**Exhibit 10.34**

 

**Option Care, Inc.**

**485 Half Day Road — Suite 300**

**Buffalo Grove, IL 60089**

 

**May 7, 2003**

### **RichardM. Smith**

**571 Silver Oak Grove**

**Colorado Springs, CO 80906**

 

 

Re:          Employment Agreement

DearRick:

Thisletter is to confirm our understanding with respect to (i) your futureemployment by Option Care, Inc. or any present or future parent, subsidiary oraffiliate thereof (collectively, the “Company”), (ii) your agreement not tocompete with the Company, (iii) your agreement to protect and preserve informationand property which is confidential and proprietary to the Company and (iv) youragreement with respect to the ownership of inventions, ideas, copyrights andpatents which may be used in the business of the Company (the terms andconditions agreed to in this letter are hereinafter referred to as the“Agreement”). In consideration of the mutual promises and covenants containedin this Agreement, and for other good and valuable consideration, the receiptand sufficiency of which are hereby mutually acknowledged, we have agreed asfollows:

1.             Employment.

(a)           Subject to the terms and conditions of this Agreement, theCompany will employ you, and you will be employed by the Company, as Presidentand Chief Operating Officer reporting only to the Chief Executive Officer ofthe Company.  You will have theresponsibilities, duty and authority commensurate with the position ofPresident and Chief Operating Officer, including, without limitation, oversightof all corporate and operating divisions of the Company.  It is understood that all such corporate andoperating divisions will report to you and only the Chief Financial Officer,General Counsel and MBI Division of the Company will report to the ChiefExecutive Officer of the Company. The principal location at which you willperform such services will be the Company’s facility located at Buffalo Grove,IL.

(b)           Devotion to Duties.  For so long as you are employed hereunder, you will devotesubstantially all of your business time and energies to the business and affairsof the Company, provided that nothing contained in this Section 1(b) will bedeemed to prevent or limit your right to devoting reasonable time to outsideactivities or to manage your personal investments on your own personal time,including, without limitation, the right to make passive investments in thesecurities of (i) any entity which you do not control, directly or indirectly,and which does not compete with the Company, or (ii) any publicly held entityso long as your aggregate direct and indirect interest does not exceed threepercent of the issued and outstanding securities of any class of securities ofsuch

 

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publicly held entity, andprovided, further that nothing contained in this Agreement will be deemed toprohibit you from owning a controlling interest in privately held companies solong as such ownership does not materially interfere with the regular dutiesrequired by your position.  You may alsoparticipate in being a member of boards of directors of for profit andnot-for-profit entities, provided that such entities are not listed on ExhibitA attached hereto.  You shall have allof the powers necessary to perform the duties assigned to you and you shall beprovided supporting services, staff , secretarial and other assistance, executiveoffice space and accoutrements commensurate therewith.

 

2.             Term of Employment.

(a)           Term; Termination. Subject to the terms hereof, your employment hereunder will commence onMay 9, 2003 (the “Commencement Date”) and will continue until May 8, 2004 (the“Initial Term”), provided that on the one year****anniversary of theCommencement Date and each subsequent one year anniversary of the CommencementDate, the term of your employment hereunder will be automatically extended foran additional period of one year (each a “Subsequent Term”) unless either youor the Company has given written notice to the other that such automaticextension will not occur (a “Non-Renewal Notice”), which notice was given notless than 45 days prior to the relevant anniversary of the CommencementDate.  The Initial Term and anySubsequent Term are referred to herein as the “Term.”

