UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-14316
APRIA HEALTHCARE GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0488566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3560 HYLAND AVENUE, COSTA MESA, CA 92626
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714)427-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
There were 51,473,919 shares of Common Stock, $.001 par value, outstanding
at August 8, 1997.
<PAGE>
APRIA HEALTHCARE GROUP INC.
FORM 10-Q
For the period ended June 30, 1997
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
June 30, December 31,
1997 1996
---------- ------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash $ 14,062 $ 26,930
Accounts receivable, less allowance for
doubtful accounts of $71,600 and
$73,809 at June 30, 1997 and December
31, 1996, respectively 300,542 335,616
Inventories 33,366 55,733
Deferred income taxes 32,894 31,106
Refundable and prepaid income taxes 23,017 34,598
Prepaid expenses and other current
assets 7,949 9,764
--------- ---------
TOTAL CURRENT ASSETS 411,830 493,747
PATIENT SERVICE EQUIPMENT, less
accumulated depreciation of $243,555
and $229,684 at June 30, 1997 and December
31, 1996, respectively 203,183 213,602
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET 118,318 120,030
COVENANTS NOT TO COMPETE, NET 14,579 17,054
GOODWILL, NET 288,489 295,536
OTHER ASSETS 8,732 9,141
--------- ---------
$1,045,131 $1,149,110
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 64,287 $ 83,619
Accrued payroll and related taxes
and benefits 28,680 34,850
Other accrued liabilities 42,403 51,699
Current portion of long-term debt 10,640 11,588
--------- --------
TOTAL CURRENT LIABILITIES 146,010 181,756
LONG-TERM DEBT 591,968 623,276
DEFERRED INCOME TAXES 11,737 1,143
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value:
10,000,000 shares authorized;
none issued - -
Common Stock, $.001 par value:
150,000,000 shares authorized;
51,464,930 and 51,203,450 shares
issued and outstanding at June 30,
1997 and December 31, 1996,
respectively 51 51
Additional paid-in capital 323,067 319,950
Retained (deficit) earnings (27,702) 22,934
--------- ---------
295,416 342,935
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
$1,045,131 $1,149,110
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues $295,735 $306,579 $609,598 $601,882
Costs and expenses:
Cost of net revenues 128,463 96,943 233,142 191,034
Selling, distribution and
administrative 150,054 144,493 297,366 285,437
Provision for doubtful
accounts 70,183 14,560 85,947 27,858
Amortization of intangible
assets 4,179 4,349 8,377 8,451
------- ------- ------- -------
352,879 260,345 624,832 512,780
------- ------- ------- -------
OPERATING (LOSS) INCOME (57,144) 46,234 (15,234) 89,102
Interest expense 12,732 12,003 25,491 23,111
------- ------- ------- -------
(LOSS) INCOME BEFORE TAXES (69,876) 34,231 (40,725) 65,991
Income taxes - 12,323 9,911 23,757
------- ------- ------- -------
NET (LOSS) INCOME $(69,876) $ 21,908 $(50,636) $ 42,234
======= ======= ======= =======
(Loss) income per common and
common equivalent share $ (1.36) $ 0.42 $ (0.99) $ 0.81
======= ======= ======= =======
Weighted average number of
common and common equivalent
shares outstanding 51,411 52,575 51,336 52,286
(Loss) income per common and
common equivalent share assuming
full dilution $ (1.36) $ 0.42 $ (0.99) $ 0.81
======= ======= ======= =======
Weighted average number of common
and common equivalent shares
outstanding 51,411 52,576 51,336 52,399
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
-----------------------
1997 1996
------ ------
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $(50,636) $ 42,234
Items included in net (loss) income
not requiring (providing) cash:
Provision for doubtful accounts 85,947 27,858
Provision for excess/obsolete
equipment 23,000 513
Depreciation 59,807 44,217
Amortization of intangible assets 8,377 8,451
Amortization of deferred debt costs 559 519
Loss on sale of property,
equipment and improvements 42 21
Gain on disposition of assets (448) -
Deferred income taxes 8,806 (1,829)
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Increase in accounts receivable
(before bad debt writeoffs) (50,647) (103,440)
Decrease (increase) in inventories 1,785 (14,905)
Decrease in prepaids and other assets 13,407 19,108
Decrease in accounts payable (19,332) (38,377)
Decrease in accrued payroll
and other liabilities (15,952) (15,260)
Net purchases of patient service
equipment, net of effects of
acquisitions (34,942) (56,298)
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 29,773 (87,188)
INVESTING ACTIVITIES
Purchases of property, equipment
and improvements, net of effects
of acquisitions (13,200) (30,094)
Proceeds from sale of property,
equipment and improvements 225 67
Proceeds on disposition of assets 5,196 -
Acquisitions and payments of
contingent consideration (3,168) (7,317)
-------- --------
NET CASH USED IN
INVESTING ACTIVITIES (10,947) (37,344)
FINANCING ACTIVITIES
Proceeds under revolving credit
facility 113,000 222,300
Payments under revolving credit
facility (141,600) (104,300)
Payments of senior and other
long-term debt (6,148) (5,084)
Capitalized debt costs, net - (11)
Issuances of Common Stock 3,054 12,887
-------- --------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (31,694) 125,792
-------- --------
NET (DECREASE) INCREASE IN CASH (12,868) 1,260
Cash at beginning of period 26,930 18,829
-------- --------
CASH AT END OF PERIOD $ 14,062 $ 20,089
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
APRIA HEALTHCARE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Apria Healthcare Group Inc. ("the Company") and its subsidiaries. All
significant intercompany transactions and accounts have been eliminated.
In the opinion of management, all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the results of
operations for the interim periods presented, have been reflected herein.
The results of operations for interim periods are not necessarily
indicative of the results to be expected for the entire year. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended December 31, 1996, filed with the Company's 1996
Form 10-K.
NOTE B - RECLASSIFICATIONS AND USE OF ACCOUNTING ESTIMATES
Certain amounts from prior periods have been reclassified to conform to the
current year presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make assumptions that
affect the amounts reported in the financial statements and accompanying
notes. Such amounts include, among others, the allowance for doubtful
accounts, patient service equipment reserves, other asset valuation
allowances and certain liabilities. Management periodically re-evaluates
the estimates inherent in certain financial statement amounts and may
adjust accordingly. In the second quarter of 1997, Management estimated
and recorded a $20,000,000 adjustment to reduce accounts receivable and net
revenues, a $55,000,000 adjustment to increase the allowance for doubtful
accounts and a $23,000,000 adjustment to provide for inventory and patient
service equipment losses. Actual results could differ from the estimates.
NOTE C - INCOME TAXES
No tax benefit will be recognized in the second quarter of the current
fiscal year because the tax losses will be carried forward. The six month
tax provision of $9,911,000 primarily represents an increase in the
Company's valuation allowance for deferred tax assets.
NOTE D - BUSINESS COMBINATIONS
The Company periodically makes acquisitions of complementary businesses in
specific geographic markets. Acquisitions that closed during the six month
period ended June 30, 1997 resulted in cash payments of approximately
$2,750,000.
NOTE E - RESTRUCTURING COSTS
In connection with the 1995 merger between Abbey Healthcare Group
Incorporated and Homedco Group, Inc., the Company adopted a plan to
restructure and consolidate its operating locations and administrative
functions within specific geographic areas. The plan, which was completed
by September 1996, resulted in a restructuring charge in 1995 of
approximately $68,304,000, consisting of accrued costs and impairments.
The following table summarizes amounts paid during the six months ended
June 30, 1997 and the remaining accrual at June 30, 1997.
Accrual at December 31, 1996 $7,131,000
Severance amounts paid through June 30, 1997 (1,704,000)
Other amounts paid through June 30, 1997 (1,045,000)
----------
Accrual at June 30, 1997 $4,382,000
==========
The remaining accrual balance consists of $300,000 for severance and
related personnel costs, $3,679,000 for branch and billing center closure
costs and $403,000 for miscellaneous restructuring costs.
NOTE F - LONG-TERM DEBT
The Credit Agreement between the Company and a syndicate of banks was
amended in April 1997 and further amended in July 1997. The loan facility
was reduced from $800,000,000 to $600,000,000, amounts available for
acquisitions were reduced and tighter restrictions were imposed on
dividends and other distributions.
The applicable margin range on the London Interbank Offered Rate ("LIBOR")
interest rate option was increased to a high of 1.5% per annum and a low of
.5% per annum. Certain nonrecurring charges and resulting net losses (as
defined by the agreement) will be excluded from the calculation of certain
financial ratios when determining covenant compliance.
In August 1997, the Company's counterparty to an 18-month swap agreement
covering $280,000,000 in notional principal, exercised its option to
terminate after one year.
NOTE G - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted by the Company
on December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The
impact of Statement 128 on the calculation of primary and fully diluted
earnings per share for the periods presented herein is not expected to be
material.
NOTE H - EQUITY
The change in stockholders' equity, other than from net loss, resulted
primarily from the exercise of stock options. For the six months ended
June 30, 1997, proceeds from the exercise of stock options amounted to
$3,054,000.
NOTE I - COMMITMENTS AND CONTINGENCIES
The Company is engaged in the defense of certain claims and lawsuits
arising out of the ordinary course and conduct of its business, the outcome
of which are not determinable at this time. The Company has insurance
policies covering such potential losses where such coverage is cost
effective. In the opinion of management, any liability that might be
incurred by the Company upon the resolution of these claims and lawsuits
will not, in the aggregate, have a material adverse effect on the
consolidated results of operations or financial position of the Company.
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The Company's business
is subject to a number of risks, some of which are beyond the Company's
control. The Company has described certain of those risks in its Current
Report on Form 8-K as filed with the Securities and Exchange Commission on
June 26, 1997. Such report may be used for purposes of the Private
Securities Litigation Reform Act of 1995 as a readily available document
containing meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those projected in
any forward-looking statements the Company may make from time to time.
These risks include whether the Company will be able to resolve issues
pertaining to the collectibility of its accounts receivable, pricing
pressures (including changes in governmental reimbursement levels), the
impact of healthcare reform propsals, the effect of federal and state
healthcare regulations, the highly competitive market, recent losses, the
concentration of large payors and dependence on relationships with third
parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In June 1997, the Company announced that it would explore alternatives to
enhance shareholder value. The Company has retained an investment banking
firm as its financial advisor and will consider a variety of potential
alternatives, including a merger, sale or capital restructuring. To date,
the Company has received a number of inquiries and expects to enter into
confidentiality agreements with potential investors in mid-August 1997.
