Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 1 of 30
EXHIBIT A
Case 1:04-cv-01565-SLR
Document 174-2
I.:.. ....v .'
Filed 08/20/2007
. . . .-".
Page 2 of 30
FROM PAUL w~:mGS #~
Ei\1PLOY?vIEÌ'1 AGREEMtTI
AGRE\1EN between Cora Heait~ër: CO!Joration. a Delaware November 3D,
corporation (the "Company"), l41d Da.iiel Crcíiley("Exec¡:¡ive~)"niade as of
. 1999, the date upon whi~h Executive has e:(ccuted and dd:mcd this Agreement to the
Company (tle "Effective Date"), . '
In consideration ofth~mutuû co\'emlIts co::ai::ed herein and other gooù and
valuable consideration, the receipt and suf::~ncy otwi:;:i ~re hereby acknowledged, the
parties hereto agree as follows:
1. Ernplo\-,lifIl. The Cc::pany sb.l :::plo)' Executivc, and Executive
accepts employment with ihe Company, \i':~ the.ten ard conditions set forth in this
Agrement for the period bcginnini on the ê::~ hereotw:i !:ding as provided In pargraph
I.
I
5 hereof (the "Employment Period"). . .
2. Position and Duties. if.ig the Ec?~o)inent Period, Executive shall
serve as the Chainnan of the Boiird. Presidc:~ and Chcr=.;i:~ut¡vc Offcer of
the Company
iud all of its \vhollY-O',lled subsidiares. ;,"td E.xecuÜ",: shaH have the normal dunes, the Bo:ic, President, and CliiefExeculive responsibilties and authorii)' oCille Chaia of
Offcer. Executive is a ronn~r Chief Exe~uûve Offce~ of u Fortune 200 Cmnpany in
demand to serve as Chaimia!i oftha BL'ard, Chief .E'i~cuiÌ\'e Offcer or turn around
management Executive also owns and ope!!~es his o\'illeunpaiiy, Dynamc Healthcare, that has varous business interests. Executive: in::nds to do ?"l;..:ever is professionally necessar
to tum the Company around anJ the Comt~y recognim t)al F,xecutive wUl h:wc other
business Îltcrcts andmay scr\'eas i.i offc,; or consb:.i 10 other businesses. Executive Directors, to appoint
shall ha.ve the nght, with the concurrence "fwe Compm;osJ30ard of
a chief executive offcer when the Compa.y, in EXetu~\"e's reasonable opinion, has been
stabifued; pro;jded, however, that such i: appointie:::shal1 not be deemed to cause a .termination of the Employment perod b)' i.ie Comps.:r h~reul1der nnd sh,tlll.not trgger
payment of any amõuris to E:¡ecutiyc pu."S~t to Se;ti;:~ Sed). Upon the appointment of
position as Chairman of
a successor chief executive offcer pursui:i:tQ th S~:r.o!l 2, Executive shall retai his the BOLld and aU of~e ter oftis Ag.cement shan remain in full
effct except.to the extent modified in a m:i.neni:hich ii ::mtuJ1y acceptable to the paries,
including without limitation an adjustmet. to tle base cc:;penseHon payable hereunder.
3. Base Salaf' and Be::efits.
(a) Execuu"e's base saJ:.1'
(fue"Base Sala.-y'') shall initially be S650,000
peranum,payablein ca ilnd in accord~=ce with tkCompeny's general payrll practices. The Base Salar shall be reviewed aiua:lyòythe Bo~:d oiDircctorS ofile Company (the "Board") and increaed (but not decreased) based upon ?:xe.cutive's peifonnance.
. (b) Tn addition to the Base Salary, Executive shall be entitled to a
performance bonus
(tlie ".Bonus") payable 'lith 90 cUys oÍtÌe end of each fiscal year base~ upon the Company's operating rëSults, as tollows: ~f eaings before interest, taes,
depreciation and amortation (EBITA) of the CO~:.'1Yl as me¡isured by the. nuditcd
financial statements of the Compmy in an)' one yea ~~U!s or eXceid... 100% of the target
amounts (the "BE1TDA Targets") to be d;~erined b:i1::e Compen.~ation Committee of Board of Directors of the Comp:i-:j' (COr.l5tig of
the at l:ast r...o outside directors who wil
LN~e~i~.o\
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 3 of 30
lTHU)':!. ~ 8' 9~ 'J: LV! U ..
,.. lI'"IUI l~\o'. i \, ~ .. ....\v.... ~ l\ l.u';:-'lir.s:' n..
comprise ani~orityofsuch Committee) and
Exe,?utive in good faith.beginniiig in fisc~l yea: the 2000, 'Executh'c shal be entitled to a bonus for such year (the "Bonus") equal to the
the Base Salar in effect 9'( the last day of
percentagé set fort on Schedult:A hereto of
Company's fiscal year for whien such "Bonus is pa.yable. Any Bonus eared by Executive hereunder sbill be payable by the Company.in cash; the Eff~ctive Date to purch:ie
. (c) Executive shal be grted options as of 1,0001000 sh\les ofConuon Stock of
the Company (the "Option i:hares") at a pncß 'equal Exchange on the Effective
to the elosmg 'pric~ aCthe Common Stock on the New York Stock
Date. The Option Shars shall be grted.to Exective under the Company's 1994 Slock
Option/Stock Issuance Plan (the "Plan"). Each ofthethe Option Shares covered thereby and options (the "Options") shull vest OD'
become exercisalle by Executive as' to 33~113% of each of the firs~ second lId third nnivcrsancs orlhe Effctive Oate, if
Executive is then
empioyed by tkCompanyl iid wil vest as tå 100% ofthe Option Shurcs upon: (i) a below); oJ MY Chage in Control (ll defined below); (ü) any teration hy the Company (Hi)this
Agreem~iother than, a teimination by t1e Company for Cause (lI defined
'below). . '
a. Change In Control of For puroses of this Agreement,. trtee or owci fiduciar holding secwities of shares of Common Stock or tbe Company or (B)
termation by Executive pursuant to pargrph 5(a)(ii) hereof; or (iv) if the Bmployillcnt Period is temated as a result orExecutive's death or pennanent Disabilty (as defined
the Company shall
. be.deemed t? ?ave occuned if: (i) any ''person'' (as such term is Sections BCd) and 14(d) . of the Secunties Exçbange Act of 1934; asthe Company under an employee benefit plan amended (thc iinhehaug~ Act")), other th a
afthe Com?anyor the Senior subordinatedNoteholders pil1suantto the Securities Exchange Agreement dated May 6, 1998, or a. group çomposed prim:iplilly thereof. becomeS the
"beneficial ownet' (as defined inRule 1'3d-3 promul~ated under the Exchange Act), directly or indirectly, of securties ofthe Coinpanyreresentingthe combinedofCA) the outstanding 50% or more voting power of the
Company's then.outswdigsecuritiesentitled to vote generally in the election of dir~tors;
(ii) during any paiod of nol more than two consecutive years, individuals who a.t the
. beginng oÏ such period consti~ute the Boa.m, and any uew director (other than a director
designated by a pmo:i who has entere into anths pargraph 3 with(c)) whose election by the agreement the CompáiY to effect a.
traaction descnoeù in paragraph (i) or (m) of Board ornomination for election
by the Compaais sharholder was approved by a vote of
a.t least ti'io-ûirds of fae directors stil in offce for electioneitherpreviously so approved, who were was in offce at the beginng
of ~th period or whose election or nomition.
voting Ce2e for any reaon to constitute a inajonty of the Board¡ or (Hi) the shareholders of the
Company approve a merger or consolida.tion which would result in U1C holders of . securities.
rcresent (eiUierby
of the Company outstandig immedately prior thereto failing to contiue to r-ioig outstanding orby'being converted into votig securities ofthe the voting 50curties ofthe
surïiving entity) at least 50% ofthe combined voting power of
Compan)' or such survving entity outstading immediately aftar such merger or
cOllolidatioo;or (iv) or
the shareholder of the Company approve a plan of complete \iquidition of the Company or an agreement for the sate or disposition by tIie Company of all or su1:mantially all oftlie Company's assets or any tmuction having a similar effect.
