Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR
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Document 138-3

Filed 05/04/2007

Page 1 of 46

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24 November 1999

- PERSONAL & CONFlDENTIAL
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Doiiu Tice - Cc: K. Genda
W. Feder

CONFIDENTIAL

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S. Feinberg
Subject Winterland

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With Winterland continuing to make progress in its business, we have explored
thè possibility of an IPO.. The general reactioa. is that the eangs are only just emerging and that we would realize substantially better valuation hy waiting unlII Q2 or so of 2000. That is a multiple times $5..6M in 1999 would notb~

wort as much as a multiple times $10- I 2M for 2000, So rather than take
subs~tántively less, we believe it will be bettel-o wait a couplt ofquarters,

Wint~daiid ,has many executionchaUenges and potential positives. However, it
.-:-""".
, 'L~;::'~':~;
is my belief that -we nee tó have more critical mass create the real optimal value.

are too vested: in four (4) arstsnicenses (Ricky Máitin, BackStrèetBols, Nsync, andPokemon). VirtàUy 90% of oureamngs come from these. We just do not ha\ie the Private Label working yet. ft could brea even or eek out a small pmfit
in 2QOO.
, :

'We just are too smal to hit the radar screen ànd .

and a lager listofartists to

To create the critical mass, I hav~personaUy contacted cMdrs Margar~t He.ffeman to see whether ,there is a way to "double down~' with their Signature . unit She took my calL. Here's what I told het:

· I am Chairman and represent the owners of Winterland.
· We had tred to buy. Signature to have a larger list of arists an~ to gain

gre~ter absorption. . · Licensed ãpparel has some awe inspiring cásh funding requirements that are
\ . I management,

hard for new entres to deal. with. It takes size, earngs, a factory, and on going cash flow. '.' : _ and it'sstiH hård.

an ideal portal to capitalize on e-commerce. CMGI could be such a portal. · W/L and Signatures are only 20 minutes away from each other in the Bay.
· . WlL does not have

CONFIDENTIAL
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EXHIBIT

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 2 of 46

CONFIDENTIAL
;';..-.

· W/L and Sigmltures (together) would have synergies that would enable the combination to be better than ei ther. ~ould' be on their own. The factory would become a valùable, cost-effective, asset for both. A combined entity would have better costs (of all' kinds). improved productivity, and llave a bttter overall ability to be more effectively managed _ . . and, importtly be better able to attract even more business at lower costs than either could acmeve on their own. . · W/L could giveCMGlsome pro-rat~ share in an equity swap (a non~cash transaction), relieve CMGI from having to manage Signature, .eliminate the
need Jor CMGI to fund artÍst/icense up-front demands, and' .. . give

CMGI much more product to run through theit portal. .
· WIL ard Signatures together would have

the mass to have an IPù . . . _

so their could be another econouuc pop for aU owners. And we would Jepresent a g¡-eatacq~irorfor something like Giant, but at better. prices than
cither cou:1d achieve individually..

Heffernan got it and she got it quicÎdy. It felt likt she was literally jumping at positives of the conversation. She said tliåt I made her holiday. She said that
she would ~alk to her Bóard, and call me" back. Whar she didn't say but what was alsQ obvious was that CMGI see tne management challenge, doesn't see the fit p~r Se, and øoesu't want to even try to understand the exigencies of this

,.

. 4~unl1suain businèss.
) ~.::~t.~::.;;

private line. She wanted to know whether I

Litèlally. five (5) uunutes after I spoke to Heffeman. shecaUed me back' on my had àlready (or intended) discussed this idea with.Del Furano or anyone else at Signatures. I ~old her no. She was
øbviQusly happy and CMGI and said that she didn'l.want Del to get

"in the way of anything

their Böar núght want to do. She doesn't sound like.she has any

vested interest in Signature or Del Furan.' She intends to NOT talk to any.
.Signature.:people.and to sort this out at the parl?ut leveL

Be careful to keep this opportunity to 'Yourself so that we don't úpend the

possibiltv.
This cmild be the absolute best "non-cash~' way to really pop the value here. Hopefully, you all agree.
j..
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Sincerely,

?!
B51

CONFIDENTIAL

Case 1:04-cv-01565-SLR
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Document 138-3

Filed 05/04/2007

Page 3 of 46

REPORTER: LORRJE L MARCIIANT RPR. eRR. eSR NO "'511

-'7--~'-"'~'''.~''_. .., ~_.~~ ," - ~.~~_ _,~'\~-.~~~___

EXHIBIT: 11
w;,"= I J¡VDIl)¡ 't~
Date: -4.(01_ #ofpa s: 11

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1l:.. Dynamic
.LIl Healthcare

_ Solutions
PERSONAL & CONFIDENTIAL

. 18 November 1999

loScd£L~
..-n r-;cEnl:. 'j

Don Amaral Chaian, President & CEO
Coram Healthcare COIporatioD'
llis 17thSlreet

--~ -- ----

..- --

Dtnver, CO 80202
Dear Mr. Amaral,

for my fies. annou'nci;ment of any kind may be made without my prior pennission.

AUached is the executed copy of the Employment Agreement between myself and Coram Healthcare Corporation. Please .have Ibe appropñate individual execuie the contract on behalfofCoram and retur a fully execuled copy to me

While the contract does not.iake effeci uniil 30 November 1999, I am h~ving Kurt Davis (my-ei:F.SVP-Oi--lilVesr -Relaiioils afFHC)prepårpres.
release" I win forward it 10 you for review~ Note: 1 am stipulating thai no

.J

,

.F~naJ)y, as we discussed, i have scheduled a mee1mg with the Coram anorney's.
in my Sacramento offces on 29 November to have a careful review of ihe

liligaiion betWeen Coram and ÀetnaJS Healcare.
My present inlentioD is to be in Denver on the 30th of

November to star.

Sincerely,

,.
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VOJ Com fu ~
Daniel D. Crowley. v- V J .

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ChaiIian. President & CEO
cc Steve Feinberg

I

ExtUBIT

tXl,°b:t ç
COR..EOTY000038?

Aiiachmenr

~Où C'piiot ~i,ii . Suite IZ50. $:enmenio. C\ 956H 9t6.H9.6056' 916.++9.6059 I...

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fRO¡' PAUL HASTINGS:I

QIUI. IU'99 - 9:19/Sî. 9:18/NO. 4260460169 P 2

- - - - _.,... ~

-

. EMPLOYMrr AGREEMENT
.,

coiporàt¡on (the "Company), and Daniel Crowley eExcativc"), made as ofNovembcr 30,

AGREEN betweai Cor. Hc;lthcarc Coipr,;non. a Delawar

.1999, the-date upon which E~ecutive b:i execuled and delivered this Agreement to lbe Company (the "Effective Date").
In eonsidenlion ofthcmuh!a1 coven:miscont:iincdherci and oiler good and
valuable t:onsderon, the receipt and Sufciency of which ;ie hereby :ieknowlcdged, the
paries hcro agree

as follo\\s; .
provided in Pargrh

L Emolovmenj. The Company dialcrploy E¡u..-culivc, amI Ex(Cutive :iccepts emloyment with ihe Company, Upn Ibetem and condilions set fOM in lhis
Agrcment forthe pcñ6i1 begiiining on the dale hereof and ending as

§ hereof:(lhe "Employment Perod").

. 1. PosÍlionand Duti~. Dug Ibc Emplo)'ent Penod, Exceulivesaall

serve,aS the ChanDan of the Board, Presidenl:md ChefExociitive Offcer orthe Comp;ly

and aU ofi1s wholly-owned subsidi:i~; ard Excalive shall hav.e the nirm2J dUhes, the Chilm oflheBoard. Pn:idcnl, and aiief EXeCUlive Offeu. ExC1utive IS ar~JDer -aiief Executive Offcer
re:oIl&Ïbilitics and iuilboniy of of :i Foilune 200 Company demaid fo serve asChairoiaJ of l;c -Board. Clcf E'teeulivcOlfcc: or :turn ,aroUnd in

maiagçrcnL Exective al$o owns andopml6 his ownconipanY.'Dyamc Hëaltcae.lha(
has vanôuS blliness inteicsls. E.'lecutivc i-rcnds lo-do~lileverj5 pTOressionaUy nc.csar

to ti lbc Companyaruni-':iil rhe COllllY rcognes rhal F..ecutive wiU.h:ive' other
bUS¿.S3 intcn:ts iid may Sqle:i an offcer orcoDsulail10

oiJie-,usinc3Se.. fuCOlIvc shall have' the ,nght, wjth ii Coneunecc of the Company~s Doard of Diia:loJS. tp apint
~ ehiefeJrecUlIye offcer whcn the CompwJ,.ÌD EXC1lIve's reasonable opinion, ha:becn

'i.tibilied; provided. Ìiowcver, lhalsuch an appomtment shall n.ot be deemed_to caUSe a

icnalÏon of tbe Employment Perod byihc CompiiyhereundeT :ina'sh:ill 'Dol trgger
paymcrlo( any'3IoUnts 10 Executive Plltto S~on :S(d). Upon the :ippointmcii ofa SUccesor chief executive offcer purt to il, Secti~n 2, Exceutivesh.ll kt:in his

position asOiaÏmsn ortleBoaiù aid ,,1/ oft1e lem ofihs AgrcUlcnl,shaU:räi:i Ü1 fuJl
effect'except to t1c extent modi fied m a maner which is mulilly acceptable (olle pares, including Wilbòut Jintion an adjustment lò-Ibe baSe compenation payabl.chqeder.
3.. lJase Salar and Benefits
(a) Execii\-e's base saar (the "ßasSalar1$haJl initi:ily be S650,oo

per anum, payable ùi ca ~ iii accrd:uce\Viib ih!= Compii's gO\ccalp:ryrlJ pr:iccs.

