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EXHIBIT 10.76
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is entered into on December __, 1998 to be
effective as of October 16, 1998 by and between AMERICAN HOMEPATIENT, INC., a
Delaware corporation (the "Company"), and XXXX X. XXXX, a resident of the State
of Tennessee (the "Employee").
WHEREAS, the Company has agreed to pay the Employee certain severance
benefits in connection with termination of her employment under the terms and
conditions set forth herein and in exchange for the Employee's agreements
contained herein; and
WHEREAS, in her position as an employee of the Company, the Employee
has had access to confidential information and trade secrets of the Company and
has 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.
1.1 Termination. The parties agree that the Company's employment of
the Employee will be deemed terminated at the close of business on October 16,
1998 (the "Termination Date"). Accordingly, the Employee hereby resigns as an
officer of the Company and all of its subsidiaries and relinquishes all powers
and rights associated therewith (except as expressly set forth herein), and the
Company hereby accepts such resignation, on behalf of itself and its
subsidiaries, effective as of the Termination Date.
1.2 Severance Pay; Benefits.
(a) The Company will pay the Employee, as a severance payment, an
amount equal to the sum of (i) twelve (12) times the sum of her current monthly
base salary (not including incentive compensation or benefits), plus (ii) twelve
(12) times her monthly $500.00 vehicle allowance (exclusive of gasoline and oil
expense reimbursements). Employee acknowledges that the Company has, as of the
date of execution hereof, already made four (4) payments to the Employee
pursuant to this obligation, and the Company agrees to continue to make such
payments in equal bi-weekly installments in accordance with the Company's
standard payroll practices. In addition, subject to paragraph 6(c), between
January 4, 1999 and January 8, 1999, the Company will pay the Employee the lump
sum of Fifty Thousand and No/100 Dollars ($50,000.00) in lieu of any incentive
compensation.
(b) Subject to paragraph 6(c), Company will continue medical and
dental insurance employee benefits to which Employee was entitled immediately
prior to the Termination Date until the earlier of (i) twelve (12) months
following the Termination Date or (ii) the date or
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dates on which Employee receives, as an employee, independent contractor or
agent, medical, dental and/or life insurance benefits from a third party. The
parties hereby acknowledge that COBRA coverage eligibility for Employee will
commence immediately upon cessation of such benefits. Company will provide
Employee such director and officer liability insurance coverage as it may from
time to time provide its officers (including but not limited to if new such
insurance is obtained) until such time as Employee is no longer subject to
claims as an officer of Company. Company acknowledges that Employee is entitled
to her individual account balances with respect to the Company's Supplemental
Executive Retirement and Stock Purchase Plans as the balances exist as of the
Termination Date. Moreover, Company agrees to accelerate Employee's vesting
schedule under the Company's Supplemental Executive Retirement Plan so that her
Employer Contribution Account is fully vested and not subject to forfeiture as
of the Termination Date. This Agreement will inure to the benefit of and be
enforceable by Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amounts are still payable to her hereunder, all
such amounts, unless otherwise provided hereunder or under the terms of
governing insurance or other documents, will be paid in accordance with the
terms of this Agreement to Employee's devisee, legatee or other designee or, if
there be no such designee, to Employee's estate.
1.3 Options. The parties acknowledge that Company has granted
Employee under Company's 1991 Nonqualified Stock Option Plan (the "1991 Option
Plan") options to acquire, in the aggregate, seventy-two thousand (72,000)
shares of Company common stock, the majority of which options are vested. The
Company hereby agrees that the options regarding sixteen thousand (16,000)
shares of Company common stock not previously vested will vest as of the
Termination Date. Further, the Company hereby agrees to extend the term in which
Employee may exercise all options granted to her until the close of business on
October 15, 2001. Although not anticipated, in the event the Company, through
one or more transactions, reprices options issued under the 1991 Option Plan to
the Company's Chief Executive Officer, any of the Company's Senior Vice
Presidents, or any member of the Company's Board of Directors at any time prior
to October 15, 2001, the options held by the Employee will simultaneously be
repriced on identical terms.