(d) In addition to the Base Salar and any bonuses payable to Executive
puruant to this par~graph, Executive shal be entitled to the following benefits dunng the Emplol'Ienl Perod, wùess otherwise incre?Sed by the 'Board:
-2-
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 4 of 30
i ,," (~HUI ~ ~ :8' 99
FROM. PAUL HAS:;NGS Ë:
~: £:J; i) L, i , . '" .. -, ..", .. , ..... ,..
. (i) Health insurce, dentalinsuriicc and dlsiibilty insurance lI
such coverage is made generly available to the scruor executives of
the Company
and whole life inul1nce with a policy value of S1,000.000 naming Executivels
beneficiar of choice;
wee paid vacation each year (any
unused yacaton wil
(ii) four
be paid out at the Base Salar rule on DecembetJ (. of each year during tbe
Employment Peñod and 'upon termation of ths Agreement); .
. . (iii) parcipation in aiy group
life insurace plan,. or other
inurance plan, medical cipeneplan or
other benefit 31:ig~mentmaintaicd by the Company for its senioroxecuvcs gmerllY and, ¡(applicable, their famly members; and
(iv) a car allowance of$l.800permonlh.
. (e) The. Company shal provi de E.'(eeutive corporate hou.ing in Denver,
Colorado for aU or such portion or the Employment Penod as is requested by Execti ve,
(0 The Company shall alo pay to Executh'e an :uiOtmt equal to the
"Gross.cd-up Excess Tax Liabilty.lt The tem"Grossed-up Excess Tax liabilty" inea an
llriounl which. after Executive' ~ payment of federa and state income tax liabilties wising
on the receipt of the Grossed-up E.'(cèssTaxLiabi1typa~cnt, shall equal ¡he nmount of
the
'''BenefitS Tax Liabilty." The tcm "Benefits Tax Lia:Oi1ity shall mean the sum offederl the benefits payable by Executive upon the receipt of
and slate meomoe tax Iiabiltywlich is. provided for
in Section 3(d), (c) and (i) herof.
(g) The çompany shall reimbure Execuiive for all reasonable expenses incurrd by him in the course of performg his ,duties und~r this Agreement, including
upgrades for first class air trvel, which are
consistent with the Company's policies in effect
from time to time with respec to trvel, enterent and otlcrbusÌD~ss expenses, subject
_ to the Company's i;cq\¡iremeiits with resect to reportg and documentation OfllUCh expenses.
(h) In addition to the
Base Salar and any bonuses payable to Executive
hereunder. Executive shall also be entitled to receive an acquisition honus (hAcquisi1ioli
Bonus") equal to 2.99 times theaiual Base Salai and "Turget Bonus" (as defined on
Schedule
A hereof) payable 10 Executive heremider at the iimo when the Acquisition Bonus
Bonus shall hèpaid concurrently\\ith 1he consummation
becomes payable. The Acquisition
the Company
° ura niergeroT consolidation wbichresu1tsin theholder3 of\"oting securities of
outstanding immetately pnor thereto falig to continue to represent (either by remainig the surivig entity) at h:ast 50% converted intC) votigsooutities of outstanding, or by being of the combined voting power oftle voting securties oftJie Company or such surlving
enlity oUhrtanding imediately after such merger or consolidation, orthc sale or disposition
by the Company of all or substantiully al of
the Company's ~sets, or any tral1Sal;ÛOn having
i,;mllar eff~t, other than a liquidaiion of the Company (an "Acquisition").
(i) Thecompanyshl pay for Exo:utivc'sannual feueral and state
tax preparation costs up to a,maxñnuzn ófSlO,OOO per calendar year.
. 4. ;Board Memhershin. :Exeçutive shall b~ elecled or
appointed 10 serve
as a member of th~ Boanl of Directors 10 fill a vacancy thereon and shal i be appointed
-3-
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 5 of 30
.... .! n-o,-I"" ,:.
F~OlJ. FA\;L r).;:. ..\\: ~.
......... r.HU)"..t 1 .9'U-ii. , .iVI ,'li. II \1 L 18"99 4
Chui.au of the Board as of the Effective Da.t~, With respect to all subseq.uent regular
c:leciions of directors during the Employment Pi:od, thc coiipaiiy shall nonúnalc, and use
its best effort to elect, Executive to serve as a member of
the Board, I£Executive is elected
to sem on the Board, Executive shal be named the Chninnan of the Board. Upon the
termination of the Employment Peñod for any reasoi Executive shall resign lI a director and oSeer of the Company and its Subsidiares, as the case Diay b~, Forpurposes ofthis
Agre~ent, iiSubsidiarjes" shall lIean any corporation of wli¡ch the securities having a .
IDô.jOrit)' ofthe
voting power in electing diectors are, at the time 01' determnation, owned
. i i
by ihe Coiipaiiy, directy or thrQugh one or more Subsidiaries.
S. Tem).
(a) The Employment Period shall cod on November 29, 2002, provided
ilat: (i) the Employment Period shal terminate prior to such dale upon Executi..e's ,
I.
resignation, death or pemaneit disabilty (defied lI the expiration of a continuous penod
of I 80 days durng whioh Executive is Unable to pedorn his assigned duties duo to physical
I
or meiiial incapacitY; (ii) the Employment l'erod mil)' be teninatC!d by Executive lil any time ?oor t~ such date ifthe Company fais to comply with any miilenal provision ortm!; Agreement, which falUTc has not been eured within 10 busine.~s days after notice of such noncotDpliance has been given by Exective to the Company¡ and (ii) thc Employment
Period may be terminated.hy the Company at KOy time prior to such date for Cause.
(b) lfthe EmploymentPeriod is tennatcd by the Company for Cause
shal
due 10 hi through the date of iemunation. .
Executive's dcnUi
(c) IftheEmploymenlPenod is teriinaled as a result of
orist~ated by Executive's resignation, Executive
be entitled to receive all :iO\L!1ts
or permanent Disabilty, tlit: Company sball pay MY iiounts due to Exccutive through the
date oftemuation and ¡i Bonus (payable as set fort in paragniph 3(b)) in an amount equal to tbe Bonus which would hav" otherwse been payable to Executive Jlursuant to paragraph
3(b ..1th respect to the fiscal J'ell in wmch'such terination occurs.
(d) Hille EmployientPerodis terminated by tlié Company õ¡hÚ than
for Cause or by Executive pursuait iopatgrphs 5(a)(ii) above, Execuiive shall be entitled
to receive (i) his Base Salar thrugh the third anverry or the Effectivc Date (or, if
longer, for a period of24 monihs afer the date oftenation), payablo in accordance with the Company's geter:i parroll practice, and (ii) the then applicable Target Bonus which
shall be paY2hle with l\cty days afçr the end of each of the Company's fiscal years
ending thereafer through 1002. The Company shall alo continue coverage ror Employee
under the Co;npany's life insurance, medcal, heath disabilty and similar welfare benefit
pla.'is and the whole life insurance plan descr'bed in pargrph 3(d)(i) t1iongh the third
ani..ersary of
the EffeclÌye Date (or, iflonger. for a period of24 months afer the date of
tmuination).
( e) Eiccept as oUierseset fort abYc, all ofExeculive's rights to frige
benefits anå bonuses hereunder (if any) accrug afer the termination of tbe Employment
Period shall cease upon ~ch tCOliinlition,
(. Forpuiose oflhs Agreement, "Cause" shall
mean (i) tbecontinuing
wilfu f:ulure or refual by Executive to perfotm substantial and matenal duties hereunder
(otherthan Zly such failure resulting from Exec*ive's joc¡ipacity due to physicalsubstantial written demand for or mental
ilness), which has not c~ased within 10busines~ days after
'..'1..".. .
-4-
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 6 of 30
. ,.n . .. ...
,_..U¡" ,,' '1
9:t; :~.