The Base Salar shal be icvicwcd :rUally by the Bo;idorDircctors of the C'..n.ipan (rbc MBo:ud1 3Id in=cd (bul not deceased) based upo Exectivc's penonnanèe
(b) Jii addiiion 10 the Base S~lai, E:tccutivc sh31l.be entitled_ 10. a'

-pciomÏ:icc bonus,(lhe MBonusMJp:iy.blc witl 90 days ofthecnd of cach fisc;) ycbased

. upon theCòmpaoy's opertig results, ii fóllows: jf c;ings before inteR taes,

deprecation and anortlioD (EBfIA) of the .Compan,as mcast by the audited
".i

nniicial stCricnlS Qf the Compãny in anyone yea cq or exeeed... i 00% of Uit taget
:iounls (lle "EBnDA T;igcls") to be dclcrmedby the Compens¡ition CommiUce of

Bo;i ofDireclOi- of the Company (tonsisiig of at leit two oulsidc directors who will the

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COR.-EQTY0000383

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Page 5 of 46

fROa PAUL Il-SìINGS "

.ITIH 1. 18' 99 9: iO/Si. 9:! 8/10- ~ n0460 16fP 3

--

cömprise am:ioriiy of such Committee) 3DdExccutive in good f:iith, bcginning in fical year

2000, Executive shal be cilitlcd 10 a bonus for such year (the "Bonus")'equ; 10 the
pen:entage Get for oil Schedule A li.erto oflhe lJase Salary in effect Oll thc ias day of the
Company's fiscal yi:lor which such BODUS is p:ipbk Any Donus eared by Executive

h~UDder SlU be payable by the Company in ca.
i ,000,000 sllarcs ofConuon Slock or the Company (the "Option Shares") al :i pnciiequal . to Ihe closing price oflhe Common Stoc on theNcw York Stock ex¿hangc'on Oie EffectiVe
Date. The Opilon Shii_shaU be grl~d (0 Exc.iive under the Cçmp.ary's 1994 Slock
(c) Executive shil he gntod optioiins ofihc ElIcclive D:ie 10 purchue

OptionlStOck Issance Plan (the "P-Ian~). E3ch of the options (lhe "Options') s1;i Yci and
.become exercisale by Executive as to 33-Iß% of i:åcb of the Opiion Shar coveted thy the fi secnd:md tJd :iivcraics of the EIcctive D;ilo. if

~mployed by the Comp:iny, and wiU ves as to 100% orihe Option Execntive is then $h: upo: (i) a Chge in Contrl (lL defined below); (ü) any tcmaiión by the Company of this
. Agreemail other than atciin:ition by tbeC-ompany.£orC:iu:e (as defined below): (iii) my

on

bëlow). .
1.

tc:atioD by Exa:ulÌvc pursuanlto pangrph 5(a)(ii) hereof; or (Îv) ifilie Emptoyment:

l'eriod is lerated as 3 resull of Executive's de:tb or pennancnt Disability (as defined

. For purosÇs of this Agrement, a Change in COnlrol oflhc Company shal.

bedecmed 10 have occured if: (i) any ''pi;n'' (as Stch tenn is Sections I J(d) and'14(d)
of-the SecurticS ExcJ¡3D!:e Act or 1934.; iiummded (thc "Excla!ige AcC)), olherlb:i a
trtee or otbq .Gduciar boldingseeurtil; ofßie Cottpany Uiider an employee benefit pl:i

ofih.e COmpiuyor ihe Senior Subordinated NoteJólderspursuant lo-lhcSCtties Exchange Agreeml?1 Ìlated May 6,1998,.or a group comPO~tdp'rincip3iiy thcrcOf.ba:ømes tbc
õetdiciå) O\Vct' (as defi¡ied in Rule Bd-3 prOmUlgalahindci:lhe Exdi:ugc Act), diraUy

-- ~~li;n!ir~iiy,. of soxuñiics oOhc Company.ticsiirig50% Oi more orCA) the õUblading' shars ofC-ommon Stocl or the 'Compiiy oc ÆB) thçcoinbincd voiing power of the
' Company's lhtt--utsandùg se-çniiescntilled to vole¡ generlly in th'i: e1eclion of diroetor.;

(iÏ) diig any perod of nol more than two consecutive: years, individuals who at' lhe beginng of such prnod constitue ile Boiiaid' any new direclor (other th2J :id,r=tor
dcsgnaied by a per:on ~ho has entered: IJ1l0' ii agrement with the Company 19 dfec a
lràciioii descnòed in partrph (i) or fil) oflhspargrph J(a)) whose e1cdlon by ~e

Board or noiiimition for declÏon by the Company's :slioJder w:i approved by a Vole of
at

least fwo-thrds of the directors stiii in o.Qcc who Were either in offce :it'thc beginn.g

or such pcnud or whose t1ettion or notIon for elcctioii was prcviouSlj so approved
. ce:e for an rcaonto COO&tilue. a m:iJority or lle Boar; or (iü) Ihe sharldci of the

secties of tho Company ouistandig imC'ately priorthèleto' f:iilig to colÏc to
. tc~ent (either by rtg oUlslllding or bybcing coiivClcd inio votig securities of 'SYÌng entity):it leat

Company approve a merger orconsolídllon 'wllch :would r~uli in tiie holden of voting

Company or such SUrvving entity oUbtadig imediately alia- such mercc or
. liqlÙdition of the Company

the 50"1. ofJhè cobincd TOtig power ofthQ YO.ling i;eC!ÏC3 ófthe

consolidaiion; or (iv) or the sharcliolder oftbc Company appRlYe 3 plan of coplclc or an agncmen~foT the ute or diso,itiol) .by ibe Cl7panyof . all or subslanti:ily iin of ihCompany"s !lSels or any In:ietion havint a sinùlareffcc
(d) In addilioJ) to the Base S:iar and any bonuses payable 10 Executive

,PlIuanl to thspangrli Executivc sha be' aitiiJed to the fõ1lomng bçic1li durg the

Eiployicnt lçrod, imcss otherwse increaed by the Bo:i:

lN41nn.4

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COR.-EQTY0000384

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,¡.Roli PAUL. HASTINGS II

(îJ!);:.:B"99 9:10/Si. 9:

I B/NO;

426M60169 P ,4

such coverage is m;de generally available to the.semor executivcs 'of the Company

(i) ,Hcal¡h Ìta; dental inurnncc and disabilty ince as

benefie~:u of choice; . '
..l

:id whole life inrace with a policy vaue of n,ooo,oo namg llecutve's

and .
)
') ,

he p-aid out at the'Basc S:i:u nte on December 31 of c:ch ye:i during-the Bmplo~~t,Pcr0d and llon tenion oflhs Agreement); .

, . (ii) fourwcch,paid vacaton cachyc:r(anYlUused v;icaton will

IOcc plan medic:l expèoe plan Of-olber benefit arngemenlmlÙtaic: by the '

. (ñi) pincipation in any grup life insranee plan, .or olber

Company (oritS semor executives gcncrUy and, if appJic:ible, their f:ily members;

. (iv) Har allowance ofSI,800p¿r month.

(e) The Company shaJl provide Executve eorporntc housing in Denver. Colorado (or aU OT sueh portion of the Employmeit Perod as is requested by Execi ve.
, (0 The Comp:iy shall al pay toEii~tit.ivc an anlOuiifequal to the _
"Grossed-up Exces TaxLiability/' The ter "Gred-up Exets T:i LiabJli!y" mc: an
:mount which., :iIter Executi-ic':ipaymeni of federland stte incoinet:i liabilties añsÌtg

on the recqpt ofiJeGnsse~-uExccss Tax l.abiliypaycnt, shall equal Ihe amount orlhe '~enefit& Tn Liabiltr." The tcm ''Benefits Tax-LabiIity shnllmca thesum of federl
anilsiatc income lax liabiliiywluch Ïspayle by l!xecutiYe upon the rè¿eiptofthc-bene.fts proded ror in Scçion 3(i1): (e) and (i) bCT(

inc bYJñm in -the course of perfoiig his dntits under this Agreement. incJudmg
'UpgniJcs for fi~t cbs- ainravcl. whih ;u cons31ent with the Company's policies in effect

_. -'-- . (g) ThCCompany.i;baUreimbiieEx~vcforlhc:bjcexp~es

-rCom time t(HilDe wtth reect to lrl'cl. entcr,ci and aller busincss Clp~scs. subjec ' to the Company's rcquircmenJs with rqp 10 nporrg and documentation of Stch

'exeneS. '
bcrunde., Execu!ivc shaJl also be entitled (orcceÍve :U acquisition ~onus ("Acquisition
(h) In addition to theBlUc Salar ILd anybonuseSp;iyabJe'toExeculive

