Exhibit 10.18
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Apria Healthcare Group Inc. (the "Company") and Xxxxxx X. Xxxxxx (the
"Executive"), as of December 7, 2000, effective as of January 1, 2000.
I. EMPLOYMENT.
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The Company hereby employs the Executive and the Executive hereby accepts
such employment upon the terms and conditions hereinafter set forth. The term of
the employment will continue until the termination of Executive's employment by
reason of his written resignation, termination by the Company for any reason by
written notice of termination, or death, provided that for purposes of Section
IV-D-3, the "Expiration Date" shall initially be December 31, 2001, and shall be
extended one (1) day for each day of the Executive's employment during the term
of this Agreement until the Executive's employment is terminated for any reason.
For instance, if the Executive's employment with the Company is terminated on
January 1, 2001, the Expiration Date shall be December 31, 2002. The Executive's
employment may be terminated at any time by written notice from the Executive to
the Company or from the Company to the Executive, in the manner provided in
Section XVI hereof.
II. DUTIES.
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A. The Executive shall serve during the course of his employment as the
Chief Executive Officer of the Company, reporting to the Board of Directors. The
Executive shall be the senior executive officer of the Corporation, with the
authority to supervise and direct the other officers and employees of the
Corporation, and with authority from time to time to delegate to other officers
such executive and other powers with duties as he shall deem appropriate,
subject in all respects to the authority of the Board.
B. The Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company. Nothing herein shall prevent the
Executive, upon approval of the Board of Directors of the Company, from serving
as a director or trustee of other corporations or businesses which are not in
competition with the business of the Company or in competition with any present
or future affiliate of the Company. Nothing herein shall prevent the Executive
from investing in real estate for his own account or from becoming a partner or
a stockholder in any corporation, partnership or other venture not in
competition with the business of the Company or in competition with any present
or future affiliate of the Company.
III. COMPENSATION.
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A. Commencing on January 1, 2000, the Company will pay to the Executive a
base salary at the rate of $650,000 per year. Amounts payable shall be reduced
by standard withholdings and other authorized deductions. The Executive's salary
may be increased from time to time at the discretion of the Company's Board of
Directors or its Compensation Committee.
B. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive
shall be entitled to participate in all annual bonus, incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
executives of the Company, including without limitation the Company's Incentive
Compensation Plan and the Company's 401(k) Savings Plan.
C. Welfare Benefit Plans. The Executive and/or his family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives of
the Company. The Company reserves the right to modify, suspend or discontinue
any and all of the above plans, practices, policies and programs at any time
without recourse by the Executive so long as such action is taken generally with
respect to other similarly situated peer executives and does not single out the
Executive.
D. Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to fringe benefits,
including without limitation (i) a car allowance of $12,500 per year, payable in
periodic installments in accordance with the Company's customary practices, (ii)
reasonable access to the Company's independent auditors for personal financial
planning, (iii) reasonable travel and entertainment expenses of the Executive's
spouse, on an actually incurred basis when necessary in connection with
participation in Company events, and (iv) such other benefits in accordance with
the plans, practices, programs and policies as may be in effect generally with
respect to other executives of the Company.
F. Vacation. The Executive shall be entitled to four weeks of paid vacation
annually, to be available and prorated monthly during the term of this Agreement
and otherwise to be consistent with the vacation policy and practice applicable
to other executives of the Company.
G. Stock Options. The provisions in Section 2-G of the employment agreement
between the Executive and the Company dated as of May 5, 1998, as amended, shall
remain in full force and effect.
H. Relocation. The provisions in Section 2-H of the employment agreement
between the Executive and the Company dated as of May 5, 1998, as amended, shall
remain in full force and effect.
IV. TERMINATION.
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A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that the Disability of the Executive has occurred (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section XVI of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of his duties. For
purposes of this Agreement, "Disability" shall mean a physical or mental
impairment which substantially limits a major life activity of the Executive and
which renders the Executive unable to perform the essential functions of his
position, even with reasonable accommodation which does not impose an undue
hardship on the Company. The Company reserves the right, in good faith, to make
the determination of Disability under this Agreement based upon information
supplied by the Executive and/or his medical personnel, as well as information
from medical personnel (or others) selected by the Company or its insurers.
