EXHIBIT 10.14
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 Xxxxx X. Xxxxx (the "Executive").
RECITALS
A. It is the desire of the Company to retain the services of the Executive
and to recognize the Executive's contribution to the Company.
B. The Company and the Executive wish to set forth certain terms and
conditions of Executive's employment.
C. The Company wishes to provide to the Executive certain benefits in the
event that his employment is terminated by the Company without cause or in the
event that he terminates employment for Good Reason (as defined below), in order
to encourage the Executive's performance and continued commitment to the
Company.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve 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
his working time and efforts to the business and affairs of the Company. The
Executive further agrees that he shall not undertake any outside activities
which create a conflict of interest with his duties to the Company, or which, in
the judgment of the Board of Directors of the Company, interfere with the
performance of the Executive's duties to the Company.
2. Compensation and Benefits.
(a) Salary. The Executive's salary shall be such salary as the
Company assigns to him from time to time in accordance with its
regular practices and policies. The parties to this Agreement
recognize that the Company may, in its sole discretion, increase such
salary at any time.
(b) Bonuses. The Executive's eligibility to receive any bonus
shall be determined in accordance with the Company's Incentive
Compensation Plan or other bonus plans as they shall be in effect from
time to time. The parties to this Agreement recognize that such bonus
plans may be amended and/or terminated by the Company at any time.
(c) Expenses. During the term of the Executive's employment, the
Executive shall be entitled to receive reimbursement for all
reasonable and customary expenses incurred by the Executive in
performing services for the Company in accordance with the Company's
reimbursement policies as they may be in effect from time to time. The
parties to this Agreement recognize that such policies may be amended
and/or terminated by the Company at any time.
(d) Other Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs and arrangements
of the Company (including, without limitation, stock option plans or
agreements and insurance, retirement and vacation plans, programs and
arrangements), in accordance with the terms of such plans, programs or
arrangements as they shall be in effect from time to time during the
period of the Executive's employment. The parties to this Agreement
recognize that the Company may terminate or modify such plans,
programs or arrangements at any time.
3. Grounds for Termination. The Executive's employment may be terminated on
any of the following grounds:
(a) Without Cause. The Executive or the Company may terminate the
Executive's employment at any time, without cause, by giving the other
party to this Agreement at least 30 days advance written notice of
such termination.
(b) Death. The Executive's employment hereunder shall terminate
upon his death.
(c) Disability. If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been unable to
perform the essential functions of his position, even with reasonable
accommodation that does not impose an undue hardship on the Company,
on a full-time basis for the entire period of six (6) consecutive
months, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of such
six-month period), shall not have returned to the performance of his
duties hereunder on a full-time basis (a "disability"), the Company
may terminate the Executive's employment hereunder.
(d) Cause. The Company may terminate the Executive's employment
hereunder for cause. For purposes of this Agreement, "cause" shall
mean that the Company, acting in good faith based upon the information
then known to the Company, determines that the Executive has engaged
in or committed: willful misconduct; theft, fraud or other illegal
conduct; refusal or unwillingness to substantially perform his duties
(other than such failure resulting from the Executive's disability)
after written demand for substantial performance is delivered by the
Company that specifically identifies the manner in which the Company
believes the Executive has not substantially performed his duties;
insubordination; any willful act that is likely to and which does in
fact have the effect of injuring the reputation or business of the
Company; violation of any fiduciary duty; violation of the Executive's
duty of loyalty to the Company; or a breach of any term of this
Agreement. For purposes of this Section 3(d), no act, or failure to
act, on the Executive's part shall be considered willful unless done
or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for cause without delivery to the
Executive of a notice of termination signed by the Company's 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 his employment hereunder with Good Reason, the Executive
shall be entitled to receive severance pay in an aggregate amount
equal to 100% of his Annual Compensation, 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 his 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 his termination, plus the sum of
(i) an amount equal to the average of the Executive's two most recent
annual bonuses, if any, received under the Company's Incentive
Compensation Plan prior to the notice of termination, (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 his 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 he would be entitled to here-
under if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination.
As used in this Agreement,"Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 5 or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrator, successors, heirs, dis-
tributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Execu-
tive's estate.
6. Notices. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxx X. Xxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxx Xxx, 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 his employment by the Company and for a period of one year thereafter,
he will not influence or attempt to influence customers of the Company or any of
its present or future subsidiaries or affiliates, either directly or indirectly,
to divert their business to any individual, partnership, firm, corporation or
other entity then in competition with the business of the Company, or any
subsidiary or affiliate of the Company.
8. Noncompetition. The Executive promises and agrees that for a period of
one year following termination of his employment, he 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 his employment, he will not,
directly or indirectly solicit any of the Company employees who earned annually
$50,000 or more as a Company employee during the last six months of his or her
own employment to work for any other business, individual, partnership, firm,
corporation, or other entity.
10. Confidential Information.
(a) The Executive, in the performance of his duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential
information, including but not limited to systems technology, field
operations, reimbursement, development, marketing, organizational, xxxxx-
cial, 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 consul-
tants, or used presently or at any time in the future in the course of its
business that is not otherwise part of the public domain (collectively, the
"Confidential Material"). All such Confidential Material is considered
secret and will be available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive shall not,
directly or indirectly for any reason whatsoever, disclose or use any
such Confidential Material, unless such Confidential Material ceases
(through no fault of the Executive's) to be confidential because it has
become part of the public domain. All records, files, drawings, documents,
notes, disks, diskettes, tapes, magnetic media, photographs, equipment and
other tangible items, wherever located, relating in any way to the
Confidential Material or otherwise to the Company's business, which the
Executive prepares, uses or encounters during the course of his employment,
shall be and remain the Company's sole and exclusive property and shall be
included in the Confidential Material. Upon termination of this Agreement
by any means, or whenever requested by the Company, the Executive shall
promptly deliver to the Company any and all of the Confidential Material,
not previously delivered to the Company, that may be or at any previous
time has been in the Executive's possession or under the Executive's
control.
(b) The Executive hereby acknowledges that the sale or unauthorized
use or disclosure of any of the Company's Confidential Material by any
means whatsoever and at any time before, during or after the Executive's
employment with the Company shall constitute unfair competition. The
Executive agrees he shall not engage in unfair competition either during
the time employed by the Company or any time thereafter.
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 his right to be paid
until the date of employment termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The fees and
expenses of the arbitrator shall be borne by the Company.
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:
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Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE
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Name: Xxxxx X. Xxxxx