The Company has also commenced a restructuring of its operations to
focus more fully on the core business lines of respiratory therapy, home
infusion therapy and home medical equipment. The lower-margin medical
supply and home health nursing lines will be phased out over the remainder
of 1997 and early 1998.
Results of Operations
- ---------------------
Net Revenues: Net revenues decreased 3.5% to $295.7 million for the second
quarter of 1997 compared with $306.6 million for the same quarter last
year. For the six months ended June 30, 1997, net revenues were $609.6
million compared with $601.9 million for the same period last year,
representing a 1.3% increase. The decrease in the second quarter of 1997
compared to the second quarter of 1996 reflects a charge taken in the
second quarter of 1997 to provide for estimated revenue adjustments of $20
million. Revenue adjustments result from (1) incorrect contract prices
entered upon service delivery due to complex contract terms, a biller's
lack of familiarity with a contract or payor or an incorrect system price,
(2) subsequent changes to estimated revenue amounts for services not covered
by a preexisting contract, and (3) failure subsequent to service delivery to
qualify a patient for reimbursement due to lack of authorization or a missed
filing or appeal deadline [see Liquidity and Capital Resources]. The minimal
increase in the six- month period in 1997 versus the same period last year
reflects slow volume growth and price competition in the managed care
environment.
Respiratory therapy, home infusion therapy and home medical equipment/other
revenues represented 51.0%, 23.4% and 25.7%, respectively, of total
revenues for the six months ended June 30, 1997. The relationship of
respiratory therapy to total revenues decreased by 0.9% as compared to the
same period in 1996, largely due to a temporary shift in focus away from
traditional business, the impact of which is greatest on the respiratory
line. This trend, however, appears to be reversing gradually as evidenced
by the increase in the respiratory percentage in the second quarter of
1997, when compared to the first quarter of 1997 and the fourth quarter of
1996. Further, the 1997 sales commission plan emphasizes higher-margin
traditional business.
In August 1997, the Balanced Budget Act of 1997 was adopted which includes
several provisions affecting Medicare reimbursement for home medical
equipment and services. Reimbursement for home oxygen services will be
reduced by 25% in 1998 and an additional 5% in 1999 and subsequent years.
The Company estimates the impact on 1998 revenues to be $60 to $65 million.
Also effective January 1, 1998, Consumer Price Index-based reimbursement
increases on durable medical equipment will be frozen through 2002.
Gross Profit: Gross margins for the second quarter and the six months
ended June 30, 1997 were 56.6% and 61.8%, respectively, compared with 68.4%
and 68.3% for the same periods last year. The primary reasons for the
decrease was a $23 million charge taken in the second quarter to provide
for losses in inventory and patient service equipment and the $20 million
revenue adjustment previously described.
Another factor contributing to the decline in gross margins is the
Company's participation in the managed care environment. The intense
pressure by employers on managed care organizations leads to greater price
pressure on subcontracted providers such as the Company. To address this
downward pressure on gross margins, the Company has adopted numerous
initiatives, the most significant of which is the decision to exit the
lower-margin medical supply and home health nursing lines. Prior to this
decision, management initiated a contract assessment process whereby the
Company's top revenue-producing accounts were reviewed for profitability.
The objective of the review was to identify contracts which could be
renegotiated to obtain better terms and improved business mix and eliminate
those not meeting acceptable profitability levels. The review phase was
completed and the Company entered the negotiation phase with a fair amount
of success. The decision to exit the medical supply and nursing lines has,
in some instances, complicated the renegotiation process and resulted in an
additional objective of eliminating language binding the Company to provide
medical supplies and nursing services. The Company is working with its
customers and patients to ensure that their needs for these products and
services are being met during this transitional period.
Other initiatives the Company has adopted to improve its gross margins
include (1) the phasing out of subrented patient service equipment, (2) the
placement of sales force initiatives on certain higher-margin products and
services and (3) the development of an infusion therapy formulary which
helps optimize gross margins through negotiated price reductions and
limitations on product choices. During the last half of 1996 the Company
established automated purchasing budgets to more effectively control the
purchase and use of patient service equipment which has resulted in an $18
million reduction in patient service equipment purchases in the six months
ended June 30, 1997, as compared to the same period last year. Further, now
that all locations have been converted to two standardized information
systems (primary system captures activity for respiratory, home medical
equipment/other; secondary system captures infusion activity), management
continues to develop and monitor reporting tools designed to evaluate
product/service mix at an individual branch level.
Selling, Distribution and Administrative: Selling, distribution and
administrative expenses expressed as percentages of net revenues for the
second quarter and six months ended June 30, 1997 were 50.7% and 48.8%,
respectively, compared with 47.1% and 47.4% for the same periods in 1996.
The increase in the percentage for the second quarter of 1997 versus the
same period in 1996 is due to the decrease in net revenues and an increase
in expenses, primarily attributable to increased staffing levels in the
functional areas of reimbursement, patient service and information systems
to address the problems the Company had been experiencing in these areas
[see Liquidity and Capital Resources].
Provision for Doubtful Accounts: The provision for doubtful accounts as a
percentage of net revenues for the second quarter and six months ended June
30, 1997 was 23.7% and 14.1%, respectively, compared to 4.8% and 4.6% for
the same periods in the prior year. The 1997 percentages reflect a charge
of $55 million taken in the second quarter to increase the allowance for
doubtful accounts and reflects a more conservative position taken on
accounts in excess of 180 days. The change in estimate was considered
necessary by Management because the reduction in these accounts has been
slower than anticipated. The charge also reflects an increase to the bad
debt provision rate for accounts receivable aged less than 180 days,
necessitated by billing and collection difficulties that continued into
early 1997 [see Liquidity and Capital Resources].
Interest Expense: Interest expense for the second quarter and six months
ended June 30, 1997 increased to $12.7 million and $25.5 million,
respectively, from $12.0 million and $23.1 million for the same periods
last year. The increases represent the impact of increases in long-term
debt in the 1997 periods as mitigated by lower interest rates [see
Liquidity and Capital Resources].
Income Taxes: No income tax benefit was recognized in the second
quarter of 1997 because the tax loss will be carried forward. The six
month tax provision of $9.9 million primarily represents an increase
in the Company's valuation allowance for deferred tax assets.
Liquidity and Capital Resources
- -------------------------------
Cash provided by the Company's operations was $29.8 million for the six
months ended June 30, 1997, compared with $87.2 million used in operations
during the same period last year. The main reasons for the significant
improvement between the two periods are as follows: (1) a decrease in
the magnitude of the accounts receivable increase (before writeoffs) during
the six months ended June 30, 1997, as compared to the same period in
1996, (2) a reduction in accounts payable in the first quarter of 1996
which resulted from the elimination of a processing backlog caused by the
1995 centralization of the Company's accounts payable function, (3) the
receipt of a federal tax refund in 1997 and (4) a reduction in patient
service equipment and inventory expenditures in the first six months of
1997 compared to the same period last year. The higher equipment and
inventory expenditures in 1996 were due to concerted efforts by the Company
to upgrade the quality of the asset base.
Accounts receivable, before allowance for doubtful accounts, decreased by
$37.3 million during the six months ended June 30, 1997. The decrease
includes the impact of bad debt writeoffs, net of recoveries, totaling
$88.2 million. Despite high levels of bad debt write-offs and
revenue adjustments, accounts in excess of 180 days at June 30, 1997
decreased by only $17 million since December 31, 1996. Days sales
outstanding (DSO - calculated as of each period-end by dividing accounts
receivable less allowance for doubtful accounts by the 90-day rolling
average of net revenues), increased from 99 days at December 31, 1996 to
105 days at March 31, 1997 and decreased to 86 days at June 30, 1997
(after adjustments and writeoffs). The primary cause of the slower than
expected decline in accounts receivable in excess of 180 days and the
increase in DSO are the residual effects of the disruptions and delays in
billing and collection activity associated with the Company's conversion of
its field locations to the standardized information systems and a higher than
normal turnover rate among billing and collection personnel in 1996. These
activities contributed to billing delays and errors and, ultimately,
difficulties in receiving timely reimbursement.
Management's quarter-end accounts receivable analysis included a review of
aging trends and the aggregate amounts and timing of cash applications, bad
debt write-offs and revenue adjustments during the six months ended June
30, 1997. Based on such analyses, Management estimated and recorded in the
second quarter of 1997 a $20 million adjustment to reduce accounts
receivable and net revenues and a $55 million adjustment to increase the
allowance for doubtful accounts [see Results of Operations].
Actions taken in 1996 to mitigate the impact of conversion disruptions and
employee turnover included, among others, a collection incentive program
with special emphasis on older accounts, hiring additional management level
billing and collection personnel and reinforcement training for the billing
locations. Early in 1997, the Company took further steps to reduce the
incidence of billing errors including a process review of the field
information systems to identify opportunities to improve billing
processing, timeliness and accuracy, validation of system pricing files and
implementation of billing center audits to assess compliance with billing
practices and procedures. Further, in the second quarter of 1997, the
Company appointed an executive vice president of operations and reorganized
the reimbursement and information system functions.
Long-term debt, including current maturities, decreased by $32.3 million
from December 31, 1996 to June 30, 1997. In addition to the cash provided
by operations, the decrease in long-term debt can be attributed to a
reduction in property, plant and equipment expenditures and proceeds
received on the disposition of assets in two transactions described below.
On January 30, 1997, after obtaining a release from the Omnicare Board of
Directors, the Company sold all its 1,875,000 ordinary shares of Omnicare
plc, a public limited company incorporated under the laws of England, to a
former director. Cash proceeds from the sale were $2.8 million, which
resulted in a gain of $1.2 million.
On March 14, 1997, the Company sold M&B Ventures, Inc., its last remaining
Medicare-certified home health agency, which operated in South Carolina
under the assumed business names of Doctors Home Health and Advanced Care
Service to North Trident Regional Hospital, Inc., a subsidiary of
Columbia/HCA Healthcare Corporation. Cash proceeds from the sale were $2.4
million, resulting in a loss on the sale of approximately $784,000.
In anticipation of the planned merger with Vitas Healthcare Corporation,
the Company entered into a credit agreement in August 1996 which provided a
revolving loan facility of up to $800 million. Because the merger was
never consummated and due to declining long-term debt levels and high
commitment fees, the Company decided to reduce the facility to $600 million
effective July 31, 1997. The first and second amendments to the Company's
credit agreement were executed on April 22, 1997 and July 31, 1997,
respectively. In addition to reducing the loan facility, the amendments
allow the exclusion of certain nonrecurring charges (as defined by the
agreement) from the computation of certain financial covenant ratios and
increase the margin range applicable to rates based on the London Interbank
Offered Rate.
