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EXHIBIT 10.3
AMERICAN HEALTH PROPERTIES, INC.
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
WITH
XXXXXX X. XXXXXXXX
This Amended and Restated Executive Employment Agreement (the
"Agreement") is entered into as of July 16, 1999, between AMERICAN HEALTH
PROPERTIES, INC., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXXX, an individual ("Executive").
1. EMPLOYMENT AND TERM
The Company agrees to employ Executive for the period commencing on the
day and the year first written above and ending on the earlier of: (a) the date
of termination of Executive's employment in accordance with Section 4(a)-(c)
below or (b) the date that is three (3) years from the date the Company provides
Executive with written notice of termination of Executive's employment. The
Board of Directors of the Company (the "Board") shall review the terms of
Executive's employment on an annual basis and shall make such modifications to
the terms as the Board in its discretion shall deem appropriate and as Executive
shall consent.
2. DUTIES
(a) Executive shall serve in the capacity of President and Chief
Executive Officer. Executive shall perform such services and duties as are
usually associated with such positions as well as those decided upon by the
Board.
(b) Executive shall devote his full business time and energy to the
business and affairs of the Company and shall use his best efforts and abilities
faithfully and diligently to promote the business interests of the Company and
its subsidiaries as directed by and to the reasonable satisfaction of the Board.
(c) Executive's services shall be rendered in accordance with such
policies as the Company may establish for the conduct of its officers and
employees.
(d) Provided such services or investments do not violate any applicable
law, regulation or order or interfere in any way with the faithful and diligent
performance by Executive of services to the Company otherwise required or
contemplated by this Agreement or requested by the Board, Executive may:
(i) Serve as a director, trustee, or in any other similar capacity
of any business enterprise or any civic, educational, charitable or
trade organization if the Board has been informed of such service and
the Board has not expressly requested Executive to refuse, or to
discontinue, such service, and
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(ii) Make and manage personal business investments of Executive's
choice that are consistent with the conflict-of-interest policies of
the Company.
3. COMPENSATION
Commencing as of February 1, 1999, the Company shall compensate
Executive as follows:
(a) Base Salary. Executive shall receive a Base Salary at the rate of
Five Hundred Forty-nine Thousand and Five Hundred Dollars ($549,500) per annum
which shall be payable in semi-monthly installments in conformity with the
Company's policy relating to its employees generally as in effect from time to
time. Executive's Base Salary shall be reviewed periodically by the Board and
may be increased by action of the Board upon such review, but Executive's salary
shall not be decreased except as provided in Sections 4 and 5.
(b) Incentive Compensation. The Board may, in its discretion, award an
annual bonus in addition to base compensation. Such bonus, if any, shall be paid
in such amount and based upon such criteria as are from time to time adopted by
the Board.
(c) Club Membership. During the term of this Agreement, Executive shall
also be entitled to receive the use of a membership in one or more club(s)
approved by the Chairman of the Compensation and Board Affairs Committee of the
Board, suitable for promoting the business interests of the Company.
(d) Automobile. During the term of this Agreement, Executive shall also
be entitled to receive the use of a Company automobile, to be used primarily by
Executive, or in lieu thereof, at Executive's election, receive an automobile
allowance of $10,800 per annum which shall be payable in semi-monthly
installments.
(e) Certain Travel. During the term of this Agreement, Executive shall
be entitled to receive reimbursement for the reasonable expense of commercial
air travel of Executive or his spouse, for up to three trips per month total,
between the Company's principal executive office and Los Angeles, California.
(f) Additional Benefits. Executive also shall be entitled to receive
all benefits for which he is eligible under the terms of any stock incentive
plan, pension plan, SERP, life, medical, dental, vision and disability insurance
and reimbursement programs, and any other plans or arrangements, which the
Company may provide for executive officers from time to time ("Additional
Benefits"). Additional Benefits shall in all respects be paid in accordance with
the then-existing plans, or policies, programs, or arrangements establishing or
governing such Additional Benefits. The Company reserves the right to add,
terminate, or amend any existing plans, policies, programs, or arrangements
during the term of this Agreement and at all other times.
(g) Vacation. Vacation, at full pay, of four (4) weeks per calendar
year. Vacation not used during any calendar year may not be carried over to the
following year.
