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EXHIBIT 10.77
SEPARATION AND RELEASE AGREEMENT
THIS SEPARATION AND RELEASE AGREEMENT is entered into as of December
30, 1998 by and between AMERICAN HOMEPATIENT, INC., a Delaware corporation (the
"Company"), and XXXXXXX XXXXXXXXX, a resident of the State of Massachusetts (the
"Employee").
WHEREAS, the Company has agreed to pay Employee certain sums in
connection with termination of his employment and in settlement of certain
claims under the terms and conditions set forth herein and in exchange for
Employee's agreements contained herein; and
WHEREAS, in his position as an employee, director and consultant to the
Company, Employee had access to confidential information and trade secrets of
the Company and developed relationships with customers, employees, suppliers and
others who deal with the Company, which relationships are valuable to the
Company.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements made herein, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
1. Termination; Severance Pay; Options Previously Granted; D&O
Insurance.
1.1 Termination. The parties agree that the Company's employment of
Employee terminated at the close of business on Friday, November 6, 1998, (the
"Termination Date"). Effective as of the date of this Agreement, Employee hereby
resigns as a director of the Company and as an officer and director of all the
Company's subsidiaries in which he holds any position. The Company hereby
accepts such resignations on behalf of itself and its subsidiaries.
1.2 Payment to Employee.
(a) Upon execution of this Agreement by Employee, the Company will
pay Employee, by wire transfer of same day funds to account #0212862942 at Fleet
Bank in Boston, Massachusetts, a lump sum payment in the amount of Forty-Seven
Thousand Six Hundred Seventy-Two Dollars and 12/100 ($47,672.12), as determined
as follows: Twenty-Five percent (25%) of Two Hundred Seventy-five Thousand and
No/100 Dollars ($275,000.00), less Twenty-One Thousand Three Hundred Seven
Dollars and 08/100 ($21,307.08) in withholding taxes, plus Two Hundred
Twenty-Nine Dollars and 20/100 ($229.20) to enable Employee to exercise his
COBRA rights for up to one year with respect to his dental coverage under the
Company's plan of insurance. Employee acknowledges that all salary due to him
for work through the Termination Date has been paid. The Company acknowledges
that expense reimbursements to Employee in an amount no greater than $2,500.00
remain pending with the Company. The parties further acknowledge that COBRA
coverage eligibility for the Employee commenced immediately upon the Termination
Date, and that
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it is Employee's responsibility to timely exercise and make payments required to
continue any family dental or other coverage to which Employee or his dependants
may be entitled.
(b) Commencing on March 15, 1999 and continuing on the 15th
day of each month until November 15, 1999, the Company will pay to Employee by
wire transfer, same day funds, an amount equal to Twenty-Two Thousand Nine
Hundred and Sixteen Dollars and 67/100 ($22,916.67) less appropriate withholding
taxes.
1.3 Options Previously Granted. The parties acknowledge that
the Company granted Employee under the Company's 1995 Nonqualified Stock Option
Plan for Directors (the "1995 Directors Option Plan") vested options to acquire,
in the aggregate, Seven Thousand Five Hundred (7,500) shares of Company common
stock at a price of $19.00 per share. Employee's rights to such options shall be
subject to the terms and the conditions of the option agreement attached hereto
as Exhibit A (the "Option Agreement"), which Option Agreement shall be executed
simultaneously with the execution of this Agreement, and the terms and
conditions of the 1995 Directors Option Plan. Employee acknowledges that
pursuant to the terms of the 1995 Directors Option Plan, Employee has three (3)
months from the date of this Agreement to exercise his options to acquire
Company common stock.