~:! t: :lU. '"L\lV jli" ....
r
1
F~OM, PAUL HASTiNGS t,¡
performance is delivered (0 Executive by
the compuyi which ¿e:;and identifies the maner
in wbich the Company bel1c\'es that Exeèutive has not perro¡¡d such duties nnd the steps required to cure such failw'c 11) perfonn; (ti) Execmi\'e shall i;::~ntionany and wilfully the Company and
engageinmisconducttowerd the Companywhich is lIateial\yii~:lrious to
its Subsidiaries, monetarily or otheiwise (includ,g. b~t not li:;.i:t:l to, conduct in violation
Executive of or the entering of a plea
of pargraph 7. or 8 hereof), (It (ii) the conviction of
. of nolo contender by Executive with resect to, II I~lony, l\Oiwtinmnding the forègoing,
ExeC\itivels Employment hereunder shal not be deemed to he i.;niinated for Cause lless
and until there shall
have beeii delivered to Exective a copy of;¡ ~esolution duly adopted by
the entire ire:iibmhíp of the Board at a
an affative vote of not less than a majority of
meetg of the Board (aner written notice to Executive and R ~~onablo opportity for
Executive, together
with Executive's counel. to .be beard before the 'Board), fiding tht in
the Board, Excçutivc sh?u1d be termi:i¡::d f~r Ci'.se, Cause, shall
the good faith opinion of
not be deemed to include the performance of duties for other corr¡:2.leS or businesses that
do iiot compele with the çomp:my or unasonably intedcre wi:h Executive's tumatound;
resonsibilties for the Company.. .
(g) In the cyent of any dispute regarding t;;: existence or Executive's
Disabilty hereunder, the matter \"il be resolved by !he detem:¡.::a:ion or a majority orthree physicians qualified to practice medicine in Colorado, or.~ tel be si:iect~ by each of Executive and the Boar and the third to be selecied by tlt twc designated physicinn., For this piupose, Executive wil submit to appropriate medical e~a.":¡i:atjons.
)
\
. (h) Executive
shallnot
be required to mitigô:ethc amount of
any
payment
any
provided for in ths pargrph 5 by seeking other employmen: e:- OiJ'ierwise, and the amount
of any payment or benefit provided for in this p:i$faph 5 s::l!l! not b.e reduced by
compensation eared by Exeç1Jtive as a result of emplo)me¡, by :inolher çmployer ot' by retirement .beieflts.
6. QQ:Qfideniial Informaüon, The Em:ii:\'e acknowledges t1a.t the
ironnation, observations and dala o~taied b~' hi i..hi!~ employed.by the Company
. concerning the business or afiairs of thc .Comöaiiy or a:Y S:ib'sidiai'Y ("Confidential InfOtuAtionll) ~e the property or Ute Company or such Subsr¿iar,'. Therfore, Exeoutive
agrees thiit he shallllut disclose to any unauthoried person or i:se for his O\\ll11cÇQUnt any
Confldentia1lnformation wiihout the pnor wriUcn consent of il:e Board, unless and to the
extent required by law, rule or regulalion or pumait to an)' a,¿'¡¡¡stratiYe or eour order,
The ten IIConfidential Iifonnation" shal not include 0) ¡ï1ojjation which is generally this
available to the public or those iii the Company's ind\ist as 0: ¡he date uf execution of
Agreement or wluch later becomes generly iiv2Ìlable to ¡l:~ public or those in the 'Company's industr other than as a result of EXetuti~'e' prohibited discl~sure; (ii) inormation wluch comes to Exec.utive from a bona fide thrd pary source so long as sucli source was not, to Executive's knowledge. prohibited from p!(l\'ÌlEng suc.h inormation to or oùierobligat!(\:! and (ií) information which
Executive by anyconlictu;il, legal, fiduciar
was known to Executive before sut:n inforilIon was obtain~d from the Company. Executive shall deliver to tbe Company at the teition of the Employment Period, or at
any other time the Company may reuest åU memo'ril notes. plan, records, report,
computer tapes and softare and other documents and ¿,ata (2.å cepies therco 0 relatig to
the Confidential Inonna1Ïon or the businèss of
the Compaii)' C~ 2.:ty Subsidiary which he
may then possess or have iUlder his control.
.5-
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 7 of 30
, "1"1' ~\,~-'\'r' ;..
FR01( rl\U-, ¡¡;:...w;: -.
,llU ! t. (..,..,)" 18'99 9:22/87, 9:1~il\U. ~LOV'fO\::Ul ,
7,
Non.Competo, Non.Solicitation,
(a) , Executive acknowledges that in
the course orrus employment with
the Company he wil become. familar with the Company':; tmde secrets and with Oth6T
confdential information concerning the Company and its predece.'l~ors and thal his sçrces
. will be of
special, uniqut: and extraordina value 10 the Coiipiiy, Therefore, Executive agrees that (i) durng the period in which Executive is receiving compensation from the Company pursuant to paragraph 5 hereof. or (ii) if the Employment Period is tenninatcd as
provided in paragraph .5
''Noncompete Perod"), he i;hall not directly cr indirectly own, manage, contro I, paricipate in, consult with, render seivices (0, or in ary maner engag~ in nny business competing with any business of lhe Company (Lr its Subsidiares, 3ß such businesses exist or are in process
(b);' for a period of one yoii following such terination (the
on the date ofile tenninalion ofExeclttivc's employment, within any geographical area in
which the Company or its Subsidiares engage 0, plan to engage in such businesses. '.
Geographic areas in which the Company and/or its Subsidinries plan to operate any
businesses or in which any businesses or the Company exist or l1re in process wil be . .
identified in wrting upon request ofExecuHvc within thrt days or tho ùutc oftemûnation
of , i the Employment Penod. Nothing here lib
all prohibit Executive .fom. being a passive
owner cifnot nior~ than 5% ofthc outstandig stock of any class (if a corporation which is
publicly traded, so long lI Executive has no active paricipation iLl 1118 business of such
corpration,
indirectly though another entity (i) induce or attempt to induce any employee of the Company or any Subsidiar to leave the employ of the Company or siich Subsidiary, or in
(b) During the Noncompete Period, Executive shall not direciJy or
anyway interfere with the relationship between the Company iir any Subsidiii and iuy
employee thereof, (ii) solicit any person who was an employee of the Company or any Subsidiary at any time wilhin one year prior to termation of the Employment Perod, or (Hi) bdu:;e or attempt to induce any customer, supplier, licensee or other business relation of the Company or any S'ibsidiut)' to cease doing business with the Company or such Subsidia.-y. or in any way intedere with ~e relationship .betweeii any such customer,
. supplier. licensee ûr business relntion and tr'ie Cünipai1Y or wiY Subsidiui-i.
(c) If al the time of enforcement or ths paragraph 7, a court shall holrl
that the durtion. scope or area restrctions. stated herein are unre;isonable under
circu!n~tances then existing, the pares agr th¡it the maxmum duration, scope or area
reasonable under such cirumstancés shall bé substituted for t1e stuted duration, scope or area end tht the cour shall be allowed to revise the restctions contained herein to cover tbe ma.,imur penod, scope and area pemutted by law.
the breach or a theatened breach by Executive of any of ths pargrph 7, the Copany, in addition ond'supplemcnlar to other rights Z,1d reedies existing in its favor, may apply to nny court of Jawor equity of compe1E.tjursdiction for specifc performance anòJor injunciiv~ or other n~1iefit order 10 enforce or prevent any violations of the provisions thereof(without posting a bond or other securty).
(d) In the event of the provisions of
. .
8, ßxecutivc and Company Rcorescntalions. Executive hereby
rcpieseJI: and wa.anls to the Company that (i) the execution, delivery and performance of ths Agreement by Exççtive doe.~ not and wil nqt oonlcl -iith, breach, violate or cause a
default under any contrct, agrt:ement, io.trent, order, judgment or decree to which
Executive is a par)' or by\Yhich he is bound, and (ii) upon the execution iid delivery ofrhis
'.'1...""1
-6-
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 8 of 30
(~HiU)" 'S'M 9:
FROM PA~L HASìiNGS ~i
:1 : ,.: 'J'J l
23/S'. 9:'iH/ìiU.4LOVllOV10:1 J U
Agreement by the CompaJiy, this Agreement sha1l he the valid and binding obllgation of
Exeoutiw, enforceable In accordanco with its.ter. The Company hereby represents and
WaIdlits to E:tecu1Íve th:it it is not cntt:rig lnlOJlis Agreement in contemplation of merger or sale of
any
the Company.
