1
EXHIBIT 10.1
AMERICAN HEALTH PROPERTIES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
WITH
XXXXXX X. XXXXXXX
This Executive Employment Agreement (the "Agreement") is entered into
as of April 15, 1996, between AMERICAN HEALTH PROPERTIES, INC., a Delaware
corporation (the "Company") and XXXXXX X. XXXXXXX, an individual ("Executive").
1. EMPLOYMENT AND TERM
The Company agrees to employ Executive for the period commencing on
the day and the year first written above and ending on the earlier of: (a) the
date of termination of Executive's employment in accordance with Section
4(a)-(c) below or (b) the date that is two (2) years from the date the Company
provides Executive with written notice of termination of Executive's
employment. The Board of Directors of the Company (the "Board") shall review
the terms of Executive's employment on an annual basis and shall make such
modifications to the terms as the Board in its discretion shall deem
appropriate and as Executive shall consent.
2. DUTIES
(a) Executive shall serve in the capacity of Senior Vice President
and Chief Investment Officer. Executive shall perform such services and duties
as are usually associated with such positions as well as those decided upon by
the President and the Board.
(b) Executive shall devote his full business time and energy to
the business and affairs of the Company and shall use his best efforts and
abilities faithfully and diligently to promote the business interests of the
Company and its subsidiaries as directed by and to the reasonable satisfaction
of the President and the Board.
(c) Executive's services shall be rendered in accordance with such
policies as the Company may establish for the conduct of its officers and
employees.
(d) Provide leadership in the Company's efforts to develop a
merchant banking or similar vehicle as the lead executive.
(e) Provided such services or investments do not violate any
applicable law, regulation or order or interfere in any way with the faithful
and diligent performance by Executive of services to the Company otherwise
required or contemplated by this Agreement or requested by the Board, Executive
may:
2
(i) Serve as a director, trustee, or in any other
similar capacity of any business enterprise or any civic, educational,
charitable or trade organization if the Board has been informed of
such service and the Board has not expressly requested Executive to
refuse, or to discontinue, such service, and
(ii) Make and manage personal business investments of
Executive's choice that are consistent with the conflict-of-interest
policies of the Company.
3. COMPENSATION
Commencing as of April 15, 1996, the Company shall compensate
Executive as follows:
(a) Base Salary. Executive shall receive a Base Salary at the
rate of Two Hundred Thousand Dollars ($200,000) per annum which shall be
payable in semi-monthly installments in conformity with the Company's policy
relating to its employees generally as in effect from time to time. Executive's
Base Salary shall be reviewed periodically by the Board and may be increased by
action of the Board upon such review, but Executive's salary shall not be
decreased except as provided in Sections 4 and 5.
(b) Incentive Compensation. The Board may, in its discretion,
award an annual bonus in addition to base compensation. Such bonus, if any,
shall be paid in such amount and based upon such criteria as are from time to
time adopted by the Board.
(c) Additional Benefits. Executive also shall be entitled to
receive all benefits for which he is eligible under the terms of any stock
incentive plan, pension plan, SERP, life, medical, dental, vision and
disability insurance and reimbursement programs, and any other plans or
arrangements, which the Company may provide for executive officers from time to
time ("Additional Benefits"). Additional Benefits shall in all respects be paid
in accordance with the then-existing plans, or policies, programs, or
arrangements establishing or governing such Additional Benefits. The Company
reserves the right to add, terminate, or amend any existing plans, policies,
programs, or arrangements during the term of this Agreement and at all other
times.
(d) Vacation. Vacation, at full pay, of four (4) weeks per
calendar year. Vacation not used during any calendar year may not be carried
over to the following year.
All compensation paid to Executive shall be subject to withholding for
taxes and subject to payroll and other taxes as required by applicable law and
in conformity with the Company's policies relating thereto as in effect from
time to time.
4. TERMINATION OF EMPLOYMENT BY THE COMPANY
The compensation provided for in Section 3 of this Agreement and
Executive's employment by the Company may be terminated by the Company prior to
expiration of the term set forth in Section 1(b) as provided for below:
2
3
(a) Disability. If Executive becomes either partially or totally
unable to perform his duties because of any physical or mental disability
during the term of his employment hereunder for three (3) consecutive calendar
months or for shorter periods aggregating 90 or more business days in any
12-month period, Executive's employment may be terminated by the Company at any
time during the continuance of such disability. Upon termination as described
in this Section 4(a), Executive shall be entitled to receive the Base Salary
provided for in Section 3(a) of this Agreement for a period of 90 days after
such termination. The Company shall offset against such Base Salary payments
any payments received by Executive as a result of such illness or injury
pursuant to any federal or state program or any salary continuation or similar
program or disability insurance established by the Company.
