SEPARATION AGREEMENT AND RELEASE
Exhibit 10.1
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is entered into and made effective as of November 9, 2017 (the “Effective Date”) by and between XXXX X. XXXX, (the “Employee”), AAC Holdings, Inc. (“Holdings”) and AMERICAN ADDICTION CENTERS, INC. (the “Employer”) (collectively the “Parties”).
1. Separation Date. The Employee acknowledges that the Employee’s employment with the Employer will end effective December 31, 2017 (the “Separation Date”). The Employer will pay the Employee’s regular pay through the Separation Date. The Employee also resigns from his service as Chief Financial Officer of Holdings and its subsidiaries effective on the Separation Date.
2. Consideration. In exchange for the release of claims and other covenants and promises by the Employee detailed in this Agreement, the Employer agrees to pay the Employee Four Hundred Fifty Thousand Dollars ($450,000) (the “Separation Amount”), which amount shall be payable following the expiration of the Release Consideration Period (as defined below). Such payment shall be less applicable deductions required by law. The Employer will issue the Employee a Form W-2 for the Separation Amount in the normal course of business. Employee acknowledges that the Separation Amount is in addition to any compensation Employee has earned from the Employer and that Employee would not be entitled to the Severance Amount but for his execution of this Agreement.
3. Vesting of Shares. The Parties acknowledge and agree that, pursuant to Employee’s existing Restricted Shares Award Agreements, 6,633 shares shall vest to Employee on December 31, 2017.
4. Acknowledgment of No Other Payments or Benefits. Except for payments set forth in Sections 1 and 2 hereof and any vested benefits under the Employer’s 401(k) savings plan to be paid in accordance with such plan, no other payments, bonuses or benefits will be made by the Employer or Holdings to the Employee. The Employee acknowledges that the Employee has no entitlement to, or any right to make any claim for, any additional payments, commissions, bonuses or benefits by the Employer or Holdings of any kind whatsoever. The Employee’s eligibility for coverage as an active employee under all employee benefit plans maintained by the Employer terminate on the last day of the month following the Separation Date. Any further continuation of health benefits coverage will be at the Employee’s expense to the extent and for the period provided by law.
5. Non-Admission. The Employee understands and acknowledges that this Agreement is in no way an admission of any legal liability or wrongdoing by the Employer for any acts or omissions with respect to the Employee, including without limitation, the Employee’s employment with, or separation of employment from the Employer, with all such wrongdoing or liability being expressly denied.
6. Employee Release. The Employee hereby releases the Employer and Holdings, together with all of their parents, subsidiaries, affiliates and divisions, including all related companies, employee leasing companies, and as to each, their respective successors and assigns, general and limited partners, directors, officers, representatives, attorneys, shareholders, agents, employees,
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and their respective heirs and personal representatives (collectively, the “Employee Releasees”), from any and all claims, causes of action, grievances, expenses, liabilities, costs (including attorneys’ fees), obligations (whether known or unknown), that in any way arise from, grow out of, or are related to the Employee’s employment with the Employer, Employee’s termination of employment with the Employer, Employee’s service as the Chief Financial Officer of Holdings, Employer or their subsidiaries, or events that occurred before the date Employee executes this Agreement (collectively, the “Employee Released Claims”). Employee also represents and warrants that Employee has not sold, assigned or transferred any Released Claims.
The Employee Released Claims include, without limitation, any rights or claims in law or equity for breach of contract, wrongful termination or past wages under applicable state law; claims relating to discrimination, harassment, retaliation, accommodation, or whistle blowing (for example, claims under the Age Discrimination in Employment Act (“ADEA”); claims relating to benefits (for example, claims under the Employee Retirement Income Security Act of 1974); claims relating to employee leave (for example, claims under the Family and Medical Leave Act); claims relating to mandatory notifications (for example, claims under the Worker Adjustment and Retraining Notification Act or the Fair Credit Reporting Act); claims relating to worker safety (for example, claims under the Occupational Health and Safety Act of 1970); or claims for personal injury, defamation, mental anguish, injury to health and personal reputation; and any other related claim under federal, state or local law of any form against Employer Releasees; provided, however, that this release does not extend to rights or claims the release of which is expressly prohibited by law or that may arise after the Separation Date in this Agreement. The Employee understands that the categories and statutes listed above are for example only, and that the Employee is waiving all claims, whether based on federal, state, or local law, common law or otherwise.
