<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended Commission file number
DECEMBER 31, 1994 1-11343
CORAM HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0615337
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1125 SEVENTEENTH STREET, 15TH FLOOR 80202
DENVER, COLORADO (Zip Code)
(Address of principal executive offices)
(303) 292-4973
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12 (b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
Common Stock ($.001 par value per share) New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /x/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. / /
BASED ON THE CLOSING PRICE ON MARCH 20, 1995, THE AGGREGATE MARKET VALUE OF
COMMON STOCK HELD BY NONAFFILIATES OR THE REGISTRANT WAS $1,007.8 MILLION.
THE NUMBER OF COMMON SHARES OUTSTANDING OF THE REGISTRANT WAS 39,465,677 AS
OF MARCH 20, 1995.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the name, age, principal occupations
and business experience during the last five years of each of the directors and
executive officers of the Company. The executive officers serve at the
pleasure of the Board of Directors of the Company (the "Board of Directors" or
the "Board"). Each member of the Board of Directors holds office until the
next meeting of the stockholders of the Company or until his successor is
elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
<S> <C> <C>
James M. Sweeney . . . . . . . . . . . 52 Chairman and Chief Executive Officer
Patrick J. Fortune . . . . . . . . . . 47 President, Chief Operating Officer and Director
Olav B. Bergheim . . . . . . . . . . . 44 Executive Vice President
Sam R. Leno . . . . . . . . . . . . . . 49 Vice President, Secretary and Chief Financial Officer
Tommy H. Carter . . . . . . . . . . . . 52 Vice Chairman of the Board of Directors
Richard A. Fink . . . . . . . . . . . . 40 Director
Stephen G. Pagliuca . . . . . . . . . . 40 Director
L. Peter Smith . . . . . . . . . . . . 45 Director
Dr. Gail R. Wilensky . . . . . . . . . 50 Director
</TABLE>
Mr. Sweeney has been Chairman and Chief Executive Officer of the
Company since July 1994. Mr. Sweeney was the Chairman and Chief Executive
Officer of McGaw, Inc., and served as a member on the Board of Directors of
McGaw, Inc. from October 1990 until he resigned effective February 7, 1994.
From February 1988 to October 1990, Mr. Sweeney was the Chairman and Chief
Executive Officer of CarePartners, Inc., a provider of patient monitoring
services and home therapies. Mr. Sweeney was the founder of Caremark, Inc.,
formerly the largest home infusion therapy company in the United States, and
served as its Chairman and Chief Executive Officer from June 1979 to February
1988.
Mr. Fortune has been President and Chief Operating Officer of the
Company since August 1994, and a Director since November, 1994. Between 1991
and August 1994, Mr. Fortune served as Corporate Vice President -Information
Management, at Bristol-Myers Squibb where he was responsible for worldwide
information technology, planning, systems integration and organization
consolidation. Prior to 1991, Mr. Fortune was Senior Vice President and Group
Executive at Packaging Corporation of America and a Group Corporate Vice
President at Baxter Healthcare Corporation ("Baxter Healthcare").
Mr. Bergheim has been Executive Vice President of the Company since
March 1995. Prior to March 1995, Mr. Bergheim held various positions with
Baxter Healthcare for 18 years, most recently as Group Corporate Vice President
and President, Baxter Cardiovascular Group.
Mr. Leno has been Vice President and Chief Financial Officer of the
Company since July, 1994, and Secretary since November, 1994. Between October,
1989 and July, 1994, Mr. Leno served as Vice President of Finance and
Information Technology for the Hospital Business of Baxter Healthcare. Prior
to October, 1989, Mr. Leno held various executive positions with Baxter
Healthcare and American Hospital Supply Corporation.
Mr. Carter has served as a director of the Company since July 1994.
Between September 1993 and July 1994, Mr. Carter was Chief Executive Officer
and President of T2. Prior to September 1993, Mr. Carter, a co-founder of T2,
served as President of T2 from 1984 to October 1988 and as a director from 1984
to 1990. Mr. Carter came out of retirement to assume the duties of President
and Chief Executive Officer in September 1993. From November 1978 to May 1984,
Mr. Carter served in various capacities with Kendall McGaw Corporation, a
manufacturer of intravenous fluids and equipment, including Regional Manager,
National Sales Administration Manager, and Vice President of Sales and
Marketing for the United States.
