EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into this 10th day of February,
2002, by and between American Healthways, Inc., a Delaware corporation
("Company") and Xxxxxx X. Xxxxxx ("Officer").
W I T N E S S E T H
I. Employment. In consideration of the mutual promises and
agreements contained herein, the Company employs Officer and Officer hereby
accepts employment under the terms and conditions hereinafter set forth.
II. Duties. Officer is engaged as an Executive Vice President of
the Company. During the terms of this Agreement, Officer shall also serve
without additional compensation in such other offices of the Company or its
subsidiaries or affiliates to which he may be elected or appointed by the Board
of Directors or by the Chief Executive Officer of the Company.
III. Term. Subject to the terms and conditions set forth herein,
Officer shall be employed hereunder for a term beginning on February 10, 2002
and terminating on February 10, 2003 (the "Expiration Date") unless sooner
terminated or further extended as hereinafter set forth. The Expiration Date
shall be automatically extended for one additional year at the end of the first
term of this Agreement and at the end of each year thereafter (so that the term
of this Agreement shall be extended automatically for one year and no more),
unless the Company notifies Officer in writing (the "Termination Notice") on or
before sixty (60) days prior to the Expiration Date that this automatic
extension provision is canceled and is of no further force and effect. Officer
will continue to be paid full pay and benefits during this sixty (60) day
period. Notwithstanding the automatic extension of the Expiration Date or any
other provisions herein, this Agreement shall expire on the date that Officer
becomes 65 years of age.
IV. Compensation. For all duties rendered by Officer, the Company
shall pay Officer a salary of $240,000 per year ("Base Salary"), payable in
equal monthly installments at the end of each month. All compensation payable
hereunder shall be subject to withholding for federal income taxes, FICA and
all other applicable federal, state and local withholding requirements.
V. Extent of Service. Officer shall devote substantially all of
his working time, attention and energies to the business of the Company and
shall not during the term of this Agreement take directly or indirectly an
active role in any other business activity without the prior written consent of
the Chief Executive Officer of the Company; but this Section shall not prevent
Officer from making real estate or other investments of a passive nature or
from participating without compensation in the activities of a nonprofit
charitable organization where such participation does not require a substantial
amount of time and does not adversely affect his ability to perform his duties
under this
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Agreement. Officer shall not serve on the board of directors of an entity
outside of the Company and its affiliates without the prior approval of the
Chief Executive Officer of the Company.
VI. Disability. During any period in which Officer fails to
perform his duties hereunder as a result of incapacity due to physical or
mental illness, Officer shall continue to receive his Base Salary until his
employment is terminated hereunder. In the case of incapacity due to physical
or mental illness resulting in Officer being absent from his duties hereunder
on a full time basis for more than ninety (90) consecutive days or for more
than one hundred and twenty (120) days in any consecutive six (6) month period
or in the case of a determination by the Board of Directors that Officer is
permanently and totally disabled from performing his duties hereunder, the
Company may terminate Officer's employment hereunder by the delivery of written
notice of termination. In the event the Company so terminates Officer under
this Section, such termination shall be considered termination without just
cause and the Company shall pay Officer such amounts and provide such benefits
as are required by Section VIII hereof, reduced by the benefits payable to
Officer under the Company's disability insurance policies.
For purposes of this Section, the determination of whether Officer is
incapacitated due to physical or mental illness and therefore disabled shall be
made by the Chief Executive Officer of the Company upon advice of a licensed
physician. Any dispute which shall arise between the parties hereto regarding
whether the Officer is disabled as contemplated in this Section shall be
settled by arbitration as provided in Section XV.
In the event of Officer's incapacity due to physical or mental
illness, Officer shall be entitled to participate in the Company's health
insurance and life insurance programs so long as is permitted under the
provisions of these coverages. If Officer is no longer eligible for coverage in
the Company's health insurance plan, the Company shall pay the difference
between the cost of COBRA medical insurance coverage (available after active
eligibility has ended) and Officer's contribution to the plan immediately
preceding the disability but in no event shall the Company pay this difference
for any period beyond the unexpired term of this Agreement or beyond the period
of Officer's eligibility to participate in COBRA health insurance benefits.
Following Officer's termination for disability, Officer's benefits for past
participation in the Company's bonus, capital accumulation and stock option
plans shall be determined in accordance with the provisions of those plans and
Officer shall not be eligible for further participation in these plans beyond
the date of termination.