1.4 Directors and Officers Insurance; Indemnification. The
Company will provide Employee director and officer liability insurance coverage
in amounts, and on terms and conditions, no less favorable to Employee than the
coverage provided for any other present or former officer or director of the
Company, until the earlier of (i) the sixth anniversary of the Termination Date
or (ii) such time as the Company and its affiliates no longer maintain any
policy of insurance covering errors or omissions by any of the Company's present
or former officers or directors. The Company will, promptly upon written request
and to the fullest extent legally permitted or authorized by the Company's
certificate of incorporation, by-laws or Board resolutions or, if greater, by
the laws of the State of Delaware, indemnify and hold harmless Employee in all
pending or threatened actions, suits and proceedings, against him or threatened
against him, whether civil, criminal, administrative, or investigative by reason
of the fact that Employee was a director, officer, or agent of the Company, or
was at the Company's request serving as a director, officer, employee or agent
of another entity, against all costs, expenses, liabilities and losses
(including, without limitation, judgments, interest, penalties, fines, ERISA
excise taxes or penalties, attorneys' fees reasonably incurred, expenses of
investigation reasonably incurred, and reasonable amounts paid to or to be paid
in settlement) that are suffered or incurred by him in connection with any such
pending or threatened action, suit or proceeding, and such indemnification shall
inure to the benefit of Employee's heirs, executives and administrators. In
addition, the Company shall advance to Employee all costs and expenses
(including, without limitation, attorneys fees) reasonably incurred by him in
connection with any such pending or threatened action, suit or proceeding within
20 days after receipt by the Company of a written request for advancement
accompanied by (x) documentation reasonably evidencing the sums for which
advancement is sought and (y) to the extent required by law, an undertaking by
Employee to repay the amount advanced if he is ultimately determined not to be
entitled to indemnification against such costs and expenses. Notwithstanding
anything herein to the contrary,
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Employee shall not be entitled to indemnification if it is prohibited by
Delaware General Corporation Law, and nothing in this Agreement shall limit or
reduce Employee's rights under Article XI of the Company's current Certificate
of Incorporation (which Article relates to indemnification).
2. Confidentiality, Non-Solicitation and Other Covenants.
2.1 Confidentiality.
(a) Employee hereby agrees and acknowledges that he has had access
to or is aware of certain confidential, restricted and/or proprietary
information concerning operation and growth by the Company of its health care
business (the "Business"). Further, Employee hereby represents to the Company
that he has delivered to the Company all materials, including but not limited to
documents, discs, computer software and copies thereof, containing "Trade
Secrets" or "Confidential Information" (each as defined below), whether compiled
or created by Employee or furnished to him. Employee hereby undertakes and
agrees that he shall have a duty to the Company to protect such information that
is in his possession or control from improper use or disclosure.
(b) For the purposes of this Section 2, the following definitions
shall apply:
(i) "Trade Secret" shall mean any specialized technical
information or data not generally known to the public relating to (w)
the Company's or its affiliates' procurement of medical equipment and
other inventory for resale; (x) marketing strategy or plans of the
Company or its affiliates; (y) the Company's or its affiliates'
proprietary computer software; and (z) terms of the Company's or its
affiliate's contracts with suppliers, employees and principal
customers, which terms are not generally known to the competitors of
the Company.
(ii) "Confidential Information" shall mean any material data or
information, other than Trade Secrets, that relates to the Company or
its affiliates or its Business and is not generally known by the
public. Confidential Information shall include, without limitation,
any information pertaining to the Business Opportunities (as
hereinafter defined) of the Company, the details of this Agreement,
and the business plans, financial statements and projections of the
Company.
(iii) "Business Opportunity" shall mean any information or plans
of the Company or its affiliates concerning the purchase of or
investment in (or potential purchase of or investment in) any entity,
retail outlets, stores, distribution centers or similar service
facilities in the field of health care, or the availability of any of
the foregoing for purchase or investment by the Company, together with
all related information, concerning the specifics of any contemplated
purchase or investment (including price, terms and the identity of
such entity or outlet), regardless of whether the Company has entered
any agreement, made any commitment, or issued any bid or offer to
purchase or invest with respect to any such opportunity.
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(c) Employee shall not, without the prior written consent of the
Company and except (x) as required by law, by subpoena, or by order of any
court, legislative body, or other Person with apparent jurisdiction to require
disclosure or (y) and except for disclosure in confidence to any attorney,
accountant or other professional in the course of seeking professional advice or
services, use or disclose, or negligently permit any unauthorized "Person" who
is not an employee, agent, attorney, accountant or other representative of the
Company to use, disclose, or gain access to, any Trade Secrets or Confidential
Information. For purposes of this Agreement, "Person" is defined as a
corporation, partnership, joint venture or other business entity, a governmental
agency, or an individual.
2.2 Non-Solicitation. For a twelve (12) month period following the
Termination Date, Employee will not solicit, directly or indirectly, in
competition with the Company, any client, customer, employee, joint-venture, or
business opportunity of the Company or its affiliates; and (ii) the Employee
will not, directly or indirectly, (a) solicit or encourage any individual who is
now or hereafter employed by the Company to leave the employ of the Company or
(b) hire any individual who shall have been employed by the Company at any time
during the three (3) months prior to such hiring. The Employee acknowledges that
the covenants contained herein are reasonable.