As part of this release, the Employee covenants and agrees not to file, commence or initiate any suits, grievances, demands or causes of action against any Employer Releasee based upon or relating to any Employee Released Claim forever discharged pursuant to this Agreement. In accordance with 29 C.F.R. § 1625.23(b), this covenant not to xxx does not preclude Employee from bringing a lawsuit to challenge the validity of the release language contained in this Agreement. If Employee breaches this covenant not to xxx, Employee hereby agrees to pay all of the reasonable costs and attorneys’ fees actually incurred by the Employer Releasees in defending against such claims, demands, or causes of action, together with such and further damages as may result, directly or indirectly, from that breach. Moreover, Employee agrees that Employee will not persuade or instruct any person to file a suit, claim, or complaint with any state or federal court or administrative agency against the Releasees. The parties agree that this Agreement will not prevent Employee from filing a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”), or its equivalent state or local agencies, or otherwise participating in an administrative investigation. However, to the fullest extent permitted by law, Employee agrees to relinquish and forgo all legal relief, equitable relief, statutory relief, reinstatement, back pay, front pay, and any other damages, benefits, remedies, and relief to which Employee may be entitled as a result of any claim, charge, or complaint against the Releasees and agrees to forgo and relinquish reinstatement, all back pay, front pay, and other damages, benefits, remedies, and relief that Employee could receive from claims, actions, or suits filed or charges instituted or pursued by any agency or commission based upon or arising out of the matters that are released and waived by this Agreement. The Parties intend
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that this paragraph and the release of claims herein be construed as broadly as lawfully possible. Notwithstanding the foregoing, nothing herein shall release or be construed to release (i) claims for indemnification and contribution by Employee arising as an employee or officer of Holdings and/or Employer; (ii) Employee’s rights under any retirement or benefit plans; (iii) claims for workers’ compensation; and (iv) Employee’s rights under this Agreement.
7. Employer Release. The Employer and Holdings hereby release the Employee, his heirs, executors, personal representatives, successors, administrators, agents and assigns (collectively, the “Employee Releasees”) from any and all claims, causes of action, grievances, expenses, liabilities, costs (including attorneys’ fees), obligations (whether known or unknown), that in any way arise from, grow out of, or are related to the Employee’s employment with Holdings and Employer, Employee’s termination of employment with the Employer, Employee’s service as the Chief Financial Officer of Holdings, Employer or their subsidiaries, or events that occurred before the date Employee executes this Agreement (collectively, the “Employer Released Claims”), provided, however that neither Holdings nor Employer releases (i) any claims based upon fraud, theft, embezzlement or other acts of dishonesty with respect to Holdings, Employer or any of their subsidiaries; or (ii) the rights of Holdings and Employer under this Agreement.
As part of this Release, the Employer and Holdings covenant and agree not to file, commence, or initiate any suits, grievances, demands or causes of action against any Employee Releasee based upon or relating to any Employer Released Claim forever discharged pursuant to this Agreement. If either Employer or Holdings breaches this covenant not to xxx, Employer and Holdings, jointly and severally, hereby agree to pay all of the reasonable costs and attorneys’ fees actually incurred by the Employee Releasees in defending against any such claims, demands, or causes of action, together with such and further damages as may result directly or indirectly, from such breach. Moreover, Employer and Holdings agree that neither Employer nor Holdings will persuade or instruct any person to file a suit, claim or complaint with any state or federal court or administrative agency against any Employee Releasee.
8. Acknowledgement Regarding Wages. The Employee acknowledges and agrees that following the payment set forth in Section 1 hereof, the Employee: (a) has received all pay to which the Employee was entitled during the Employee’s employment with the Employer; (b) is not owed unpaid wages or unpaid overtime compensation by the Employer; and (c) does not believe that the Employee’s rights under any state or federal wage and hour laws, including the federal Fair Labor Standards Act (“FLSA”), were violated by any Releasee during the Employee’s employment with the Employer.