Bol1!1') equa'to2.99 ticsthe anual B~e S:i:i an "Target BODUS" (as defined on ScliuleAhecf) payahle 10 Eiu:çutive_bcidcrat the iimcwhen the AtquisítionBQßus beamespayaJe 'IeAc.iisition Boous s~aJl hêpaidcoDCUenUylylb the coo:inatiön

oramagcror lioDSoJillalio)l whithtÄuts in lheboldas of voting Steurilies oflhc-,Copipæi

,õutsing im-iCd2lei pñót therchf-lg locont.ue to rcprest (dthi: by'remaig
Dutsding, or bybcingcoßvcred into votig i¡cctics of

the Company or 3\cl S1ying of th combined TOlig power of the votig socurtia¡ofdiCmiVig i:tity) at Je2 SOO/o
enti oiitsaodingírcdiicly afier'sudi merer or consolidoiion, or thC;Si1Jc oc-disposition
by tb Company of all or substantially an of

6ÙUar effeci. olhérthan a liquidation oflbe Compay (an -Acquistion"). . .

the Compmy'¡; :isels,'or 2ly lrdciioti having

(i), Thecomp:ishJ pay for lax prepartion cost up 10 ama:imum ofS I 0,000

Exccuv&'s arual redcr. and pc caendar

year.

state

)
as

4. Board Memhcrhil!., ExcculÎvc shan be, e1ecled or :ippointcd'io sere

'a f!cmbcr,oflhc BO-idofDirectors fo fill a vacacy thereon and sbaUlie appòinicd

\)4GlJ_l

-3COR.-EQTY0000385

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. FRO!. PAUL HASTINGS øi

rimJlILI8"999:1i/Sî. 9:18/NO.4160460169 p 5

. Chairan of the Boar as of the EffoctÏve Dat;; With rtSccl 10 all subscqucni regular

dcçiions of directors during ibc Employmcnl Pciod. the Comp;iy shall nomia!i; and'usc

. iis bel effort todcct. Exccuiivc to serc ¡u a mcibcoftle Board. IfEieciivc is elected -10 serve OD the Boar Execuve shal be D3ed the Cb:iímiai of the Boar~ UpPn the , tamation of the Emloymmt Pcõod for any reason Executive slallresign as :i, director
and offcer oflhc Comp;uiy ;ind ¡Is Subsidi:uci. as the case DlilY b~ For

this purses of Agreement, "Subsidimcs" shall mea any cOtporation of wrneli the scrtics having a
majoniy of the votig power in electing diectors are. at the lime of dclerm;itÏot owned
'by the Company. tlireètJy Of iJirouih one or IDorC Subsidi:ues. -i '

5. Term.
(a) The EmploymentPcrod shall end oñ November 29. 2002. prvided
that (i) the 'Etnlóymcni Period shal teiinate pnor 10 sùeh date upon Executive's
. resigntion. death .or pcanent diswility (drJed as ,the expir-aiion of a continuous perod

of JiO days dunng whicbExeeuiive is UDiible-lo pcdoim hi assigned duties due to physical

or mcrul incapacity); (ii) the Employmctl Perod may be teiinalcd by Exccuuvc lit lly'
tiicprior to ~i:h date ¡flhe Conipany fai Agrecmclll. which

10 comply with my milenal piovisio()~fthis

fai)¡irc h3Snol.liecn curM with IO'busines'days after noiice of such

. i:oneomplian~e h~ been given by E:iccilve 10 the Company; and.(iii) the Emploýment ' Pcriod may be lcrminalcd by ¡hc Company at any Iimepñor to such dale for CIUSe.
oris ~cr3lcd by Executive'srcsign3tioD,;Ex~utivesball be i:iiiled 10 recdve all :i~unts
. due to

(b) Iflhe Employment Pcriod Ïi Icrnalcdby rhe Company for CaUSe

hi thrugh l1c dale oflcrnation..' . ,
(.c) .lfll EinploymcDl PaiQd is IctDstci as a result orExecl!tive'~ dc:th

~..

,.,or:pcrm:ul-sabilily. iJlc Compay shatlpay;my amounlsdm:'to EXCQri'Ve-iou~ Ibe
to Ibe Bonus whiëh would

,dale oftermaiíon and il.Ðonus(pay.3ble 3: set íort. inpangr.ip!i 3(b)) in an amo1l( equal

3(1) will 'respect to the: fiscal y.c: in which such rcmaliOß occurs.

bàve

otherwise been payable to &i;Ctlrivepllisuanl to paragrph

(d) If the Employment Prood is terinalcd líy rhe Company other than
for C:iU&C or by

EXCGulIvç pUTmanl to pargrpfu 5(a)(ii)-above, Execuiive shaJi, be erlilled

to receive,(i) hisBasç Sa1àJ tlUiIUgJ the th ,aivi:o( tJ¡eEßèctve Date (or. if

lODger; for ~ penod of24 moii, afe! the date or tenniinIIQn). ..3y;blc in accordance "'tb

the COmp;iy's gencr payroll prachecs and (ii) the thci ;ipplicaJe Tatge( Bopus which shaU be pay;!e wi 'QÙely OOJ3 ana- UJi. Cid or e: of the. Comp;mys fiscal yea .ending Ihcreåfcr though 100. The Company shalhlso cnniiiue,coveDge for Employee
uo,da th,ç C-ompans life ítiee, pii:dkaJ.Jieatb dktiility ~d siJ:u wtlfarbepë:fit

p'~ :md the whole life inurae plan dcscnlied ii pargrh 3(d) iJugh the 1hrd
' :uivernry of the Effective Date (or. if lODger. for :a peod of14 morill aler tlc dae of

tcrlion).

(e) Exccpl as òtherse 3d rooh abve, aU ofExecuiivc's riglis to frige
benefits and boniies herundcr (if any) accrug afer the lerinaiion of

Period shil ceae upon:rch Icmun;ilion.

the Emloyment

(1) Forpuisc of ths Agreement. "Cause" shallmc: (i)the continuing "'iIIf.f~ure or rcfuii by fuccutIve 10 perorm substlial and maieral duties hereunder

(other th;m any ~ch failure rouliirig from Executive's Iic;llity due to,physic2. or miml:a

illness). which has nol ceaed withiiil 0 business days aler wriUen demand for substmtial .

l,Q10n.'

-4.
COR..EQTY00003ii6

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Page 8 of 46

FRoi PAUL HASîiNGS Ii

(ïHUr:, ;,8'99 9:

11/r!. 9:i8/NO.4260460169 P 6

peionnanceis delivcied 10 Executive by lbeCompmy, which demand id~iiiifies the mancr in which the Co~pany btlie\'cs that ExcctÏvehu Dot pcrfóimcd such dutie.') an the steps

require 10 cur such failure to pcnor: (iij úccutive sbJII intentionally an willfuJly
'l

_ cng.einmisconduct low;u the Companywluch is m:lmallyinjmious to the Company and
,ilS Subsidiares, monetarly or oth~rw (includg. but no~ linUted to, conduct in YÏoJalÍon
of pargraph 1 ör 8 hettof), or Iiii) the convicton of

Executive of or the entering of a plea

of nolo ~iitendcic by Executive with reC1lto, D felony. Notwithsanding tle fOr-going.
Execve's EmpJoymènt herelÛlder sh DOl

be deeed to be taminated for Cause uicss :id until there sh~lIbavc beeD delivered to Execve 3 ropy oh resolution duly :idopted by
an af1aiive vote of nòt less lh a majority of the enlire memberhip of the Board at ';1

meetg of Ihe Board (after wnncn notice to fuca!I~c 2nd :i rczOllblo opportity for
Executive, iogeter with Execulive's counel.

to be hem berore Ihe ~oard). fidîng !ht in

thesood faith opinion oflhe B.o:ud, Exoctivc should-be taminated för C:usc. Cause shalJ

:resonsibiltieS for the Comp:iy.' ,
)
-,t, '.

not be deèrod to include the peroimance of duties fot other comp.anies .or businesses ihat do nol~ompete wìih tle Coinpmy or unasonably inlCDerc with Execuiive's turnaraund

, (g) In the cyeiit of any dispute reg:iding iheexislerie oJ Exa;nive's

Disability berlider,lhe rnotlcrn.ill be lc:olved bribe dctenín:iiioiiof a majorityafthrec
physicians quali1ìcd ta praciiecmcdicine in Colol'do, one, to be ,sdected by cach .of .

Executive aiìi the Boar and the thiio be selcded by thetwa design3ted physician!. For rhispiupse"Exccutivc wil su~mit 1o,3pcipñ:ate medcal cltiiÌDiltions.
lb) Executiveshàllnolb,c tcquii: romitig:att the :imount of :;y payment proYÌdcdforiii ths pargrph 5'by,scckig othdanplo)'Clt .or aiheise, :id the :iount

Qfany payment or 'benefit providedfor in th$ p:m~ph .5 sli~U not be i-educedbY any còi:pCDtion c'cd by fucculIve as a ri:uJl oC employment by :inother empl.oyer or by
Ictii-i;:tbc:e1l . . --,-.--- _... - ... ,

inoimaiion, .observations and dara obtaiedby hi wlile einployed ny the Company
concering the business or "f(:airso( the Company or ;my' Stihsi-Ji;u ("Confidenti:.t
lnfòrm3tioD~)::C the p"'pcrtyoofihc Company :agrees.

