Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This
Amended and Restated Employment Agreement (the
“Agreement”) is entered into by and between Apria
Healthcare Group Inc. (the “Company”) and
Lawrence A. Mastrovich (the “Executive”), as of
October 20, 2005.
I.
EMPLOYMENT .
The
Company hereby employs the Executive and the Executive hereby
accepts such employment, upon the terms and conditions hereinafter
set forth. The term of the employment will continue until the
termination of Executive’s employment by reason of his
written resignation, termination by the Company for any reason by
written notice of termination, or death, provided that for purposes
of Section IV-D-3, the “Expiration Date” shall
initially be April 7, 2004, and shall be extended one (1) day for
each day of the Executive’s employment during the term of
this Agreement until the Executive’s employment is terminated
for any reason. For instance, if the Executive’s employment
with the Company is terminated on January 1, 2003, the Expiration
Date shall be December 31, 2004. The Executive’s employment
may be terminated at any time by written notice from the Executive
to the Company or from the Company to the Executive, in the manner
provided in Section XVI hereof.
II.
DUTIES .
The
Executive shall serve during the course of his employment as the
President and Chief Operating Officer of the Company, reporting to
the Chief Executive Officer. The Executive 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, provided such
duties and responsibilities are the types of duties that would
ordinarily be assigned to a person with employment experience and a
position comparable to that of the Executive. Initially, the
Executive shall have responsibility for the following areas: field
operations, corporate logistics, corporate revenue management,
clinical services and regulatory affairs and compliance. 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 in 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.
III.
COMPENSATION .
A.
The Company will pay to
the Executive a base salary at the rate of $375,000 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.
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 the Chief Executive Officer of the
Company, including without limitation (i) the Company’s
Executive Bonus Plan (a copy of which has been previously provided
to the Executive) and (ii) the Company’s 401(k) Savings
Plan.
C. Welfare Benefit
Plans . The Executive and/or his family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary continuance,
group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other senior
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 conjunction 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
the Chief Executive Officer 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. Relocation .
The Executive agrees to relocate his family and his primary
residence to Orange County, California, and to perform his duties
under Section II of this Agreement primarily from the
Company’s executive offices in Lake Forest, California. The
Company shall provide the Executive with the relocation benefits
described in the Company’s offer letter dated March 29,
2002.
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 XVII if its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30
th 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 material term of this Agreement for a 30-day period after
written notification is delivered by the Company that specifically
refers to this paragraph and identifies the manner in which the
Company believes the Executive has breached a material term of this
Agreement. For purposes of this paragraph, no act, or failure to
act, on the Executive’s part shall be considered willful
unless done or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
without delivery to the Executive of a notice of termination signed
by the Company’s Chief Executive Officer or Chairman of the
Board 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 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 .
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1.
Death or Disability . If the Executive’s employment is
terminated by reason of the Executive’s death or Disability,
this Agreement shall terminate without further obligations to the
Executive or his legal representatives under this Agreement, other
than for (a) payment of the sum of (i) the Executive’s base
salary through the date of termination of employment to the extent
not theretofore paid, plus (ii) any earned vacation pay, to the
extent not theretofore paid (the sum of the amounts described in
clauses (i) and (ii) shall be hereinafter referred to as the
“Accrued Obligations”), which shall be paid to the
Executive or his estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the date of termination of
employment; and (b) payment to the Executive or his estate or
beneficiary, as applicable, (i) any amounts due pursuant to the
terms of any applicable welfare benefit plans; (ii) obligations
pursuant to the terms of any outstanding stock option agreements;
and (iii) obligations under the Company’s 401(k) Savings
Plan.
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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.
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3.
Other than Cause or Death or Disability .
(a) If, during the term
of this Agreement, (i) the Company terminates the Executive’s
employment for other than Cause or death or Disability, or (ii) the
Executive terminates his employment hereunder with Good Reason (as
defined below), the Executive’s employment shall terminate
and the Executive shall be entitled to receive the
following:
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(1) an
amount equal to the Contract Balance (as defined below) in one lump
sum upon such termination of his employment; and
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(2)
the Accrued Obligations as of the date of termination of
employment.
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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
obligations to make payments required to be made under any other
incentive compensation plan.
(b) The term “Good
Reason” means:
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(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
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(ii)
if, following the Executive’s relocation to the Orange
County, California area, 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
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(iii)
if the Company does not permit the Executive to continue to serve
as the President and Chief Operating Officer or another mutually
acceptable senior executive position.
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(c)
The term “Contract Balance” means an amount equal to
the annual base salary and car allowance that Executive would have
earned from the Company had the Executive continued his employment
from the date the Executive’s employment terminated through
the Expiration Date (i.e., base salary and car allowance for two
(2) years), using the rate of base salary and the car allowance in
effect on the date on which the Executive received or gave written
notice of his termination, plus an amount equal to two (2)
times the sum of (i) an amount equal to the average of the
Executive’s two (2) most recent annual bonuses, if any,
received under the Company’s Executive Bo
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