All compensation paid to Executive shall be subject to withholding for
taxes and subject to payroll and other taxes as required by applicable law and
in conformity with the Company's policies relating thereto as in effect from
time to time.
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4. TERMINATION OF EMPLOYMENT BY THE COMPANY
The compensation provided for in Section 3 of this Agreement and
Executive's employment by the Company may be terminated by the Company prior to
expiration of the term set forth in Section 1(b) as provided for below:
(a) Disability. If Executive becomes either partially or totally unable
to perform his duties after the making of reasonable accommodations because of
any physical or mental disability during the term of his employment hereunder
for three (3) consecutive calendar months or for shorter periods aggregating 90
or more business days in any 12-month period, Executive's employment may be
terminated by the Company at any time during the continuance of such disability.
Upon termination as described in this Section 4(a), Executive shall be entitled
to receive the Base Salary provided for in Section 3(a) of this Agreement for a
period of 90 days after such termination. The Company shall offset against such
Base Salary payments any payments received by Executive as a result of such
illness or injury pursuant to any federal or state program or any salary
continuation or similar program or disability insurance established by the
Company.
Upon termination as described in this Section 4(a), Executive shall
resign from his offices as an officer and director of the Company and its
subsidiaries and the Company shall continue Executive's coverage under any and
all life, medical, dental, vision and disability insurance plans for a period of
120 days after such termination at the expense of the Company. Other Additional
Benefits shall be made available to Executive as required by applicable laws,
including the health coverage continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act, 29 U.S.C. xx.xx. 1161-1168 ("COBRA"), and by
the terms of the Additional Benefit plans, policies, programs, and arrangements
in effect at the time of termination. Executive's period of coverage under COBRA
(29 U.S.C. ss. 1162(2)), shall begin on the date of the termination of his
employment under this Section 4(a). Executive agrees to execute such documents
as may be requested by the Company in order to comply with its obligations under
this Section 4(a) and under COBRA and other applicable laws. The Company shall
provide Executive with the health coverage continuation benefits specified by
COBRA whether or not the Company is obligated under COBRA to do so.
(b) Death. If Executive dies during the term of this Agreement,
Executive's Beneficiary or Beneficiaries, as defined in Section 7 of this
Agreement, shall be entitled to receive the Base Salary provided for in Section
3(a) of this Agreement for a period of 90 days after the date such death occurs.
Additional Benefits shall be made available to the Beneficiaries of Executive
under the life, medical, dental, vision and other Additional Benefit plans,
policies, programs, and arrangements, as required by applicable laws, including
COBRA, and by the terms of the Additional Benefit plans, policies, programs, and
arrangements in effect at the time of Executive's death. The Company shall
provide Executive's Beneficiaries with the health coverage continuation benefits
specified by COBRA whether or not the Company is obligated under COBRA to do so.
(c) For Cause. The Company may upon 14 days' notice to Executive
terminate this Agreement and all of its obligations hereunder to Executive
accruing after the date of such termination if the termination is for "cause." A
termination for cause is a termination effected by the Board on one or more of
the following grounds: (i) that Executive has been declared of unsound
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mind by a court, (ii) that Executive has been convicted of a felony, (iii) that
Executive has been convicted of a misdemeanor involving moral turpitude, or (iv)
that Executive has repeatedly committed a material breach of this Agreement
(provided that Executive has been notified of the prior breach).
Except as expressly required by applicable laws, including COBRA if
applicable, and by the terms of the Additional Benefits plans, policies,
programs, and arrangements then in effect, upon such termination, Executive's
rights under Section 3 of this Agreement shall terminate on the date of the
termination of his employment under this Section 4(c). Executive's period of
coverage under COBRA (29 U.S.C. ss. 1162(2)), if any, shall begin on the date of
the termination of his employment under this Section 4(c). Upon termination as
described in this Section 4(c), Executive shall resign from his offices as an
officer and director of the Company and its subsidiaries. Executive agrees to
execute all documents as may be requested by the Company in order to comply with
its obligations under this Section 4(c) and under COBRA, if applicable, and any
other applicable laws.
(d) Other Termination. The Company may by notice to Executive terminate
Executive's employment for reasons other than those specified in Sections 4(a)
through (c) above. In the event notice of termination of Executive's employment
is given by the Company for reasons other than those specified in Sections 4(a)
through (c), and provided that the provisions of Section 5 do not apply, from
the date of such notice of termination Executive shall be entitled to receive
only the compensation specifically provided below:
(i) The Executive's annual Base Salary in effect at the time of
termination until the expiration of the employment period as provided
in Section 1(b) of this Agreement.