. 9, SurvivaL. Pargrphs 5, 6, 7 and 8 shall survive and CO!1tinuc in full force in accordance with tlieir tenns notwthtanding :my tenninatioii ofthç Employment Period.
. 10. Notices. All notices, requests, demands and other communications
required or permitted to be given under t1s Agreement shall be in writing nnd shiilbe deemed to be dolivcre and receive five business days after havitig been deposited in the United States mall a.rid enclosed in'a registered or ~fil: posi-paid envelope; one buiness
day after having beeD sent by. overight courer; when personally delivered or sent by'.'
facsimi1~ communcations equipment of
the semüDl pary on II businiss day, or otherse
. on the next succeçdig business day thereafter ~d 10 t:h case addressed to
the resective
par at the addres set forth below or to such otherchanp;ed nddrcsses ns the pary llay have
fixed by noiice as provided herein: . .
Notices to Execuiive:
Danel Crowley 400 Capitol-Mull Suite 1250 Sacramentai CA 95814
Telephone: (916) 449-6056
Fax: (91 ó) 449-6059
with a copy to:
Pillsbur, Maùison & Sutr 1LP
t100 ('iinitnl Miill --- ..-C'-.__....-....
Suite 1700
Sact'cnto, CA 95814.4419 Attention: Michael A. Kvane, Esq, Telephone: (916) 329-4713
Fax: (916) 441-3583
Notices 10 the Comp:iv:
Cora Healthcare Corporation
1125 Seventeenih Stret
. Suite 1500
Denver, CO 80202
Attention: Scott Lnrscn, Esq,
Telcphone: (303) 292-4913
Fax: (303) 298-0047
1..iì023.~
-7- .
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 9 of 30
"j ; ~ 01 !tv. 'T ,;\1 v . li.\i . .. .
, "L tAu r_~~.. ,~~ ~ ¡ FRO~l-I .,,,ii~r" :,1
(TIul :i.l899, 9:i:r~:,
I
v.ith a copy ~o:
Pout, HasÛlgS, Junofsky & Walker LLP
SS5 S, Flower StrC(, 23nl Floor Los Angeles, CA 90071 Attenûon: Anna M. Grves, Esq,
Telephone: (213) 683.6345
Fax: .(213) 996-3345
i l, Scverihì1ty. Wheneverpossible, each provision ofUils Agreement
wil be inteipreted in sueh maner as to be effective and valid uoder applicable law, but jf
respect this Agrecmentis held to be invald, ilegal or unenforceable in any any provision of . .under any applicable law or rule in any. jursdiction, such invalidity, ilegality or
unenforceabilty will not .affect any other provISion or any other jurisdictiol1, but tlùs AgreelDeIt will be re.fonncd, constred and enorced in such jursdiction as if siich invalid, been contaned herein, .i1e~aI or unenforceable ptovision had never
12. Çornulete Agrement Ths Agrement, tliosc documents expressly
referred to herein and other documents or even date herewith embody tho complete
agreement and understading. among 1Ic panies and supersode. and pn;empt any pnor
lU1dertandings, aw.eemel1ts or representatins bycramong thepari es, wntten or oral.. which
may have related to the subject matter herf in any way. .
13, Cou13lerpar. 'Ths Agreement maybe executed in separate
counterpar, each of
which is detied to be an ongial and all olwlijch b.ken together
is intendcdtobind and
constitute one and the same iigrecmenl
14, SUccessoTS md Asign. Ths Agrement
inure
to tìe betefit. of and be cnfotcelble by E.,,~utiv~ the Company
and Uicir respective heirs,
siiccessors and assigns. except that .Beetive may not assi~ hi~ nghts or delegate his obligations hereunder wilhoutUiepnorwren coni~t oftbe Company. The Company will require any successor (whether direct or indiect, liy purhase, merger. consolidation or otherwise) of all or i;bstiilial1y aU of lhebusincss and/or assets of tho Company, to
. express!)' assume aiiç1 agree tG perform th Agreeent in the san~rnanner and 10 the same
extent that the Company would be requi to perorm it if no such s\lccession ha~ taken
place.
15. Alto niex.~' Fees and Costs. Ifany action atJnw or equity is necessar
to..ei:orce or interpret the tenus ofthiAgrenL Executive shall be entitled to reasonable attorneys' feesi costs and disburements in addition to anyreliefto wrncnhe may otherwise
be entitled ifhe is the prevailig par
in such action.
16, ChoiceofLnw. TbAgrementwillbegovemedbytheinterial law,
and Dot the laws ofconiicts, of the State of
Colorado,
17. Amendmenl and Waier. The provisions oftlús Agreementmay be
amended or wai ved only witli the pnorwrtten consent of the Compauy and Execuiive, and
no course of conduct or failure or delay in eiorcg the provisioni of this Agreement shal
afect the validity, binding effect or enorceabilty of
ths Agreement.
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 10 of 30
I-:U)" '~'9~ \¡n .._.\l ~
FRO~ PAUL .l~S¡iNGS ~:
;::¿4/lL ~: :O/IIV. ItLuv,:IJ'..i.¡ . .v
h.n
-i
*****
IN WITNESS WBRF.OF, the pa.i1es hereto l:üYt:cxecuted this Agreement
as of
the da!è fit wrtten above,
~LTHC.'-~f\ORPOrr(ON
Br.~~tOO~~ttJ! . Its: Q" Il~l\i\ t.r...
~ t;e IJw o/i
i
I
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 11 of 30
,...FRO~l .PAUL HASTiNGS =:
riïful1:.:S'99 ~._7/:ii. ~:!~:lIV.':Lwmli~,'
.M
SCHBDULB A BONUS COMPENSATlOJl
Beginn2 with thii Company's fiscal
yea 2000, if
the Com::~'y hits the percentage ofiis
EBl1DA Vrar~çt set foI1h nelowi Exeçutiv~ ,,,ill be t:nliÓ.: to receive as Bonus that
perentage of nis BaseSalar (as in effect on the last day of:~~ fiscal year in queson) set
tòrt bolo'..'. If the Company hits l! percentage of its EBimA Target which is greater than one of the percentages set forth below but les than tiie :¡:xt succei:ina percentage,
Executive snail be entitled to Teceive a pro rata portion of :ne incrcmentalBase Salary
payment.
PERCENTAGE OF BETTDA TARGET
100.0 %,1'
PtRCE\-lAGE OF BASE SALARY
60%.
65% 70% 75%
80%
101J%
103.0% 104.5% 106.0% 107.5%
109.00;
11 0.$%
85%
85% 95% 100% 110% 121% 132%
143 %
112.0% 114.0% 116,0%
118.()%
120.%
122.0% 124,0% 126.0% 128.0% 130.0% 132,0% 134.0% 136.0% 138,0% 140,0% 142,0%
148,()%
154% 166% 177% 188%
200% 211% 212%
223 %
144.0/ 146.%
150.0%
234% 145% 256% 267% 278% 289% 300%
.;
T'rse represe!lt the "Target Bonus" levels for purcse.~ oftrus Agreement.
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 12 of 30
Al1ENDMENT NO, 1 TO EMPLOYMNT AGREEI'\IENT
(this ~AmendmentU),
THIS AMENDMENT
NO, i TO EMPLOYMENT AGREEMENT
dated as of ¡1kll.e!f(. 6ei/ 70 i 1999 amends that certain Employment Agreement, dated as
of
November 3D, 1999 (the "Employment Agreement") between Coram Healthcare Corporation,
a Delaware corporation (the "company"), and Daniel Crowley (the IlExecutive"), and is made and entered int.o wiin reference to the facts described below, All term appearing in this Amendment with intial capitalization shall have the meanings ascribed to them in the Employment Agreement,
unlessj other~vise defined herein. .
