SEPARATION AGREEMENT, GENERAL WAIVER, AND RELEASE OF CLAIMS
Exhibit 10.1
SEPARATION AGREEMENT, GENERAL WAIVER, AND RELEASE OF CLAIMS
The following Separation Agreement, General Waiver, and Release of Claims (“Agreement”) is
made between Xxxx X. Xxxxxxx (“Xxxxxxx” or “Executive”), on the one hand, and Xxxxxx Healthcare,
Inc. (“Company”) and each and every past and present parent, subsidiary, associated, affiliated,
predecessor, and successor companies, and the agents, officers, directors, and owners of each, on
the other hand (collectively, the “Parties”).
RECITALS
A. Company employed Xxxxxxx as Chief Legal Officer, General Counsel, and Corporate Secretary
pursuant to an Amended and Restated Employment Agreement dated December 31, 2009 (“Employment
Agreement”).
B. By delivering Notice of Termination Without Cause to Xxxxxxx on July 29, 2010, Company
terminated Executive’s employment effective immediately.
C. The Parties desire to settle, fully and finally, all claims Xxxxxxx might have against
Company, up to and including the Effective Date of this Agreement, including without limitation
those claims arising out of or relating to Xxxxxxx’ employment or the termination of that
employment with Company.
NOW, THEREFORE, in consideration of the terms, conditions, and promises set forth herein, the
Parties agreed as follows:
1. Employment Separation, Resignation from Affiliated Positions, and Reporting
Obligation. Executive’s employment terminated effective July 29, 2010 (the “Termination
Date”). Effective immediately, Executive hereby resigns from any position he held with any of
Company’s affiliates. Company agrees that Executive is still insured under any and all applicable
insurance coverage including without limitation director and officer liability coverage, errors and
omissions coverage, and umbrella coverage. Company further agrees that its Form 8-k filing will
reflect that the Employment Agreement has terminated.
2. Consideration. In consideration for Executive’s signing and not revoking this
Agreement, and continued compliance with his obligations arising herein, Company shall provide
Executive with the following severance benefits on the terms and conditions set forth in paragraph
3:
x. Xxxxxxxxx Payment. The net sum of seven hundred and fifty thousand dollars ($750,000),
calculated as Executive’s Base Salary in effect on the Termination Date plus fifty percent of
Executive’s Base Salary in effect on the Termination Date (“Severance Payment”);
b. Pro Rata Bonus. The net sum of one hundred and forty five thousand eight hundred and
thirty three dollars and thirty three cents ($145,833.33), calculated as a pro rata portion of the
Termination Bonus based on the number of months Executive worked during the fiscal year prior to
the Termination Date (the “Pro Rata Bonus”);
Page 1 of 7
c. Health and Welfare Benefits. The net sum of sixty five thousand dollars ($65,000),
representing eighteen (18) months of health and welfare benefits. Executive and his family will
continue to have all applicable health and welfare benefits under COBRA;
d. Accelerated Vesting.
i. One hundred percent vesting of all of the previously granted equity compensation,
including, without limitation, shares of restricted stock, existing options, initial options, and
future equity compensation held by Executive as of the Termination Date (the “Equity
Compensation”); and
ii. The entirety of Executive’s contributions and the Company’s contributions to Executive’s
401(k) plan account, as if Executive were fully vested as of the Termination Date; and
e. Letter of Recommendation. J. Xxxxx Xxxxxx, M.D. agrees to provide Executive with a letter
of recommendation within seven (7) days of the Termination Date, and to cooperate with Executive to
ensure that the recommendation is mutually agreeable.
f. Phone retention. Company agrees to assign the Company-issued cell phone number
(000-000-0000) to Executive for his personal use following the Termination Date.
g. Attorney Fee Reimbursement. Company shall reimburse Executive for up to $5,000 for his
expenses in engaging legal counsel to review and negotiate this Agreement on his behalf. All
reimbursements to Executive by Company pursuant to this subsection (g) shall be in accordance with
Company’s expense reimbursement policy.
h. Outplacement Service. Within ten (10) business days of the Parties’ execution of this
Agreement, Company shall pay Executive the net sum of ten thousand dollars ($10,000) for
outplacement services on Executive’s behalf.
i. Deferred Compensation. The Company acknowledges that, pursuant to Section 4(d) of the
Employment Agreement, Executive is entitled to deferred compensation, and that nothing in this
Agreement affects his rights with respect to such deferred compensation.
3. Timing of Consideration. The Severance Payment and the Pro Rata Bonus shall be
distributed as follows:
a. the portion thereof that does not exceed the Exemption Limit shall satisfy the involuntary
separation pay exemption under Treasury Regulation Section 1.409A-1(b)(9)(iii), shall be exempt
from Section 409A of the Code, and shall be paid in a lump sum payment within the ten (10) day
period commencing on the 60th day after the Termination Date; and
b. the remaining portion (if any) shall be subject to and shall comply with Section 409A of
the Code and shall be paid in a lump sum payment within the ten (10) day period following the
earlier of (a) the expiration of the six (6) month period commencing on the Termination Date, or
(b) the date of Executive’s death.
