EXHIBIT 10.38
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is
entered into by and between Apria Healthcare Group Inc. (the "Company") and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive"), as of the 26th day of February, 1999.
I. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby
accepts such employment, upon the terms and conditions hereinafter set forth,
from February 26, 1999, to and including January 18, 2001. The period of
employment covered by this Agreement shall be automatically extended for an
additional year until January 18, 2002, unless either party shall send the other
a notice prior to October 1, 2000, declining to accept such extension.
II. DUTIES.
A. The Executive shall serve during the course of his employment as the
President and Chief Operating Officer of the Company, reporting to the Chief
Executive Officer. He shall have responsibility for all operating field
management, the corporate-wide sales, marketing and revenue management functions
and such other duties and responsibilities as shall be determined from time to
time by the Chief Executive Officer or the Board of Directors of the Company.
B. The Executive agrees to devote substantially all of his time, energy
and ability to the business of the Company. Nothing herein shall prevent the
Executive, upon approval of the Board of Directors of the Company, from serving
as a director or trustee of other corpo0rations or businesses which are not in
competition with the business of the Company or in competition with any present
or future affiliate of the Company. Nothing herein shall prevent the Executive
from investing in real estate for his own account or from becoming a partner or
a stockholder in any corporation, partnership or other venture not in
competition with the business of the Company or in competition with any present
or future affiliate of the Company.
III. COMPENSATION.
A. Salary. The Company will pay to the Executive a base salary at the
rate of $400,000 per year. Such salary shall be payable in periodic installments
in accordance with the Company's customary practices. Amounts payable shall be
reduced by standard withholdings and other authorized deductions. The
Executive's salary may be increased from time to time at the discretion of the
Company's Board of Directors or its Compensation Committee.
B. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive
shall be entitled to participate in all annual bonus, incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
executives of the Company, including without limitation the Company's Incentive
Compensation Plan at the 40% target level, with eligibility for over-achievement
up to 80% of base salary.
C. Welfare Benefit Plans. The Executive and/or his family, as the case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the
Company (including, without limitation, medical, prescription, dental,
disability, salary continuance, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other
executives of the Company. The Company reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs at
any time without recourse by the Executive so long as such action is taken
generally with respect to other similarly situated peer executives and does not
single out the Executive.
D. Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to fringe benefits,
including without limitation (i) a car allowance of $8,400 per year, payable in
periodic installments in accordance with the Company's customary practices, (ii)
reasonable access to the Company's independent auditors for personal financial
planning, (iii) reasonable travel and entertainment expenses of the Executive's
spouse, on an actually incurred basis when necessary in connection with
participation in Company events, and (iv) such other benefits in accordance with
the plans, practices, programs and policies as may be in effect generally with
respect to other executives of the Company.
F. Vacation. The Executive shall be entitled to four weeks of paid
vacation annually, to be available and prorated monthly during the term of this
Agreement and otherwise to be consistent with the vacation policy and practice
applicable to other executives of the Company.
IV. TERMINATION.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that the Disability of the Executive has occurred (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section XVIII of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of his duties. For
purposes of this Agreement, "Disability" shall mean a physical or mental
impairment which substantially limits a major life activity of the Executive and
which renders the Executive unable to perform the essential functions of his
position, even with reasonable accommodation which does not impose an undue
hardship on the Company. The Company reserves the right, in good faith, to make
the determination of Disability under this Agreement based upon information
supplied by the Executive and/or his medical personnel, as well as information
from medical personnel (or others) selected by the Company or its insurers.
B. Cause. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement, "Cause" shall mean that the Company,
acting in good faith based upon the information then known to the Company,
determines that the Executive has engaged in or committed: willful misconduct;
theft, fraud or other illegal conduct; refusal or unwillingness to substantially
perform his duties (other than such failure resulting from the Executive's
Disability) for a 30-day period after written demand for substantial performance
is delivered by the Company that specifically refers to this paragraph and
identifies the manner in which the Company believes the Executive has not
substantially performed his duties; insubordination; any willful act that is
likely to and which does in fact have the effect of injuring the reputation or
business of the Company; violation of any fiduciary duty; violation of the
Executive's duty of loyalty to the Company; or a breach of any term of this
Agreement. For purposes of this paragraph, no act, or failure to act, on the
Executive's part shall be considered willful unless done or omitted to be done,
by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for Cause without
delivery to the Executive of a notice of termination signed by the Company's
Chairman of the Board or Chief Executive Officer stating that the Board of
Directors of the Company has determined that the Executive has engaged in or
committed conduct of the nature described in the second sentence of this
paragraph, and specifying the particulars thereof in detail.