(ii) Additional Benefits under any life, medical, dental, vision
and disability insurance and reimbursement programs in which Executive
was participating at the time of notice of termination of Executive's
employment, which benefits shall be continued until the earlier to
occur of the expiration of Executive's employment period as provided in
Section 1(b) or Executive's acceptance of comparable employment.
Additional Benefits under the terms of any stock incentive plan,
pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of stock options and
acceleration of the lapse of restrictions of any restricted stock
awards held by Executive that would have vested or lapsed during the
period between notice of termination of Executive's employment and the
expiration of Executive's employment period as provided in Section
1(b).
Upon termination of Executive's employment as described in this Section
4(d), Executive shall resign from his offices as an officer and director of the
Company and its subsidiaries and the Company shall, at the option of Executive,
(i) continue installment payments to Executive on the periodic basis described
in Section 3(a) at the rate and for the duration of the employment period
specified in Section 4(d)(i); or (ii) make a lump sum payment to Executive equal
to seventy-five percent (75%) of the amounts due Executive under Section 4(d)(i)
for the duration of the employment period specified therein. A lump sum payment
in accordance with this paragraph shall be made within ten (10) working days of
Executive's election.
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Upon termination of Executive's employment as described in this Section
4(d), Additional Benefits shall be made available to Executive as required by
applicable laws, including COBRA. Executive's period of coverage under COBRA (29
U.S.C. ss. 1162(2)), for purposes of this Section 4(d) shall begin on the date
of the termination of the benefits to which Executive is entitled pursuant to
Section 4(d)(ii). Executive agrees to execute such documents as may be requested
by the Company in order to comply with its obligations under this Section 4(d)
and under COBRA and any other applicable laws. The Company shall provide
Executive with the health coverage continuation benefits specified by COBRA
whether or not the Company is obligated under COBRA to do so.
(e) Constructive Termination. The occurrence of any of the following
events shall be deemed a termination of Executive's employment under Section
4(d) above:
(i) Failure to elect or reelect or otherwise to maintain Executive
in the office or the position, or a substantially equivalent office or
position, with the Company which Executive holds as of the date of this
agreement (or which may be increased from time to time).
(ii) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to
Executive's position with the Company, a reduction in Executive's Base
Salary, as increased from time to time, or the termination or denial of
Executive's rights to a substantial amount of Additional Benefits as
herein provided, any of which is not remedied within 10 calendar days
after receipt by the Company of written notice from Executive of such
change, reduction or termination, as the case may be.
(iii) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
The determination by Executive in good faith that any of the events described in
clauses (i) through (iii) above has occurred shall be conclusive.
5. TERMINATION RELATING TO CHANGE OF CONTROL
(a) Any of the following events shall constitute a "Change of Control"
hereunder:
(i) any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement) individuals who at the
beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of Directors
or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or
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(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company
or any of its subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Reorganization"), or sale or other
disposition of all or substantially all of the Company's assets to an
entity that is not wholly owned by the Company (a "Sale"), unless
immediately following such Reorganization or Sale, more than 80% of the
total voting power (in respect of the election of directors, or similar
officials in the case of an entity other than a corporation) of either
(x) the surviving corporation or entity resulting from such
Reorganization or the entity which has acquired all or substantially
all of the assets of the Company (in either case, the "Surviving
Entity"), or (y) if applicable, the ultimate parent entity that
directly or indirectly has beneficial ownership of 50% or more of the
total voting power (in respect of the election of directors, or similar
officials in the case of an entity other than a corporation) of the
Surviving Entity (the "Parent Entity"), is represented by Company
voting securities that were outstanding immediately prior to such
Reorganization or Sale (or, if applicable, is represented by shares
into which such Company voting securities were converted pursuant to
such Reorganization or Sale), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of
such Company voting securities among the holders thereof immediately
prior to the Reorganization or Sale; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
(b) Effective upon or within 180 days of a Change of Control, Executive
may terminate employment with the Company by delivering written notice of such
termination to the Company, accompanied by Executive's resignation from his
offices, if any, as an officer and director of the Company and its subsidiaries.
