EXHIBIT 10.5
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this
"Agreement") is made as of this 22nd day of May, 1998,
between Apria Healthcare Group Inc., a Delaware corporation
(the "Company"), and Xxxxx Xxxxxxx (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 Senior Vice President, Human Resources,
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, provided,
however, that the Executive's bonus for 1998 shall be
guaranteed in the amount of $50,000, which shall be payable
to the Executive on January 4, 1999. The parties to this Agreement
recognize that such bonus plans (but not the guaranteed 1998 bonus)
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 fulltime 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 sixmonth 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
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, 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 $50,000 guaranteed 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.
(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:
Xxxxx Xxxxxxx
11 Starlight
Xxxxxx, 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 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
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.
10. 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.
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 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:
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
EXECUTIVE
-----------------------------------
Xxxxx Xxxxxxx
