Document:

Exhibit 10.29

 

IMPORTANT NOTICE

 

THIS
INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

 

CONSOLIDATED, AMENDED AND RESTATED TERM NOTE

 

	
  $1,600,000.00

  	
   

  	
  Arlington, Virginia

  
	
   

  	
   

  	
  July      , 2003

  

 

FOR VALUE
RECEIVED, ON-SITE SOURCING, INC., a
corporation organized and existing under the laws of the State of Delaware,
having its chief executive office at 832 North Henry Street, Alexandria,
Virginia 22314, promises to pay to the order of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association and successor in interest to First Union National Bank, having an
address of 1970 Chain Bridge Road, McLean, Virginia 22102 (the “Lender”),
without offset and in immediately available funds, the principal sum of One
Million Six Hundred Thousand and 00/100 Dollars ($1,600,000.00) (the “Principal
Sum”), or so much thereof as has been or may be advanced to or for the account
of the Borrower pursuant to the terms and conditions of the Loan Agreement (as
hereinafter defined), together with interest thereon at the rate or rates
hereinafter provided, in accordance with the following terms:

 

1.                                       Interest.  The annual rate of interest (the “Rate”) on the principal amount
owing under this Consolidated, Amended and Restated Term Note (the “Note”)
shall be a fluctuating annual rate equal to the LIBOR Market Index Rate
(hereinafter defined) in effect from time to time plus Two and Thirty-five One
Hundredths percentage points (2.35%).  
The LIBOR Market Index Rate, for any day, is the rate for 1 month U.S.
dollar deposits as reported on Telerate page 3750 as of 11:00 a.m., London time,
on such day, or if such day is not a London business day, then the immediately
preceding London business day (or if 
not  so  reported,  then  as determined by Lender from another
recognized source or interbank quotation). 
Absent manifest error, the Lender’s determination of the LIBOR Market Index
Rate for any day shall be conclusive.

 

The rate of
interest that shall accrue under this Note shall change immediately upon any
change in the LIBOR Market Index Rate.

 

If the LIBOR
Market Index Rate is discontinued or unavailable, interest on the outstanding
principal balance shall accrue at an annual rate equal to the Prime Rate.  The “Prime Rate” shall be the rate announced
from time to time by Wachovia  Bank,
National Association in its sole discretion as Wachovia  Bank, National Association’s prime rate as a
reference for fixing the lending rate for commercial loans.  The Prime Rate is a

 

 

reference rate
only and does not necessarily represent the lowest rate of interest charged for
commercial borrowings.

 

Interest will
accrue daily on an actual/360 day basis (that is, a per-diem interest rate will
be determined on the basis of a 360-day year; accrued interest shall be
determined by multiplying the per-diem rate by the actual number of days
principal is outstanding).

 

Each payment
made on this Note shall be applied to accrued interest before it is applied to
principal.  Interest shall accrue from
the date of this Note on the unpaid balance and shall continue to accrue after
maturity, whether by acceleration or otherwise, until this Note is paid in full.

 

2.                                       Payments and Maturity.  Interest accruing on the outstanding
principal balance owing under this Note shall be payable on the first day of
each month, commencing on the first day of the first month following the date
of this Note.  In addition, this Note is
payable in equal monthly installments of principal in the amount of Sixty Six
Thousand Six Hundred Sixty Seven and 00/100 Dollars ($66,667.00), commencing on
the first day of the first month following the date of this Note, and being due
on the first day of each month thereafter, through and including the payment
due on July 31, 2005; provided however, that on July 31, 2005 (the “Maturity
Date”) this Note shall mature, and the entire amount of principal then
remaining unpaid, together with all accrued interest thereon, and all other
amounts owing under this Note shall become due and payable in full.

