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Exhibit
10.1
SEPARATION
AGREEMENT
AND FULL AND FINAL
RELEASE
This Separation Agreement and
Full and Final Release (the “ Agreement ”) is
made and entered into by and between Greg Eveland (hereinafter
referred to as the “ Executive ”) and Walco
International, Inc. (hereafter referred to as the “
Company ”). Animal Health International, Inc.
(hereinafter referred to as “ AHII ”) is a party
to this Agreement solely for the purposes expressly stated
below.
WHEREAS, the Executive and
the Company previously entered that certain Employment Agreement
dated September 1, 1997, as amended on June 30, 2005 (the
“ Employment Agreement ”);
WHEREAS, pursuant to the
Animal Health International, Inc. 2007 Stock Option and Incentive
Plan (the “ Stock Option Plan ”), AHII granted
to the Executive an option to purchase 125,000 shares of AHII stock
subject to the terms of that certain Incentive Stock Option
Agreement (the “ Stock Option Agreement ”)
entered into between AHII and the Executive dated January 30,
2007; and
WHEREAS, the parties desire
to amend certain terms of the Employment Agreement to facilitate
the Executive’s transition from the Company, and extend
certain obligations of the Executive as specified
herein.
NOW THEREFORE, in exchange
for the valuable consideration paid or given under this Agreement,
the receipt, adequacy, and sufficiency of which is hereby
acknowledged, the parties knowingly and voluntarily agree to the
following terms:
| 1. |
Notice of Termination Without Cause; Termination Date;
Effect of Termination. |
Pursuant to Section 5.4
of the Employment Agreement, the Company has, by this paragraph,
provided the Executive with written notice that it is terminating
the Employment Agreement and his employment without Cause (as
defined in the Employment Agreement). The Executive’s
employment with the Company and the Employment Agreement shall be
terminated effective October 1, 2007 (the “
Termination Date ”). Effective as of the Termination
Date, the Employee hereby resigns from all corporate, board, and
other offices and positions he held with the Company and all of its
subsidiaries and affiliates.
| 2. |
Final Pay and Benefits. |
The Executive acknowledges
that he has received, or will receive, the following payments and
benefits in accordance with the Company’s existing policies,
or at the Company’s discretion, pursuant to his employment
with the Company and his participation in the Company’s
benefit plans:
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a. |
Payment of his regular base salary through the Termination
Date. This amount is a gross amount, subject to applicable
deductions and withholdings, and will be paid to the Executive on
or before the Company’s first regularly scheduled payday
after the Termination Date. |
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Page 1 of 14 |
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Executive’s initials |
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b. |
Subject to the terms and conditions of this Agreement, payment
or other entitlement, in accordance with the terms of the
applicable plan or other benefit, of any benefits to which he had a
vested entitlement as of the Termination Date under the terms of
employee benefit plans established by the Company. |
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c. |
The Executive is entitled at his option to continue his group
health insurance coverage in accordance with the Consolidated
Omnibus Budget Reconciliation Act (“ COBRA ”)
after the Termination Date. If the Executive elects to continue
such insurance coverage, he must complete a COBRA election form,
which will be furnished to him under separate cover, and timely
return it in accordance with its terms. |
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d. |
Based on the Executive’s participation in the Stock
Option Plan, the Executive received options to purchase 125,000
shares of Company stock awarded pursuant to his Stock Option
Agreement. By signing this Agreement, the Executive represents and
warrants that he has no options to purchase any stock of the
Company or any of the other Released Parties (as defined in
Paragraph 10) other than as described in the Stock Option
Agreement. All options that were not fully vested and were
therefore not exercisable as of the Termination Date shall be
forfeited except as provided below. |
| 3. |
Termination of Prior Agreements; Post-Termination
Obligations Under Employment Agreement. |
In consideration of the
mutual promises and undertakings set out in this Agreement, the
parties agree that all prior agreements (the “ Prior
Agreements ”) between (a) the Company and the
Executive, and (b) the Executive and any of the other Released
Parties (as defined in Paragraph 10 below), including without
limitation the Employment Agreement, shall be terminated as of the
Effective Date (as defined in Paragraph 24) except as provided
below. The parties further agree that, as of the Effective Date,
the Executive and the other Released Parties shall have no further
liabilities, obligations, or duties to the Executive, and the
Executive shall forfeit all rights and benefits, under the Prior
Agreements. Notwithstanding the previous two sentences and the
termination of the Executive’s employment with the Company,
the Executive acknowledges that Sections 7 (Confidential
Information), 8 (Assignment of Rights to Intellectual Property), 9
(Restricted Activities), 10 (Enforcement of Covenants), and 13
(Definitions) of the Employment Agreement, as such terms may be
amended by this Agreement (together, the “
Post-Termination Obligations ”), shall continue in
full force and effect according to their terms after the
Termination Date. The Executive further acknowledges and agrees
that he intends to, and shall, comply with his Post-Termination
Obligations under the Employment Agreement notwithstanding the
termination of his Employment Agreement and his employment with the
Company.