9. Disclosure. The Employee acknowledges and warrants that the Employee is not aware of, or that the Employee has fully disclosed to the Employer in writing, any matters for which the Employee was responsible or which came to the Employee’s attention as an employee of the Employer that might give rise to, evidence or support any claim of illegal or improper conduct, regulatory violation, unlawful discrimination, retaliation or other cause of action against the Employer.
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10. Compliance with Older Worker Benefit Protection Act.
| a. | Consideration Period. The Employee acknowledges and understands that the Employee has a period of up to twenty-one (21) days from receipt of this Agreement to consider its terms, although the Employee need not take that long and that Employee hereby waives any and all additional rights to any further review period. If the Employee has not executed this Agreement and returned it to the Employer within twenty-one (21) days, this Agreement will be cancelled and will have no effect. |
| b. | Revocation Period. The Employee acknowledges and understands that, for a period of seven (7) days following the Employee’s signing of this Agreement, the Employee may revoke Employee’s acceptance by delivering a written revocation to Xxxxxxx Xxxxxx Xxxxxxxx, who is the Chief Legal Officer, General Counsel and Secretary, for the Employer, via email at xxxxxxxxxx@XxxxxxxXXX.xxx. If the Employee timely revokes this Agreement, all of its provisions will be null and void. This Agreement will not be effective or enforceable and no Severance Amount will be provided to Employee until the expiration of the seven (7) day period for revocation has expired. Collectively, the twenty-one (21) day consideration period and seven (7) day revocation period shall be referred to as the “Release Consideration Period.” |
| c. | Knowing and Voluntary Execution. The Employee acknowledges that the Employee is hereby advised and encouraged to consult with an attorney of the Employee’s choice before signing this Agreement; that the Employee has carefully read and fully understands the terms and conditions of this Agreement in their entirety and is fully satisfied with its terms, including without limitation, the consideration to be paid to Employee by Employer; that the Employee has had an adequate opportunity to consider the Agreement; that the Employee knowingly and voluntarily assents to all the terms and conditions contained in this Agreement without any duress, coercion or undue influence by the Employer, its representatives, or any other person; that Employee has no pending claim, complaint, grievance with any federal or state agency or any court seeking money damages or relief against Releasees; that Employee is not waiving rights or claims that may arise after the date of this Agreement is executed and that the Employee is not suffering from any disability or condition that would render the Employee unable to enter into this Agreement. |
11. Non-Disparagement. To the extent permitted by law, each party affirms and agrees that it will not, at any time after the date hereof, make any remarks or comments, orally or in writing, to anyone, via media or otherwise, which remarks or comments reasonably could be construed to be derogatory or disparaging to any of the other party’s Releasees, or to any of the Employer’s current or former directors, officers, employees, products or services, or which comments reasonably could be anticipated to be damaging or injurious to the reputation or good will of same. The term “media” includes, without limitation, radio, television, film, internet, and social media such as Twitter and Facebook. This Section 11 does not in any way interfere with any Party’s right and responsibility to give truthful testimony under oath. Employee acknowledges that neither this provision nor any other portion of this Agreement is intended to prohibit Employee from making a truthful and accurate report to any governmental agency with oversight authority over the Releasees.
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12. Restrictive Covenants.