Mr. Fink has served as a director of the Company since July 1994. Mr.
Fink has been partner of the Orange County, California office of Brobeck,
Phleger & Harrison, a California-based law firm, since October 1987.
Page 2 of 12 pages
<PAGE> 3
Mr. Pagliuca has served as a director of the company since July 1994.
Mr. Pagliuca founded Information Partners, a venture capital and management
buyout company based in Boston, Massachusetts, in 1989 and has been Managing
Director since that time, focusing on health care and information industry
private-equity investment opportunities. Prior to 1989, Mr. Pagliuca was a
partner at Bain & Company, a management consulting firm based in Boston,
Massachusetts, where he concentrated on the health care and information
industries.
Mr. L. Peter Smith has served as a director of the Company since July
1994. Between November 1993 and July 1994, Mr. Smith was director of Medisys,
Inc. ("Medisys"). Mr. Smith served as the Managing Partner of AllCare Health
Services, Inc., which was acquired by Medisys in December of 1992. Mr. Smith
is also President and serves on the Board of Directors of Ralin Medical, Inc.
("Ralin"), a company specializing in ambulatory cardiac monitoring. Prior to
joining Ralin in 1990, Mr. Smith served in various capacities with Baxter
Healthcare. From 1984 through 1989 he was president of the home infusion
therapy division of Baxter Healthcare. Mr. Smith also serves on the Board of
Directors of Sabratek, Inc. and AMSYS, Inc.
Dr. Wilensky has served as a director of the Company since November
1994. Since January 1993, Dr. Wilensky has served as a Senior Fellow at
Project HOPE. From March 1992 to January 1993, Dr. Wilensky served in the Bush
Administration as Deputy Assistant to the President for Policy Development,
responsible for advising the President on health and welfare issues. From
January 1990 to March 1992, Dr. Wilensky served in the Department of Health and
Human Services, where she directed the Medicare and Medicaid programs. From
April 1983 to January 1990, Dr. Wilensky was Vice President, Division of Health
Affairs at Project HOPE. Dr. Wilensky is an elected member of the Institute
of Medicine of the national Academy of Sciences. She has also served as a
member of the Physician Payment Review Commission and the Health Advisory
Committee of the General Accounting Office. Dr. Wilensky also serves as a
Director of United HealthCare Corporation, Syncor International Corporation and
Advanced Tissue Sciences, Inc.
COMPLIANCE WITH SECTION 16.
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
persons who beneficially own greater than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission") and
the New York Stock Exchange. Based solely upon its review of copies of the
Section 16 reports the Company has received and written representations from
certain reporting persons, the Company believes that during its fiscal year
ended December 31, 1994, all of its directors, executive officers and greater
than 10% beneficial owners were in compliance with their filing requirements.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION OF DIRECTORS
Fees for Board Service. Directors who are employees of the Company
receive no additional compensation for service on the Board of Directors.
Non-employee directors of the Company receive no compensation for each Board
meeting attended, however, all out-of-pocket expenses of directors related to
meetings attended will be reimbursed by the Company.
Outside Directors' Automatic Option Grant Program. Non-employee
members of the Company's Board of Directors participate in the Automatic Option
Grant Program in effect under the Company's 1994 Stock Option/Stock Issuance
Plan (the "Option Plan"). Each individual who served as a non-employee Board
member on July 28, 1994 (other than Mr. Carter) received an automatic option
grant under the program for 75,000 shares of Common Stock at an exercise price
of $11.00 per share, the fair market value on such date. Accordingly, Messrs.
Fink, Pagliuca and Smith each received such a 75,000-share option grant. On
November 11, 1994, the date of her
Page 3 of 12 pages
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appointment to the Board, Dr. Wilensky received an automatic option grant for
75,000 shares of Common Stock at an exercise price of $15.375 per share. Each
75,000-share option grant is immediately exercisable for all of the option
shares. However, any shares purchased under the option will be subject to
repurchase by the Company at the original exercise price paid per share upon
the optionee's cessation of Board service prior to vesting in such shares.
