EXHIBIT 10.1
MUTUAL SEPARATION AGREEMENT
This Mutual Separation Agreement ("Agreement") is made and entered as
of October 18, 2002, by and among Advocat Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X Xxxxxxx, M.D. (hereinafter "Employee").
W I T N E S S E T H:
WHEREAS, Employee has been employed by Company as Chief Executive
Officer; and
WHEREAS, Company and Employee have agreed to mutually terminate their
employment relationship;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to the following terms and conditions governing
the termination of Employee's employment from Company:
1. Last Day of Employment and Termination of Employment
Agreement. Employee's last day of employment with Company shall be October 18,
2002. Employee and the Company acknowledge and agree that both parties are
subject to a certain Employment Agreement dated May 14, 1994 (the "Employment
Agreement") and that in consideration of the payments and other consideration
set forth herein, the Employment Agreement shall terminate effective as of the
date set forth above and, as of the effective date, the Employment Agreement
shall be void and have no further effect, except that the provisions of Section
IX(B) and the last sentence of IX(C) shall survive the termination and shall be
enforceable as written. The provisions of paragraph 2 of this Agreement shall
supercede and replace the provisions of Sections VIII and XI in their entirety.
2. Severance Payment. In consideration of the promises contained
herein and of Employee's service, Company agrees to pay Employee (i) a lump sum
amount of $196,570.54 payable upon the execution of this Agreement. In addition,
the Company agrees to pay to Employee $24,571.32 per pay period for a period of
twelve (12) pay periods, beginning on November 8, 2002 each of which payment
will be less normal withholding and is to be paid with the normal payroll. No
further salary, vacation, sick pay, fringe benefits or other payments beyond
those contemplated by or described in this paragraph, or in paragraph 3 below
shall be made by Company to Employee.
3. COBRA Continuation Coverage. Employee has been covered under a
group medical or health benefits plan while employed by Company. Employee shall
have a right to continue such coverage in accord with the provisions of COBRA.
Employee may exercise the option of continuing such coverage consistent with,
for the duration allowed by, and under the conditions imposed under applicable
federal and state laws. If
Employee elects to continue COBRA benefits, Company will pay the cost of such
health insurance benefits during the period Employee is receiving severance pay
from Company (six months). Thereafter, Employee will bear the expense of such
benefits. Company shall provide Employee with a standard "COBRA" letter
providing further details concerning Employee's health insurance continuation
rights.
4. Release from Non-Compete Agreement Any and all non-compete
clauses, as set forth in the Employment Agreement, shall be void and have no
effect as of the signing of this Agreement other than Section VIII(B) and the
last sentence of Section VIII(C), which shall remain in effect.
5. Stock Option Agreement. Employee presently participates in a
stock option plan and the Company agrees that all outstanding options granted to
Employee under the Company's stock option plan shall be fully vested as of the
date of this Agreement. Employee shall have one year from the date of this
Agreement to exercise any of his options, after which date all such options
shall terminate and no longer be exercisable.
6. Transfer of Employee 401(k) Accounts. If requested in writing
by Employee, Company shall, as and to the extent permitted by applicable law,
transfer Employee's 401(k) plan to an account designated by Employee.
Notwithstanding the foregoing, no unvested amounts shall be transferred to
Employee.
7. Release of all Claims. In consideration of the foregoing
actions taken, or to be taken by Company, each party promises to irrevocably and
unconditionally waive, release, and forever discharge the other party from all
rights, claims, and liability, whether or not they are presently known to exist,
that each party has, had, or may have against the other party arising out of or
relating in any manner to Employee's employment and/or separation from
employment with the Company. The rights and claims that Employee waives,
releases, and discharges include, to every extent allowed by law, but are not
limited to those arising under the Age Discrimination in Employment Act of 1967,
the Older Workers' Benefit Protection Act, the Civil Rights Acts of 1866, 1871,
1964 and 1991, the Immigration Reform and Control Act of 1986, the Occupational
Safety and Health Act, the Americans with Disabilities Act, the Equal Pay Act of
1963, the Employee Retirement Income Security Act, the Family and Medical Leave
Act of 1993, and the Comprehensive Omnibus Budget Reconciliation Act. This is
not a complete list, and Employee waives, releases, and discharges all other
rights and claims Employee has, had, or may have under all other federal, state
and local laws, regulations and ordinances, including but not limited to
statutory and common law contract, tort, and/or wrongful discharge claims
arising out of or relating in any manner to Employee's employment and/or
separation from employment with the Company. Similarly, Company waives,
releases, and discharges all rights and claims Company has, had, or may have
under any federal, state and local laws, regulations and ordinances, including
but not limited to statutory and common law contract or tort claims arising out
of or relating in any manner to Employee's employment and/or separation from
employment with the Company. The foregoing language notwithstanding, the Company
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and Employee acknowledge that this section does not apply to any rights, claims
or liability either party has, had, or may have against the other party arising
out of or relating to a material breach of this Agreement.
