CONFIDENTIALITY, NON-COMPETITION AND SEVERANCE PAY AGREEMENT
Exhibit 10.2
This CONFIDENTIALITY, NON-COMPETITION AND SEVERANCE PAY AGREEMENT is made as of June 18, 2007
by and between AMERICAN HOMEPATIENT, INC., a Delaware corporation (hereinafter the “Company”), and
XXXXX X. XXXXXXXXX, a resident of the State of Georgia (the “Employee”).
WHEREAS, the Company has agreed to employ the Employee, either directly or through a wholly
owned subsidiary; and
WHEREAS, a condition of the Employee’s employment with the Company is his execution of a
confidentiality, non-competition and severance pay agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements made herein,
the parties, intending to be legally bound hereby, agree as follows:
1. Non-Compete and Confidentiality.
A. The Employee will, with reasonable notice during or after his employment with the Company,
furnish information as may be in his possession and cooperate with the Company as may reasonably be
requested in connection with any claims or legal actions in which the Company is or may become a
party.
B. The Employee recognizes and acknowledges that all information pertaining to the affairs,
business, clients, customers or other relationships of the Company is confidential and is a unique
and valuable asset of the Company. Access to and knowledge of this information are essential to
the performance of the Employee’s duties. The Employee will not during his employment with the
Company (the “Period of Employment”) or after, except to the extent reasonably necessary in the
performance of his duties, give to any person, firm, association, corporation or governmental
agency any information concerning the affairs, business, clients, customers or other relationships
of the Company except as required by law. The Employee will not make use of this type of
information for his own purposes or for the benefit of any person or organization other than the
Company. The Employee will also use his best efforts to prevent the disclosure of this information
by others. All records, memoranda, etc. relating to the business of the Company whether made by
the Employee or otherwise coming into his possession are confidential and will remain the property
of the Company. Upon termination of employment, Employee will immediately deliver to Company all
materials, including but not limited to documents, discs, computer software and copies thereof,
containing confidential and/or proprietary information of Company, whether compiled or created by
Employee or furnished to him.
C. Employee will not, either during the Period of Employment or at any time thereafter, use
(except for the sole benefit of Company) or disclose to others any proprietary, secret or
confidential information, knowledge or data of the Company or its affiliates.
D. During the Period of Employment and thereafter, the Employee will not use his status with
the Company to obtain loans, goods or services from another organization on
terms that would not be available to him in the absence of his relationship to the Company. During the Period of
Employment and for a twelve (12) month period following termination of such employment for any
reason, (i) the Employee will not make any statements or perform any acts intended to advance the
interest of any existing or prospective competitor of the Company in any way that will injure the
interests of the Company; and (ii) the 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 the Company upon the date
of termination of employment. During the Period of Employment and for a twelve (12) month period
following termination of such employment for any reason, (i) the Employee will not solicit any
client of the Company or discuss with any client of the Company or any employee of the Company any
information or the operation of any business intended to compete with the Company; and (ii) the
Employee will not, directly or indirectly, hire any current or future employee of the Company, even
if such individual is no longer employed by the Company, or solicit or encourage any such employee
to leave the employ of the Company. Notwithstanding the foregoing, beginning twelve (12) months
after his termination of employment with the Company for any reason, Employee may hire a past
employee of the Company 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. The Employee acknowledges that the
covenants contained herein are reasonable as to geographic and temporal scope.
E. The Employee acknowledges that his breach or threatened or attempted breach of any
provision of this Agreement would cause irreparable harm to the Company not compensable in monetary
damages and that the 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 this
Agreement without being required to prove damages or furnish any bond or other security.
F. For purposes of Sections 1, 4, 5, 6, and 7 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 a more than 5% ownership interest.