In August 1997, the Company's counterparty to an 18-month swap agreement
covering $280 million in notional principal, exercised its option to
terminate the agreement after one year.
Overall, the Company believes that cash provided by operations and amounts
available under its existing credit facilities will be sufficient to
finance its current operations for at least the next 12 months. At August
8, 1997, availability under the credit facility was $203.5 million.
<PAGE>
PART II. OTHER INFORMATION
- --------------------------
Item 1-3. Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Stockholders of the Company on May 22,
1997.
(b) Directors re-elected at Annual Meeting:
Jeremy M. Jones
H.J. Mark Tompkins
Members of the Board whose terms expire in 1998:
Terry Hartshorn
George L. Argyros
Vincent M. Prager
Members of the Board whose terms expire in 1999:
David L. Goldsmith
Leonard Green
Frederick S. Moseley
(c) Matters Voted Upon at Annual Meeting:
1. Election of Directors
---------------------
The Company's Board currently consists of eight
directors and is divided into three classes with
staggered three-year terms. Stockholder voting
results for the two directors re-elected were as
follows:
FOR WITHHELD
---------- --------
Jeremy M. Jones 45,451,614 606,794
H.J. Mark Tompkins 45,366,826 591,582
2. Approval of the Company's 1997 Stock Incentive Plan
---------------------------------------------------
The Board of Directors adopted and approved the
Company's 1997 Stock Incentive Plan, subject to
ratification by the holders of a majority of the
shares represented at the Annual Meeting.
Stockholder voting results were as follows:
For 28,220,298
Against 11,345,587
Abstain 766,956
Broker Non-Votes 5,725,567
3. Ratification of the Company's Independent Accountants
-----------------------------------------------------
The Board of Directors selected Ernst & Young
to serve as the Company's independent accountants
for the fiscal year ending December 31, 1997,
subject to ratification by the holders of a
majority of the shares represented at the
Annual Meeting. Stockholder voting results were
as follows:
For 45,905,009
Against 55,958
Abstain 97,441
Broker Non-Votes 0
Item 5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description and Reference
------- -------------------------
4.1 Amendment No. 1 to the Rights Agreement dated as
of June 30, 1997, by and among Apria Healthcare
Group, Inc., Norwest Bank Minnesota, N.A. and U.S.
Stock Transfer Corporation. Incorporated by
reference to Apria Healthcare Group Inc.'s Form
8-A/A, as filed with the Securities and Exchange
Commission on July 9, 1997.
10.1 Employment Agreement dated April 1, 1997, between
Apria Healthcare Group Inc. and Merl A. Wallace.
10.2 First Amendment to Credit Agreement, dated April
22, 1997, among Apria Healthcare Group Inc. and
certain of its subsidiaries, Bank of America
National Trust and Savings Association,
Nationsbank of Texas, N.A. and other financial
institutions party to the Credit Agreement.
10.3 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Lisa M.
Getson.
10.4 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Robert S.
Holcombe.
10.5 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Jerome J.
Lyden.
10.6 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Gary L.
Mangiofico.
10.7 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Steven T.
Plochocki.
10.8 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Thomas M.
Robbins.
10.9 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Susan K.
Skara.
10.10 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Lawrence
H. Smallen.
10.11 Executive Severance Agreement dated June 28, 1997,
between Apria Healthcare Group Inc. and Dennis E.
Walsh.
10.12 Second Amendment to Credit Agreement dated July
31, 1997, among Apria Healthcare Group Inc. and
certain of its subsidiaries, Bank of America
National Trust and Savings Association,
NationsBank of Texas, N.A. and other financial
institutions party to the Credit Agreement.
11.1 Statement of Computation of Earnings per Share.
27.1 Financial Data Schedule.
27.2 Amended Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated June 26,
1997, with the Securities and Exchange Commission reporting (1)
that it had issued a press release announcing that (i) it has
retained Goldman, Sachs & Co. as its financial advisor,
(ii) it will consider a variety of potential alternatives,
including the possibility of a merger or sale of the
Company or a capital restructuring to enhance
shareholder value, (iii) it has begun to restructure
its operations to focus more fully on its core
businesses, and (iv) it expected its financial results
for the second quarter ending June 30, 1997, to include
charges of up to $95 million, before taxes, and (2) that
the Company's business is subject to a number of risks,
some of which are beyond the Company's control. The
Company described certain of those risks in the above
mentioned Current Report on Form 8-K so that it may be
used for purposes of the Private Securities Litigation
Reform Act of 1995 as a readily available document
containing meaningful cautionary statements identifying
important factors that could cause actual results to
differ materially from those projected in any forward-
looking statements the Company may make from time to time.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APRIA HEALTHCARE GROUP INC.
------------------------------
Registrant
August 14, 1997 /s/ Lawrence H. Smallen
------------------------------
Lawrence H. Smallen
Chief Financial Officer,
Senior Vice President, Finance
and Treasurer
(Principal Financial Officer)
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into
by and between Apria Healthcare Group Inc. (the "Company") and
Merl A. Wallace (the "Executive"), as of the 1st day of April
1997.
I. EMPLOYMENT.
The Company hereby employs the Executive and the Executive
hereby accepts such employment, upon the terms and conditions
hereinafter set forth, from April 1, 1997, to and including
April 1, 1999. This Agreement is subject to renewal only as set
forth in Section VI below.
II. DUTIES.
A. The Executive shall serve during the course of his
employment as the Executive Vice President, Operations of the
Company, and shall have such other duties and responsibilities
as shall be determined from time to time by a Committee
consisting of the Chief Executive Officer, the President and
Chief Operating Officer and the Chief Financial Officer (the
"Operations Committee").
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.
C. For the term of this Agreement, the Executive shall
report to the Operations Committee or its designee, provided,
however, that the Executive's annual performance review shall be
performed by the Chief Executive Officer in consultation with
the other members of the Operations Committee.
III. COMPENSATION.
A. The Company will pay to the Executive a base salary at
the rate of $215,000 per year for the first year and $250,000
per year for the second year starting April 1, 1998. 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. In
the event that this Agreement is renewed pursuant to Section VI
hereof, the Executive's salary during any renewal term may be
further increased from time to time at the Company's discretion
as a result of the annual performance review process.
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.
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.
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 a continuation of
his current car allowance of $8,400 per year, in accordance with
the plans, practices, programs and policies as in effect
generally with respect to other executives of the Company.
F. Vacation. The Executive shall be entitled to paid
vacation in accordance with the plans, policies, programs and
practices as in effect generally with respect to other
executives of the Company.
G. Modifications, etc. 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.
H. Stock Options. The Executive's stock options are
governed by separate written option agreements and the terms of
the Company's stock option plans. The Executive will not be
eligible for any further grants or awards of stock options until
after April 1, 1999.
IV. TERMINATION.
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 XIX 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) 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
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
Chief Executive Officer stating that, in his good faith opinion,
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.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If the Executive's employ
ment 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 annual base salary through the date of termination
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;
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 termi
nated 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 (including
any renewal) the Company terminates the Executive's employment
for other than Cause or death or Disability, or if the Executive
terminates his employment hereunder with Good Reason (as defined
below), this Agreement shall terminate and the Executive shall
be entitled to receive a severance payment payable in one lump
sum upon the termination of his employment in an amount equal to
200% of his Annual Compensation, 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. Such payment shall constitute the
sole and entire obligation of the Company to provide any
compensation or benefits to the Executive upon termination,
except that 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) For purposes of this Section IV-D-3, 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, 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.
(c) For purposes of this Section IV-D-3, 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.
4. Exclusive Remedy. The Executive agrees that the
payments contemplated by this Agreement shall constitute the
exclusive and sole remedy for any termination of his employment
and the Executive covenants not to assert or pursue any other
remedies, at law or in equity, with respect to any termination
of employment.
V. ARBITRATION.
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 VII, VIII, IX, or X 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.
VI. RENEWAL.
This Agreement shall be automatically renewed for one
additional year each year after the expiration of the stated
term, unless either party gives notice to the other, in writing,
at least thirty (30) days prior to the expiration of this
Agreement (or any renewal) of its or his desire to terminate the
Agreement or modify its terms. In the event such a notice is
given and the parties are unable to agree on a mutually
acceptable position for the Executive to continue as part of the
Company's senior management, then on the date of expiration of
this Agreement (or any renewal) the Company will pay the
Executive the amount that would have been paid if there were a
termination of employment under Section IV-D-3. The Executive
agrees that, at the time of any such expiration, he will
consider acceptable either a continuation of the Executive Vice
President, Operations position or a return to his prior position
as the senior executive in charge of the Company's Western Zone,
in the event that the Company should offer him either of those
positions.
VII. ANTISOLICITATION.
The Executive promises and agrees that during the term of
this Agreement (including any renewal) 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.
VIII. 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 competi
tion with the business of the Company or any subsidiary or
affiliate of the Company.
IX. 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.
X. 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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential
Material"). All such Confidential Material is considered secret
and will be available to the Executive in confidence. Except in
the performance of duties on behalf of the Company, the
Executive shall not, directly or indirectly for any reason
whatsoever, disclose or use any such Confidential Material,
unless such Confidential Material ceases (through no fault of
the Executive's) to be confidential because it has become part
of the public domain. All records, files, drawings, documents,
notes, disks, diskettes, tapes, magnetic media, photographs,
equipment and other tangible items, wherever located, relating
in any way to the Confidential Material or otherwise to the
Company's business, which the Executive prepares, uses or
encounters during the course of 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 that he shall not engage in unfair competition either
during the time employed by the Company or any time thereafter.
XI. 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.
XII. SUCCESSORS.
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 and its successors and assigns and any
such 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.
XIII.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.
XIV. MODIFICATION.
This Agreement may not be amended or modified other than by
a written agreement executed by the Executive and the Company's
Chairman and Chief Executive Officer or his successor.
XV. 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.
XVI. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire
agreement and final understanding concerning the Executive's
employment with the Company and the other subject matters
addressed herein between the parties. It is intended by the
parties as a complete and exclusive statement of the terms of
their agreement. It supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether
written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included
in this Agreement shall not be binding upon or enforceable
against either party. This is a fully integrated agreement.
XVII. 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.
XVIII.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.
XIX. COMMUNICATIONS.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered or if mailed by registered or certified
mail, postage prepaid, addressed to the Executive at 21622
Honeysuckle Street, Trabuco Canyon, California 92679 or
addressed to the Company at 3550 Hyland Avenue, Costa Mesa,
California 92626, Attention: Chief Executive Officer, 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.