6_ 'Confi-dcniial Infarmaton. The Executive3ckowledges ,thát the

or such Subidiary. Th,eifore,-Exectiyc
my administi:itive or cour oller.
the date of

)

that he sb~1 nol diSclose 10 any inuthori person ortise for hjs.ovo;,n :iocount any CoIidentiaI InfomialÏon withoulthe prior wñUm 'COllcnt .of Uie'Bo;ird~ unless and 10 ,the
eieDt icquioo hy Jaw. rue or Itgul:1ionor jiurl to

'-

The irn "Confidential Infonnatiori.sbaI nor-indude (i infoimatoD, which is gener.lly
avail2Jeto the public or those in lle Compaíy's ùidtJa5 of

exection alibis

Agreement or which later hccmcsgcnen agibble '0 -the publi~ or thasc in 1be
.C.ompany's 'ind~ other than :I ",reult of Executie's prliòited di,scll?st~ 60

inôìmOD which comes 10 Executie fr a blna fide thrd pary souic so loii& as Sùch
soime wa not, to Execuiivc's knowledge. prohibitod fim prviding suc in.oonation to

Exi:tive by any conlrNal, legaL fiduo;i.or olber obligation; and,(ii) ~roir;ilIan which

,was known 10 Executive ,beforo sudi inoiition was obtained' from the Compan_
Exécutive shall delier to the Company attle temli~D oftbe Eiplo)'cnt,Pcrod,_or at

any other tie the Campany may rãoes aU memoida nales, plan record, ceoro,
coi:puter-I:ics and ,ofte ani! other dOCCo~ and ebla (and copics therf) rclaiig 10

the Confidential Inonnaton .or thc buiinë: .of the Company or any Subsidiar which he

)

may then posses or have tiner his contrl -,

(.411oi,'

-5.

CORÆQTYOOO0387

B57

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 9 of 46

fROM, PAUL, HASTiNGS -~I

lïlllil. 16'99 9:221ST. 9:18/NO.4266460169P 1

7.

NOn-CollDcte Non7SolicitatioD,

the Company he wil become fimm~ with ihe Company's trade secreis and wilh olber

. '(3) Executive acknowledges thatIi the course oflús employmmt With

confdential inormation i:oncerning the Coany and ils prdeccs~ors :ud thai his serees.
wil be of specal, unique :ud extrordiu value to the Conip~y. ThcreforC:ExeculIve

agr.te that (i durng ihe period in which Execve; is recciving compensation fiom Ihe
Company puinant 10 paragraph 5 hereof: or (ij) if the Employmenl Period is terminated as

prvided În panph 5tb), for a peñod of one yea foflowiQg such termination (the' _
"Noncompelc Perod"), be shall nol diry erindimly own.maruge. conleol, parcipalc
in coiult wìlh rcncrsemces 10. or in

any biuncs oftle Company orits Snbsidiañes, a&sucb busineses exist,of ar in pross
,on Ihedale oBbe leminalioii ofExcclÌvc's employment, wilbin any geographical ar in

any maner engage in:my business compering with

which the CoÏiany or its Subsidiarcs engagc or pla 10 eng:ige in such busineScs.
Gcngiaphic arcas in, which '¡he Company and/or ils Subsidianti plan to opente -:my

b\lmesses OT' in whkh ~ bllinessa or the .Company exisl or are iit process wi be
idcnlied in wñting upon TcqUest ofExcCutivc wilhn thrt days orthc date oftemiaiion

)

, ortlie Employmenl Penoit Nolhing hac shall prohiòit Execuiivc rroinbcing a passive

æ~rnti~. '
owner of Dot. morc ih31 5Y. of

the oulsiandig SlOel: of any clas Of a corporalion which is

publiCly trded so I~ng :I .E~cutivelu DO acve parcipation iii ihe busiIcss of such

(b) Dunng ihe Nonc9mpelc Perod. Exeeuiive sh:ilf not directly or indiectly tho~gh 3nóihcrenliiy (i) induecor attempl to'induce anycmployce or the

)

Comp:ay.c;r:my Sub3idi'ai,t'?ltave the,empJoy òftheCoinpany or such Suosidiai, or in. -ay w;iy inlerTere witlr .the relaiionship ,bctWeci ihc Col!paiiy or, any'Subsidi:u and, my
eipioyeêthe~r. (ii) solicit,ailyperson who was aI employee or Ibe Comp.:iny or any

Silbsidi~ ~ lIytÏmc'wilhi-n one yea prior to termatiOn of Ihc:~Empioymçit Peruitor :(ii) indUce or :illåipt to ¡ndoce any customer. supplier.liccnscc or oiher busines' relation

of the Company or any Subsidi:u to ceae doing buses!: wiih ihe Company or such, Subsidiar. or in any w.:iyinteicte .with 'the relationship ,beteen any- such cusomer.'
ths par.agrph 7. a court sh;i bold

supplier.liceiisce or business rd:iiiòn and,thc Compa:y or any Subsidì:u.
(c) If al the time of eiio~cmcrt of

that the dution. scope or ,area' retnctòrn stted hctein arc unre:isonablc under

cirumtancei then cxisting, the,p;ies ~ that the maum durtion. scopc,or area
Teasonable under Such.citances i;halbc subi;tuled for the stated duration, scope or
ai and tht th cour sh:i1 he Jlnowed 10 i-vie the rcclions contaned herei io cover the maximum perod scpe,:ind :l.C3 petted by law.

'(d) In the event ofib\: breach or a tbeatcned brc.eh by Executive of any

7, the Copany. in .ddition and 3uplcmenlar ¡oother may aply to any eouct of law or equity ôf competenl jurdiction for sp~ifii: pcODnl!ce and/or injunctve or oiher relicf in order to
oflhe provirions ofihs pargrph rights and recdesexistig in ils favor.

. ción:e or prveni :iyvioJations orthe provisions tbCTeOf(withut posting a bond or other

,m:urty).
, " 8. ~tivc :inc: COIlpiiv Rcp~CltitiIl9s. Executive bmby

ieprëenls and waits 10 the Companyrbai (i) the excalIoll ddivdy aiilperoID21c"of ths Agreement by Extltivc doe not and wil DOl confcl with, breach. violate or cose a
default under any conlrct, agr~cmeni. imtncnl, order. judgment or decree 10 which
Executive is 3 pary or by which

he is bound. and (ü) upon the exCcution and dd¡-~cry ofuii~, '

l.Ai.U,n..'

,-6-

COR_EOTY0000388

B58

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 10 of 46

rRoi PAUL. HASTINGS 'I

-, miJlI.8"999:23/Sl- 9:IB/NO_ 4260460169 P 8

Agreement by ih~ Company, ibis Agirnt shall be the valid iind binding obligation of

Excotivi:, enforceable in accordance l'ilh ils tem_ The Company hCleby'rcp~cnli :id
warrants to,ÐCCbve that it i3 not eotcg into lhs Agreement in contemplation of any
merge or s;ie of

the Compiny. ' ,

Period. " ,

9. , SUm'rl. Pan gnhs 5. 6. 1 and 8 :mall survve and continue in full forCe in aecoribec wiih lheir term n6lwih:idig :iy tenninaiiou oelhe Employment

requied or permillcd to be given IJndcr ths Agreeent shan be in wñling :lJid sbaJl be
deemed to b~ delivcre and receive fit-c .busc:s da)' aOcrbaving been deposited in the

10'. N(iiie~. AU notice. riuem. dem;ids and oiher conuniinications

United Slaes maihntl enclosed În :i n;~er or ccficdpot-paid envelope; one buSess -day :ier haVÏg been sent by ovangbt cowier, when pcnon:illy delivered or sent .by

Eicslc eommrieatiorn equipment oflhe sendingpiui on.i bu'sines ihy. or otbere
on the next succeedig busiC:$ day therft:id in ea cae addrcsed'io the resëciivc

par al i1e addres setfonh below orto :rd) oller duged :iddrcsscs:i the par ni;iy h:ive

:6JCcd by notice as provided herein: ,
NotiCts to Executive:

,I

Danel Crwley .
400 Capitol Mall Suite 1250

Saqanenio. CA95Si4
. TelephoDe: . (9) 6) 449-656
)'

, Fax:' (916) 449-659
~-'- - - -~, - will a' copy 10:

PilBbui. Madison & SUlr LLP

400 C;titol M:iU
, Suite 1700

SIICrmto. CA 95314-19

Attailion: Michael A., KVie. E:q_

Telephone: (916) 329-47B

Fax; (916)441-3583
Notices 10 ,the COIDll;iV:

CoÍam Heatilc2C Corpor'dioIl'

J i 2: Scvcilc:1h Str
Soile UOO

DciVCT.CO 80202

Altentioñ:' Scottl.cn~.
Telephone: (303) 292-4973

Fax: _ (303) 29lH7

. 1N'l1V.