 

3.                                       Automatic Debit of Checking Account for Payments in
Respect of Reimbursement Obligations.  Borrower authorizes Lender to debit its demand deposit account
number 2000003778052 and any other account with Lender designated in writing by
Borrower, beginning as of the date of this Note, for any payments due hereunder
or under any other Loan Documents. 
Borrower further certifies that Borrower holds legitimate ownership of
this account and preauthorizes this periodic debit as part of its right under
said ownership.

 

4.                                       Default Interest.  Upon the occurrence of an Event of Default
(as hereinafter defined), the unpaid principal balance shall bear interest thereafter,
until the Event of Default is cured, at a rate of two percent (2.0%) per annum
in excess of the rate or rates of interest that would otherwise be in effect
under this Note.

 

5.                                       Late Charges.  If the Borrower fails to make any payment under the terms of this
Note within ten (10) days after the date such payment is due, the Borrower
shall pay to the Lender on demand a late charge equal to five percent (5.0%) of
such payment.

 

6.                                       Application and Place of Payments.  Except as otherwise provided in the Loan
Agreement (hereinafter defined), all payments, made on account of this Note
shall be applied first to the payment of accrued and unpaid interest then due
hereunder, second to

 

2

 

the unpaid
principal balance and the remainder, if any, shall be applied to any other
amounts which remain owing hereunder. 
All payments on account of this Note shall be paid in lawful money of
the United States of America in immediately available funds during regular
business hours of the Lender at its office at 1970 Chain Bridge Road, McLean,
Virginia 22102, or at such other times and places as the Lender may at any time
and from time to time designate in writing to the Borrower.

 

7.                                       Loan Agreement.  This Note is “Term Note #2” described in an
Amended and Restated Revolving Line of Credit Loan Agreement, Term Loans
Agreement and Security Agreement, dated as of May 30, 2001, by and between the
Borrower and the Lender, as modified by that certain First Modification of
Amended and Restated Revolving Line of Credit Loan Agreement, Term Loans
Agreement and Security Agreement, dated as of July 2, 2001, and as further
modified by that certain Second Modification of Amended and Restated Revolving
Line of Credit Loan Agreement, Term Loans Agreement and Security Agreement
dated as of May 23, 2002, and as further modified by that certain Third
Modification of Amended and Restated Revolving Line of Credit Loan Agreement,
Term Loans Agreement and Security Agreement dated as of September 25, 2002, and
as further modified by that certain Fourth Modification of Amended and Restated
Revolving Line of Credit Loan Agreement, Term Loans Agreement and Security
Agreement dated as of February 3, 2003, and as further modified by that certain
Fifth Modification of Amended and Restated Revolving Line of Credit Loan
Agreement, Term Loans Agreement and Security Agreement dated as of March 24,
2003, and as further modified by that certain Sixth  Modification of Amended and Restated Revolving Line of Credit
Loan Agreement, Term Loans Agreement and Security Agreement dated as of May 6,
2003, and as further modified by that certain Seventh Modification of Amended
and Restated Revolving Line of Credit Loan Agreement, Term Loans Agreement and
Security Agreement of even date herewith 
(as so amended, the “Loan Agreement”). 
The indebtedness evidenced by this Note is included within the meaning
of the term “Debt” as defined in the Loan Agreement.  The term “Loan Documents” as used in this Note shall have the
meaning ascribed to that term in the Loan Agreement.  Capitalized terms used in this Note but not defined herein have
the meanings ascribed to them in the Loan Agreement.

 

8.                                       Security.  This Note is secured by the Collateral described in the Loan
Agreement.

 

9.                                       Events of Default.  The occurrence of any one or more of the
following events shall constitute an event of default (individually, an “Event
of Default” and collectively, the “Events of Default”) under the terms of this
Note:

 

(a)                                  The
failure of the Borrower to pay to the Lender when due any amounts payable under
this Note or to fully and timely perform any obligations under this Note; or

 

(b)                                 The
occurrence of an event of default under the terms and conditions of any of the
other Loan Documents.