B. Cause. The Company may terminate the Executive's employment 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; failure to substantially perform his duties (other than
such failure resulting from the Executive's Disability) for a 30-day period
after written demand for substantial performance is delivered by the Company
that specifically refers to this paragraph and 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 paragraph, 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 of the Board stating that the Board
of Directors of the Company has determined that the Executive has engaged in or
committed conduct of the nature described in the second sentence of this
paragraph, and specifying the particulars thereof in detail.
C. Other than Cause or Death or Disability. 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, subject to the provisions of this Agreement.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If the Executive's employment is terminated by
reason of the Executive's death or Disability, this Agreement shall terminate
without further obligations to the Executive or his legal representatives under
this Agreement, other than for (a) payment of the sum of (i) the Executive's
base salary through the date of termination of employment to the extent not
theretofore paid, plus (ii) any earned vacation pay, to the extent not
theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the "Accrued Obligations"), which shall be paid to
the Executive or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of termination of employment; and (b) payment to the
Executive or his estate or beneficiary, as applicable, any amounts due pursuant
to the terms of any applicable welfare benefit plans.
2. Cause. If the Executive's employment is terminated by the Company for
Cause, this Agreement shall terminate without further obligations to the
Executive other than for the timely payment of the Accrued Obligations. If it is
subsequently determined that the Company did not have Cause for termination
under this Section IV-D-2, then the Company's decision to terminate shall be
deemed to have been made under Section IV-D-3 and the amounts payable thereunder
shall be the only amounts the Executive may receive for his termination.
3. Other than Cause or Death or Disability.
(a) If, during the term of this Agreement, (i) the Company terminates
the Executive's employment for other than Cause or death or Disability,
or (ii) the Executive terminates his employment hereunder with Good
Reason (as defined below), the Executive's employment shall terminate
and the Executive shall be entitled to receive the following:
(1) an amount equal to the Contract Balance (as defined below)
in one lump sum upon such termination of his employment; and
(2) in exchange for the post-termination covenants provided in
the Nondisclosure and Noncompetition Agreement attached hereto as
Exhibit A (the "Nondisclosure Agreement"), the payments described in
Section 3(b) of the Nondisclosure Agreement. Nothing in this Section
IV-D-3(a) shall be deemed to create a presumption concerning the reason
for the termination of the Executive's employment.
Any payment made pursuant to this Section IV-D-3(a) shall be reduced by
all amounts required to be withheld by applicable law, and shall only
be made in exchange for a valid release of all claims the Executive may
have against the Company in a form acceptable to the Company. Such
payment shall constitute the sole and entire obligation of the Company
to provide any compensation or benefits to the Executive upon
termination, except for obligations under the Company's 401(k) Savings
Plan, obligations pursuant to the terms of any outstanding stock option
agreements and the Company's obligation to provide the benefits
required by Section IV-D-3(e) below, and payments required to be made
under any other incentive compensation plan, and except that the
Company will also pay to the Executive any Accrued Obligations (as
defined in Section IV-D-1).
(b) The term "Good Reason" means:
(i) if the Executive's annual base salary is reduced, 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) if, following the Executive's relocation to Orange County,
California, 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) if the Company's Board of Directors does not permit the
Executive to continue to serve as the Chief Executive
Officer with the responsibilities as described in Section
II-A or another mutually acceptable senior executive
position; or
(iv) if a Change of Control of the Company occurs and, at any
time concurrent with or during the six-month period
following said Change of Control, the Executive shall
have sent to the Chairman of the Company a written notice
terminating his employment on a date specified in said
notice.
(c) The term "Contract Balance" means an amount equal to the annual
base salary and car allowance that Executive would have earned from the
Company had Executive continued his employment from the date the
Executive's employment terminated through the Expiration Date (i.e.,
base salary and car allowance for two (2) years), using the rate of
base salary and the car allowance in effect on the date on which the
Executive received or gave written notice of his termination, plus an
amount equal to two (2) times the sum of (i) an amount equal to the
average of the Executive's two (2) most recent annual bonuses, if any,
received under the Company's Incentive Compensation Plan prior to such
notice of termination, and (ii) 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 annual amount is hereby initially
determined to be $10,000.
