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, 1998
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 51,770,859 shares of Common Stock, $.001 par value,
outstanding at August 3, 1998.
<PAGE>
APRIA HEALTHCARE GROUP INC.
FORM 10-Q
For the period ended June 30, 1998
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
Item 3. Quantitative and Qualitative Disclosures About Market Price
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
<CAPTION>
June 30, December 31,
1998 1997
---------- ------------
(unaudited)
(dollars in thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 74,712 $ 16,317
Accounts receivable, less allowance
for doubtful accounts of $45,757
and $58,413 at June 30, 1998 and
December 31, 1997, respectively 212,190 256,845
Inventories 22,861 26,082
Prepaid expenses and other current
assets 5,737 12,329
--------- ---------
TOTAL CURRENT ASSETS 315,500 311,573
PATIENT SERVICE EQUIPMENT, less
accumulated depreciation of $261,189
and $245,772 at June 30, 1998 and
December 31, 1997, respectively 161,005 184,704
PROPERTY, EQUIPMENT AND
IMPROVEMENTS, NET 83,780 87,583
INTANGIBLE ASSETS, NET 165,525 167,620
OTHER ASSETS 817 5,690
--------- ---------
$ 726,627 $ 757,170
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 46,180 $ 50,691
Accrued payroll and related taxes
and benefits 32,069 40,397
Accrued insurance 13,136 12,247
Other accrued liabilities 30,954 30,463
Current portion of long-term debt 7,348 8,685
--------- ---------
TOTAL CURRENT LIABILITIES 129,687 142,483
LONG-TERM DEBT 536,386 540,220
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value:
10,000,000 shares authorized;
none issued - -
Common Stock, $.001 par value:
150,000,000 shares authorized;
51,748,259 and 51,568,525
shares issued and outstanding
at June 30, 1998 and December
31, 1997, respectively 52 51
Additional paid-in capital 325,739 324,090
Retained deficit (265,237) (249,674)
--------- ---------
60,554 74,467
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
$ 726,627 $ 757,170
========= =========
</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,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues $240,627 $295,735 $491,165 $609,598
Costs and expenses:
Cost of net revenues 80,797 128,463 166,655 233,142
Selling, distribution and
administrative 140,404 150,054 282,350 297,366
Provision for doubtful
accounts 12,816 70,183 26,611 85,947
Amortization of intangible
assets 3,501 4,179 7,065 8,377
-------- -------- -------- --------
237,518 352,879 482,681 624,832
-------- -------- -------- --------
OPERATING INCOME (LOSS) 3,109 (57,144) 8,484 (15,234)
Interest expense 11,565 12,732 23,047 25,491
-------- -------- -------- --------
LOSS BEFORE TAXES (8,456) (69,876) (14,563) (40,725)
Income taxes 500 - 1,000 9,911
-------- -------- -------- --------
NET LOSS $ (8,956) $(69,876) $(15,563) $(50,636)
======== ======== ======== ========
Net loss per common share $ (0.17) $ (1.36) $ (0.30) $ (0.99)
======= ======= ======= =======
Net loss per common share
assuming dilution $ (0.17) $ (1.36) $ (0.30) $ (0.99)
======= ======= ======= =======
</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,
-----------------
1998 1997
---- ----
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(15,563) $(50,636)
Items included in net loss
not requiring (providing) cash:
Provision for doubtful accounts 26,611 85,947
Provision for revenue adjustments - 20,000
Provision for excess/obsolete
equipment 5,091 23,000
Depreciation 54,728 59,807
Amortization of intangible assets 7,065 8,377
Amortization of deferred debt costs 819 559
Gain on disposition of assets (118) (406)
Deferred income taxes - 8,806
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Decrease (increase) in accounts
receivable 18,314 (70,647)
Decrease in inventories 672 1,785
Decrease in prepaids and other assets 7,195 13,407
Decrease in accounts payable (4,510) (19,332)
Decrease in accrued payroll and
other liabilities (7,068) (15,952)
Net purchases of patient service
equipment, net of effects of
acquisitions (17,878) (34,942)
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 75,358 29,773
INVESTING ACTIVITIES
Purchases of property, equipment
and improvements, net of effects
of acquisitions (10,727) (13,200)
Proceeds from disposition of assets 149 5,421
Acquisitions and payments of
contingent consideration (1,722) (3,168)
-------- --------
NET CASH USED IN
INVESTING ACTIVITIES (12,300) (10,947)
FINANCING ACTIVITIES
Proceeds under revolving
credit facility - 113,000
Payments under revolving credit
facility - (141,600)
Payments of senior and other
long-term debt (4,807) (6,148)
Capitalized debt costs, net (1,442) -
Issuances of Common Stock 1,586 3,054
-------- --------
NET CASH USED IN
FINANCING ACTIVITIES (4,663) (31,694)
-------- --------
NET INCREASE (DECREASE) IN CASH 58,395 (12,868)
Cash at beginning of period 16,317 26,930
-------- --------
CASH AT END OF PERIOD $ 74,712 $ 14,062
======== ========
</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, 1997,
filed with the Company's 1997 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. Actual results could differ from
these estimates.
NOTE C - INCOME TAXES
Current income tax expense reflects state tax amounts accrued and paid
on a basis other than or in addition to taxable income.
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, 1998 resulted in cash payments of
approximately $1,672,000.
NOTE E - 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, 1998, proceeds from the exercise of stock options amounted to
$1,586,000.
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company is engaged in the defense of certain claims and lawsuits,
the outcomes of which are not determinable at this time, and is in the
process of responding to subpoenas from the United States Attorney's
office, as to which the Company is unaware of what claims or proceedings,
if any, may result. The Company has insurance policies covering potential
losses from claims and lawsuits where such coverage is available and
cost effective. In the opinion of management, any liability that might
be incurred by the Company upon the resolution of the claims and
lawsuits of which it is aware will not, in the aggregate, have a
material adverse effect on the consolidated results of operations or
financial position of the Company (see Item 1 of Part II).
NOTE G - PER SHARE AMOUNTS
<TABLE>
The following table sets forth the computation of basic and diluted per
share amounts:
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Numerator:
Net loss $ (8,956) $(69,876) $(15,563) $(50,636)
Numerator for basic per
share amounts - loss
available to common
stockholders $ (8,956) $(69,876) $(15,563) $(50,636)
Numerator for diluted per
share amounts - loss
available to common
stockholders $ (8,956) $(69,876) $(15,563) $(50,636)
Denominator:
Denominator for basic
per share amounts -
weighted average shares 51,731 51,411 51,693 51,336
Effect of dilutive securities:
Employee stock options - - - -
-------- -------- -------- --------
Dilutive potential common
shares - - - -
-------- -------- -------- --------
Denominator for diluted per
share amounts - adjusted
weighted average shares 51,731 51,411 51,693 51,336
======== ======== ======== ========
Basic loss per share amounts $ (0.17) $ (1.36) $ (0.30) $ (0.99)
======= ======= ======= =======
Diluted loss per share amounts $ (0.17) $ (1.36) $ (0.30) $ (0.99)
======= ======= ======= =======
Employee stock options excluded
from the computation of
diluted per share amounts:
Exercise price exceeds
average market price
of Common Stock 3,786,392 1,938,909 2,932,922 1,311,364
Other 56,394 469,810 105,895 564,008
--------- --------- --------- ---------
3,842,786 2,408,719 3,038,817 1,875,372
========= ========= ========= =========
Average exercise price per
share that exceeds average
market price of Common Stock $14.72 $20.24 $16.37 $21.59
====== ====== ====== ======
</TABLE>
Due to the net loss incurred for the three months and six months ended
June 30, 1998 and 1997, the impact of employee stock options is
antidilutive for those periods and there is no difference between basic
and diluted per share amounts.
<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 Form 10-K for the fiscal year ended December 31, 1997, as filed
with the Securities and Exchange Commission on April 15, 1998. 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 ongoing issues pertaining to management stability
and recruiting, the collectibility of its accounts receivable,
healthcare reform and the effect of federal and state healthcare
regulations, pricing pressures (including changes in governmental
reimbursement levels), the effectiveness of its information systems,
the highly competitive market, recent losses, the concentration of
large payors, dependence on relationships with third parties and the
availability and adequacy of insurance.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Background: In June 1997, the Company announced that it retained
an investment banking firm as its financial advisor to explore
strategic alternatives to enhance shareholder value, including the
possible sale, merger, or recapitalization of the Company. During the
first quarter of 1998, the Company entered into an agreement for a
recapitalization transaction, however, the agreement was terminated by
mutual consent of the parties on April 3, 1998. In May, 1998 the
Company's active exploration of alternatives was terminated. The
process and resulting uncertainties are believed to have adversely
affected the Company's financial results.
In June 1997, the Company decided to reemphasize its traditional
referral-based business and to focus more fully on the core business
lines of respiratory therapy, infusion therapy and home medical
equipment. To this end, the Company began efforts to renegotiate or
terminate certain managed care contracts that do not meet minimum
profitability thresholds, as well as to exit certain lower-margin
service lines, including medical supplies, women's health and nursing
management. A consequence of both of these initiatives was the loss of
related higher-margin business.
RESULTS OF OPERATIONS
Net Revenues: Net revenues were $240.6 million for the three-
month period ended June 30, 1998 compared with $295.7 million for the
same period in 1997. For the six months ended June 30, 1998, net
revenues decreased to $491.2 million from $609.6 million for the same
period last year. A number of factors impacted revenue, the most
significant of which was the reduction in Medicare reimbursement rates.
The Balanced Budget Act of 1997 contained several provisions affecting
reimbursement rates for products and services provided by the Company.
The reimbursement rates for home oxygen services were reduced by 25%
effective January 1, 1998 with an additional 5% reduction scheduled for
1999, and the reimbursement rates for respiratory drugs were reduced by
5%. Also included in the Balanced Budget Act of 1997 was a freeze on
Consumer Price Index-based reimbursement rate increases for 1998
through 2002. The estimated impact of the rate reductions on revenues
for the first six months in 1998 was approximately $29.2 million.
The strategic decisions discussed above also contributed to the
decline in revenues in 1998. The discontinued service lines of medical
supplies, women's health and nursing management represented combined
annual revenues of approximately $55.8 million. Some portion of the
medical supply and nursing management business is expected to continue
due to core-business customer requirements. The Company exited
contracted business representing approximately $25.0 million and
$13.7 million in annual revenues during 1997 and during the first half
of 1998, respectively. Also, the Company disposed of several unprofitable
branch locations in California and Arizona in the latter part of 1997 with
annual revenues of approximately $3.3 million.
The three- and six-month periods in 1997 reflect a $20.0 million
charge to provide for estimated revenue adjustments.
Other conditions and factors had an adverse impact on net revenues
in 1998, but are difficult to quantify. First, the process discussed
above to identify a strategic alternative to enhance shareholder value
has created uncertainties that affected the Company's ability to retain
current business and secure new business. Next, formidable competition
at both the local and national levels has affected revenues and
margins, especially in the infusion line. Finally, a shortage in
trained sales personnel also contributed to the decrease in revenues.
During the first part of 1998, the Company undertook numerous
initiatives to restore quality, or higher-margin, revenue growth.
These included streamlining and standardizing its managed care
contracting procedures, increasing the size and strength of the field
selling organization and introducing new sales commission programs
based on gross profit contribution.
Gross Profit: Gross margins for the second quarter and the six
months ended June 30, 1998 were 66.4% and 66.1%, respectively, compared
to 56.6% and 61.8% for the same periods last year. The gross margins
for the 1998 periods reflect the Medicare reimbursement rate reduction
discussed above. The gross margins for the 1997 periods reflect
the $20.0 million revenue adjustment charge described above and a
$23.0 million charge to provide for losses in inventory and patient
service equipment. If the effect of the 1998 reimbursement rate
reduction and the 1997 charges are factored out, the gross margins for
the 1998 periods still show improvement compared to the 1997 periods.
The strategy to renegotiate or exit unprofitable contracts/business
lines and initiatives adopted by the Company to reduce costs
contributed to the improvement. Controls placed on the purchase and
use of patient service equipment resulted in a $17.1 million reduction
in net purchases during the first six months of 1998 as compared to
the same period last year. Also, the phasing out of subrented patient
service equipment reduced expenditures between the comparable six-month
periods by $7.5 million. In addition to the initiatives listed above
that focus on quality revenue growth (see Net Revenues), the Company has
engaged a consulting firm to help identify opportunities for operational
improvement and cost savings. The areas currently under review in this
large-scale project are purchasing and supply management, inventory and
asset management and vehicle fleet and delivery management.
Selling, Distribution and Administrative: Selling, distribution
and administrative expenses as a percentage of net revenues were 58.3%
and 57.5% for the second quarter and first half of 1998, respectively,
compared with 50.7% and 48.8% for the same periods in 1997. On a
dollar basis, selling, distribution and administrative expenses
decreased by $9.7 million and $15.0 million between the comparable
three- and six-month periods, respectively, however, the decrease rates
were not commensurate with the decrease in net revenues. In
response to the reduction in revenues, Management has taken steps to
reduce costs, the most significant of which is a reduction in the
Company's labor force. From June 30, 1997 to June 30, 1998, full-time
equivalent employees have been reduced by nearly 900. The labor force
reduction commenced in the fourth quarter of 1997 and continued into
the first quarter of 1998, therefore the full cost savings is reflected
only in the most recent months of 1998. Management is currently
evaluating its business model, operating strategies and cost structure
to identify appropriate changes that can be made to further reduce
expenses and bring operating costs in line with the lower revenue base
(see Gross Profit).
Provision for Doubtful Accounts: The provision for doubtful
accounts as a percentage of net revenues was 5.3% and 5.4% for the
quarter and six-month periods ended June 30, 1998 as compared to 23.7%
and 14.1% for the same periods in the prior year. The provision in the
1997 periods reflects a $55 million charge taken in the second quarter
of 1997 to increase the allowance for doubtful accounts due to a more
conservative estimate of the receivables' collectibility.