XX. 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.
Photographic copies of such signed counterparts may be used in
lieu of the originals for any purpose.
XXI. 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 ________________________ ______________________
Jeremy M. Jones Merl A. Wallace
Chairman and
Chief Executive Officer
EXHIBIT 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") dated as of April 22, 1997 is made between APRIA
HEALTHCARE GROUP INC., a corporation organized and existing under
the laws of the State of Delaware ("Apria") and the Subsidiaries
of Apria identified on the signature pages of this Amendment and
any Subsidiary of Apria that, subject to Section 9.13 of the
Credit Agreement, shall have executed a Joinder Agreement (Apria
and such Subsidiaries are referred to individually as a
"Borrower" and, collectively, as the "Borrowers"), each of the
financial institutions listed on Schedule I to the Credit
Agreement or that, pursuant to Section 13.4 of the Credit
Agreement, shall become a "Bank" thereunder (individually, a
"Bank" and, collectively, the "Banks"), NATIONSBANK OF TEXAS,
N.A., as the Syndication Agent, and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as the Administrative Agent.
RECITALS
I. The Borrowers, the Banks, the Syndication Agent and the
Administrative Agent are parties to the Credit Agreement dated as
of August 9, 1996 (the "Credit Agreement") pursuant to which the
Banks extended certain credit to the Borrowers.
II. The Borrowers have requested that (i) up to $76,000,000
of the reserves and charges taken by Apria in the fourth quarter
of its 1996 fiscal year be excluded from the calculation of the
Fixed Charge Coverage Ratio and the Consolidated Fund
Indebtedness to Consolidated EBITDA Ratio for the first three
fiscal quarters of 1997 and (ii) the definition of Minimum
Consolidated Net Worth be revised to (a) exclude amounts used by
Apria for permitted repurchases of capital stock and (b) delete
references to the Vitas Merger.
III. The Borrowers have requested that the Credit Agreement
be amended to reflect the foregoing.
IV. The Banks are willing to accommodate the requests of
the Borrowers on the terms and conditions specified in this
Amendment.
AGREEMENT
In consideration of the foregoing premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this
Amendment agree as follows:
1. Defined Terms. Capitalized terms used but not defined
in this Amendment shall have the respective meanings assigned to
such terms in the Credit Agreement.
2. Amendment to Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended by adding the following definition in
proper alphabetical order:
""1996 Charges and Reserves" shall mean the one time
charges and reserves in an aggregate amount of up to
$76,000,000 taken by Apria in the fourth quarter of its 1996
fiscal year."
3. Amendments to Section 10.
(a) Section 10.9 of the Credit Agreement is
hereby amended by adding the following clause at the end of such
section:
"; provided that, solely for the purpose of determining
compliance with this Section 10.9, the calculation of the
Fixed Charge Coverage Ratio for the fiscal quarters ending
on March 31, 1997, June 30, 1997 and September 30, 1997
shall be made without giving effect to the 1996 Charges and
Reserves."
(b) Section 10.10 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"10.10 Minimum Consolidated Net Worth. Apria will not
permit its Consolidated Net Worth at the end of any fiscal
quarter, commencing with the fiscal quarter ending
September 30, 1996 to be less than an amount equal to
(a) $313,832,700, plus (b) an amount equal to 75% of
Consolidated Net Income (in excess of zero) for each fiscal
quarter commencing with the fiscal quarter ending
September 30, 1996, which amount shall be added to
Consolidated Net Worth as of the last day of each such
fiscal quarter, plus (c) 100% of the net proceeds of
issuances of Apria Common Stock, minus (d) any amounts used
by Apria to repurchase its capital stock in accordance with
Section 10.3(iii)"
(c) Section 10.11 of the Credit Agreement is
hereby amended by adding the following clause at the end of such
Section:
"; provided that, solely for the purpose of determining
compliance with this Section 10.11, and without affecting
the determination of the Applicable Margin, the calculation
of the Consolidated Funded Indebtedness to Consolidated
EBITDA Ratio for the fiscal quarters ending on March 31,
1997, June 30, 1997 and September 30, 1997 shall be made
without giving effect to the 1996 Charges and Reserves."
4. Representations. Each of the Borrowers represents and
warrants to the Banks that it has the corporate or partnership
power to execute, deliver and perform the terms and provisions of
this Amendment and has taken all necessary corporate or
partnership action to authorize the execution, delivery and
performance by it of this Amendment. Each of Apria and its
Material Subsidiaries has duly executed and delivered this
Amendment and this Amendment constitutes its legal, valid and
binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
5. Conditions Precedent. The effectiveness of this
Amendment is subject to (i) the Administrative Agent's receipt of
the consent of the Required Banks, (ii) each of the
representations and warranties contained in Section 8 of the
Credit Agreement being true and correct as of the date of this
Amendment and (iii) the receipt by the Administrative Agent of
this Amendment, duly executed and delivered by each of the
Borrowers.
6. Reference to and Effect on the Credit Agreement, Notes
and Guaranty.
(a) Except as specifically amended by this
Amendment, the Credit Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
(b) This Amendment shall be construed as one with
the Credit Agreement and the Credit Agreement shall, where the
context requires, be read and construed throughout so as to
incorporate this Amendment.
(c) All documents executed in connection with the
Credit Agreement, including, but not limited to, the Notes and
the Guaranty shall remain in full force and effect and are hereby
ratified and confirmed with respect to the Credit Agreement, as
amended hereby.
7. Entire Agreement. This Amendment, together with the
Credit Agreement and the other documents referred to in, or
executed in connection with, the Credit Agreement supersedes all
prior agreements and understandings, written or oral, among the
parties with respect to the subject matter of this Amendment.
8. Expenses. The Borrowers shall reimburse the
Administrative Agent on demand for all costs, expenses and
charges (including, without limitation, reasonable fees and
charges of external legal counsel for the Administrative Agent)
incurred by the Administrative Agent in connection with the
preparation, performance or enforcement of this Amendment.
9. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of its parties and their
respective successors and permitted assigns.
10. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Amendment and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
11. Captions. The captions and section headings appearing
in this Amendment are included solely for convenience of
reference and are not intended to affect the interpretation of
any provision of this Amendment.
12. Counterparts. This Amendment may be executed in any
number of counterparts all of which when taken together shall
constitute one and the same instrument and any of the parties to
this Amendment may execute this Amendment by signing any such
counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signatures are physically attached to the same document.
13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties to this Amendment have
caused their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
APRIA HEALTHCARE GROUP INC.
APRIA HEALTHCARE, INC.
APRIA NUMBER ONE, INC.
APRIA NUMBER TWO, INC.
PROTOCARE OF METROPOLITAN NEW YORK,
INC.
HOMEDCO OF NEW YORK STATE, INC.
By:
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:
-------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By:
------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Syndication Agent
By:
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
Los Angeles International Branch
By: ABN AMRO NORTH AMERICA, INC.
as agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
BANK OF IRELAND/GRAND CAYMAN BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Bank and as a Co-Agent
By:
-------------------------------
Name:
Title
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
CREDIT LYONNAIS
New York Branch
By:
------------------------------
Name:
Title:
DEUTSCHE BANK AG, acting through
its Los Angeles Branch and/or its
Cayman Islands Branch
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
Los Angeles Agency
By:
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., as a Bank and as a Co-
Agent
By:
-------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:
--------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
WELLS FARGO BANK, N.A.
By:
------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:
------------------------------
Name:
Title:
THE SAKURA BANK LIMITED
By:
------------------------------
Name:
Title:
THE SANWA BANK, LIMITED
By:
------------------------------
Name:
Title:
THE SUMITOMO BANK LIMITED
By:
------------------------------
Name:
Title:
THE FUJI BANK, LIMITED,
Los Angeles Agency
By:
------------------------------
Name:
Title:
EXHIBIT 10.3
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this "Agreement")
is made as of this 28th day of June, 1997, between Apria
Healthcare Group Inc., a Delaware corporation (the "Company"),
and Lisa M. Getson (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that her employment is terminated
by the Company without cause or in the event that she
terminates employment for Good Reason (as defined below), in
order to encourage the Executive's performance and continued
commitment to the Company.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements set forth below, the
parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve
in such positions and undertake such duties and have such
authority as the Company, through its Chief Executive Officer,
President or Board of Directors, shall assign to the Executive
from time to time in the Company's sole and absolute
discretion. The Company has the right to change the nature,
amount or level of authority and responsibility assigned to the
Executive at any time, with or without cause. The Company may
also change the title or titles assigned to the Executive at
any time, with or without cause. The Executive agrees to
devote substantially all of her working time and efforts to the
business and affairs of the Company. The Executive further
agrees that she shall not undertake any outside activities
which create a conflict of interest with her duties to the
Company, or which, in the judgment of the Board of Directors of
the Company, interfere with the performance of the Executive's
duties to the Company.
2. Compensation and Benefits.
(a) Salary. The Executive's salary shall be
such salary as the Company assigns to her from time to time in
accordance with its regular practices and policies. The
parties to this Agreement recognize that the Company may, in
its sole discretion, increase such salary at any time.
(b) Bonuses. The Executive's eligibility to
receive any bonus shall be determined in accordance with the
Company's Incentive Compensation Plan or other bonus plans as
they shall be in effect from time to time. The parties to this
Agreement recognize that such bonus plans may be amended and/or
terminated by the Company at any time.
(c) Expenses. During the term of the
Executive's employment, the Executive shall be entitled to
receive reimbursement for all reasonable and customary expenses
incurred by the Executive in performing services for the
Company in accordance with the Company's reimbursement policies
as they may be in effect from time to time. The parties to this
Agreement recognize that such policies may be amended and/or
terminated by the Company at any time.
(d) Other Benefits. The Executive shall be
entitled to participate in all employee benefit plans, programs
and arrangements of the Company (including, without limitation,
stock option plans or agreements and insurance, retirement and
vacation plans, programs and arrangements), in accordance with
the terms of such plans, programs or arrangements as they shall
be in effect from time to time during the period of the
Executive's employment. The parties to this Agreement
recognize that the Company may terminate or modify such plans,
programs or arrangements at any time.
3. Grounds for Termination. The Executive's
employment may be terminated on any of the following grounds:
(a) Without Cause. The Executive or the
Company may terminate the Executive's employment at any time,
without cause, by giving the other party to this Agreement at
least 30 days advance written notice of such termination.
(b) Death. The Executive's employment
hereunder shall terminate upon her death.