-1- '
COR.-EQTY0000389

B59

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 11 of 46

FRoJi PAUL ILSïillS 'I

(T) 1 i. 1899 9:23/Sï. 9:

I

B/NO_ 41604601£9 p 9

-

with a copy 10:

Piiul, H;uliis, JanorsJc &. W;iktr LLP
555 S. FJOWCT StrCt 23rd Floor

to, Angeles, CA 90071
Tekphonè: (213)

Fn: (213) 996-'3345

AtcilÎon: Anna M. Grves. Esq. 683-634S'

i L ScvcrhililX. Wbenevcrpo33Ible. each provision o(Uùs Agrement

wid be intCId~ in sûcb m3Jeras 1tJ be effcclIe and valid under applicable law, .bui if aoypJ"vision ortbis l.ccmcnl is held 10 be invald, i1eg:ilor unenforceable in aryrcpcct

UDer any apliC2lc law or rule in any jidiclion, such invalidity. illegality, òr
uncnorcbility will nor affect :my othq proYisimi or :my other juñsdielioii, but th
AiPcnt will bc refonncd construed and cIorccr in,'.sch jurd~ciion :I if such

'illegal or uncrorcealeprosion had never been roiitaned herein.
refrI!cd 10

invalid.

, 12. Complete Aimçient 1bs Agrement, those documents exr.sly

herm aDd other docUment of cVCIdateheicwith,l.inbody the complete

agecieni and 1ldenfading'-'aongllc pare, :id 1-liperscde and preempt any prior

widcrandÎigs,agreemcilS oneprcsentatiòDSby~r among the pmies. wrUci or oral, which
may haYere1al~d to the :mbj~t maltcrhcrfin aiy wiiy.

, 11. . Counkmars, ,Ths Agr~ent 'may be .eXeculed in's-eartc'
'counteiar. each, of "'tith is dccmedio he au oñgÏal and all -of which laken IOgc:iher

constitute' one;id ihe ~)e :igrc:cmcnL
~,.J4c, SUcaioan Ai;i~. Ths.Agreilis inened to

to,thebcoefit of and be i:ottc:ibfe by EXectiye, Ilc: Company .and their rcspeelIvc,heis,

bind -ad Inm-

assigns. excaii .thåt Exeçtivc ma DOl assivi hi¡; lights or dclegoto his :()blig~lIoDShcr~uDd~rwithoullhe pñorwrlten consenl oflbc-Company_ -The Company~ii

succes~ and

reqire anY'suefcSor (wlicUier direct or indirc:t, by pllasc, merger. cpnsoliilioß or

expressly aSsume aiid ;igre to pcrforrlhAgrc:cmeil in the same inann~ and'io the saue
exlent l!allle' Company would

olheist) of 211 o.r r;hslaoti:ilyaIl of the business ånd/or a...scls oIthc Compaiy, to

be place. -, . rcqbir 10 pmonn it j f no such silc~sioß ha taen

tocnofCor intapt lIe lems ofiJusAgrenl Extcljve shaJI beentitJed to'rcaon,ablc
altom93 fee C9St ii.luwscments ili addition

15. MJomC' Fees iid Cost If any action at J.w otcquity'js neces
relieflo wmch he Inay otheise

10 ' he culled ¡fhe is~e pievailig par ~ suth ;ion. iny

, ~ti. OioiceofL:iw.11AgrcmenlwìUbei:ovC¡cdbYlleintcmlbw.
and not the Jaw3 of ronfict. o(thc State ofCoIo,r.o.

.1. Amendment and Waiver. The provions oIthi Agrcc01t DUybo
atcndro or w;vedonlp"j,th the prior wrtten consêO of the Company DO caure of COriuct or finlutc or delay in enorcg the proYisiow oftbis Agtcm~tand an Executive, sli

f

a1cc the valdity; bInmg effec or enorcilty of ths AgrenL

lN~1n,l

COR.-EQTY0000390
-8-

~,

l'

~.

B60

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 12 of 46

FROM -PAUL HASTINGS II

(î)li.IS'99 9:

14/Sî. 9:Iß/NO,

4260460169 P 10

as uf the date fi wñttca ~bo~REOF. the: p:ies hCTob;i'YC \:~tctcd ilùs Agrement

IN WI . .'
. . ~mcORP°ïr'ON

.....

Br. niK~lk Ils:~ ,- .
,U,l-I'_~

Je tVw 0/
-'

)" .

W~1Vn-"

COR.-EQTY0000391
-9-

B61

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 13 of 46

. fROM PAUL HASîlNGS II

Ií II. I l99 9,14IS. HB/O. 41'04óOm i IÌ .'

, BONUS COMPENSATION
BcgIg with the Comp:iy's fis~yc; 200. if

. SCHULE A

I

the Comp:iy io reeive as Bonus tl ,EBfIA Target set fort belowi ExeclÏvc win be i:iitlcd hils 1Ic: pcreOtagc: of iis
ptrt1age ofhìBase Salar (:i m efec on !be las d~y of fort below. If

the Target Whch is grc:lcr th the Company 1)113 a perentage of ils EBI1DA fiscal y~ ÌI queSion) set

one of the pCIeitagcs 'set fort below hut les than the next succecdinf 'Percntage. Eucutivc shallbc enlÌtled to receive a pr rata porton of the incrtrenla B:ie' Salary

payment
,rRRCENAGE OPEBITDA TARGET
PERCENTAGE OF BASE SALARY

100.0 %.

1.3.0%

10J.o/

60W' 65%
70Y.

104.:% . 106,00/ 107.5% 109,00/ 1lO.5%
112.W/o

15% 80% 85% 85% 95%
IOb%

J14.0% Ho.O%
11,8.0%

JIU%
121%,

,in.by.
~.

120.0%

132% 143%

. -.: - ---_.- - ---

,~_ _ 12.~;'_
J30~0",h

124.0% J26.0%

J54%
166% 177%

132.0%
134.00/"

2U%
223% 234% 245%. 256% 267% 278% 289% 300%

200%

i 88% _. - .,'

140.0~
14i~0% 144.ii%
146.0"/0

136.0% 138.0%

212%"

148.()%

150.0%

..

Th~c rcresOlt lhe ï :igc: Bonus"lcYels for pur~ of du~ Ágr6JenL

lNwi.

GÒR.~EQ
-10-

1"0000391.

B62

SEe Into - Coram Healthcare Corp - 8-K - For i 1/23/99 - EX-99.2

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 14Page 2 of 4 of 46

EX-99.2

Ist Page of 2

Previous

Just 1st

EXHIBIT 99.2 DANIEL D. CROWLEY NAMD CHIRM, PRESIDENT AN CEO OF CORA HETHCARE: . NE LEADER HAS REPUTATION FOR FOCUS, INTENSITY AN SUCCESSFUL TUAROuNs
DENR - NOV: 30, 1999 - Coram Healthcare Corporation (NYSE: eRR) announced that, effective today, Daniel D. Crowle~ has been named Chairman of the Board, President and Chief Executive Officer. Former Coram Chairman and interim Cliief Executive Officer Donald J.
Amaral will remain a member of the Board of Directors.

"I am pleased to announce Dan Crowley's a.rriva.l at Coram today," said Mr.
AmraL. "I have known Dan for 'a numer of years and believe his focus, intensity and turnaround exerience will strengthen the cgmpany to better compete and better serve ,our customers, healthcare providers, employees and shareholders."
Mr. Crowley; 52, is Chairman, President and CEO of Sacramento-based Dynamic Healthcare Soiutions, a managemènt consulting and investment firm he established in 1997. He also serves as ChaiFman of the Board of Winterland, a leading
privately held affinity merchandise company in

organization supporting programs for at-risk

'''z;y'initia:1; focus will be to

'provi,dë,'the ieadership catalyst that will create the possibility for a solid

the music and industry'. He is also founder of the Crowley Children"s Fund, entertainment a charitable children. assess Coram's strengths and qpportuni ties and to

tlliràroun4,.;, saici .Mr. ,Crowley. "By initiating a disciplined business pla;nning pröèess'and apèrformance-driven incentive program targeted to achieve very
s:peciElG ,goais,.' the Coram team will be able to refocus the' energy of the 'orgaIii~ati¿n toward those areas holding, the greatest potential to create profitable growth, positive cash

, '. " .

flow and shareholder vallie.

:. ,r

"With the proposed sale of Coram's pr!;scription services unit and the wind-down of the R-Net subsidiaries, we have a unique opportunity to refocus Coram on' its core home infusion business and to build on this with Coram's synergistic clinical trials and medical informatics business. After an initial assessment, we will be prepared to communicate our turnaround plans in more detail.

"Clearly Coram faces a numer öf very real challenges. However, one positive is that the company's lenders have indicated their support for the COmpany and its leadership by granting the recently announced 6-month moratorium on certain covenants and principal and interest payments."
Before founding Dynamic Healthcare Solutions, Mr. Crowley was Chairman, President and CEO of Foundation Health Corporation. He joined Foundation in 1989 to turn around the diffused, unprofitable company heavily indebted from a leveraged buyout. Under his leadership the company rapidly became profitable,
established itself as a national

leader in
REPORTE, lORE L MARCJWn: RPR. CRR. CS NO /0521

EXHmlT: 2 I
Witness: . C f 0 UJI t ~ .'

