EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is
entered into by and between APRIA HEALTHCARE GROUP INC. (the "Company") and
XXXXXXXX X. XXXXX (the "Executive") as of August 29, 2002, effective as of
February 12, 2002.
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. 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
President and 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. Salary. The Company will pay to the Executive a base salary at the rate
of $600,000 per year. Such salary shall be payable in periodic installments in
accordance with the Company's customary practices. 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. Annual increases, if
granted, will normally be effective as of January 1 of each year.
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 $14,400 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.
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; refusal or unwillingness 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:
(i) the Accrued Obligations (as defined in Section IV-D-1) as of the
date of termination of employment; and
(ii) 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, the Company's obligation to
provide the benefits required by Section IV-D-3(c) below, and the
Company's obligations to make payments required to be made under any
other incentive compensation plan.
(b) The term "Good Reason" means:
(i) 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) 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) there shall occur a "change of control" of the Company and, at
any time concurrent with or during the six-month period
following such change of control, the Executive shall have sent
to the Chairman of the Company's Board of Directors a written
notice terminating his employment on a date specified in said
notice. For purposes of this Agreement, the term "change of
control" shall mean the occurrence of one of the following:
(1) 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;
(2) 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;
(3) the Company is materially or completely liquidated; or
(4) 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 (1) 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.
(c) 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.
(d) In the event the Executive initiates arbitration pursuant to Section
VI 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 VI; 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 VI 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. 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 V
shall be resolved in the manner specified in Section VI hereof.
VI. 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(d)(ii). The fees and expenses of the arbitrator shall be borne by the
Company.
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 of the Board of
Directors, or if the Executive is the Chairman of the Board, any such written
agreement shall be executed by the Executive and the Chairman of the Corporate
Governance and Nominating Committee of the Board.
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 from and after the date hereof. It supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matter hereof, including without limitation the
Executive's Employment Agreements dated November 7, 1997, January 26, 1998,
February 27, 1999, and December 7, 2000, except that (i) such prior agreements
shall remain in effect with respect to the time periods prior to the date hereof
during which such agreements were in effect, and (ii) any reference in the
Executive's stock option agreements with the Company to the term "Good Reason"
as defined in such agreements shall be deemed to refer to "Good Reason" as
defined in this Agreement. 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.
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 000 Xxx Xxxx Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
or addressed to the Company at 00000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx
00000, Attention: Chairman of the Board, with a copy to the Senior Vice
President and General Counsel, and with a copy to 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 Corporate
Governance and 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 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 Xxxxxxxx X. Xxxxx
Chairman
EXHIBIT A
NONDISCLOSURE AND NONCOMPETITION AGREEMENT
This Nondisclosure and Noncompetition Agreement (this "Agreement") is
dated as of the 12th day of February, 2002 by and between Xxxxxxxx X. Xxxxx (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 the 12th day of February, 2002
(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 Holdings, 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 receive payments
that in the aggregate equal the Post-Termination Covenant Payment (as defined
below), 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.
As used herein, the term "Post-Termination Payment" shall mean an amount
equal to three (3) times the sum of: (i) the Executive's annual base salary in
effect on such date, plus (ii) 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, plus (iii) the
Executive's annual car allowance as of such date, plus (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 Post-Termination Payment 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(d)(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 of
the Board of Directors, or if the Executive is the Chairman of the Board, any
such written agreement shall be executed by the Executive and the Chairman of
the Corporate Governance and Nominating Committee of the Board.
(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.
(g) 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.
(h) 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.
(i) 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 000 Xxx Xxxx
Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or addressed to the Company at 00000
Xxxxxxxxxx Xxxxx, Xxxx Xxxxxx, XX 00000, Attention: Senior Vice President and
General Counsel, with a copy to the attention of 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.
(j) 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.
(k) 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 Xxxxxxxx X. Xxxxx
Chairman
