EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement made effective as of February 9, 2005, by and between
AMERICAN HOMEPATIENT, INC., a Tennessee corporation (collectively, with its
parent, American HomePatient, Inc., a Delaware corporation, the "Company"), and
XXXXX XXXXXX (the "Executive").
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I
EMPLOYMENT
The Company desires to employ the Executive in such capacity and the
Executive agrees to be employed by the Company upon the terms and conditions
provided in the Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
During the Period of Employment (as such term is defined herein below),
the Executive agrees to serve as Executive Vice President and Chief Operating
Officer of the Company and to be responsible for the typical management
responsibilities expected of an officer holding such positions and such other
responsibilities as may be assigned to Executive from time to time by the Board
of Directors of the Company consistent with such positions.
SECTION III
TERMS AND DUTIES
A. Period of Employment.
The period of Executive's employment under this Agreement will commence
as of February 9, 2005, and shall continue through February 8, 2006 ("Initial
Term"), subject to extension or termination as provided in this Agreement
("Period of Employment"). Upon expiration of the Initial Term, the Period of
Employment shall automatically extend for additional one (1) year periods,
unless either party gives written notice at least thirty (30) days in advance of
the expiration of the then current period of employment of such party's intent
not to extend the Period of Employment.
B. Duties.
During the Period of Employment, the Executive shall devote
substantially all of his business time, attention and skill to the business and
affairs of the Company and its subsidiaries. The Executive will perform
faithfully the duties which may be assigned to him from time to time by the
Board of Directors of the Company.
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SECTION IV
COMPENSATION
For all services rendered by the Executive in any capacity during the
Period of Employment, the Executive shall be compensated as follows:
A. Base Salary.
The Company shall pay the Executive an annual base salary ("Base
Salary") of Two Hundred Sixty Thousand Dollars ($260,000) for the first year of
this Agreement, with increases each year thereafter as determined by the Board
of Directors. The Base Salary shall be payable according to the customary
payroll practices of the Company, but in no event less frequently than once each
month.
B. Annual Incentive Award.
The Company will pay annual incentive compensation awards to the
Executive in amounts up to eighty percent (80%) of his annual base salary (the
"Annual Incentive Award") under such incentive programs as may from time to time
be provided to employees of the Company of similar rank, which programs may be
created, changed or terminated at any time in the Company's sole discretion.
C. Benefits and Car Allowance.
Executive will receive a monthly automobile allowance of $700.
Executive will be entitled to such medical, dental, disability and life
insurance benefits, participation in any profit-sharing plan or similar plans of
Company, and such other employee benefits as are provided to employees of the
Company of similar rank from time to time.
SECTION V
BUSINESS
The Company acknowledges and agrees that Executive shall initially
continue to maintain a permanent residence in Atlanta, Georgia but will travel
to the Nashville, Tennessee metropolitan area and various other geographic
locations to perform his duties and obligations. The Company will reimburse the
Executive for all reasonable travel, accommodations and other expenses incurred
by the Executive in connection with the performance of his duties and
obligations under this Agreement wherever they may arise.
SECTION VI
DISABILITY
A. In the event of disability of the Executive during the Period of
Employment, the Company will continue to pay the Executive according to the
compensation provisions of this Agreement during the period of his disability,
until such time as Executive's long term disability
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insurance benefits are available. However, in the event the Executive is
disabled for a continuous period of six (6) months after the Executive first
becomes disabled, the Company may terminate the employment of the Executive. In
this case, normal compensation will cease except for earned but unpaid Base
Salary and Annual Incentive Award which would be payable on a prorated basis for
the year in which the disability occurred. In the event of such termination, all
unvested stock options held by Executive shall be deemed fully vested on the
date of such termination.
B. During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as he is physically and mentally able to do so, the Executive will furnish
information and assistance to the Company and from time to time will make
himself available to the Company to undertake assignments consistent with his
prior position with the Company and his physical and mental health. If the
Company fails to make a payment or provide a benefit required as part of the
Agreement, the Executive's obligation to fulfill information and assistance will
end.
C. The term "disability" will have the same meaning as under any
disability insurance provided pursuant to this Agreement or otherwise.
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, the Company's obligation to make payments under this Agreement shall
cease as of the date of death, except for earned but unpaid Base Salary and
Annual Incentive Award which will be paid on a prorated basis for that year.
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SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. If the Executive's employment terminates due to either a Without
Cause Termination or a Constructive Discharge (as defined later in this
Agreement), the Company will pay the Executive in a lump sum upon such
Termination or Constructive Discharge an amount equal to one hundred percent
(100%) of his Base Salary as in effect at the time of such termination. Earned
but unpaid Base Salary will also be paid in a lump sum at such time. If the
Executive's employment terminates due to either a Without Cause Termination or a
Constructive Discharge or pursuant to Section XI, all stock options ("Options")
granted to the Executive by the Company shall be deemed vested, and the Company
shall cause the Options to remain exercisable for the remainder of their stated
term.