Upon termination as described in this Section 4(a), Executive shall
resign from his offices as an officer of the Company and its subsidiaries and
the Company shall continue Executive's coverage under any and all life,
medical, dental, vision and disability insurance plans for a period of 120 days
after such termination at the expense of the Company. Other Additional
Benefits shall be made available to Executive as required by applicable laws,
including the health coverage continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act, 29 U.S.C. Sections 1161- 1168 ("COBRA"),
and by the terms of the Additional Benefit plans, policies, programs, and
arrangements in effect at the time of termination. Executive's period of
coverage under COBRA (29 U.S.C. Section 1162(2)), shall begin on the date of
the termination of his employment under this Section 4(a). Executive agrees to
execute such documents as may be requested by the Company in order to comply
with its obligations under this Section 4(a) and under COBRA and other
applicable laws. The Company shall provide Executive with the health coverage
continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(b) Death. If Executive dies during the term of this Agreement,
Executive's Beneficiary or Beneficiaries, as defined in Section 7 of this
Agreement, shall be entitled to receive the Base Salary provided for in Section
3(a) of this Agreement for a period of 90 days after the date such death
occurs. Additional Benefits shall be made available to the Beneficiaries of
Executive under the life, medical, dental, vision and other Additional Benefit
plans, policies, programs, and arrangements, as required by applicable laws,
including COBRA, and by the terms of the Additional Benefit plans, policies,
programs, and arrangements in effect at the time of Executive's death. The
Company shall provide Executive's Beneficiaries with the health coverage
continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(c) For Cause. The Company may upon 14 days' notice to Executive
terminate this Agreement and all of its obligations hereunder to Executive
accruing after the date of such termination if the termination is for "cause."
A termination for cause is a termination effected by the Board on one or more
of the following grounds: (i) that Executive has been declared of unsound mind
by a court, (ii) that Executive has been convicted of a felony, (iii) that
Executive has been convicted of a misdemeanor involving moral turpitude, or
(iv) that Executive has repeatedly committed a material breach of this
Agreement (provided that Executive has been notified of the prior breach).
3
4
Except as expressly required by applicable laws, including COBRA if
applicable, and by the terms of the Additional Benefits plans, policies,
programs, and arrangements then in effect, upon such termination, Executive's
rights under Section 3 of this Agreement shall terminate on the date of the
termination of his employment under this Section 4(c). Executive's period of
coverage under COBRA (29 U.S.C. Section 1162(2)), if any, shall begin on the
date of the termination of his employment under this Section 4(c). Upon
termination as described in this Section 4(c), Executive shall resign from his
offices as an officer of the Company and its subsidiaries. Executive agrees to
execute all documents as may be requested by the Company in order to comply
with its obligations under this Section 4(c) and under COBRA, if applicable,
and any other applicable laws.
(d) Other Termination. The Company may by notice to Executive
terminate Executive's employment for reasons other than those specified in
Sections 4(a) through (c) above. In the event notice of termination of
Executive's employment is given by the Company for reasons other than those
specified in Sections 4(a) through (c), from the date of such notice of
termination Executive shall be entitled to receive only the compensation
specifically provided below:
(i) The Executive's annual Base Salary in effect at the
time of termination until the expiration of the employment period as
provided in Section 1(b) of this Agreement.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of stock options
and acceleration of the lapse of restrictions of any restricted stock
awards held by Executive that would have vested or lapsed during the
period between notice of termination of Executive's employment and the
expiration of Executive's employment period as provided in Section
1(b).
Upon termination of Executive's employment as described in this
Section 4(d), Executive shall resign from his offices as an officer of the
Company and its subsidiaries and the Company shall, at the option of Executive,
(i) continue installment payments to Executive on the periodic basis described
in Section 3(a) at the rate and for the duration of the employment period
specified in Section 4(d)(i); or (ii) make a lump sum payment to Executive
equal to seventy-five percent (75%) of the amounts due Executive under Section
4(d)(i) for the duration of the employment period specified therein. A lump sum
payment in accordance with this paragraph shall be made within ten (10) working
days of Executive's election.
Upon termination of Executive's employment as described in this
Section 4(d), Additional Benefits shall be made available to Executive as
required by applicable laws, including COBRA.
