Amendment No. 2 to Employment Agreement



 





Exhibit
10.1



Amendment No. 2

to Employment Agreement




     This Amendment No. 2 to Employment Agreement (“Amendment No. 2”) is entered into as of
December 21, 2007, and to be effective the date hereof, by and between AMERICAN HOMEPATIENT, INC.
and JOSEPH F. FURLONG III (“Executive”).



     WHEREAS, Executive is currently employed by the Company as its Chief Executive Officer
pursuant to the terms of his Employment Agreement dated as of December 1, 2000, as amended by
Amendment No. 1 to Employment Agreement (collectively, the “Employment Agreement”); and



     WHEREAS, on April 10, 2007, the Company experienced a “Change in Control” as such phrase is
defined in the Employment Agreement as a result of the acquisition of more than 35% of the
Company’s outstanding voting securities by Highland Capital Management, L.P. and its affiliates;



     WHEREAS, as a result of the Change in Control, Executive became entitled to certain rights if
his employment is terminated, by either the Company or Executive, within twelve months of the
Change in Control;



     WHEREAS, in order to induce the Executive to not terminate and to continue his employment with
the Company, the Executive and the Company desire to amend certain terms of the Employment
Agreement effective as of the date hereof;



     In consideration of the mutual covenants contained in this Amendment No. 2, the parties hereto
agree as follows:



     1. Section VIII.A. is hereby amended by the addition of the following at the end thereof:




“Notwithstanding anything to the contrary in this Section VIII.A,
the Options shall be deemed vested and exercisable as of January 2,
2008 in the same manner and pursuant to the same terms as would be
applicable under this Section VIII.A if the Executive’s employment
had terminated Without Cause or as a result of a Constructive
Discharge as of such date.



     2. Section XI.A. is hereby amended by the addition of the following paragraph at the end
thereof:




“If Executive is employed by the Company on January 2, 2008, then
notwithstanding anything to the contrary in this Section XI.A:




     (i) The Company shall pay $3,300,000 to the Executive in
cash or immediately available funds on January 2, 2008.













 






(ii) The Company shall maintain in the Joseph F. Furlong,
III Irrevocable Trust an amount equal to $1,471,939 in
order to provide for the Company’s obligations under Section
XI.C until the time for assessment of the excise tax under
Code §4999 against Executive for payments made under this
Section XI.A has been barred by the applicable statute of
limitations.




(iii) If Executive’s employment with the Company is
terminated for any reason by either Executive or the Company
after January 2, 2008, the benefits and perquisites
described in this Agreement as in effect on January 2, 2008
(other than travel and accommodation expenses and access to
office support), including without limitation, health
insurance and life insurance, shall be continued until
January 1, 2011; provided, however, that the obligation to
pay health insurance premiums shall terminate upon Executive
obtaining other employment to the extent such insurance is
provided by Executive’s new employer.




(iv) If Executive’s employment with the Company is
terminated for any reason by either Executive or the Company
after January 2, 2008, Executive shall have continued access
to existing office space and administrative support in San
Francisco for six months following termination.




(v) Upon the termination of Executive’s employment for any
reason by either Executive or the Company, the Company shall
pay an amount equal to the Company matching payments for
corporate retirement plans made with respect to Executive on
or before January 2, 2008 that are unvested at the time of
Executive’s termination.




(vi) Upon the termination of Executive’s employment for any
reason by either Executive or the Company, the Executive may
require the Company to repurchase all or a portion of his
Options granted prior to January 2, 2008 with an aggregate
difference between the fair market value of one share of the
Company’s common stock on the date of termination and the
per share exercise price set forth in the Options being
redeemed up to a maximum repurchase obligation of $1,396,660
and, effective January 2, 2008, the provisions of Section
VIII.E are hereby deleted and shall not apply. This right
may be exercised for ninety (90) days after the Executive’s
termination. Further, in addition to the amount required to
be maintained under Section



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XI.A(ii), the Company shall maintain in the Joseph F.
Furlong, III Irrevocable Trust an amount equal to
$1,396,660 in order to provide for the Company’s obligations
under this Section XI.A(vi) until the earlier of (i) the
date on which all of the Options which the Company may be
required to purchase under this Section XI.A(vi) have
expired or (ii) the lapse of Executive’s right to require
the Company to purchase his Options under this Section
XI.A(vi).




(vii) The payments and benefits provided in this paragraph
shall be in lieu of any amounts that Executive would
otherwise be entitled to receive under this Agreement as a
result of the termination of his employment with the Company
for any reason by either Executive or the Company (other
than earned but unpaid Base Salary and Bonus, which will be
paid in a lump sum at the time of the termination of the
Executive’s employment with the Company).




The intent of this paragraph is, to the extent the payment made
under this Section XI.A is treated as a form of nonqualified
deferred compensation that is subject to the provisions of Section
409A of the Internal Revenue Code, to have this agreement to make
such payment on January 2, 2008 treated as an election as to time
and manner of payment consistent with the transitional relief
contained in IRS Notice 2006-79.”



     3. In all other respects, the Employment Agreement remains in full force and effect without
change.



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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	AMERICAN HOMEPATIENT, INC.

 	 
	 	By:  	/s/ Stephen L. Clanton
 	 
	 	 	Name:  	Stephen L. Clanton 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                           /s/ Henry J. Blackstock
 	 
	 	 	Name:  	Henry J. Blackstock 	 
	 	 	Title:  	Chairman of the Compensation
Committee 	 
	 



	 	 	 	 	 
	 	 	 
	 	  	                                                       /s/ Joseph F. Furlong, III
 	 
	 	 	Joseph F. Furlong, III 	 
	 	 	 	 
	 




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