Notwithstanding theforegoing, your employment hereunder will terminate upon the first to occur ofthe following:

                (i)            Immediately upon your death;

                (ii)           By the Company:

(A)          By written notice to you effective the date of such notice,following your failure, due to illness, accident or any other physical ormental incapacity, to perform the essential functions of your position for anaggregate of 90 business days within any period of 180 consecutive businessdays during the term hereof as determined by a physician selected by you(“Disability”), provided that if applicable law provides any provisionregarding disability that is more favorable to you than that set forth herein,such more favorable provision will govern;

(B)           By written notice to you effective the date of suchnotice, for Cause (as defined below); or

(C)           By written notice to you effective 30 days after the dateof such notice and subject to Section 4 hereof, without Cause; or

                (iii)          By you:

(A)          At any time by written notice to the Company effective 30days after the date of such notice; or

(B)           By written notice to the Company for Good Reason (asdefined below) effective the date of such notice.

 

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                (b)           Definition of “Cause”.  For purposes of this Agreement, “Cause”means (i) your conviction of a felony or act of dishonesty, either inconnection with the performance of your obligations to the Company or whichotherwise materially and adversely affects your ability to perform suchobligations, (ii) your willful disloyalty or deliberate dishonesty, (iii) thecommission by you of an act of fraud or embezzlement against the Company, (iv)suspension or exclusion from participation in the Medicare or MedicaidPrograms, (v) continued willful failure or refusal to perform your dutieshereunder as reasonably directed by the Board of Directors of the Company, or(vi) a material breach by you of any material provision of this Agreement whichbreach is not cured within 30 days after delivery to you by the Company ofwritten notice of such breach, provided that if such breach is not capable ofbeing cured within such 30 day period, you will have a reasonable additionalperiod to cure such breach but only if you promptly commence and continue goodfaith efforts to cure such breach.  Anydetermination under this Section 2(b) will be made by two thirds of the Boardof Directors of the Company (the “Board”) voting on such determination.  With respect to any such determination, theBoard will act fairly and in utmost good faith and will give you and yourcounsel an opportunity to appear and be heard at a meeting of the Board or andpresent evidence on your behalf.  No actor omission on your part will be considered “willful” unless done, or admittedto be done, by you in bad faith or without your reasonable belief that such actor omission was in the best interest of the Company.

(c)           Definition of “Good Reason”.  For purposes of this Agreement, a “GoodReason” means any of the following:

(i)            A change in the principal location at which you provideservices to the Company, without your prior written consent;

(ii)           Failure of the Board to appoint you as President and ChiefOperating Officer of the Company, or removal as President and Chief OperatingOfficer of the Company provided that such failure or removal is not inconnection with a termination of your employment hereunder by the Company;

(iii)          A material adverse change by the Company in your duties,authority or responsibilities as President and Chief Operating Officer of theCompany which causes your position with the Company to become of lessresponsibility or authority than your position as of immediately following the CommencementDate, provided that such change is not in connection with a termination of youremployment hereunder by the Company;

(iv)          A change in the lines of reporting such that you no longerreport to Raj Rai, the Chief Executive Officer of the Company;

(v)           The assignment to you of duties not commensurate orconsistent with your position as President and Chief Operating Officer of theCompany without your prior written consent;

(vi)          A reduction in your compensation or other benefits;

(vii)         A material breach of this Agreement by the Company that hasnot been cured within 30 days after written notice thereof by you to theCompany;

 

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                (viii)        A Change of Control (as defined in Section 2(d) below) of theCompany; or

                (ix)           Failure by the Company to obtain theassumption of this Agreement by any successor to the Company.

(d)           Definition of “Change of Control” For purposes ofthis Agreement, a Change of Control means that any of the following events hasoccurred:

(i)           Any person (as such term is used in Section 13(d) of theSecurities Exchange Act of 1934 (the “Exchange Act”)), other than the Company,any employee benefit plan of the Company or any entity organized, appointed orestablished by the Company for or pursuant to the terms of any such plan,together with all “affiliates” and “associates” (as such terms are defined inRule 12b-2 under the Exchange Act), or EJ Financial becomes the beneficialowner or owners (as defined in Rule I 3d-3 and 13d-5 promulgated under theExchange Act), directly or indirectly (the “Control Group”), of more than 50%of the outstanding equity securities of the Company, or otherwise becomesentitled, directly or indirectly, to vote more than 50% of the voting powerentitled to be cast at elections for directors (“Voting Power”) of the Company,;