 

3

 

10.                                 Remedies.  Upon the occurrence of an Event of Default, at the option of the
Lender, all principal, accrued interest and other amounts payable by the
Borrower to the Lender under the terms of this Note shall become immediately
due and payable, and the Lender shall have all of the rights, powers, and
remedies available under the terms of this Note, any of the other Loan
Documents and all applicable laws.  The
Borrower hereby waives presentment, protest and demand, notice of protest,
notice of demand and of dishonor and non-payment of this Note, and expressly
agrees that this Note or any payment hereunder may be extended from time to
time without in any way affecting the liability of the Borrower.

 

11.                                 Expenses.  The Borrower promises to pay to the Lender on demand by the
Lender all costs and expenses incurred by the Lender in connection with the
collection, defense and enforcement of this Note, including, without
limitation, all attorneys’ fees and expenses, all court costs and all
arbitration fees and costs.

 

12.                                 Notices.  Any notice, request, or demand to or upon the Borrower or the
Lender shall be deemed to have been properly given or made when delivered in
accordance with the Loan Agreement.

 

13.                                 Miscellaneous.  Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Loan Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative
and concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Loan Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lender of
any or all such other rights, powers, or remedies.  No failure or delay by the Lender to insist upon the strict
performance of any term, condition, covenant, or agreement of this Note or any of
the other Loan Documents, or to exercise any right, power, or remedy consequent
upon a breach thereof, shall constitute a waiver of any such term, condition,
covenant, or agreement or of any such breach, or preclude the Lender from
exercising any such right, power, or remedy at a later time or times.  By accepting payment after the due date of
any amount payable under the terms of this Note, the Lender shall not be deemed
to waive the right either to require prompt payment when due of all other
amounts payable under the terms of this Note or to declare an Event of Default
for the failure to effect such prompt payment of any such other amount.  No course of dealing or conduct shall be
effective to amend, modify, waive, release, or change any provisions of this
Note.

 

14.                                 Partial Invalidity.  If any term or provision of this Note or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Note shall be valid and be enforceable to the
fullest extent permitted by law.

 

4

 

15.                                 Captions.  The captions herein set forth are for convenience only and shall
not be deemed to define, limit, or describe the scope or intent of this Note.

 

16.                                 Governing Law.  The provisions of this Note shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia (excluding Virginia’s choice of law rules).

 

17.                                 Consent to Jurisdiction.  Provisions of the Loan Agreement concerning
the Borrower’s consent to the jurisdiction of state and federal courts sitting
in the Commonwealth of Virginia are incorporated into this Note by reference
and shall have the same force and effect as if fully set forth in this Note.

 

18.                                 Waiver of Trial by Jury.  Provisions of the Loan Agreement concerning
the Borrower’s and Lender’s mutual waiver of trial by jury in disputes between
the Borrower and the Lender are incorporated into this Note by reference and
shall have the same force and effect as if fully set forth in this Note.

 

19.                                 ARBITRATION.  PROVISIONS OF THE LOAN AGREEMENT SPECIFYING THAT CERTAIN DISPUTES
BETWEEN THE BORROWER AND THE LENDER SHALL BE RESOLVED BY BINDING ARBITRATION
ARE INCORPORATED INTO THIS NOTE BY REFERENCE AND SHALL HAVE THE SAME FORCE AND
EFFECT AS IF FULLY SET FORTH IN THIS NOTE.