Upon Executive's termination of employment or tendering of resignation as
specified in the preceding sentence, or if the Company (or any successor)
terminates (whether by Constructive Termination, within the meaning of Section
4(e), or otherwise) Executive's employment for any reason within 180 days of a
Change of Control, Executive shall be entitled to receive:
(i) A lump sum payment (the "Severance Payment") equal to three
(3) times Executive's Compensation Level. "Compensation Level" shall
mean the sum of (A) the greater of (1) Executive's annual base salary
in effect on the date of termination or (2) Executive's annual base
salary in effect immediately prior to the Change of Control, plus (B)
an amount (the "Bonus Amount") equal to the greater of (1) Executive's
maximum bonus opportunity under the Company's annual bonus plan
("Maximum Bonus") in respect of the year of Executive's termination of
employment determined as of Executive's date of termination or (2)
112.5% of the amount determined under clause (A) of this sentence. Such
lump sum payment shall be paid by the Company on the date (the "Payment
Date") that is no later than two (2) business days immediately prior to
the Anticipated COC Date or, in the case of a Change of Control in
respect of which an Anticipated COC Date is not applicable, no later
than ten (10) working days following any termination of employment
covered by this Section 5. For purposes of this Agreement, the
"Anticipated COC Date" is the date
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reasonably determined in good faith by the Chief Executive Officer of
the Company to be the date on which an anticipated Change of Control
is expected to occur.
(ii) Additional Benefits (for Executive, his spouse and
dependents) under any and all life, medical, dental, vision and
disability insurance and reimbursement programs in which Executive was
participating at the earlier of (A) the date immediately prior to the
Change of Control and (B) the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of three (3) years following
Executive's date of termination of employment or Executive's acceptance
of comparable employment; provided, however, that medical benefits (for
Executive, his spouse and dependents) shall continue until the date on
which Executive and his spouse are eligible to be covered by Medicare;
provided, further, that upon Executive's acceptance of comparable
employment, Additional Benefits under plans and programs of the Company
(or any successor) shall be secondary to the benefits available, if
any, for Executive, his spouse and dependents from the benefit plans
maintained by Executive's new employer. Additional Benefits under the
terms of any stock incentive plan, pension plan and SERP will not be
continued except as expressly required by applicable laws or by the
terms of the Additional Benefits plans, policies, programs, and
arrangements then in effect.
(iii) As of the Payment Date, immediate acceleration of vesting of
all stock options and dividend equivalent rights and immediate lapse of
restrictions on all restricted stock awards held by Executive.
(iv) A lump sum payment equal to the product of (A) the Bonus
Amount and (B) a fraction, the numerator of which is the number of
weeks elapsed (with a full week credited for any partial week elapsed)
during the year of termination through the date of termination, and the
denominator of which is 52. Such lump sum payment shall be paid by the
Company on the Payment Date.
(v) A lump sum payment equal to the present value of the excess of
(A) the amount payable to Executive pursuant to the Company's
Supplemental Executive Retirement Plan ("SERP") determined as if
Executive had been credited with three (3) additional years of age and
service (with annual compensation during such three-year period equal
to the Compensation Level), over (B) the amount actually payable to
Executive pursuant to the SERP. For purposes of this paragraph (v), the
amount in each of clauses (A) and (B) shall be determined as actuarial
equivalent lump sum amounts (determined in accordance with the lump sum
and actuarial equivalent payment provisions of the SERP). Such lump sum
payment shall be paid by the Company on the Payment Date.
(c) On the Payment Date, the Company shall pay to Executive, with
respect to each outstanding stock option held by Executive that provides for the
grant of dividend equivalent rights, a lump sum payment equal to the product of
(i) and (ii), where (i) is the sum of (A) an amount equal to the accumulated
dividend equivalents in respect of such stock options credited as of the Change
of Control, plus (B) an amount equal to the sum of the projected additional
dividend equivalents that would have been credited in respect of such stock
options during the period commencing on the Change of Control through the fifth
anniversary of the date of grant of such stock options, assuming the Company had
continued to declare dividends with the same frequency as dividends were
declared
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immediately prior to the Change of Control, and using a dividend equivalent
crediting rate equal to the rate used for crediting dividend equivalents in
respect of the most recent dividend actually paid by the Company immediately
prior to first public announcement of the anticipated Change of Control (i.e.,
based on the amount of such actual dividend paid by the Company and the closing
price per share of the Company's common stock on the declaration date of such
dividend), and (ii) is the greater of (A) the closing price per share of the
Company's common stock on the most recent trading day immediately prior to the
Payment Date and (B) if applicable, the final value per share paid to holders of
the Company's common stock in the transaction giving rise to the Change of
Control (provided, that if holders of the Company's common stock receive
publicly traded shares or securities in such transaction, the value per share
shall be determined under this clause (ii)(B) with reference to the closing
price of such shares or securities on the most recent trading day immediately
prior to the Payment Date).