B. If the Executive's employment terminates due to a Termination for
Cause, earned but unpaid Base Salary will be paid on a pro-rated basis for the
year in which the termination occurs. No other payments will be made by the
Company.
C. Upon termination of the Executive's employment, the Period of
Employment will cease as of the date of the termination.
D. For this Agreement, the following terms have the following meanings:
1. "Termination for Cause" means termination of the
Executive's employment by the Company's Board of Directors, acting in good
faith, by written notice to the Executive specifying the event(s) relied upon
for such termination, due to the Executive's serious misconduct with respect to
his duties under this Agreement, which has resulted or is likely to result in
material economic damage to the Company, including but not limited to a
conviction for a felony or perpetration of a common law fraud; provided,
however, except in the case of a conviction for a felony or a perpetration of a
common law fraud, that Company must provide such notice thirty (30) days prior
to termination and provide Executive with the opportunity to cure such damage or
likely damage, to the Company's reasonable satisfaction, thirty (30) days of
such notice.
2. "Constructive Discharge" means termination of the
Executive's employment by the Executive due to a failure of the Company to
fulfill its obligations under this Agreement in any material respect including
any reduction of the Executive's Base Salary or other compensation other than
reductions applicable to all employees of the Company, or other material change
by the Company in the functions, duties or responsibilities of the position
which would reduce the ranking or level, responsibility, importance or scope of
the position. The Executive will provide the Company a written notice which
describes the circumstances being relied on for the termination with respect to
the Agreement within thirty (30) days after the event giving rise to the notice.
The Company will have thirty (30) days to remedy the situation prior to the
termination for Constructive Discharge.
3. "Without Cause Termination" means termination of the
Executive's employment by the Company other than due to death, disability, or
Termination for Cause.
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SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING
AND AFTER THE PERIOD OF EMPLOYMENT
A. The Executive will, with reasonable notice during or after the
Period of Employment, 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 Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company, as hereinafter defined, 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 Executive's duties under this Agreement. The
Executive will not during the Period of Employment or after except to the extent
reasonably necessary in performance of the duties under this Agreement, 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 Executive 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 Executive 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 Executive or otherwise coming into his possession are confidential and will
remain the property of the Company.
C. During the Period of Employment and for a twelve (12) month (or in
the case of a Change in Control payment under Section XI, a twenty-four (24)
month) period thereafter (the "Noncompete Period"), the Executive 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 Noncompete Period: (i) the Executive
will not make any statements or perform any acts intended to advance the
interest of any existing or prospective competitors of the Company in any way
that will injure the interest of the Company; (ii) the Executive without prior
express written approval by the Board of Directors of the Company will not
directly or indirectly own or hold any proprietary interest in or be employed by
or receive compensation from any party primarily engaged, in the United States,
in the same or any substantially similar business as conducted by the Company
during the Period of Employment; (iii) the Executive without express prior
written approval from the Board of Directors, will not solicit any of the then
current clients of the Company or discuss with any employee of the Company
information related to the operation of any business intended to compete with
the Company; and (iv) the Executive will not directly or indirectly hire any
employee of the Company or solicit or encourage any such employee to leave the
employ of the Company. For the purposes of the 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, other than ownership of
less than 5% of any class of equity interest in a publicly-held company. The
Executive acknowledges that the covenants contained herein are reasonable as to
geographic and temporal scope.
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D. The Executive acknowledges that his breach or threatened or
attempted breach of any provision of Section IX 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
Section IX without being required to prove damages or furnish any bond or other
security.
E. The Executive shall not be bound by the provisions of Section IX in
the event of the default by the Company in its obligations under this Agreement
that are to be performed upon or after termination of this Agreement that has
not been corrected or remedied within 30 days after Company's receipt of written
notice from the Executive specifying such default.
F. If the period of time or other restrictions specified in this
Section should be adjudged unreasonable at any proceeding, then the period of
time or such other restrictions shall be reduced by the elimination or reduction
of such portion thereof so that such restrictions may be enforced in a manner
adjudged to be reasonable.
SECTION X
INDEMNIFICATION, LITIGATION
The Company will indemnify the Executive to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The Executive will be entitled to any
insurance proceeds related to any award, or any fees or expenses incurred by
Executive in connection with any action, suit or proceeding brought by a third
party to which he may be made a party by reason of being a director or an
officer of the Company. The Company will use its best efforts to obtain
directors and officers liability insurance covering the Executive in an amount
and with terms and provisions reasonably acceptable to Executive. In the event
the Company obtains such insurance for any employee, officer, director or
affiliate, the Company shall cause such insurance to cover Executive.