 

20.                                 Prior Notes.  This Note consolidates, amends and restates (a) a certain Term
Note, dated as of July 2, 2001, in the original principal amount of One Million
Seven Hundred Eighty Thousand Three Hundred and 00/100  Dollars ($1,780,300.00) and made payable by
Borrower to the order of Lender (the “First Note”) and (b) a certain Term Note,
dated as of September 25, 2002, in the original principal amount of One Million
Two Hundred Fifty Thousand and 00/100 
Dollars ($1,250,000.00) and made payable by Borrower to the order of
Lender (the “Second Note”)(the First Note and Second Note being hereafter
referred to collectively as the “Original Promissory Notes”).  This Note is not a novation of the Original
Promissory Notes.  In addition to any
other amounts owing by Borrower to Lender in conjunction with the
consolidation, amendment and restatement of the Original Promissory Notes by
this Note, Borrower shall deliver to Lender contemporaneous with the execution
of this Note all interest owing under the Original Promissory Notes plus an
amount sufficient to reduce the collective principal balances owing under the
Original Promissory Notes to One Million Six Hundred Thousand and 00/100
Dollars ($1,600,000.00).  From and after
the date of this Note, all principal outstanding under this Note shall bear
interest at the rate or rates provided in this Note. Interest accruing prior to
the date hereof on principal advanced under the First Note and Second Note
shall be calculated as provided in the First Note and Second Note,
respectively.  Lender has signed this
Note for the purpose of signifying Lender’s agreement to the terms hereof
(including the modifications of the Original Promissory Notes), and not for the
purpose of becoming a co-maker of this Note or incurring any

 

5

 

liability
under this Note.  To induce Lender to
consent to this Note, and the modifications herein contained, the Borrower: (i)
warrants and represents that it has no offsets or defenses to its obligations
under the First Note and Second Note, as consolidated, modified and restated by
this Note; and (ii) hereby releases and waives any and all claims and actions
of any kind that it may have against the Lender as of the date of this Note
arising out of or relating to the Loan Agreement, the Original Promissory Notes
or other Loan Documents.

 

21.                                 JUDGMENT BY CONFESSION  THE UNDERSIGNED HEREBY DULY CONSTITUTE AND
APPOINT JOSEPH P. CORISH, JENNIFER A. BRUST, GREGORY BAUGHER AND ANY VICE
PRESIDENT AND SENIOR VICE PRESIDENT OF THE LENDER AS THE TRUE AND LAWFUL
ATTORNEY-IN-FACT, FOR THEM, IN ANY OR ALL OF THEIR NAMES, PLACE AND STEAD, AND
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT TO CONFESS JUDGEMENT AGAINST THEM,
OR ANY OF THEM, IN THE CIRCUIT COURT FOR THE COUNTY OF ARLINGTON, VIRGINIA,
UPON THIS NOTE AND ALL AMOUNTS OWED HEREUNDER, INCLUDING ALL COSTS OF
COLLECTION, REASONABLE ATTORNEYS’ FEES 
AND COURT COSTS, HEREBY RATIFYING AND CONFIRMING THE ACTS OF SAID
ATTORNEY-IN-FACT AS IF DONE BY THEMSELVES, EXPRESSLY WAIVING BENEFIT OF ANY
HOMESTEAD OR OTHER EXEMPTION LAWS.

 

IN WITNESS
WHEREOF, the Borrower has caused this instrument to be executed by its duly
authorized officer or officers as of the date first written above.

 

(Signatures and Notary Acknowledgments on following pages)

 

BORROWER:

 

6

 

	
   

  	
  ON-SITE
  SOURCING, INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  (SEAL)

  	 

	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, successor-in-interest to First Union National
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  (SEAL)

  	 

	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

COMMONWEALTH
OF VIRGINIA

COUNTY
OF                           :
to wit:

 

I, the
undersigned Notary Public in and for the aforesaid jurisdiction, do hereby
certify that
                                                 
as
                                             of
On-Site Sourcing, Inc., whose name is signed to the foregoing Consolidated,
Amended and Restated Term Note, personally appeared before me within the
aforesaid jurisdiction and acknowledged the same.