(d) In connection with any termination of employment pursuant to this
Section 5, the Company shall provide Executive with (i) outplacement services
from an outplacement firm of Executive's choice up to a maximum cost of $10,000,
(ii) continuation for a period of three (3) years following Executive's date of
termination of the benefits provided in Sections 3(c) and 3(d), and (iii)
continuation for a period of three (3) years following Executive's date of
termination of the executive medical/financial counseling services provided by
the Company to Executive at the level in effect on Executive's date of
termination (or, if greater, in effect immediately prior to the Change of
Control); provided that the Executive may elect to receive the cash value of the
benefits provided under this Section 5(d), in which case such amount shall be
paid by the Company on the Payment Date.
(e) If any dispute arises between the Company and Executive regarding
Executive's rights under this Section 5, Executive shall be entitled to recover,
on an as-incurred basis, his attorneys' fees and costs incurred in connection
with such dispute, notwithstanding the provisions of Section 19 hereof.
(f) If the expected Surviving Entity of any Change of Control timely
provides the Consulting Notice to Executive, Executive agrees that, following
the termination of Executive's employment pursuant to this Section 5, Executive
shall serve as a consultant to the Surviving Entity until the first anniversary
of Executive's date of termination (the "Consulting Period"). For purposes of
this Agreement, the "Consulting Notice" is a written notice delivered by the
expected surviving entity of such Change of Control to Executive no later than
30 days prior to the Anticipated COC Date (or, if there is no Anticipated COC
Date, no later than 10 days following Executive's termination of employment)
pursuant to which such expected Surviving Entity irrevocably elects and
covenants to retain Executive as a consultant to the Company, on the terms set
forth below in this Section 5(f), for the entirety of the one-year Consulting
Period, and agrees to pay Executive the fully-earned consulting fee required
under this Section 5(f), which fee shall be fully earned by Executive upon
delivery of the Consulting Notice without regard to whether the Company or such
expected Surviving Entity uses some, all or none of the consulting services
agreed to be provided by Executive. During the Consulting Period, Executive
shall be reasonably available for up to 200 hours of consultation with the
Company by telephone or in person at the Company's principal executive office,
and Executive shall provide consulting services substantially similar to the
services performed by Executive immediately prior to the earlier of the Payment
Date or Executive's date of termination of employment. Performance of consulting
services shall be scheduled on reasonable
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notice and in such a manner so as not to interfere significantly with other
business activities of Executive. During the Consulting Period, the Company
shall pay, in accordance with its normal payroll practices (but no less
frequently than monthly), Executive the fully-earned consulting fee in an amount
equal to the greater of (A) Executive's annual base salary in effect on the date
of termination or (B) Executive's annual base salary in effect immediately prior
to the Change of Control, and shall reimburse Executive for business and travel
expenses associated with such consulting services reasonably and necessarily
incurred by Executive during the Consulting Period.