(ii)          A consolidation or merger (in one transaction or a seriesof related transactions) of the Company pursuant to which the holders of theCompany’s equity securities immediately prior to such transaction or series ofrelated transactions would not be the holders, directly or indirectly,immediately after such transaction or series of related transactions of morethan 50% of the Voting Power of the entity surviving such transaction or seriesof related transactions, unless EJ Financial becomes the holder of more than50% of the Voting Power of the entity surviving such transaction or series oftransaction;

(iii)         The date upon which the individuals who are members of theBoard as of the Commencement Date, cease for any reason to constitute amajority of the Board, unless the election or nomination for election by theCompany’s stockholders of any new director or directors was approved by a voteof a majority of the Board, in which case such new director or directors shall,for purposes of this Agreement, be considered a member or members of the Board;

(iv)         The sale, lease, exchange or other transfer (in onetransaction or a series of related transactions) of all or substantially all ofthe assets of the Company, unless such sale lease exchange or other transfer ofall or substantially all the assets of the Company is to EJ Financial; or

(v)          The liquidation or dissolution of the Company or theCompany ceasing to do business.

3.             Compensation.

(a)           Base Salary. While you are employed hereunder, the Company will pay you a base salaryat the annual rate of $300,000 (the “Base Salary”).  The Base Salary will be reviewed and may be adjusted****upward,(but not downward)****no less frequently than annually.  The Base Salary will be payable insubstantially equal installments in accordance with the Company’s payrollpractices as in effect from time to time. The

 

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Company will deduct from each suchinstallment any amounts required to be deducted or withheld under applicablelaw or under any employee benefit plan in which you participate.

(b)           Bonus.

                (i)            Annual Bonus.  Commencing after the close of fiscal year2003, and thereafter annually, you will be eligible to be awarded a bonus forthe prior year of up to 40% of your Base Salary (“Annual Bonus”).  Your eligibility to be awarded an AnnualBonus will be based on the then current bonus criteria established by the CEOand approved by the Board of Directors of the Company.

(c)           Equity Compensation.

                (i)            Initial Option Grant.  Simultaneously with the approval of thisAgreement, the Board has agreed to grant you an option (the “Option”) under theOPTION CARE, INC. AMENDED AND RESTATED STOCK INCENTIVE PLAN (1997) (the “Plan”)to purchase 300,000 shares of the Company’s common stock (the “Common Stock”)pursuant to a written stock option agreement between the Company and you in theform attached hereto as Exhibit 3(c)(i) (the “Option Agreement”).  The Option will be an incentive stock optionto the extent permissible under applicable law.

(ii)           Effect of Change of Control.  In the event of (a) a Change of Control (asdefined in Section 2(d)) of the Company while you continue to be employed bythe Company and (b) your employment with the Company is terminated by theCompany without Cause, by the Company by delivery of a Non-Renewal Notice, orby you for a Good Reason within twelve months after the date of the Change ofControl, the Option will become fully vested and   exercisable.

(d)           Vacation. You will be entitled to paid vacation in each calendar year and paidholidays and personal days in accordance with the Company’s policies for itssenior executives as in effect from time to time, but not less than four weekspaid vacation in each calendar year. Accrued unused vacation will not be carried over from year to year.

(e)           Fringe Benefits. You will be entitled to participate in the same manner as other seniorexecutives of the Company in any employee benefit plans which the Companyprovides or may establish for the benefit of its senior executives generally(including, without limitation, group life, disability, medical, dental andother insurance, tax benefit and planning services, 401(k), retirement,pension, profit-sharing and similar plans) (collectively, the “FringeBenefits”), provided that the Fringe Benefits will not include any stock optionor similar plans relating to the grant of equity securities of theCompany.  Prior to your enrollment inany group insurance package, including medical, dental, vision and short-termdisability plans, the Company will reimburse you for all COBRA payments paid byyou to your previous employer.