 

GIVEN
under my hand and seal
this         day of
                              ,
2003.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  My
  Commission expires:

  	
   

  	
   

  
					

 

COMMONWEALTH
OF VIRGINIA

 

7

 

COUNTY
OF                           :
to wit:

 

I, the
undersigned Notary Public in and for the aforesaid jurisdiction, do hereby
certify
that                                              as                                              of
Wachovia Bank, National Association, successor-in-interest to First Union
National Bank, whose name is signed to the foregoing Consolidated, Amended and
Restated Term Note, personally appeared before me within the aforesaid
jurisdiction and acknowledged the same.

 

GIVEN
under my hand and seal
this         day of 
                              ,
2003.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  My
  Commission expires:

  	
   

  	
   

  
					

 

8Exhibit 10.34

 

Option Care, Inc.

485 Half Day Road — Suite 300

Buffalo Grove, IL 60089

 

May 7, 2003

Richard
M. Smith

571 Silver Oak Grove

Colorado Springs, CO 
80906

 

 

Re:          Employment Agreement

Dear
Rick:

This
letter is to confirm our understanding with respect to (i) your future
employment by Option Care, Inc. or any present or future parent, subsidiary or
affiliate thereof (collectively, the “Company”), (ii) your agreement not to
compete with the Company, (iii) your agreement to protect and preserve information
and property which is confidential and proprietary to the Company and (iv) your
agreement with respect to the ownership of inventions, ideas, copyrights and
patents which may be used in the business of the Company (the terms and
conditions agreed to in this letter are hereinafter referred to as the
“Agreement”). In consideration of the mutual promises and covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, we have agreed as
follows:

1.             Employment.

(a)           Subject to the terms and conditions of this Agreement, the
Company will employ you, and you will be employed by the Company, as President
and Chief Operating Officer reporting only to the Chief Executive Officer of
the Company.  You will have the
responsibilities, duty and authority commensurate with the position of
President and Chief Operating Officer, including, without limitation, oversight
of all corporate and operating divisions of the Company.  It is understood that all such corporate and
operating divisions will report to you and only the Chief Financial Officer,
General Counsel and MBI Division of the Company will report to the Chief
Executive Officer of the Company. The principal location at which you will
perform 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 devote
substantially all of your business time and energies to the business and affairs
of the Company, provided that nothing contained in this Section 1(b) will be
deemed to prevent or limit your right to devoting reasonable time to outside
activities or to manage your personal investments on your own personal time,
including, without limitation, the right to make passive investments in the
securities 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 entity
so long as your aggregate direct and indirect interest does not exceed three
percent of the issued and outstanding securities of any class of securities of
such

 

 

publicly held entity, and
provided, further that nothing contained in this Agreement will be deemed to
prohibit you from owning a controlling interest in privately held companies so
long as such ownership does not materially interfere with the regular duties
required by your position.  You may also
participate in being a member of boards of directors of for profit and
not-for-profit entities, provided that such entities are not listed on Exhibit
A attached hereto.  You shall have all
of the powers necessary to perform the duties assigned to you and you shall be
provided supporting services, staff , secretarial and other assistance, executive
office space and accoutrements commensurate therewith.

 

2.             Term of Employment.

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

Notwithstanding the
foregoing, your employment hereunder will terminate upon the first to occur of
the 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 or
mental incapacity, to perform the essential functions of your position for an
aggregate of 90 business days within any period of 180 consecutive business
days during the term hereof as determined by a physician selected by you
(“Disability”), provided that if applicable law provides any provision
regarding 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 such
notice, for Cause (as defined below); or

(C)           By written notice to you effective 30 days after the date
of 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 30
days after the date of such notice; or

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

 

2

 