| a. | Non-Competition. Employee acknowledges that (i) the principal business of the Employer (which expressly includes for purposes of this Section 12 (and any related enforcement provisions hereof), its successors and assigns) is the business of providing inpatient and outpatient substance abuse treatment services and drug testing and diagnostic laboratory services related to addiction treatment throughout the United States (the “Business”); (ii) the Employee’s work for Employer and his service as the Chief Financial Officer of Holdings, Employer and their subsidiaries has given him access to the confidential affairs and proprietary information of the Employer; (iii) the covenants and agreements of the Employee contained in this Section 12 are essential to the business and goodwill of the Employer and/or Holdings; and (iv) the Employer and Holdings would not have entered into this Agreement but for the covenants and agreements set forth in this Section 12. Accordingly, the Employee covenants and agrees that, by and in consideration of the payment of the Severance Amount to be provided by the Employer and Holdings hereunder, the Employee covenants and agrees that, during the period commencing on the Separation Date and ending two years following the Separation Date and its affiliates (the “Restricted Period”), he shall not in the United States, directly engage in any element of the Business or otherwise compete with the Employer or its affiliates. Nothing in this section is intended, nor shall be interpreted, as prohibiting, precluding or restricting the Employee’s right or ability to act as an employee or consultant to any private equity, venture capital, consulting firm, law firm, investment banking, or commercial banking firm or institution. |
| b. | Non-Solicitation of Employer’s Employees, Marketing Sources and Contractor Relationships. In further consideration for the payment of the Severance Amount, the Employee agrees not to, during the Restricted Period, directly or indirectly, on the Employee’s behalf or on behalf of or in conjunction with any person or legal entity, hire or engage to perform services, or recruit, solicit, or induce, or attempt to recruit, solicit, or induce, to become hired or engaged to perform services, or to terminate their employment or independent contractor relationship with the Employer, any employee or independent contractor (specifically including without limitation, marketing or development sources and physicians) of the Employer. |
| c. | Return of Property; Confidential Information. Excluding the Employee’s laptop and table device, the Employee represents that the Employee has not retained, but rather has returned to the Employer, all property and business records of Releasees in any form and all copies of such records. To the extent such information was in electronic form and not subject to pending current litigation that the Employee is party to, the Employee represents that the Employee has irretrievably deleted it to the best of the Employee’s ability and will take no steps to retrieve it. The Employee also acknowledges that, in the Employee’s position with the Employer, the Employee had access to the Employer’s confidential information, including, without limitation, confidential client and treatment information, protected by 42 CFR Part 2, confidential financial records; financial and other plans; marketing methods and systems; advertising strategies and methods; strategic plans; databases; payroll |
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| information; information regarding suppliers; reports prepared by consultants; training materials; management and administrative systems; and other business information (collectively and separately, “Confidential Information”). The Employee agrees not to use or disclose such Confidential Information to any third parties for so long as it remains confidential to the public and to comply with all federal securities laws and trading policies of the Employer, as applicable. |
| d. | Consideration for Restrictive Covenants/Remedies. Employee acknowledges that he would not be entitled to any of the Separation Amount but for his entering into this Agreement. The Parties acknowledge and agree that of the total Separation Amount, Two Hundred Twenty-Five Thousand Dollars ($225,000) is being allocated as consideration for the Restrictive Covenants set forth herein. Therefore, among the remedies available to Employer and/or Holdings should the Employee breach any of the foregoing Restrictive Covenants will be the recovery of the consideration herein specifically allocated to those Restrictive Covenants, provided, however, under this sentence Employer shall be limited to recovering such consideration in an amount calculated on a pro rata basis for the applicable remaining Restricted Period. Employee also acknowledges that Employer and/or Holdings have the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Employee of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants. Employee further agrees that, in any action seeking specific performance or other equitable relief, he will not assert or contend that any of the provisions of this Section 12 are unreasonable or otherwise unenforceable. The existence of any claim or cause of action by the Employee, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. |
13. Cooperation. The Employee agrees that it is an essential term of this Agreement that the Employee cooperate with the Employer, Holdings, and all Releasees and its counsel at all times in any internal or external claims, charges, audits, investigations, and/or lawsuits involving the Employer, Holdings, and/or any other Releasee of which the Employee may have knowledge or in which the Employee may be a witness. Such cooperation includes meeting with the Employer representatives and counsel to disclose such facts as the Employee may know; preparing with the Employer’s counsel for any deposition, trial, hearing, or other proceeding; attending any deposition, trial, hearing or other proceeding to provide truthful testimony; and providing other assistance to the Employer and its counsel in the defense or prosecution of litigation as may, in the sole judgment of the Employer’s counsel, be necessary. The Employer agrees to reimburse the Employee for reasonable and necessary out-of-pocket expenses incurred by the Employee in the course of complying with this obligation, in each case that are pre-authorized by the Employer or Holdings. Nothing in this Section 13 should be construed in any way as prohibiting or discouraging the Employee from testifying truthfully under oath as part of, or in connection with, any such proceeding.
