EXHIBIT 10.6
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this "Agreement")
is made as of this 28th day of June, 1997, between Apria
Healthcare Group Inc., a Delaware corporation (the "Company"),
and Xxxx X. Xxxxxxxxxx (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that his employment is terminated
by the Company without cause or in the event that he terminates
employment for Good Reason (as defined below), in order to
encourage the Executive's performance and continued commitment to
the Company.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements set forth below, the
parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve
in such positions and undertake such duties and have such
authority as the Company, through its Chief Executive Officer,
President or Board of Directors, shall assign to the Executive
from time to time in the Company's sole and absolute discretion.
The Company has the right to change the nature, amount or level
of authority and responsibility assigned to the Executive at any
time, with or without cause. The Company may also change the
title or titles assigned to the Executive at any time, with or
without cause. The Executive agrees to devote substantially all
of his working time and efforts to the business and affairs of
the Company. The Executive further agrees that he shall not
undertake any outside activities which create a conflict of
interest with his duties to the Company, or which, in the
judgment of the Board of Directors of the Company, interfere with
the performance of the Executive's duties to the Company.
2. Compensation and Benefits.
(a) Salary. The Executive's salary shall be such
salary as the Company assigns to him from time to time in
accordance with its regular practices and policies. The parties
to this Agreement recognize that the Company may, in its sole
discretion, increase such salary at any time.
(b) Bonuses. The Executive's eligibility to
receive any bonus shall be determined in accordance with the
Company's Incentive Compensation Plan or other bonus plans as
they shall be in effect from time to time. The parties to this
Agreement recognize that such bonus plans may be amended and/or
terminated by the Company at any time.
(c) Expenses. During the term of the Executive's
employment, the Executive shall be entitled to receive
reimbursement for all reasonable and customary expenses incurred
by the Executive in performing services for the Company in
accordance with the Company's reimbursement policies as they may
be in effect from time to time. The parties to this Agreement
recognize that such policies may be amended and/or terminated by
the Company at any time.
(d) Other Benefits. The Executive shall be
entitled to participate in all employee benefit plans, programs
and arrangements of the Company (including, without limitation,
stock option plans or agreements and insurance, retirement and
vacation plans, programs and arrangements), in accordance with
the terms of such plans, programs or arrangements as they shall
be in effect from time to time during the period of the
Executive's employment. The parties to this Agreement recognize
that the Company may terminate or modify such plans, programs or
arrangements at any time.
3. Grounds for Termination. The Executive's
employment may be terminated on any of the following grounds:
(a) Without Cause. 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.
(b) Death. The Executive's employment hereunder
shall terminate upon his death.
(c) Disability. If, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been unable to perform the essential
functions of his position, even with reasonable accommodation
that does not impose an undue hardship on the Company, on a full-
time basis for the entire period of six (6) consecutive months,
and within thirty (30) days after written notice of termination
is given (which may occur before or after the end of such six-
month period), shall not have returned to the performance of his
duties hereunder on a full-time basis (a "disability"), the
Company may terminate the Executive's employment hereunder.
(d) Cause. The Company may terminate the
Executive's employment hereunder 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) after written demand for substantial performance is
delivered by the Company that specifically 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 Section 3(d), 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 Chief Executive Officer or President
stating that, in the good faith opinion of the officer signing
such notice, the Executive has engaged in or committed conduct of
the nature described above in the second sentence of this Section
3(d), and specifying the particulars thereof in detail.
4. Payments upon Termination.
(a) Without Cause or with Good Reason. In the
event that the Executive's employment is terminated by the
Company for any reason other than death, disability or cause as
defined in Section 3 (b), (c) and (d) of this Agreement, or in
the event that the Executive terminates his employment hereunder
with Good Reason, the Executive shall be entitled to receive
severance pay in an aggregate amount equal to 100% of his Annual
Compensation, provided, however, that in the event such
termination occurs during the two-year period following a Change
of Control of the Company, the Executive shall be entitled to
receive an aggregate amount equal to 200% of his Annual
Compensation, which shall be paid in periodic installments in
accordance with the Company's customary practice over a period of
one (1) or two (2) years, as applicable, less any amounts
required to be withheld by applicable law, in exchange for a
valid release of all claims the Executive may have against the
Company in a form acceptable to the Company. The Company will
also pay to the Executive any earned but unused vacation time at
the rate of pay in effect on the date of the notice of
termination.
(b) Annual Compensation. For purposes of this
Section 4, 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 for 1997. 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, 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.
(c) Good Reason. For purposes of this Section 4
the term "Good Reason" means:
(i) any reduction in the Executive's
annual base salary, 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.
(d) Release of all Claims. The Executive
understands and agrees that the Company's obligation to pay the
Executive severance pay under this Agreement is subject to the
Executive's execution of a valid written waiver and release of
all claims which the Executive may have against the Company
and/or its successors in a form acceptable to the Company in its
sole and absolute discretion.
(e) Death, Disability or Cause. In the event
that the Executive's employment is terminated due to death,
disability or cause, the Company shall not be obligated to pay
the Executive any amount other than earned unused vacation,
reimbursement for business expenses incurred prior to his
termination and in compliance with the Company's reimbursement
policies, and any unpaid salary for days worked prior to the
termination.
(f) Change of Control. For purposes of this
Section 4, a "Change of Control" shall be deemed to have occurred
if :
(i) 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;
(ii) 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;
(iii) the Company is materially or
completely liquidated;
(iv) 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; or
(v) a majority of the Board of
Directors of the Company is replaced over a two (2)
year period unless such replacements have been approved
by at least two-thirds (2/3) of those remaining
directors who were directors at the beginning of such
two (2) year period.
Notwithstanding clause (i) 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% of 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.
5. Successors; Binding Agreement.
(a) The Company will require 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 agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the
same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except
that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
date of termination. As used in this Agreement, "Company" shall
mean the Company as herein before defined and any successor to
its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrator, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxxxxxxx
000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxxx, XX 00000
If to the Company:
Apria Healthcare Group Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to the attention of: Senior Vice President,
Human Resources or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
7. Antisolicitation. The Executive promises and
agrees that, during the period of his employment by the Company
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.
8. Noncompetition. The Executive promises and
agrees that for a period of one year following termination of his
employment, he will not enter business or work with or for any
business, individual, partnership, firm, corporation or other
entity then in competition with the business of the Company or
any subsidiary or affiliate of the Company.
9. 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.
10. 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 he shall not engage in unfair competition either during
the time employed by the Company or any time thereafter.
11. 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.
12. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed
by the Executive and the Chief Executive Officer or the President
of the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of California without regard to its
conflicts of law principles.
13. Validity. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
15. 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 7, 8, 9 or 10 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.
16. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
APRIA HEALTHCARE GROUP INC.
By:________________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Xxxx X. Xxxxxxxxxx