                (b)           Definition of “Cause”.  For purposes of this Agreement, “Cause”
means (i) your conviction of a felony or act of dishonesty, either in
connection with the performance of your obligations to the Company or which
otherwise materially and adversely affects your ability to perform such
obligations, (ii) your willful disloyalty or deliberate dishonesty, (iii) the
commission by you of an act of fraud or embezzlement against the Company, (iv)
suspension or exclusion from participation in the Medicare or Medicaid
Programs, (v) continued willful failure or refusal to perform your duties
hereunder 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 which
breach is not cured within 30 days after delivery to you by the Company of
written notice of such breach, provided that if such breach is not capable of
being cured within such 30 day period, you will have a reasonable additional
period to cure such breach but only if you promptly commence and continue good
faith efforts to cure such breach.  Any
determination under this Section 2(b) will be made by two thirds of the Board
of Directors of the Company (the “Board”) voting on such determination.  With respect to any such determination, the
Board will act fairly and in utmost good faith and will give you and your
counsel an opportunity to appear and be heard at a meeting of the Board or and
present evidence on your behalf.  No act
or omission on your part will be considered “willful” unless done, or admitted
to be done, by you in bad faith or without your reasonable belief that such act
or omission was in the best interest of the Company.

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

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

(ii)           Failure of the Board to appoint you as President and Chief
Operating Officer of the Company, or removal as President and Chief Operating
Officer of the Company provided that such failure or removal is not in
connection 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 the
Company which causes your position with the Company to become of less
responsibility or authority than your position as of immediately following the Commencement
Date, provided that such change is not in connection with a termination of your
employment hereunder by the Company;

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

(v)           The assignment to you of duties not commensurate or
consistent with your position as President and Chief Operating Officer of the
Company 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 has
not been cured within 30 days after written notice thereof by you to the
Company;

 

3

 

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

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

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

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

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

(iii)         The date upon which the individuals who are members of the
Board as of the Commencement Date, cease for any reason to constitute a
majority of the Board, unless the election or nomination for election by the
Company’s stockholders of any new director or directors was approved by a vote
of 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 one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company, unless such sale lease exchange or other transfer of
all or substantially all the assets of the Company is to EJ Financial; or

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

3.             Compensation.

(a)           Base Salary. 
While you are employed hereunder, the Company will pay you a base salary
at 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 in
substantially equal installments in accordance with the Company’s payroll
practices as in effect from time to time. 
The

 

4

 

Company will deduct from each such
installment any amounts required to be deducted or withheld under applicable
law or under any employee benefit plan in which you participate.

(b)           Bonus.

                (i)            Annual Bonus.  Commencing after the close of fiscal year
2003, and thereafter annually, you will be eligible to be awarded a bonus for
the prior year of up to 40% of your Base Salary (“Annual Bonus”).  Your eligibility to be awarded an Annual
Bonus will be based on the then current bonus criteria established by the CEO
and approved by the Board of Directors of the Company.

(c)           Equity Compensation.

                (i)            Initial Option Grant.  Simultaneously with the approval of this
Agreement, the Board has agreed to grant you an option (the “Option”) under the
OPTION 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 the
form attached hereto as Exhibit 3(c)(i) (the “Option Agreement”).  The Option will be an incentive stock option
to the extent permissible under applicable law.

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

(d)           Vacation. 
You will be entitled to paid vacation in each calendar year and paid
holidays and personal days in accordance with the Company’s policies for its
senior executives as in effect from time to time, but not less than four weeks
paid 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 senior
executives of the Company in any employee benefit plans which the Company
provides or may establish for the benefit of its senior executives generally
(including, without limitation, group life, disability, medical, dental and
other insurance, tax benefit and planning services, 401(k), retirement,
pension, profit-sharing and similar plans) (collectively, the “Fringe
Benefits”), provided that the Fringe Benefits will not include any stock option
or similar plans relating to the grant of equity securities of the
Company.  Prior to your enrollment in
any group insurance package, including medical, dental, vision and short-term
disability plans, the Company will reimburse you for all COBRA payments paid by
you to your previous employer.

(f)            Automobile; Computer; Mobile Phone.  The Company will pay you an automobile
allowance 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, the
Company shall also include you under its general corporate automobile insurance
program and pay

 

5

 

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

                (g)           Life Insurance; Disability
Insurance.  The Company, at its
expense, will purchase life insurance on your life and disability insurance
consistent with the Executive Program offered to executives of the Company.