Amortization of Intangible Assets: Amortization of intangible
assets was $3.5 million and $7.1 million for the second quarter and
first six months of 1998, respectively, compared to $4.2 million and
$8.4 million for the same periods last year. The decreases are due to
the $133.5 million write-off of impaired goodwill in the fourth quarter
of 1997. The resulting reduction in amortization expense was offset
somewhat by a reduction in the amortization period for a certain class
of the Company's goodwill from 40 years to 20 years.
Interest Expense: Interest expense was $11.6 million and $23.0
million for the three- and six-month periods ended June 30, 1998,
respectively, compared to $12.7 million and $25.5 million for the same
periods in 1997. The decreases are due to lower long-term debt levels
in the 1998 periods, as offset by higher effective interest rates in
1998.
Income Taxes: Income tax expense for the six months ended June
30, 1998 was $1.0 million versus $9.9 million for the same period last
year. The decrease is attributable to the corresponding decrease in
pretax income for the respective periods. The recorded tax expense in
1998 relates to state taxes payable on a basis other than or in
addition to taxable income.
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow: Cash provided by the Company's operations
for the six months ended June 30, 1998 was $75.4 million versus $29.8
million for the same period last year. This increase was achieved
despite the significant decrease in net income, after adding back the
non-cash charges, between the two periods. The primary reason for the
improvement in operating cash flow was the decrease in the first six
months of 1998 in accounts receivable as compared to a significant
increase in the same period in 1997 (see Accounts Receivable). Also
contributing to the increase in operating cash flow was a reduction in
net purchases of patient service equipment of almost 50%.
Additionally, less cash was used in 1998 due to smaller decreases in
accruals and accounts payable. Slightly offsetting the cash flow gains
was a $12.0 million federal tax refund received in the first quarter of
1997.
Accounts Receivable: Accounts receivable before allowance for
doubtful accounts decreased by $57.3 million during the first six
months of 1998. The decrease is attributable to the impact of bad debt
write-offs totaling $59.7 million and strong cash collections, which
represented 105% of net revenues. Accounts receivable aged in excess
of 180 days decreased by $15.2 million between December 31, 1997 and June
30, 1998 and remained relatively constant as a percentage of total accounts
receivable. 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) decreased from 87
days at December 31, 1997 to 79 days at June 30, 1998.
Management is aggressively seeking to improve its overall revenue
management process. The major activities completed or in progress
include the implementation of a special quality assurance function in
each branch, designed to improve workflow and billing accuracy, and the
introduction of software enhancements to simplify the order-intake
process and thereby reduce billing errors.
Other Balance Sheet Changes: The decrease in accrued payroll and
related taxes and benefits at June 30, 1998, compared to December 31,
1997 is due to the difference in the number of days' costs accrued at
each period-end. At December 31, 1997, other assets was primarily
comprised of payments for businesses acquired late in the year. The
payments were then allocated to the various underlying acquired assets
in early 1998.
The Company periodically makes acquisitions of complementary
businesses in specific geographic markets. The cost of acquisitions
that closed during the six-month period ended June 30, 1998 totaled
approximately $1.7 million.
Long-term Debt: The Company's credit agreement with a syndicate
of banks was amended twice in 1997 and further amended in January,
March and April of 1998. Total availability under the facility was
reduced from an original maximum of $800.0 million to $400.0 million.
Further reductions to $385.0 million, $350.0 million and $300.0 million
are scheduled for December 31, 1998, 1999 and 2000, respectively. As a
result of these amendments, borrowings under the credit agreement are
secured by substantially all the assets of the Company. Additionally,
amounts available for acquisitions were reduced, tighter restrictions
were imposed on dividends and other distributions and interest rates
and commitment fees were increased. At June 30, 1998, availability
under the credit facility was $51.7 million.
Under the Indenture governing the Company's $200.0 million 9 1/2%
Senior Subordinated Notes due 2002, the Company's ability to incur
indebtedness becomes restricted at times when the Company's "Fixed
Charge Coverage Ratio" (as defined in the Indenture) is less than 3.0
to 1.0. Charges taken against revenues in the second and fourth
quarters of 1997 resulted in the Fixed Charge Coverage Ratio being less
than 3.0 to 1.0. This condition is expected to continue for at least
the balance of 1998. The Company has changed its cash management
procedures so as to avoid the need to incur indebtedness that would
otherwise require a modification of the terms of the Indenture and has
accumulated a cash balance of $74.7 million as of June 30, 1998. The
Company believes that cash provided by operations will be sufficient to
finance its current operations for at least the next 12 months or until
the borrowing restriction is eliminated. However, the lack of
borrowing ability may restrict the Company's ability to make major
acquisitions during 1998, and the Company may attempt to obtain consent
to an amendment to the Indenture which would permit borrowings for
acquisitions and other purposes.
Year 2000 Issue: As the year 2000 approaches, an issue ("Year
2000 Issue") impacting all companies has emerged regarding how existing
application software programs and operating systems can accommodate
this date value. In brief, many existing application programs in the
marketplace were designed to accommodate a two digit date position
which represents the year (e.g., "95" is stored on the system and
represents the year 1995). Consequently, the year 1999 could be the
maximum date value that systems would be able to accurately process.
Beginning in late 1997, the Company conducted a comprehensive
review of its existing computer systems, including an assessment of the
nature and potential extent of the impact of the Year 2000 Issue. As a
result, the Company has begun the modification process of its software
in order for its computer systems to function properly in the year 2000
and thereafter. The Company is utilizing internal resources to
reprogram and test the software for the year 2000 modifications. The
total cost of the project is not expected to have a material effect on
the Company's results of operations. The project is currently on
schedule and the Company anticipates all phases of the project,
including the testing and implementation phases, to be completed by
December 31, 1998. Further, the Company's systems underwent two
external assessments of the Year 2000 Issue and received a "low" risk
rating.
Additionally, a formal process has been instituted to assess other
potential risks the Company may face in light of the Year 2000 Issue.
Examples of such issues include, but are not limited to, electronic
interfaces with external agents such as payors (which includes Medicare
and Medicaid), banks and suppliers and internal operational issues such
as date-sensitive security systems and elevators. Another area of
potential risk is with certain patient service equipment items
that have microprocessors with date functionality which could
malfunction in the year 2000. Among other steps, the Company has
initiated formal communications with all its significant suppliers
of patient service equipment to ensure those third parties are also
working to remediate their own year 2000 issues, if applicable. The
Company believes that it will be able to resolve these issues and
any others it may identify by the year 2000. The cost of such remediation
has not yet been quantified.
Recent Developments: In May 1998, the board of directors appointed
Philip L. Carter as Chief Executive Officer and director of the Company
and appointed Richard H. Koppes as director. Also in May, the board
accepted the resignations of five members. In June 1998, the board
appointed two new members, Philip R. Lochner, Jr. and Beverly Benedict
Thomas. Finally, in July 1998, the board appointed David H. Batchelder
as director. These appointments and resignations bring the number of
directors on the board to nine.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and certain of its present and former
officers and/or directors are defendants in a class action
lawsuit, In Re Apria Healthcare Group Securities Litigation,
filed in the U.S. District Court for the Central District of
California, Southern Division (Case No. SACV98-217 GLT).
This case is a consolidation of three similar class actions
filed in March and April, 1998. Pursuant to a Court Order
dated May 27, 1998, the plaintiffs in the original three
class actions filed a Consolidated Amended Class Action
Complaint on August 6, 1998. The Amended Complaint purports
to establish a class of plaintiff shareholders who purchased
the Company's common stock between May 22, 1995 and January
20, 1998. No class has been certified at this time. The
Amended Complaint alleges, among other things, that the
defendants made false and/or misleading public statements
regarding the Company and its financial condition in
violation of federal securities laws. The Amended Complaint
seeks compensatory and punitive damages as well as other
relief.
On July 17, 1998, a related class action was filed by
the co-lead plaintiff's counsel in the consolidated federal
action in the Superior Court for the State of California for
the County of Orange, entitled Schall v. Apria Healthcare
Group Inc., et al. (Case No. 797060). The Complaint in this
case contains the same or similar allegations as the Amended
Complaint in the federal action, although the defendants are
alleged to have violated state, as opposed to federal,
securities laws and other laws.
The Company believes that it has meritorious defenses to
the plaintiffs' claims in these class actions, and it intends
to vigorously defend itself in both the federal and state
cases. In the opinion of the Company's management, the
ultimate disposition of these class actions will not have a
material adverse effect on the Company's financial condition
or results of operations.
On July 8, 1998, the Company issued a press release
reporting that it had received six subpoenas from the U. S.
Attorney's office in Sacramento, California, requesting
documents related to the Company's billing practices. The
documents requested include those located at the Company's
corporate headquarters and offices in San Diego and
Sacramento, California, and Canonsburg, Pennsylvania. On
July 29, 1998, the Company received another subpoena
requesting additional billing-related documents from its'
Sacramento office. The Company is in the process of
complying with the subpoenas. The Company is unaware of what
claims or proceedings, if any, the government may be
contemplating with respect to these subpoenas.
Items 2-5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Reference
------- --------------------
3.2 Bylaws of the Company as Amended and Restated
through May 5, 1998.
10.1 Fifth Amendment to Credit Agreement and Waiver
dated April 15, 1998, among the Company 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.
Incorporated by reference to the Company's
Form 10-K for the year ended December 31,
1997.
10.2 First Amendment to Security Agreement dated
April 15, 1998, among the Company 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. Incorporated
by reference to the Company's Form 10-K for
the year ended December 31, 1997.
10.3 Employment Agreement dated May 5, 1998,
between the Company and Philip L. Carter.
10.4 Resignation and General Release Agreement
dated May 15, 1998, between Lawrence H.
Smallen and the Company.
10.5 Executive Severance Agreement dated May 22,
1998, between the Company and Frank Bianchi.
10.6 Resignation and General Release Agreement
dated June 20, 1998, between Susan K. Skara
and the Company.
10.7 Executive Severance Agreement dated June 29,
1998, between the Company and Michael R.
Dobbs.
10.8 Resignation and General Release Agreement
dated June 30, 1998 (effective date July 17,
1998), between Merl A. Wallace and the
Company.
10.9 Resignation and General Release Agreement
dated July 1, 1998 (effective date August 7,
1998), between Thomas M. Robbins and the
Company.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this report is filed.
<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, 1998 /s/JAMES E. BAKER
-----------------------------
James E. Baker
Vice President, Controller
(Chief Accounting Officer)
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
APRIA HEALTHCARE GROUP INC.,
A DELAWARE CORPORATION
(As Amended through May 5, 1998)
ARTICLE I
OFFICES
SECTION 1.1 Registered Office. The registered office of
this Corporation shall be in the City of Wilmington, County of
New Castle, Delaware and the name of the resident agent in charge
thereof is the agent named in the Certificate of Incorporation
until changed by the Board of Directors (the "Board").
SECTION 1.2 Principal Office. The principal office for the
transaction of the business of the Corporation shall be at such
place as may be established by the Board. The Board is granted
full power and authority to change said principal office from one
location to another.
SECTION 1.3 Other Offices. The Corporation may also have
an office or offices at such other places, either within or
without the State of Delaware, as the Board may from time to time
designate or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 Time and Place of Meetings. Meetings of
stockholders shall be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
SECTION 2.2 Annual Meetings of Stockholders. The annual
meeting of stockholders shall be held on such date and at such
time and place as may be fixed by the Board of Directors and
stated in the notice of the meeting, for the purpose of electing
directors and for the transaction of such other business as is
properly brought before the meeting in accordance with these
Bylaws. To be properly brought before the annual meeting,
business must be either (i) specified in the notice of annual
meeting (or any supplement or amendment thereto) given by or at
the direction of the Board of Directors, (ii) otherwise brought
before the annual meeting by or at the direction of the Board of
Directors, (iii) brought before the meeting in accordance with
Rule 14a-8 under the Securities Exchange Act of 1934, or (iv)
otherwise properly brought before the annual meeting by a
stockholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be
timely a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days
prior to the meeting; provided, however, that in the event that
less than forty (40) days' notice or prior public disclosure of
the date of the annual meeting is given or made to stockholders,
notice by a stockholder, to be timely, must be received no later
than the close of business on the tenth (10th) day following the
day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made, whichever first
occurs. A stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to
be brought before the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the
class, series and number of shares of the Corporation which are
beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such business. No business shall
be conducted at the annual meeting except in accordance with the
procedures set forth in this Article II, Section 2.2. The
officer of the Corporation presiding at an annual meeting shall,
if the facts warrant, determine and declare to the annual meeting
that business was not properly brought before the annual meeting
in accordance with the provisions of this Article II, Section
2.2, and if he should so determine, he shall so declare to the
annual meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 2.3 Special Meetings. Special meetings of the
stockholders of the Corporation for any purpose or purposes may
be called at any time by the Board, or by a committee of the
Board that has been duly designated by the Board and whose powers
and authority, as provided in a resolution of the Board or in the
Bylaws of the Corporation, include the power to call such
meetings, and shall be called by the Chairman or Secretary at the
request in writing of a majority of the Board, or at the request
in writing of stockholders owning a majority in amount of the
entire capital stock of the Corporation issued and outstanding
and entitled to vote but such special meetings may not be called
by any other person or persons; provided, however, that if and to
the extent that any special meeting of stockholders may be called
by any other person or persons specified in any provisions of the
Certificate of Incorporation or any amendment thereto, or any
certificate filed under Section 151(g) of the Delaware General
Corporation Law (or its successor statute as in effect from time
to time hereafter), then such special meeting may also be called
by the person or persons in the manner, at the times and for the
purposes so specified. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated
in the notice.