(g) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined by the Accounting Firm (as defined below) that any
payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) by the Company (or any of its affiliated
entities) or any entity which effectuates a Change of Control (or any of its
affiliated entities) to or for the benefit of Executive (whether pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 5(g)) (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall, on the Payment Date, pay to Executive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes and net of any deductions which are disallowed to
Executive by reason of Executive's receipt of the Gross-Up Payment and net of
any benefits that result from the deductibility by Executive of such taxes
(including, in each case, any interest or penalties imposed with respect to such
taxes), including, without limitation, any federal, state, and local income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Subject to the foregoing provisions of this Section 5(g), all
determinations required to be made under this Section 5(g), including whether a
Gross-Up Payment is required, the amount of such Gross-Up Payment, and the
assumptions to be utilized in arriving at such determinations, shall be made by
the public accounting firm that is retained by the Company as of the date
immediately prior to the Change of Control (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive that there has been or will be a Payment, or such earlier time as
is requested by the Company (collectively, the "Determination"). In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, Executive may appoint another
nationally recognized public accounting firm (or, alternatively, may specify the
office and personnel of the public accounting firm retained by the Company as of
the date immediately prior to the Change of Control) to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company and the Company shall enter into any agreement
requested by the Accounting Firm in connection with the performance of the
services hereunder. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion to such
effect, and to the effect that failure to report the Excise Tax, if any, on
Executive's applicable federal income tax return will not result in the
imposition of a negligence or similar penalty. The Determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in
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the application of Section 4999 of the Code at the time of the Determination, it
is possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment") or Gross-Up Payments are made by the
Company which should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the Executive
thereafter is required to make payment of any Excise Tax or additional Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to
or for the benefit of Executive. In the event the amount of the Gross-Up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been made
and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent he
has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. Executive shall
cooperate, to the extent his expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
(h) Executive agrees that in the event that payments are made by the
Company to Executive on a Payment Date (or thereafter) in advance of an expected
Change of Control, and such Change of Control does not occur within 10 business
days following the Anticipated COC Date, Executive shall be obligated to, and
shall, repay to the Company, within 2 business days following written notice by
the Company to Executive that such Change of Control has not occurred during
such period, all such amounts paid pursuant to this Section 5; provided that the
return of such payments shall not prejudice Executive's rights under this
Section 5 with respect to any Change in Control.
(i) Any payments by the Company under this Section 5 (after taking into
account any amounts repaid to the Company pursuant to Section 5(h)) shall be in
lieu of any payments under Section 4(d).
6. TERMINATION OF EMPLOYMENT BY EXECUTIVE
(a) In addition to his rights under Section 5 hereof, Executive may
terminate employment with the Company without cause as of a specified date not
less than 30 days after delivering written notice of such termination to the
Company. Upon the effective date of such termination, Executive's right to
receive the compensation provided for in Section 3 of this Agreement shall
terminate. The Company may at any time in its sole discretion waive all or part
of the notice period and specify any day in such period that has not yet
occurred as the date of termination for purposes of this Section 6(a); in the
event of such occurrence, the Company shall pay Executive the amount of the
compensation provided for in Section 3 of this Agreement for the remainder of
the notice period given by Executive.
(b) Upon termination as described in Section 6(a), Additional Benefits
will be made available to Executive as required by applicable laws, including
COBRA, if applicable, and by the terms of the Additional Benefit plans,
policies, programs, and arrangements in effect at the time of termination.
Executive's period of coverage under COBRA (29 U.S.C. ss. 1162(2)), if any,
shall
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begin on the date of the termination of his employment under Section 6(a).
Executive agrees to execute such documents as may be requested by the Company in
order to comply with its obligations under this Section 6(b) and under COBRA, if
applicable, and any other applicable laws.
7. DESIGNATION OF BENEFICIARY
Executive may designate one or more persons or entities (including a
trust or trusts or his estate) to receive any compensation payable to him under
Section 4(b) ("Beneficiaries"). If Executive shall designate more than one
Beneficiary, he shall set forth the proportion in which each is to receive such
compensation; any such designation which fails to set forth such proportion
shall be an invalid designation as to all those so designated. Executive also
may designate one or more successor Beneficiaries who shall succeed to the
rights of the Beneficiaries originally designated, in case the latter should die
prior to the receipt of full payment. Executive may from time to time change any
designation so made, and that last designation shall be controlling. If
Executive designates a person other than, or in addition to, his spouse, his
spouse shall specifically approve his designation and authorize the Company to
pay his compensation as designated. In the absence of a valid designation by
Executive meeting the requirements of this Section 7, or in the event of the
death of a Beneficiary for whom no successor Beneficiary has been validly
designated, Executive's compensation, or the portion of such compensation then
payable to such deceased Beneficiary, shall be paid to the administrator or
executor of Executive's estate for the benefit of Executive's estate, who shall
in that event be deemed a Beneficiary under this Section 7.
Executive's designation and his spouse's approval and authorization, if
necessary, must be in the form of a signed writing witnessed by two adult
persons (other than any designated Beneficiary) and must have been delivered to
the Company prior to Executive's death.