VII. Termination for Just Cause. For purposes of this Agreement,
the Company shall have the right to terminate Officer for "just cause" if, in
the good faith opinion of the Chief Executive Officer of the Company, Officer
is guilty of (i) intoxication while on duty, (ii) theft or dishonesty, (iii)
conviction of a crime involving moral turpitude, or (iv) upon written notice to
Officer, there is failure to cure within 30 days any willful and continued
neglect or negligence by Officer in the performance of his duties as an officer
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or (v) upon written notice to Officer, there is failure to cure within 30 days
any violation of Company Policy or Code of Conduct. For purposes of this
Section VII, the Chief Executive Officer of the Company shall make
determination of a violation. In making such determination, the Chief Executive
Officer of the Company shall not act unreasonably or arbitrarily. Any dispute
which shall arise between the parties hereto regarding whether Officer has
committed any act which could give Company "cause" to terminate this Agreement
shall be settled by arbitration as provided in Section XV. Upon such
termination by the Company, the Company shall have no further obligation to the
Officer under this Agreement.
VIII. Termination Without Just Cause. Officer's employment under
this Agreement may be terminated (i) by the Company at any time "without just
cause" by providing Officer with written notice, (ii) by the Company by
providing Officer with Termination Notice (as defined in Section III), or (iii)
by Officer at any time within twelve (12) months following the occurrence of a
Change In Control (as defined in Section XIX herein). Officer's termination
date shall be deemed the date Officer receives his written notice of
termination or Termination Notice from the Company or the date the Company
receives notice from the Officer of his termination in accordance with Section
IX herein. In the event of such termination:
a. Subject to compliance by Officer with the provisions of
Section VIII herein, the Company shall pay Officer monthly
from the termination date for a total of one (1) year or the
remaining term of this Agreement, whichever is greater. In
addition, Officer will be paid any unpaid vacation pay earned
by him, up to and including the date of termination, on the
termination date.
b. Officer shall cease as of the termination date his further
participation in the Company's stock option plans, capital
accumulation plans, bonus plans, monthly automobile allowance
and any other benefit or compensation plan in which Officer
participated or was eligible to participate except as set
forth in Section VIII(c) below. The Officer's termination
date shall be utilized for any vesting provisions of the
plans listed above in this subparagraph (b).
c. Following termination by the Company without just cause,
Officer shall be eligible to obtain COBRA health insurance
coverage under the Company's health insurance plan for a
period of time generally available to other participants
eligible for such coverage. If the Officer elects this COBRA
health insurance coverage, Officer's contribution to such
coverage will continue at rates contributed by the Company's
other officers as may be in effect from time to time while
the Officer's COBRA health insurance coverage is in place.
While life and disability insurance coverage cannot be
provided following the Officer's termination under the terms
of these group insurance plans, the Company will pay to
Officer the equivalent amount of the Company's contribution
to the premiums for these
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coverage's for the remaining payment term of this contract in
an amount equal to the amount contributed by the Company for
these coverage's for other officers of the Company in effect
while Officer's coverage following termination is in place.
If Officer maintains COBRA health coverage with the Company
upon new employment following termination from the Company,
the full cost of the COBRA health insurance coverage shall be
the responsibility of the Officer. In addition, upon new
employment following termination from the Company, the
Company's reimbursement of life and disability insurance
premium contributions will also terminate.
d. No payments of Base Salary or of any other type of
compensation shall be made to Officer after Officer becomes
sixty five (65) years of age.
e. All payments hereunder will cease upon the death of Officer.
IX. Termination by Officer. Officer may terminate his employment
hereunder at any time upon sixty (60) days written notice. Upon such
termination by Officer, other than termination in accordance with Section
VIII.(iii), the Company shall pay the Officer his Base Salary due through the
date on which his employment is terminated at the rate in effect at the time of
notice of termination. The Company shall then have no further obligation to
Officer under this Agreement.
X. Termination Upon Death. If Officer dies during the term of
this Agreement, the Company shall pay his Base Salary due through the date of
his death at the rate in effect at the time of his death. The Company shall
then have no further obligations to Officer or any representative of his estate
or his heirs except that Officer's estate or beneficiaries as the case may be
shall be paid such amounts as may be payable under the Company's life insurance
policies and other plans as they relate to benefits following death then in
effect for the benefit of Officer.
XI. Restrictive Covenants.
(a) Confidential Information. During the term of
employment provided hereunder and continuing during
the period while any amounts are being paid to
Officer pursuant to the terms of the Agreement, and
for a period of one (1) year thereafter, Officer
agrees not to disclose to any person other than a
person to whom disclosure is necessary in connection
with the performance of his duties or to any person
specifically authorized by the Chief Executive
Officer of the Company any material confidential
information concerning the Company, including, but
not limited to identities of customers and
prospective customers identities of individual
contacts at customers, information about Company
colleagues, models and strategies, contract formats,
business plans and related operation methodologies,
financial information or measures, data bases,
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computer programs, treatment protocols, operating
procedures and organization structures.