SECTION 2.4 Stockholder Lists. The officer who has charge
of the stock ledger of the Corporation shall prepare and make, at
least ten (10) days before every meeting of stockholders, a
complete list of stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting or at the place of the meeting, and the
list shall also be available at the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 2.5 Notice of Meetings. Notice of each meeting of
stockholders, whether annual or special, stating the place, date
and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which such meeting has been called,
shall be given to each stockholder of record entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting. Except as otherwise expressly
required by law, notice of any adjourned meeting of the
stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation
or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent
thereto. Notice of any meeting of stockholders shall be deemed
waived by any stockholder who shall attend such meeting in person
or by proxy, except a stockholder who shall attend such meeting
for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
SECTION 2.6 Quorum and Adjournment. The holders of a
majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall
constitute a quorum for holding all meetings of stockholders,
except as otherwise provided by applicable law or by the
Certificate of Incorporation; provided, however, that the
stockholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough stockholders
to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares
required to constitute a quorum. If it shall appear that such
quorum is not present or represented at any meeting of
stockholders, the Chairman of the meeting shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed.
If the adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. The
Chairman of the meeting may determine that a quorum is present
based upon any reasonable evidence of the presence in person or
by proxy of stockholders holding a majority of the outstanding
votes, including without limitation, evidence from any record of
stockholders who have signed a register indicating their presence
at the meeting.
SECTION 2.7 Voting. In all matters, when a quorum is
present at any meeting, the vote of the holders of a majority of
the capital stock having voting power present in person or
represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which by express
provision of applicable law or of the Certificate of
Incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such
question. Such vote may be by voice or by written ballot;
provided, however, that the Board may, in its discretion, require
a written ballot for any vote, and further provided that all
elections for directors must be by written ballot upon demand
made by a stockholder at any election and before the voting
begins.
Unless otherwise provided in the Certificate of
Incorporation each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by such
stockholder.
SECTION 2.8 Proxies. Each stockholder entitled to vote at
a meeting of stockholders may authorize in writing another person
or persons to act for such holder by proxy, but no proxy shall be
voted or acted upon after three years from its date, unless the
person executing the proxy specifies therein the period of time
for which it is to continue in force.
SECTION 2.9 Inspectors of Election. The Corporation shall,
in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report
thereof. The Corporation or the Chairman of the meeting shall
appoint one or more alternate inspectors to replace any inspector
who fails to act. Each inspector, before undertaking his or her
duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall ascertain the
number of shares outstanding and the voting power of each,
determine the shares represented at the meeting and the validity
of the proxies and ballots, count all votes and ballots,
determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the
inspectors and certify their determination of the number of
shares represented at the meeting and their count of all votes
and ballots. Each inspector shall perform his or her duties and
shall make all determinations in accordance with the Delaware
General Corporation Law including, without limitation, Section
231 of the Delaware General Corporation Law.
The date and time of the opening and closing of the polls
for each matter upon which the stockholders will vote at a
meeting shall be announced at the meeting. No ballot, proxies or
votes, nor revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless
the Court of Chancery upon application by a stockholder shall
determine otherwise.
The appointment of inspectors of election shall be in the
discretion of the Board except that so long as the Corporation
has a class of voting stock that is (i) listed on a national
securities exchange, (ii) authorized for quotation on an
interdealer quotation system of a registered national securities
association, or (iii) held of record by more than 2,000
stockholders, appointment of inspectors shall be obligatory.
ARTICLE III
DIRECTORS
SECTION 3.1 Powers. The Board shall have the power to
manage or direct the management of the property, business and
affairs of the Corporation, and except as expressly limited by
law, to exercise all of its corporate powers. The Board may
establish procedures and rules, or may authorize the Chairman of
any meeting of stockholders to establish procedures and rules,
for the fair and orderly conduct of any meeting of stockholders
including, without limitation, registration of the stockholders
attending the meeting, adoption of an agenda, establishing the
order of business at the meeting, recessing and adjourning the
meeting for the purposes of tabulating any votes and receiving
the results thereof, the timing of the opening and closing of the
polls, and the physical layout of the facilities for the meeting.
SECTION 3.2 Number, Election and Tenure. The number of
directors shall be eight until changed by resolution adopted by
the Board. The directors shall be divided into three classes as
nearly equal in number as possible, designated Class I, Class II
and Class III. The initial term of office of Class I directors
shall expire at the 1996 annual meeting of stockholders; of Class
II directors at the 1997 annual meeting of stockholders; and of
Class III directors at the 1998 annual meeting stockholders. At
each annual meeting of stockholders, successors to the class of
directors whose terms of office expire in that year shall be
elected to hold office for a term of three (3) years. Each
director shall hold office until his successor is elected and
qualified or until his earlier resignation. No decrease in the
number of directors shall shorten the term of any incumbent
director
SECTION 3.3 Intentionally Omitted.
SECTION 3.4 Meetings. The Board may hold meetings, both
regular and special, either within or outside the State of
Delaware.
SECTION 3.5 Annual Meeting. The Board shall meet as soon
as practicable after each annual election of directors.
SECTION 3.6 Regular Meetings. Regular meetings of the
Board shall be held without call or notice at such time and place
as shall from time to time be determined by resolution of the
Board.
SECTION 3.7 Special Meetings. Special meetings of the
Board may be called at any time, and for any purpose permitted by
law, by the Chairman of the Board, or by the Secretary on the
written request of any two members of the Board unless the Board
consists of only one director in which case the special meeting
shall be called on the written request of the sole director,
which meetings shall be held at the time and place designated by
the person or persons calling the meeting. Notice of the time,
place and purpose of any such meeting shall be given to the
directors by the Secretary, or in case of the Secretary's
absence, refusal or inability to act, by any other officer. Any
such notice may be given by mail, by facsimile, by telephone, by
personal service, or by any combination thereof as to different
directors. If the notice is by mail, then it shall be deposited
in a United States Post Office at least seventy-two (72) hours
before the time of the meeting; if by facsimile, by telephone or
by personal service, communicated or delivered at least twenty-
four (24) hours before the time of the meeting.
SECTION 3.8 Quorum. At all meetings of the Board, a
majority of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of
business, and the affirmative vote of a majority of the directors
present at a meeting at which a quorum is present shall be
necessary to constitute the act of the Board. Any meeting of the
Board may be adjourned to meet again at a stated day and hour.
Even though a quorum is not present, as required in this Article
III, Section 3.8, a majority of the directors present at any
meeting of the Board, either regular or special, may adjourn from
time to time until a quorum is present. Notice of any adjourned
meeting need not be given.
SECTION 3.9 Fees and Compensation. Each director and each
member of a committee of the Board shall receive such fees and
reimbursement of expenses incurred on behalf of the Corporation
or in attending meetings as the Board may from time to time
determine. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 3.10 Meetings by Telephonic Communication. Members
of the Board or any committee thereof may participate in a
regular or special meeting of such Board or committee by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Article III,
Section 3.10 shall constitute presence in person at such meeting.
SECTION 3.11 Committees. The Board may designate
committees, each committee to consist of one or more of the
directors of the Corporation. Any such committee, to the extent
provided in the resolution of the Board, shall have and may
exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers that may require it. Notwithstanding the foregoing, no
committee of the Board shall have the power or authority in
reference to: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders
for approval or (ii) adopting, amending or repealing any bylaw of
the Corporation. Unless the resolution appointing such committee
or the Certificate of Incorporation expressly so provides, no
such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of
the Delaware General Corporation Law. Each committee shall have
such name as may be determined from time to time by resolution
adopted by the Board. Each committee shall keep minutes of its
meetings and report to the Board when required.
SECTION 3.12 Action Without Meetings. Unless otherwise
restricted by applicable law or by the Certificate of
Incorporation or by these Bylaws, any action required or
permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting if all members
of the Board or of such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board or committee.
SECTION 3.13 Filling of Vacancies. Any vacancy on the
Board, including any newly created directorship resulting from an
increase in the number of directors, or any nominee for election
as a director at a meeting of the stockholders, may be filled or
nominated by the stockholders of this Corporation, by a majority
of the whole Board or by a duly constituted committee of the
Board so authorized. The member or members of any committee of
the Board authorized to fill vacancies on the Board, or to
nominate persons for election as directors at a meeting of the
stockholders, as set forth in the immediately preceding sentence
that are present at any meeting and not disqualified from voting,
whether or not he/she or they constitute a quorum, may
unanimously appoint another member of the Board to act at the
meeting in the place of any absent or disqualified member of such
committee.
ARTICLE IV
OFFICERS
SECTION 4.1 Appointment and Salaries. The senior officers
of the Corporation shall be appointed by the Board and shall be a
Chairman of the Board, a Chief Executive Officer, a President, a
Chief Operating Officer, a Treasurer and a Chief Financial
Officer. The Board or the Chief Executive Officer may appoint
one or more Vice Presidents, a Secretary and such other officers
(including assistant secretaries and financial officers) as the
Board or the Chief Executive Officer may deem necessary or
desirable. The senior officers, and any other officers appointed
by the Board, shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the Board. Each other officer
appointed by the Chief Executive Officer shall hold office for
such term and shall exercise such powers and perform such duties
as shall be determined from time to time by the Chief Executive
Officer or the Board. The Board shall fix the salaries of all
officers appointed by it. Unless prohibited by applicable law or
by the Certificate of Incorporation or by these Bylaws, one
person may be elected or appointed to serve in more than one
official capacity. Any vacancy occurring in any senior office of
the Corporation may be filled only by the Board.
SECTION 4.2 Removal and Resignation. Any officer may be
removed, either with or without cause, by the Board or, in the
case of an officer other than a senior officer, by the Board or
the Chief Executive Officer. Any officer may resign at any time
by giving notice to the Board, the Chief Executive Officer or the
Secretary. Any such resignation shall take effect at the date of
receipt of such notice or at any later time specified therein
and, unless otherwise specified in such notice, the acceptance of
the resignation shall not be necessary to make it effective.
SECTION 4.3 Chairman of the Board. The Chairman of the
Board shall, unless otherwise determined by the Board, preside at
all meetings of the stockholders and the Board; and shall have
such other powers and duties as may from time to time be assigned
by the Board.
SECTION 4.4 Chief Executive Officer. The Chief Executive
Officer shall be the senior executive officer of the Corporation,
with the authority to supervise and direct the other officers and
employees of the Corporation, and with authority from time to
time to delegate to other officers such executive and other
powers and duties as he or she shall deem appropriate, subject in
all respects to the authority of the Board.
SECTION 4.5 President. If the Chairman of the Board is not
the Chief Executive Officer, or if the position of Chief
Executive Officer is vacant, the President shall have all of the
authority of the Chief Executive Officer of the Corporation. The
President shall have such other powers and duties as the Board or
Chief Executive Officer may from time to time prescribe.
SECTION 4.6 Chief Operating Officer. Subject to the powers
of the Chief Executive Officer, the Chief Operating Officer shall
be the principal officer in charge of the operations of the
Corporation other than those areas of responsibility as the Board
or Chief Executive Officer may from time to time assign to the
President.
SECTION 4.7 Vice President. In the absence of the
President, or in the event of the President's inability or
refusal to act, the Vice President, if any (or if there be more
than one Vice President, the Vice Presidents in the order of
their rank or, if of equal rank, then in the order designated by
the Board or, in the absence of any designation, then in the
order of their appointment), shall perform the duties of the
President and, when so acting, shall have all the powers of and
be subject to all the restrictions upon the President. The rank
of Vice Presidents in descending order shall be Executive Vice
President, Senior Vice President and Vice President. The Vice
Presidents shall perform such other duties and have such other
powers as the Board or the Chief Executive Officer may from time
to time prescribe.
SECTION 4.8 Secretary and Assistant Secretary. The
Secretary shall attend all meetings of the Board (unless the
Board shall otherwise determine) and all meetings of the
stockholders and record all the proceedings of the meetings of
the Corporation and of the Board in a book to be kept for that
purpose and shall perform like duties for the committees when
required. The Secretary shall give, or cause to be given, notice
of all meetings of stockholders and special meetings of the
Board. The Secretary shall have custody of the corporate seal of
the Corporation and shall (as well as any Assistant Secretary)
have authority to affix the same to any instrument requiring it
and to attest it. The Secretary shall perform such other duties
and have such other powers as the Board or the Chief Executive
Officer may from time to time prescribe.
SECTION 4.9 Chief Financial Officer. Subject to the powers
of the Chief Executive Officer, the Chief Financial Officer shall
be the principal officer in charge of the financial affairs of
the Corporation and shall perform such other duties and have such
other powers as the Board or the Chief Executive Officer from
time to time prescribe.
SECTION 4.10 Treasurer. Subject to the powers of the Chief
Financial Officer, the Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board. Subject to the
powers of the Chief Financial Officer, the Treasurer may disburse
the funds of the Corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render
to the Board at its regular meetings, or when the Board so
requires, an account of transactions and of the financial
condition of the Corporation. The Treasurer shall perform such
other duties and have such other powers as the Board or the Chief
Executive Officer may from time to time prescribe.
SECTION 4.11 Bonds. If required by the Board and at the
expense of the Corporation, the Chief Financial Officer, the
Treasurer, and the Assistant Treasurer, if any, shall give the
Corporation a bond (which shall be renewed at such times as
specified by the Board) in such sum and with such surety or
sureties as shall be satisfactory to the Board for the faithful
performance of the duties of such person's office and for the
restoration to the Corporation, in case of such person's death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in
such person's possession or under such person's control belonging
to the Corporation.
SECTION 4.12 Assistant Officers. An assistant officer
shall, in the absence of the officer to whom such person is an
assistant or in the event of such officer's inability or refusal
to act (or, if there be more than one such assistant officer, the
assistant officers in the order designated by the Board, in the
absence of any designation, then in the order of their
appointment), perform the duties and exercise the powers of such
officer. An assistant officer shall perform such other duties
and have such other powers as the Board or the officer appointing
any such assistant officer may from time to time prescribe.
