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EXHIBIT 10.2
AMERICAN HEALTH PROPERTIES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
WITH
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
This Executive Employment Agreement (the "Agreement") is entered into
as of July 7, 1997, between AMERICAN HEALTH PROPERTIES, INC., a Delaware
corporation (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual ("Executive").
1. EMPLOYMENT AND TERM
The Company agrees to employ Executive for the period commencing on the
day and the year first written above and ending on the earlier of: (a) the date
of termination of Executive's employment in accordance with Section 4(a)-(c)
below or (b) the date that is two (2) years from the date the Company provides
Executive with written notice of termination of Executive's employment. The
Board of Directors of the Company (the "Board") shall review the terms of
Executive's employment on an annual basis and shall make such modifications to
the terms as the Board in its discretion shall deem appropriate and as Executive
shall consent.
2. DUTIES
(a) Executive shall serve in the capacity of Senior Vice President,
General Counsel and Corporate Secretary. Executive shall perform such services
and duties as are usually associated with such positions as well as those
decided upon by the President and the Board.
(b) Executive shall devote his full business time and energy to the
business and affairs of the Company and shall use his best efforts and abilities
faithfully and diligently to promote the business interests of the Company and
its subsidiaries as directed by and to the reasonable satisfaction of the
President and the Board.
(c) Executive's services shall be rendered in accordance with such
policies as the Company may establish for the conduct of its officers and
employees.
(d) Provided such services or investments do not violate any applicable
law, regulation or order or interfere in any way with the faithful and diligent
performance by Executive of services to the Company otherwise required or
contemplated by this Agreement or requested by the Board, Executive may:
(i) Serve as a director, trustee, or in any other similar
capacity of any business enterprise or any civic, educational,
charitable or trade organization if the Board has been informed of such
service and the Board has not expressly requested Executive to refuse,
or to discontinue, such service, and
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(ii) Make and manage personal business investments of
Executive's choice that are consistent with the conflict-of-interest
policies of the Company.
3. COMPENSATION
Commencing as of July 7, 1997, the Company shall compensate Executive
as follows:
(a) Base Salary. Executive shall receive a Base Salary at the rate of
One Hundred Seventy-five Thousand Dollars ($175,000) per annum which shall be
payable in semi-monthly installments in conformity with the Company's policy
relating to its employees generally as in effect from time to time. Executive's
Base Salary shall be reviewed periodically by the Board and may be increased by
action of the Board upon such review, but Executive's salary shall not be
decreased except as provided in Sections 4 and 5.
(b) Incentive Compensation. The Board may, in its discretion, award an
annual bonus in addition to base compensation. Such bonus, if any, shall be paid
in such amount and based upon such criteria as are from time to time adopted by
the Board.
(c) Additional Benefits. Executive also shall be entitled to receive
all benefits for which he is eligible under the terms of any stock incentive
plan, pension plan, SERP, life, medical, dental, vision and disability insurance
and reimbursement programs, and any other plans or arrangements, which the
Company may provide for executive officers from time to time ("Additional
Benefits"). Additional Benefits shall in all respects be paid in accordance with
the then-existing plans, or policies, programs, or arrangements establishing or
governing such Additional Benefits. The Company reserves the right to add,
terminate, or amend any existing plans, policies, programs, or arrangements
during the term of this Agreement and at all other times.
(d) Vacation. Vacation, at full pay, of four (4) weeks per calendar
year. Vacation not used during any calendar year may not be carried over to the
following year.
All compensation paid to Executive shall be subject to withholding for
taxes and subject to payroll and other taxes as required by applicable law and
in conformity with the Company's policies relating thereto as in effect from
time to time.
4. TERMINATION OF EMPLOYMENT BY THE COMPANY
The compensation provided for in Section 3 of this Agreement and
Executive's employment by the Company may be terminated by the Company prior to
expiration of the term set forth in Section 1(b) as provided for below:
(a) Disability. If Executive becomes either partially or totally unable
to perform his duties after the making of reasonable accommodations because of
any physical or mental disability during the term of his employment hereunder
for three (3) consecutive calendar months or for shorter periods aggregating 90
or more business days in any 12-month period, Executive's employment may be
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terminated by the Company at any time during the continuance of such disability.
Upon termination as described in this Section 4(a), Executive shall be entitled
to receive the Base Salary provided for in Section 3(a) of this Agreement for a
period of 90 days after such termination. The Company shall offset against such
Base Salary payments any payments received by Executive as a result of such
illness or injury pursuant to any federal or state program or any salary
continuation or similar program or disability insurance established by the
Company.