(d) 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; or
(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.
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.
(e) In the event of any termination of the Executive's employment
pursuant to Section IV-D-3(a), the Company shall, for a period of one
year following the termination date, provide the Executive with
appropriate office space in a furnished office suite, including
reasonable secretarial, telephone, copying and delivery services. The
Company shall not be required to spend more than a total of $50,000 to
provide this benefit to the Executive.
(f) In the event the Executive initiates arbitration pursuant to
Section V to enforce his rights to any payments under this Section
IV-D-3 (including but not limited to payments under the Nondisclosure
Agreement), or the Company seeks to withhold or reduce any such
payments for any reasons, then:
(i) the burden of proving that the Executive is not entitled to
such payments shall be on the Company;
(ii) The Company shall pay all expenses incurred by the Executive
in prosecuting or defending any such proceeding as they are
incurred by the Executive in advance of the final
disposition of such dispute, together with any tax liability
incurred by the Executive in connection with the receipt of
such amounts; provided, however, that the payment of such
expenses incurred in advance of the final disposition of
such proceeding shall be made only upon delivery to the
Company of an undertaking, by or on behalf of the Executive,
to repay all amounts so advanced to the extent the
arbitrator in such proceeding so determines as provided in
Section V; and
(iii) All such payments required under this Agreement (including
but not limited to payments under the Nondisclosure
Agreement) shall continue to be made on the dates provided
herein without any offsets, claims or charges of any kind
whatsoever being asserted by the Company, except in the
event a final determination pursuant to the arbitration
provisions of Section V has been rendered and such
determination provides that the Company is entitled to
assert any such offset, claim or charge against the
Executive.
4. Exclusive Remedy. The Executive agrees that the payments contemplated by
this Agreement shall constitute the exclusive and sole remedy for any
termination of his employment and the Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any termination
of employment.
V. ARBITRATION.
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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. Such arbitration shall be conducted in
Orange County, California, and the arbitrator shall be a resident of Orange
County, California or of a county contiguous to Orange County, California.
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 the Nondisclosure
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. Any arbitration proceeding pertaining to this
Agreement shall be consolidated with any arbitration proceeding pertaining to
the Nondisclosure Agreement. The arbitrator's order shall specify, based on the
outcome of the arbitration, whether the Executive shall repay any of the
Executive's expenses theretofore paid by the Company pursuant to Section
IV-D-3(f)(ii). The fees and expenses of the arbitrator shall be borne by the
Company.
VI. CERTAIN MODIFICATIONS TO NONDISCLOSURE AGREEMENT.
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The Nondisclosure Agreement provides for certain payments to the Executive
if the Executive agrees to refrain from taking certain actions within a
specified period following a termination of employment, including accepting an
employment or consulting relationship with a principal competitor of the
Company. The Company and the Executive may, from time to time (but no more often
than once during any six (6)-month period and no later than the occurrence of a
Change of Control), propose to add or delete one or more names of principal
competitors to or from, as applicable, those identified in the Nondisclosure
Agreement by giving notice to the other party as specified in Section XVI. Such
addition or deletion shall be made if such entity becomes or ceases to be, as
applicable, a principal competitor of the Company, provided that there shall be
no more than three (3) principal competitors of the Company identified on the
Nondisclosure Agreement at any given time. If no objection to such proposal is
made within ten (10) business days following the giving of notice thereof, such
proposal shall be deemed accepted and the Nondisclosure Agreement shall be
modified accordingly. Any dispute concerning the operation of this Section VI
shall be resolved in the manner specified in Section V hereof.
VII. REFRAINING FROM UNFAIR COMPETITION.
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A. Concurrently herewith, the Executive is entering into the Nondisclosure
Agreement.
B. The Company and the Executive hereby agree that the terms of the
Nondisclosure Agreement are incorporated into this Agreement by this reference,
and shall be a part hereof.