ARTICLE V
SEAL
It shall not be necessary to the validity of any instrument
executed by any authorized officer or officers of the Corporation
that the execution of such instrument be evidenced by the
corporate seal, and all documents, instruments, contracts and
writings of all kinds signed on behalf of the Corporation by any
authorized officer or officers shall be as effectual and binding
on the Corporation without the corporate seal, as if the
execution of the same had been evidenced by affixing the
corporate seal thereto. The Board may give general authority to
any officer to affix the seal of the Corporation and to attest
the affixing by signature.
ARTICLE VI
FORM OF STOCK CERTIFICATE
Every holder of stock in the Corporation shall be entitled
to have a certificate signed by, or in the name of, the
Corporation by the Chairman of the Board or Vice-Chairman of the
Board, if any, or by the President or a Vice-President, and by
the Treasurer or an Assistant Treasurer or the Chief Financial
Officer, or the Secretary or an Assistant Secretary certifying
the number of shares owned of the Corporation. Any or all of the
signatures on the certificate may be a facsimile signature. If
any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer,
transfer agent or registrar at the date of the issuance.
If the Corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the
powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series
thereof and the qualification, limitations or restrictions of
such preferences or rights shall be set forth in full or
summarized on the face or back of the certificate that the
Corporation shall issue to represent such class or series of
stock. Except as otherwise provided in Section 202 of the
General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the
certificate a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such
preferences or rights.
ARTICLE VII
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
Any and all shares of any other corporation or corporations
standing in the name of the Corporation shall be voted, and all
rights incident thereto shall be represented and exercised on
behalf of the Corporation, as follows: (i) as the Board of the
Corporation may determine from time to time, or (ii) in the
absence of such determination, by the Chief Executive Officer or
such other officer as may be designated from time to time by the
Chief Executive Officer. The foregoing authority may be
exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly
executed by said officer.
ARTICLE VIII
TRANSFERS OF STOCK
Upon surrender of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
ARTICLE IX
LOST, STOLEN OR DESTROYED CERTIFICATES
The Board may direct a new certificate or certificates be
issued in place of any certificate theretofore issued alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate to
be lost, stolen or destroyed. When authorizing such issue of a
new certificate, the Board may, in its discretion and as a
condition precedent to the issuance, require the owner of such
certificate or certificates, or such person's legal
representative, to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the Corporation with respect to the lost, stolen or
destroyed certificate.
ARTICLE X
RECORD DATE
The Board may fix in advance a date, which shall not be more
than sixty (60) days nor less than ten (10) days preceding the
date of any meeting of stockholders, nor more than sixty (60)
days prior to any other action, as a record date for the
determination of stockholders entitled to notice of or to vote at
any such meeting and any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise the rights in
respect of any change, conversion or exchange of stock, and in
such case such stockholders, and only such stockholders as shall
be stockholders of record on the date so fixed shall be entitled
to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights,
or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any
such record date fixed as aforesaid.
ARTICLE XI
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of
record of any share or shares of stock of the Corporation as the
holder in fact thereof and shall not be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or
other notice thereof, except as expressly provided by applicable
law.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by
resolution of the Board.
ARTICLE XIII
AMENDMENTS
Subject to any contrary or limiting provisions contained in
the Certificate of Incorporation, these Bylaws may be amended or
repealed, or new Bylaws may be adopted (i) by the affirmative
vote of the holders of at least a majority of the Common Stock of
the Corporation, or (ii) by the affirmative vote of the majority
of the whole Board at any regular or special meeting. Any Bylaws
adopted or amended by the stockholders may be amended or repealed
by the Board or the stockholders.
ARTICLE XIV
DIVIDENDS
SECTION 14.1 Declaration. Dividends on the capital stock
of the Corporation, subject to the provisions of the Certificate
of Incorporation, if any, may be declared by the Board at any
regular or special meeting, pursuant to law, and may be paid in
cash, in property or in shares of capital stock.
SECTION 14.2 Set Aside Funds. Before payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sums as the directors
from time to time, in their absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall
determine to be in the best interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE XV
INDEMNIFICATION AND INSURANCE
SECTION 15.1 Right to Indemnification. Each person who was
or is a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is alleged action or inaction in an official capacity
or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the laws of the
State of Delaware, as the same exist or may hereafter be amended,
against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnification in connection
with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board.
The right to indemnification conferred in this Article shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires,
the payment of such expenses incurred by a director or officer in
his or her capacity as a director of officer (and not in any
other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not
entitled to be indemnified under this Article XV, Section 15.1 or
otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with
the same scope and effect as the foregoing indemnification of
directors and officers.
SECTION 15.2 Right of Claimant to Bring Suit. If a claim
under Article XV, Section 15.1 is not paid in full by the
Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is
required, has been tendered to the Corporation ) that the
claimant has failed to meet a standard of conduct which makes it
permissible under Delaware law for the Corporation to indemnify
the claimant for the amount claimed. Neither the failure of the
Corporation (including its Board, independent legal counsel, or
its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant
is permissible in the circumstances because he or she has met
such standard of conduct, nor an actual determination by the
Corporation (including its Board, independent legal counsel, or
its stockholders) that the claimant has not met such standard of
conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet such standard of conduct.
SECTION 15.3 Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in defending
a proceeding in advance of its final disposition conferred in
this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision
of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 15.4 Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether
or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under Delaware
law.
SECTION 15.5 Expenses as a Witness. To the extent that any
director, officer, employee or agent of the Corporation, is by
reason of such position, or a position with another entity at the
request of the Corporation, a witness in any action, suit or
proceeding, he or she shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her or on his
or her behalf in connection therewith.
SECTION 15.6 Indemnity Agreements. The Corporation may
enter into agreements with any director, officer, employee or
agent of the Corporation providing for indemnification to the
full extent permitted by Delaware law.
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into
by and between Apria Healthcare Group Inc. (the "Company") and
Philip L. Carter (the "Executive"), as of the 5th day of May,
1998.
I. EMPLOYMENT.
The Company hereby employs the Executive and the Executive
hereby accepts such employment, upon the terms and conditions
hereinafter set forth, from May 5, 1998, to and including April
30, 2002. The period of employment covered by this Agreement
shall be automatically extended for an additional year until
April 30, 2003, unless either party shall send the other a
notice prior to November 1, 2002, declining to accept such
extension.
II. DUTIES.
A. The Executive shall serve during the course of his
employment as the Chief Executive Officer of the Company,
reporting to the Board of Directors. The Executive shall be
the senior executive officer of the Corporation, with the
authority to supervise and direct the other officers and
employees of the Corporation, and with authority from time to
time to delegate to other officers such executive and other
powers with duties as he shall deem appropriate, subject in all
respects to the authority of the Board.
B. The Executive agrees to devote substantially all of
his time, energy and ability to the business of the Company.
Nothing herein shall prevent the Executive, upon approval of the
Board of Directors of the Company, from serving as a director or
trustee of other corporations or businesses which are not in
competition with the business of the Company or in competition
with any present or future affiliate of the Company. Nothing
herein shall prevent the Executive from investing in real estate
for his own account or from becoming a partner or a stockholder
in any corporation, partnership or other venture not in
competition with the business of the Company or in competition
with any present or future affiliate of the Company.
III. COMPENSATION.
A. The Company will pay to the Executive a base
salary at the rate of $500,000 per year. Such salary shall be
payable in periodic installments in accordance with the
Company's customary practices. Amounts payable shall be reduced
by standard withholdings and other authorized deductions. The
Executive's salary may be increased from time to time at the
discretion of the Company's Board of Directors or its
Compensation Committee.
B. Annual Bonus, Incentive, Savings and Retirement Plans.
The Executive shall be entitled to participate in all annual
bonus, incentive, savings and retirement plans, practices,
policies and programs applicable generally to other executives
of the Company, including without limitation the Company's
Incentive Compensation Plan at the 40% target level, with
eligibility for over-achievement up to 80% of base salary. For
the 1998 fiscal year, the Executive's bonus under the Incentive
Compensation Plan shall be not less than $200,000, payable on
the earlier of (i) the last day of the Executive's employment,
in the event the Company terminates his employment for other
than Cause or death or Disability (as such terms are defined
below) or in the event the Executive terminates his employment
for Good Reason (as defined below, but not including a
termination for Good Reason as defined under Section IV-D-3(b)-
(iv) if the Executive gives notice terminating his employment
prior to January 4, 1999), or (ii) January 4, 1999.
C. Welfare Benefit Plans. The Executive and/or his
family, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, group life, accidental death and
travel accident insurance plans and programs) to the extent
applicable generally to other executives of the Company. The
Company reserves the right to modify, suspend or discontinue any
and all of the above plans, practices, policies and programs at
any time without recourse by the Executive so long as such
action is taken generally with respect to other similarly
situated peer executives and does not single out the Executive.
D. Expenses. The Executive shall be entitled to receive
prompt reimbursement for all reasonable employment expenses
incurred by him in accordance with the policies, practices and
procedures as in effect generally with respect to other
executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to
fringe benefits, including without limitation (i) a car
allowance of $8,400 per year, payable in periodic installments
in accordance with the Company's customary practices, (ii)
reasonable access to the Company's independent auditors for
personal financial planning, (iii) reasonable travel and
entertainment expenses of the Executive's spouse, on an actually
incurred basis when necessary in connection with participation
in Company events, and (iv) such other benefits in accordance
with the plans, practices, programs and policies as may be in
effect generally with respect to other executives of the
Company.
F. Vacation. The Executive shall be entitled to four
weeks of paid vacation annually, to be available and prorated
monthly during the term of this Agreement and otherwise to be
consistent with the vacation policy and practice applicable to
other executives of the Company.
G. Stock Options. Within ten days following
the execution and delivery of this Agreement, the Company shall
deliver to the Executive one or more signed stock option
agreements dated May 5, 1998, evidencing the Executive's right
to purchase a total of 750,000 shares of the Company's common
stock at a price per share equal to $9.00. Such stock options
shall have a ten-year term and shall be consistent with the form
of stock options generally provided to the Company's executives,
except that the vesting shall be as follows:
(i) 375,000 shares shall vest and become exercisable
immediately as of the date of this Agreement, and
(ii) 187,500 shares shall vest and become exercisable on
the first date subsequent to May 5, 1999 on which the
average closing price of the Company's common stock traded
on the New York Stock Exchange during any period of 90
consecutive calendar days subsequent to May 5, 1998 shall
have been greater than $14.00 per share, and
(iii) 187,500 shares shall vest and become exercisable
on the first date subsequent to November 5, 2000 on which
the average closing price of the Company's common stock
traded on the New York Stock Exchange during any period of
90 consecutive calendar days subsequent to May 5, 1998
shall have been greater than $18.00 per share.
Such options shall also provide that all unvested portions of
said options shall immediately vest and become exercisable (i)
in the event a Change of Control (as defined below) occurs
subsequent to January 1, 1999, and (ii) in the event that,
prior to November 5, 2000, the Executive's employment is
terminated by the Company other than for Cause or if the
Executive terminates his employment for Good Reason (as defined
below, but not including a termination for Good Reason as
defined under Section IV-D-3(b)-(iv) if the Executive gives
notice terminating his employment prior to January 1, 1999.
All vested portions of such options shall remain exercisable for
a period of three years following any termination of the
Executive's employment other than for Cause.
H. Relocation. In order to facilitate his employment
and performance under this Agreement, the Executive agrees, as
promptly as practical, to relocate his principal residence to
Orange County, California. In connection with such relocation,
the Company will reimburse the Executive for his reasonable
relocation costs in accordance with the Company's Policy No. D-
9C, such reimbursable costs to include the moving of the
Executive's household goods and furnishings, closing costs on
the sale of his present home (including, if incurred, a sales
commission of up to 6% of the sales price), closing costs, if
incurred, on the purchase of his new home (including, if
incurred, up to 1.5 points on any mortgage loan arranged at the
time of purchase) and a lump sum amount of $1,500 for
incidentals in connection with the relocation. Such
reimbursements will be made promptly upon delivery by the
Executive to the Company of appropriate receipts in accordance
with the Company's normal practices, and will be "grossed-up" to
compensate the Executive for the Federal and State tax
implications of the reimbursement.
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 XVIII of its intention to terminate the
Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive, provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of his duties. For
purposes of this Agreement, "Disability" shall mean a physical
or mental impairment which substantially limits a major life
activity of the Executive and which renders the Executive unable
to perform the essential functions of his position, even with
reasonable accommodation which does not impose an undue hardship
on the Company. The Company reserves the right, in good faith,
to make the determination of Disability under this Agreement
based upon information supplied by the Executive and/or his
medical personnel, as well as information from medical personnel
(or others) selected by the Company or its insurers.
B. Cause. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause"
shall mean that the Company, acting in good faith based upon the
information then known to the Company, determines that the
Executive has engaged in or committed: willful misconduct;
theft, fraud or other illegal conduct; failure to substantially
perform his duties (other than such failure resulting from the
Executive's Disability) for a 30-day period after written demand
for substantial performance is delivered by the Company that
specifically refers to this paragraph and identifies the manner
in which the Company believes the Executive has not
substantially performed his duties; insubordination; any
willful act that is likely to and which does in fact have the
effect of injuring the reputation or business of the Company;
violation of any fiduciary duty; violation of the Executive's
duty of loyalty to the Company; or a breach of any term of this
Agreement. For purposes of this paragraph, no act, or failure to
act, on the Executive's part shall be considered willful unless
done or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
without delivery to the Executive of a notice of termination
signed by the Company's Chairman of the Board stating that the
Board of Directors of the Company has determined that the
Executive has engaged in or committed conduct of the nature
described in the second sentence of this paragraph, and
specifying the particulars thereof in detail.
C. Other than Cause or Death or Disability. The
Executive or the Company may terminate the Executive's
employment at any time, without Cause, by giving the other party
to this Agreement at least 30 days advance written notice of
such termination, subject to the provisions of this Agreement.