Upon termination as described in this Section 4(a), Executive shall
resign from his offices as an officer of the Company and its subsidiaries and
the Company shall continue Executive's coverage under any and all life, medical,
dental, vision and disability insurance plans for a period of 120 days after
such termination at the expense of the Company. Other Additional Benefits shall
be made available to Executive as required by applicable laws, including the
health coverage continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act, 29 U.S.C. ▇▇.▇▇. 1161-1168 ("COBRA"), and by the terms of
the Additional Benefit plans, policies, programs, and arrangements in effect at
the time of termination. Executive's period of coverage under COBRA (29 U.S.C.
ss. 1162(2)), shall begin on the date of the termination of his employment under
this Section 4(a). Executive agrees to execute such documents as may be
requested by the Company in order to comply with its obligations under this
Section 4(a) and under COBRA and other applicable laws. The Company shall
provide Executive with the health coverage continuation benefits specified by
COBRA whether or not the Company is obligated under COBRA to do so.
(b) Death. If Executive dies during the term of this Agreement,
Executive's Beneficiary or Beneficiaries, as defined in Section 7 of this
Agreement, shall be entitled to receive the Base Salary provided for in Section
3(a) of this Agreement for a period of 90 days after the date such death occurs.
Additional Benefits shall be made available to the Beneficiaries of Executive
under the life, medical, dental, vision and other Additional Benefit plans,
policies, programs, and arrangements, as required by applicable laws, including
COBRA, and by the terms of the Additional Benefit plans, policies, programs, and
arrangements in effect at the time of Executive's death. The Company shall
provide Executive's Beneficiaries with the health coverage continuation benefits
specified by COBRA whether or not the Company is obligated under COBRA to do so.
(c) For Cause. The Company may upon 14 days' notice to Executive
terminate this Agreement and all of its obligations hereunder to Executive
accruing after the date of such termination if the termination is for "cause." A
termination for cause is a termination effected by the Board on one or more of
the following grounds: (i) that Executive has been declared of unsound mind by a
court, (ii) that Executive has been convicted of a felony, (iii) that Executive
has been convicted of a misdemeanor involving moral turpitude, (iv) that
Executive has repeatedly committed a material breach of this Agreement (provided
that Executive has been notified of the prior breach), or (v) that Executive has
not permanently relocated his principal residence to a location which is within
80 miles of the Company's principal executive offices by September 1, 1998.
Except as expressly required by applicable laws, including COBRA if
applicable, and by the terms of the Additional Benefits plans, policies,
programs, and arrangements then in effect, upon such termination, Executive's
rights under Section 3 of this Agreement shall terminate on the date of the
termination of his employment under this Section 4(c). Executive's period of
coverage under COBRA
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(29 U.S.C. ss. 1162(2)), if any, shall begin on the date of the termination of
his employment under this Section 4(c). Upon termination as described in this
Section 4(c), Executive shall resign from his offices as an officer of the
Company and its subsidiaries. Executive agrees to execute all documents as may
be requested by the Company in order to comply with its obligations under this
Section 4(c) and under COBRA, if applicable, and any other applicable laws.
(d) Other Termination. The Company may by notice to Executive terminate
Executive's employment for reasons other than those specified in Sections 4(a)
through (c) above. In the event notice of termination of Executive's employment
is given by the Company for reasons other than those specified in Sections 4(a)
through (c), from the date of such notice of termination Executive shall be
entitled to receive only the compensation specifically provided below:
(i) The Executive's annual Base Salary in effect at the time
of termination until the expiration of the employment period as
provided in Section 1(b) of this Agreement.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of stock options and
acceleration of the lapse of restrictions of any restricted stock
awards held by Executive that would have vested or lapsed during the
period between notice of termination of Executive's employment and the
expiration of Executive's employment period as provided in Section
1(b).
Upon termination of Executive's employment as described in this Section
4(d), Executive shall resign from his offices as an officer of the Company and
its subsidiaries and the Company shall, at the option of Executive, (i) continue
installment payments to Executive on the periodic basis described in Section
3(a) at the rate and for the duration of the employment period specified in
Section 4(d)(i); or (ii) make a lump sum payment to Executive equal to
seventy-five percent (75%) of the amounts due Executive under Section 4(d)(i)
for the duration of the employment period specified therein. A lump sum payment
in accordance with this paragraph shall be made within ten (10) working days of
Executive's election.
Upon termination of Executive's employment as described in this Section
4(d), Additional Benefits shall be made available to Executive as required by
applicable laws, including COBRA. Executive's period of coverage under COBRA (29
U.S.C. ss. 1162(2)), for purposes of this Section 4(d) shall begin on the date
of the termination of the benefits to which Executive is entitled pursuant to
Section 4(d)(ii). Executive agrees to execute such documents as may be requested
by the Company in order to comply with its obligations under this Section 4(d)
and under COBRA and any other
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applicable laws. The Company shall provide Executive with the health coverage
continuation benefits specified by COBRA whether or not the Company is obligated
under COBRA to do so.