8. REIMBURSEMENT OF EXPENDITURES
During the term of this Agreement, the Company shall reimburse
Executive for business expenses reasonably and necessarily incurred by him on
its behalf in accordance with its business-expense reimbursement policies as in
effect from time to time and subject to Executive's furnishing such
substantiation of such expenses as the Company may require.
9. RELOCATION
If the Company shall relocate its principal executive offices to a
location which is in excess of 25 miles from its current location in Denver,
Colorado, Executive shall be entitled to receive all of the benefits of the
Company's relocation policy in effect in connection with such move. Such
benefits shall, at a minimum, include (i) the Company's guarantee to purchase
Executive's Denver residence at its then current appraised market value or
Executive's purchase cost plus remodeling costs, whichever is greater, if
Executive has been unable to sell the residence after marketing it for a minimum
of 90 days; (ii) reimbursement of any sales commission, and (iii) reimbursement
of direct moving costs. In the event of a relocation of the Company's principal
executive offices from Denver, Colorado in connection with a "Change of Control"
as defined in Section 5(a) hereof, Executive may elect to designate his
residence in Los Angeles, California as his residence for purposes of the
relocation benefits to which he is entitled hereunder.
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10. CONFIDENTIAL INFORMATION
During the term of this Agreement and the period specified in Section
17 of this Agreement, Executive shall not disclose to any persons (other than
another employee of the Company) any confidential information relating to the
business of the Company obtained by him while in the employ of the Company,
without the consent of the Board, except as necessary or appropriate in the
discharge of his obligations to the Company and its shareholders.
11. NONASSIGNMENT OF EXECUTIVE'S OBLIGATIONS AND DUTIES
The obligations and duties of Executive hereunder shall be personal and
not assignable.
12. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and shall be binding upon
the Company and its respective successors and assigns, including any purchaser
of all or substantially all of its assets, and shall be binding upon Executive's
assigns, executors, administrators, Beneficiaries, or their legal
representatives. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by operation of law, or otherwise.
13. NOTICES
Any notices provided for in this Agreement shall be sent to the Company
at American Health Properties, Inc., 0000 X. Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: Chairman, Compensation Committee, or at
such other address as the Company may from time to time in writing designate,
and to Executive at 0000 X. Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx,
Xxxxxxxx 00000, or at such other address as he may from time to time in writing
designate. All notices will be deemed to have been delivered (i) as of the first
to occur of actual receipt or two (2) business days after being sent by
certified mail, return receipt requested, postage paid and properly addressed to
the designated address of the party to whom addressed or (ii) if notice is given
in any other manner, when actually received.
14. ENTIRE AGREEMENT
This instrument contains the entire agreement between the Company and
Executive relating to the subject of Executive's employment by the Company,
except to the extent that the terms and provisions of Additional Benefits,
expense reimbursement policies and Company policies governing executives and
employees generally are (as referred to herein) set forth in other documents.
This Agreement supersedes all prior and contemporaneous oral and written
agreements, understandings, and representations, among the parties with respect
to the subject matter hereof, including without limitation that certain amended
and restated executive employment agreement between the Company and Executive,
dated as of March 15, 1999.
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15. UNIQUE SERVICES
Executive recognizes that the services to be rendered by him pursuant
to this Agreement are of a character giving them peculiar value, the loss of
which cannot be adequately compensated for in damages, and in the event of a
breach of this Agreement by Executive, the Company shall be entitled to
equitable relief by way of injunction in addition to any other legal or
equitable remedies available to it.
16. TERMINATION OF AGREEMENT
This Agreement shall terminate at the end of the period of Executive's
employment, as described in Section 1 of this Agreement (or at the end of any
different period specifically set forth herein for the termination of
Executive's employment), and may be continued thereafter only upon the execution
of a writing to that effect signed by the Company and Executive. If Executive's
employment continues after the termination of this Agreement for any period
during which no such writing is in effect, Executive shall be deemed to be
employed at the will of the Company and his employment may be terminated at any
time with or without notice and with or without cause and without obligation of
any party to any other party.