4
5
Executive's period of coverage under COBRA (29 U.S.C. Section 1162(2)), for
purposes of this Section 4(d) shall begin on the date of the termination of the
benefits to which Executive is entitled pursuant to Section 4(d)(ii). Executive
agrees to execute such documents as may be requested by the Company in order to
comply with its obligations under this Section 4(d) and under COBRA and any
other applicable laws. The Company shall provide Executive with the health
coverage continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(e) Constructive Termination. The occurrence of any of the
following events shall be deemed a termination of Executive's employment under
Section 4(d) above:
(i) Failure to elect or reelect or otherwise to maintain
Executive in the office or the position, or a substantially equivalent
office or position, with the Company which Executive holds as of the
date of this agreement (or which may be increased from time to time).
(ii) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or duties
attached to Executive's position with the Company, a reduction in
Executive's Base Salary, as increased from time to time, or the
termination or denial of Executive's rights to a substantial amount of
Additional Benefits as herein provided, any of which is not remedied
within 10 calendar days after receipt by the Company of written notice
from Executive of such change, reduction or termination, as the case
may be.
(iii) The Company shall relocate its principal executive
offices, or require Executive to have his principal location of work
changed, to any location which is in excess of 25 miles from its
present location.
(iv) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
5. TERMINATION RELATING TO CHANGE OF CONTROL
(a) Any of the following events shall constitute a "Change of
Control" hereunder:
(i) any "person" (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not
including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
5
6
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
(b) Within 180 days of a Change of Control, Executive may
terminate employment with the Company by delivering written notice of such
termination to the Company, accompanied by Executive's resignation from his
offices as an officer of the Company and its subsidiaries. Upon Executive's
termination of employment as specified in the preceding sentence, or if the
Company (or any successor) terminates Executive's employment for any reason
within 180 days of a Change of Control, Executive shall be entitled to receive:
(i) A lump sum payment equal to two (2) times Executive's
Average Annual Compensation. "Average Annual Compensation" shall mean
the average of Executive's combined salary plus Bonus for the two
calendar years immediately preceding the date of determination. If for
either of the two calendar years in the calculation period Executive
was employed for less than a full year by the Company, Executive's
salary and Bonus for such year(s) shall be computed on an annualized
basis. "Bonus" shall mean the cash portion of any incentive
compensation paid to Executive plus an amount in cash equal to the
value of any restricted stock or stock options received by Executive
as a deferral of or in lieu of a cash bonus.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of all stock
options and immediate lapse of restrictions on all restricted stock
awards held by Executive.
6
7
(c) In connection with any termination of employment pursuant to
this Section 5, the Company shall provide Executive with outplacement services
from an outplacement firm of Executive's choice up to a maximum cost of
$10,000.
(d) If any dispute arises between the Company (or any successor)
and Executive regarding Executive's rights under this Section 5, Executive
shall be entitled to recover his attorneys' fees and costs incurred in
connection with such dispute.
(e) If the aggregate of all amounts received by Executive as a
result of termination of employment pursuant to this Section 5 equals or
exceeds an amount that would cause Executive to be deemed to receive an "excess
parachute payment" as defined in Internal Revenue Code Section 280G and
subjects Executive to an excise tax liability under Internal Revenue Code
Section 4999, Executive shall also be entitled to receive a lump sum payment
equal to the "grossed-up" amount of such excise tax liability and regular
federal and state tax liabilities with respect to the lump sum payment made
under this Section 5(e).
(f) Any payments under Sections 5(b)-(e) shall be in lieu of any
payments under Section 4(d).
6. TERMINATION OF EMPLOYMENT BY EXECUTIVE.
(a) In addition to his rights under Section 5 hereof, Executive
may terminate employment with the Company without cause as of a specified date
not less than 30 days after delivering written notice of such termination to
the Company. Upon the effective date of such termination, Executive's right to
receive the compensation provided for in Section 3 of this Agreement shall
terminate. The Company may at any time in its sole discretion waive all or
part of the notice period and specify any day in such period that has not yet
occurred as the date of termination for purposes of this Section 6(a); in the
event of such occurrence, the Company shall pay Executive the amount of the
compensation provided for in Section 3 of this Agreement for the remainder of
the notice period given by Executive.
(b) Upon termination as described in Section 6(a), Additional
Benefits will be made available to Executive as required by applicable laws,
including COBRA, if applicable, and by the terms of the Additional Benefit
plans, policies, programs, and arrangements in effect at the time of
termination. Executive's period of coverage under COBRA (29 U.S.C. Section
1162(2)), if any, shall begin on the date of the termination of his employment
under Section 6(a). Executive agrees to execute such documents as may be
requested by the Company in order to comply with its obligations under this
Section 6(b) and under COBRA, if applicable, and any other applicable laws.