With respect to the options granted to Messrs. Fink, Pagliuca and L. Peter
Smith the optionee will vest in twenty-five percent (25%) of the option shares
upon completion of one year of Board service measured from the grant date.
With respect to Dr. Wilensky's options, the optionee will vest in 25% of the
option shares upon completion of one year of service measured from grant date
and will vest in the balance in a series of equal monthly installments over the
next thirty-six (36) months of Board service thereafter.
On July 28, 1994, Mr. Carter received a non-statutory stock option
grant to purchase 94,500 shares of Common Stock at an exercise price of $11.00
per share. The option becomes exercisable in a series of three (3) successive
equal annual installments over Mr. Carter's period of Board service, with the
first such installment to become exercisable on the first anniversary of the
option grant date.
On the date of each annual stockholders meeting, beginning with the
1995 Annual Meeting, each individual who will continue to serve as a
non-employee Board member will receive a non-statutory stock option to purchase
2,500 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock on the automatic option grant date. Each option will
be immediately exercisable for all of the option shares. However, any shares
purchased under the option will be subject to repurchase by the Company at the
original exercise price paid per share upon the optionee's cessation of Board
service prior to vesting in such shares. The optionee will vest in the option
shares in a series of equal monthly installments over twelve (12) months of
Board service measured from the automatic option grant date.
The shares subject to the option granted to Mr. Carter and to each
automatic option granted to the other non-employee Board members under the Plan
will vest in full upon (i) the optionee's cessation of Board service due to
death or disability, (ii) an acquisition of the Company by merger or asset sale
or (iii) a hostile change in control of the Company.
The option granted to Mr. Carter and each automatic option granted to
the other non-employee Board members includes a limited stock appreciation
right which will allow the optionee, upon the successful completion of a
hostile tender offer for more than 50% of the Company's outstanding securities,
to surrender that option to the Company, in return for a cash distribution in
an amount per surrendered option share equal to the highest price per share of
Common Stock paid in the tender offer less the exercise price payable per
share.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS.
The following table provides certain summary information concerning
the compensation earned by the Company's Chief Executive Officer and each of
the other four most highly compensated executive officers (collectively, the
"Named Executive Officers"), determined as of the end of the Company's fiscal
year for services rendered during the fiscal year ended December 31, 1994.
Information with respect to fiscal years prior to the last completed fiscal
year is not provided because the registrant was not a reporting company
pursuant to Section 13(a) or 15(d) of the Exchange Act at any time prior to
July 8, 1994.
Page 4 of 12 pages
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
ANNUAL COMPENSATION(1) Awards
---------------------------------- ------------
Securities
Underlying
Name and Other Annual Options/SARs All Other
Principal Positions Year Salary Bonus Compensation (#) Compensation
- - - --------------------------- --------- --------- ------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
James M. Sweeney 1994 $ -0- $ -- $ -- 3,000,000 $3,596,918(2)
Chairman and Chief
Executive Officer
Patrick J. Fortune 1994 161,762 87,000 171,129(3) 350,000 --
President and Chief
Operating Officer
Sam R. Leno 1994 126,202 -- 31,769(4) 150,000 --
Vice President and
Chief Financial Officer
</TABLE>
(1) Reflects salary, bonus and other annual compensation paid by the
registrant since its formation on July 8, 1994.
(2) Consists of a cash fee paid to Mr. Sweeney for financial advisory
services rendered in connection with the formation of the Company
pursuant to an agreement with T2. See "Certain Relationships and
Related Transactions."
(3) Consists of reimbursed expenses paid to Mr. Fortune in connection with
his move to Denver, Colorado.
(4) Consists of reimbursed expenses paid to Mr. Leno in connection with
his move to Denver, Colorado.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning captions granted
to each of the Named Executive Officers during the fiscal year ended December
31, 1994. In addition, in accordance with the rules of the Commission, there
are shown hypothetical gains or "option spreads" that would exist for the
respective options. These gains are based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were granted
over the full option term. Except for the limited stock appreciation rights
described in footnote (3) below, no stock appreciation rights were granted to
the Named Executive Officers during the fiscal year ended December 31, 1994.
