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Exhibit 10(xxii)
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 14th day of
October, 1996, by and between Xxx Xxxxxxx ("Executive") and Coventry Corporation
("Employer"), a Delaware corporation with its principal place of business at 00
Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000.
W I T N E S S E T H:
WHEREAS, Executive desires to enter into an employment relationship
with Employer and Employer desires to employ Executive; and
WHEREAS, Executive and Employer desire to set forth in a written
agreement the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. EMPLOYMENT. On the Effective Date (as defined in Section 3 below),
Executive shall be engaged by Employer as its Vice President of Operations.
Executive hereby agrees to such employment on and after the Effective Date under
the terms and conditions hereinafter set forth.
2. DUTIES. As Vice President of Operations, Executive shall report to
the President and Chief Executive Officer of Employer and shall be responsible
for the establishment implementation, and administration of information systems
for Employer and its subsidiaries and affiliates, including the formulation of
long range plans, goals and objectives for information systems, and such other
powers and duties normally associated with such position or as may be delegated
or assigned to Executive by Employer's President and Chief Executive Officer.
During the term of this Agreement, Executive shall also serve without additional
compensation in such other offices of the Employer or its subsidiaries or
affiliates to which he may be elected or appointed by the Board of Directors of
Employer or its subsidiaries or affiliates, respectively.
3. EFFECTIVE DATE. Executive's employment shall commence on October 14,
1996 (the "Effective Date").
4. INITIAL TERM. Subject to the terms and conditions set forth herein,
Executive shall be employed hereunder for an initial term of one year beginning
on the Effective Date. If at the end of the initial term a new employment
contract is not executed, the term of this Agreement shall continue on a
year-to-year basis in the absence of notice of either party.
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5. BASE COMPENSATION. For all duties rendered by Executive, Employer
shall pay Executive a base salary ("Base Salary") of One Hundred Ninety Thousand
Dollars ($190,000), annually, to be reviewed on an annual basis based upon the
performance of Executive. The Base Salary shall be paid to Executive in equal
semi-monthly payments in accordance with Employer's normal payroll policies.
6. ADDITIONAL COMPENSATION. During the period of this Agreement and as
a result of employment under this Agreement, Executive shall receive or be
eligible for the following additional compensation:
(a) EMPLOYER STOCK OPTIONS: Executive will be granted a
nonqualified stock option to purchase 100,000 shares of Common
Stock of Employer at an exercise price per share equal to the
closing price per share of the Common Stock of Employer as
reported on the Nasdaq National Market on the Effective Date.
The option will vest at a rate of one-fourth of the shares per
year over a four-year vesting period beginning on the
Effective Date, or in the event substantially all of the
capital stock or assets of Employer are sold or transferred or
Employer is merged into or consolidated with another
unaffiliated entity, then the option will become fully vested
on the date of closing. The option will expire on the tenth
anniversary of the Effective Date unless sooner terminated by
Executive terminating his employment hereunder. The option
shall be granted under and in accordance with the terms and
conditions of Employer's Second Amended and Restated 1993
Stock Option Plan and a letter agreement between Executive and
Employer dated the Effective Date.
(b) BONUS COMPENSATION: Executive shall be eligible for an annual
bonus ("Bonus") potential of 40% of Base Compensation, which
shall be based upon achievement of budget and other
operational performance factors. Executive's bonus and
performance factors shall be determined on an annual basis by
the Compensation and Benefits Committee.
(c) CAR ALLOWANCE: Executive shall be entitled to a car allowance
of $550.00 per month.
(e) OTHER BENEFITS: Executive will be eligible for participation
in any employee benefit programs available to officers of
Employer from time to time as provided in Section 15 below.
7. EXPENSES AND COSTS OF RELOCATION. Executive shall be reimbursed for
ordinary and necessary business expenses incurred by Executive on behalf of
Employer and its subsidiaries or affiliates upon presentation of vouchers in
accordance with the usual and customary procedure of Employer in relation to
such expense items, except that Employer may elect, at its option, to pay such
expense items directly rather than reimburse Executive therefor.
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Executive shall also be reimbursed for expenses associated with the
relocation of Executive to Employer's designated location, including the payment
of realtor's fees, closing costs, moving expenses and reasonable pre-move travel
expenses (meals, lodging and car rental expense) to search for a new residence.
8. EXTENT OF SERVICE. Executive shall devote substantially all of his
working time, attention and energies to the business of the Employer 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
Employer; but except as provided in Section 13(b), this Section shall not
prevent Executive from serving as a director of other entities not affiliated
with Employer, from making real estate or other investments of a passive nature
or from participating in the activities of a nonprofit charitable organization
where such participation does not require a substantial amount of time and does
not adversely affect Executive's ability to perform his duties under this
Agreement.