(f)            Automobile; Computer; Mobile Phone.  The Company will pay you an automobileallowance of $500.00 per month paid semi-monthly.  The amount of such allowance may be reviewed and adjusted upward,but not downward not less frequently then annually.  In addition to the automobile allowance described above, theCompany shall also include you under its general corporate automobile insuranceprogram and pay

 

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all expenses thereof.  The Company will also provide you with amobile telephone and laptop computer, for Company use, at the expense of theCompany.  Reimbursement for chargesrelated to business use of your mobile telephone will be made in accordancewith Section 3(h) below.

                (g)           Life Insurance; DisabilityInsurance.  The Company, at itsexpense, will purchase life insurance on your life and disability insuranceconsistent with the Executive Program offered to executives of the Company.

(h)           Reimbursement of Expenses.  The Company will reimburse you for allapproved, ordinary and reasonable out-of-pocket business expenses that areincurred by you in furtherance of the Company’s business in accordance with theCompany’s policies with respect thereto as in effect from time to time.  Without limiting the generality of theforegoing, the Company shall reimburse you for professional dues andsubscriptions paid by you, including, AICPA, ILCPA and HFMA.  Subject to approval, you will also beentitled to attend seminars, conferences and trade meetings, relating to thebusiness of the Company.

(i)            Relocation Expenses.  The Company will pay or reimburse you for reasonable out ofpocket costs incurred by you in connection with your relocation from ColoradoSprings, CO to the Chicago-land area including costs related to the move andstorage of your and your family’s belongings, family trip to the Chicago-landarea for “house-hunting”, temporary housing for up to six months, travelexpenses from Chicago, IL to Colorado Springs, CO, closing costs on purchase ofresidences, and shall specifically exclude the purchase price of a home orresidence.  The Company will take suchsteps as are reasonable, including a tax gross up, as agreed to by you, the CFOand CEO, and the following shall not be grossed up, (i) moving of householdgoods and personal effects, (ii) one trip to the new residence, and (iii)lodging expenses prior to the expected relocation, to ensure that you or yourbeneficiaries do not incur unnecessary tax liability with regard to the paymentor reimbursement of any relocation expenses.

(i)            Indemnification.  The Company will indemnify you to the extentpermitted by its charter and by-laws and by applicable law against all costs,charges and expenses, including, without limitation, attorneys’ fees, incurredor sustained by you in connection with any action, suit or proceeding to whichyou may be made a party by reason of being an officer, director or employee ofthe Company.  In connection with theforegoing, you will be covered under any directors and officers, any employmentpractices, any errors and omissions and any other liability insurance policythat protects other officers of the Company.

4.             Severance Compensation.

(a)           Definition of Accrued Obligations.  For purposes of this Agreement, “AccruedObligations” means (i) the portion of your Base Salary as has accrued prior toany termination of your employment with the Company and has not yet been paid,(ii) an amount equal to the value of your accrued unused vacation days for thethen current year, (iii) the amount of any Initial Annual Bonus or Annual Bonusearned and accrued but not yet paid, which amount will include a pro rataportion of any previously determined Annual Bonus which would have been earnedif such termination had not occurred and (iv) the amount of any expensesproperly incurred by you on behalf of the Company prior to any such terminationand not yet reimbursed.

 

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(b)           Death or Disability.  If your employment hereunder is terminated as a result of yourdeath or Disability:

(i)            The Company will pay the Accrued Obligations to you (oryour estate) promptly following such termination.

(ii)           The Company will continue to provide you or your coveredbeneficiaries with the Fringe Benefits for a period of six months subject toapplicable law and the terms of the respective policies.