Page 5 of 12 pages
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<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Number of % of Total Option Term(1)
Securities Options -----------------------------
Underlying Granted to
Options Employees in Exercise Price
NAME Granted(2)(3) Fiscal Year Per Share ($/Sh)(4) Expiration Date 5% 10%
----------------- ------------- ------------ ------------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
James M. Sweeney 3,000,000 60.0 $11.00 July 27, 2004 $20,753,522 $52,593,503
Patrick J. Fortune 350,000 7.0 11.75 July 31, 2004 2,586,329 6,554,266
Sam R. Leno 150,000 3.0 11.00 July 27, 2004 1,037,676 2,629,675
</TABLE>
(1) Potential realizable value is determined by taking the exercise price
per share and applying the stated annual appreciation rate compounded
annually for the remaining term of the option (ten years), subtracting
the exercise price per share at the end of the period and multiplying
the remaining number by the number of options granted. Actual gains,
if any, on stock options exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall
stock market conditions.
(2) The options granted to Messrs. Sweeney, Fortune and Leno are
immediately exercisable for all the option shares. However, any
shares purchased under the options will be subject to repurchase by
the Company at the original exercise price paid per share upon the
optionee's cessation of service prior to vesting in such shares. The
optionee will vest in twenty-five percent (25%) of the option shares
upon completion of one year of service measured from the grant date
and will vest in the balance in a series of equal monthly installments
over the next thirty-six (36) months of service thereafter. The
shares subject to Mr. Sweeney's option will immediately vest in full
upon (i) an acquisition of the Company by merger or asset sale or (ii)
a hostile change in control of the Company, and the option will remain
exercisable for such vested shares until the expiration of the ten
(10)-year option term. The shares subject to Messrs. Fortune and
Leno's options will immediately vest in full upon an acquisition of
the Company by merger or asset sale, unless the Company's repurchase
right with respect to the unvested option shares is transferred to the
acquiring entity. In the event either Messrs. Fortune or Leno's
service is involuntarily terminated within eighteen (18) months
following (i) an acquisition of the Company by merger or asset sale in
which the Company's repurchase right is assigned to the acquiring
entity or (ii) a hostile change in control of the Company, all unvested
shares subject to such options will immediately vest in full. Each of
Messrs. Fortune and Leno's option has a maximum term of 10 years,
subject to earlier termination in the event of the cessation of their
service with the Company.
(3) Each option granted to the Named Executive Officers includes a limited
stock appreciation right which will allow the optionee, upon the
successful completion of a hostile tender offer for more than 50% of
the Company's outstanding securities, to surrender that option to the
Company in return for a cash distribution in an amount per surrendered
option share equal to the highest price per share of Common Stock paid
in the tender offer less the exercise price payable per share.
(4) The exercise price for each option may be paid in cash, in shares of
the Company's Common Stock valued at fair market value on the exercise
date or through a cashless exercise procedure involving a same-day
sale of the purchased shares. The Company may also finance the option
exercise by loaning the optionee sufficient funds to pay the exercise
price for the purchased shares, together with any Federal and state
income tax liability incurred by the optionee in connection with such
exercise.
Page 6 of 12 pages
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OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth information concerning the aggregate
number of options exercised during the fiscal year ended December 31, 1994, by
each of the Named Executive Officers of the Company and outstanding options
held by each such officer at December 31, 1994. None of the Named Executive
Officers exercised any stock appreciation rights during the 1994 fiscal year.
The stock appreciation held by such individuals at the end of that fiscal year
are described at footnote (3) above, under "Option Grants in Last Fiscal Year."
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised Options at In-the-Money Options at
December 31, 1994 December 31, 1994(2)
-------------------------------- ---------------------------------
Shares Exercisable/ Exercisable/
Acquired on Value Subject to Subject to
NAME Exercise Realized Exercisable Repurchase(1) Unexercisable Exercisable Repurchase(1) Unexercisable
- - - ------------------- ----------- ---------- ----------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James M. Sweeney -- -- 0 3,000,000 0 $ 0 $16,500,000 $ 0
Patrick J. Fortune -- -- 0 350,000 0 0 1,662,500 0
Sam R. Leno -- -- 0 150,000 0 0 825,000 0
</TABLE>
(1) The options granted to Messrs. Sweeney, Fortune and Leno are
immediately exercisable for all the option shares. However, any
shares purchased under the options are subject to repurchase by the
Company, at the original exercise price paid per share, upon the
optionee's cessation of service prior to vesting in such shares. Each
optionee will vest in the option shares in a series of installments
upon the optionee's continued service over a four (4)-year period
measured from the option grant date. No option shares have vested as
of December 31, 1994.