D. Obligations of the Company Upon Termination.
1. Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability,
this Agreement shall terminate without further obligations to
the Executive or his legal representatives under this Agreement,
other than for (a) payment of the sum of (i) the Executive's
base salary through the date of termination 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 terminated by
the Company for Cause, this Agreement shall terminate without
further obligations to the Executive other than for the timely
payment of the Accrued Obligations. If it is subsequently
determined that the Company did not have Cause for termination
under this Section IV-D-2, then the Company's decision to
terminate shall be deemed to have been made under Section IV-D-3
and the amounts payable thereunder shall be the only amounts the
Executive may receive for his termination.
3. Other than Cause or Death or Disability.
(a) If, during the term of this Agreement , (i) the
Company terminates the Executive's employment for other
than Cause or death or Disability, or (ii) the Executive
terminates his employment hereunder with Good Reason (as
defined below), 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 300% of his Annual
Compensation (as defined below).
Any payment made pursuant to this Section IV-D-3(a) shall
be reduced by all amounts required to be withheld by
applicable law, and shall only be made in exchange for a
valid release of all claims the Executive may have against
the Company in a form acceptable to the Company. Such
payment shall constitute the sole and entire obligation of
the Company to provide any compensation or benefits to the
Executive upon termination, except for obligations under
the Company's 401(k) Savings Plan, obligations pursuant to
the terms of any outstanding stock option agreements and
the Company's obligation to provide the benefits required
by Section IV-D-3(d) below, and except that the Company
will also pay to the Executive any Accrued Obligations (as
defined in Section IV-D-1).
(b) The term "Good Reason" means:
(i) if the Executive's annual base salary is reduced,
except for a general one-time "across-the board"
salary reduction not exceeding ten percent (10%)
which is imposed simultaneously on all officers
of the Company; or
(ii) if, following the Executive's relocation to
Orange County, California, the Company requires
the Executive to be based at an office location
which will result in an increase of more than
thirty (30) miles in the Executive's one-way
commute; or
(iii) if the Company's Board of Directors does not
permit the Executive to continue to serve as the
Chief Executive Officer with the responsibilities
as described in Section II-A or another mutually
acceptable senior executive position; or
(iv) if a Change of Control of the Company occurs and,
at any time concurrent with or during the six-
month period following said Change of Control,
the Executive shall have sent to the Chairman of
the Company a written notice terminating his
employment on a date specified in said notice.
(c) The term "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 amount of 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. In the
event that such notice of termination is received or given
by the Executive (but not including any notice of
termination given by the Executive pursuant to Section IV-D-
3(b)-(iv) if the Executive gives such notice prior to
January 4, 1999) prior to January 4, 1999, then solely for
purposes of calculating Annual Compensation, the
Executive's average of his two most recent annual bonuses
shall be deemed to be his guaranteed 1998 minimum bonus of
$200,000.
(d) A "Change of Control" shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "1934 Act") is, becomes or
enters a contract to become, the "beneficial owner",
as such term is used in Rule 13d-3 promulgated under
the 1934 Act, directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
voting common stock of the Company;
(ii) all or substantially all of the business of the
Company is disposed of, or a contract is entered to
dispose of all of the business of the Company pursuant
to a merger, consolidation other transaction in which
(a) the Company is not the surviving company or (b)
the stockholders of the Company prior to the
transaction do not continue to own at least sixty
percent (60%) of the surviving corporation;
(iii) the Company is materially or completely liquidated; or
(iv) any person (other than the Company) purchases any
common stock of the Company in a tender or exchange
offer with the intent, expressed or implied, of
purchasing or otherwise acquiring control of the
Company.
Notwithstanding clause (i) above, a "Change of Control"
shall not be deemed to have occurred solely because a
person shall be, become or enter into a contract to become
the beneficial owner of 25% or more, but less than 40%, of
the voting common stock of the Company, if and for so long
as such person is bound by, and in compliance with, a
contract with the Company providing that such person may
not nominate, vote for, or select more than a minority of
the directors of the Company. The exception provided by
the preceding sentence shall cease to apply with respect to
any person upon expiration, waiver, or non-compliance with
any such contract, by which such person was bound.
(e) In the event of any termination of the Executive's
employment pursuant to Section IV-D-3(a), the Company
shall, for a period of one year following the termination
date, provide the Executive with appropriate office space
in a furnished office suite, including reasonable
secretarial, telephone, copying and delivery services. The
Company shall not be required to spend more than a total of
$50,000 to provide this benefit to the Executive.
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 VI, VII, or VIII 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. 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.
VII. 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.
VIII. 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.
IX. 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.
X. 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, its subsidiaries and its successors
and assigns and any such subsidiary, successor or assignee shall
be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" and
"assignee" shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger
or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by
operation of law or otherwise.
XI. 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.
XII. MODIFICATION.
This Agreement may not be amended or modified other than by
a written agreement executed by the Executive and the Company's
Chairman.
XIII. 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.
XIV. 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.
XV. 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.
XVI. 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.
XVII. COMMUNICATIONS.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or by courier, or if mailed by
registered or certified mail, postage prepaid, addressed to the
Executive at 10520 Wilshire Boulevard, #702, Los Angeles,
California 90024, or addressed to the Company at 3560 Hyland
Avenue, Costa Mesa, California 92626, Attention: Senior Vice
President and General Counsel, with a copy to the attention of
the Senior Vice President, Human Resources. Either party may
change the address at which notice shall be given by written
notice given in the above manner.
XVIII. EXECUTION.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Xerographic copies of such signed counterparts may be used in
lieu of the originals for any purpose.
IX. 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:
----------------------------- -----------------------------
Ralph V. Whitworth Philip L. Carter
Chairman
EXHIBIT 10.4
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this
"Agreement"), made as of the 15th day of May, 1998, by and
between Lawrence H. Smallen, an individual ("Mr. Smallen"), and
Apria Healthcare Group Inc., a Delaware corporation ("Apria"), is
a resignation agreement which includes a general release of
claims. In consideration of the covenants undertaken and the
releases contained in this Agreement, Mr. Smallen and Apria agree
as follows:
1. Mr. Smallen shall voluntarily resign from his
positions as an officer and employee of Apria and all of its
affiliates and subsidiaries by executing Exhibit A attached
hereto, such resignation to be effective June 16, 1998.
2. Mr. Smallen shall return to Apria and shall not
take or copy in any form or manner any financial information,
lists of customers, prices, and similar confidential and
proprietary materials or information of Apria.
3. Apria shall pay to Mr. Smallen the following
amounts:
a. $282,668 in compensation, subject to standard
withholding for federal and state taxes, which shall be
payable as follows. On June 16, 1998 Apria shall make a
lump-sum payment to Mr. Smallen of $94,000. The remaining
$188,668 shall be payable in accordance with Apria's regular
payroll procedures in 26 substantially equal installments
over a 12-month period commencing on the first regular
payroll date after June 16, 1998; and
b. All earned but unpaid vacation pay, and any
salary amounts earned but not yet paid, payable as promptly
as practicable following June 16, 1998.
4. Neither this Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any
proceeding as evidence of an admission by Apria or Mr. Smallen of
any violation of Apria's policies or procedures, or state or
federal laws or regulations. This Agreement may be introduced,
however, in any proceeding to enforce the Agreement. Such
introduction shall be pursuant to an order protecting its
confidentiality.
5. Except for (i) those obligations created by or
arising out of this Agreement for which receipt or satisfaction
has not been acknowledged herein, (ii) any rights Mr. Smallen may
have under stock option agreements with Apria and any retirement,
401(k), SERP or similar benefit plans of Apria, and (iii) the
continuing right to indemnification as provided by applicable law
or in Apria's bylaws and articles of incorporation in connection
with acts, suits or proceedings by reason of the fact that he was
an officer or employee of Apria where the basis of the claims
against him consists of acts or omissions taken or made in such
capacity, Mr. Smallen on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and
fully releases and discharges Apria, and its predecessors, subsid
iaries and affiliates, past and present, and each of them, as
well as its and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives,
assigns, and successors, past and present, and each of them,
hereinafter together and collectively (including Apria) referred
to as the "Apria Releasees," with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders and
liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsus
pected, and whether or not concealed or hidden, which he now owns
or holds or he has at any time heretofore owned or held as
against the Apria Releasees, arising out of or in any way connect
ed with his employment relationship with any Apria Releasee, or
his voluntary resignation from employment with the Apria
Releasees or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, resulting from any act or
omission by or on the part of any Apria Releasee committed or
omitted prior to the date of this Agreement, including, without
limiting the generality of the foregoing, any claim under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Family
and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, or any claim for
severance pay, bonus, sick leave, holiday pay, vacation pay, life
insurance, health or medical insurance or any other fringe bene
fit, workers' compensation or disability.
Except for those obligations created by or arising out
of this Agreement for which receipt or satisfaction has not been
acknowledged herein, and except as provided below, Apria on
behalf of itself and the Apria Releasees (to the extent the
matter in question arises on the basis of their relationship to
Apria) hereby acknowledges full and complete satisfaction of and
releases and discharges, and covenants not to sue, Mr. Smallen
from and with respect to any and all claims, agreements, obliga
tions, losses, damages, injuries, demands and causes of action,
known or unknown, suspected or unsuspected, whether or not
concealed or hidden, arising out of or in any way connected with
Mr. Smallen's employment relationship with any Apria Releasee or
his voluntary resignation from employment with the Apria
Releasees, or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, which Apria now owns or
holds or has at any time heretofore owned or held as against Mr.
Smallen.
6. It is the intention of Apria and Mr. Smallen in
executing this Agreement that the same shall be effective as a
bar to each and every claim, demand and cause of action
hereinabove specified. In furtherance of this intention, Apria
and Mr. Smallen hereby expressly waive any and all rights and
benefits conferred upon them by the provisions of SECTION 1542 OF
THE CALIFORNIA CIVIL CODE and expressly consent that this
Agreement shall be given full force and effect according to each
and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims,
demands and causes of action hereinabove specified. SECTION 1542
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Apria and Mr. Smallen, and each of them, acknowledge that either
may hereafter discover claims or facts in addition to or
different from those which either or both of them now knows or
believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of
executing this Agreement, may have materially affected this
settlement. Nevertheless, Apria and Mr. Smallen each hereby
waive any right, claim or cause of action that might arise as a
result of such different or additional claims or facts. Apria
and Mr. Smallen each acknowledge that it or he understands the
significance and consequence of such release and such specific
waiver of SECTION 1542.
7. The terms and conditions of this Agreement shall
remain confidential as between the parties and professional
advisers to the parties and neither of them shall disclose them
to any other person, except as provided herein or as required by
the rules and regulations of the Securities and Exchange
Commission ("SEC") or as otherwise may be required by law or
court order. Without limiting the generality of the foregoing,
neither Apria nor Mr. Smallen will respond to or in any way
participate in or contribute to any public discussion concerning,
or in any way relating to, the execution of this Agreement or the
events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be
required by law or court order, if inquiry is made of Apria
concerning any of the claims released by this Agreement or
relating to Mr. Smallen's employment with Apria, Apria shall
provide to third parties only Mr. Smallen's dates of employment
with Apria and its predecessors and his job titles during such
employment, in accordance with the normal practices of Apria's
human resources department.
8. Mr. Smallen will continue to keep confidential all
confidential and proprietary Apria information, as required by
Section 10 of the Executive Severance Agreement dated June 28,
1998 between Mr. Smallen and Apria. In this regard, Mr. Smallen
acknowledges the continuing effectiveness, in accordance with
their respective terms, of Sections 7, 9 and 10 of said Executive
Severance Agreement.
9. Mr. Smallen expressly acknowledges and agrees
that, by entering into this Agreement, he is waiving any and all
rights or claims that may have arisen under the Age
Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement.
Mr. Smallen further expressly acknowledges that:
a. He is hereby advised in writing by this Agreement
to consult with an attorney before signing this Agreement;
b. He was given a copy of this Agreement on May 8,
1998, and informed that he had 21 days within which to
consider the Agreement; and
c. He was informed that he has seven (7) days
following the date of his execution of the Agreement in
which to revoke the Agreement.
10. Apria and Mr. Smallen each warrant and represent
that neither has heretofore assigned or transferred to any person
not a party to this Agreement any released matter or any part or
portion thereof and each shall defend, indemnify and hold
harmless the other from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether or
not litigation is commenced) based on or in connection with or
arising out of any such assignment or transfer made, purported or
claimed.
11. Apria and Mr. Smallen acknowledge that any
employment or contractual relationship between them (including
with any other Apria Releasee) will terminate on June 16, 1998,
that they have no further employment or contractual relationship
except as may arise out of this Agreement and that Mr. Smallen
waives any right or claim to reinstatement as an employee of any
Apria Releasee and will not seek employment in the future with
Apria.
12. Mr. Smallen agrees that he shall be exclusively
liable for the payment of all of his share of federal and state
taxes which may be due as the result of the consideration
received from the settlement of disputed claims as set forth
herein.
13. Mr. Smallen agrees that, following the termination
of his employment with Apria, (i) he will, at no cost to him,
cooperate with any reasonable request Apria may make for
information or assistance with respect to any matter involving
Mr. Smallen during his period of employment, and (ii) he will not
at any time, directly or indirectly, disparage Apria or take any
action with the intention of injuring Apria's business or
prospects. Apria, on behalf of itself and the Apria Releasees,
agrees that it will use its best efforts to cause its officers
and directors not to disparage Mr. Smallen in any manner.