1.4 Transitional Consulting Agreement. The parties agree that
for a period of up to twenty-four (24) months from the Termination Date (the
"Consulting Period"), Company will retain Employee as a consultant to provide
services on an "as-needed" basis to assist in transition associated with
termination of Employee's employment. For such consulting services, Company will
pay a fee of Twenty-Four Thousand and No/100 Dollars ($24,000.00), payable over
the first twelve (12) months of the Consulting Period in equal amounts in
accordance with the Company's standard payroll practices. Employee acknowledges
and agrees that even though the fees under this paragraph 1.4 will be fully paid
one year from the Termination Date, Employee's consulting responsibilities will
continue for two (2) years. During the Consulting Period, Employee will not be
entitled to receive, and will not receive, any benefit provided by the Company
or any of its affiliates to employees except as expressly stipulated in
paragraphs 1.2 and 1.3 of this Agreement. The Company hereby acknowledges that
Employee may have other commitments during the Consulting Period, including but
not limited to full-time employment. Accordingly, the performance of duties
under this paragraph 1.4 will not be inconsistent with Employee's ability to be
employed on a full-time basis elsewhere. In other words, the Company will not
require a prescribed minimum
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amount of time to the performance of Employee's duties hereunder, while Employee
will devote such time as reasonably necessary to perform her duties hereunder.
Additionally, the Company will not be responsible for deducting or withholding
any taxes or other assessments from any monies paid to Employee as a consultant
under this paragraph 1.4. The parties acknowledge and agree that Employee is to
act as a consultant and advisor to Company and not as an agent or employee in
any respect. Accordingly, the Employee will have no right, authority or power to
act for or on behalf of Company or its affiliates except as Company may
specifically grant.
1.5 Provision of Outplacement Services in Consideration of Release
of Age Discrimination Claims. Although Employee has never raised an age
discrimination issue, in order for this Agreement to embody a release of all
claims as contemplated by both parties, federal law stipulates that Employee
specifically release any potential claims on the basis of age discrimination.
Therefore, in consideration for such release and in addition to the
consideration provided in Paragraph 1.2 above, the Company will give Employee
the laptop computer she has been using in the performance of her duties and will
pay up to Ten Thousand and No/100 Dollars ($10,000.00) for services provided in
the "Individual Outplacement Services" program as provided by Xxxxxxx Xxxxxxxxxx
& Associates during the twelve (12) month period immediately following the
Termination Date. The Employee may, within three (3) weeks of the date of this
Agreement, elect to use comparable services of another agency and receive
reimbursement from the Company on the same basis set forth in the preceding
sentence, subject to the Company's prior written approval of such alternative
agency and services, which approval will not be unreasonably withheld.
2. Confidentiality, Non-Compete and Other Covenants.
2.1 Confidentiality.
(a) Employee hereby agrees and acknowledges that she has had access
to or is aware of certain confidential, restricted and/or proprietary
information concerning operation by Company of its health care business (the
"Business"). Further, Employee hereby represents to the Company that she has
allowed Company to reformat the laptop computer referenced in Section 1.5 and
has delivered to Company all memoranda, notes, records, drawings, discs,
computer software, manuals or other documents and materials, including all
copies thereof, containing "Trade Secrets" or "Confidential Information" (each
as defined below), whether compiled or created by Employee or furnished to her.
Employee hereby undertakes and agrees that she shall have a duty to Company to
protect such information from use or disclosure.
(b) For the purposes of this Section 2.1, the following definitions
shall apply:
(i) "Trade Secret" as related to the Business, shall mean any
specialized technical information or data relating to (w) procurement
of medical equipment and other inventory for resale; (x) marketing
strategy or plans of Company or its affiliates; (y) proprietary
computer software; and (z) terms of contracts with suppliers,
employees and principal customers of Company which are not generally
known to the competitors of Company.