(c)           Terminationfor Cause or in the Absence of a Good Reason.  If your employment hereunder is terminated either by the Companyfor Cause or by you in the absence of a Good Reason (either pursuant to Section2(a)(iii)(A) above or by delivery by you of a Non-Renewal Notice), the Companywill pay the Accrued Obligations to you promptly following such termination.

                (d)           Termination Without Cause or for aGood Reason.  If your employmenthereunder is terminated either by the Company without Cause (either pursuant toSection 2(a)(ii)(c) above or by delivery of a Non-Renewal Notice by theCompany) or by you for a Good Reason:

(i)            The Company will pay the Accrued Obligations to youpromptly following such termination.

(ii)           The Company will pay you, in quarterly installment amounts(beginning on the effective date of such termination and continuingthereafter), an amount equal to the Base Salary at the rate in effect at suchtermination in accordance with Section 3(a) of this Agreement for the periodcommencing on the date of such termination and ending on the first anniversaryof the date of such termination; provided, that in the event of a Change inControl and the termination of your employment under either A or B below, youshall be entitled to a lump sum payment equal to one 1 times (1) your annualBase Salary then payable; (2) an amount equal to the highest Annual Bonus youreceived during the most recent three (3) years; and (3) an amount equal to thecontributions made or credited by the Company under all employee retirementplans for your benefit for the most recent year.  The following shall constitute termination under this paragraph:

(A)            You terminate your employment forGood Reason within one (1) year after the Change in Control.

(B)             This Agreement is terminated by theCompany or its successor within the six (6) months preceding the Companyentering into a definitive letter of intent to consummate a Change in Controlor the one-year period succeeding the Change in Control.

                (iii)          The Company will continue to provideyou with the Fringe Benefits 12 months following such termination.

                (iv)          The Company will continue to pay youany Annual Bonus in accordance with Section 3(b)(i) of this Agreement duringthe period commencing on the date of such termination and ending on the date ofthe end of the then

 

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current Term.  The amount of such bonus after the date of such termination willequal the greater of (A) the last such bonus paid before the date of suchtermination, or (B) the average of three most recent such bonuses paid beforethe date of such termination (and all such prior bonuses if less than three).

                (v)           If you are subject to any excise tax(“Excise Tax”) on your compensation by the Company whether as a result ofpayment of any sum or provision of any benefit hereunder or under any agreementbetween you and the Company, the terms of any option agreement or otherwise(including but not limited to excise taxes imposed under Section 4999 of theCode), the Company will then “gross-up” your compensation by making anadditional payment to you in an amount which, after reduction for any income orexcise taxes payable as a result of receiving such additional payment, is equalto the Excise Tax.

                (iv)          The Company will provide you with outplacementservices (with a firm selected by you but at the expense of the Company) for upto four  months following suchtermination.

                (e)           No Duty to Mitigate.  Notwithstanding any other provision of thisAgreement, (i) you will have no obligation to mitigate your damages for anybreach of this Agreement by the Company or for any termination of thisAgreement, whether by seeking employment or otherwise and (ii) the amount ofany benefit due to you after the date of such termination pursuant to thisAgreement will not be reduced or offset by any payment or benefit that you mayreceive from any other source.

5.             Prohibited Competition.

(a)           Certain Acknowledgements and Agreements.

                (i)            We have discussed, and you recognizeand acknowledge the competitive and proprietary aspects of the business of theCompany.

(ii)           You acknowledge that a business willbe deemed competitive with the Company if it performs any of the services ormanufactures or sells any of the products provided or offered by the Company orif it performs any other services and/or engages in the production,manufacture, distribution or sale of any product similar to services orproducts, which services or products were performed, produced, manufactured,distributed or sold by the Company during the period while you are employedhereunder.

 

(iii)          You furtheracknowledge that, while you are employed hereunder, the Company will furnish,disclose or make available to you Confidential Information (as defined below)related to the Company’s business and that the Company may provide you withunique and specialized training.  Youalso acknowledge that such Confidential Information and such training have beendeveloped and will be developed by the Company through the expenditure by theCompany of substantial time, effort and money and that all such ConfidentialInformation and training could be used by you to compete with the Company.