2.3 Remedies. The Employee acknowledges that his breach or
threatened or attempted breach of any provision of Section 2 of this Agreement
could cause irreparable harm to the Company not compensable in monetary damages
and that the Company shall be entitled, in addition to all other applicable
remedies, to seek a temporary and permanent injunction and a decree for specific
performance of the terms of Section 2 of this Agreement without being required
to prove damages or furnish any bond or other security; provided that the
Company shall have no right to enforce this Section 2 through injunction if it
at any time materially breaches any provision of this Agreement. Nothing herein
contained will be construed as prohibiting the Company from pursuing any other
remedy available to it for such breach or attempted or threatened breach.
2.4 Application to Affiliates. For purposes of this Agreement, the
term "Company" refers to American HomePatient, Inc., a Delaware corporation, any
successors by merger, and the term "affiliate" means each corporation, limited
liability company, partnership, joint venture or other business entity in which
American HomePatient, Inc. directly or indirectly has a 30% or greater ownership
interest.
3. Releases; Covenant Not to Xxx.
3.1 General Release By Employee. Employee for himself, his
dependents, heirs, executors, administrators, successors, and assigns, does
hereby fully, finally and forever release and discharge the Company, its
officers, directors, agents, employees, subsidiaries and affiliates from any and
all claims, obligations and liabilities, including those for personal injuries,
as well as claims for compensatory/punitive damages, breach of contract,
liquidated damages, wages, salaries, commissions, bonuses, deductions, back pay,
front pay, court costs, attorneys' fees, job assignments, promotions/transfers,
past employment as a consultant, monetary damages for intentional infliction
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of mental/emotional distress, or any other causes, claims, or demands which, as
of the date hereof, Employee has or may have had arising out of or relating to
Employee's employment with, consultation with, and/or separation from employment
with the Company. Further released are, including without limitation, any such
claims that, as of the date hereof, Employee has or may have had under Title VII
of the Civil Rights Act of 1991(42 U.S.C. xx.xx. 2000(e), et seq.) the AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, as amended ("ADEA"); the Civil Rights
Acts of 1866, 1871, 1964 and 1991; the Americans with Disabilities Act of 1990
(42 U.S.C. ss. 1211 et seq.); the Rehabilitation Act of 1973 (29 U.S.C. ss. 701,
et seq.); the Fair Labor Standards Act (29 U.S.C. ss. 201, et seq.); the Equal
Pay Act of 1973 (29 U.S.C. Chapter 8, xx.xx. 206(d), et seq.); the Consolidated
Omnibus Budget and Reconciliation Act of 1985, 29 U.S.C. ss. 1161, et seq., as
amended, the Employee Retirement Income and Security Act of 1974 (29 U.S.C. ss.
1001, et seq., as amended) (but not as to the continuation benefits, if any, to
which Employee may be entitled); any state or federal "whistle-blower" type
statutes; any and all claims under the laws of any state, county, municipality
or other governmental subdivision of the United States or any state; and any and
all other relevant Federal and/or State statutory and/or common laws including,
but not limited to intentional infliction of emotional distress. Notwithstanding
anything in this Section 3 to the contrary, nothing herein shall release the
Company from any claims or damages, or preclude, limit or prohibit Employee from
suing the Company for, any wrongs arising from conduct or actions of the
Company, or any of its officers, directors, agents, employees, subsidiaries or
affiliates, that have ben concealed and of which Employee has no knowledge as of
December 31, 1998.
3.2 ADEA RELEASE. EMPLOYEE SPECIFICALLY RELEASES COMPANY AND
THE OTHER AFFILIATED PARTIES INCLUDED IN SUBSECTION 2.4, FROM ANY CLAIMS BASED
UPON ANY LAW PROHIBITING DISCRIMINATION ON THE BASIS OF EMPLOYEE'S AGE,
INCLUDING BUT NOT LIMITED TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT ("ADEA
CLAIMS"). EMPLOYEE IS RECEIVING ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) AS CONSIDERATION FOR THE RELEASE OF SUCH ADEA CLAIMS, WHICH
$100,000 IS A PART OF THE LUMP SUM PAYMENT SET FORTH IN SUBSECTION 1.2 HEREIN.
EMPLOYEE DOES NOT WAIVE RIGHTS OR CLAIMS UNDER THE ADEA THAT MAY ARISE AFTER THE
DATE THIS AGREEMENT IS EXECUTED BY EMPLOYEE.
3.3 Covenant Not to Xxx. Employee covenants that he will not
initiate or bring any proceeding, suit, claim, or administrative proceeding
against the Company, its affiliates, agents, employees, officers, successors or
assigns arising out of or relating to his employment by, or consulting for, the
Company or the conduct of the Company's business prior to the Termination Date.