RECITALS
WEEREAS, the Company and the Executive desire to amend the Employment Agreement to revise the txercise price that wil be applicable to the stock options that wil be.granted to the
Executive¡
follows:. .
1. Amendment to Emplovment Agreement,
deie~g the first sentence of
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree as
. 1.1 Paragraph (c) of Section 3 of the Employment Agreement is hereby amended by
the paragraph il its entirety and substituting the following in its place:
(a)
Executive shall be granted options as of the Effective Date to purchase 1,000,000
shares bf Corrunon Stock of
the Company (the "Option Shares") at a price equal
to the closing price of the Conuon Stock of the New York Stock Exchange on
November 29, 1999, the day inediately preceding the Effective Date,
2. CounteIJarts, This Amendment may be executed in separate counterpar, each of which
is deemed to be an original and all of which taken together constitUte one and the same
amendment.
3. Miscellaneous. Except as expressly amended by ths 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," Employment Agreement the hereof, and other words
of similar import shall, unless the context otherwise requires, mean
as amended by this Amendment. In the event of any confict or inconsistency between the terms
and conditions of the Employment Agreement a¡.d the terms and conditions of ths Amendment,
the terms and conditions of this Amendment shall control.
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 13 of 30
1~~14:24
l10~-L~
~EGf\l
. !'il t H~..'i j :-l~c:t1~l.l-t": i
IN Wl'lNE WlæOp, the partes hr.l'etc. hive e;~ec\lt~d !hs ~A¡uendm,ent as or th data
ruSt above wTÎtu:n, "
'I
H:\LEO,U"CORA:.IC;WL Y A)1U,OOC
..
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 14 of 30
EXHIBIT B
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 15 of 30
~'
n. .... -,.. v.,,
CJl
91644~~~ \U l-1:11ii:
R.~ 26 ;Zøcæ 13: 44 FR CO i-EfL'r¡-.R .
SECONl .4MEMENT TO :eMri:OYMAGl~
II Ame.n.cn") is od as of Apii16,
. . THS SECND 2.000, by aI EMPLOYM AOtæ (th AMME TO ~ctwae eoHcih eo¡p°ii
a. Dala.ws. oorponon (tl llCcinpin)"~, ar Danel D. Crowley ("Exeçudv~'~.
~ClAl
A. Th ~ ~o\liy ød øi ci~ th çcr Bmployil
A1l"" ei",avo N"";" 30. 199. lhi .. ,ul"'ii .. .ir,c1iv~ IS of
NoVCIbc 30, 1999. (eollcevcl. th'l£¡iloyicnt Ageaen").
l=. Bah ofth pi ~shc to -d th Bmploy.ent Agenient as '
~ fort h.in
NOWTIFORE in conllde¡ton oCth ~ £C for ab& an th
cov~ conta bm i. oil goo an vauale consIdertioo. ,rb reipt and
suffcieny ofwb. ar he acOW~ged th eomp en tb Exeoutve: 1ih~ a¡
ai folloW$:
1.
e.~ 1hcEolo)'t Ag~eiei is hmbyømeie. as
îol\o,,'S:
(a) Section 3~) of1he grployme A¡reeinenli herby aiei by
deletg iii:b paap in It! c.tity and relacin It with tho follow' tho eii to a iirComi~ bous In adtion toth:B sal. EilUva ii bii entitled of ciU 1t ycii baeå
upon i; CompllS o~ rests inlld;aga! a taet level of eaugs as cõtablied bv th Exi:vc ii thCo~tion conlttofCor' s Boai or
Eiploymen Tc: With
(tf "Incetive BoD.US'~ payala wI gO daYi of
Dir(cto16 befor the beg!i of to theCompay's ficsl yw imng p:çber 31, eac ûf1h CompRnY's fisc. year durng ila repe
d.~atoii and amcrton (EITDA) of
th Copany wi& bifctO iicr tles, 2000. 't Im:cnvc Bonus ah be, as follows: l! for suCh '1m, as meaur
by tb auited fi~iA ittecnlS of the Coi:y for its fia. yr: en
J)be: 31,2.000,to w1i th Ex~ve ,hal be cnií sh be al aiount equa eq or ex $14,000,000 (t1c "200 In v; Taiirt'),
th Intive B onus to 25% of
. ~ve Bon al ~ pøid in C81I Co.r's iivajlblc F~ Cah (as dcfi
beloW) or from the 'Rvolvi Crdit PACty (as that ~ is difid beloW)~
In addltion to 1ivo gonu ih tho aveit th th EJrrA. of
the Compails EBlTA tht eieds the 2000 Incentive Taret, rhe
the Company 55
muured by auited flnancisl st of tb Company equas or Cltcds S3S,OOO,OOO . , th CompaY sha piy an á.tlon! ba~ (1lo"EBlTDA
æ\ù.. q~~~ ~'MI-iQ
Bonus'') ofSS .000,000 to the &CV6 or o1hs as clgntc by gxeCltive, if an)',
th def below) Ag:it Any Incetive BDD, BBlIDA Bonus, SIJS B~\U (asEmpioymt 01' other
bo.U$ ean by tM E;ulve unr øn provi sibn of
~1~
U-'Cr:'l,lO i
4_ _ ---'-'-'
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 16 of 30
.I
.1
r".C,ttl
91644SC2i9 TU i-~lNllt:
flR ø6 2Øeø 13: 1\5 fR cc ¡. THAA
C01llraon, as Agent, or ~y. 5~l CtCdii fiilty
ano\lt dra.wn on the Revolvi ~dit FiciltY at th tl uch u*
.. is an iuoun th Is grca1crihai.6S% (th~ pcrcao6 dIwn as of A prl16, 2000) ,
(th uRevolvi¡ Cr F~ltY'): provide however,
or tli= maxum fu avab.bl: to th Conipi ui suh cret facity (for
c:p101 the nøui siunt wlalo un the R,volving Credt FaclitY is ( ,
560,0li,000 .. .. of Ap ~ 1000 the smeU11 _wa $3gJ hlmi. c",""
Cooi¡iy &ha111 . to the Ibeel1tlve aiò ~i"i" esgMted
ùidivldu1 rcleii f'ollo\ì'S: 50% in ca on th'due dae and ~O% In inõiY
.~ Wli be pad' edwy li a'lum su otk' ~~ ~
. . (b) ~oD3oftl'Splo~A~rois er yartwbyadd. .
the followi provlslon to $Uh SectWl3 as a new Secton 3(j); . ,
,desgntd ieipient ~ for iuy reaon wbtsocv · iuy \lpa - :...1. /luß
iital.c:t5 ever olovcn (1 1) nuths. In the cvcntth th Ex~~ .'
~ '
In adtion to th Base Sal'Y ii any otler bani~ pa.yable 1.dcr th Aienon
or the A¡riit, Exi:cutive !h iiso b= entitled 1. reive. upon co~u.tion or
II "R.fiiitn" (as th1:n is defid beow) ofth$ Compay's "Prncipa IXbt !D~ts" (as th te is d~in below), a auices bonus (th ClSi.lS Bonusll)
equa to the greater of (i) '1.5% of the ¡ir!rpa aiaunt .(jf the :Pdn~ Debt
Inin th ar coiw~ ino common or preferred sloek issue by the coipiiYior(U) l,O%ofW toiapnDalaiount o!tbPrlipa1DebHI)~\ .. :
o utEing afer consu:tion of th Rifiii l\fua fiP,..BonU!1 sh bel g. S 11h S u.dl Ca .,the
p.id_~~!h S~D'" ,ithe
Rbolv~ ~
Tho ~ ''Fcipal Dcbt!D;ri:o¡¡b" ~ ~ (a) th R.oi~ Credt :liu:lltyj
and (b) thi c. Sectie. .:achanic Agrcemmt, ~u. of MaY 6, 1998, as
l\ende4 by iud be~n tB Co Coram. In,¡ Cerru Par, L.P.;
A and Serci B Notes is.ut pumt thereto.