(2) Value is determined by subtracting the exercise price from the fair
market value (the closing price for the Common Stock as reported by
the New York Stock Exchange) as of December 30, 1994 ($16.50) and
multiplying the resulting number by the number of underlying shares of
Common Stock.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The Company does not presently have any employment contracts in effect
with the Chief Executive Officer or any of the other executive officers named
in the Summary Compensation Table.
The shares subject to the options granted to the Company's Chief
Executive Officer under the 1994 Stock Option/Stock Issuance Plan (as described
above in Footnote (2) to the Individual Grants Table in the section entitled
"Option Grants in Last Fiscal Year") will immediately vest in full upon (i) an
acquisition of the Company by merger or asset sale or (ii) a hostile change in
control of the Company.
The shares subject to the options granted to the other Named Executive
Officers will immediately vest in full upon an acquisition of the Company by
merger or asset sale, unless such options are assumed by the acquiring entity.
In the event the optionee's service is involuntarily terminated within eighteen
(18) months following (i) an acquisition of the Company by merger or asset sale
in which the option is assumed by the acquiring entity or (ii) a hostile change
in control of the Company, the shares subject to such options will immediately
vest in full.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard A. Fink and Stephen G. Pagliuca were the only two members of
the Compensation Committee of the Company during the last completed fiscal
year. Messrs. Fink and Pagliuca are both non-employee directors of the
Company who have not previously been in the Company's employ. Mr. Fink is a
partner in a law firm that rendered various legal services to the Company in
1994.
Page 7 of 12 pages
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No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 27, 1995, the number of
owners of the Company's outstanding Common Stock, beneficially owned by (i)
each person known to the Company to be the owner of more than 5% of any such
class, (ii) each of the Company s directors, (iii) each of the Named Executive
Officers and (iv) all directors and executive officers of the Company as a
group. All information is taken from or based upon ownership filings made by
such persons with the Commission or upon information provided by such persons
to the Company. Unless otherwise indicated, the address of each person named
below is 1125 Seventeenth Street, Suite 1500, Denver, Colorado 80202.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF COMMON STOCK(1) COMMON STOCK OUTSTANDING(1)
------------------------------------ ------------------ ---------------------------
<S> <C> <C>
James M. Sweeney(2) . . . . . . . . . . . 3,000,000 7.0*
Patrick J. Fortune(3) . . . . . . . . . . 350,000 *
Olav B. Bergheim(4) . . . . . . . . . . . -0- --
Sam R. Leno(5) . . . . . . . . . . . . . 150,000 *
Tommy H. Carter(6) . . . . . . . . . . . 77,587 *
Richard A. Fink(7) . . . . . . . . . . . 75,000 *
Stephen G. Pagliuca(8) . . . . . . . . . 75,000 *
L. Peter Smith(9) . . . . . . . . . . . . 135,081 *
Dr. Gail R. Wilensky(10) . . . . . . . . 75,000 *
All Executive Officers and Directors
as a group (9 persons)(11) . . . . . . . 3,937,668 9.0%
- - - ---------------
</TABLE>
* Less than 1%
(1) Shares of Common Stock subject to options or warrants which are currently
exercisable or exercisable within 60 days are deemed outstanding for computing
the percentage of the person holding such options or warrants but are not
deemed outstanding for computing the percentage of any other person. Except as
indicated by footnote, the Company understands that the persons named in the
table above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them. No percent of class is shown
for holdings of less than 1%. Percentage computations are based on 39,682,277
shares of Common Stock outstanding as of April 27, 1995.