SECTION XI
CHANGE IN CONTROL
A. Effect of Change in Control
In the event there is a Change in Control (as defined below) and within
the twelve (12) month period following such event Executive is terminated in a
Without Cause Termination (or in the event Executive is terminated in a Without
Cause Termination in contemplation of such a Change in Control) or elects to
resign upon written notice to the Company following a Constructive Discharge,
the Company shall pay to the Executive the amounts described in the paragraph
below in lieu of any amounts otherwise payable under Section VIII. Without
limiting the foregoing, any Without Cause Termination or Constructive Discharge
that occurs within six (6) months prior to a Change in Control shall be deemed
to be made in contemplation of such Change in Control.
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The Company shall pay to the Executive in a lump sum upon such
termination or resignation (in no event later than five (5) business days after
such termination or resignation) an amount equal to two hundred percent (200%)
of the sum of his Base Salary plus an amount equal to two hundred percent (200%)
of the Annual Incentive Award Executive received for performance during the
Company's immediately preceding fiscal year. The benefits and perquisites
described in this Agreement as in effect at the date of resignation or
termination of employment will also be continued for twenty-four (24) months
from the effective date of termination or resignation pursuant to a Change of
Control. Company matching payments for corporate retirement plans will become
fully vested.
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 fifty
percent (50%) of the outstanding voting securities of the Company, (ii) the
Company shall be merged or consolidated with another corporation or entity and
as a result of such merger or consolidation less than seventy-five percent (75%)
of the outstanding voting securities of the surviving or resulting corporation
or entity 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 or entity which 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 fifty percent (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. Excise Tax Indemnification.
If the Internal Revenue Service asserts, or if Executive or the Company
is advised in writing by a nationally recognized accounting firm, that any
payment in the nature of compensation to, or for the benefit of, Executive from
the Company (or any successor in interest) constitutes an "excess parachute
payment" under section 280G of the Internal Revenue Code, whether paid pursuant
to this Agreement or any other agreement, and including property transfers
pursuant to securities and other employee benefits that vest upon a change in
the ownership of effective control of the Company (collectively, the "Excess
Parachute Payments") the Company shall pay to Executive, on demand, a cash sum
sufficient (on a grossed- up basis) to indemnify Executive and hold him harmless
from the following (the "Tax Indemnity Payment"):
(i) The amount of excise tax under section 4999 of the
Internal Revenue Code on the entire amount of the Excess Parachute Payments and
all Tax Indemnity Payments to Executive pursuant to this subsection C:
(ii) The amount of all estimated local, state, and federal
income taxes on all Tax Indemnity Payments to Executive pursuant to this
subsection C (determined in each case at the highest marginal tax rate);
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(iii) The amount of any fines, penalties, or interest that
have been or potentially will be, assessed in respect of any excise or income
tax described in the preceding clauses (a) or (b); so the amounts of Excess
Parachute Payments received by Executive will not be diminished by an excise tax
imposed under section 4999 of the Internal Revenue Code or by any local, state,
or federal income tax payable in respect of the Tax Indemnity Payments received
by Executive pursuant to this subsection C.
SECTION XII
WITHHOLDING TAXES
The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes that shall be required
pursuant to any law or governmental regulation.
SECTION XIII
EFFECTIVE PRIOR AGREEMENTS
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and supersedes any prior
employment or severance agreements between the Company and its affiliates, and
the Executive.
SECTION XIV
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 corporation or entity which assumes this Agreement and all
obligations and undertakings of the Company hereunder. Upon such a
Consolidation, Merger or Sale of Assets, the term "the Company" as used will
mean the other corporation or entity and this Agreement shall continue in full
force and effect. This Section XIV is not intended to modify or limit the rights
of the Executive hereunder, including without limitation, the rights of
Executive under Section XI.
SECTION XV
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.
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SECTION XVI
GOVERNING LAW; ARBITRATION
This Agreement has been executed and delivered in the State of
Tennessee its validity, interpretation, performance and enforcement shall be
governed by the laws of that state.
Any dispute among the parties hereto shall be settled by arbitration in
Nashville, Tennessee in accordance with the rules then obtaining of the American
Arbitration Association and judgment upon the award rendered may be entered in
any court having jurisdiction thereof.
SECTION XVII
NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to such addresses as may have been furnished by one party to the
other party in writing.
SECTION XVIII
BINDING AGREEMENT
This Agreement shall be binding on the parties' successors, heirs and
assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
April 26, 2005.
AMERICAN HOMEPATIENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx, III
--------------------------------
Xxxxxx X. Xxxxxxx, III,
Chief Executive Officer
EXECUTIVE:
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
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