(c) Disability. If, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been unable to perform the essential
functions of her position, even with reasonable accommodation
that does not impose an undue hardship on the Company, on a
fulltime basis for the entire period of six (6) consecutive
months, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end
of such sixmonth period), shall not have returned to the
performance of her duties hereunder on a full-time basis (a
"disability"), the Company may terminate the Executive's
employment hereunder.
(d) Cause. The Company may terminate the
Executive's employment hereunder for cause. For purposes of
this Agreement, "cause" shall mean that the Company, acting in
good faith based upon the information then known to the
Company, determines that the Executive has engaged in or
committed: willful misconduct; theft, fraud or other illegal
conduct; refusal or unwillingness to substantially perform her
duties (other than such failure resulting from the Executive's
disability) after written demand for substantial performance is
delivered by the Company that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed her duties; insubordination; any
willful act that is likely to and which does in fact have the
effect of injuring the reputation or business of the Company;
violation of any fiduciary duty; violation of the Executive's
duty of loyalty to the Company; or a breach of any term of this
Agreement. For purposes of this Section 3(d), no act, or
failure to act, on the Executive's part shall be considered
willful unless done or omitted to be done, by her not in good
faith and without reasonable belief that her action or omission
was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for cause without delivery to the Executive of a
notice of termination signed by the Company's Chief Executive
Officer or President stating that, in the good faith opinion of
the officer signing such notice, the Executive has engaged in
or committed conduct of the nature described above in the
second sentence of this Section 3(d), and specifying the
particulars thereof in detail.
4.Payments upon Termination.
(a) Without Cause or with Good Reason. In the
event that the Executive's employment is terminated by the
Company for any reason other than death, disability or cause as
defined in Section 3 (b), (c) and (d) of this Agreement, or in
the event that the Executive terminates her employment
hereunder with Good Reason, the Executive shall be entitled to
receive severance pay in an aggregate amount equal to 100% of
her Annual Compensation, provided, however, that in the event
such termination occurs during the two-year period following a
Change of Control of the Company, the Executive shall be
entitled to receive an aggregate amount equal to 200% of her
Annual Compensation, which shall be paid in periodic
installments in accordance with the Company's customary
practice over a period of one (1) or two (2) years, as
applicable, less any amounts required to be withheld by
applicable law, in exchange for a valid release of all claims
the Executive may have against the Company in a form acceptable
to the Company. The Company will also pay to the Executive any
earned but unused vacation time at the rate of pay in effect on
the date of the notice of termination.
(b) Annual Compensation. For purposes of this
Section 4, the term "Annual Compensation" means an amount equal
to the Executive's annual base salary at the rate in effect on
the date on which the Executive received or gave written notice
of her termination, plus the sum of (i) an amount equal to the
average of the Executive's two most recent annual bonuses, if
any, received under the Company's Incentive Compensation Plan
prior to the notice of termination, (ii) the Executive's annual
car allowance, if any, and (iii) an amount determined by the
Company from time to time in its sole discretion to be equal to
the average annual cost for Company employees of obtaining
medical, dental and vision insurance under COBRA, which amount
is hereby initially determined to be $5,000 for 1997. In the
event that the Executive's bonus for one of the two calendar
years preceding the calendar year in which the Executive
receives or gives written notice of termination was a prorated
bonus due to Executive having worked a partial year, solely for
purposes of calculating Annual Compensation, the Executive's
prorated bonus will be recalculated to reflect the bonus the
Executive would have received had the Executive worked for the
entire year.
(c) Good Reason. For purposes of this Section
4 the term "Good Reason" means:
(i) any reduction in the Executive's
annual base salary, except for a general one-time "across-
the-board" salary reduction not exceeding ten percent
(10%) which is imposed simultaneously on all officers of
the Company;
or
(ii) the Company requires the Executive
to be based at an office location which will result in
an increase of more than thirty (30) miles in the
Executive's one-way commute.
(d) Release of all Claims. The Executive
understands and agrees that the Company's obligation to pay the
Executive severance pay under this Agreement is subject to the
Executive's execution of a valid written waiver and release of
all claims which the Executive may have against the Company
and/or its successors in a form acceptable to the Company in
its sole and absolute discretion.
(e) Death, Disability or Cause. In the event
that the Executive's employment is terminated due to death,
disability or cause, the Company shall not be obligated to pay
the Executive any amount other than earned unused vacation,
reimbursement for business expenses incurred prior to her
termination and in compliance with the Company's reimbursement
policies, and any unpaid salary for days worked prior to the
termination.
(f) Change of Control. For purposes of this
Section 4, a "Change of Control" shall be deemed to have
occurred if :
(i) any "person", as such term is
used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") is,
becomes or enters a contract to become, the "beneficial
owner", as such term is used in Rule 13d-3 promulgated
under the 1934 Act, directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
voting common stock of the Company;
(ii) all or substantially all of the
business of the Company is disposed of, or a contract is
entered to dispose of all of the business of the Company
pursuant to a merger, consolidation other transaction in
which (a) the Company is not the surviving company or (b)
the stockholders of the Company prior to the transaction
do not continue to own at least sixty percent (60%) of the
surviving corporation;
(iii) the Company is materially or
completely liquidated;
(iv) any person (other than the Company)
purchases any common stock of the Company in a tender or
exchange offer with the intent, expressed or implied, of
purchasing or otherwise acquiring control of the Company;
or
(v) a majority of the Board of Directors
of the Company is replaced over a two (2) year period
unless such replacements have been approved by at least
two-thirds (2/3) of those remaining directors who were
directors at the beginning of such two (2) year period.
Notwithstanding clause (i) above, a "Change of
Control" shall not be deemed to have occurred solely because a
person shall be, become or enter into a contract to become the
beneficial owner of 25% or more, but less than 40%, of the
voting common stock of the Company, if and for so long as such
person is bound by, and in compliance with, a contract with the
Company providing that such person may not nominate, vote for,
or select more than a minority of the directors of the Company.
The exception provided by the preceding sentence shall cease to
apply with respect to any person upon expiration, waiver, or
non-compliance with any such contract, by which such person was
bound.
5. Successors; Binding Agreement.
(a) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, to expressly assume
and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as she
would be entitled to hereunder if she terminated her employment
for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the date of termination. As used in
this Agreement, "Company" shall mean the Company as herein
before defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided
for in this Section 5 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrator, successors, heirs,
distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to her hereunder
if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or
other designee or, if there be no such designee, to the
Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Lisa M. Getson
2415 Naples
Newport Beach, CA 92660
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Attention: Chief Executive
Officer
With a copy to the attention of: Senior Vice
President, Human Resources
or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
7. Antisolicitation. The Executive promises and
agrees that, during the period of her employment by the Company
and for a period of one year thereafter, she will not influence
or attempt to influence customers of the Company or any of its
present or future subsidiaries or affiliates, either directly
or indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity then in
competition with the business of the Company, or any subsidiary
or affiliate of the Company.
8. Noncompetition. The Executive promises and
agrees that for a period of one year following termination of
her employment, she will not enter business or work with or for
any business, individual, partnership, firm, corporation or
other entity then in competition with the business of the
Company or any subsidiary or affiliate of the Company.
9. Soliciting Employees. The Executive promises
and agrees that for a period of one year following termination
of her employment, she will not, directly or indirectly solicit
any of the Company employees who earned annually $50,000 or
more as a Company employee during the last six months of his or
her own employment to work for any other business, individual,
partnership, firm, corporation, or other entity.
10. Confidential Information.
(a) The Executive, in the performance of her duties
on behalf of the Company, shall have access to, receive and be
entrusted with confidential information, including but not
limited to systems technology, field operations, reimbursement,
development, marketing, organizational, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential
Material"). All such Confidential Material is considered secret
and will be available to the Executive in confidence. Except
in the performance of duties on behalf of the Company, the
Executive shall not, directly or indirectly for any reason
whatsoever, disclose or use any such Confidential Material,
unless such Confidential Material ceases (through no fault of
the Executive's) to be confidential because it has become part
of the public domain. All records, files, drawings, documents,
notes, disks, diskettes, tapes, magnetic media, photographs,
equipment and other tangible items, wherever located, relating
in any way to the Confidential Material or otherwise to the
Company's business, which the Executive prepares, uses or
encounters during the course of her employment, shall be and
remain the Company's sole and exclusive property and shall be
included in the Confidential Material. Upon termination of
this Agreement by any means, or whenever requested by the
Company, the Executive shall promptly deliver to the Company
any and all of the Confidential Material, not previously
delivered to the Company, that may be or at any previous time
has been in the Executive's possession or under the Executive's
control.
(b) The Executive hereby acknowledges that the sale
or unauthorized use or disclosure of any of the Company's
Confidential Material by any means whatsoever and at any time
before, during or after the Executive's employment with the
Company shall constitute unfair competition. The Executive
agrees she shall not engage in unfair competition either during
the time employed by the Company or any time thereafter.
11. Parachute Limitation. Notwithstanding any
other provision of this Agreement, the Executive shall not have
any right to receive any payment or other benefit under this
Agreement, any other agreement, or any benefit plan if such
right, payment or benefit, taking into account all other
rights, payments or benefits to or for the Executive under this
Agreement, all other agreements, and all benefit plans, would
cause any right, payment or benefit to the Executive under this
Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b) (2) of the Internal Revenue Code as
then in effect (a "Parachute Payment"). In the event that the
receipt of any such right or any other payment or benefit under
this Agreement, any other agreement, or any benefit plan would
cause the Executive to be considered to have received a
Parachute Payment under this Agreement, then the Executive
shall have the right, in the Executive's sole discretion, to
designate those rights, payments or benefits under this
Agreement, any other agreements, and/or any benefit plans, that
should be reduced or eliminated so as to avoid having the
right, payment or benefit to the Executive under this Agreement
be deemed to be a Parachute Payment.
12. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
signed by the Executive and the Chief Executive Officer or the
President of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles.
13. Validity. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and
the same instrument.
15. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement or Executive's
employment by the Company shall be settled exclusively by
arbitration, conducted before a single neutral arbitrator in
accordance with the American Arbitration Association's National
Rules for Resolution of Employment Disputes as then in effect.
Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Company shall
be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of
any violation of the provisions of Sections 7, 8, 9 or 10 of
this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the
necessity of the Company's posting any bond, and provided,
further, that the Executive shall be entitled to seek specific
performance of her right to be paid until the date of
employment termination during
the pendency of any dispute or controversy arising under or in
connection with this Agreement. The fees and expenses of the
arbitrator shall be borne by the Company.