Gold Sac CredIt p¡er5, L,P.j anFoot Capita Coi:raon an the Series
The te "R." sh in~ii ! traction or ¡ct of related irs.tloi
. BJJlrtvc: by th Compan's Bow or Dirct0 tht proes for ciiher (I) tha ,of the Prclpal Debt lntrtS into B comblron of
ci:ivc¡sion of &Q er all
new Cotn)' ~bt int:l. Md sl of common or preferd stock iBed by
~ Company,; or (b) ~ eolltrsionolth: Principa Debt Intretls Into new debt
l~ wued by th CoinY.
del e ting su S ec in it e: u-.d rap Li!. It with the followi: .
pro cd be as ofth EffeGve Da1 an r. on lh~ thd anvw of
(c) giion 5(a) or th :Bploymei A~mc:nt is heoby iueicd by
11e Comps.y agree. to tl;iloy and ExecurvCl accepts suh enployn fo the
the
wclU me 2
-2-
.---- ---_.__.-.
Case 1:04-cv-01565-SLR
~.
Document 174-2
Filed 08/20/2007
Page 17 of 30
A"R 10 2eZ~ ;a::' l-, ". .,_.
~i.b4~~ IU r~ll""''
~ Q,e; 2e 1'3145 FR ~ ~~
1!,c1N. Do', ~",4c tb (Q ¡h iiIO)onll'.. øb i.~to ,uc
ol "l BKir'.'. ,.&JUoi do" ~ ditlity(cl.. ¡h
1l.im .. .-~.i fuôoo ofhl ..,¡¡¡ ci due i. pbysi or .i.ot
.icOO .f. ....",,,,, p.n.d of 1 ao dJy' dur whch Jlutivo Is .,to to
i..aelty); (U) ih BOlpl'ym""orod "''1b. ,.ied by -ii"" al onilø'
pn i. ,Do do iftJ Ciifols 10 OOOlpl¡ -:th ony ,!,,.i piw;oo oftb'
A8""; w!,b¡;bco oo __ with lOb.,,,,... d'l .i (il 0 .. Siyo by Bx..i"" ui tho CoUI!'ö ~ ... th, ."" no.-pla¡ i.
, .i for eo IotJ.i- oftb .""on ofon oftb .."" In..,,~o''
(I) "".u¡ (iv) of th S..ii 1I i;ployl Nnod .i autom.diy bo
. Effectlv~ Da ..~ hi ~ ~D
Eøpi-on l'",.d '" bo _"to by ¡h C.c1P"'y al on - pror I. ..oJ
ic'Wod~~(l)Y'__OO--"ihtb.._of""
. (d) Soton 5(iI of th Bn.,.' Â8"""" ¡, i-by ..drJ by , deleiin sih Si:on ,in i19 entirety Qd replaClng it with th foUowlg: .
If th. ¡¡oilOi"l'oiod I' ~ by th CoOlPonòiboiib for C- Of by BX"'uI' p"" 10 ~ph i' ,obOl.iil..iy.ii- from tht !!ill""" d.. 5(11(11) ab"", Of If of ci" of tho ,ospo'bi\ ooor J.b Uti. B.io Cbef--"" Off snd ¡w"1 othas coo,,,p!to bY gooo, i of
th..i th B,..,i bo entld to ..01" bl !W. sii'"
AutomobiloA1ow= ilroush th tb ii- of\h'.i ,,,,,oo of
enloymootg.... paymtl tl "Scy~_lerod'? paln ~ wi1l _oi' .r..U" p..,,,, .. id bon- l'",.bl. i-und", tbb CoOl" bo-" d~ as q,iebc i- tbu¡¡tb. S".. l'rlod The C""l"y .i.ii ,1s oo'" ",VC' fo _utv. 1l" \h. CoSl" ¡If.
by th Com~ for the benfit of
In"".. .,... hWth dlsobll\t ",d- w.if= bonl pli doscibc In
""floe ,(d) (Of und" oi!orpbii" ln.,ingthv.1,1I&U- po1l, obio the ~ccti..c and i\y fuòcd byth Compiiy,
The BxecntTc &1l receive a ful ta groSS-UP for any t2 liabilty oft1 Executve
for such b~£its and the Äutinobllc Alov.Ci) thughout the entie Sevi:cc
(e) Setion 3 oftb Employiit Agi''Ce!~:i:i:d!l heby iucn by ¡¡dl
Perod .
Ifthii E'iû..c and the Bo or
the followi prvWon to such Sectlon ç. II new Section 3 (k): Directors cour on th appointrei of ø. Chief
Eiutlve Offcer a.or a piede for th eop;y as canttIpWcd by secon i
of th Agitcmcnt th Agccii wUl ¡e ii ful force 8. affct withut modi"'flo. to ..y of ih i- .. condloo eo' for h= (oth" tl rh.
ExulÎvCl'~ cl to 1M ext they may be a,l¡ned to the rrw èhM eiwcutivc
.flcoi,lniu' bul ioillio 10 th Ex,uti." B"o Sol. bous .pp.nu" :
and fu benafits; provide. howe. tht the neW Chief Execuuve Offce aror Presidcpt shl be entled to recive ii portouoftl EBrrA Bonus In :n. 5~:C
r~onilY nClgotWd bcni th xeCUtivß ~ such pern. ì 4 ~ 1.-
S ~t +.l 1K i"e'nO¡ n\~~. L 1\ . ( . _~' Jiw r;Ú i ~ 040\ C"".A£ r. 4~J ct'f ~resIJi'1i ~:r k
c¡ fPI7"£ ~ I ~f :h-tbc- C¡J IVko't '1 eWtii(lr. P /1"" I _ ~n ,/lldY',,,S¿L.íU1
-_.------_..- .- ._--.",'n i\on
Case 1:04-cv-01565-SLR
1\ (ù F;PR ll! c:~'" "'J -- ,
Document 174-2
Filed 08/20/2007
Page 18 of 30
91&44~'; \U i-e1Ni=
FrR e6 zi 13146 FR CO flLrrAR
oiilcl in sc'pæato "" om 2. kount~. Ths ~t mil be: cxu~"" io'- ..pUble~uitiii,
all eoc orvMch is _cd to .... erigln an
tbe sa tnt. .
. 3. Mi",.1I"~ -i" -iy ""dol òy th ..¬ t1
Boploymcnt Ap'" aI cootl, io IiU Cm' om eft In ..oo,.i.. with the
pivii..oter wos of sInlai import shilliunes the context oUi~llC reuire, mea _LAo usiot1Jl_A~ t1__~.""i-Io." hcrClfa an
incnsiiir. betwee th tc an eonditoi: of
th Empioyment A.t an ~ ters th~ Employøen ~c:ii8. arendcè1 by. ths Arnt. In th ovent of any con:ct or
om ..0l of ths ~ ii -' an cotl of .1u ""nden .i
control.
. IN wi'ISS WfF i 1bc iiaiu h&ct have: ~tod t1 A.dit as of ,. EXCUIE
th date fit abve wntt .
By:
~~QtL(JUlT~ . 'r . 'A.r~ Dacel P, Ctwlc:y
By: L. Pet=r Smith
Dirtor, CouimslIûoii coniue
UlCw. J.c :i
-4-
** TOPL ~.Ø7 **
--------- -
Case 1:04-cv-01565-SLR
& 1,)
R. H"'=, J."' ..w.._ .
P.ljl-UÖ-'Jr TlU U4:08 pn RPUN NED1tif.L ll\v
. ¡
, .
Document 174-2
i. 'HI ......
Filed 08/20/2007
Page 19 of 30
APR 2i5 2æ 1:3:48 fR CO HERLiH~ë
S164496e59 TO 1847478S0
P.07/ß
y¡.. sa 1JUWJ\. . .
2. . Coun~ Ths Ament miy be executed in S~pm C:Oune:iu
3, . MisceUaneQus, Bxcpl as exresy ainendcd by. tb Amendmen' tr
:.hQf~~~d~ to ~mozi8Jds1Ofwhhtaen~.~~;a~,,~~~o~:.~~ - ,....:.r:.t~~~
Employmcn .Á¡ru'iwt !h cOl1iie in ful force ind efee in accorc~ with tb
eon!1l.. .