(b) Non-Competition. During the term of employment
provided hereunder and continuing during the period
while any amounts are being paid to Officer pursuant
to the terms of the Agreement, and for a period of
one (1) year thereafter, Officer will not (a)
directly or indirectly own, manage, operate, control
or participate in the ownership, management,
operation or control of, or be connected as an
officer, employee, partner, director or otherwise
with, or any have financial interest in, or aid or
assist anyone else in the conduct of, any business
which is in competition with any business conducted
by the Company or which Officer knew or had reason
to know the Company was actively evaluating for
possible entry, provided that ownership of five (5)
percent or less of the voting stock of any public
corporation shall not constitute a violation hereof.
(c) Non-Solicitation. During the term of employment
provided for hereunder and continuing during the
period while any amounts are being paid to Officer
pursuant to the terms of this Agreement, and for a
period of one (1) year thereafter, Officer will not
(a) directly or indirectly solicit business which
could reasonably be expected to conflict with the
Company's interest from any entity, organization or
person which has contracted with the Company, which
has been doing business with the Company, from which
the Company was soliciting business at the time of
the termination of employment or from which Officer
knew or had reason to know that Company was going to
solicit business at the time of termination of
employment, or (b) employ, solicit for employment,
or advise or recommend to any other persons that
they employ or solicit for employment, any employee
of the Company.
(d) Consultation. Officer shall, at the Company's
written request, during the period he is receiving
any payment from the Company hereunder, cooperate
with the Company in concluding any matters in which
Officer was involved during the term of his
employment and will make herself available for
consultation with the Company on other matters
otherwise of interest to the Company. The Company
agrees that such requests shall be reasonable in
number and will consider Officer's time required for
other employment and/or employment search.
(e) Enforcement. Officer and the Company acknowledge and
agree that any of the covenants contained in this
Section XI may be specifically enforced through
injunctive relief but such right to
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injunctive relief shall not preclude the Company
from other remedies, which may be available to it.
(f) Continuing Obligation. Notwithstanding any provision
to the contrary or otherwise contained in this
Agreement, the Agreement and covenants contained in
this Section XI shall not terminate upon Officer's
termination of his employment with the Company or
upon the termination of this Agreement under any
other provision of this Agreement.
XII. Vacation. During each year of this Agreement, Officer shall
be entitled to vacation in accordance with Company policy in effect from time
to time, but in any event not less than 4 weeks per year.
XIII. Benefits. In addition to the benefits specifically provided
for herein, Officer shall be entitled to participate while employed by the
Company in all benefit plans maintained by the Company for officers generally
according to the terms of such plans.
XIV. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by registered or
certified mail to his residence in the case of Officer, or to its principal
office in the case of the Company and the date of mailing shall be deemed the
date which such notice has been provided.
XV. Arbitration. Any dispute between the parties hereto shall be
settled by final and binding arbitration in Nashville, Tennessee, in accordance
with the then effective rules of the American Arbitration Association, and
judgment upon the award rendered may be entered in any court having
jurisdiction thereof.
XVI. Waiver of Breach. The waiver by either party of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by the other party.
XVII. Assignment. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. The Officer acknowledges that the
services to be rendered by him are unique and personal, and Officer may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement.
XVIII. Entire Agreement. This instrument contains the entire
agreement of the parties and supersedes all other prior agreement, employment
contracts and understandings, both written and oral, express or implied with
respect to the subject matter of this Agreement and may not be changed orally
but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. The laws of the State of Tennessee shall govern this Agreement.
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XIX. Headings. The sections, subjects and headings of this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
XX. Definitions. For purposes of this Agreement, a "Change of
Control" shall be deemed to mean:
(a) a transaction or series of transactions (occurring
within 24 months of each other) in which all or any
substantial (defined as more than fifty percent
(50%) of the assets of American Healthways, Inc.)
portion of Company assets have been acquired through
a merger, business combination, purchase or similar
transaction by any entity or person, other than an
entity controlled by American Healthways, Inc. or
(b) a transfer or series of transfers (occurring within
24 months of each other) in which securities
representing control of American Healthways, Inc.
("control" being defined as greater than fifty
percent (50%) of the outstanding voting power of the
outstanding securities of American Healthways, Inc.)
are acquired by or otherwise are beneficially owned,
directly or indirectly, by any corporation, person
or "group" (as such term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934).
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first written.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
AMERICAN HEALTHWAYS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Chairman and Chief Executive Officer
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