Page 2 of 7
4. Tax Indemnification. Company shall issue 1099 forms to Executive for all amounts
set forth and paid pursuant to Paragraphs 2(a), 2(b), 2(c), 2(g), and 2(h). Executive acknowledges
that Company makes no representations or warranties with respect to the tax treatment of these
amounts by any local, state, or federal taxing authority. Executive agrees to indemnify and hold
harmless Company from any liability for any taxes, penalties, or interest that may be assessed by
any taxing authority due to the fact that Company made, or failed to make, withholdings or
deductions from these amounts.
5. No Consideration Absent Execution of this Agreement. Executive understands and
agrees that, pursuant to Section 12 of his Employment Agreement, he would not receive all of the
monies and/or benefits specified in Paragraph 2 above, except for his execution of this Agreement
and continued fulfillment of the promises contained herein.
6. Release of Claims against the Company and Others. Executive knowingly and
voluntarily releases and forever discharges, to the full extent permitted by law, the Company, its
parent corporations, affiliates, subsidiaries, divisions, predecessors, successors, and assigns and
the current and former employees, officers, directors, and agents thereof (“Released Parties”), of
and from any and all claims, known and unknown, asserted and unasserted, Executive has or may have
against Released Parties as of the date of execution of this Agreement, including without
limitation all actions, causes of action, grievances, obligations, costs, damages, losses, claims,
liabilities, suits, debts, demands, and benefits, of whatever character, in law or in equity, known
or unknown, suspected or unsuspected, of any kind or nature whatsoever, based on any act, omission,
event, occurrence, or nonoccurrence from the beginning of time to the Effective Date, including
without limitation any and all claims or causes of action, regardless of their nature and
regardless of whether they are brought under common law or statute, arising out of or in any way
relating to Executive’s employment or termination of employment with Company. Executive agrees
that this release of claims includes without limitation claims for breach of any implied or express
contract or covenant; claims for promissory estoppel; any claim for attorneys’ fees; claims of
wrongful denial of insurance and employee benefits, including but not limited to claims for
wrongful denial of disability benefits or retirement benefits under Company’s benefit plans, or any
other plan; claims relating to the issuance, vesting, or exercise of any stock grants; claims for
wrongful termination; public policy violations; defamation, invasion of privacy, fraud,
misrepresentation, emotional distress or other common law or statutory causes of action; claims of
harassment, retaliation, or discrimination under federal, state, or local law; claims based on any
federal, state, or other governmental statute, regulation, or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866,
the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act,
the Equal Pay Act, the Employee Retirement Income Security Act of 1974, the California Fair
Employment and Housing Act, the California Family Rights Act, the California Labor Code, the
California Business and Professions Code, the California Government Code and/or the California
Constitution. To the extent permitted by law, Executive also releases any and all claims he may
have that arose prior to the Effective Date under the Family and Medical Leave Act and the Fair
Labor Standards Act.
This release does not limit Executive’s right, where applicable, to file or participate in an
investigative proceeding of any federal, state, or local governmental agency. To
Page 3 of 7
the extent permitted by law, Executive agrees that if such an administrative claim is made, he
shall not be entitled to recover any individual monetary relief or other individual remedies.
Executive agrees that the release set forth in this paragraph shall be and remain in effect in
all respects as a complete general release as to the matters released. This release does not
extend, however, to any future claims Executive may have for breach of this Agreement.
7. Civil Code Section 1542. Executive represents that that he is not aware of any
claim not released by this Agreement. Executive acknowledges that he is familiar with the
provisions of California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Executive, being aware of said code section, agrees to expressly waive any rights he may have
thereunder, as well as under any other statute or common law principles of similar effect.
8. Acknowledgment of Waiver of Claims under ADEA. Pursuant to the Age Discrimination
in Employment Act and the Older Workers Benefit Protection Act, Executive acknowledges that he has
been advised to consult with counsel prior to signing this Agreement and that he has been given a
period of sixty (60) days to consider the terms of this Agreement and, if Executive should execute
it prior to the expiration of the sixty day consideration period, knowingly waives his right to
consider this Agreement for sixty days. This release does not extend to claims that as a matter of
law cannot be waived. The Parties acknowledge that Executive may, for a period of seven (7) days
following the execution of this Agreement, revoke acceptance thereof. This revocation must be done
in writing and delivered to:
Xxxxx X. Xxxxx
Xxxxxx Xxxxx & Xxxxxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Xxxxxx Xxxxx & Xxxxxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
before the close of business on the seventh day.
9. Continuing Obligations. The Parties understand and agree that certain of their
obligations under the Employment Agreement are ongoing and enforceable beyond the Termination Date,
including without limitation the Confidentiality provision in Section 10 and the Non-Solicitation
and Non-Disparagement provisions in Section 11 which the Parties hereby incorporate by reference.
The Parties also understand and agree that their reaffirmation of those obligations below, and
promise to continue to abide by them, is a material inducement for the Parties to enter into this
Agreement. Executive understands that Company’s obligation to pay the severance benefits outlined
above in Paragraph 2, and his right to retain those severance benefits, is conditioned on his
compliance with his continuing obligations to the Company.