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(ii) "Confidential Information," as related to the Business,
shall mean any data or information, other than Trade Secrets, which is
material to Company or its affiliates and not generally known by the
public. Confidential Information shall include, without limitation,
any information pertaining to the Business Opportunities (as
hereinafter defined) of Company, the details of this Agreement, and
the business plans, financial statements and projections of the
Company. Confidential Information does not include information which
(x) is or becomes generally available to the public other than as a
result of disclosure by Employee or disclosure by another person,
other than Company, who is prohibited from disclosing such
information, (y) was available to Employee on a non-confidential basis
prior to her employment by Company, or (z) becomes available to
Employee on a non-confidential basis from a person other than Company
who is not prohibited from disclosing the information publicly.
(iii) "Business Opportunity" shall mean any information or plans
of Company concerning the purchase of or investment in any retail
outlets, stores, distribution centers or similar service facilities in
the field of health care, or the availability of any such outlets for
purchase or investment by Company, together with all related
information, concerning the specifics of any contemplated purchase or
investment (including price, terms and the identity of such outlet),
regardless of whether Company has entered any agreement, made any
commitment, or issued any bid or offer to such outlet or other
facility.
(c) Employee shall not, without the prior written consent of
Company and except as required by law, use or disclose, or negligently permit
any unauthorized "Person" who is not an employee of 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.
(d) Following the Termination Date, Employee will, with reasonable
notice, furnish information as may be in her possession and cooperate fully with
Company as may reasonably be requested in connection with any claims,
investigations, or legal actions or other disputes in which the Company is or
may become a party. Company will reimburse Employee for out-of-pocket expenses
she actually incurs in order to satisfy her obligations under this clause (e).
2.2 Non-Competition and Non-Solicitation. For a twelve (12) month
period following the Termination Date, (i) Employee will not make any statements
or perform any acts intended to advance the interest of any existing or
prospective competitor of Company in any way that will injure the interests of
the Company; and (ii) Employee will not directly or indirectly own or hold any
"Proprietary Interest" in or be employed by or receive compensation from any
party engaged in the same or any similar business within fifty (50) miles of any
location of Company existing as of the Termination Date. Employee will not, now
or hereafter, make any disparaging comments to any patient, customer, health
care provider, vendor, or any other Person with whom Company does business, nor
will Employee derive, directly or indirectly, any economic profit or benefit as
a result of any such disparaging comments. For a twelve (12) month period
following the Termination Date, (i) Employee will not solicit any client of
Company or discuss with any client of Company or any employee of Company any
information concerning the operation of any business
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intended to compete with the Company; and (ii) Employee will not, directly or
indirectly, hire any Person now or hereafter employed by Company, or solicit or
encourage any such employee to leave the employ of Company; provided, however,
that beginning twelve (12) months after the Termination Date, Employee may hire
a past employee of Company but only so long as such past employee has not been
so employed for at least six (6) months. For the purposes of this Agreement,
"Proprietary Interest" means legal or equitable ownership, whether through stock
holdings or otherwise, of a debt or equity interest (including options,
warrants, rights and convertible interests) in a business firm or entity, or
ownership of more than 5% of any class of equity interest in a publicly-held
company. Employee acknowledges that the covenants contained herein are
reasonable as to geographic and temporal scope.
2.3 Remedies. Employee acknowledges that her breach or threatened or
attempted breach of any provision of Section 2 of this Agreement would cause
irreparable harm to Company not compensable in monetary damages and that Company
shall be entitled, in addition to all other applicable remedies, to 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. Nothing herein contained will be construed as
prohibiting 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 Section 2 of this
Agreement, the term "Company" refers to American HomePatient, Inc., a Delaware
corporation, and each corporation, limited liability company, partnership, joint
venture or other business entity in which American HomePatient, Inc. directly or
indirectly has an ownership interest.
3. Releases; Covenant Not to Xxx.
3.1 General Release. Employee hereby fully and forever releases
Company, its successors and assigns, affiliates, insurers, officers, directors,
employees and agents, from any and all liability, causes of action, suits,
damages, claims and demands whatsoever that Employee may have and that arise
from or relate in any way to her employment with Company or the conduct of
Company's business through the date hereof.