14. This Agreement is an integrated document and
constitutes and contains the entire agreement and understanding
concerning Mr. Smallen's employment, voluntary resignation from
the same and the other subject matters addressed herein between
the parties, and supersedes and replaces all prior negotiations
and all agreements, proposed or otherwise, whether written or
oral, concerning the subject matter hereof, and expressly
releases all Apria Releasees from any obligations not covered
herein, including, but not limited to Apria's Severance Pay Plan
and, except as provided in the last sentence of Paragraph 8
above, the Executive Severance Agreement, dated June 28, 1997,
between Mr. Smallen and Apria. This Agreement does not, however,
affect Mr. Smallen's rights under any Apria retirement, 401(k),
SERP or similar benefit plan, including the Abbey Healthcare
Group Incorporated Employees' Retirement Plan. This Agreement
also does not modify the provisions of any of Mr. Smallen's stock
options. Prior to the execution and delivery of this Agreement,
however, the Compensation Committee of Apria's Board of Directors
has authorized amendments to Mr. Smallen's stock option
agreements to provide that all of Mr. Smallen's vested stock
options, representing the currently exercisable right to purchase
a total of 56,120 shares of Apria's common stock, shall continue
to be exercisable during the three-year period following the
termination of Mr. Smallen's employment, until June 16, 2001,
except for the 5,000 share option granted on February 28, 1991,
which shall continue to be exercisable for one year following the
termination of employment, until June 16, 1999. Amendments
confirming the extension of Mr. Smallen's right to exercise said
options shall be executed and delivered to Mr. Smallen on or
prior to June 16, 1998.
15. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect the other provisions or applications of this 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.
16. This Agreement has 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, the laws of the State of
California without regard to principles of conflict of laws.
17. This Agreement may be executed in counterparts,
and each counterpart, when executed, shall have the efficacy of a
signed original. Photographic copies of such signed counterparts
may be used in lieu of the originals for any purpose.
18. Any dispute or controversy between Mr. Smallen on
the one hand, and Apria (or any other Apria Releasee), on the
other hand, in any way arising out of, related to, or connected
with this Agreement or the subject matter hereof, or otherwise in
any way arising out of, related to, or connected with
Mr. Smallen's employment with any Apria Releasee or the
termination of Mr. Smallen' s employment with any Apria Releasee,
shall be submitted for resolution by arbitration in accordance
with the provisions of Section 15 of the Executive Severance
Agreement between the parties dated as of June 28, 1997. APRIA
AND MR. SMALLEN ACKNOWLEDGE, UNDERSTAND AND AGREE THAT IN THE
EVENT OF A DISPUTE UNDER THIS AGREEMENT, EACH PARTY HAS WAIVED
ANY RIGHT TO A JURY TRIAL AND A JUDICIAL RESOLUTION OF THE
DISPUTE.
19. No waiver of any breach of any term or provision
of this Agreement shall be construed to be, or 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.
20. In entering this Agreement, the parties represent
that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that they have read the
Agreement and have had the opportunity to have the Agreement
explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all
additional actions that may be necessary or appropriate to give
full force to the terms and intent of this Agreement and which
are not inconsistent with its terms.
22. Mr. Smallen hereby declares as follows:
I, Lawrence H. Smallen, hereby acknowledge that I was
given 21 days to consider the foregoing Agreement and voluntarily
chose to sign the Agreement prior to the expiration of the 21-day
period.
I have read the foregoing Agreement and I accept and
agree to the provisions it contains and hereby execute it
voluntarily with full understanding of its consequences.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and correct.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement this 15th day of May, 1998.
------------------------------------
Lawrence H. Smallen
APRIA HEALTHCARE GROUP INC.
By:
---------------------------------
Lawrence M. Higby
President and Chief Operating Officer
<PAGE>
EXHIBIT A
May 15, 1998
Mr. Lawrence M. Higby
President & Chief Operating Officer
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Dear Larry:
This is to advise you that effective June 16, 1998, I hereby
voluntarily resign my position as Senior Vice President, Chief
Financial Officer and Treasurer and my employment in any other
capacity with Apria Healthcare Group Inc. or any of its
affiliates or subsidiaries.
Sincerely yours,
--------------------------------
Lawrence H. Smallen
EXHIBIT 10.5
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this
"Agreement") is made as of this 22nd day of May, 1998,
between Apria Healthcare Group Inc., a Delaware corporation
(the "Company"), and Frank Bianchi (the "Executive").
RECITALS
A. It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
B. The Company and the Executive wish to set
forth certain terms and conditions of Executive's employment.
C. The Company wishes to provide to the
Executive certain benefits in the event that his employment is
terminated by the Company without cause or in the event that
he terminates employment for Good Reason (as defined below),
in order to encourage the Executive's performance and
continued commitment to the Company.
NOW, THEREFORE, in consideration of the foregoing
and of the respective covenants and agreements set forth
below, the parties hereto agree as follows:
1. Positions and Duties. The Executive shall
serve as the Company's Senior Vice President, Human Resources,
or in such other position and shall undertake such duties and
have such authority as the Company, through its Chief
Executive Officer, 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, provided,
however, that the Executive's bonus for 1998 shall be
guaranteed in the amount of $50,000, which shall be payable
to the Executive on January 4, 1999. The parties to this Agreement
recognize that such bonus plans (but not the guaranteed 1998 bonus)
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 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 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 Chairman or
Chief Executive Officer 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, which shall be
payable in one lump sum, 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, provided, however, that if the date of such
notice of termination shall precede the date on which
bonuses are paid to the Company's executives for the 1999
fiscal year, then the amount to be included in the
Executive's Annual Compensation pursuant to this clause (i)
shall be the $50,000 guaranteed amount of his bonus for
1998, (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.
(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.
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:
Frank Bianchi
11 Starlight
Irvine, CA 92612
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 the
Company's Senior Vice President and General
Counsel
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. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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 or 9 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.
15. 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 as of the date and year first
above written.
APRIA HEALTHCARE GROUP INC.
By:
----------------------------------
Name: Philip L. Carter
Title: Chief Executive Officer
EXECUTIVE
-----------------------------------
Frank Bianchi
EXHIBIT 10.6
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this
"Agreement"), made as of the 20th day of June, 1998, by and
between Susan K. Skara, an individual ("Ms. Skara"), and Apria
Healthcare Group Inc., a Delaware corporation ("Apria"), is a
resignation agreement which includes a general release of claims.
In consideration of the covenants undertaken and the releases
contained in this Agreement, Ms. Skara and Apria agree as
follows:
1. Ms. Skara shall voluntarily resign from her
position as an employee of Apria and all of its affiliates and
subsidiaries by executing Exhibit A attached hereto, such
resignation to be effective June 20, 1998.
2. Ms. Skara shall return to Apria and shall not take
or copy in any form or manner any financial information, lists of
customers, prices, and similar confidential and proprietary
materials or information of Apria.
3. Apria shall pay to Ms. Skara the following
amounts:
a. $189,536.90 in severance compensation, subject to
standard withholding for federal and state taxes, which
shall be payable as follows. On July 8, 1998, Apria shall
make a lump-sum payment to Ms. Skara of $63,000. The
remaining $126,536.90 shall be payable in accordance with
Apria's regular payroll procedures in 26 substantially equal
installments over a 12-month period ending on the first
regular payroll date after July 8, 1999; and
b. All earned but unpaid vacation pay, and any salary
amounts earned but not yet paid, shall be payable as
promptly as practicable following June 20, 1998.
4. Neither this Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any
proceeding as evidence of an admission by Apria or Ms. Skara of
any violation of Apria's policies or procedures, or state or
federal laws or regulations. This Agreement may be introduced,
however, in any proceeding to enforce the Agreement. Such
introduction shall be pursuant to an order protecting its
confidentiality.
5. Except for (i) those obligations created by or
arising out of this Agreement for which receipt or satisfaction
has not been acknowledged herein, (ii) any rights Ms. Skara may
have under stock option agreements with Apria and any retirement,
401(k), SERP or similar benefit plans of Apria, and (iii) the
continuing right to indemnification as provided by applicable law
or in Apria's bylaws and articles of incorporation in connection
with acts, suits or proceedings by reason of the fact that she
was an officer or employee of Apria where the basis of the claims
against her consists of acts or omissions taken or made in such
capacity, Ms. Skara on behalf of herself, her descendants,
dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and
fully releases and discharges Apria, and its predecessors, subsid
iaries and affiliates, past and present, and each of them, as
well as its and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives,
assigns, and successors, past and present, and each of them,
hereinafter together and collectively (including Apria) referred
to as the "Apria Releasees," with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders and
liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsus
pected, and whether or not concealed or hidden, which she now
owns or holds or she has at any time heretofore owned or held as
against the Apria Releasees, arising out of or in any way connect
ed with her employment relationship with any Apria Releasee, or
her voluntary resignation from employment with the Apria
Releasees or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, resulting from any act or
omission by or on the part of any Apria Releasee committed or
omitted prior to the date of this Agreement, including, without
limiting the generality of the foregoing, any claim under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Family
and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, or any claim for
severance pay, bonus, sick leave, holiday pay, vacation pay, life
insurance, health or medical insurance or any other fringe bene
fit, workers' compensation or disability.
Except for those obligations created by or arising out
of this Agreement for which receipt or satisfaction has not been
acknowledged herein, and except as provided below, Apria on
behalf of itself and the Apria Releasees (to the extent the
matter in question arises on the basis of their relationship to
Apria) hereby acknowledges full and complete satisfaction of and
releases and discharges, and covenants not to sue, Ms. Skara from
and with respect to any and all claims, agreements, obligations,
losses, damages, injuries, demands and causes of action, known or
unknown, suspected or unsuspected, whether or not concealed or
hidden, arising out of or in any way connected with Ms. Skara's
employment relationship with any Apria Releasee or her voluntary
resignation from employment with the Apria Releasees, or any
other transactions, occurrences, actions, omissions, claims,
losses, damages or injuries whatsoever, known or unknown, sus
pected or unsuspected, which Apria now owns or holds or has at
any time heretofore owned or held as against Ms. Skara.
6. It is the intention of Apria and Ms. Skara in
executing this Agreement that the same shall be effective as a
bar to each and every claim, demand and cause of action
hereinabove specified. In furtherance of this intention, Apria
and Ms. Skara hereby expressly waive any and all rights and
benefits conferred upon them by the provisions of SECTION 1542 OF
THE CALIFORNIA CIVIL CODE and expressly consent that this
Agreement shall be given full force and effect according to each
and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims,
demands and causes of action hereinabove specified. SECTION 1542
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HER MUST HAVE MATERIALLY AFFECTED HER
SETTLEMENT WITH THE DEBTOR."
Apria and Ms. Skara, and each of them, acknowledge that either
may hereafter discover claims or facts in addition to or
different from those which either or both of them now knows or
believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of
executing this Agreement, may have materially affected this
settlement. Nevertheless, Apria and Ms. Skara each hereby waive
any right, claim or cause of action that might arise as a result
of such different or additional claims or facts. Apria and
Ms. Skara each acknowledge that it or she understands the
significance and consequence of such release and such specific
waiver of SECTION 1542.
7. The terms and conditions of this Agreement shall
remain confidential as between the parties and professional
advisers to the parties and neither of them shall disclose them
to any other person, except as provided herein or as required by
the rules and regulations of the Securities and Exchange
Commission ("SEC") or as otherwise may be required by law or
court order. Without limiting the generality of the foregoing,
neither Apria nor Ms. Skara will respond to or in any way
participate in or contribute to any public discussion concerning,
or in any way relating to, the execution of this Agreement or the
events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be
required by law or court order, if inquiry is made of Apria
concerning any of the claims released by this Agreement or
relating to Ms. Skara's employment with Apria, Apria shall
provide to third parties only Ms. Skara's dates of employment
with Apria and its predecessors and her job titles during such
employment, in accordance with the normal practices of Apria's
human resources department.
8. Ms. Skara will continue to keep confidential all
confidential and proprietary Apria information, as required by
Section 10 of the Executive Severance Agreement dated June 28,
1997 between Ms. Skara and Apria. In this regard, Ms. Skara
acknowledges the continuing effectiveness, in accordance with
their respective terms, of Sections 9 and 10 of said Executive
Severance Agreement.
9. Ms. Skara expressly acknowledges and agrees that,
by entering into this Agreement, she is waiving any and all
rights or claims that may have arisen under the Age
Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. Ms.
Skara further expressly acknowledges that:
a. She is hereby advised in writing by this Agreement
to consult with an attorney before signing this Agreement;
b. She was given a copy of this Agreement on May 26,
1998, and informed that she had 21 days within which to
consider the Agreement; and
c. She was informed that she has seven (7) days
following the date of her execution of the Agreement in
which to revoke the Agreement.
10. Apria and Ms. Skara each warrant and represent
that neither has heretofore assigned or transferred to any person
not a party to this Agreement any released matter or any part or
portion thereof and each shall defend, indemnify and hold
harmless the other from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether or
not litigation is commenced) based on or in connection with or
arising out of any such assignment or transfer made, purported or
claimed.
11. Apria and Ms. Skara acknowledge that any
employment or contractual relationship between them (including
with any other Apria Releasee) will terminate on June 20, 1998,
that they have no further employment or contractual relationship
except as may arise out of this Agreement and that Ms. Skara
waives any right or claim to reinstatement as an employee of any
Apria Releasee and will not seek employment in the future with
Apria.
12. Ms. Skara agrees that she shall be exclusively
liable for the payment of all of her share of federal and state
taxes which may be due as the result of the consideration
received from the settlement of disputed claims as set forth
herein.
13. Ms. Skara agrees that, following the termination
of her employment with Apria, (i) she will, at no cost to her,
cooperate with any reasonable request Apria may make for
information or assistance with respect to any matter involving
Ms. Skara during her period of employment, and (ii) she will not
at any time, directly or indirectly, disparage Apria or take any
action with the intention of injuring Apria's business or
prospects. Apria, on behalf of itself and the Apria Releasees,
agrees that it will use its best efforts to cause its officers
and directors not to disparage Ms. Skara in any manner.
14. This Agreement is an integrated document and
constitutes and contains the entire agreement and understanding
concerning Ms. Skara's employment, voluntary resignation from the
same and the other subject matters addressed herein between the
parties, and supersedes and replaces all prior negotiations and
all agreements, proposed or otherwise, whether written or oral,
concerning the subject matter hereof, and expressly releases all
Apria Releasees from any obligations not covered herein,
including, but not limited to Apria's Severance Pay Plan and,
except as provided in the last sentence of Paragraph 8 above, the
Executive Severance Agreement, dated June 28, 1997, between Ms.
