Amendment or the Agreement, Executive shall also be entitled to
receive, upon consummation of a "Refinancing" (as that term is defined
below) of the Company's "Principal Debt Instruments" (as that term is
defined below), a success bonus (the "Success Bonus") equal to the
greater of (i) 1.5% of the principal amount of the Principal Debt
Instruments that are converted into common or preferred stock issued by
the Company; or (ii) 1.0% of the total principal amount of the
Principal Debt Instruments outstanding after consummation of the
Refinancing. Such Success Bonus shall be paid immediately upon the
Effective Date of the Refinancing from Free Cash or the Revolving
Credit Facility.
The term "Principal Debt Instruments" shall mean (a) the Revolving
Credit Facility; and (b) that certain Securities Exchange Agreement,
dated as of May 6, 1998, as amended, by and between the Company; Coram,
Inc.; Cerberus Partners, L.P.; Xxxxxxx Xxxxx Credit Partners, L.P.; and
Foothill Capital Corporation and the Series A and Series B Notes issued
pursuant thereto.
The term "Refinancing" shall mean a transaction or series of related
transactions approved by the Company's Board of Directors that provides
for either: (a) the conversion of some or all of the Principal Debt
Instruments into a combination of new Company debt instruments and
shares of common or preferred stock issued by the Company; or (b) the
conversion of the Principal Debt Instruments into new debt instruments
issued by the Company.
(c) Section 5(a) of the Employment Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:
The Company agrees to employ and Executive accepts such employment for
the period beginning as of the Effective Date and ending on the third
anniversary of the
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Effective Date, provided that: (i) the Employment Period shall
terminate prior to such date upon Executive's resignation, death or
permanent disability (defined as the expiration of a continuous period
of 180 days during which Executive is unable to perform the essential
functions of his assigned duties due to physical or mental incapacity);
(ii) the Employment Period may be terminated by Executive at any time
prior to such date if the Company fails to comply with any material
provision of this Agreement, which failure has not been cured within 10
business days after written notice of such noncompliance has been given
by Executive to the Company; and (iii) the Employment Period may be
terminated by the Company at any time prior to such date for Cause. In
the absence of the occurrence of any of the events in subsections (i)
through (iv) of this Section, the Employment Period shall automatically
be renewed for up to two (2) additional one (1) year terms commencing
on the third anniversary of the Effective Date.
(d) Section 5(d) of the Employment Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:
If the Employment Period is terminated by the Company other than for
Cause or by Executive pursuant to paragraph 5(a)(ii) above, or if
Executive's duties, responsibilities, and/or job title is substantially
altered from that of Chairman of the Board, Chief Executive Officer and
President other than as contemplated by Section 2 of this Agreement,
then Executive shall be entitled to receive his Base Salary and
Automobile Allowance through the third anniversary of the date such
termination of employment becomes effective (the "Severance Period"),
payable in accordance with the Company's general payroll practices, and
all bonuses payable hereunder, however denominated, as described herein
throughout the Severance Period. The Company shall also continue
coverage for Executive under the Company's life insurance, medical,
health, disability and similar welfare benefit plans described in
Section 3(d) (or under other plans, including the whole life insurance
policy, obtained by the Company for the benefit of the Executive and
fully funded by the Company. The Executive shall receive a full tax
gross-up for any tax liability of the Executive for such benefits and
the Automobile Allowance) throughout the Severance Period.
(e) Section 3 of the Employment Agreement is hereby amended by adding
the following provision to such Section as a new Section 3(k):
If the Executive and the Board of Directors concur on the appointment
of a Chief Executive Officer and/or a President for the Company as
contemplated by Section 2 of the Agreement, this Agreement will remain
in full force and effect without modification to any of the terms and
conditions set forth herein (other than the Executive's duties to the
extent they may be assigned to the new chief executive officer),
including but not limited to the Executive's Base Salary, bonus
opportunities and full benefits; provided, however, that the new Chief
Executive Officer and/or President shall be entitled to receive a
portion of the EBITDA Bonus in an amount reasonably negotiated between
the Board of Directors, the Executive and such person. The split of the
money between Xxxxxx X. Xxxxxxx and the new Chief Executive Officer or
President needs to be approved by the Board of Directors whose approval
will not be unreasonably withheld.
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2. Counterparts. This Amendment may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same instrument.
3. Miscellaneous. 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, the terms
"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.
CORAM HEALTHCARE CORPORATION EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxx
Chairman of Compensation Committee
By: /s/ L. Xxxxx Xxxxx
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L. Xxxxx Xxxxx
Director, Compensation Committee
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