(iv)          For purposes of this Agreement, “ConfidentialInformation” means confidential and proprietary information of the Company, whetherin written, oral, electronic or other form, including but not limited to,information and facts

 

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concerning business plans, customers, future customers,suppliers, licensors, licensees, partners, investors, affiliates or others,training methods and materials, financial information, sales prospects, clientlists, inventions, or any other scientific, technical or trade secrets of theCompany or of any third party provided to you or the Company under a conditionof confidentiality, provided that Confidential Information will not includeinformation that is (1) in the public domain other than through any fault oract by you, (2) known to you prior to its disclosure to you in the course ofyour employment hereunder, or (3) lawfully disclosed to you by a source otherthan the Company which source has a legal right to disclose such information.

                (b)           Non-Competition; Non-Solicitation.  During the period while you are employedhereunder and for a period of one year following the termination of youremployment hereunder for any reason or for no reason you will not, without theprior written consent of the Company:

(i)            For yourself or on behalf of anyother person or entity, directly or indirectly, either as principal, partner,stockholder, officer, director, member, employee, consultant, agent,representative or in any other capacity, own, manage, operate or control, or beconcerned, connected or employed by, or otherwise associate in any manner with,engage in, or have a financial interest in, any of the Company’s set forth inExhibit A, as may be updated and modified throughout any  term of this Agreement, attached hereto,except that nothing contained herein will preclude you from purchasing orowning securities of any such business if such securities are publicly traded,and provided that your holdings do not exceed three percent of the issued andoutstanding securities of any class of securities of such business, or

 

(ii)           Either individuallyor on behalf of or through any third party, solicit, entice or persuade orattempt to solicit, entice or persuade any key****employee of or consultant tothe Company to leave the service of the Company.

                (c)           Survival of Acknowledgements andAgreements.  Your acknowledgementsand agreements set forth in this Section 5 will survive the termination of youremployment hereunder for any reason or for no reason.

                6.             Protected Information.  You will at all times, both during the period while you areemployed hereunder and after the termination of your employment hereunder forany reason or for no reason, maintain in confidence and will not, without theprior written consent of the Company, use, except in the course of performanceof your duties for the Company or by court order, disclose or give to othersany Confidential Information.  Upon thetermination of your employment hereunder for any reason or for no reason, youwill return to the Company all tangible Confidential Information and copies thereof(regardless how such Confidential Information or copies are maintained).

                7.             Ownership of Ideas, Copyrights and Patents.

(a)           Property of the Company.  All ideas, discoveries, creations, manuscripts and properties,innovations, improvements, know-how, inventions, designs, developments,apparatus, techniques, methods, and formulae (collectively the “Inventions”)which may be used in the business of the Company, whether patentable,copyrightable or not, which you may conceive, reduce to practice or developwhile you

 

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are employed hereunder, alone or inconjunction with another or others, and whether at the request or upon thesuggestion of the Company or otherwise, will be the sole and exclusive propertyof the Company, and that you will not publish any of the Inventions without theprior written consent of the Company. You hereby assign to the Company all of your right, title and interestin and to all of the foregoing.

 

(b)           Cooperation.  At any time during your employment hereunderor after the termination of your employment hereunder for any reason or for noreason, you will fully cooperate with the Company and its attorneys and agentsin the preparation and filing of all papers and other documents as may berequired to perfect the Company’s rights in and to any of such Inventions,including, but not limited to, joining in any proceeding to obtain letterspatent, copyrights, trademarks or other legal rights with respect to any suchInventions in the United States and in any and all other countries, providedthat the Company will bear the expense of such proceedings, and that any patentor other legal right so issued to you personally will be assigned by you to theCompany or its designee without charge by you. The Company will reimburse you for reasonable expenses incurred by youin connection with the performance of your obligations under this Section 7.