7. DESIGNATION OF BENEFICIARY
Executive may designate one or more persons or entities (including a
trust or trusts or his estate) to receive any compensation payable to him under
Section 4(b) ("Beneficiaries"). If Executive shall designate more than one
Beneficiary, he shall set forth the proportion in which each is to receive such
compensation; any such designation which fails to set forth such proportion
shall be an invalid
7
8
designation as to all those so designated. Executive also may designate one or
more successor Beneficiaries who shall succeed to the rights of the
Beneficiaries originally designated, in case the latter should die prior to the
receipt of full payment. Executive may from time to time change any
designation so made, and that last designation shall be controlling. If
Executive designates a person other than, or in addition to, his spouse, his
spouse shall specifically approve his designation and authorize the Company to
pay his compensation as designated. In the absence of a valid designation by
Executive meeting the requirements of this Section 7, or in the event of the
death of a Beneficiary for whom no successor Beneficiary has been validly
designated, Executive's compensation, or the portion of such compensation then
payable to such deceased Beneficiary, shall be paid to the administrator or
executor of Executive's estate, who shall in that event be deemed a Beneficiary
under this Section 7.
Executive's designation and his spouse's approval and authorization,
if necessary, must be in the form of a signed writing witnessed by two adult
persons (other than any designated Beneficiary) and must have been delivered to
the Company prior to Executive's death.
8. REIMBURSEMENT OF EXPENDITURES
During the term of this Agreement, the Company shall reimburse
Executive for business expenses reasonably and necessarily incurred by him on
its behalf in accordance with its business-expense reimbursement policies as in
effect from time to time and subject to Executive's furnishing such
substantiation of such expenses as the Company may require.
9. CONFIDENTIAL INFORMATION
During the term of this Agreement, Executive shall not disclose to any
persons (other than another employee of the Company) any confidential
information relating to the business of the Company obtained by him while in
the employ of the Company, without the consent of the Board, except as
necessary or appropriate in the discharge of his obligations to the Company and
its shareholders.
10. NONASSIGNMENT OF EXECUTIVE'S OBLIGATIONS AND DUTIES
The obligations and duties of Executive hereunder shall be personal
and not assignable.
11. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and shall be binding upon
the Company and its respective successors and assigns, including any purchaser
of all or substantially all of its assets, and shall be binding upon
Executive's assigns, executors, administrators, Beneficiaries, or their legal
representatives.
8
9
12. NOTICES
Any notices provided for in this Agreement shall be sent to the
Company at American Health Properties, Inc., 0000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Chairman, Compensation Committee,
or at such other address as the Company may from time to time in writing
designate, and to Executive at 0000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000, or at such other address as he may from time to time
in writing designate. All notices will be deemed to have been delivered (i) as
of the first to occur of actual receipt or two (2) business days after being
sent by certified mail, return receipt requested, postage paid and properly
addressed to the designated address of the party to whom addressed or (ii) if
notice is given in any other manner, when actually received.
13. ENTIRE AGREEMENT
This instrument contains the entire agreement between the Company and
Executive relating to the subject of Executive's employment by the Company,
except to the extent that the terms and provisions of Additional Benefits,
expense reimbursement policies and Company policies governing executives and
employees generally are (as referred to herein) set forth in other documents.
This Agreement supersedes all prior and contemporaneous oral and written
agreements, understandings, and representations, if any, among the parties.
14. TERMINATION OF AGREEMENT
This Agreement shall terminate at the end of the period of Executive's
employment, as described in Section 1 of this Agreement (or at the end of any
different period specifically set forth herein for the termination of
Executive's employment), and may be continued thereafter only upon the
execution of a writing to that effect signed by the Company and Executive. If
Executive's employment continues after the termination of this Agreement for
any period during which no such writing is in effect, Executive shall be deemed
to be employed at the will of the Company and his employment may be terminated
at any time with or without notice and with or without cause and without
obligation of any party to any other party.
15. WAIVERS
The waiver or breach of any term or condition of this Agreement will
not be deemed to constitute the waiver of any other breach of the same or any
other term or condition.
16. GOVERNING LAW
This Agreement will be governed by and construed in accordance with
the laws of Colorado.
9
10
17. SEVERABILITY
If any provision or clause of any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.
19. NO CONFLICT WITH PRIOR AGREEMENTS AND RIGHTS
Executive hereby represents and warrants to the Company that neither
the execution of this Agreement nor performance by Executive of his obligations
hereunder conflicts with any contractual commitment on his part to any third
party or violates or interferes with any right of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN HEALTH PROPERTIES, INC.
By /s/ XXXXXX X. XXXXXXXX
-----------------------------
Xxxxxx X. Xxxxxxxx
President and
Chief Executive Officer
/s/ XXXXXX X. XXXXXXX
----------------------
Executive
10