C. Other than Cause or Death or Disability. The Executive or the
Company may terminate the Executive's employment at any time, without Cause, by
giving the other party to this Agreement at least 30 days advance written notice
of such termination, subject to the provisions of this Agreement.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If the Executive's employment is terminated by
reason of the Executive's death or Disability, this Agreement shall terminate
without further obligations to the Executive or his legal representatives under
this Agreement, other than for (a) payment of the sum of (i) the Executive's
base salary through the date of termination to the extent not theretofore paid,
plus (ii) any earned vacation pay, to the extent not theretofore paid (the sum
of the amounts described in clauses (i) and (ii) shall be hereinafter referred
to as the "Accrued Obligations"), which shall be paid to the Executive or his
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the date of termination; and (b) payment to the Executive or his estate or
beneficiary, as applicable, any amounts due pursuant to the terms of any
applicable welfare benefit plans.
2. Cause. If the Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to the
Executive other than for the timely payment of the Accrued Obligations. If it is
subsequently determined that the Company did not have Cause for termination
under this Section IV-D-2, then the Company's decision to terminate shall be
deemed to have been made under Section IV-D-3 and the amounts payable thereunder
shall be the only amounts the Executive may receive for his termination.
3. Other than Cause or Death or Disability.
(a) If, during the term of this Agreement, (i) the Company
terminates the Executive's employment for other than Cause or
death or Disability, or (ii) the Executive terminates his
employment hereunder with Good Reason (as defined below), this
Agreement shall terminate and the Executive shall be entitled
to receive a severance payment payable in one lump sum upon
the termination of his employment in an amount equal to 300%
of his Annual Compensation (as defined below).
Any payment made pursuant to this Section IV-D-3(a) shall be
reduced by all amounts required to be withheld by applicable
law, and shall only be made in exchange for a valid release of
all claims the Executive may have against the Company in a
form acceptable to the Company. Such payment shall constitute
the sole and entire obligation of the Company to provide any
compensation or benefits to the Executive upon termination,
except for obligations under the Company's 401(k) Savings
Plan, obligations pursuant to the terms of any outstanding
stock option agreements and the Company's obligation to
provide the benefits required by Section IV-D-3(d) below, and
except that the Company will also pay to the Executive any
Accrued Obligations (as defined in Section IV-D-1).
(b) The term "Good Reason" means:
(i) the Executive's annual base salary is reduced, except
for a general one-time "across-the board" salary
reduction not exceeding ten percent (10%) which is
imposed simultaneously on all officers of the Company;
or
(ii) the Company requires the Executive to be based at an
office location which will result in an increase of
more than thirty (30) miles in the Executive's one-way
commute; or
(iii) if the Company's Board of Directors or Chief Executive
Officer does not permit the Executive to continue to
serve as the President and Chief Operating Officer with
the responsibilities as described in Section II-A or
another mutually acceptable senior executive position;
or
(iv) there shall occur a "change of control" of the Company
and, at any time concurrent with or during the
six-month period following such change of control, the
Executive shall have sent to the Chief Executive
Officer of the Company (or the party acting in such
capacity) a written notice terminating his employment
on a date specified in said notice. For purposes of
this Agreement, the term "change of control" shall mean
the occurrence of one of the following:
(1) any "person," as such term is used in Sections
13(d)and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") is, becomes
or enters a contract to become, the "beneficial
owner," as such term is used in Rule 13d-3
promulgated under the 1934 Act, directly or
indirectly, of securities representing
twenty-five percent (25%) or more of the voting
common stock of the Company;
(2) all or substantially all of the business of the
Company is disposed of, or a contract is entered
to dispose of all of the business of the Company
pursuant to a merger, consolidation other
transaction in which (a) the Company is not the
surviving company or (b) the stockholders of the
Company prior to the transaction do not continue
to own at least sixty percent (60%) of the
surviving corporation;
(3) the Company is materially or completely liquida-
▇▇▇; or
(4) any person (other than the Company) purchases any
common stock of the Company in a tender or
exchange offer with the intent, expressed or
implied, of purchasing or otherwise acquiring
control of the Company.