 

8.             Records.  Upon termination of your employmenthereunder for any reason or for no reason, you will deliver to the Company anyproperty of the Company which may be in your possession, including products,materials, memoranda, notes, records, reports or other documents or photocopiesof the same.

9.             General.

                (a)           Notices.  All notices, requests, consents and othercommunications hereunder will be in writing, will be addressed to the receivingparty’s address set forth above or to such other address as a party maydesignate by notice hereunder, and will be either (i) delivered by hand, (ii)sent by overnight courier, or (iii) sent by registered or certified mail,return receipt requested, postage prepaid. All notices, requests, consents andother communications hereunder will be deemed to have been given either (i) ifby hand, at the time of the delivery thereof to the receiving party at the addressof such party set forth above, (ii) if sent by overnight courier, on the nextbusiness day following the day such notice is delivered to the courier service,or (iii) if sent by registered or certified mail, on the fifth business dayfollowing the day such mailing is made.

                (b)           Entire Agreement.  This Agreement, together with the otheragreements specifically referred to herein, embodies the entire agreement andunderstanding between the parties hereto with respect to the subject matterhereof and supersedes all prior oral or written agreements and understandingsrelating to the subject matter hereof. No statement, representation, warranty,covenant or agreement of any kind not expressly set forth in this Agreementwill affect, or be used to interpret, change or restrict, the express terms andprovisions of this Agreement.

                (c)           Modifications and Amendments.  The terms and provisions of this Agreementmay be modified or amended only by written agreement executed by the partieshereto.

                (d)           Waivers and Consents.  The terms and provisions of this Agreementmay be waived, or consent for the departure therefrom granted, only by writtendocument

 

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executed by the party entitled to thebenefits of such terms or provisions. No such waiver or consent will be deemedto be or will constitute a waiver or consent with respect to any other terms orprovisions of this Agreement, whether or not similar. Each such waiver orconsent will be effective only in the specific instance and for the purpose forwhich it was given, and will not constitute a continuing waiver or consent.

                (e)           Assignment.  The Company may assign its rights andobligations hereunder to any person or entity that succeeds to all orsubstantially all of the Company’s business or that aspect of the Company’sbusiness in which you are principally involved.  You may not assign your rights and obligations under thisAgreement without the prior written consent of the Company.

                (f)            Benefit.  All statements, representations, warranties,covenants and agreements in this Agreement will be binding on the partieshereto and will inure to the benefit of the respective successors and permittedassigns of each party hereto. Nothing in this Agreement will be construed to createany rights or obligations except among the parties hereto, and no person orentity will be regarded as a third-party beneficiary of this Agreement.

                (g)           Governing Law.  This Agreement and the rights andobligations of the parties hereunder will be construed in accordance with andgoverned by the law of****the State of Illinois, without givingeffect to the conflict of law principles thereof.

                (h)           Jurisdiction, Venue and Service ofProcess.  Any legal action orproceeding with respect to this Agreement that is not subject to arbitrationpursuant to Section 9 below may be brought in the courts of the State ofIllinois or of the United States of America for the Northern District ofIllinois.  By execution and delivery ofthis Agreement, each of the parties hereto accepts for itself and in respect ofits property, generally and unconditionally, the jurisdiction of the aforesaidcourts.