8. Released Parties. The parties agree that for the purposes of
this Agreement all references to (i) Advocat Inc. or the Company should be
understood to mean not only Advocat Inc., itself, but also all current, past and
future parent companies, subsidiary companies and affiliated companies of
Advocat Inc., as well as all current, past and future officials, employees,
agents, representatives, officers, directors, attorneys, shareholders,
successors and assigns of Advocat Inc. and its current, past and future parent
companies, subsidiary companies and affiliated companies, and all persons acting
by, through, under or in concert with any of them and (ii) Employee shall be
understood to mean Employee and his heirs and representatives, and their
successors and assigns (collectively referred to as "Released Parties").
9. Covenant Not to Xxx or Bring Other Claims. Employee represents
that Employee has no employment discrimination or other complaints or charges
against Company or the Released Parties pending before any local, state or
federal court, tribunal or administrative agency. Employee further represents
that Employee shall not file any such complaints or charges at any time
hereafter against the Released Parties, except as it may relate to a breach of
this Agreement, and that, if any such court, tribunal or agency assumes or has
assumed jurisdiction over any such complaint or charge, Employee shall promptly
request in writing that the court, tribunal or agency withdraw the matter.
10. Confidentiality. Employee hereby agrees that the terms of this
Agreement shall remain STRICTLY CONFIDENTIAL and that Employee shall not
disclose the benefits Employee has received, or will receive, from Company
pursuant to the terms of this Agreement to any other person including, without
limitation, any future, current, or former employee of, or applicant for
employment with, Company, but excluding Employee's immediate family, and legal
and tax advisors, if any, unless compelled to do so by judicial or
administrative process. The foregoing representation is a material term and
condition of this Agreement.
11. Governing Law and Venue. This Agreement shall be interpreted
under the laws of the State of Tennessee. The parties hereto submit to the
jurisdiction of any federal or state court of competent jurisdiction sitting in
the State of Tennessee over any suit, action or proceeding arising out of or
relating to this Agreement.
12. Entire Agreement. This Agreement contains the entire
understanding between the parties concerning the subject matter hereof and it
may be amended or modified only by another writing executed by both parties.
There have been no offers or inducements with respect to the execution of this
Agreement by Employee except as set forth herein.
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13. Employee and the Company each represent and agree that:
a. They have carefully read and fully understand this
Agreement.
b. They have had the opportunity to discuss thoroughly
all aspects of this Agreement with their legal counsel.
c. They are voluntarily entering into this Agreement of
their own free will, free of any coercion, pressure or duress. They are
knowingly releasing in accordance with the terms contained herein. Should
Employee ever attempt to challenge this Agreement, Employee shall as a
precondition return to Company all consideration provided to Employee hereunder.
d. Employee acknowledges that the Company informed
Employee that he had 21 days to consider this Agreement before signing. The
Company has also informed Employee that for a period of 7 days after the date
upon which Employee signs this Agreement, Employee may revoke it. Employee
further acknowledges understanding that if Employee revokes this Agreement,
Employee will lose all benefits of this Agreement and must return any payments
that have been made.
14. Cooperation, Mutual Respect, No Disparagement. The parties
agree that certain matters which Employee was involved in during his period of
employment may necessitate Employee's cooperation in the future. Employee agrees
to cooperate with all reasonable requests of Company for such assistance in the
future provided that the Company may not make any such requests after one (1)
year from the effective date of this Agreement. In the event that Employee
cooperates with the Company's requests, and provided that such requests require
more than an insubstantial effort on behalf of Employee, the Company shall
compensate Employee for such efforts at Employee's then prevailing rates. Each
party agrees to mutually respect the other and to refrain from making any
disparaging comments about the other or disparaging the business of the other.
15. No Admission. Each party acknowledges that this document does
not constitute an admission by the other party of any unlawful act or of any
violation of any statute, regulation or other provision of statutory, regulatory
or common law.
16. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their heirs, estates, successors and
assigns, their affiliates, employees, directors, officers, shareholders, and
agents.
17. Notices. Any notice or communication required or permitted to
be given hereunder shall be deemed to have been properly given when received,
addressed as follows (or to such other addresses as the parties may specify by
due notice to the others):
Company:
Advocat Inc.
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000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Employee:
Xxxxxxx X. Xxxxxxx, M.D.
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18. Counterpart Copies. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same.
19. Legal Fees and Costs. In the event any party hereto elects to
incur legal expenses to enforce or interpret any provision of this Agreement,
the prevailing party will be entitled to recover such legal expenses, including
without limitation, attorney's fees, costs and necessary disbursements, in
addition to any other relief to which such party shall be entitled.
ADVOCAT INC
By: /S/ Xxxxxxx X. Council III
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Title: CEO/CFO
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EMPLOYEE:
/S/ Xxxxxxx X. Xxxxxxx, M.D.
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Xxxxxxx X. Xxxxxxx, M.D.
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