16. Entire Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and
canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
APRIA HEALTHCARE GROUP INC.
By:_______________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
__________________________________________
Name: Lisa M. Getson
EXHIBIT 10.4
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 Robert S. Holcombe (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Robert S. Holcombe
38 Oakbrook
Coto de Caza, CA 92679-4742
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Robert S. Holcombe
EXHIBIT 10.5
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 Jerome J. Lyden (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Jerome J. Lyden
12180 S. Riviera
Tustin, CA 92680
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Jerome J. Lyden
EXHIBIT 10.6
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 Gary L. Mangiofico (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Gary L. Mangiofico
916 Skyline Terrace
Laguna Beach, CA 92651
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Gary L. Mangiofico
EXHIBIT 10.7
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 Steven T. Plochocki (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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 300% of his Annual
Compensation, provided, however, that in the event such
termination occurs during the three-year period following a
Change of Control of the Company, the Executive shall be entitled
to receive an aggregate amount equal to 300% 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 three (3) 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Steven T. Plochocki
22446 Rosebriar
Mission Viejo, CA 92692
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Steven T. Plochocki
EXHIBIT 10.8
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 Thomas M. Robbins (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Thomas M. Robbins
10990 Blackbrook Drive
Duluth, GA 30136
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Steven T. Plochocki
Title: President & Chief Operating Officer
EXECUTIVE
___________________________________________
Name: Thomas M. Robbins
EXHIBIT 10.9
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 Susan K. Skara (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that her employment is terminated
by the Company without cause or in the event that she terminates
employment for Good Reason (as defined below), in order to
encourage the Executive's performance and continued commitment to
the Company.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements set forth below, the
parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve
in such positions and undertake such duties and have such
authority as the Company, through its Chief Executive Officer,
President or Board of Directors, shall assign to the Executive
from time to time in the Company's sole and absolute discretion.
The Company has the right to change the nature, amount or level
of authority and responsibility assigned to the Executive at any
time, with or without cause. The Company may also change the
title or titles assigned to the Executive at any time, with or
without cause. The Executive agrees to devote substantially all
of her working time and efforts to the business and affairs of
the Company. The Executive further agrees that she shall not
undertake any outside activities which create a conflict of
interest with her duties to the Company, or which, in the
judgment of the Board of Directors of the Company, interfere with
the performance of the Executive's duties to the Company.
2. Compensation and Benefits.
(a) Salary. The Executive's salary shall be such
salary as the Company assigns to her from time to time in
accordance with its regular practices and policies. The parties
to this Agreement recognize that the Company may, in its sole
discretion, increase such salary at any time.
(b) Bonuses. The Executive's eligibility to
receive any bonus shall be determined in accordance with the
Company's Incentive Compensation Plan or other bonus plans as
they shall be in effect from time to time. The parties to this
Agreement recognize that such bonus plans may be amended and/or
terminated by the Company at any time.
(c) Expenses. During the term of the Executive's
employment, the Executive shall be entitled to receive
reimbursement for all reasonable and customary expenses incurred
by the Executive in performing services for the Company in
accordance with the Company's reimbursement policies as they may
be in effect from time to time. The parties to this Agreement
recognize that such policies may be amended and/or terminated by
the Company at any time.
(d) Other Benefits. The Executive shall be
entitled to participate in all employee benefit plans, programs
and arrangements of the Company (including, without limitation,
stock option plans or agreements and insurance, retirement and
vacation plans, programs and arrangements), in accordance with
the terms of such plans, programs or arrangements as they shall
be in effect from time to time during the period of the
Executive's employment. The parties to this Agreement recognize
that the Company may terminate or modify such plans, programs or
arrangements at any time.
3. Grounds for Termination. The Executive's
employment may be terminated on any of the following grounds:
(a) Without Cause. The Executive or the Company
may terminate the Executive's employment at any time, without
cause, by giving the other party to this Agreement at least
30 days advance written notice of such termination.
(b) Death. The Executive's employment hereunder
shall terminate upon her death.
(c) Disability. If, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been unable to perform the essential
functions of her position, even with reasonable accommodation
that does not impose an undue hardship on the Company, on a 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 her
duties hereunder on a full-time basis (a "disability"), the
Company may terminate the Executive's employment hereunder.
(d) Cause. The Company may terminate the
Executive's employment hereunder for cause. For purposes of this
Agreement, "cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company,
determines that the Executive has engaged in or committed:
willful misconduct; theft, fraud or other illegal conduct;
refusal or unwillingness to substantially perform her duties
(other than such failure resulting from the Executive's
disability) after written demand for substantial performance is
delivered by the Company that specifically identifies the manner
in which the Company believes the Executive has not substantially
performed her duties; insubordination; any willful act that is
likely to and which does in fact have the effect of injuring the
reputation or business of the Company; violation of any fiduciary
duty; violation of the Executive's duty of loyalty to the
Company; or a breach of any term of this Agreement. For purposes
of this Section 3(d), no act, or failure to act, on the
Executive's part shall be considered willful unless done or
omitted to be done, by her not in good faith and without
reasonable belief that her action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for cause
without delivery to the Executive of a notice of termination
signed by the Company's Chief Executive Officer or President
stating that, in the good faith opinion of the officer signing
such notice, the Executive has engaged in or committed conduct of
the nature described above in the second sentence of this Section
3(d), and specifying the particulars thereof in detail.
4. Payments upon Termination.
(a) Without Cause or with Good Reason. In the
event that the Executive's employment is terminated by the
Company for any reason other than death, disability or cause as
defined in Section 3 (b), (c) and (d) of this Agreement, or in
the event that the Executive terminates her employment hereunder
with Good Reason, the Executive shall be entitled to receive
severance pay in an aggregate amount equal to 100% of her Annual
Compensation, provided, however, that in the event such
termination occurs during the two-year period following a Change
of Control of the Company, the Executive shall be entitled to
receive an aggregate amount equal to 200% of her Annual
Compensation, which shall be paid in periodic installments in
accordance with the Company's customary practice over a period of
one (1) or two (2) years, as applicable, less any amounts
required to be withheld by applicable law, in exchange for a
valid release of all claims the Executive may have against the
Company in a form acceptable to the Company. The Company will
also pay to the Executive any earned but unused vacation time at
the rate of pay in effect on the date of the notice of
termination.
(b) Annual Compensation. For purposes of this
Section 4, the term "Annual Compensation" means an amount equal
to the Executive's annual base salary at the rate in effect on
the date on which the Executive received or gave written notice
of her termination, plus the sum of (i) an amount equal to the
average of the Executive's two most recent annual bonuses, if
any, received under the Company's Incentive Compensation Plan
prior to the notice of termination, (ii) the Executive's annual
car allowance, if any, and (iii) an amount determined by the
Company from time to time in its sole discretion to be equal to
the average annual cost for Company employees of obtaining
medical, dental and vision insurance under COBRA, which amount is
hereby initially determined to be $5,000 for 1997. In the event
that the Executive's bonus for one of the two calendar years
preceding the calendar year in which the Executive receives or
gives written notice of termination was a prorated bonus due to
Executive having worked a partial year, solely for purposes of
calculating Annual Compensation, the Executive's prorated bonus
will be recalculated to reflect the bonus the Executive would
have received had the Executive worked for the entire year.
(c) Good Reason. For purposes of this Section 4
the term "Good Reason" means:
(i) any reduction in the Executive's
annual base salary, except for a general one-time
"across-the-board" salary reduction not exceeding ten
percent (10%) which is imposed simultaneously on all
officers of the Company;
or
(ii) the Company requires the Executive
to be based at an office location which will result in
an increase of more than thirty (30) miles in the
Executive's one-way commute.
(d) Release of all Claims. The Executive
understands and agrees that the Company's obligation to pay the
Executive severance pay under this Agreement is subject to the
Executive's execution of a valid written waiver and release of
all claims which the Executive may have against the Company
and/or its successors in a form acceptable to the Company in its
sole and absolute discretion.
(e) Death, Disability or Cause. In the event
that the Executive's employment is terminated due to death,
disability or cause, the Company shall not be obligated to pay
the Executive any amount other than earned unused vacation,
reimbursement for business expenses incurred prior to her
termination and in compliance with the Company's reimbursement
policies, and any unpaid salary for days worked prior to the
termination.
(f) Change of Control. For purposes of this
Section 4, a "Change of Control" shall be deemed to have occurred
if :
(i) any "person", as such term is used
in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") is,
becomes or enters a contract to become, the "beneficial
owner", as such term is used in Rule 13d-3 promulgated
under the 1934 Act, directly or indirectly, of
securities representing twenty-five percent (25%) or
more of the voting common stock of the Company;
(ii) all or substantially all of the
business of the Company is disposed of, or a contract
is entered to dispose of all of the business of the
Company pursuant to a merger, consolidation other
transaction in which (a) the Company is not the
surviving company or (b) the stockholders of the
Company prior to the transaction do not continue to own
at least sixty percent (60%) of the surviving
corporation;
(iii) the Company is materially or
completely liquidated;
(iv) any person (other than the Company)
purchases any common stock of the Company in a tender
or exchange offer with the intent, expressed or
implied, of purchasing or otherwise acquiring control
of the Company; or
(v) a majority of the Board of
Directors of the Company is replaced over a two (2)
year period unless such replacements have been approved
by at least two-thirds (2/3) of those remaining
directors who were directors at the beginning of such
two (2) year period.
Notwithstanding clause (i) above, a "Change of Control"
shall not be deemed to have occurred solely because a person
shall be, become or enter into a contract to become the
beneficial owner of 25% or more, but less than 40%, of the voting
common stock of the Company, if and for so long as such person is
bound by, and in compliance with, a contract with the Company
providing that such person may not nominate, vote for, or select
more than a minority of the directors of the Company. The
exception provided by the preceding sentence shall cease to apply
with respect to any person upon expiration, waiver, or non-
compliance with any such contract, by which such person was
bound.
5. Successors; Binding Agreement.
(a) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the
same amount and on the same terms as she would be entitled to
hereunder if she terminated her employment for Good Reason,
except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed
the date of termination. As used in this Agreement, "Company"
shall mean the Company as herein before defined and any successor
to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrator, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amounts would still be payable to her hereunder if she had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Susan K. Skara
4726 E. El Rito Drive
Orange, CA 92867
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Attention: Chief Executive Officer
With a copy to the attention of: Senior Vice President,
Human Resources or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
7. Antisolicitation. The Executive promises and
agrees that, during the period of her employment by the Company
and for a period of one year thereafter, she will not influence
or attempt to influence customers of the Company or any of its
present or future subsidiaries or affiliates, either directly or
indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity then in
competition with the business of the Company, or any subsidiary
or affiliate of the Company.