2. Severance Pay in the Event of Termination or Other Occurrence
A. In the event there is a “Change in Control” of the ownership of the Company, and the
Company within twelve (12) months following such Change in Control, (i) terminates Employee’s
employment (ii) without Employee’s consent reduces Employee’s salary or (iii) without Employee’s
consent requires Employee to relocate somewhere other than the greater Nashville, Tennessee area or
the greater Atlanta, Georgia area, then, immediately following termination described in (i) above,
or upon Employee’s resignation following any of the occurrences described in (ii) and (iii) above,
Employee shall be entitled to receive as a severance payment in a lump sum an amount equal to
(150%) of his annual base salary (not including incentive compensation or benefits), as in effect
at the time of such termination or resignation, plus (150%) of the annual incentive compensation
Employee received for
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performance during Company’s immediately preceding fiscal year or his annual
incentive bonus potential for the first fiscal year of employment, whichever is greater, multiplied
by a fraction, the numerator of which is the total number of full calendar months during which
Employee was employed by Company during Company’s current fiscal year prior to such termination or
resignation and the denominator of which is twelve (12), plus the product of Employee’s then
current monthly vehicle allowance, if any, (exclusive of gasoline and oil expense reimbursement) as
in effect at the time of such termination or resignation, multiplied by eighteen (18). In
addition, any earned but unpaid base salary, unpaid incentive compensation from prior years, and
accrued vacation will be paid. The Company will also pay the COBRA premium attributable to
Employee’s medical and dental insurance benefits as such benefits were in effect immediately prior
to termination or resignation pursuant to this Section 2(A), with payments beginning on the first
day of the calendar month immediately following the date of termination or resignation and
continuing until the earlier of (i) eighteen (18) months after the date of termination or
resignation, or (ii) the date on which Employee is eligible to receive, as an employee, independent
contractor or agent, medical and/or dental insurance benefits from a third party. The Company will
deduct from the lump sum severance payment to the Employee the standard employee deduction for
medical/dental insurance as in effect on the date of termination or resignation pursuant to this
Section 2(A) for up to an eighteen (18) month period. If Employee elects to discontinue COBRA for
any reason before expiration of the eighteen (18) month period and notifies the Company of the same
in writing, the Company will thereafter refund to the Employee that portion of the deduction not
attributable to the COBRA premium actually paid. Further, any stock options granted to the
Employee will be fully vested upon a Change of Control, whether or not the Employee is terminated
or resigns pursuant to this Section 2(A), notwithstanding any previously stated vesting restrictions but
subject to expiration or termination pursuant to the governing stock option plan.
B. A “Change in Control” shall be deemed to have occurred if (i) a tender offer shall be made
and consummated for the ownership of more than 50% of the outstanding voting securities of the
Company, (ii) the Company shall be merged or consolidated with another corporation and as a result
of such merger or consolidation less than 50% of the outstanding voting securities of the surviving
or resulting corporation shall be owned in the aggregate by the former shareholders of the Company,
as the same shall have existed immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another corporation that is not a wholly-owned
subsidiary, or (iv) a person, within the meaning of Section 3(a)(9) or of Section 13 (d)(3) (as in
effect on the date hereof) of the Securities and Exchange Act of 1934 (“Exchange Act”), shall
acquire more than 50% of the outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record). For purposes hereof, ownership of voting securities shall
take into account and shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange Act.
C. Termination Without Cause Not Accompanied by a Change in Control. In the event that
Company terminates Employee’s employment without cause (and such termination does not trigger the
provisions of Section 2(A)), Employee shall be entitled to receive as a severance payment in a lump
sum upon such termination an amount equal to (i) his annual base salary (not including incentive
compensation or benefits), as in effect at the time of termination, plus (ii) the annual incentive
compensation Employee received for performance during Company’s immediately preceding fiscal year,
multiplied by a fraction, the numerator of which
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is the total number of full calendar months during which Employee was employed by Company during Company’s current fiscal year prior to termination
and the denominator of which is twelve (12), plus Employee’s then current monthly vehicle
allowance, if any, (exclusive of gasoline and oil expense reimbursement) as in effect at the time
of termination multiplied by twelve (12). Employee will also be entitled to any earned but unpaid
base salary, unpaid incentive compensation from prior years, and accrued vacation. The Company
will pay the COBRA premium attributable to Employee’s medical and dental insurance benefits as such
benefits were in effect immediately prior to termination, with payments beginning on the first day
of the calendar month immediately following the date of termination and continuing until the
earlier of (i) twelve (12) months after the date of termination, or (ii) the date on which Employee
is eligible to receive, as an employee, independent contractor or agent, medical and/or dental
insurance benefits from a third party. The Company will deduct from the severance payment to the
Employee the standard employee deduction for medical/dental insurance as in effect on the date of
termination for up to a twelve (12) month period. If Employee elects to discontinue COBRA for any
reason before expiration of the twelve (12) month period and notifies the Company of the same in
writing, the Company will thereafter refund to the Employee that portion of the deduction not
attributable to the COBRA premium actually paid. Further, any stock options granted to the Employee
will be fully vested upon a termination under this Section 2(C), notwithstanding any previously
stated vesting restrictions but subject to expiration or termination pursuant to the governing
stock option plan. Termination without cause shall not include termination as a result of the
following: termination for “cause”, resignation by Employee, or Employee’s death or disability.