Notwithstanding clause (1) above, a "change of control" shall not be deemed
to have occurred solely because a person shall be, become or enter into a
contract to become the beneficial owner of 25% or more, but less than 40%, of
the voting common stock of the Company, if and for so long as such person is
bound by, and in compliance with, a contract with the Company providing that
such person may not nominate, vote for, or select more than a minority of the
directors of the Company. The exception provided by the preceding sentence shall
cease to apply with respect to any person upon expiration, waiver, or
non-compliance with any such contract, by which such person was bound.
(c) The term "Annual Compensation" means an amount equal to the
Executive's annual base salary at the rate in effect on the date on
which the Executive received or gave written notice of his
termination, plus the sum of (i) an amount equal to the average of the
Executive's two most recent annual bonuses, if any, received under the
Company's Incentive Compensation Plan prior to the notice of
termination, (ii) the Executive's annual car allowance, if any, and
(iii) an amount determined by the Company from time to time in its
sole discretion to be equal to the average annual cost for Company
employees of obtaining medical, dental and vision insurance under
COBRA, which amount is hereby initially determined to be $5,000. In
the event that the Executive's bonus for one of the two calendar years
preceding the calendar year in which the Executive receives or gives
written notice of termination was a prorated bonus due to Executive
having worked a partial year, then solely for purposes of calculating
Annual Compensation, the Executive's prorated bonus will be
recalculated to reflect the bonus the Executive would have received
had the Executive worked for the entire year. In the event that such
notice of termination is received or given by the Executive prior to
the first date subsequent to the commencement of the Executive's
employment by the Company on which annual bonuses are generally paid
to other executives of the Company, then solely for purposes of
calculating Annual Compensation, the Executive's average of his two
most recent annual bonuses shall be deemed to be his applicable target
bonus pursuant to Section III-B, with no over-achievement.
(d) In the event of any termination of the Executive's employment pursuant
to Section IV-D-3(a), the Company shall, for a period of one year
following the termination date, provide the Executive with appropriate
office space in a furnished office suite, including reasonable
secretarial, telephone, copying and delivery services. The Company
shall not be required to spend more than a total of $50,000 to provide
this benefit to the Executive.
4. Exclusive Remedy. The Executive agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole remedy
for any termination of his employment and the Executive covenants not to assert
or pursue any other remedies, at law or in equity, with respect to any
termination of employment.
V. INTENTIONALLY DELETED
VI. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement or Executive's employment by the Company shall be settled exclusively
by arbitration, conducted before a single neutral arbitrator in accordance with
the American Arbitration Association's National Rules for Resolution of
Employment Disputes as then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of the
provisions of Sections VII, VIII, or IX of this Agreement and the Executive
hereby consents that such restraining order or injunction may be granted without
the necessity of the Company's posting any bond, and provided, further, that the
Executive shall be entitled to seek specific performance of his right to be paid
until the date of employment termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The fees and
expenses of the arbitrator shall be borne by the Company.
VII. ANTISOLICITATION.
The Executive promises and agrees that during the term of this
Agreement (including any renewal) and for a period of one year thereafter, he
will not influence or attempt to influence customers of the Company or any of
its present or future subsidiaries or affiliates, either directly or indirectly,
to divert their business to any individual, partnership, firm, corporation or
other entity then in competition with the business of the Company or any
subsidiary or affiliate of the Company.
VIII. SOLICITING EMPLOYEES.
The Executive promises and agrees that, for a period of one year
following termination of his employment, he will not directly or indirectly
solicit any of the Company employees who earned annually $50,000 or more as a
Company employee during the last six months of his or her own employment to work
for any other business, individual, partnership, firm, corporation, or other
entity.