VIII.EXCISE TAX.
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A. In the event that any amount or benefit that may be paid or otherwise
provided to or in respect of the Executive by or on behalf of the Company or any
affiliate, whether pursuant to this Agreement or otherwise (collectively,
"Covered Payments"), is or may become subject to the tax imposed under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision or any comparable provision of state, local or foreign law)
("Excise Tax"), the Company will pay to the Executive a "Reimbursement Amount"
equal to the total of: (A) any Excise Tax on the Covered Payments, plus (B) any
Federal, state, and local income taxes, employment and excise taxes (including
the Excise Tax) on the Reimbursement Amount, plus (C) the product of any
deductions disallowed for Federal, state or local income tax purposes because of
the inclusion of the Reimbursement Amount in the Executive's income multiplied
by the Executive's combined Federal, state, and local income tax rate for the
calendar year in which the Reimbursement Amount is includible in the Executive's
taxable income, plus (D) any interest, penalties or additions to tax imposed
under applicable law in connection with the Excise Tax or the Reimbursement
Amount, plus (E) any reasonable out-of-pocket costs incurred by the Executive in
connection with any of the foregoing. For purposes of this Section VIII-A, the
Executive will be deemed to pay (1) Federal income taxes at the highest
applicable marginal rate of Federal income taxation applicable to individuals
for the calendar year in which the Reimbursement Amount is includible in the
Executive's taxable income and (2) any applicable state and local income taxes
at the highest applicable marginal rate of taxation applicable to individuals
for the calendar year in which such Reimbursement Amount is includible in the
Executive's taxable income, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or local taxes if paid
in such year (determined without regard to limitations on deductions based upon
the amount of the Executive's adjusted gross income). Except to the extent
provided in Section VIII-C below, this provision is intended to put Employee in
the same position as Employee would have been had no Excise Tax been imposed
upon or incurred as a result of any Payment.
B. The payment of a Reimbursement Amount under this Section VIII shall not
be conditioned upon the Executive's
termination of employment.
C. Notwithstanding the foregoing provisions of this Section VIII-A, if the
Company determines that, absent this sentence, the Executive is entitled to a
Reimbursement Amount, but that the portion of the Covered Payments that would be
treated as "parachute payments" under Code Section 280G ("Covered Parachute
Payments") does not exceed 103% of the greatest amount of Covered Parachute
Payments that could be paid to the Executive such that the receipt of such
Covered Parachute Payments would not give rise to any Excise Tax (the "Safe
Harbor Amount"), then no Reimbursement Amount shall be paid to the Executive
(unless for any reason Executive is determined to be subject to the Excise Tax
after application of the balance of this sentence, in which case the full
Reimbursement Amount shall be paid), and the Covered Parachute Payments payable
under this Agreement shall be reduced so that the Covered Parachute Payments, in
the aggregate, are reduced to the Safe Harbor Amount. For purposes of reducing
the Covered Parachute Payments to the Safe Harbor Amount, only amounts payable
under this Agreement shall be reduced. If the reduction of the amounts payable
under this Agreement would not result in a reduction of the Covered Parachute
Payments to the Safe Harbor Amount, no amounts payable under this Agreement or
otherwise shall be reduced pursuant to this Section VIII-C. The Company shall
notify the Executive of any intent to reduce the amount of any Covered Payments
in accordance with this Section VIII-C (which notice, if practicable, shall be
given prior to the occurrence of an event that would give rise to a Covered
Parachute Payment), and Executive shall have the right to designate which of the
Covered Payments shall be reduced and to what extent, provided that the
Executive may not so elect to the extent that, in the determination of counsel
to the Company, such election would cause the Executive to be subject to the
Excise Tax.
D. The determination of whether an event described in Code Section
280G(b)(2)(A)(i) has occurred, the amount of any Reimbursement Amount and/or the
amounts described in Section VIII-C above shall be made initially by an
accounting firm mutually acceptable to the Company and the Executive; provided,
however, that nothing herein shall limit the Executive's right to payment of the
Reimbursement Amount in the event it is determined that any of such initial
determinations was incorrect.