CORAHEALTHCAIC0R10AATION .
prvliol1s therf: ÅJ used in ib EIIplo~tA~t, t1e tei ''h~I\I ''herto,"
h~e(t; and otb.words ofsilar import shl, uicss-tlc context olherwreui:s, mç3.
the Em'piOi'm~lAgcccnl as amoned by. th Amendment In the evt of MY con. ct or
incnsistcy 'betwen thi: ta an conditiii QftM £iplopnent Ag in tb te
and conditioii:i of tMs Anmi, th ter an conditions of il Am~diClt sJW
IN WlmESS WHREOF, the p.iH hc: ha.ve exee lhs Aiendment as of ,-
the date fi abe wrtte. .
mcUIS'
. ii
,
By;
St~ph. A. Fdnb~g .
L1aiD D CKw~ '~r?t Diie1 D, Crowley . 'r
Chaian of Compention Commttee:
By: L. (l-. L:
t, PeierSiith
Diror, Com,penitol1 Comtrttcc
l."CP.i' Nl'J 2.
~.
.. TOTFL ÆGE. 'i iH
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 20 of 30
EXHIBIT C
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 21 of 30
rN ,TH ~I~EO STATtS a~KRUPTCY COURT
FOR THE DIS1'UC' OF DE:LAW.i
In re: I
)
CORA REOURCES N%ORK, INC.,) and CORA INC¡PEN~ PRACTICE) C£.. No, '9-,sa9
.isoctJ.:nOti, INC., ) (MFWl
o.btorii, )
)
a~~pecy Courtroom
No, i, SiXth ,loor Marine Midland pl£z& 5%' ~&r~.t St~e.e wilmington, O.la~aro
Tburiday, o.ç.mb~r 21. ,000
1:35 ¡i.n\,
nt:OR!: TK HONORALE ~y r, wALTH,
~nlt.d 5t&t.. 8&akptÇi ~ud;=
.' T=ln6cri~e oe Froe,.ding; ..
W!LCOlt i: n:Z~i
1330 ~n9 Stri.t - WilMinsto~ o.law.ra 19801
I:!O%l S:$S-Olï7
A-36
. ~ ..~...~ _._- - -.-.... ..- _...._----_.~- _._-_.-- ....-.
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 22 of 30
37
point wien Another pl~ or sale or some other vehicle
chat I think thiri ii ~o b&.ii to ~onelud. ~ill result :n
3 any~hinq oth.r than cr.ditor. glttinq 11.1 and the
~ equityholderi itill getting nothing,
5 SQ. Your Honor, if eh. i5lui i.s tn.at
6 somi~y did so~thin9 wrong. &nd I'm not suagestins
7 that. and I'm c.rtainly not IndorsLng that vi.v. but it 8 that'l the point. thire i. ridr..' in the courts, but t
9 don' t think that the aniwer i. to ~ut thi. company out ot
10 bulin....
11 Than you.
i: ~ cotJ'I: Well, I'a in . diHieult
13 iituitio~, I would like to iid.itap =y dueii', Dut I
'.,.,._-.,.!
14 think I havi to determini in -deçidin9 wbithir to conli~
is thi. plan uner 112'(1) (3), I mu.t conclude th&t it is
I ~V~
l' pro?o.id in goo taith ~ that thi plan proponent
17 acted in goo faith, I ju.e do not want to bi in a
18 po.ttion to conclüdi on tni. ricord that that ii so. t
19 canot concludi on thii record that that i. to,
20 I think that the contrlctual reLationship
~l b4c..n c.rberu. ~nd thi CEO. ~r, crowley. did caine th~
22 proc.... an t think that, Lf &nythin9, the ulcimate
23 f&irn... of the pr~'l' in b&nXPtcy i. · p&r.~t
2' prineipli to b4 protected by thi Bankptcy CQur~.
.~~.__u. ..__ ._...._ .' ._. .. ... .. ~
- _. -....- -'''--'-'- ..._-_.... .-..._..............._....
A-37
"0' .._."... ........._..-...._-- " 'p.'"
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 23 of 30
( y
H
1
Maybe we would be at thc .¿me place today
if that contractual relationship had not been thire. if
it had been diic1o..d to .&11 partii.. but I don't know
2
4
that And I don't think anybody will know that,
5
6
We are at & t.rrible piace, ,he Equity
committ.., even on it' n~ire, waich I &9rl, with the
C.editor,' Committ.c'l couni.l and ta.ir valuation expert
7
a
~
and the croi..,x&mioation of the Equity Committ.. expert
do" poine aut the qu..tionabl. nature of that valuation,
10
11 12
r r
I tlink unr:u a:y of the nUlrl tni c~Y ii inioLv.ct tody. But t don't think I can
coufi~ & plan baied on thlt fict beeiui, I think that
b,cau.e of the proc'i, being taicted by thii relation.hip
13
H
15 16
which b~&n in NgV.~er of l"'. an pirhapl in ~uqu.t of
1"" ha. .0 taint,d the dabtQrl' ...trueturin9 of it.
debt. the d,btors' D~QEi.tion= toward. . plan. even the
17
dib~or" ri.tructuring of itl operation.,
I t.ink an thAt poiii~ I thii: i ~ ii . IhaIM
U
19 20
t~t Mr. croley an ~rhapl c.:beru. &nd tae d.btor
iti.i! i. tainted in this ~.r c.au'. I think the.e is
n
2i
~3
evid.nee that Mr, Crowliy did do & goo job operationally
in hllpin9 th. debtar tu~ around. But t C~' t conclude
that the dlDtor mliht not h&v. done ivin b4ttir had thire
24
not b..n thi. r.lationihip. I don't knew. Tnat'l the
A-38
~.'- -_._--_.. .... ._.__...- ,.._..--_.__..-. -- ...
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 24 of 30
r~' . '~"
,(".."
33
1 problem, I don' t know wh~~ ~Quid hive Qappen.d wichoue
i chil "àtiál contlii:e of intirut. r do think ie' 5 an
3 actual conflict ot intarelt,
, I think eliat th. action. of Mr, Cro..ley co
5 hid. the rilationihip, and I think that tC-20 did sho~ tn 6 incint eo hid. ~h. r.lationihip and eo hid, hi. r'ques~
for additional compeniation in WinterlLn in axchang' ~or
8 hi. e ftorei here did at leiit evidence chat h., him.ei f.
9 believ-d that thii relition.hip should not oe diicloaed
10 And, th.refore, did, in fict, taint hi. ability to serve
11 ii ci of the debtor.
14 Whethii- it: epeni up a P-iOrl'l bo or
13 encourag.' eth.r notehold.r. or other partie. in tuturi
i~ b&nptci.. to try t:h, .&~ thing, I'm not i. concerned
15 &bt eh&t. but t j use do noe want my n. confirming I"
l' plan where thii type of ictivity oceurr.d for i. year
17 b.~Qt. ~b. plan w.. propo.-d tor eenfi~~tioni t jnl~ 18 c~ot conclude that it' 1 p~poi.d in goo faith for
19 eh.. ri.ioni.
20 I do noe have the ability to iuqq.'c a
ii different pllA. I do not have the ability to give an
ii cxemcion from Stark II,
i3 So I liava it to the ~ebtQr to I~. whe,. it
24 904_ from here for now. I'll look for i fo~ of orde: if
A-39
..._.__....~-_.__..._.._-~--_._-_.._.....---------_...._--..
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 25 of 30
(
30
1 someone wanes eo pre.ant me wie~ on..
2 KR, M!NI: W. will. Your ~ono~. i TH CO~Ti We'll ItaAd adjourned. 4 Hl, LEV: Thank you, Your Honor.
S (The he.ring wi. then concluded It
, i:i5 p.ii,)
'1 .---S
9
10
U
H
13
i.
15
l'
1 '1
1&
U
10
21
12
2)
a
A-40
._...~ ."- _.. ---_.~_..---_..-- .-....¥..._.