(2) Includes 3,000,000 shares subject to an option granted to Mr. Sweeney on
July 28, 1994, which option is immediately exercisable, but any option shares
purchased thereunder will be unvested and subject to repurchase by the Company
at the original exercise price paid per share upon the optionee's cessation of
service prior to the vesting of such shares. The optionee will vest as to 25%
of the option shares upon July 7, 1995 and will vest as to the balance of the
option shares in a series of successive equal monthly installments upon his
completion of each additional month of service with the Company over the next
thirty-six (36) months thereafter.
(3) Includes 350,000 shares subject to an option granted to Mr. Fortune on
August 1, 1994 (the "August Option Grant"), which option is immediately
exercisable, but any option shares purchased thereunder will be unvested and
subject to repurchase by the Company at the original exercise price paid per
share upon the optionee's cessation of service prior to the vesting of such
shares. The optionee will vest as to 25% of the option shares upon August 1,
1995 and will vest as to the balance of the option shares in a series of
successive equal monthly installments upon his completion of each additional
month of service with the Company over the next thirty-six (36) months
thereafter. Does not include 50,000 shares subject to an option granted to Mr.
Fortune on February 1, 1995, which options will
Page 8 of 12 pages
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vest as to 25% of the option shares upon February 1, 1996, and will vest as to
the balance in the same manner as the August Option Grant.
(4) Does not include 300,000 shares subject to an option granted to Mr.
Bergheim on March 8, 1995, which option will vest as to 25% of the option shares
on March 8, 1996, and will vest as to the balance of the option shares in a
series of successive equal monthly installments upon his completion of each
additional month of service with the Company over the next thirty-six (36)
months hereafter.
(5) Includes 150,000 share subject to an option granted to Mr. Leno on July 28,
1994, which option is immediately exercisable, but any option shares purchased
thereunder will be unvested and subject to repurchase by the Company at the
original exercise price paid per share upon the optionee's cessation of service
prior to the vesting of such shares. The optionee will vest as to 25% of the
option shares upon July 7, 1995 and will vest as to the balance of the option
shares in a series of successive equal monthly installments upon his completion
of each additional month of service with the Company over the next thirty-six
(36) months thereafter.
(6) Does not include 94,500 shares subject to an option granted to Mr. Carter
on July 28, 1994, which option will vest in three equal and successive annual
installments over Mr. Carter s continued period of service with the Company
measured from July 28, 1994 and which was granted to Mr. Carter in cancellation
of his existing contractual right to receive an option grant for 150,000 shares
of T2 Common Stock in September 1994.
(7) Includes 75,000 shares subject to an option granted to Mr. Fink on July 28,
1994, which option is immediately exercisable, but any option shares purchased
thereunder will be unvested and subject to repurchase by the Company at the
original exercise price paid per share upon the optionee's cessation of services
prior to the vesting of such shares. The optionee will vest as to 25% of the
option shares upon July 7, 1995 and will vest as to the balance of the option
shares in a series of successive equal monthly installments upon his completion
of each additional month of Board service with the Company over the next
thirty-six (36) months thereafter.
(8) Includes 75,000 shares subject to an option granted to Mr. Pagliuca on July
28, 1994, which option is immediately exercisable, but any option shares
purchased thereunder will be unvested and subject to repurchase by the Company
at the original exercise price paid per share upon the optionee's cessation of
service prior to the vesting of such shares. The optionee will vest as to 25%
of the option shares upon July 7, 1995 and will vest as to the balance of the
option shares in a series of successive equal monthly installments upon his
completion of each additional month of Board service with the Company over the
next thirty-six (36) months thereafter.
(9) Include 75,000 shares subject to an option granted to Mr. Smith on July 28,
1994, which option is immediately exercisable, but any option shares purchased
thereunder will be unvested and subject to repurchase by the Company at the
original exercise price paid per share upon the optionee's cessation of service
prior to the vesting of such shares. The optionee will vest as to 25% of the
option shares upon July 7, 1995 and will vest as to the balance of the option
shares in a series of successive equal monthly installments upon his completion
of each additional month of Board service with the Company over the next
thirty-six (36) months thereafter.