8. Noncompetition. The Executive promises and
agrees that for a period of one year following termination of her
employment, she will not enter business or work with or for any
business, individual, partnership, firm, corporation or other
entity then in competition with the business of the Company or
any subsidiary or affiliate of the Company.
9. Soliciting Employees. The Executive promises and
agrees that for a period of one year following termination of her
employment, she will not, directly or indirectly solicit any of
the Company employees who earned annually $50,000 or more as a
Company employee during the last six months of his or her own
employment to work for any other business, individual,
partnership, firm, corporation, or other entity.
10. Confidential Information.
(a) The Executive, in the performance of her duties on
behalf of the Company, shall have access to, receive and be
entrusted with confidential information, including but not
limited to systems technology, field operations, reimbursement,
development, marketing, organizational, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of her employment, shall be and remain the Company's
sole and exclusive property and shall be included in the
Confidential Material. Upon termination of this Agreement by any
means, or whenever requested by the Company, the Executive shall
promptly deliver to the Company any and all of the Confidential
Material, not previously delivered to the Company, that may be or
at any previous time has been in the Executive's possession or
under the Executive's control.
(b) The Executive hereby acknowledges that the sale or
unauthorized use or disclosure of any of the Company's
Confidential Material by any means whatsoever and at any time
before, during or after the Executive's employment with the
Company shall constitute unfair competition. The Executive
agrees she shall not engage in unfair competition either during
the time employed by the Company or any time thereafter.
11. Parachute Limitation. Notwithstanding any other
provision of this Agreement, the Executive shall not have any
right to receive any payment or other benefit under this
Agreement, any other agreement, or any benefit plan if such
right, payment or benefit, taking into account all other rights,
payments or benefits to or for the Executive under this
Agreement, all other agreements, and all benefit plans, would
cause any right, payment or benefit to the Executive under this
Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b) (2) of the Internal Revenue Code as
then in effect (a "Parachute Payment"). In the event that the
receipt of any such right or any other payment or benefit under
this Agreement, any other agreement, or any benefit plan would
cause the Executive to be considered to have received a Parachute
Payment under this Agreement, then the Executive shall have the
right, in the Executive's sole discretion, to designate those
rights, payments or benefits under this Agreement, any other
agreements, and/or any benefit plans, that should be reduced or
eliminated so as to avoid having the right, payment or benefit to
the Executive under this Agreement be deemed to be a Parachute
Payment.
12. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed
by the Executive and the Chief Executive Officer or the President
of the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of California without regard to its
conflicts of law principles.
13. Validity. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
15. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement or Executive's
employment by the Company shall be settled exclusively by
arbitration, conducted before a single neutral arbitrator in
accordance with the American Arbitration Association's National
Rules for Resolution of Employment Disputes as then in effect.
Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any
violation of the provisions of Sections 7, 8, 9 or 10 of this
Agreement and the Executive hereby consents that such restraining
order or injunction may be granted without the necessity of the
Company's posting any bond, and provided, further, that the
Executive shall be entitled to seek specific performance of her
right to be paid until the date of employment termination during
the pendency of any dispute or controversy arising under or in
connection with this Agreement. The fees and expenses of the
arbitrator shall be borne by the Company.
16. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
APRIA HEALTHCARE GROUP INC.
By:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Susan K. Skara
EXHIBIT 10.10
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 Lawrence H. Smallen (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Lawrence H. Smallen
30582 Hunt Club Drive
San Juan Capistrano, CA 92675
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Jeremy M. Jones
Title: Chief Executive Officer
EXECUTIVE
___________________________________________
Name: Lawrence H. Smallen
EXHIBIT 10.11
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 Dennis E. Walsh (the "Executive").
RECITALS
It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
The Company wishes to provide to the Executive
certain benefits in the event that 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% of 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
hereunder 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, distributees,
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 Executive's estate.
6. Notices. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Dennis E. Walsh
3 San Miguel
Coto de Caza, CA 92679
If to the Company:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
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, financial, management,
administrative, clinical, customer, distribution and sales
information, data, specifications and processes presently owned
or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the
future in the course of its business that is not otherwise part
of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and will be
available to the Executive in confidence. Except in the
performance of duties on behalf of the Company, the Executive
shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such
Confidential Material ceases (through no fault of the
Executive's) to be confidential because it has become part of the
public domain. All records, files, drawings, documents, notes,
disks, diskettes, tapes, magnetic media, photographs, equipment
and other tangible items, wherever located, relating in any way
to the Confidential Material or otherwise to the Company's
business, which the Executive prepares, uses or encounters during
the course of 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:________________________________________
Name: Steven T. Plochocki
Title: President & Chief Operating Officer
EXECUTIVE
___________________________________________
Name: Dennis E. Walsh
EXHIBIT 10.12
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") dated as of July 31, 1997 is made between APRIA
HEALTHCARE GROUP INC., a corporation organized and existing under
the laws of the State of Delaware ("Apria") and the Subsidiaries
of Apria identified on the signature pages of this Amendment and
any Subsidiary of Apria that, subject to Section 9.13 of the
Credit Agreement, shall have executed a Joinder Agreement (Apria
and such Subsidiaries are referred to individually as a
"Borrower" and, collectively, as the "Borrowers"), each of the
financial institutions listed on Schedule I to the Credit
Agreement or that, pursuant to Section 13.4 of the Credit
Agreement, shall become a "Bank" thereunder (individually, a
"Bank" and, collectively, the "Banks"), NATIONSBANK OF TEXAS,
N.A., as the Syndication Agent, and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as the Administrative Agent.
RECITALS
I. The Borrowers, the Banks, the Syndication Agent and the
Administrative Agent are parties to the Credit Agreement dated as
of August 9, 1996 (the "Credit Agreement"), as amended by the
First Amendment to Credit Agreement dated as of April 22, 1997
(the "First Amendment"), pursuant to which the Banks extended
certain credit to the Borrowers.
II. The Borrowers have requested that up to $76,000,000 of
the reserves and charges taken by Apria in the fourth quarter of
its 1996 fiscal year and up to $100,000,000 of the reserves and
charges to be taken in the second quarter of its 1997 fiscal year
be excluded from the calculation of Consolidated EBITDA and that
the net losses from such periods be deducted from the calculation
of Minimum Consolidated Net Worth.
III. The Borrowers have requested that the Total Revolving
Loan Commitment be reduced to $600,000,000, with the Revolving
Loan Commitment of each Bank commensurately reduced by 25%.
IV. The Borrowers have requested that the Credit Agreement
be amended to reflect the foregoing.
V. The Banks are willing to accommodate the requests of the
Borrowers on the terms and conditions specified in this
Amendment.
AGREEMENT
In consideration of the foregoing premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this
Amendment agree as follows:
1. Defined Terms. Capitalized terms used but not defined
in this Amendment shall have the respective meanings assigned to
such terms in the Credit Agreement.
2. Amendment to Recitals. The Recitals to the Credit
Agreement are hereby amended by deleting the amount
"$800,000,000" on the third line of the first Recital and
replacing it with the amount "$600,000,000".
3. Amendments to Section 1.1.
(a) The definition of "Consolidated EBITDA" in
Section 1.1 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Consolidated EBITDA" shall mean, for the four-
quarter period preceding any date of determination, the
sum of Consolidated Net Income (before consolidated
interest income, Consolidated Interest Expense and
provisions for taxes, and extraordinary gains or losses
or gains or losses from sales of assets other than
inventory or Rental Equipment sold in the Ordinary
Course of Business) for such period, plus (a) (to the
extent deducted in arriving at Consolidated Net Income
for such period) (i) the amount of amortization of
intangibles, (ii) depreciation, (iii) all Merger Costs
incurred in connection with the Abbey Merger
(determined on an pre-tax basis) and (iv) the 1996
Charges and Reserves and the 1997 Charges and Reserves,
plus (b) the EBITDA allocable to any Permitted Acquired
Business acquired in such period for such period, minus
(c) the EBITDA allocable to any assets, capital stock,
division or business group divested by Apria or any of
its Consolidated Subsidiaries in such period; provided
that with respect to clauses (b) and (c), such EBITDA
shall only be added or subtracted, as applicable, for
the period commencing at the beginning of such four-
quarter period through the date of such acquisition or
divestiture.
(b) The definition of "Total Revolving Loan
Commitment" in Section 1.1 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Total Revolving Loan Commitment" shall mean, at
any time, the sum of the Revolving Loan Commitments of
each of the Banks. The principal amount of the Total
Revolving Loan Commitment is $600,000,000 as of July
31, 1997.
(c) Section 1.1 of the Credit Agreement is hereby
amended by adding the following definition in proper alphabetical
order:
"1997 Charges and Reserves" shall mean the one
time charges and reserves in an aggregate amount of up
to $100,000,000 taken by Apria in the second quarter of
its 1997 fiscal year.
4. Amendment to Section 9.13. Section 9.13 of the Credit
Agreement is hereby amended by deleting subsection (a)(i) of such
Section and replacing it with the following new subsection
(a)(i):
(i) with respect to all Permitted Transactions
(other than Subsidiary Reorganizations) in any one
fiscal year, the sum (without duplication) of (I) cash
paid by Apria in connection with such Permitted
Transactions, (II) the Fair Market Value of Apria
Common Stock issued in connection with such Permitted
Transactions and (III) the amount (determined by using
the face amount of the debt or the amount payable at
maturity, whichever is greater) of all Permitted Debt
incurred, assumed or acquired in all such Permitted
Transactions, shall not exceed (x) $25,000,000 in
fiscal 1997 and (y) $60,000,000 in any fiscal year
thereafter;
5. Amendments to Section 10.
(a) Section 10.3 of the Credit Agreement is
hereby amended to read in its entirety as follows:
10.3 Dividends. Apria will not, nor permit any of its
Subsidiaries to, declare or pay any Dividends except
that: (1) any Subsidiary of Apria may pay Dividends to
Apria or any Wholly-Owned Subsidiary of Apria; and (ii)
provided that no Default or Event of Default has
occurred and is continuing or would result therefrom,
Apria may declare and pay Dividends in an amount not to
exceed $2,500,000 in any fiscal year.
(b) Section 10.9 of the Credit Agreement is
hereby amended by deleting the proviso at the end of such
Section, which proviso was added pursuant to the First Amendment.