3.2 ADEA Release. Employee specifically releases Company and the
other related parties included in paragraph 3.1, 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"). 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 she will not
initiate or bring any proceeding, suit, claim, or administrative proceeding
against Company, its affiliates, agents, employees, officers, successors and
assigns arising out of or in any way related to her employment by Company or the
conduct of Company's business prior to the date hereof. Employee further
covenants that she will not, without Company's prior written consent unless
required to do so by means of a valid court order or subpoena, cooperate with
any Person in the institution or prosecution
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of any such proceeding, suit, claim or investigation brought, initiated or
conducted by any Person against Company, its affiliates, agents, employees,
officers, successors and assigns. Employee further covenants that she will
notify Company immediately in the event she is contacted by any Person regarding
any pending or contemplated proceeding, suit, claim or investigation involving
Company, its affiliates, agents, employees, officers, successors and assigns.
4. Exit Interview. The parties will engage in an exit interview to
address issues relating to the operations of Company and Employee's employment.
Employee hereby represents and warrants that in such exit interview she will
inform Xxxxxx X. Xxxxxxx, III, President and Chief Executive Officer, and
Company counsel of all violations of law, if any, known by Employee to have been
committed by or on behalf of Company and/or its affiliates.
5. No Obligation to Mitigate. Employee will not be required to mitigate
the amount of any payments provided for under this Agreement by seeking other
employment or otherwise. Other than with respect to the medical and dental
insurance benefits noted in Section 1.2(b), no payment provided for under this
Agreement will be reduced by any compensation earned by Employee as a result of
employment by another employer or otherwise after the Termination Date.
6. Agreement is Voluntary and Knowing.
(a) Employee acknowledges she 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 Company.
(b) Employee is voluntarily entering into this Agreement, of her own
free will, free of any coercion, pressure or duress. She is knowingly releasing
Company in accordance with the terms contained herein. Employee further
acknowledges that she is receiving consideration beyond anything of value to
which she is already entitled. Should Employee ever attempt to challenge this
Agreement, Employee shall as a precondition return to Company all consideration
provided to Employee hereunder.
(c) Employee shall have up to twenty-one (21) days in which to
consider this Agreement. After the execution of this Agreement, Employee shall
have an additional seven (7) days to revoke this Agreement. Therefore, this
Agreement will become final on the eighth (8th) day after Employee has executed
it. Notwithstanding any other provision hereof to the contrary, other than the
second sentence of Section 1.2(a). No consideration will be paid to Employee
until this Agreement becomes final.
7. Successors and Assigns. The provisions hereof shall inure to the
benefit of and be binding upon the permitted successors and assigns of the
parties hereto. Company will require any successor or assign (whether direct or
indirect by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to unconditionally
assume and agree to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no such succession or
assignment had taken place. Notwithstanding the
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foregoing, the rights and obligations of Employee hereunder are not assignable,
other than as noted in the last two (2) sentences of Section 1.2(b), 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
thereby.
9. Waivers. The waiver of a breach by either party of a 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 terms or provisions of this Agreement at any time or times.
10. 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.
11. Exclusiveness. This Agreement constitutes the entire understanding
and agreement between the parties with respect to the employment and severance
arrangements of the 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.
12. 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.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when mailed
first-class postage prepaid by registered mail, return receipt requested, or
when delivered by hand, overnight delivery service or confirmed facsimile
transmission, to the following:
A. If to 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 the Employee by the Company in
writing; or
B. If to Employee, at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx,
00000, or such other address as may have been furnished to the Company by the
Employee in writing.
14. Consolidation, Merger or Sale of Assets. Nothing in this Agreement
shall preclude Company from consolidating or merging into or with, or
transferring all or substantially all of its
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assets to, another individual, entity or business that assumes this Agreement
and all obligations of the Company hereunder.
15. 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
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
AMERICAN HOMEPATIENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
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Its: President and Chief Executive Officer
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"EMPLOYEE"
/s/ Xxxx X. Xxxx
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XXXX X. XXXX
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