E. The Executive shall promptly notify the Company in writing of any claim
by any taxing authority that, if successful, would require the payment by the
Company of a Reimbursement Amount; provided, however, that failure by the
Executive to give such notice promptly shall not result in a waiver or
forfeiture of any of the Executive's rights under this Section VIII except to
the extent of actual damages suffered by the Company as a result of such
failure. If the Company notifies the Executive in writing within 15 days after
receiving such notice that it desires to contest such claim (and demonstrates to
the reasonable satisfaction of the Executive its ability to pay any resulting
Reimbursement Amount), the Executive shall:
1. give the Company any information reasonably requested by the Company
relating to such claim;
2. take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney selected by the Company that is reasonably acceptable to the Executive;
3. cooperate with the Company in good faith in order effectively to contest
such claim; and
4. permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company's actions do not unreasonably interfere with
or prejudice the Executive's disputes with the taxing authority as to other
issues; and provided, further, that the Company shall bear and pay on an
after-tax and as-incurred basis, all attorneys fees, costs and expenses
(including additional interest, penalties and additions to tax) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax and as-incurred basis, for all resulting taxes
(including, without limitation, income and excise taxes), interest, penalties
and additions to tax.
IX. SUCCESSORS.
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A. This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company, its subsidiaries and its successors and assigns and any such
subsidiary, successor or assignee shall be deemed substituted for the Company
under the terms of this Agreement for all purposes. As used herein, "successor"
and "assignee" shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise.
X. WAIVER.
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No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
XI. MODIFICATION.
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This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company's Chairman.
XII. SAVINGS CLAUSE.
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If any provision of this Agreement or the application thereof is held
invalid, such invalidity shall not affect any other provisions or applications
of the Agreement which can be given effect without the invalid provisions or
applications and, to this end, the provisions of this Agreement are declared to
be severable.
XIII.COMPLETE AGREEMENT.
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This Agreement constitutes and contains the entire agreement and final
understanding concerning the Executive's employment with the Company and the
other subject matters addressed herein between the parties. It is intended by
the parties as a complete and exclusive statement of the terms of their
agreement. It supersedes and replaces all prior negotiations and all agreements
proposed or otherwise, whether written or oral, concerning the subject matter
hereof. Any representation, promise or agreement not specifically included in
this Agreement shall not be binding upon or enforceable against either party.
This is a fully integrated agreement. Except as provided herein, the Executive's
prior employment agreement with the Company is no longer in effect.
XIV. GOVERNING LAW.
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This Agreement shall be deemed to have been executed and delivered within
the State of California and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, by the laws
of the State of California without regard to principles of conflict of laws.
XV. CONSTRUCTION.
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In any construction to be made of this Agreement, the same shall not be
construed against any party on the basis that the party was the drafter. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.
XVI. COMMUNICATIONS.
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All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand or
by courier, or if mailed by registered or certified mail, postage prepaid,
addressed to the Executive at 00000 Xxxxxxxx Xxxxxxxxx, #000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, or addressed to the Company at 0000 Xxxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000, Attention: Chairman of the Board, with a copy to the Senior
Vice President and General Counsel, with a copy to the attention of the Senior
Vice President, Human Resources; provided, however, that if the Executive is the
Chairman of the Board, such communication shall be sent to the Chairman of the
Nominating Committee of the Board (together with such copies to the Senior Vice
President and General Counsel and the Senior Vice President, Human Resources).
Either party may change the address at which notice shall be given by written
notice given in the above manner.
XVII.EXECUTION.
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This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Xerographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
XXXXX.XXXXX COUNSEL.
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The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have each had the opportunity to
consult with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
APRIA HEALTHCARE GROUP INC. THE EXECUTIVE
By ____________________________ _____________________________
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxx
Chairman
EXHIBIT A
Nondisclosure and Noncompetition Agreement
This Nondisclosure and Noncompetition Agreement (this "Agreement") is dated
as of this 7th day of December, 2000 by and between Xxxxxx X. Xxxxxx (the
"Executive") and Apria Healthcare Group Inc. (the "Company).