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Page 2 of 14 |
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Executive’s initials |
| 4. |
Agreement to Amend and Extend Duration of Restricted
Activities Under Employment Agreement. |
The Executive acknowledges
that Section 9.1 of the Employment Agreement contains a
covenant not to compete in favor of the Company and that
Section 9.3 of the Employment Agreement contains a covenant
not to solicit in favor of the Company. The parties further
acknowledge that, under Section 20 of the Employment
Agreement, they may amend the Employment Agreement in a writing
signed by both parties. Accordingly, and in exchange for the
Company’s promises and undertakings under this Agreement, the
Executive agrees that (a) the length of the covenant not to
compete under Section 9.1 of the Employment Agreement shall be
amended and extended without further action until
September 30, 2010, and (b) the length of the covenant
not to solicit under Section 9.3 of the Employment Agreement
shall be amended and extended without further action until
September 30, 2010. The Executive further acknowledges and
agrees that he intends to, and shall, comply with the above
referenced covenant not to compete and covenant not to solicit
obligations under the Employment Agreement until September 30,
2010 notwithstanding the termination of his Employment Agreement
and his employment with the Company.
| 5. |
Non-Admission of Liability. |
The Executive and the Company
are entering into this Agreement as a way of amicably concluding
their employment relationship on the Termination Date, and
resolving voluntarily any dispute or potential dispute or claim
that the Executive has or might have with the Company, whether
known or unknown by the Executive at this time. This Agreement is
not and should not be construed as an allegation or admission on
the part of the Company or the Executive that it or he has acted
unlawfully or violated any state or federal law or regulation. The
Company and the other Released Parties specifically disclaim any
liability to the Executive or any other person, and the Executive
specifically disclaims any liability to the Company or any other
person, for any alleged violation of rights or for any alleged
violation of any order, law, statute, duty, policy or contract.
Except to the extent necessary to enforce this Agreement, neither
this Agreement nor any part of it may be construed, used, or
admitted into evidence in any judicial, administrative, or arbitral
proceedings as an admission of any kind by the Company, the
Executive or any of the other Released Parties.
Contingent upon the
Executive’s acceptance and non-revocation of this Agreement
and in consideration of the Executive’s promises and
undertakings in this Agreement, the Company or AHII, as applicable,
shall provide to him, in addition to the salary and benefits he
will receive pursuant to Paragraph 2, the following separation
benefits (the “ Separation Benefits
”):
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a. |
the Company shall pay the Executive, by direct deposit unless
otherwise instructed by Executive, $225,000.00 (TWO HUNDRED
TWENTY-FIVE THOUSAND and NO/100 DOLLARS), less applicable taxes and
withholdings, in 24 equal semi-monthly installments beginning on
the fifteenth day of the month during which the Effective Date
occurs and continuing on the fifteenth and last days of the month
over a 12-month period until paid in full. |
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Page 3 of 14 |
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Executive’s initials |
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b. |
the Company shall pay the Executive, by direct deposit unless
otherwise instructed by Executive, $225,000.00 (TWO HUNDRED
TWENTY-FIVE THOUSAND and NO/100 DOLLARS), less applicable taxes and
withholdings, in 48 equal semi-monthly installments beginning on
October 15, 2008 and continuing on the fifteenth and last days
of the month over a 24-month period until paid in full. |
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c. |
on the 30th day following the Effective Date of this Agreement
(as defined in Paragraph 24), the Company shall transfer titles (if
applicable) and ownership to the Executive of (i) the 2004 GMC
Yukon Denali (Vehicle Identification Number VIN1GKFK66U44J330150)
currently in the possession of the Executive, which for tax
purposes is agreed to have a fair market value of $21,000,
(ii) the Dell model PP18L laptop computer currently in the
possession of the Company, and (iii) the Blackberry model
8700C personal digital assistant currently in the possession of the
Executive; provided, however , that the Executive shall port
the telephone number assigned to the Blackberry to the service
provider of his choice within 30 days following the Termination
Date and that the Executive shall be responsible for all charges in
connection with such service after the Termination
Date. |
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d. |
if the Executive timely elects to continue medical, dental and
vision insurance continuation coverage following the Termination
Date under COBRA, the Company shall provide for such coverage at
the Company’s expense for 18 months beginning October 1,
2007 and ending April 30, 2009 in accordance with Paragraph
6(g) (the “ MDV Premium Payments ”). If the
Executive thereafter exhausts his COBRA coverage eligibility and
obtains subsequent medical, dental and/or vision insurance coverage
by purchasing an individual insurance policy that is reasonably
acceptable to the Company, the Company shall reimburse the
Executive for the cost of such coverage in accordance with
Paragraph 6(g) (the “ MDV Reimbursement ”). Such
MDV Reimbursements shall be made as soon as practicable, but in no
event later than the last day of the calendar month following the
calendar month in which such costs were incurred. The
Company’s obligation for MDV Reimbursements under this
Paragraph 6(d) shall extend until (i) September 30, 2010;
or (ii) the date the Executive obtains other group health
insurance coverage (as a result of subsequent employment, marriage,
or otherwise) through another employer’s group health
insurance plan, whichever is sooner. The Company’s
