EXHIBIT 10.3
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this "Agreement")
is made as of this 28th day of June, 1997, between Apria
Healthcare Group Inc., a Delaware corporation (the "Company"),
and Xxxx X. Xxxxxx (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that her employment is terminated
by the Company without cause or in the event that she
terminates employment for Good Reason (as defined below), in
order to encourage the Executive's performance and continued
commitment to the Company.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements set forth below, the
parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve
in such positions and undertake such duties and have such
authority as the Company, through its Chief Executive Officer,
President or Board of Directors, shall assign to the Executive
from time to time in the Company's sole and absolute
discretion. The Company has the right to change the nature,
amount or level of authority and responsibility assigned to the
Executive at any time, with or without cause. The Company may
also change the title or titles assigned to the Executive at
any time, with or without cause. The Executive agrees to
devote substantially all of her working time and efforts to the
business and affairs of the Company. The Executive further
agrees that she shall not undertake any outside activities
which create a conflict of interest with her 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 her 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 her 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 her 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 her 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 her
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 her 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 her not in good
faith and without reasonable belief that her action or omission
was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for cause without delivery to the Executive of a
notice of termination signed by the Company's Chief Executive
Officer or President stating that, in the good faith opinion of
the officer signing such notice, the Executive has engaged in
or committed conduct of the nature described above in the
second sentence of this Section 3(d), and specifying the
particulars thereof in detail.
4.Payments upon Termination.
(a) Without Cause or with Good Reason. In the
event that the Executive's employment is terminated by the
Company for any reason other than death, disability or cause as
defined in Section 3 (b), (c) and (d) of this Agreement, or in
the event that the Executive terminates her employment
hereunder with Good Reason, the Executive shall be entitled to
receive severance pay in an aggregate amount equal to 100% of
her Annual Compensation, provided, however, that in the event
such termination occurs during the two-year period following a
Change of Control of the Company, the Executive shall be
entitled to receive an aggregate amount equal to 200% of her
Annual Compensation, which shall be paid in periodic
installments in accordance with the Company's customary
practice over a period of one (1) or two (2) years, as
applicable, less any amounts required to be withheld by
applicable law, in exchange for a valid release of all claims
the Executive may have against the Company in a form acceptable
to the Company. The Company will also pay to the Executive any
earned but unused vacation time at the rate of pay in effect on
the date of the notice of termination.
(b) Annual Compensation. For purposes of this
Section 4, the term "Annual Compensation" means an amount equal
to the Executive's annual base salary at the rate in effect on
the date on which the Executive received or gave written notice
of her termination, plus the sum of (i) an amount equal to the
average of the Executive's two most recent annual bonuses, if
any, received under the Company's Incentive Compensation Plan
prior to the notice of termination, (ii) the Executive's annual
car allowance, if any, and (iii) an amount determined by the
Company from time to time in its sole discretion to be equal to
the average annual cost for Company employees of obtaining
medical, dental and vision insurance under COBRA, which amount
is hereby initially determined to be $5,000 for 1997. In the
event that the Executive's bonus for one of the two calendar
years preceding the calendar year in which the Executive
receives or gives written notice of termination was a prorated
bonus due to Executive having worked a partial year, solely for
purposes of calculating Annual Compensation, the Executive's
prorated bonus will be recalculated to reflect the bonus the
Executive would have received had the Executive worked for the
entire year.
(c) Good Reason. For purposes of this Section
4 the term "Good Reason" means:
(i) any reduction in the Executive's
annual base salary, except for a general one-time "across-
the-board" salary reduction not exceeding ten percent
(10%) which is imposed simultaneously on all officers of
the Company;
or
(ii) the Company requires the Executive
to be based at an office location which will result in
an increase of more than thirty (30) miles in the
Executive's one-way commute.
(d) Release of all Claims. The Executive
understands and agrees that the Company's obligation to pay the
Executive severance pay under this Agreement is subject to the
Executive's execution of a valid written waiver and release of
all claims which the Executive may have against the Company
and/or its successors in a form acceptable to the Company in
its sole and absolute discretion.
(e) Death, Disability or Cause. In the event
that the Executive's employment is terminated due to death,
disability or cause, the Company shall not be obligated to pay
the Executive any amount other than earned unused vacation,
reimbursement for business expenses incurred prior to her
termination and in compliance with the Company's reimbursement
policies, and any unpaid salary for days worked prior to the
termination.