RECITALS
WHEREAS, concurrently herewith, the Executive is entering into an
Employment Agreement with the Company dated as of December 7, 2000, effective as
of January 1, 2000 (the "Employment Agreement");
WHEREAS, the Employment Agreement provides that this Agreement shall be
incorporated by reference into and become a part of the Employment Agreement;
and
WHEREAS, the Executive and the Company hereby intend to enter into certain
agreements pertaining to confidentiality and their obligations to perform and
refrain from performing certain acts prior to and following the termination of
the Executive's employment with the Company, and for the Company to pay
consideration to the Executive in exchange for the agreement by the Executive to
take and refrain from taking certain actions following such termination of
employment.
AGREEMENT
1. Acknowledgements by the Executive. The Executive acknowledges that:
(a) In carrying out his duties and responsibilities under the Employment
Agreement and his predecessor employment agreement with the Company, the
Executive is a member of the Company's senior executive management and
participates in formulating and implementing business plans and policies that
are and will continue to be essential to the Company's competitive success;
(b) These activities require relationships of trust and confidence between
the Executive and the Company's other officers and the Company's directors;
(c) The Executive, in the performance of his duties on behalf of the
Company, has had and will have access to, has received and will receive, and was
entrusted and will 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
owned 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 was and will be made available to
the Executive in confidence;
(d) 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;
(e) The Executive's employment with a competitor of the Company within a
reasonable time following the termination of his employment with the Company
would create a substantial likelihood that the Executive would inevitably
disclose or use, to the detriment of the Company, such Confidential Information,
and that it is essential to the Company's legitimate business interests and also
to free and fair competition in the industry within which the Company does
business, to protect the Company's Confidential Material from disclosure; and
(f) The risk of inevitable disclosure is particularly applicable to any
such employment by the Executive in a similar senior position with those
competitors of the Company that are similar in operation, service, missions and
markets to the Company ("Principal Competitors"), and that as of the date of
this Agreement the Principal Competitors are Lincare Holding, Inc., American
Home Patient, Rotech Medical Corporation and their parent, affiliated and
subsidiary companies.
2. Nondisclosure and Noncompetition Agreement. The Executive hereby
acknowledges, represents, warrants and covenants that:
(a) 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 the Employment 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 agrees that he shall not engage in unfair competition
either during the time employed by the Company or any time thereafter;
(c) The Executive will not, within one year following the termination of
his employment with the Company (the "Post-Termination Period"), accept an
employment or consulting relationship, directly or indirectly, with any entity
engaged in the business of home respiratory therapy, home infusion therapy, and
home medical equipment, within the United States. Without limiting the
generality of the foregoing, during the Post-Termination Period, the Executive
has not accepted and will not accept any employment or consulting relationship
with any Principal Competitor;
(d) During the term of his employment and during the Post-Termination
Period, the Executive will not initiate communications with any of the Company's
employees who earned annually $50,000 or more as a Company employee during
six-month period prior to the termination of such employee's employment with the
Company, for the purpose of soliciting such employee to work for any other
business, individual, partnership, firm, corporation, or other entity; and
(e) During the term of his employment and during the Post-Termination
Period, the Executive 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.
3. Agreement to Compensate the Executive.
(a) The parties agree that the Executive will be adequately compensated
under the Employment Agreement, without regard to this Section 3, for the
representations and warranties set forth above and for the covenants that the
Executive has agreed herein to perform prior to the date of the Executive's
termination of employment.
(b) The parties further agree that, if the Executive's employment is
terminated under either of the circumstances described in Section IV-3(a) of the
Employment Agreement, the Executive shall be entitled to the following payments,
it being understood that (i) such payments are intended to compensate the
Executive fully for the performance of the covenants of Executive during the
Post-Termination Period provided in Section 2 above, and (ii) the Executive is
not entitled to receive any payments under this Section 3 in the event the
Executive's employment is terminated other than under one of the circumstance
described in Section IV-3(a) of the Employment Agreement:
(i) An amount equal to the Executive's annual base salary in effect on such
date;
(ii) An amount equal to the average of the Executive's two (2) most recent
annual bonuses, if any, received under the Company's Incentive Compensation Plan
prior to such notice of termination;
(iii) An amount equal to the Executive's annual car allowance as of such
date; and
(iv) An amount determined by the Company 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 $10,000.