Employee further covenants that he will, to the extent permitted by law, notify
the Chief Executive Officer of the Company immediately in the event he is
contacted by any Person regarding any pending or contemplated proceeding, suit,
claim or investigation involving the Company, its affiliates, agents, employees,
officers, successors or assigns.
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3.4 Sum Paid Is For Release Of Claims. The parties agree that the
sum paid is for release of claims and was not calculated based on or derived
from lost wages or benefits Employee might have received had his employment
continued.
3.5 Release By the Company. The Company, for itself, its officers,
directors, agents, employees, subsidiaries and affiliates, does hereby fully,
finally and forever release and discharge Employee for himself, his dependents,
heirs, executors, administrators, successors, and assigns from any and all
claims, obligations and liabilities, as well as claims for compensatory/punitive
damages, breach of contract, liquidated damages, court costs, attorneys' fees,
or any other causes, claims, or demands, as of the date hereof, that the Company
has or may have had arising out of, or relating to, Employee's employment with,
consulting for, and/or separation from employment with the Company. The Company
covenants that it will not initiate or bring any proceeding, suit, claim, or
administrative proceeding against Employee, his dependents, heirs, executors,
administrators, successors or assigns arising out of or relating to Employee's
employment with, or consulting for, the Company or the conduct of the Company's
business prior to the Termination Date. Notwithstanding anything in this Section
3 to the contrary, nothing herein shall release Employee from any claims or
damages, or preclude, limit or prohibit the Company from suing Employee for, any
wrongs arising from conduct or actions of Employee which have ben concealed by
Employee and of which no member of the Company's board of directors (other than
Employee) had knowledge as of December 31, 1998. The Company further covenants
that it will notify Employee immediately in the event that it, or its attorneys,
is contacted by any Person regarding any pending or contemplated proceeding,
suit claim or investigation in which Employee is a party or in which he is
threatened to be named as a party.
3.6 No Admission of Liability. This Agreement shall not in any way
be construed as an admission by the Company or Employee of any liability
whatsoever, or as an admission by either of the Company or Employee of any acts
of wrongdoing against the other or any other persons.
3.7 No Release of Claims under this Agreement. Nothing in this
Section 3 shall be construed to release, limit, or bar any claim based on any
breach, or claimed breach, of this Agreement.
3.8 No Release of Monitor Company. Nothing in this Section 3 shall
be construed to release, limit in any way, or bar any claim that the Company may
have against Monitor Company or its affiliates, other than claims against
Monitor Company or its affiliates that seek to impose liability on Monitor
Company or its affiliates for claims against Employee that are released by
Section 3.5.
4. Disclosure; Post-Departure Assistance. Employee shall, at a mutually
agreeable time prior to March 26, 1999, discuss with representatives of the
Company and the Company's legal counsel, at their request, any issue relating to
the operation of the Company's Business of which Employee has knowledge. In
addition, Employee shall, on reasonable notice and subject to
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Employee's commitments and obligations, furnish such information as may be in
his possession, and such additional cooperation and assistance, as the Chief
Executive Officer of the Company may specifically and reasonably request in
connection with any claims, investigations, legal actions or other disputes in
which the Company is or may become a party and in which Employee's interests do
not conflict with those of the Company. Employee shall be obligated to provide,
at no charge to the Company, up to sixteen (16) hours of his time (including,
without limitation, travel time) in connection with his obligations under this
Section 4. For each hour (a) after March 26, 1999, or (b) in excess of 16 hours,
the Company shall pay Employee Five Hundred Dollars ($500) per hour promptly
upon receipt of an invoice for such time. As a condition to Employee's
obligation to provide information and cooperation under this Section 4, the
Company shall advance to the Employee amounts sufficient to cover the costs of
all reasonable travel, lodging, legal and other expenses relating thereto;
provided, however, that Company will have no obligation to reimburse Employee's
legal expenses in connection with the matters as to which the Company's primary
outside law firm renders to Employee an unqualified written opinion stating that
Employee's interests do not conflict with those of the Company, any such opinion
to be provided within 21 days of Employee's written notice to the Company
requesting such an opinion.
5. Agreement is Voluntary and Knowing.
5.1 Employee acknowledges he understands the terms and conditions of
this Agreement. Employee has had the opportunity to discuss thoroughly all
aspects of this Agreement with Employee's legal counsel and has been advised to
do so by the Company.