Date:--Dl #ofpa es: .3

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~~c lnIO - coram Healthcare Corp - K-K - For 11123/99 - EX-99.2

Case 1:04-cv-01565-SLR

Document 138-3

Filed 05/04/2007

Page 15 Page 3 of 4 of 46

EX-99.2

Las t Page of 2

Previous

Just 2nd

managed care and joined the ranks of the Fortune 500. It grew from less than $300 million in revenues in 1988 to more than $5 billion in 1997, when Mr. Crowley completed a strategic merger with another company.
Prior to his role at Foundatio~ Health, he served as the Executive Vice Pr~sident of Blue Cross and Blue Shield of Ohio where he led the turnarounds of Several business units, including the Western Division, where he reestablished the viability of that operation.
)

More recently, he brought management focus, stronger profitability and operational improvements to Winterland during a turnaround and a period of rapid
growth. The result has been financial

performance ahead of plan and the successful refinancing of a portion of Winterland'g debt.
Coram Healthcare Corporation, through its spbsidiaries, is a

Denver-based

"national leader in providing quality home infusion therap.y, support for cIinical
trials, medical 'product development and medical informatics, and pharmacy benefit management and mail order services.

Note: Except for historical information, all other statements in this press release are "forward-looking" within the meaning of the Private Securities Litigation Refori "Act of 1995. Tlie, Company's actual results may vary materially
from these forward-looking statements due

", reiiursement.,related risks; shifts in the mix of parties that. pay for the
)
future liabilities under capitation arrang.ements; timing of or ability '. certain legal proceedinss; dependence' on key personnel ;

the Company's history of operating losses and uncertainties associated with . future operating results; significant outstanding indebtednessj equity conve:ision rights held by existing debt holders; limited liquidity¡

to important risk factors' including'

CQllanYi s services; dependence upon relationships with third parties; uncertain

to complete acquisitions;' government regulation of the home health care industrY;
potential volatility of' the stock price; New York Stock Exchange listing status¡ and unanticipated
impacts from the Year 2000 issue. These and other risk factors are described in the Company'S fOrm 10-K Anual Report, as amended, Form 10-Q Quarterly Reports, and" Form 8-K Current Reports on file with the Securities and Exchange

J

Commission.

)

B64

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SEC Info..1:04-cv-01565-SLR -Document 138-3 - EX-99.2 Case Coram Healthcare Corp 8-K - For 11123/99 Filed 05/04/2007

Page 16 of 464 öf 4 Page

Dates ReferencedHerein and Documents Incorp'orated By Reference
Referenced-On Page
This 8-K Filng

Date First Last Other Filings

..

For The Period Ended 11/23/99 11130/99

Filed On / Filed As Of 1218/99
'\

l

1
List All Filings

nm
Alternative Formats: Rich Text / Word (. rtf). Text

eta!.

( . txt). EDGAR (. saml). XM (.xm).

Copyright (( 2007 Fian Finnegan & Company All Rights. Reserved ww~secirio.i:òm - Fri, 30 Mar. 2007 17:52:51.0 GMT - Help at SEC Ilifo '

)

)

'.~! '. .,

B65

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Case 1:04-cv-01565-SLR

Document 138-3

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Page 17 of 46

REORTER, LORIE L MAR RPR. eR C.s NO. iroii

~'dL

.".., . '."

w.~A~¡) L ofpag : 1 f,~ Date: IColO #
HrALTHCARr
i i::i Sc~'c-nreen(h Succc~ SUatt' i i:.:J
Dcn\"cr.. -(olondo 802.02

EXIBIT: 20

-COR A ~I

Telephone 3°3.29.2-1973 s.:::J CO;t.nt lie
F:icsimile 30.ì-298.0043

PERSONAL & CONFIDENTIAL

16 December 1999

To:

Denver Plaing Meeting Attendees

Subject:

Executive Impact on COTê Culture

, Now that the dust has settled, we need 10 give greater clarty to the need for the Senior Staff'

(Denver Planing Meeting Attendees) to be on task and extraordinarly well coo~dinated eftòrt
First, it is imperative that we act as a team. Everyone on the common strategy, focused on the
corporate goals. No exception!

Second, it goes without saiing that ewr: executive must give Coram their undivided loyalty. '
The company deserves our undivided anention, focus, and best professional effort. All of

us are

expected to know, in detail, accurately that which is important in the area in which we ear a

living. . Tils is not happenig every time, every day and we need to do better.
Tlurd, it is essential that al the executIres put in ,the time, effort, and focus to fully work the task
ahead of us. It is unfair for some to

car the load of others who are less committed. When

some leave in the middle of

the task to attend a seminar or non-critical vacation; for

some
our

personal diversion; or show up late and leave work early it sets a tone for the rest of

employees.
the many is diluted by polìtics. Recently, one Senior Officer told another Senior Offcer that he would not follow the general guideline to minimize time away
Fourth, the good work of

from work these next few months. If he was compelled to cancel a vacation, he would just quit.
Of course, lam not going to tell anyone when itis an important time to be at

work. However,

divisive "behind the bosses back" ch,mer is politics and it is unacceptable. For the record, we

are right in the middle of a "Corpcrate Moment" with critical events that need to go right, now. Later happens only if we stay on task cmd "out-work the issues". How can ths happen if we are not acnially at work?
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Denver Planning Meeting Attendees
16 December 1999

Page Two

We have to be a team, one for all and all for one. No superstars, heroes, or lone rangers. We get'

. thereby working together. As hard as it might be for us, we will replace people' who have divided loyalties. There is no other choice.
Out of implied respect and consideration for the hard earned money thatthe shareholders and
debt holders gave to Coram, and the years of

hard work and sweat equity our own executives

have invested. . . we need to getan improved result. For my par, I am absolutely convinced do
we can get Coram on track. It's right there for us. The question is whether we are willing to

what it takes. To that end, I am writing this letter to make certain we all aæon the same page.
It would be easier ihve could see each other every day and just chat over coffee. But that is not

practical given the National geography we occupy. The point is, I want you to understand that
you as an important leader. 1
you are my own conduit to help shape the culture and I see each of

believe that any executive who has the words "Vice President" in' their title acts as the President material responsibility. Very few people are able to rise to that in my own absence. This is a
Ievei in the Corporate world. That's ~vhy not ev~ryone can bear the title. The fact is~ this is your
Company. You and I \\ilI shape the future and the way it will go. spite of

It happens because orus, or in us. I want you to think about what you are willing to do to make this effort a real

,?uccess, "and the way that you can personally assist me in this "shaping". J hope that you will

'come to the conclusion that you can count on me and my commitment to get the job done. I also
want you to know that lam counting on you, as welL.

" Chaif.an, President & CEO,

~~

Si9cerely;,.

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..~..~

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Page i of 150

REPRTER:. icÍR£.L Ú.fRalA RPR. eR i'$ NO. /05l-J

'proe-Tye: 200i, MIC-CLEA .
originator-Key-Asymmetrie:

- - - - - BEG;rN PRIVACY - ENHACED MESSAGE - - -.--

,'"_~I~ Dale: # of p' ges:
EXHIBIT: 3£\
I

Originator-Name: webmast~r§W. see. gOY
MFgwCgYEVQgBAQICAf 8DSgAwRwJAW2 sNKK9A VtBzYZmr6 aGj I WyK3XmZv3 dTINen

TWSM7vrzLAbmYQaionwg5sDW3 P6oaM5D3 tdezXMm7 zi T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FHpGJbxhmFdSLAWI WTbzVONnfD5IM9kqRIgEBLvB9 i4 CBY7mw9 zGehvj 2FQBJDtB, T~dl V6BhHBB 1WSgeAOn+g==

~SEt-DÒCUMT~00Ò0950i34 -00-002799. txt : 20000331

ACCESSION NUER: ,00009501.34-00-002799
CONFORMED SUBMISSION TYPE: 10-K

~SEC~HEADER~0000950134 - 00 -002799. hdr. sgml : 20000331

PUBLIC, DOCUMNT COUNT: 9
CONFORMD PERIOD OF REPORT: 19991231

FILED AS OF DATE: . 20000330
FILER:
COMPAN DATA:
. COMPAN CONFORMED NAME:

CORA REALTHCARE CORP

CENTRA INDEX KEY:
STANDARD INDUSTRIAL CLASSIFICATION: IRS NtlBER: STATE OF INCORPORATION:

0000924174
SERVICES-HOME HEALTH CARE SERVICES (8082

330615337
DE

FISCAL YE END:
FILING' VALUES:

1231

FORM TYPE: SEC ACT:

10-K

SEe. FILE NUER:
FILM' NUER:
BUSINESS ADDRESS: STREET' 1 :

001-113.43 587013
1125 SEVENTEENTH ST STE 2100 DENVR
CO

I,
¡

CITY:
STATE:

ZIP:
BUSINESS PHONE:
MAIL 'ADDRESS:

80202 3032924973
ONE LAESHORE CENTRE
32B1 GUASTI ROAD SUITE 700
ONTARIO
CA

l

STREET 1: STREET 2: CITY:
!
~

STATE:

ZIP:

91761

¡ ¿/SEC-HEAER~
; ~DOCUMENT~

I ~TYPE::10-K
i d;EQUENCE ~ 1

i ~DESCRIPTION~FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 1999 TEXT,
~PAGE~
I .

1

i
!

l
li
i

!