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14. Indemnification. To the full extent permitted by law, Holdings and Employer shall continue to defend, indemnify and hold harmless Employee pursuant to their current indemnification obligations set forth in their respective organizational documents and any and all insurance policies providing coverage to employees and officers of Holdings and Employer for any and all claims, lawsuits, judgments, expenses and/or other losses that have arisen due to his employment with Employer or serving as an officer of Holdings and/or Employer, or any subsidiary, including two pending civil actions and any action or proceeding that may be filed or initiated after the Separation Date that pertains to any period prior to the Separation Date.
15. No Precedent. The terms of this Agreement will not establish any precedent, nor will this Agreement be used as a basis to seek or justify similar terms in any subsequent situation involving persons other than the Employee. This Agreement may not be offered, used or admitted into evidence in any proceeding or litigation, whether civil, criminal, arbitral or otherwise for such purpose.
16. Attorneys’ Fees. If a party breaches any provision or obligation of this Agreement, the non-breaching party(ies) is entitled to recover from the breaching party all costs, including reasonable attorneys’ fees and expenses, incurred by it in enforcing this Agreement, whether by filing suit or otherwise.
17. Entire Agreement. This Agreement constitutes the entire understanding of the parties, supersedes all prior oral or written agreements on the subject matter of this Agreement and cannot be modified except by a writing signed by all parties, provided, however, nothing in this Agreement shall supersede or affect Employee’s rights pursuant to a Restricted Share Award Agreement or defense or indemnification pursuant to any governance and organizational document, insurance policy, or other indemnity agreement.
18. Choice of Law. This Agreement will be governed and construed under the laws of the State of Tennessee without regard to the conflict of laws principles of that state.
19. Exclusive Jurisdiction and Venue. The appropriate state or federal court in Xxxxxxxxxx County, Tennessee will be the exclusive jurisdiction and venue for any dispute arising out of this Agreement. The parties voluntarily submit to the jurisdiction of these courts for any litigation arising out of or concerning the application, interpretation or any alleged breach of this Agreement.
20. Binding Effect. This Agreement inures to the benefit of, and is binding upon, the parties and their respective successors and assigns.
21. Captions. The captions to the various sections of this Agreement are for convenience only and are not part of this Agreement.
22. Severability. If any provisions of this Agreement are determined to be invalid or unenforceable for any reason, such determination will not affect the validity of the remainder of this Agreement, including any other provision of this Agreement. If a court finds that any provision of this Agreement is invalid or unenforceable, but that modification of such provision will make it valid or enforceable, then such provision will be deemed to be so modified.
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23. Waiver. The waiver by either party of a breach by the other party of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by the party.
24. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute the same agreement.
25. Amendments. Any amendment to this Agreement must be in writing and signed by duly authorized representatives of each of the Parties hereto and must expressly state that it is the intention of each of the Parties hereto to amend the Agreement. No breach of any provision of this Agreement shall be deemed waived unless the waiver is in writing signed by a duly authorized representative of the waiving party. Waiver of any one breach shall not be deemed a waiver of any other breach of the same or any other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
| EMPLOYEE: | ||||||
| Date: November 9, 2017 | /s/ Xxxx X. Xxxx | |||||
| XXXX X. XXXX | ||||||
| EMPLOYER: | ||||||
| AMERICAN ADDICTION CENTERS, INC. | ||||||
| Date: November 9, 2017 | By: | /s/ Xxxxxxx X. Xxxxxxxxxx | ||||
| Name: | Xxxxxxx X. Xxxxxxxxxx | |||||
| Title: | Chairman and Chief Executive Officer | |||||
| HOLDINGS | ||||||
| AAC HOLDINGS, INC. | ||||||
| Date: November 9, 2017 | By: | /s/ Xxxxxxx X. Xxxxxxxxxx | ||||
| Name: | Xxxxxxx X. Xxxxxxxxxx | |||||
| Title: | Chairman and Chief Executive Officer | |||||
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