5.2 Employee acknowledges that his Agreement was provided to him on
December 17, 1998, and that he shall have twenty-one (21) days (prior to
execution of this Agreement) in which to consider this Agreement. If Employee
elects to execute this Agreement prior to the expiration of the twenty-one (21)
days, such election is solely his choice. After the execution of this Agreement,
Employee shall have seven (7) days to revoke this Agreement. Employee has been
advised to consult with an attorney or advisor concerning this Agreement and has
done so. Employee represents and warrants that he freely negotiated the terms of
this Agreement, and enters into it and executes it voluntarily. In the event
Employee elects to revoke this Agreement, Employee shall promptly return all
consideration provided to Employee herein or such revocation shall be of no
force or effect.
6. No Disparagement. Each party hereto agrees not to disparage or make
comments of a negative or unfavorable nature with respect to the other, other
than (x) truthful statements required by law, by subpoena, or by order of any
court, legislative body, or other Person with apparent jurisdiction to require
such statements and (y) statements made in confidence to any attorney,
accountant or other professional in the course of seeking professional advice or
services, and warrants that it/he has made so such statements since the
Termination Date.
7. Successors and Assigns. The provisions hereof (including, without
limitation, the provisions of Section 1.4, 3 and 4) shall inure to the benefit
of and be binding upon the successors
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and assigns of the Company. Notwithstanding the foregoing, the rights and
obligations of Employee hereunder are not assignable during his lifetime, and
any prohibited assignment will be null and void.
8. Governing Law. This Agreement shall be interpreted under, subject to
and governed by the laws of the State of Tennessee, and all questions concerning
its validity, construction, and administration shall be determined in accordance
therewith.
9. Additional Agreements. Simultaneously with the execution of this
Agreement, Employee shall execute the Form 5 attached as Exhibit B and
authorizes the Company to file this form with the Securities and Exchange
Commission. Upon request of the Company, Employee agrees to execute any
additional documents, agreements or forms reasonably necessary to evidence or
effectuate (x) the termination of his affiliation with the Company or (y) the
terms of this Agreement.
10. Attorneys' Fees. In the event of any proceeding or litigation
arising out of this Agreement, the prevailing party in such proceeding or
litigation shall be entitled to recover the reasonable costs and expenses
incurred in connection with such proceeding or litigation, including, but not
limited to reasonable attorneys' fees.
11. Waivers. The waiver of a breach by either party of any term or
provision of this Agreement, at any time or times, shall not be deemed or
construed to be a waiver of any subsequent breach or breaches of the same or of
any other term or provision of this Agreement at any time or times.
12. Invalidity. The invalidity or unenforceability of any provision of
this Agreement shall not affect any other provision hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
was omitted. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
13. Exclusiveness. This Agreement constitutes the entire understanding
and agreement between the parties with respect to the employment and severance
arrangements of Employee and supersedes any and all other agreements, oral or
written, between the parties. No waiver, modification, or amendment to this
Agreement shall be valid unless the same be reduced to writing and signed by the
parties hereto.
14. Modification. This Agreement may not be modified or amended except
in writing signed by the parties. No term or condition of this Agreement will be
deemed to have been waived except in writing by the party charged with waiver. A
waiver shall operate only as to the specific term or condition waived and will
not constitute a waiver for the future or act on anything other than that which
is specifically waived.
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15. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made (x) five
days after being mailed first-class postage prepaid by registered mail, return
receipt requested, or (y) when delivered by hand, overnight delivery service or
confirmed facsimile transmission, to the following:
A. If to the Company, at Suite 400, 0000 Xxxxxxxx Xxx, Xxxxxxxxx,
Xxxxxxxxx 00000, Attention: President and Chief Executive Officer, or at such
other address as may have been furnished to Employee by the Company in writing,
with a copy to Xxxx Manner, Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C., 000
Xxxxxxxxx Xxxxxx, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000; or
B. If to Employee, at 00 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 or
such other address as may have been furnished to the Company by Employee in
writing, with a copy to Xxxxxx X. Xxxxxxxx, Xxxxxxxxx Law Offices, 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000.
16. Consolidation, Merger or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another individual,
entity or business that assumes this Agreement and all obligations of the
Company hereunder.
17. Final Settlement. The parties declare that each has carefully read
this Agreement, that each has reviewed its terms with each one's respective
counsel, and that each agrees to it for the purpose of making a full and final
adjustment and resolution of the matters contained herein. Nothing in this
agreement is to be construed as an admission of any kind by either Employee or
the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first set above herein.
"COMPANY"
AMERICAN HOMEPATIENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
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XXXXXX X. XXXXXXX, III
Its: Chief Executive Officer
"EMPLOYEE"
/s/ Xxxxxxx XxxXxxxxx
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XXXXXXX XXXXXXXXX
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