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

I

i

i

I

http://ww.sec.gov/Archives/edgar/data/92417 4/0000950134-00-002799 .txt
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Page 2.õI15(l

Washington, D. C. 20549
FORM 10-K
ANAL REPORT PURSUANT

TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHAGE ACT OF 1934

FOR THE FISCAL YEA ENED DECEMBER 31, 1999
COMMISSION FILE NUER 1-11343
. CORA HEAtTHCARE CORPORATION (Exact name of registrant as specified in its charter)
",TABLE:: ",S::
DELAWARE

",C::

. 33~0615337
(IRS Employer Inentification No.)

(State or other jurisdiction of incorporation or organization)

1125 SEVENTEENTH STREET, SUITE 2100

DENVR, COLORAO
'(Address of principal executive offices) ",/TABLE::

80202
(Zip Code)

Registrant's telephone number, including area code: (303) 292-4973

Securities registered pursuant to Section 12 (b) of the Act:
None

Securities registered pursuant to Section 12 (g.) of the Act:
",:rABLE:: ",CAPTION::

TITLE OF EACH CLAS-

NAME. OF EACHEXCHÀGE ON WHICH REGISTERED
",C::

.",S::
Common Stock ($.001 parvaltieper, slla,re)

Over the Counter Bulletin Board

",/TABLE::
filed all reports Indicate by check mark whether the Registrant (1) has required to be filed by Section 13 or '15 (d)' of the Securities Exchange Act of 1934 during the preceding '12 months and (2) has been subject to such filing

requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 óf Regulation S-K is not contained herein, and will not be contained, to the

best of Registrant i s knowledge, in definitive proxy or information statements
.-("~ incorporated by reference, in

Part III of this Form 10-K or any amendment to this

Form 10-K (,)
As of March 14, 2000, there were outstariding49,638,452 shares of

the

which is the only class of voting stock of the of such date, the aggregate market value of the Registrant, outstanding. As shares of common stock held by nonaffiliates of the Registrant based on the , for the common stock on the Over the Counter Bulletin Board on closing price March 14, 2000, was approximately $26.3 million.
Registrant's common stock,

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PageSioflS0,
million for acguisitions., working' capital, letters of credit and other corporate, purposes.. The facility matures in February 2001 and bears ~n interest rate of ' prime plus 1.5%, which was' 10.0% as of '.December 31, 1999. AS of December 31, company, has' $44,0 million under the facility, Because s\istantially 19"9'9, the . all of the interest orithe comp'ary's debt iEf f~JÇe~, a hypothetical 10.0%

decrease in ip.terest rates'wÒuld not hei:ir,e'amaterial impact on thecol)pany..
Increases in interest rates could, however, increase interest expenses
the. company, if any. The. company does not hedge against .interest rate changes. See Note 9 to the company iS Consolidated
associated with future borrowings by

Financial 'Statements. '.
ITEM

8 . FINANCIAL STATEMENTS
The compa.ny's Consolidated 'Financial' Statements,. Notes to Consolidated

Fipancial Statements and financial statement schedule at December 31, 1999 and

1998. and .for the years ended December 31, 1999, 1998 and 1997 and the Report of
Independent Auditors are included in' this report as indicated on Financial

the Index to

Statements arid ,Schedule on pagè 'F-l.

ITEM 9; CHAGES IN AN DISAGREEMETS WITH ACCOUNTANTS ON ACCOUNTING AN, FINANCIAL DISCLOSURE

. None,
PART III

ITEM 10. DIRECTORS AN EXECUTIVE OFFICERS OF THE REGISTRAT

BOAR OF DtRECTORS
The following table sets .forth ,certain information concerning each'member of the Board of Directors of Coram as of March 16, ,2000" Except as provided below, none of the directors entered into any arrangement. qr understanding 'pursuant to which such person was to serve as a director~
ooTABLE:. ooCAPTION:.

DIRE
AGE

NAE

ooS:. ooC:.
Daniel D., Crowley, .....,.,.. '..,......,..... .....,............. 52

POSITION WITH CORA

SIN

Chairman of the Board

'¿C;: .. oo,C?

Donald J. Amaral.............,............................... 47

William J . Casey......... ....' . . . . . .. . . . .. . .. . . . ... : . . .. . .. . 55

L. ,Peter Smith:.,....... .', . .. . . .... . . .', .. .. . . .. .. '.. .'. .. ,. ... 50

Stephen A. Feinberg............,......,....."............... 39 Sandra L. Smoley.......................,....,......,........ 63

oo/TABLE;: .

Director Director Director Director Director

Mr. Crowley joined Coram as its Chaíiman, Chief Executive Officer and President as of November 30, 1999. He is also Chairman of Winterland, a privately held affinity merchandise company in the. music and. entertainment industry, and Chairman, Chief Executive Officer and President of Dyamic Healthcare SolutiOnS, LLC,a privately held ,management consulting and investment firm ,that he establ:ished in 1997. Prior to founding

. .

3.9
00

PAGE:. 41

Dyamic Healthcare Solutions, Mr. Crowley served as the Chairman, Chief

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Page 53 of i 50

Executive Officer and President of Foundation Health

Corporation, a post

that he

h~d served in since 1989.
Mr. Amaral served as Chairman of the company' sBoard of

Directors ,from

September 1997 until November 30, 1999. Mr. Am~ral has served as a director of the 'company since octobei 1995,- Chief .E~ecutíve Officer otthe company from: October 1995 .th~ough Aprii 23, 1999 and 9ctober 22; 1999 through Novèmber 30, 1999, and,as Presidènt ,£romOctòber 1995 through December 1997. Previously, he was President and Chief Operating Officer of OrNda Healthcorp ("OrNda") from April 1994 to August, 1995,,'and served in various executive positions with Summit Health Ltd., ("Summit") from October 1989 to April 1994, including. President and Chief Executive Officer between 'October 1991 and April 1994. Summit was merged into OrNda in April 1994, Mr. Amaral is, also a member of the Board Of Directors of CareMatrix Corporation.
Mr. Casey has served asa director of Coram ..ince Septembe;r 1997. Since 'consultant in the healthcare industry, speciai,izing in hospital management evaluation, hospital planning, managed care

1983, Mr. Ca~ey has' served as ,a ,

contracting andturna~ound services.' From 1986 to 1997, Mr. Casey has also
Group, :tnc. and, its affiliated, medical groups, w1iiëh provide to non-governmental facilities. In ,addition, from 1988 to

served as .Contract Administrator for Emergency Department Physicians' Medical

physician services
1997 , Mr. Casey has

physician services to government facilities. ,Mr .

served as Contract Administrator for NP Medic~l Group, Inc., which provides Casey also serves as a director of TriCounties Bank.

designated'

, Mr. Feinberg has served as a director of Coram since June 1998. He was to serve on the Board of Directors pursuant to the Securities

Mr. Feinberglias also been designated

I

Exchange' Agreement. Pursuant to the terms of the' Securi ties Exchange Agreement, as a member of the Audit Committee and the Compensation Committee. Mr. Feinberg has managed separate pools of capital since 1985. Through, Cerberus Capital Management, L.P., and its affiliates, Mr.

Feinberg cu~rently, ~anages, approximately ten funds which make inv~stments in
,publicly traded and private bank debt, trade claims, large and'middle market bank loans, distressed ,real estate and public and private equity, including

pos,t-bankruptcy,equity. '
Mr. L. Peter Smith

has served as a director of Coram since July 1994.
of Medisys., Inc.

'Between Novembér 1993 and July 1994, Mr. Smith' was a director,

.

Mr. Smith served' as the' Managing Partner of A1lCare Health Services, Inc., which was'acquired by' Medisys in December 1992. Mr, Smith is also Chief Executive Officer and'serves on the Board' of Directors of Ralin Medical; Inc., a company speciali'zing in cardiac disease management, Mr . Smith also serves on the Board of Directors of Gateway, Inc. and.AMSYS, Inc" Mr. Smith previously served on the Board, of Directors of ,Sabratek Corporation from October 1~92 through August 23, 1999. Sabratek Corporation filed a voluntary bankruptcy petition under Chapter
11 of the United States Code on December 17, 1999 and that proceeding

'is

presently pending before' the Unïted States Bankruptcy, Court in Delaware.,

Ms. Smoley waseleçted to coram's Board of Directors on February 10, 2000.
; ....-,. of The Sandra Smoley government consulting firm based in Sacramento, California. From October 1993 to January'1999, she served .as the Secretary of the California Health and Welfare Agency. 'Prior to that time, she was Secretary of the California State and Consumer Services Agency from January 1993 to Ms. Smoley is the, Chairman and Chief Executive Officer company, a heaith care and local

October 1993.,'
40
",PAGE;: '42

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I

-: ¡TABLE::

In 1,998, tlriusual or infre.quently occurring charges included the reversal of
$3.9 million ,of restructuring reserves in the, fourth quarter. In 1999, Coram initiated three restructuring plans' and charged $5.8 million to continuing operations as restructuring' charges. Coram also recognized impairment on goodwill and other assets of $9. '1 million in 1999. See Nqte 7.