Skara and Apria. This Agreement does not, however, affect Ms.
Skara's rights under any Apria retirement, 401(k), SERP or
similar benefit plan. This Agreement also does not modify the
provisions of any of Ms. Skara's stock options.
15. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect the other provisions or applications of this 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.
16. This Agreement has 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, the laws of the State of
California without regard to principles of conflict of laws.
17. This Agreement may be executed in counterparts,
and each counterpart, when executed, shall have the efficacy of a
signed original. Photographic copies of such signed counterparts
may be used in lieu of the originals for any purpose.
18. Any dispute or controversy between Ms. Skara on
the one hand, and Apria (or any other Apria Releasee), on the
other hand, in any way arising out of, related to, or connected
with this Agreement or the subject matter hereof, or otherwise in
any way arising out of, related to, or connected with Ms. Skara's
employment with any Apria Releasee or the termination of
Ms. Skara' s employment with any Apria Releasee, shall be
submitted for resolution by arbitration in accordance with the
provisions of Section 15 of the Executive Severance Agreement
between the parties dated as of June 28, 1997.
APRIA AND MS. SKARA ACKNOWLEDGE, UNDERSTAND AND AGREE
THAT IN THE EVENT OF A DISPUTE UNDER THIS AGREEMENT, EACH
PARTY HAS WAIVED ANY RIGHT TO A JURY TRIAL AND A JUDICIAL
RESOLUTION OF THE DISPUTE.
19. No waiver of any breach of any term or provision
of this Agreement shall be construed to be, or 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.
20. In entering this Agreement, the parties represent
that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that they have read the
Agreement and have had the opportunity to have the Agreement
explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all
additional actions that may be necessary or appropriate to give
full force to the terms and intent of this Agreement and which
are not inconsistent with its terms.
22. Ms. Skara hereby declares as follows:
I, Susan K. Skara, hereby acknowledge that I was given
21 days to consider the foregoing Agreement and voluntarily chose
to sign the Agreement prior to the expiration of the 21-day
period.
I have read the foregoing Agreement and I accept and
agree to the provisions it contains and hereby execute it
voluntarily with full understanding of its consequences.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and correct.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement this ____ day of May, 1998.
-------------------------------
Susan K. Skara
APRIA HEALTHCARE GROUP INC.
By:
----------------------------
<PAGE>
EXHIBIT A
June 20, 1998
Mr. Philip L. Carter
Chief Executive Officer
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Dear Phil:
This is to advise you that, effective June 20, 1998, I
hereby voluntarily resign my position as Senior Vice President,
Human Resources, and my employment in any other capacity with
Apria Healthcare Group Inc. or any of its affiliates or
subsidiaries.
Sincerely yours,
----------------------------
Susan K. Skara
EXHIBIT 10.7
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this "Agreement")
is made as of this 29th day of June, 1998, between Apria
Healthcare Group Inc., a Delaware corporation (the "Company"),
and Michael R. Dobbs (the "Executive").
RECITALS
A. It is the desire of the Company to retain the
services of the Executive and to recognize the Executive's
contribution to the Company.
B. The Company and the Executive wish to set forth
certain terms and conditions of Executive's employment.
C. The Company wishes to provide to the Executive
certain benefits in the event that his employment is terminated
by the Company without cause or in the event that he terminates
employment for Good Reason (as defined below), in order to
encourage the Executive's performance and continued commitment to
the Company.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements set forth below, the
parties hereto agree as follows:
1. Positions and Duties. The Executive shall serve
as the Company's Senior Vice President, Logistics, or in such
other position and shall undertake such duties and have such
authority as the Company, through its Chief Executive Officer,
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, provided, however,
that the Executive's bonus for 1998 shall be guaranteed in the
amount of $50,000, which shall be payable to the Executive on
January 4, 1999. The parties to this Agreement recognize that
such bonus plans (but not the guaranteed 1998 bonus) 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 Chairman or Chief Executive Officer
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, which shall be payable in one lump sum, 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, provided, however, that if
the date of such notice of termination shall precede the date on
which bonuses are paid to the Company's executives for the 1999
fiscal year, then the amount to be included in the Executive's
Annual Compensation pursuant to this clause (i) shall be the
$50,000 guaranteed amount of his bonus for 1998, (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.
(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.
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:
Michael R. Dobbs
20000 Waco Road
Apple Valley, CA 92308-6125
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 the Company's
Senior Vice President and General Counsel
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. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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 or 9 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.
15. 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 as of the date and year first above written.
APRIA HEALTHCARE GROUP INC.
By:
--------------------------------
Name: Philip L. Carter
Title: Chief Executive Officer
EXECUTIVE
-------------------------------
Michael R. Dobbs
EXHIBIT 10.8
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this
"Agreement"), made as of the ____ day of ____________, 1998, by
and between Merl A. Wallace, an individual ("Mr. Wallace"), and
Apria Healthcare Group Inc., a Delaware corporation ("Apria"), is
a resignation agreement which includes a general release of
claims. In consideration of the covenants undertaken and the
releases contained in this Agreement, Mr. Wallace and Apria agree
as follows:
1. Mr. Wallace shall voluntarily resign from his
position as an employee of Apria and all of its affiliates and
subsidiaries by executing Exhibit A attached hereto, such
resignation to be effective July 17, 1998.
2. Mr. Wallace shall return to Apria and shall not
take or copy in any form or manner any financial information,
lists of customers, prices, and similar confidential and
proprietary materials or information of Apria.
3. In consideration of Mr. Wallace's general release
of claims and other promises set forth herein, Apria shall pay to
Mr. Wallace the following amounts:
a. $542,658.40 in compensation, subject to
standard withholding for federal and state taxes, which
shall be payable in one lump sum on the effective date of
resignation; and
b. All earned but unpaid vacation pay, and any
salary amounts earned but not yet paid, payable on the
effective date of resignation.
4. Neither this Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any
proceeding as evidence of an admission by Apria or Mr. Wallace of
any violation of Apria's policies or procedures, or state or
federal laws or regulations. This Agreement may be introduced,
however, in any proceeding to enforce the Agreement. Such
introduction shall be pursuant to an order protecting its
confidentiality.
5. Except for (i) those obligations created by or
arising out of this Agreement for which receipt or satisfaction
has not been acknowledged herein, (ii) any rights Mr. Wallace may
have under stock option agreements with Apria and any retirement,
401(k), SERP or similar benefit plans of Apria, and (iii) the
continuing right to indemnification as provided by applicable law
or in Apria's bylaws and articles of incorporation in connection
with acts, suits or proceedings by reason of the fact that he was
an officer or employee of Apria where the basis of the claims
against him consists of acts or omissions taken or made in such
capacity, Mr. Wallace on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and
fully releases and discharges Apria, and its predecessors, subsid
iaries and affiliates, past and present, and each of them, as
well as its and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives,
assigns, and successors, past and present, and each of them,
hereinafter together and collectively (including Apria) referred
to as the "Apria Releasees," with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders and
liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsus
pected, and whether or not concealed or hidden, which he now owns
or holds or he has at any time heretofore owned or held as
against the Apria Releasees, arising out of or in any way connect
ed with his employment relationship with any Apria Releasee, or
his voluntary resignation from employment with the Apria
Releasees or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, resulting from any act or
omission by or on the part of any Apria Releasee committed or
omitted prior to the date of this Agreement, including, without
limiting the generality of the foregoing, any claim under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Family
and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, or any common law
or statutory claim for fraud, wrongful termination, violation of
public policy or defamation, or any claim for severance pay,
bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit, workers'
compensation or disability.
Except for those obligations created by or arising out
of this Agreement for which receipt or satisfaction has not been
acknowledged herein, and except as provided below, Apria on
behalf of itself and the Apria Releasees (to the extent the
matter in question arises on the basis of their relationship to
Apria) hereby acknowledges full and complete satisfaction of and
releases and discharges, and covenants not to sue, Mr. Wallace
from and with respect to any and all claims, agreements, obliga
tions, losses, damages, injuries, demands and causes of action,
known or unknown, suspected or unsuspected, whether or not
concealed or hidden, arising out of or in any way connected with
Mr. Wallace's employment relationship with any Apria Releasee or
his voluntary resignation from employment with the Apria
Releasees, or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, which Apria now owns or
holds or has at any time heretofore owned or held as against Mr.
Wallace.
6. It is the intention of Apria and Mr. Wallace in
executing this Agreement that the same shall be effective as a
bar to each and every claim, demand and cause of action
hereinabove specified. In furtherance of this intention, Apria
and Mr. Wallace hereby expressly waive any and all rights and
benefits conferred upon them by the provisions of SECTION 1542 OF
THE CALIFORNIA CIVIL CODE and expressly consent that this
Agreement shall be given full force and effect according to each
and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims,
demands and causes of action hereinabove specified. SECTION 1542
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Apria and Mr. Wallace, and each of them, acknowledge that either
may hereafter discover claims or facts in addition to or
different from those which either or both of them now knows or
believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of
executing this Agreement, may have materially affected this
settlement. Nevertheless, Apria and Mr. Wallace each hereby
waive any right, claim or cause of action that might arise as a
result of such different or additional claims or facts. Apria
and Mr. Wallace each acknowledge that it or he understands the
significance and consequence of such release and such specific
waiver of SECTION 1542.
7. The terms and conditions of this Agreement shall
remain confidential as between the parties and professional
advisers to the parties and neither of them shall disclose them
to any other person, except as provided herein or as required by
the rules and regulations of the Securities and Exchange
Commission ("SEC") or as otherwise may be required by law or
court order. Without limiting the generality of the foregoing,
neither Apria nor Mr. Wallace will respond to or in any way
participate in or contribute to any public discussion concerning,
or in any way relating to, the execution of this Agreement or the
events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be
required by law or court order, if inquiry is made of Apria
concerning any of the claims released by this Agreement or
relating to Mr. Wallace's employment with Apria, Apria shall
provide to third parties only Mr. Wallace's dates of employment
with Apria and its predecessors and his job titles during such
employment, in accordance with the normal practices of Apria's
human resources department.
8. Mr. Wallace will continue to keep confidential all
confidential and proprietary Apria information, as required by
Section X of the Employment Agreement dated April 1, 1997 between
Mr. Wallace and Apria. In this regard, Mr. Wallace acknowledges
the continuing effectiveness, in accordance with their respective
terms, of Sections VII, IX and X of said Employment Agreement.
9. Mr. Wallace expressly acknowledges and agrees
that, by entering into this Agreement, he is waiving any and all
rights or claims that may have arisen under the Age
Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. Mr.
Wallace further expressly acknowledges that:
a. He is hereby advised in writing by this Agreement
to consult with an attorney before signing this Agreement;
b. He was given a copy of this Agreement on June 25,
1998, and informed that he had 45 days within which to
consider the Agreement;
c. He was informed that he has seven days following
the date of his execution of this Agreement in which to
revoke the Agreement; and
d. He has received Exhibit B to this Agreement, which
provides a list of (i) job titles and ages of all
individuals with responsibilities related to the Compass
Project who have been selected for termination of employment
and the offer of consideration for signing a release and/or
waiver of rights and claims under said Act, and (ii) the
ages of all individuals in the same job classifications or
with such responsibilities whose employment is not being
terminated.
10. Apria and Mr. Wallace each warrant and represent
that neither has heretofore assigned or transferred to any person
not a party to this Agreement any released matter or any part or
portion thereof and each shall defend, indemnify and hold
harmless the other from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether or
not litigation is commenced) based on or in connection with or
arising out of any such assignment or transfer made, purported or
claimed.
11. Apria and Mr. Wallace acknowledge that any
employment or contractual relationship between them (including
with any other Apria Releasee) will terminate on July 17, 1998
that they have no further employment or contractual relationship
except as may arise out of this Agreement and that Mr. Wallace
waives any right or claim to reinstatement as an employee of any
Apria Releasee and will not seek employment in the future with
Apria.
12. Mr. Wallace agrees that he shall be exclusively
liable for the payment of all of his share of federal and state
taxes which may be due as the result of the consideration
received from the settlement of disputed claims as set forth
herein.
13. Mr. Wallace agrees that, following the termination
of his employment with Apria, (i) he will, at no cost to him,
cooperate with any reasonable request Apria may make for
information or assistance with respect to any matter involving
Mr. Wallace during his period of employment, and (ii) he will not
at any time, directly or indirectly, disparage Apria or take any
action with the intention of injuring Apria's business or
prospects. Apria, on behalf of itself and the Apria Releasees,
agrees that it will use its best efforts to cause its officers
and directors not to disparage Mr. Wallace in any manner.
14. This Agreement is an integrated document and
constitutes and contains the entire agreement and understanding
concerning Mr. Wallace's employment, voluntary resignation from
the same and the other subject matters addressed herein between
the parties, and supersedes and replaces all prior negotiations
and all agreements, proposed or otherwise, whether written or
oral, concerning the subject matter hereof, and expressly
releases all Apria Releasees from any obligations not covered
herein, including, but not limited to Apria's Severance Pay Plan
and, except as provided in the last sentence of Paragraph 8
above, the Employment Agreement, dated April 1, 1997, between Mr.
Wallace and Apria. This Agreement does not, however, affect Mr.
Wallace's rights under any Apria retirement, 401(k), SERP or
similar benefit plan. This Agreement also does not modify the
provisions of any of Mr. Wallace's stock options.
15. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect the other provisions or applications of this 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.
16. This Agreement has 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, the laws of the State of
California without regard to principles of conflict of laws.
17. This Agreement may be executed in counterparts,
and each counterpart, when executed, shall have the efficacy of a
signed original. Photographic copies of such signed counterparts
may be used in lieu of the originals for any purpose.