17. TRADE SECRETS; COMPETITION; SOLICITATION; NONDISPARAGEMENT
In addition to the other provisions hereof, during the term of this
Agreement, and (a) for a period of one year after Executive's employment with
the Company terminates (or three years, in the event of Executive's termination
of employment pursuant to Section 5) or for so long as the Company continues to
engage in business as a real estate investment trust, whichever period is
shorter, Executive agrees not to, directly or indirectly: (1) disclose or
utilize any trade secrets or confidential information of the Company or
otherwise compete with the Company in respect of any business then carried on by
the Company, (2) hire, cause or encourage any other person to hire, any employee
of the Company or form any business enterprise with any such employee or in any
way persuade or encourage any such employee to terminate or alter his or her
employment with the Company, (3) communicate with any customer or vendor of the
Company or any employee thereof regarding the business of the Company or such
customer's, vendor's, or employee's business relationship with the Company, or
(4) make any public statement or instigate, assist or participate in the making
of any public statement, which would libel, slander or disparage (whether or not
such disparagement legally constitutes libel or slander) the Company, its
subsidiaries and publicly known affiliates, and their past or present officers,
directors and management employees; and (b) for a period of one year after
Executive's employment with the Company terminates (or two years, in the event
of Executive's termination of employment pursuant to Section 5) or for so long
as the Company continues to engage in business as a real estate investment
trust, whichever period is shorter, Executive agrees not to, directly or
indirectly, serve as an employee, officer or director of, or consult with or
otherwise assist or act in the service of, any real estate investment trust
which does business in the United States of America and at least 67% of the
value of whose portfolio is comprised of property leased or used by
healthcare-related enterprises and institutions (other than the Company as
contemplated hereby).
18. WAIVERS
The waiver or breach of any term or condition of this Agreement will
not be deemed to constitute the waiver of any other breach of the same or any
other term or condition.
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19. GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of Colorado.
20. SEVERABILITY
If any provision or clause of any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.
22. NO CONFLICT WITH PRIOR AGREEMENTS AND RIGHTS
Executive hereby represents and warrants to the Company that neither
the execution of this Agreement nor performance by Executive of his obligations
hereunder conflicts with any contractual commitment on his part to any third
party or violates or interferes with any right of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"Executive" "Company"
AMERICAN HEALTH PROPERTIES, INC.
/s/ Xxxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. XxXxx
------------------------------------ --------------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxxx X. XxXxx
Senior Vice President
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx
Secretary
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THE FOREGOING AMENDED AND
RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT BETWEEN AMERICAN
HEALTH PROPERTIES, INC. AND
XXXXXX X. XXXXXXXX IS HEREBY
CONFIRMED AND AUTHORIZED:
/s/ XXXXXXX X. XXXX
------------------------------------
XXXXXXX X. XXXX, Chairman, Compensation and
Board Affairs Committee of the Board of Directors
of American Health Properties, Inc.
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FIRST AMENDMENT TO
AMERICAN HEALTH PROPERTIES, INC.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
WITH
XXXXXX X. XXXXXXXX
THIS FIRST AMENDMENT to the Amended and Restated Executive Employment Agreement
(this "Amendment") dated as of July 16, 1999 (the "Restated Agreement") is
entered on this 4th day of August 1999 to be effective as of July 16, 1999
between AMERICAN HEALTH PROPERTIES, INC., a Delaware corporation (the
"Company"), and XXXXXX X. XXXXXXXX, an individual ("Executive").
1. AMENDMENT TO RESTATED AGREEMENT
The Company and Executive agree that Section 5(c) of the Restated
Agreement is hereby amended to clarify that the payment to be made by the
Company to Executive pursuant to Section 5(c) shall be in respect of the
cancellation of Executive's dividend equivalent rights with respect to each
outstanding stock option held by Executive, and that, upon such payment by the
Company to Executive, any and all of Executive's dividend equivalent rights with
respect to outstanding stock options held by Executive shall terminate;
provided, that if Executive becomes obligated under Section 5(h) to repay such
payment to the Company, Executive's dividend equivalent rights shall be restored
as of the date of the purported cancellation of such rights.
2. EFFECT ON RESTATED AGREEMENT
Except as provided in paragraph 2, the Restated Agreement shall remain
in full force and effect in accordance with its terms and conditions.
3. COUNTERPARTS
This Amendment may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
be effective as of the date written above.
"Company" "Executive"
AMERICAN HEALTH PROPERTIES, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. XxXxx /s/ XXXXXX X. XXXXXXXX
--------------------------------------- -----------------------------------
Xxxxxxx X. XxXxx, Senior Vice President XXXXXX X. XXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