(c) Timing of Payment. The amount payable to the Executive pursuant to
Section 3(b) above shall be divided into fifty-two (52) equal installments and
paid weekly over the fifty-two (52)-week period beginning on the third (3rd)
business day after termination of the Executive's employment with the Company,
and on the same day of each of the fifty-one (51) weeks thereafter.
4. Miscellaneous
(a) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement or the 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. Such arbitration shall be
conducted in Orange County, California, and the arbitrator shall be a resident
of Orange County, California or of a county contiguous to Orange County,
California. 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 Section 2 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. Any arbitration proceeding pertaining to this
Agreement shall be consolidated with any arbitration proceeding pertaining to
the Employment Agreement. The arbitrator's order shall specify, based on the
outcome of the arbitration, whether the Executive shall repay any of the
Executive's expenses theretofore paid by the Company pursuant to Section
IV-D-3(f)(ii) of the Employment Agreement. The fees and expenses of the
arbitrator shall be borne by the Company.
(b) Successors.
(i) This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
(ii) This Agreement shall inure to the benefit of and be binding upon the
Company, its subsidiaries and its successors and assigns and any such
subsidiary, successor or assignee shall be deemed substituted for the Company
under the terms of this Agreement for all purposes. As used herein, "successor"
and "assignee" shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise.
(c) Waiver. No waiver of any breach of any term or provision of this
Agreement shall be construed to be, nor shall be, a waiver of any other breach
of this Agreement. No waiver shall be binding unless in writing and signed by
the party waiving the breach.
(d) Modification. This Agreement may not be amended or modified other than
by a written agreement executed by the Executive and the Company's Chairman.
(e) Savings Clause. If any provision of this Agreement or the application
thereof is held invalid, such invalidity shall not affect any other provisions
or applications of the Agreement which can be given effect without the invalid
provisions or applications and, to this end, the provisions of this Agreement
are declared to be severable.
(f) Complete Agreement. This Agreement and the Employment Agreement
constitute and contain the entire agreement and final understanding concerning
the Executive's employment with the Company and the other subject matters
addressed herein between the parties. This Agreement and the Employment
Agreement are intended by the parties as a complete and exclusive statement of
the terms of their agreement. They supersede and replace all prior negotiations
and all agreements proposed or otherwise, whether written or oral, concerning
the subject matter hereof. Any representation, promise or agreement not
specifically included in this Agreement or the Employment Agreement shall not be
binding upon or enforceable against either party. This Agreement, together with
the Employment Agreement, constitute a fully integrated agreement.
(f) Governing Law. This Agreement shall be deemed to have been executed and
delivered within the State of California and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with, and
governed by, by the laws of the State of California without regard to principles
of conflict of laws.
(g) Construction. In any construction to be made of this Agreement, the
same shall not be construed against any party on the basis that the party was
the drafter. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(h) Communications. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or by courier, or if mailed by registered or certified mail,
postage prepaid, addressed to the Executive at 00000 Xxxxxxxx Xxxxxxxxx, #000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, or addressed to the Company at 0000 Xxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Chairman of the Board, with a
copy to the Senior Vice President and General Counsel, with a copy to the
attention of the Senior Vice President, Human Resources; provided, however, that
if the Executive is the Chairman of the Board, such communication shall be sent
to the Chairman of the Nominating Committee of the Board (together with such
copies to the Senior Vice President and General Counsel and the Senior Vice
President, Human Resources). Either party may change the address at which notice
shall be given by written notice given in the above manner.
(i) Execution. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Xerographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.
(j) Legal Counsel. The Executive and the Company recognize that this is a
legally binding contract and acknowledge and agree that they have each had the
opportunity to consult with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
APRIA HEALTHCARE GROUP INC. THE EXECUTIVE
By ____________________________ _____________________________
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxx
Chairman