                (i)            Arbitration.  Any controversy, dispute or claim arisingout of or in connection with this Agreement, other than a controversy, disputeor claim arising under Section 5, 6 or 7 hereof, will be settled by final andbinding arbitration to be conducted in the State of Illinois pursuant to thenational rules for the resolution of employment disputes of the AmericanArbitration Association then in effect. The decision or award in any such arbitration will be final and bindingupon the parties and judgment upon such decision or award may be entered in anycourt of competent jurisdiction or application may be made to any such courtfor judicial acceptance of such decision or award and an order ofenforcement.  In the event that anyprocedural matter is not covered by the aforesaid rules, the procedural law ofthe State of Illinois will govern.  ****Anydisagreement as to whether a particular dispute is arbitrable under thisAgreement shall itself be subject to arbitration in accordance with theprocedures set forth herein.****

                (j)            Severability.  The parties intend this Agreement to beenforced as written. However, (i) if any portion or provision of this Agreementis to any extent be declared illegal or unenforceable by a duly authorizedcourt having jurisdiction, then the remainder of this Agreement, or theapplication of such portion or provision in circumstances other than those asto which it is so declared illegal or unenforceable, will not be affectedthereby, and each portion and provision of this Agreement will be valid aridenforceable to the fullest extent permitted by law and (ii) if any provision,or part thereof, is held to be unenforceable because of the duration of suchprovision, the

 

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geographic area covered thereby, or otheraspect of the scope of such provision, the court making such determination willhave the power to reduce the duration, geographic area of such provision, orother aspect of the scope of such provision, and/or to delete specific wordsand phrases (“blue-penciling”), and in its reduced or blue-penciled form, suchprovision will then be enforceable and will be enforced.

                (k)           Headings and Captions.  The headings and captions of the varioussubdivisions of this Agreement are for convenience of reference only and willin no way modify or affect the meaning or construction of any of the terms orprovisions hereof

                (l)            No Waiver of Rights, Powers andRemedies.  No failure or delay by aparty hereto in exercising any right, power or remedy under this Agreement, andno course of dealing between the parties hereto, will operate as a waiver ofany such right, power or remedy of the party. No single or partial exercise ofany right, power or remedy under this Agreement by a party hereto, nor anyabandonment or discontinuance of steps to enforce any such right, power orremedy, will preclude such party from any other or further exercise thereof orthe exercise of any other right, power or remedy hereunder. The election of anyremedy by a party hereto will not constitute a waiver of the right of suchparty to pursue other available remedies. No notice to or demand on a party not expressly required under thisAgreement will entitle the party receiving such notice or demand to any otheror further notice or demand in similar or other circumstances or constitute awaiver of the rights of the party giving such notice or demand to any other orfurther action in any circumstances without such notice or demand.

                (m)          Expenses.  Should the Company breach this Agreement, inaddition to all other remedies available at law or in equity, the Company willpay all of your costs and expenses resulting therefrom and/or incurred inenforcing this Agreement, including legal fees and expenses.  The Company will reimburse you forreasonable fees not to exceed $1,500.00 of one counsel retained by you in connectionwith the negotiation and execution of this Agreement.

**               **(n)           Counterparts.  This Agreement may be executed in two ormore counterparts, and by different parties hereto on separate counterparts,each of which will be deemed an original, but all of which together willconstitute one and the same instrument.

Ifthe foregoing accurately sets forth our agreement, please so indicate bysigning and returning to us the enclosed copy of this letter.
|   |   | Very truly yours,     |                               |
|--------|--------|-----------------------|------------------------------------|
|   |   |                  |                               |
|   |   | **Option Care, Inc.** |                               |
|   |   |                  |                               |   |
|   |   | By:                   | /s/ Raj Rai                        |   |
|   |   |                  | Name: Raj Rai                      |   |
|   |   |                  | Title:  CEO Option Care, Inc. |   |

 

Acceptedand Approved

 
| /s/ Richard M. Smith          |   | May 7, 2003 |
|-------------------------------|--------|-------------|
| Print Name: Richard M.  Smith |   | Date        |

####  

 

12

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#### **EXHIBIT A**

 

CaremarkRx, Inc.

CoramHealthcare

AccredoHealth

PriorityHealthcare Corp

MIMSCorporation

ApriaHealthcare Group, Inc.

CurativeHealth Services, Inc.

AdvancePCS

ChronimedInc.

ExpressScripts, Inc.

PediatricServices of America

 

13

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