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 26 of 30
n
1 State of D.la~&ri
2 County of N.~ Caitle
3
4
5
CtRTrFtC~TE
t. KAthleen S. White. RigiJeered Prof...ion~l Riportir ~nd Notary Pulic. dQ h.reby cl~tify thAt the foregoing ricord. p~g" 1 to 91. incluiiv.. is ~ true And accurate tranicript of my .tin09~.phic not.. takin on Thursday. o.cimbir 21. 2000. in thi Abi.captionid mAtter ~efori the rideral Sankruptcy Court, .
6
7
l
9
10
IN WITNSS WKP. i havi hireunto .et my hand
and .,.1 this 24th day
u
u
13
of O-cimb.r, 2000, iu
Niv C..tli couty.
u
lS
ICTHnl ¡. WlI'l, Notar. Pulic'R.po~t.r
i~
i7
18
19
%0
a
22
23
:!
A-41
, _._~..-~.-..""",,-
'.-" .... ~ ....._....".. '." .". '. .._.- .- _.~.__" . 0'- ....... .--_. .... ....... .. --,_.._- _._.--_.. . ..- . . .
Case 1:04-cv-01565-SLR
Document 174-2
Filed 08/20/2007
Page 27 of 30
EXHIBIT D
Case 1:04-cv-01565-SLR
0(T-18-200213:32
Document 174-2
Filed 08/20/2007
Page 28 of 30
P.02
MU(H SHEll 5T
3125211750
MUCHSHELIST
October 18. 2002
ATTORNEYS AT LAW 200 N. LAALLE STREET
SUITE 2100
CHICAGO. Il 60601.1095
T 312.346.3100
F 312,621,1750
wv..much~helj5t.com
DIRECf DIAL:
312.621.713
.sksi ms~muchsheJis ¡,com
Via Fax and Mail
Barry Bressler. Esq,
Schnader Harrison Segal & Lewis 1600 Market Street Suite 3600
Philadelphia, PA 19103
Re: Dan Crowley
Dear Mr. Bressler:
Thank you for inviting our client, Dan Crowley ("Executive"), to ínitata a dialogue regarding
tenns of his continued role at Coram Healthcare Corporation, a Delaware corporation As Mr. Crowley has stated on several occasions, his overarching goals are to assist the. Trustee in operating COram effectively while a fair and equitable resolution to Coram's Chapter 11 case is pursued. to resolve any derivative claim in the best interest of Coram and to receive fair financial consideration for the amounts eamed under the bonus-related terms of that
("Coram").
certain Employment Agreement between Coram and Executive made as of November 30, 1999.
as amended (the "Old Employment
Agreement"), Toward these goals and on behalf of Mr. Cíûwley, i woüid Hke to propose the fOllowing terms and conditions regarding his continued
employment with Coram:
1. Executive would enter into a new agreement with Coram, signed by Arlin Adams, as
Trust~e, on behalf of Coram (the "New Employment Agreement") that would supersede and replace the Old Employment Agreemenl Coram's perfonnance of the New Employment Agreement would be guaranteed by each of Coram's subsidiaries.
2. Under the N'ew Empfoyment Agreement. Executive would be employed by Coram as
Chief Executive Officer (CËO) for a term of six months. beginning December 1, 2002
and ending May 31, 2003, such term to be extended on a month-to-month basis thereafter unless terminated by either party upon 30 days' prior written notice.
3. Coram would pay Executive an up-front retainer in the amount of $1.0 million to be applied as a credit against the "Bonus Distribution" (as defined hereinafter).
4, Coram would pay Executive base salary at the rate of $120,000 per month during the term of the New Employment Agreement and promptly reimburse all direct costs and
Much Shelist i:(99d Denenberg Arne"t & Rubenstein. P.C.
CROWLEYKVN 014083
Case 1:04-cv-01565-SLR
'..
Document 174-2
Filed 08/20/2007
Page 29 of 30
P.03
0(T-18-2002 13:32
¡;UCH ~HEUST
3126211750
MUCHSHELIST
Barr Bressler, Esq.
October 18, 2002
Page 2
expenses incurred by Executive and/or Dynamic Healthcare ("Dynamic") on behalf of Coram and/or Coram's employees occupying space in Dynamic's Sacramento, CA facility or in the greater Sacramento area. including but not limited to office space, offce systems and parking costs and expenses, on a basis consistent with that reimbursed and rèported since the beginning of Coram's bankruptcy fiing.
S. Executive would have the same duties and responsibilties under the New Employment Agreement as he had. as CEO, under the Old Employment Agreement
6. Executive asserts lhal he is entitled 10 a total bonus of $17.3 million which amount includes the 2002 performance bonus. In the event thaI the assets of Coram are sold for Jess than $250 milJon and either the Coram bankruptcy case is converted to one under Chapter 7 or the Trustee has a ~pot" plan, Executive's $17.3 millon claim would be paid at 50¡t on the dollar. If, however, the confirmed plan provides for a conversion ofdebt to equity by the note holders, Executive's $17.3 millon claim will be paid at 80~ on the
dollar. Alternatively, if the Coram assets are sold and the Trustee realizes more than
$250 m.ii/ion, Executive's $17.3 millon claim will be paid at 100lt on the dollar in
recognition of the value his efforts have created. (This amount is referred to herein as the "Bonus Distribution,") The Bonus Distribution will be made 10 Executive on the
effective date of the Coram plan or, within three months of conversion if the case is
converted to liquidation.. If the Bonus Distribution is not made when dUe.
the unpaid balance wil accrue interest at the rate of Prime (as published in the Wall Street Journal), plus 3.0%, payable monthly, from the due date of the Bonus Distribution until the Bonus Distribution is paid in fulL.
7. Executive wil maintain his interest in Dynamic and, during the term of the New
Coram. '
Employment Agreement, may consult with other companies not in direct competition with
8. The New Employment Agreement would contain usual and customary alternative
dispute res~iution provisions for employment conlracts.
9. The Trustee wil make his best effort to promptly seek dismissal of or settle any
derivative claim on behalf or Coram or any of its affliates or subsidiaries, including but
not limited to any claim against Executive, in a mariner consistent with Trustee's legal
duties and the best interests of Coram. Trustee wil also maintain D&O coverage in force covering Executive and not modify or amend any indemnification rights to Which
Executive may be entitled. .
10. As a further incentive to maximize the value of Coram, Executive's options to purchase
1,000.000 shares of Coram common stock, priced at the NYSE close on November 29,
CROWLEYKVN 014084
Case 1:04-cv-01565-SLR
OCT -18-2002 13: 32
..
Document 174-2
Filed 08/20/2007
Page 30 of 30
P.04
MUCH SHEL i ST
3126211750
MUCHSHELIST
Barry Bressler, Esq.
October 18,2002
Page 3
1999, which fully vest as of November 30, 2002. would be 100% vested and remain in effect for their stated term.
11. Coram wil continue to provide the other perquisites and benefits provided to Executive
under the Old Employment Agreement. including but not limited to health, dental and disabilty insurance as made available to the senior executives of Coram, $1.0 milion in whole life coverage, an $1,800-a-month car allowance, corporate housing in Denver. a gross up for taxes on certin benefits, all reasonable expenses incurreçl in the course of Executive's employment (including first class air upgrades) and tax preparation costs up
to $10,000 per year.
12. Agreement is not approved by the Bankruptcy Court. the Old Employment Agreement wil remain in effect unaltered by the New Employment If the New Employment
Agreement.
13. Executive would be entitled to recover reasonable attorneys' fees and disbursements if a claim or litigation is necessary to enforce or interpret the New Employment Agreement.
14. Catifornia law would govern the New Employment Agreement.
With the impending expiration of the Old Employment Agreement on November 30, 2002, Mr. Crowley is obviously considering his alternatives. For the good of Coram and continuity of manag~m'eri!. ! would suggest we píOmptly itsuive.ihis mailer.
Please advise if the Trustee is amenable to these terms and conditions or has any questions or comments on this proposaL.
I
look (oiwara to working with you on this matter.
ø-L~ rz
Steven K Sims
sks
cc: Mr, Dan Crowley
Scott Schreiber, Esq.
39;223_:.00C
-,--... = ~.'"
:'.li:-i-
CROWLEYKVN 014085