EXHIBIT 10.37
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 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 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 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, 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:
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Xxxxxx X. Xxxxxx
Chief Executive Officer
EXECUTIVE
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Xxxxxxx X. Xxxxx