(e) Constructive Termination. The occurrence of any of the following
events shall be deemed a termination of Executive's employment under Section
4(d) above:
(i) Failure to elect or reelect or otherwise to maintain
Executive in the office or the position, or a substantially equivalent
office or position, with the Company which Executive holds as of the
date of this agreement (or which may be increased from time to time).
(ii) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties attached
to Executive's position with the Company, a reduction in Executive's
Base Salary, as increased from time to time, or the termination or
denial of Executive's rights to a substantial amount of Additional
Benefits as herein provided, any of which is not remedied within 10
calendar days after receipt by the Company of written notice from
Executive of such change, reduction or termination, as the case may be.
(iii) The Company shall relocate its principal executive
offices, or require Executive to have his principal location of work
changed, to any location which is not within the State of California
and is in excess of 80 miles from its present location.
(iv) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
5. TERMINATION RELATING TO CHANGE OF CONTROL
(a) Any of the following events shall constitute a "Change of
Control" hereunder:
(i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement) individuals who at
the beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of Directors
or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
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represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(b) Within 180 days of a Change of Control, Executive may terminate
employment with the Company by delivering written notice of such termination to
the Company, accompanied by Executive's resignation from his offices as an
officer of the Company and its subsidiaries. Upon Executive's termination of
employment as specified in the preceding sentence, or if the Company (or any
successor) terminates Executive's employment for any reason within 180 days of a
Change of Control, Executive shall be entitled to receive:
(i) A lump sum payment equal to two (2) times Executive's
Average Annual Compensation. "Average Annual Compensation" shall mean
the average of Executive's combined salary plus Bonus for the two
calendar years immediately preceding the date of determination. If for
either of the two calendar years in the calculation period Executive
was employed for less than a full year by the Company, Executive's
salary and Bonus for such year(s) shall be computed on an annualized
basis. "Bonus" shall mean the cash portion of any incentive
compensation paid to Executive plus an amount in cash equal to the
value of any restricted stock or stock options received by Executive as
a deferral of or in lieu of a cash bonus.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of all stock options
and immediate lapse of restrictions on all restricted stock awards held
by Executive.
(c) In connection with any termination of employment pursuant to this
Section 5, the Company shall provide Executive with outplacement services from
an outplacement firm of Executive's choice up to a maximum cost of $10,000.
(d) If any dispute arises between the Company (or any successor) and
Executive regarding Executive's rights under this Section 5, Executive shall be
entitled to recover his attorneys' fees and costs incurred in connection with
such dispute.
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(e) Notwithstanding any other provision of this Section 5, if the
aggregate of all amounts Executive is entitled to receive as a result of
termination of employment pursuant to this Section 5 equals or exceeds an amount
that would cause Executive to be deemed to receive an "excess parachute payment"
as defined in Internal Revenue Code Section 280G and would subject Executive to
an excise tax liability under Internal Revenue Code Section 4999, Executive may
elect to receive only those amounts that in the aggregate would not cause
Executive to be deemed to receive an "excess parachute payment" and irrevocably
waive his right to receive any other amounts he would otherwise be entitled to
under this Section 5.
(f) Any payments under Sections 5(b)-(e) shall be in lieu of any
payments under Section 4(d).
6. TERMINATION OF EMPLOYMENT BY EXECUTIVE.
(a) In addition to his rights under Section 5 hereof, Executive may
terminate employment with the Company without cause as of a specified date not
less than 30 days and not more than 90 days after delivering written notice of
such termination to the Company. Upon the effective date of such termination,
Executive's right to receive the compensation provided for in Section 3 of this
Agreement shall terminate. The Company may at any time in its sole discretion
waive all or part of the notice period and specify any day in such period that
has not yet occurred as the date of termination for purposes of this Section
6(a); in the event of such occurrence, the Company shall pay Executive the
amount of the compensation provided for in Section 3 of this Agreement for the
remainder of the notice period given by Executive.
(b) Upon termination as described in Section 6(a), Additional Benefits
will be made available to Executive as required by applicable laws, including
COBRA, if applicable, and by the terms of the Additional Benefit plans,
policies, programs, and arrangements in effect at the time of termination.
Executive's period of coverage under COBRA (29 U.S.C. ss. 1162(2)), if any,
shall begin on the date of the termination of his employment under Section 6(a).
Executive agrees to execute such documents as may be requested by the Company in
order to comply with its obligations under this Section 6(b) and under COBRA, if
applicable, and any other applicable laws.
