Exhibit 10.15
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
This Amended and Restated Executive Severance Agreement (this "Agreement")
is made as of this 26th day of February, 1999, between Apria Healthcare Group
Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx (the
"Executive").
RECITALS
A. It is the desire of the Company to retain the services of the Executive
and to recognize the Executive's contribution to the Company.
B. The Company and the Executive wish to set forth certain terms and
conditions of Executive's employment.
C. 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 as the Company's
Executive Vice President, Logistics, or in such other position and shall
undertake such duties and have such authority as the Company, through its Chief
Executive Officer, 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 Chairman or Chief Executive Officer 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 he 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 200% of his Annual Compensation, which shall be payable in one
lump sum, 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, provided, however, that if the date of such notice of termination
shall precede the date on which bonuses are paid to the Company's executives for
the 1999 fiscal year, then the amount to be included in the Executive's Annual
Compensation pursuant to this clause (i) shall be the amount of his bonus for
1998, (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.
(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; or
(iii) 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 liquidated; 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.
(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.
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:
Xxxxxxx X. Xxxxx
5 Xxxxxxxx
Xxxx xx Xxxx 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 the Company's
Senior Vice President and General Counsel
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. 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.
9. 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 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.
10. Excise Tax.
(a) In the event that any amount or benefit that may be paid or
otherwise provided to or in respect of the Executive by or on behalf of the
Company or any affiliate, whether pursuant to this Agreement or otherwise
(collectively, "Covered Payments"), is or may become subject to the tax imposed
under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any successor provision or any comparable provision of state, local or
foreign law)("Excise Tax"), the Company will pay to the Executive a
"Reimbursement Amount" equal to the total of: (A) any Excise Tax on the Covered
Payments, plus (B) any Federal, state, and local income taxes, employment and
excise taxes (including the Excise Tax) on the Reimbursement Amount, plus (C)
the product of any deductions disallowed for Federal, state or local income tax
purposes because of the inclusion of the Reimbursement Amount in the Executive's
income multiplied by the Executive's combined Federal, state, and local income
tax rate for the calendar year in which the Reimbursement Amount is includible
in the Executive's taxable income, plus (D) any interest, penalties or additions
to tax imposed under applicable law in connection with the Excise Tax or the
Reimbursement Amount, plus (E) any reasonable out-of-pocket costs incurred by
the Executive in connection with any of the foregoing. For purposes of this
Section 10(a), the Executive will be deemed to pay (1) Federal income taxes at
the highest applicable marginal rate of Federal income taxation applicable to
individuals for the calendar year in which the Reimbursement Amount is
includible in the Executive's taxable income and (2) any applicable state and
local income taxes at the highest applicable marginal rate of taxation
applicable to individuals for the calendar year in which such Reimbursement
Amount is includible in the Executive's taxable income, net of the maximum
reduction in Federal income taxes which could be obtained from the deduction of
such state or local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of the Executive's adjusted
gross income). Except to the extent provided in Section 10(c) below, this
provision is intended to put Employee in the same position as Employee would
have been had no Excise Tax been imposed upon or incurred as a result of any
Payment.
(b) The payment of a Reimbursement Amount under this Section 10 shall
not be conditioned upon the Executive's termination of employment.
(c) Notwithstanding the foregoing provisions of this Section 10, if the
Company determines that, absent this sentence, the Executive is entitled to a
Reimbursement Amount, but that the portion of the Covered Payments that would be
treated as "parachute payments" under Code Section 280G ("Covered Parachute
Payments") does not exceed 103% of the greatest amount of Covered Parachute
Payments that could be paid to the Executive such that the receipt of such
Covered Parachute Payments would not give rise to any Excise Tax (the "Safe
Harbor Amount"), then no Reimbursement Amount shall be paid to the Executive
(unless for any reason Executive is determined to be subject to the Excise Tax
after application of the balance of this sentence, in which case the full
Reimbursement Amount shall be paid), and the Covered Parachute Payments payable
under this Agreement shall be reduced so that the Covered Parachute Payments, in
the aggregate, are reduced to the Safe Harbor Amount. For purposes of reducing
the Covered Parachute Payments to the Safe Harbor Amount, only amounts payable
under this Agreement shall be reduced. If the reduction of the amounts payable
under this Agreement would not result in a reduction of the Covered Parachute
Payments to the Safe Harbor Amount, no amounts payable under this Agreement or
otherwise shall be reduced pursuant to this Section 10(c). The Company shall
notify the Executive of any intent to reduce the amount of any Covered Payments
in accordance with this Section 10(c) (which notice, if practicable, shall be
given prior to the occurrence of an event that would give rise to a Covered
Parachute Payment), and Executive shall have the right to designate which of the
Covered Payments shall be reduced and to what extent, provided that the
Executive may not so elect to the extent that, in the determination of counsel
to the Company, such election would cause the Executive to be subject to the
Excise Tax.
(d) The determination of whether an event described in Code Section
280G(b)(2)(A)(i) has occurred, the amount of any Reimbursement Amount and/or the
amounts described in Section 10(c) above shall be made initially by an
accounting firm mutually acceptable to the Company and the Executive; provided,
however, that nothing herein shall limit the Executive's right to payment of the
Reimbursement Amount in the event it is determined that any of such initial
determinations was incorrect.
(e) The Executive shall promptly notify the Company in writing of any
claim by any taxing authority that, if successful, would require the payment by
the Company of a Reimbursement Amount; provided, however, that failure by the
Executive to give such notice promptly shall not result in a waiver or
forfeiture of any of the Executive's rights under this Section 10 except to the
extent of actual damages suffered by the Company as a result of such failure. If
the Company notifies the Executive in writing within 15 days after receiving
such notice that it desires to contest such claim (and demonstrates to the
reasonable satisfaction of the Executive its ability to pay any resulting
Reimbursement Amount), the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney selected by the Company that is reasonably
acceptable to the Executive;
(iii) cooperate with the Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company's actions do not unreasonably interfere with
or prejudice the Executive's disputes with the taxing authority as to other
issues; and provided, further, that the Company shall bear and pay on an
after-tax and as-incurred basis, all attorneys fees, costs and expenses
(including additional interest, penalties and additions to tax) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax and as-incurred basis, for all resulting taxes
(including, without limitation, income and excise taxes), interest, penalties
and additions to tax.
11. 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.
12. 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.
13. 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.
14. 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 or 9 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.
15. 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, including but not
limited to the Executive's Executive Severance Agreement dated June 29, 1998, is
hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
APRIA HEALTHCARE GROUP INC.
By:_____________________________
Xxxxxx X. Xxxxxx
Chief Executive Officer
EXECUTIVE
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Xxxxxxx X. Xxxxx