(h)           Reimbursement of Expenses.  The Company will reimburse you for all
approved, ordinary and reasonable out-of-pocket business expenses that are
incurred by you in furtherance of the Company’s business in accordance with the
Company’s policies with respect thereto as in effect from time to time.  Without limiting the generality of the
foregoing, the Company shall reimburse you for professional dues and
subscriptions paid by you, including, AICPA, ILCPA and HFMA.  Subject to approval, you will also be
entitled to attend seminars, conferences and trade meetings, relating to the
business of the Company.

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

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

4.             Severance Compensation.

(a)           Definition of Accrued Obligations.  For purposes of this Agreement, “Accrued
Obligations” means (i) the portion of your Base Salary as has accrued prior to
any 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 the
then current year, (iii) the amount of any Initial Annual Bonus or Annual Bonus
earned and accrued but not yet paid, which amount will include a pro rata
portion of any previously determined Annual Bonus which would have been earned
if such termination had not occurred and (iv) the amount of any expenses
properly incurred by you on behalf of the Company prior to any such termination
and not yet reimbursed.

 

6

 

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

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

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

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

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

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

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

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

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

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

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

 

7

 

current Term.  The amount of such bonus after the date of such termination will
equal the greater of (A) the last such bonus paid before the date of such
termination, or (B) the average of three most recent such bonuses paid before
the 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 of
payment of any sum or provision of any benefit hereunder or under any agreement
between you and the Company, the terms of any option agreement or otherwise
(including but not limited to excise taxes imposed under Section 4999 of the
Code), the Company will then “gross-up” your compensation by making an
additional payment to you in an amount which, after reduction for any income or
excise taxes payable as a result of receiving such additional payment, is equal
to the Excise Tax.

                (iv)          The Company will provide you with outplacement
services (with a firm selected by you but at the expense of the Company) for up
to four  months following such
termination.

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

5.             Prohibited Competition.

(a)           Certain Acknowledgements and Agreements.

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

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

 

(iii)          You further
acknowledge 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 with
unique and specialized training.  You
also acknowledge that such Confidential Information and such training have been
developed and will be developed by the Company through the expenditure by the
Company of substantial time, effort and money and that all such Confidential
Information and training could be used by you to compete with the Company.

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

 

8

 

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

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

(i)            For yourself or on behalf of any
other 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 be
concerned, 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 in
Exhibit 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 or
owning securities of any such business if such securities are publicly traded,
and provided that your holdings do not exceed three percent of the issued and
outstanding securities of any class of securities of such business, or

 

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

                (c)           Survival of Acknowledgements and
Agreements.  Your acknowledgements
and agreements set forth in this Section 5 will survive the termination of your
employment hereunder for any reason or for no reason.

                6.             Protected Information.  You will at all times, both during the period while you are
employed hereunder and after the termination of your employment hereunder for
any reason or for no reason, maintain in confidence and will not, without the
prior written consent of the Company, use, except in the course of performance
of your duties for the Company or by court order, disclose or give to others
any Confidential Information.  Upon the
termination of your employment hereunder for any reason or for no reason, you
will 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 develop
while you

 

9

 

are employed hereunder, alone or in
conjunction with another or others, and whether at the request or upon the
suggestion of the Company or otherwise, will be the sole and exclusive property
of the Company, and that you will not publish any of the Inventions without the
prior written consent of the Company. 
You hereby assign to the Company all of your right, title and interest
in and to all of the foregoing.

 

(b)           Cooperation.  At any time during your employment hereunder
or after the termination of your employment hereunder for any reason or for no
reason, you will fully cooperate with the Company and its attorneys and agents
in the preparation and filing of all papers and other documents as may be
required to perfect the Company’s rights in and to any of such Inventions,
including, but not limited to, joining in any proceeding to obtain letters
patent, copyrights, trademarks or other legal rights with respect to any such
Inventions in the United States and in any and all other countries, provided
that the Company will bear the expense of such proceedings, and that any patent
or other legal right so issued to you personally will be assigned by you to the
Company or its designee without charge by you. 
The Company will reimburse you for reasonable expenses incurred by you
in connection with the performance of your obligations under this Section 7.