16. INDUSTRY SEGMET AND GEOGRAPHIC AREA OPERATIONS
Management regularly evaluates the operating performance of the company by company i s reportable segments are Infusion, CPS, and Lithotripsy. Infusion is the
reviewing results on,a product or service provided basis. The company's base business, which derives i'ts revenue primarily from alternate

site

infusion therapy.' .CPS primarily provides specialty mail-order pharmacy and
pharmacy benefit management services. Lithotripsy, a discontinued

operation,

derived its revenue from a non-invasive technique that used shock 'waves to other non-reportable segment represents clinical disintegrate kidney stones~, The trials and informatics services. R-Net, also a discontinued operation, is no longer identified as a reportable segments. See Note 3.

, Coram uses earnings before interest expense, income taxes, depreciation and amortization ("EBITDA"), for purposes of performance measurement. The measurement basis for segment assets includes net accounts receivable, inventory, net property and equipment, and other current assets.

F-30
-:PAGE:: 89

CORA 'HEATHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL, STATEMENTS -- (CONTINUD)
Summary information by segm~nt is as follows (in thousands) :
c:TABLE::

c:CATION::
AS OF AND FOR 'IHE YEAS ENDED DECEMBER 31,

-------c:S::
-:C::

1999

--------:C::

1998

--------:C::

1997

INFUSION
Revenue from external customers........,........'.....

Intersegmemt revenue........,...:......... '. . . ',' . . . . , . .
Interest income........ '. . . . . .'. . . . . . . . . . . . . . . . . . . ',' . . .
Equity in net income of unconsolidated joint

$432,823 22,284
78

$396,669 18,274
72

$373,684 13,358
636

ventures. ',' . . . . . . . . . , . . . . . . . . . . . . . . . . . . . ' . . . . . . . . . ,

442

107

Segment EBITDA profit. . . . . . . : . . . . . '" . . . . . . . . . . . . . . . . '
Segm!,nt assets........ .,. .,... .'........... '.............

35,819 131,893

Segment asset expenditures......................... " . CPS

5,302
$

61,874 142,970 11,153
$

54,935
12,3 , 113
17, 554

Revenue from' external customers....-. ',' . . . . . . . . . . . . . . .
Intersegment revenue...-..............................

86,625' 2,452

47,783 1,534

$

28,280
45

Interest income.. " . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . .
Equity in net income of unconsolidated, joint

ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " . . . . . , . . .
Segment EBITDA profit (loss).....................,...

Segment assets............................... . . . . . .. .
Segment asset expendi tures , . . . . . . . . . . . " . . . . . . . . . . '. , . .

662

24,003 1,645

2,000 11,992
4,03

4,106
51

(919)

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Page 1 11

of 150

Revenue from external customers............,.... '. . . . .
Intersegment revenue..........,........................

LITHOTRIPSY

658

$

37,282

Interest income..'........ '. . . . ',' " . . . .. . , . . . . . . . . . . . . . .. .
Equity

ventures............. .'........ .,.............. ."..:.......
*

"in net income of uncons¿iidated joint

i25
431 16',140 262

Segment EBITDA profit. . . . . . . . . . .. .. . . .. .. . .. .. . . . , . . . .. . . .. .

¡i.

ALL OTHER ,',
"Equity in net income of unconsolidated joint

Segment assets................,....,......... '. . . . . . . . .

Segment asset expendi tures. . . . . . . . . . . . . . . . . . . . . . " ; . . .

1,452

Revenue from external customers........:....:........ $ 1,748

Intersegment revenue......'............ " . : . . .. . . . . . . . . Inteiest income................. '. ". . . . , . . . . . . . . . . . . . . .

$ 2

$

226
'"

, 'vêntures.............................. " : . . . . . . . . .' . , Segment EBITDA profit (loss)..........:.............. 103 Segment aasets....,................... :',' . . . . . . . '. . . . . " . 492
Segment, asset, expendi tures. . . . . . . .. . . . . . . . . , . . . . . . '. . . .
-:/TABLE;,

(337)

* Repre~ents less than 2% of total category, therefore, no disclosure is made.

F-31
",PAGE;, 90

CORA HEATHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in the Consolidated Financial Statements are as follows (in thousands) :
-:TABLE;, , -:CAPTION;,

A reconciliation of the company's segment revenue, segment EBITDA profit (loss), segment assets and other significant items to the corresponding amounts

REVNUS

-:s~ -:C;,
INCOME TAXS AN MINORITY INTERESTS
$

- - -- - - - - - - - - - - - - - -- -- -- -- ----1997 1998 1999
-:C;,
c:C;,

AS OF AN FOR THE YEAS ENDED DECEMBER 31,

", '

Total for reportable segments....................... ~

Othèr r'evenue.......'...... '. . . . . . . . . . . . . . . . . . . . , . . .. . . .
Elimination of intersegment revenue.....,............

-------Total consolidated revenue........ . . . . . , . . . , . . . . . . . . . $521,196 -------INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE

$544,184 1,748 (24,736)

$464,918
2

$452,649 , 226

-------$445 ¡ 112 -------$ '63,874

(19,808)

(13,403) -------$439,472 -------$

Total EBITDA profit for reportablesegrents..... . . . . .
OtherEBITDA profit (loss).............................

36,481
103

70,156
(337)

Goodwill amortization expense............ . . . . . . . . . . . . Depreciation and other amortization expense... .. . . . . . Inter,est eXpense....................... '. . . . . . . . . . . . " . All other income (expensel, net.. ~ . . ... .. . . . . . .. . .. . .
Income (loss) from continuing

(10,784) (10,598)
(2 S , 763 )

--------

(52,323)

--------

(11,139) (11,040) (32,734) (26,849)

--------

(13,586) (12,486) (75,026) 173,477

operations before income taxes and minority interests................ $ (66, 884) $ (17,888) $142,198

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,~~-,~ ~L~ - - _.
Attachment 3

,KAsciwr:rz. BENSON i TORRES 8: FllU:DKA ll.P
1301 AVE:NUEOI'THE.A£RICA
N£: YOQK, N£W YORK 10019-6022
oNcc:..:r~" ".,"".

~m: lGC

~IZ-S06-"OO
t)¡CSIMIt£: 212.506-1800

....NCW.i~ C?lO¡
~'3-6~S.ll&£:i

..oii l' noo~ . . 71~¿lO"eoO,

'CO~~

\ ,.

DAVID M. Flli&DMAIl

:t12.te&:.lr~o

Febni 28, 2000

VIA FACSIMLE
.

¡

Mr. Danel D. Crwley ,
Chann President and CbiefExecmive Offcer

Cora Healthcare
, . 1.25 Seventeenth StreeL Suite 2100

Denver,Colorado 80202 .
Re: Proposal for Reoresentation

Dea Mr. Crowley:
Following up on our conversation oflas week, we are pleased to present to you Dur
proposal to ac as special coun to Coram Healtheae' ("Cora") ÌJ connection with a possible

fincial restrcturg.
Introduction

Before discussg parcular ta and responsibiles, pemt me to first sue our
understandi~ oithe pnmai fian~ia1 diffculties now connting Cora:

, ,

.

Coram has approximately .$260 millon in debtwmch is not being serced. The

lenders agreement to forebear with respect to Such debt expires not later th May
15,2000. Cer debt alo matues nex year. Cora's eash now may be

~nadeq~te,to serice and/or repay th dtbt ' '

,.

Unloss Cornn-harholder equty exce a S7S millon theshold ,(which it
cunen~y does no and win not abset a resctg), Cora wi1ose,a

reguatorycxcmption under Stak II wlu~h is essetial to its busess.

CROWLEYI07

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"'c:-c:t:.c;,"~"" .__.

K.aOW1TZ, B::NSON, TORRES & FRIEDMAN lLP
. Corum is experiencing a co~trçtion of its tre cri:t and needs to a'loid an
furcrresmctioii This problem is exacerbated by COIam's limited acces to

working capitaL
As we have' discused, eac of these problem may be 5uccessly addresed

'though. a .

. finacial ICstctug in whi~h debtholders exhige thei paper for &. reucd amiitpf d~bt

\

- and new equity in th reorganed compay. Typicaly, such a rescr is most effciently

':.

aCcomplished thugh Ii "pre-packaged" reorgahzation under Chpte 11 of the Feder

B3nptc Code, although, as par of our due dilgence, we would cety give ever
considertion to- altemative methods of ¡ic()mplibig the same resut.

Implementation
, A "pre-påcgedP reorgazation ~ es~tily wha

'it says: A comprehenive; pla

foi restrng Cora tht is agreed to by the relevat panes before a Chapter i 1 petition is '

ever filed. In a pre-pacbged case, the stcps'proceedig baptcy ~'C1en :more import th
those which follow. 'Afthough every cae is unque, set for1 below is a genera oUtine of

me

relevant steps to be taen '
STE i:, rietermiie enteise value. '(This enables the Boatd to deteine which

conStituents ar entitled to a recover upon thoi claisrmteresis).
STEP 2:

, monéy"). '
maagement).
, contraC1 proposed to be rej ectéd). '

Detene appropriate capita stctu. (T enables the Board to

detem the !2 ofvalue to be distrbuted to pares who are "in the

STEP 3:

Solidify Management Team. (Resolve al issues relatig to senor

STEP 4:

, Negotiate with fucn creditors. (Rach an agreement with the seres A

nnd Señes B Notes). ' '
STEP 5:
Bring other pares on board. (Negotiate with Aetna.