7. DESIGNATION OF BENEFICIARY
Executive may designate one or more persons or entities (including a
trust or trusts or his estate) to receive any compensation payable to him under
Section 4(b) ("Beneficiaries"). If Executive shall designate more than one
Beneficiary, he shall set forth the proportion in which each is to receive such
compensation; any such designation which fails to set forth such proportion
shall be an invalid designation as to all those so designated. Executive also
may designate one or more successor Beneficiaries who shall succeed to the
rights of the Beneficiaries originally designated, in case the latter should die
prior to the receipt of full payment. Executive may from time to time change any
designation so made, and that last designation shall be controlling. If
Executive designates a person other than, or in addition to, his spouse, his
spouse shall specifically approve his designation and authorize the Company to
pay his compensation as designated. In the absence of a valid designation by
Executive meeting the requirements of this Section 7, or in the event of the
death of a Beneficiary for
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whom no successor Beneficiary has been validly designated, Executive's
compensation, or the portion of such compensation then payable to such deceased
Beneficiary, shall be paid to the administrator or executor of Executive's
estate for the benefit of Executive's estate, who shall in that event be deemed
a Beneficiary under this Section 7.
Executive's designation and his spouse's approval and authorization, if
necessary, must be in the form of a signed writing witnessed by two adult
persons (other than any designated Beneficiary) and must have been delivered to
the Company prior to Executive's death.
8. REIMBURSEMENT OF EXPENDITURES
During the term of this Agreement, the Company shall reimburse
Executive for business expenses reasonably and necessarily incurred by him on
its behalf in accordance with its business-expense reimbursement policies as in
effect from time to time and subject to Executive's furnishing such
substantiation of such expenses as the Company may require. Without limitation
on the foregoing, the Company shall reimburse Executive for bar association dues
and the costs of attendance at continuing legal education seminars.
9. CONFIDENTIAL INFORMATION
During the term of this Agreement, Executive shall not disclose to any
persons (other than another employee of the Company) any confidential
information relating to the business of the Company obtained by him while in the
employ of the Company, without the consent of the Board, except as necessary or
appropriate in the discharge of his obligations to the Company and its
shareholders.
10. NONASSIGNMENT OF EXECUTIVE'S OBLIGATIONS AND DUTIES
The obligations and duties of Executive hereunder shall be personal and
not assignable.
11. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and shall be binding upon
the Company and its respective successors and assigns, including any purchaser
of all or substantially all of its assets, and shall be binding upon Executive's
assigns, executors, administrators, Beneficiaries, or their legal
representatives.
12. NOTICES
Any notices provided for in this Agreement shall be sent to the Company
at American Health Properties, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chairman, Compensation Committee, or at
such other address as the Company may from time to time in writing designate,
and to Executive at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other address as he may from time to time in writing
designate. All notices will be deemed to have been delivered (i) as of the first
to occur of actual receipt or two (2) business
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days after being sent by certified mail, return receipt requested, postage paid
and properly addressed to the designated address of the party to whom addressed
or (ii) if notice is given in any other manner, when actually received.
13. ENTIRE AGREEMENT
This instrument contains the entire agreement between the Company and
Executive relating to the subject of Executive's employment by the Company,
except to the extent that the terms and provisions of Additional Benefits,
expense reimbursement policies and Company policies governing executives and
employees generally are (as referred to herein) set forth in other documents.
This Agreement supersedes all prior and contemporaneous oral and written
agreements, understandings, and representations, if any, among the parties.
14. TERMINATION OF AGREEMENT
This Agreement shall terminate at the end of the period of Executive's
employment, as described in Section 1 of this Agreement (or at the end of any
different period specifically set forth herein for the termination of
Executive's employment), and may be continued thereafter only upon the execution
of a writing to that effect signed by the Company and Executive. If Executive's
employment continues after the termination of this Agreement for any period
during which no such writing is in effect, Executive shall be deemed to be
employed at the will of the Company and his employment may be terminated at any
time with or without notice and with or without cause and without obligation of
any party to any other party.
15. WAIVERS
The waiver or breach of any term or condition of this Agreement will
not be deemed to constitute the waiver of any other breach of the same or any
other term or condition.
16. GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of Colorado.
17. SEVERABILITY
If any provision or clause of any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.
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19. NO CONFLICT WITH PRIOR AGREEMENTS AND RIGHTS
Executive hereby represents and warrants to the Company that neither
the execution of this Agreement nor performance by Executive of his obligations
hereunder conflicts with any contractual commitment on his part to any third
party or violates or interferes with any right of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN HEALTH PROPERTIES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Executive
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