(10) Includes 75,000 shares subject to an option granted to Dr. Wilensky on
November 7, 1994, which option is immediately exercisable, but any option shares
purchased thereunder will be unvested and subject to repurchase by the Company
at the original exercise price paid per share upon the optionee's cessation of
service prior to the vesting of such shares. The optionee will vest as to 25%
of the option shares upon November 7, 1995 and will vest as to the balance of
the option shares in a series of successive equal monthly installments upon her
completion of each additional month of Board service with the Company over the
next thirty-six (36) months thereafter.
(11) Includes an aggregate of 3,800,000 shares subject to options that have
been granted to Messrs. Sweeney, Fortune, Bergheim, Leno, and all non-employee
directors of Coram following consummation of the Merger, which options have the
terms and conditions described in footnotes (2)-(10).
Page 9 of 12 pages
<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Sweeney was paid a fee of approximately $3.5 million for financial
advisory services pursuant to an agreement with T2 in connection with the merger
(the "Merger") which formed the Company on July 8, 1994. The fee paid to Mr.
Sweeney was determined as a percentage of the average total market
capitalization of the Company as determined over the ten trading day period
immediately following the Merger. In connection with the relocation of the
Company's corporate headquarters to Denver, Colorado, the Company made a loan of
$650,000 to Mr. Leno which loan bears interest at the applicable interest rate
under the Internal Revenue Code. The principal amount of such loans is due no
later than one year from the date of origination. Mr. Fink is a partner in a
law firm that rendered various legal services to the Company in 1994.
Mr. Charles A. Laverty served briefly as an executive officer of the
Company during the last fiscal year. As a result of the Merger and
restructuring of the Company, Mr. Laverty became eligible to receive certain
payments pursuant to the terms of an Employment Contract dated as of July 8,
1994 between Mr. Laverty and the Company, including a severance/noncompete
payment of $2.5 million payable in 36 monthly installments. In 1994, payments
under such contract totaled approximately $536,300. The Company also forgave a
note in the amount of approximately $400,000 from Mr. Laverty, payable to a
predecessor entity of the Company, as part of Mr. Laverty's severance.
Mr. Miles E. Gilman served briefly as an executive officer of the
Company during the last fiscal year. As a result of the Merger and
restructuring of the Company, Mr. Gilman received certain payments pursuant to
the terms of a Severance/Non-Compete Agreement dated as of July 8, 1994 between
Mr. Gilman and the Company, including a severance payment of $326,000 and a
post- termination noncompete covenant payment of $2,000,000.
Mr. William J. Brummond served briefly as an executive officer of the
Company during the last fiscal year. As a result of the Merger and
restructuring of the Company, Mr. Brummond became eligible to receive certain
payments pursuant to the terms of a Severance/Noncompete Agreement dated as of
July 8, 1994, between Mr. Brummond and the Company, including a
severance/noncompete payment of approximately $822,000, payable in 36 monthly
installments. In 1994, payments under such contract totaled approximately
$400,000.
Page 10 of 12 pages
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on May 1,
1995.
CORAM HEALTHCARE CORPORATION
By: /s/ James M. Sweeney
-------------------------------------
James M. Sweeney
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman and Chief Executive
/s/ James M. Sweeney Officer (Principal Executive May 1, 1995
--------------------------------------- Officer)
James M. Sweeney
/s/ Patrick J. Fortune President, Chief Operating Officer May 1, 1995
----------------------------------------- and Director
Patrick J. Fortune
/s/ Sam R. Leno
---------------------------------------- Secretary and Chief Financial
Sam R. Leno Officer (Principal Financial Officer May 1, 1995
and Principal Accounting Officer)
/s/ Tommy H. Carter Vice Chairman of the Board of Directors May 1, 1995
----------------------------------------
Tommy H. Carter
/s/ Richard A. Fink Director May 1, 1995
-----------------------------------------
Richard A. Fink
/s/ Stephen G. Pagliuca Director May 1, 1995
----------------------------------------
Stephen G. Pagliuca
/s/ L. Peter Smith Director May 1, 1995
-----------------------------------------
L. Peter Smith
/s/ Gail R. Wilensky Director May 1, 1995
----------------------------------------
Dr. Gail R. Wilensky
</TABLE>
Page 11 of 12 pages