(c) Section 10.10 of the Credit Agreement is
hereby amended to read in its entirety as follows:
10.10 Minimum Consolidated Net Worth. Apria will
not permit its Consolidated Net Worth at the end of any
fiscal quarter, commencing with the fiscal quarter
ending June 30, 1996, to be less than an amount equal
to (a) $313,832,767, plus (b) an amount equal to 75% of
Consolidated Net Income (in excess of zero) for each
fiscal quarter commencing with the fiscal quarter
ending September 30, 1996, which amount shall be added
to Consolidated Net Worth as of the last day of each
such fiscal quarter, plus (c) 100% of the net proceeds
of issuances of Apria Common Stock, minus (d) any
amounts used by Apria to repurchase its capital stock
in accordance with Section 10.3(iii) prior to July 31,
1997, minus (e) the net losses of Apria and its
Subsidiaries as reflected on Apria's consolidated
financial statements for the fiscal quarter ended
December 31, 1996 and the fiscal quarter ended June 30,
1997 (each calculated on an after tax basis).
(d) Section 10.11 of the Credit Agreement is
hereby amended by deleting the proviso at the end of such
Section, which proviso was added pursuant to the First Amendment.
6. Amendment to Annex I. Annex I to the Credit Agreement
is hereby amended by deleting the chart on page 1 of such Annex
and replacing it with the chart on Attachment A to this
Amendment.
7. Applicable Margin. Notwithstanding anything contained
in this Amendment or the Credit Agreement to the contrary and
irrespective of the then applicable Consolidated Funded
Indebtedness to Consolidated EBITDA Ratio or rating of Apria's
senior unsecured non-credit enhanced Indebtedness (unless such
ratio or rating would result in the Applicable Margin being based
at Level I), until the receipt by the Administrative Agent of the
financial statements of Apria and its consolidated Subsidiaries
for the fiscal year ended on December 31, 1997 pursuant to
Section 9.1(b) of the Credit Agreement, together with the
compliance certificate dated as of such date pursuant to Section
9.1(d) of the Credit Agreement, the Applicable Margin as set
forth on Annex I of the Credit Agreement (as amended by this
Amendment) shall not be based at a Level less than Level II (i.e.
Level III, IV or V).
8. Amendment to Schedule I. Schedule I to the Credit
Agreement is hereby deleted in its entirety and replaced with
Attachment B to this Amendment.
9. Amendment Fees, etc. The Borrowers shall to pay to
the Administrative Agent for distribution to each Bank that
approves this Amendment on or prior to August 8, 1997 an
amendment fee equal to .10% of such Bank's Commitment Amount as
in effect subsequent to the reductions set forth in this
Amendment.
10. Representations. Each of the Borrowers represents and
warrants to the Banks that it has the corporate or partnership
power to execute, deliver and perform the terms and provisions of
this Amendment and has taken all necessary corporate or
partnership action to authorize the execution, delivery and
performance by it of this Amendment. Each of Apria and its
Material Subsidiaries has duly executed and delivered this
Amendment and this Amendment constitutes its legal, valid and
binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
11. Conditions Precedent. The effectiveness of this
Amendment is subject to (i) the Administrative Agent's receipt of
the consent of the Required Banks, (ii) each of the
representations and warranties contained in Section 8 of the
Credit Agreement being true and correct as of the date of this
Amendment, (iii) the receipt by the Administrative Agent of this
Amendment, duly executed and delivered by each of the Borrowers
and (iv) the payment of the fees set forth in Section 9.
12. Reference to and Effect on the Credit Agreement, Notes
and Guaranty.
(a) Except as specifically amended by this
Amendment, the Credit Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
(b) This Amendment shall be construed as one with
the Credit Agreement and the Credit Agreement shall, where the
context requires, be read and construed throughout so as to
incorporate this Amendment.
(c) All documents executed in connection with the
Credit Agreement, including, but not limited to, the Notes and
the Guaranty shall remain in full force and effect and are hereby
ratified and confirmed with respect to the Credit Agreement, as
amended hereby.
13. Entire Agreement. This Amendment, together with the
Credit Agreement and the other documents referred to in, or
executed in connection with, the Credit Agreement supersedes all
prior agreements and understandings, written or oral, among the
parties with respect to the subject matter of this Amendment.
14. Expenses. The Borrowers shall reimburse the
Administrative Agent on demand for all costs, expenses and
charges (including, without limitation, reasonable fees and
charges of external legal counsel for the Administrative Agent)
incurred by the Administrative Agent in connection with the
preparation, performance or enforcement of this Amendment.
15. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of its parties and their
respective successors and permitted assigns.
16. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Amendment and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
17. Captions. The captions and section headings appearing
in this Amendment are included solely for convenience of
reference and are not intended to affect the interpretation of
any provision of this Amendment.
18. Counterparts. This Amendment may be executed in any
number of counterparts all of which when taken together shall
constitute one and the same instrument and any of the parties to
this Amendment may execute this Amendment by signing any such
counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signatures are physically attached to the same document.
19. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties to this Amendment have
caused their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
APRIA HEALTHCARE GROUP INC.
APRIA HEALTHCARE, INC.
APRIA NUMBER ONE, INC.
APRIA NUMBER TWO, INC.
PROTOCARE OF METROPOLITAN NEW YORK,
INC.
HOMEDCO OF NEW YORK STATE, INC.
By:
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By:
------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Syndication Agent
By:
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
Los Angeles International Branch
By: ABN AMRO NORTH AMERICA, INC.
as agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
BANK OF IRELAND/GRAND CAYMAN BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title
By:
------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
CREDIT LYONNAIS
New York Branch
By:
------------------------------
Name:
Title:
DEUTSCHE BANK AG, acting through
its Los Angeles Branch and/or its
Cayman Islands Branch
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
Los Angeles Agency
By:
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., as a Bank and as a Co-
Agent
By:
------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:
------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
WELLS FARGO BANK, N.A.
By:
------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:
------------------------------
Name:
Title:
THE SAKURA BANK LIMITED
By:
------------------------------
Name:
Title:
THE SANWA BANK, LIMITED
By:
------------------------------
Name:
Title:
THE SUMITOMO BANK LIMITED
By:
------------------------------
Name:
Title:
THE FUJI BANK, LIMITED,
Los Angeles Agency
By:
------------------------------
Name:
Title:
ATTACHMENT A
ANNEX I
APPLICABLE MARGIN
-------------------
Applicable Margin
(basis points per anum)
-----------------------
Level Consolidated Funded for
Indebtedness to interest on for Revolving
Consolidated EBITDA Eurodollar Loan Commitment
Ratio Loans Fee
- ----- ----------------------- ----------- --------------
Level I Greater than 2.5 to 1 150 37.5
Level II Less than or equal to 112.5 25.0
2.5 to 1 and greater
than 2.0 to 1
Level III Less than or equal to 87.5 22.5
2.0 to 1 and greater
than 1.5 to 1
Level IV Less than or equal to 75.0 17.5
1.5 to 1 and greater
than 1.0 to 1
Level V Less than or equal 50.0 15.0
to 1.0 to 1
ATTACHMENT B
SCHEDULE I
COMMITMENTS
Pro Rata
Bank Commitment Share
---- ----------- -----
Bank of America
National Trust and
Savings Association $ 56,250,000 9.375%
NationsBank of Texas, N.A. $ 56,250,000 9.375%
ABN AMRO Bank N.V.,
Los Angeles International
Branch $ 18,750,000 3.125%
Bank of Ireland/Grand
Cayman Branch $ 11,250,000 1.875%
The Bank of New York $ 26,250,000 4.375%
The Bank of Nova Scotia $ 45,000,000 7.500%
Banque Nationale de Paris $ 37,500,000 6.250%
Banque Paribas $ 33,750,000 5.625%
Credit Lyonnais
New York Branch $ 26,250,000 4.375%
Deutsche Bank AG,
Los Angeles Branch and/or
Cayman Islands Branch $ 15,000,000 2.500%
The First National Bank
of Chicago $ 18,750,000 3.125%
First Union National
Bank of North Carolina $ 18,750,000 3.125%
The Fuji Bank Limited,
Los Angeles Agency $ 11,250,000 1.875%
The Industrial Bank of
Japan, Ltd., Los Angeles
Agency $ 26,250,000 4.375%
The Long-Term Credit
Bank of Japan, Ltd. $ 41,250,000 6.875%
Mellon Bank, N.A. $ 18,750,000 3.125%
The Mitsubishi Trust
and Banking Corporation $ 11,250,000 1.875%
The Sakura Bank Limited $ 11,250,000 1.875%
The Sanwa Bank Limited $ 11,250,000 1.875%
The Sumitomo Bank Limited $ 11,250,000 1.875%
Toronto Dominion (Texas),
Inc. $ 33,750,000 5.625%
Union Bank of California,
N.A. $ 33,750,000 5.625%
Wells Fargo Bank, N.A. $ 26,250,000 4.375%
============ ======
TOTAL $600,000,000 100%
EXHIBIT 11.1
APRIA HEALTHCARE GROUP INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1997 1996 1997 1996
------ ------ ------ ------
Net (loss) income for primary
and fully diluted earnings
per share $(69,876) $21,908 $(50,636) $42,234
======== ======== ======== =======
Weighted average shares
outstanding 51,411 50,839 51,336 50,503
Incremental shares - stock options 470 1,736 563 1,783
-------- -------- ------- -------
Primary shares 51,881 52,575 51,899 52,286
Incremental shares - stock options 17 1 9 113
-------- -------- ------- -------
Fully diluted shares 51,898 52,576 51,908 52,399
======== ======== ======= =======
Primary and fully diluted
earnings per share $(1.36) $ 0.42 $(0.99) $ 0.81
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 (UNAUDITED) AND CONSOLIDATED
INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,062
<SECURITIES> 0
<RECEIVABLES> 372,142
<ALLOWANCES> 71,600
<INVENTORY> 33,366
<CURRENT-ASSETS> 411,830
<PP&E> 658,755
<DEPRECIATION> 337,254
<TOTAL-ASSETS> 1,045,131
<CURRENT-LIABILITIES> 146,010
<BONDS> 591,968
0
0
<COMMON> 51
<OTHER-SE> 295,365
<TOTAL-LIABILITY-AND-EQUITY> 1,045,131
<SALES> 609,598
<TOTAL-REVENUES> 609,598
<CGS> 233,142
<TOTAL-COSTS> 233,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 85,947
<INTEREST-EXPENSE> 25,491
<INCOME-PRETAX> (40,725)
<INCOME-TAX> 9,911
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,636)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> (.99)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS AMENDED SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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0
0
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</TABLE>