obligations under this Paragraph 6(d) are conditioned on the
Executive (i) communicating with the Company as necessary to
facilitate payment; and (ii) promptly notifying the
Company’s General Counsel in writing if he becomes eligible
for other group health insurance coverage through another
employer’s group health insurance plan. Upon written request
by the Executive each month as applicable, the Company will
promptly confirm to the Executive payment of each premium required
to be paid pursuant to this Paragraph 6(d). |
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e. |
the Company
shall continue to pay the premiums on the Executive’s life
and disability insurance policy with the Company in effect
immediately before the Termination
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Page 4 of 14 |
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Executive’s initials |
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Date for 18 months
beginning October 1, 2007 and ending April 30, 2009 in
accordance with Paragraph 6(g) (the “ Life/Disability
Premium Payments ”). If the Executive thereafter elects
to continue such life and disability insurance coverage, the
Company shall reimburse the Executive for the cost of such coverage
in accordance with Paragraph 6(g) (the “ Life/Disability
Reimbursement ”). Such Life/Disability Reimbursements
shall be made as soon as practicable, but in no event later than
the last day of the calendar month following the calendar month in
which such costs were incurred. The Company’s obligation for
Life/Disability Reimbursements under this Paragraph 6(e) shall
extend until (i) September 30, 2010, or (ii) the
date the Executive obtains other life or disability insurance, as
applicable and of comparable coverage, as a result of subsequent
employment, whichever is sooner. The Company’s obligations
under this Paragraph 6(e) are conditioned on the Executive
(i) communicating with the Company as necessary to facilitate
payment; and (ii) promptly notifying the Company’s
General Counsel in writing if he becomes eligible for other life
insurance coverage through another employer. Upon written request
by the Executive each month as applicable, the Company will
promptly confirm to the Executive payment of each premium required
to be paid pursuant to this Paragraph 6(e).
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f. |
AHII shall fully vest and make exercisable as of the
Termination Date 50,000 of the Executive’s 125,000 options to
purchase the stock of AHII previously issued to the Executive
pursuant to the Stock Option Plan and the Stock Option Agreement.
The Executive shall have until January 30, 2017 (which is the
“ Expiration Date ” as defined in the Stock
Option Agreement) to exercise such options. |
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g. |
In no event shall the Company’s obligations to make the
MDV Premium Payments and the Life/Disability Premium Payments
exceed a combined total of $1,000 per month. The Company shall each
month initially apply the $1,000 toward any outstanding MDV Premium
Payments and then toward any outstanding Life/Disability Premium
Payments. In no event shall the Company’s obligations to make
the MDV Reimbursements and Life/Disability Reimbursements exceed a
combined total of $1,000 per month. The Company shall each month
initially apply the $1,000 toward any outstanding MDV
Reimbursements and then to any outstanding Life/Disability
Reimbursements. |
| 7. |
Tax Consequences; Internal Revenue Code
Section 409A. |
The Executive acknowledges
and agrees that the Company has made no representations to him
regarding the tax consequences of the Separation Benefits offered
to him pursuant to this Agreement. In addition, the parties have
drafted this Agreement in accordance with Section 409A of the
Internal Revenue Code (the “ Code ”) and intend
that it comply with Section 409A of the Code and any related
rules, regulations, or other guidance. The parties further intend
that this Agreement shall be interpreted and construed to comply
with Section 409A of the Code. The parties agree to cooperate
and work together in good faith to take all actions reasonably
necessary to effectuate the intent of this paragraph.
Notwithstanding the preceding sentence, the Executive shall be
solely responsible for any risk that the tax treatment of all or
part of the
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Page 5 of 14 |
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Executive’s initials |
Separation Benefits may be affected by
Section 409A of the Code and impose significant adverse tax
consequences on him, including accelerated taxation, a 20%
additional tax, and interest. Because of the potential tax
consequences, the Executive has the right, and is encouraged by
this paragraph, to consult with a tax advisor of his choice before
signing this Agreement.
| 8. |
Confidentiality; Reporting Obligations; Trading
Obligations. |
In consideration of the
Company’s promises and undertakings in this Agreement, the
Executive agrees that he shall not discuss the personnel practices
of the Company, the business practices of the Company, the
termination of his employment, the reasons for such termination, or
any disagreements he may have concerning such reasons with any
employee of the Company, any customer or potential customer of the
Company, or any other third party who is not a family member
(including without limitation any member of the media). If asked
about the termination of his employment by any employee of the
Company, any customer or potential customer of the Company, or any
other third party who is not a family member, the Executive shall
limit his response to the statement that “I separated from
the company to pursue other opportunities” or similar words
to that effect.
In addition, the Executive
understands and acknowledges that AHII will file a Current Report
on Form 8-K with the Securities and Exchange Commission to report
the departure from employment of an executive officer and that this
Agreement will be filed as an exhibit to such Current Report. The
Executive further understands and acknowledges that he shall be
subject to AHII’s
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