18. Any dispute or controversy between Mr. Wallace on
the one hand, and Apria (or any other Apria Releasee), on the
other hand, in any way arising out of, related to, or connected
with this Agreement or the subject matter hereof, or otherwise in
any way arising out of, related to, or connected with Mr.
Wallace's employment with any Apria Releasee or the termination
of Mr. Wallace' s employment with any Apria Releasee, shall be
submitted for resolution by arbitration in accordance with the
provisions of Section V of the Employment Agreement between the
parties dated as of April 1, 1997. APRIA AND MR. WALLACE
ACKNOWLEDGE, UNDERSTAND AND AGREE THAT IN THE EVENT OF A DISPUTE
UNDER THIS AGREEMENT, EACH PARTY HAS WAIVED ANY RIGHT TO A JURY
TRIAL AND A JUDICIAL RESOLUTION OF THE DISPUTE.
19. No waiver of any breach of any term or provision
of this Agreement shall be construed to be, or 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.
20. In entering this Agreement, the parties represent
that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that they have read the
Agreement and have had the opportunity to have the Agreement
explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all
additional actions that may be necessary or appropriate to give
full force to the terms and intent of this Agreement and which
are not inconsistent with its terms.
22. Mr. Wallace hereby declares as follows:
I, Merl A. Wallace, hereby acknowledge that I was given
45 days to consider the foregoing Agreement and voluntarily chose
to sign the Agreement prior to the expiration of the 45-day
period.
I have read the foregoing Agreement and I accept and
agree to the provisions it contains and hereby execute it
voluntarily with full understanding of its consequences.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and correct.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement this ____ day of ____________, 1998.
---------------------------------
Merl A. Wallace
APRIA HEALTHCARE GROUP INC.
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
______________, 1998
Mr. Philip L. Carter
Chief Executive Officer
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Dear Phil:
This is to advise you that effective July 17, 1998, I hereby
voluntarily resign my position as Executive Vice President,
Corporate Operations and my employment in any other capacity with
Apria Healthcare Group Inc. or any of its affiliates or
subsidiaries.
Sincerely yours,
--------------------------------
Merl A. Wallace
EXHIBIT 10.9
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this
"Agreement"), made as of the ____ day of July, 1998, by and
between Thomas M. Robbins, an individual ("Mr. Robbins"), and
Apria Healthcare Group Inc., a Delaware corporation ("Apria"), is
a resignation agreement which includes a general release of
claims. In consideration of the covenants undertaken and the
releases contained in this Agreement, Mr. Robbins and Apria agree
as follows:
1. Mr. Robbins shall voluntarily resign from his
position as an employee of Apria and all of its affiliates and
subsidiaries by executing Exhibit A attached hereto, such
resignation to be effective August 7, 1998.
2. Mr. Robbins shall return to Apria and shall not
take or copy in any form or manner any financial information,
lists of customers, prices, and similar confidential and
proprietary materials or information of Apria.
3. In consideration if Mr. Robbins' general release
of claims and other promises set forth herein, Apria shall
pay to Mr. Robbins the following amounts:
a. $239,574.60 in compensation, subject to
standard withholding for federal and state taxes, which
shall be payable in accordance with Apria's regular payroll
procedures in 26 substantially equal installments over a 12-
month period beginning on the first regular payroll date
after the effective date of resignation; and
b. All earned but unpaid vacation and personal
holiday pay, and any salary amounts earned but not yet paid,
payable on the effective date of resignation.
4. Neither this Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any
proceeding as evidence of an admission by Apria or Mr. Robbins of
any violation of Apria's policies or procedures, or state or
federal laws or regulations. This Agreement may be introduced,
however, in any proceeding to enforce the Agreement. Such
introduction shall be pursuant to an order protecting its
confidentiality.
5. Except for (i) those obligations created by or
arising out of this Agreement for which receipt or satisfaction
has not been acknowledged herein, (ii) any rights Mr. Robbins may
have under stock option agreements with Apria and any retirement,
401(k), SERP or similar benefit plans of Apria, and (iii) the
continuing right to indemnification as provided by applicable law
or in Apria's bylaws and articles of incorporation in connection
with acts, suits or proceedings by reason of the fact that he was
an officer or employee of Apria where the basis of the claims
against him consists of acts or omissions taken or made in such
capacity, Mr. Robbins on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and
fully releases and discharges Apria, and its predecessors, subsid
iaries and affiliates, past and present, and each of them, as
well as its and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives,
assigns, and successors, past and present, and each of them,
hereinafter together and collectively (including Apria) referred
to as the "Apria Releasees," with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders and
liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsus
pected, and whether or not concealed or hidden, which he now owns
or holds or he has at any time heretofore owned or held as
against the Apria Releasees, arising out of or in any way connect
ed with his employment relationship with any Apria Releasee, or
his voluntary resignation from employment with the Apria
Releasees or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, resulting from any act or
omission by or on the part of any Apria Releasee committed or
omitted prior to the date of this Agreement, including, without
limiting the generality of the foregoing, any claim under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Family
and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, or any common law
or statutory claim for fraud, wrongful termination, violation of
public policy or defamation, or any claim for severance pay,
bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit, workers'
compensation or disability.
Except for those obligations created by or arising out
of this Agreement for which receipt or satisfaction has not been
acknowledged herein, and except as provided below, Apria on
behalf of itself and the Apria Releasees (to the extent the
matter in question arises on the basis of their relationship to
Apria) hereby acknowledges full and complete satisfaction of and
releases and discharges, and covenants not to sue, Mr. Robbins
from and with respect to any and all claims, agreements, obliga
tions, losses, damages, injuries, demands and causes of action,
known or unknown, suspected or unsuspected, whether or not
concealed or hidden, arising out of or in any way connected with
Mr. Robbins's employment relationship with any Apria Releasee or
his voluntary resignation from employment with the Apria
Releasees, or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, which Apria now owns or
holds or has at any time heretofore owned or held as against Mr.
Robbins.
6. It is the intention of Apria and Mr. Robbins in
executing this Agreement that the same shall be effective as a
bar to each and every claim, demand and cause of action
hereinabove specified. In furtherance of this intention, Apria
and Mr. Robbins hereby expressly waive any and all rights and
benefits conferred upon them by the provisions of SECTION 1542 OF
THE CALIFORNIA CIVIL CODE and expressly consent that this
Agreement shall be given full force and effect according to each
and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims,
demands and causes of action hereinabove specified. SECTION 1542
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Apria and Mr. Robbins, and each of them, acknowledge that either
may hereafter discover claims or facts in addition to or
different from those which either or both of them now knows or
believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of
executing this Agreement, may have materially affected this
settlement. Nevertheless, Apria and Mr. Robbins each hereby
waive any right, claim or cause of action that might arise as a
result of such different or additional claims or facts. Apria
and Mr. Robbins each acknowledge that it or he understands the
significance and consequence of such release and such specific
waiver of SECTION 1542.
7. The terms and conditions of this Agreement shall
remain confidential as between the parties and professional
advisers to the parties and neither of them shall disclose them
to any other person, except as provided herein or as required by
the rules and regulations of the Securities and Exchange
Commission ("SEC") or as otherwise may be required by law or
court order. Without limiting the generality of the foregoing,
neither Apria nor Mr. Robbins will respond to or in any way
participate in or contribute to any public discussion concerning,
or in any way relating to, the execution of this Agreement or the
events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be
required by law or court order, if inquiry is made of Apria
concerning any of the claims released by this Agreement or
relating to Mr. Robbins' employment with Apria, Apria shall
provide to third parties only Mr. Robbins' dates of employment
with Apria and its predecessors and his job titles during such
employment, in accordance with the normal practices of Apria's
human resources department.
8. Mr. Robbins will continue to keep confidential all
confidential and proprietary Apria information, as required by
Section 10 of the Executive Severance Agreement dated June 28,
1997 between Mr. Robbins and Apria. In this regard, Mr. Robbins
acknowledges the continuing effectiveness, in accordance with
their respective terms, of Sections 9 and 10 of said Executive
Severance Agreement.
9. Mr. Robbins expressly acknowledges and agrees
that, by entering into this Agreement, he is waiving any and all
rights or claims that may have arisen under the Age
Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. Mr.
Robbins further expressly acknowledges that:
a. He is hereby advised in writing by this Agreement
to consult with an attorney before signing this Agreement;
b. He was given a copy of this Agreement on June 23,
1998, and informed that he had 21 days within which to
consider the Agreement; and
c. He was informed that he has seven days following
the date of his execution of this Agreement in which to
revoke the Agreement.
10. Apria and Mr. Robbins each warrant and represent
that neither has heretofore assigned or transferred to any person
not a party to this Agreement any released matter or any part or
portion thereof and each shall defend, indemnify and hold
harmless the other from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether or
not litigation is commenced) based on or in connection with or
arising out of any such assignment or transfer made, purported or
claimed.
11. Apria and Mr. Robbins acknowledge that any
employment or contractual relationship between them (including
with any other Apria Releasee) will terminate on August 7, 1998,
that they have no further employment or contractual relationship
except as may arise out of this Agreement and that Mr. Robbins
waives any right or claim to reinstatement as an employee of any
Apria Releasee and will not seek employment in the future with
Apria.
12. Mr. Robbins agrees that he shall be exclusively
liable for the payment of all of his share of federal and state
taxes which may be due as the result of the consideration
received from the settlement of disputed claims as set forth
herein.
13. Mr. Robbins agrees that, following the termination
of his employment with Apria, (i) he will, at no cost to him,
cooperate with any reasonable request Apria may make for
information or assistance with respect to any matter involving
Mr. Robbins during his period of employment, and (ii) he will not
at any time, directly or indirectly, disparage Apria or take any
action with the intention of injuring Apria's business or
prospects. Apria, on behalf of itself and the Apria Releasees,
agrees that it will use its best efforts to cause its officers
and directors not to disparage Mr. Robbins in any manner.
14. This Agreement is an integrated document and
constitutes and contains the entire agreement and understanding
concerning Mr. Robbins' employment, voluntary resignation from
the same and the other subject matters addressed herein between
the parties, and supersedes and replaces all prior negotiations
and all agreements, proposed or otherwise, whether written or
oral, concerning the subject matter hereof, and expressly
releases all Apria Releasees from any obligations not covered
herein, including, but not limited to Apria's Severance Pay Plan
and, except as provided in the last sentence of Paragraph 8
above, the Executive Severance Agreement, dated June 28, 1997,
between Mr. Robbins and Apria. This Agreement does not, however,
affect Mr. Robbins' rights under any Apria retirement, 401(k),
SERP or similar benefit plan. This Agreement also does not
modify the provisions of any of Mr. Robbins' stock options.
15. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect the other provisions or applications of this 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.
16. This Agreement has 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, the laws of the State of
California without regard to principles of conflict of laws.
17. This Agreement may be executed in counterparts,
and each counterpart, when executed, shall have the efficacy of a
signed original. Photographic copies of such signed counterparts
may be used in lieu of the originals for any purpose.
18. Any dispute or controversy between Mr. Robbins on
the one hand, and Apria (or any other Apria Releasee), on the
other hand, in any way arising out of, related to, or connected
with this Agreement or the subject matter hereof, or otherwise in
any way arising out of, related to, or connected with Mr.
Robbins's employment with any Apria Releasee or the termination
of Mr. Robbins' s employment with any Apria Releasee, shall be
submitted for resolution by arbitration in accordance with the
provisions of Section 15 of the Executive Severance Agreement
between the parties dated as of June 28, 1997. APRIA AND MR.
ROBBINS ACKNOWLEDGE, UNDERSTAND AND AGREE THAT IN THE EVENT OF A
DISPUTE UNDER THIS AGREEMENT, EACH PARTY HAS WAIVED ANY RIGHT TO
A JURY TRIAL AND A JUDICIAL RESOLUTION OF THE DISPUTE.
19. No waiver of any breach of any term or provision
of this Agreement shall be construed to be, or 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.
20. In entering this Agreement, the parties represent
that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that they have read the
Agreement and have had the opportunity to have the Agreement
explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all
additional actions that may be necessary or appropriate to give
full force to the terms and intent of this Agreement and which
are not inconsistent with its terms.
22. Mr. Robbins hereby declares as follows:
I, Thomas M. Robbins, hereby acknowledge that I was
given 21 days to consider the foregoing Agreement and voluntarily
chose to sign the Agreement prior to the expiration of the 21-day
period.
I have read the foregoing Agreement and I accept and
agree to the provisions it contains and hereby execute it
voluntarily with full understanding of its consequences.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and correct.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement this ____ day of July, 1998.
-------------------------------------
Thomas M. Robbins
APRIA HEALTHCARE GROUP INC.
By:
----------------------------------
Name:
Title
<PAGE>
EXHIBIT A
July 1, 1998
Mr. Lawrence M. Higby
President & Chief Operating Officer
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Dear Larry:
This is to advise you that effective August 7, 1998, I
hereby voluntarily resign my position as Executive Vice
President, Field Operations and my employment in any other
capacity with Apria Healthcare Group Inc. or any of its
affiliates or subsidiaries.
Sincerely yours,
-----------------------------
Thomas M. Robbins
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 74,712
<SECURITIES> 0
<RECEIVABLES> 257,947
<ALLOWANCES> 45,757
<INVENTORY> 22,861
<CURRENT-ASSETS> 315,500
<PP&E> 603,117
<DEPRECIATION> 358,332
<TOTAL-ASSETS> 726,627
<CURRENT-LIABILITIES> 129,687
<BONDS> 536,386
0
0
<COMMON> 52
<OTHER-SE> 60,502
<TOTAL-LIABILITY-AND-EQUITY> 726,627
<SALES> 491,165
<TOTAL-REVENUES> 491,165
<CGS> 166,655
<TOTAL-COSTS> 166,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 26,611
<INTEREST-EXPENSE> 23,047
<INCOME-PRETAX> (14,563)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (15,563)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,563)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> (0.30)
</TABLE>