IX. CONFIDENTIAL INFORMATION.
A. The Executive, in the performance of his duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential
information, including but not limited to systems technology, field operations,
reimbursement, development, marketing, organizational, financial, management,
administrative, clinical, customer, distribution and sales information, data,
specifications and processes presently owned or at any time in the future
developed, by the Company or its agents or consultants, or used presently or at
any time in the future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material"). All such
Confidential Material is considered secret and will be available to the
Executive in confidence. Except in the performance of duties on behalf of the
Company, the Executive shall not, directly or indirectly for any reason
whatsoever, disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the Executive's) to be
confidential because it has become part of the public domain. All records,
files, drawings, documents, notes, disks, diskettes, tapes, magnetic media,
photographs, equipment and other tangible items, wherever located, relating in
any way to the Confidential Material or otherwise to the Company's business,
which the Executive prepares, uses or encounters during the course of his
employment, shall be and remain the Company's sole and exclusive property and
shall be included in the Confidential Material. Upon termination of this
Agreement by any means, or whenever requested by the Company, the Executive
shall promptly deliver to the Company any and all of the Confidential Material,
not previously delivered to the Company, that may be or at any previous time has
been in the Executive's possession or under the Executive's control.
B. The Executive hereby acknowledges that the sale or unauthorized use
or disclosure of any of the Company's Confidential Material by any means
whatsoever and at any time before, during or after the Executive's employment
with the Company shall constitute unfair competition. The Executive agrees that
he shall not engage in unfair competition either during the time employed by the
Company or any time thereafter.
X. PARACHUTE LIMITATION.
Notwithstanding any other provision of this Agreement, the Executive
shall not have any right to receive any payment or other benefit under this
Agreement, any other agreement, or any benefit plan if such right, payment or
benefit, taking into account all other rights, payments or benefits to or for
the Executive under this Agreement, all other agreements, and all benefit plans,
would cause any right, payment or benefit to the Executive under this Agreement
to be considered a "parachute payment" within the meaning of Section 280G(b) (2)
of the Internal Revenue Code as then in effect (a "Parachute Payment"). In the
event that the receipt of any such right or any other payment or benefit under
this Agreement, any other agreement, or any benefit plan would cause the
Executive to be considered to have received a Parachute Payment under this
Agreement, then the Executive shall have the right, in the Executive's sole
discretion, to designate those rights, payments or benefits under this
Agreement, any other agreements, and/or any benefit plans, that should be
reduced or eliminated so as to avoid having the right, payment or benefit to the
Executive under this Agreement be deemed to be a Parachute Payment.
XI. SUCCESSORS.
A. This Agreement is personal to the Executive and shall not, without
the prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company, its subsidiaries and its successors and assigns and any such
subsidiary, successor or assignee shall be deemed substituted for the Company
under the terms of this Agreement for all purposes. As used herein, "successor"
and "assignee" shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise.
XII. WAIVER.
No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
XIII. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company's Chairman or Chief
Executive Officer.
XIV. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, such invalidity shall not affect any other provisions or applications
of the Agreement which can be given effect without the invalid provisions or
applications and, to this end, the provisions of this Agreement are declared to
be severable.
XV. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and final
understanding concerning the Executive's employment with the Company and the
other subject matters addressed herein between the parties. It is intended by
the parties as a complete and exclusive statement of the terms of their
agreement from and after the date hereof. It supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matter hereof, including without limitation the
Executive's Employment Agreements dated November 7, 1997 and January 26, 1998,
except that (i) such prior agreements shall remain in effect with respect to the
time periods prior to the date hereof during which such agreements were in
effect, and (ii) any reference in the Executive's stock option agreements with
the Company to the term "Good Reason" as defined in such agreements shall be
deemed to refer to "Good Reason" as defined in this Agreement. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
XVI. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered
within the State of California and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
by the laws of the State of California without regard to principles of conflict
of laws.
XVII. CONSTRUCTION.
In any construction to be made of this Agreement, the same shall not be
construed against any party on the basis that the party was the drafter. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.
XVIII. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand
or by courier, or if mailed by registered or certified mail, postage prepaid,
addressed to the Executive at ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or addressed to the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Executive Officer, with a copy to the attention of the Senior
Vice President, Human Resources. Either party may change the address at which
notice shall be given by written notice given in the above manner.
XIX. EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Xerographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.
XX. LEGAL COUNSEL.
The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
APRIA HEALTHCARE GROUP INC. THE EXECUTIVE
By:
-------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