“Cause” shall mean (i) engagement by Employee in insubordination, malfeasance or misconduct, (ii) a
charge or conviction of a felony offense or conviction of a misdemeanor involving moral turpitude
brought against Employee, or (iii) a material breach by Employee of his obligations under this
Agreement. Notwithstanding the above, it is the intent of the Company at all times to comply with
the Americans With Disabilities Act, the Family and Medical Leave Act and any other applicable
federal and state employment laws.
3. Compliance Programs. The Employee will at all times while employed with the
Company comply fully with the Company’s “Guidelines of Company Policies and Conduct” and any other
compliance program, as such programs may be amended from time to time, and acknowledges that his
obligations under such programs as an employee are contractual in nature.
4. General Release. Employee hereby fully and forever releases the Company, its
successors, 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 his employment with the Company or the conduct of
the Company’s business through the date hereof.
5. Covenant Not to Xxx. Employee covenants that he will not initiate or bring any
proceeding, suit, claim or administrative proceeding against Company, its affiliates, agents,
employees, officers, directors, successors and assigns, arising out of or in any way related to his
employment by the Company or the conduct of the Company’s business prior to the date hereof.
Employee further covenants that he will not, without the 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 of any such proceeding, suit, claim or investigation brought, initiated
or conducted by any person against the Company, its affiliates, agents, employees, officers,
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directors, successors and assigns. Employee further covenants that he will notify the Company
immediately in the event he is contacted by any person regarding any pending or contemplated
proceeding, suit, claim or investigation involving the Company, its affiliates, agents, employees,
officers, directors, successors and assigns.
6. Agreement is Voluntary and Knowing. Employee acknowledges he 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.
Employee is voluntarily entering into this Agreement, of his own free will, free of any coercion,
pressure or duress. He is knowingly releasing Company in accordance with the terms contained
herein. Employee further acknowledges that he is receiving consideration beyond anything of value
to which he is already entitled. Employee will have up to twenty-one (21) days in which to
consider this Agreement. After the execution of this Agreement, Employee will 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 anything to the contrary stated in this
Agreement, the Company will not be required to make any payments or provide any benefits or other
consideration to the Employee until this Agreement becomes final pursuant to the provisions of this
Section 7.
7. Final Settlement. The parties declare that each has carefully read this Agreement,
as amended, 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
addressed herein. Nothing in this Agreement is to be construed as an admission of any kind by
either the Employee or the Company.
8. No Employment For a Term / At Will Status. Employee acknowledges and agrees that
this Agreement shall not entitle Employee to employment for any fixed term and that Employee may be
terminated at any time, with or without cause, subject to the Company’s obligations set forth
herein.
8. 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.
9. Non-Assignability by the Employee. The rights and obligations of the Employee
hereunder are not assignable.
10. 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.
11. 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.
12. 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,
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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.
13. Exclusiveness. This Agreement, together with the offer letter dated June 12,
2007, (the “Offer Letter”), constitutes the entire understanding and agreement between the parties
with respect to the employment or severance arrangements of the Employee and supersedes any and all
other agreements, oral or written, between the parties other than the Offer Letter. In the event
of a direct conflict between this Agreement and the Offer Letter, this Agreement shall control. No
waiver, modification, or amendment to this Agreement shall be valid unless the same be reduced to
writing and signed by the parties hereto.
14. 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.
15. Arbitration. Any dispute among the parties hereto shall be settled by arbitration
in Nashville, Tennessee, in accordance with the rules then in effect of the American Arbitration
Association and judgment upon the award rendered may be entered in any court having jurisdiction
thereof.
16. 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 the 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 the Employee, at 0000 Xxxxxxx Xxx, Xxxxxxxx, XX 00000 or such other address as may
have been furnished to the Company by the Employee in writing.
17. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall preclude
the Company from consolidating or merging into or with, or transferring all or substantially all of
its assets to, another individual, entity, or business that assumes this Agreement and all obligations of the Company
hereunder.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| “COMPANY” AMERICAN HOMEPATIENT , INC. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Its: | Executive Vice President, COO | |||
| “EMPLOYEE” |
||||
| /s/ Xxxxx X. Xxxxxxxxx | ||||
| XXXXX X. XXXXXXXXX | ||||
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