 

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

9.             General.

                (a)           Notices.  All notices, requests, consents and other
communications hereunder will be in writing, will be addressed to the receiving
party’s address set forth above or to such other address as a party may
designate 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 and
other communications hereunder will be deemed to have been given either (i) if
by hand, at the time of the delivery thereof to the receiving party at the address
of such party set forth above, (ii) if sent by overnight courier, on the next
business 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 day
following the day such mailing is made.

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

                (c)           Modifications and Amendments.  The terms and provisions of this Agreement
may be modified or amended only by written agreement executed by the parties
hereto.

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

 

10

 

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

                (e)           Assignment.  The Company may assign its rights and
obligations hereunder to any person or entity that succeeds to all or
substantially all of the Company’s business or that aspect of the Company’s
business in which you are principally involved.  You may not assign your rights and obligations under this
Agreement 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 parties
hereto and will inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement will be construed to create
any rights or obligations except among the parties hereto, and no person or
entity will be regarded as a third-party beneficiary of this Agreement.

                (g)           Governing Law.  This Agreement and the rights and
obligations of the parties hereunder will be construed in accordance with and
governed by the law of  the State of Illinois, without giving
effect to the conflict of law principles thereof.

                (h)           Jurisdiction, Venue and Service of
Process.  Any legal action or
proceeding with respect to this Agreement that is not subject to arbitration
pursuant to Section 9 below may be brought in the courts of the State of
Illinois or of the United States of America for the Northern District of
Illinois.  By execution and delivery of
this Agreement, each of the parties hereto accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts.

                (i)            Arbitration.  Any controversy, dispute or claim arising
out of or in connection with this Agreement, other than a controversy, dispute
or claim arising under Section 5, 6 or 7 hereof, will be settled by final and
binding arbitration to be conducted in the State of Illinois pursuant to the
national rules for the resolution of employment disputes of the American
Arbitration Association then in effect. 
The decision or award in any such arbitration will be final and binding
upon the parties and judgment upon such decision or award may be entered in any
court of competent jurisdiction or application may be made to any such court
for judicial acceptance of such decision or award and an order of
enforcement.  In the event that any
procedural matter is not covered by the aforesaid rules, the procedural law of
the State of Illinois will govern.  Any
disagreement as to whether a particular dispute is arbitrable under this
Agreement shall itself be subject to arbitration in accordance with the
procedures set forth herein.

                (j)            Severability.  The parties intend this Agreement to be
enforced as written. However, (i) if any portion or provision of this Agreement
is to any extent be declared illegal or unenforceable by a duly authorized
court having jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, will not be affected
thereby, and each portion and provision of this Agreement will be valid arid
enforceable 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 such
provision, the

 

11

 

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

                (k)           Headings and Captions.  The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and will
in no way modify or affect the meaning or construction of any of the terms or
provisions hereof

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

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

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

If
the foregoing accurately sets forth our agreement, please so indicate by
signing 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.

  	
   

  

 

Accepted
and Approved

 

	
  /s/ Richard M. Smith

  	
   

  	
  May 7, 2003

  
	
  Print Name: Richard M.
  Smith

  	
   

  	
  Date

  

 

 

12

 

EXHIBIT A

 

Caremark
Rx, Inc.

Coram
Healthcare

Accredo
Health

Priority
Healthcare Corp

MIMS
Corporation

Apria
Healthcare Group, Inc.

Curative
Health Services, Inc.

Advance
PCS

Chronimed
Inc.

Express
Scripts, Inc.

Pediatric
Services of America

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]