(f) Change of Control. For purposes of this
Section 4, a "Change of Control" shall be deemed to have
occurred if :
(i) any "person", as such term is
used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") is,
becomes or enters a contract to become, the "beneficial
owner", as such term is used in Rule 13d-3 promulgated
under the 1934 Act, directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
voting common stock of the Company;
(ii) all or substantially all of the
business of the Company is disposed of, or a contract is
entered to dispose of all of the business of the Company
pursuant to a merger, consolidation other transaction in
which (a) the Company is not the surviving company or (b)
the stockholders of the Company prior to the transaction
do not continue to own at least sixty percent (60%) of the
surviving corporation;
(iii) the Company is materially or
completely liquidated;
(iv) any person (other than the Company)
purchases any common stock of the Company in a tender or
exchange offer with the intent, expressed or implied, of
purchasing or otherwise acquiring control of the Company;
or
(v) a majority of the Board of Directors
of the Company is replaced over a two (2) year period
unless such replacements have been approved by at least
two-thirds (2/3) of those remaining directors who were
directors at the beginning of such two (2) year period.
Notwithstanding clause (i) above, a "Change of
Control" shall not be deemed to have occurred solely because a
person shall be, become or enter into a contract to become the
beneficial owner of 25% 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.
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 she
would be entitled to hereunder if she terminated her 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 her hereunder
if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or
other designee or, if there be no such designee, to the
Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxxx
0000 Xxxxxx
Xxxxxxx Xxxxx, XX 00000
If to the Company:
Apria Healthcare Group Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive
Officer
With a copy to the attention of: Senior Vice
President, Human Resources
or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
7. Antisolicitation. The Executive promises and
agrees that, during the period of her employment by the Company
and for a period of one year thereafter, she will not influence
or attempt to influence customers of the Company or any of its
present or future subsidiaries or affiliates, either directly
or indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity then in
competition with the business of the Company, or any subsidiary
or affiliate of the Company.
8. Noncompetition. The Executive promises and
agrees that for a period of one year following termination of
her employment, she will not enter business or work with or for
any business, individual, partnership, firm, corporation or
other entity then in competition with the business of the
Company or any subsidiary or affiliate of the Company.
9. Soliciting Employees. The Executive promises
and agrees that for a period of one year following termination
of her employment, she will not, directly or indirectly solicit
any of the Company employees who earned annually $50,000 or
more as a Company employee during the last six months of his or
her own employment to work for any other business, individual,
partnership, firm, corporation, or other entity.
10. Confidential Information.
(a) The Executive, in the performance of her 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 her 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 she shall not engage in unfair competition either during
the time employed by the Company or any time thereafter.
11. Parachute Limitation. Notwithstanding any
other provision of this Agreement, the Executive shall not have
any right to receive any payment or other benefit under this
Agreement, any other agreement, or any benefit plan if such
right, payment or benefit, taking into account all other
rights, payments or benefits to or for the Executive under this
Agreement, all other agreements, and all benefit plans, would
cause any right, payment or benefit to the Executive under this
Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b) (2) of the Internal Revenue Code as
then in effect (a "Parachute Payment"). In the event that the
receipt of any such right or any other payment or benefit under
this Agreement, any other agreement, or any benefit plan would
cause the Executive to be considered to have received a
Parachute Payment under this Agreement, then the Executive
shall have the right, in the Executive's sole discretion, to
designate those rights, payments or benefits under this
Agreement, any other agreements, and/or any benefit plans, that
should be reduced or eliminated so as to avoid having the
right, payment or benefit to the Executive under this Agreement
be deemed to be a Parachute Payment.
12. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
signed by the Executive and the Chief Executive Officer or the
President of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles.
13. Validity. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and
the same instrument.
15. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement or Executive's
employment by the Company shall be settled exclusively by
arbitration, conducted before a single neutral arbitrator in
accordance with the American Arbitration Association's National
Rules for Resolution of Employment Disputes as then in effect.
Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Company shall
be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of
any violation of the provisions of Sections 7, 8, 9 or 10 of
this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the
necessity of the Company's posting any bond, and provided,
further, that the Executive shall be entitled to seek specific
performance of her right to be paid until the date of
employment termination during
the pendency of any dispute or controversy arising under or in
connection with this Agreement. The fees and expenses of the
arbitrator shall be borne by the Company.
16. Entire Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and
canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
APRIA HEALTHCARE GROUP INC.
By:_______________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE
__________________________________________
Name: Xxxx X. Xxxxxx