Page 4 of 7
10. Cooperation in Litigation. Following the Termination Date, Executive agrees to
make himself reasonably available to provide information and assistance to the Company in any
disputes, lawsuits, or complaints brought against the Company by third parties, including without
limitation making himself reasonably available to provide testimony and serve as a witness, and
subject to reimbursement of his reasonable expenses incurred in having to provide testimony and
serve as a witness. The Parties further agree that neither will knowingly counsel or assist any
attorneys or their clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against the other, unless under a
subpoena or other court order to do so, or as required by law. Nothing in this paragraph shall
preclude or restrict in any way the Company or Executive from cooperating with, or assisting in,
any governmental, administrative, or regulatory investigation, inquiry, or review of the other
party. Except as precluded by law, or at the request of any governmental, administrative, or
regulatory agency or office that disclosure not occur, Executive agrees both to immediately notify
the Company upon receipt of any such subpoena or court order, and to furnish, within three
(3) business days of its receipt, a copy of such subpoena or court order to the Company.
11. Breach of this Agreement. Executive acknowledges that upon material breach of
any provision of this of this Agreement, the Company would sustain irreparable harm from such
breach, and, therefore, Executive agrees that in addition to any other remedies which the Company
may have for any material breach of this Agreement or otherwise, the Company shall be entitled to
obtain equitable relief including specific performance, injunctions, and restraining Executive from
committing or continuing any such violation of this Agreement.
12. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Executive represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Agreement. Each party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.
13. No Representations. Neither party has relied upon any representations or
statements made by the other which are not specifically set forth in this Agreement.
14. Severability. In the event that any provision hereof becomes or is declared by a
court or other tribunal of competent jurisdiction to be illegal, unenforceable, or void, this
Agreement shall continue in full force and effect without said provision.
15. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Executive concerning the subject matter of his separation
from the Company, and supersedes and replaces any and all prior agreements and understandings
concerning Executive’s employment relationship with the Company, other than those sections of the
Employment Agreement which contain or refer to the Parties’ continuing obligations.
Page 5 of 7
16. No Oral Modification. This Agreement may only be amended in writing signed by
Executive and the Company’s Chief Executive Officer.
17. Governing Law. The laws of the State of California shall govern this Agreement,
without regard to its conflicts of law provision.
18. Consent to Jurisdiction and Forum Selection. The Parties agree that all disputes
arising out of or relating to this Agreement shall be filed and litigated exclusively in the state
and federal courts located in Sacramento, California. The Parties intend this choice of venue to
be mandatory and not permissive in nature, thereby precluding the possibility of litigation between
the parties with respect to or arising out of this Agreement in any jurisdiction other than that
specified in this paragraph. The Parties hereby waive any right they may have to assert the
doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this paragraph, and stipulate that the state and federal
courts located in Sacramento, California shall have in personam jurisdiction and venue over each of
them for the purpose of litigating any dispute, controversy, or proceeding arising out of or
related to this Agreement. Any final judgment rendered against a party in any action or proceeding
shall be conclusive as to the subject of such final judgment and may be enforced in other
jurisdictions in any manner provided by law.
19. Effective Date. This Agreement shall not become effective until the expiration of
this seven-day revocation period described in Paragraph 8 (“Effective Date”).
20. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall constitute an effective
binding agreement on the part of each of the undersigned.
21. Assignment. The Parties may not assign any rights under this Agreement without
the prior written consent of the other party. Notwithstanding the foregoing, the Company may
assign this Agreement to a corporation controlling, controlled by, or under common control with the
Company without Executive’s consent.
22. No Admission of Wrongdoing. Executive and the Company agree that neither the
existence of this Agreement nor the general release nor the furnishing of the consideration for
this release shall be deemed or construed at anytime for any purpose as an admission by the Parties
of any liability or unlawful conduct of any kind.
23. Indemnification. Company agrees to defend, indemnify, and hold Executive harmless
from any and all claims, demands, lawsuits, and causes of action arising out of Executive’s
employment with Company, provided such claims, lawsuits, or causes of action are directly related
to Executive’s performance of his duties for Company, unless Executive, at the time of performing
those duties, believed his actions to be unlawful.
24. Headings. The headings contained in the Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
Page 6 of 7
25. Voluntary Execution of Agreement. The Parties execute this Agreement voluntarily
and without any duress or undue influence. The Parties acknowledge that:
a. they have read this Agreement;
b. they have been represented in the preparation, negotiation, and execution of this Agreement
by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;
c. they understand the terms and consequences of this Agreement and of the releases it
contains; and
d. they are fully aware of the legal and binding effect of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.
Date:
July 29, 2010
|
Xxxxxx Healthcare, Inc. | |||
| /s/ J.
Xxxxx Xxxxxx, M.D. |
||||
| Chairman, President, and Chief Executive Officer | ||||
Date:
July 29, 2010 |
||||
| /s/ Xxxx
X. Xxxxxxx |
Page 7 of 7