9. TERMINATION OF EMPLOYMENT. Employer may terminate this Agreement
with or without cause at any time during the term of this Agreement. If the
employment of Executive with Employer is terminated by Employer for any reason
other than Good Cause (as defined in Section 24 below), the following provisions
will apply:
(a) Employer shall during the Severance Period (as defined in
Section 24 below), continue to pay Executive an amount equal
to Executive's Base Salary at the time of termination of
employment.
Such amount will be paid during the Severance Period in
monthly or other installments, similar to those being received
by Executive at the date of termination of employment, and
will commence as soon as practicable following the date of
termination of employment.
(b) During the Severance Period Executive and his spouse and
family will continue to be covered by all Welfare Plans (as
defined in Section 24 below), maintained by Employer in which
he or his spouse or family were participating immediately
prior to the date of his termination as if he continued to be
an employee of Employer; provided that, if participation in
any one or more of such Welfare Plans is not possible under
the terms thereof, Employer will provide substantially
identical benefits to the extent possible. If, however,
Executive obtains employment with another employer during the
Severance Period, such coverage shall be provided until the
earlier of: (i) the end of the Severance Period or (ii) the
date on which the Executive and his spouse and family can be
covered under the plans of a new employer without being
excluded from full coverage because of any actual pre-existing
condition.
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(c) Executive shall not be entitled to payments during the
Severance Period attributable to compensation for vacation
periods he would have earned had his employment continued
during the Severance Period or to unused vacation periods
accrued as of the date of termination of employment.
(d) During the Severance Period Executive shall not be entitled to
reimbursement for fringe benefits such as car allowance, dues
and expenses related to club memberships, and expenses for
professional services.
Compensation under Section 9(a), (b), (c) and (d) hereof is contingent
upon Executive's compliance with Section 13 hereof.
10. TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder at any time upon sixty (60) days prior written notice. Upon such
termination by Executive, the Employer shall pay the Executive only 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 Employer shall then have no
further obligation to Executive under this Agreement.
11. SETOFF.
(a) With respect to Section 9, payments or benefits payable to or
with respect to Executive or his spouse pursuant to this
Agreement shall be reduced by the amount of any claim of
Employer against Executive or his spouse or any debt or
obligation of Executive or his spouse owing to Employer.
(b) With respect to Section 9, no payments or benefits payable to
or with respect to Executive pursuant to this Agreement shall
be reduced by any amount Executive or his spouse may earn or
receive from employment with another employer or from any
other source.
12. DEATH. If Executive dies during the Severance Period:
(a) All amounts payable hereunder to Executive shall, during the
remainder of the Severance Period, be paid to his surviving
spouse. On the death of the survivor of Executive and his
spouse, no further benefits will be paid under the Agreement.
(b) The spouse and family of Executive shall, during the remainder
of the Severance Period, be covered under all Welfare Plans
made available by Employer to Executive or his spouse
immediately prior to the date of his death to the extent
possible.
Any benefits payable under this Section 12 are in addition to any other
benefit due to Executive or his spouse or beneficiaries from Employer.
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13. RESTRICTIVE COVENANTS.
(a) Confidential Information. Executive agrees not to disclose,
either during the time he is employed by the Employer or
following termination of his employment hereunder, to any
person (other than a person to whom disclosure is necessary in
connection with the performance of his duties as an employee
of Employer or to any person specifically authorized by the
Board of Directors of Employer) any material confidential
information concerning the Employer or any of its Affiliates,
including, but not limited to, strategic plans, customer
lists, contract terms, financial costs, pricing terms, sales
data or business opportunities whether for existing, new or
developing businesses.
(b) Non-Competition. During the term of employment provided
hereunder and during the Severance Period or for a period of
one year, if longer, Executive will not 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 Employer or any Affiliate of
Employer in any state in which the Employer or any Affiliate
of Employer is conducting business on the date of termination
or expiration of this Agreement, provided that ownership of 5%
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 during the Severance Period or for a period of
one year after termination of employment, if longer, Executive
will not (i) directly or indirectly solicit business which
could reasonably be expected to conflict with the interest of
Employer or any Affiliate of Employer from any entity,
organization or person which has contracted with the Employer
or any Affiliate of Employer, which has been doing business
with the Employer or any Affiliate of Employer, from which the
Employer or any Affiliate of Employer was soliciting business
at the time of the termination of employment or from which
Executive knew or had reason to know that Employer or any
Affiliate of Employer was going to solicit business at the
time of termination of employment, or (ii) employ, solicit for
employment, or advise or recommend to any other persons that
they employ or solicit for employment, any employee of the
Employer or any Affiliate of Employer.
(d) Consultation. Executive shall, at the Employer's written
request, during the Severance Period or for a period of one
year after termination of employment, if longer, cooperate
with the Employer in concluding any matters in which Executive
was involved during the term of his employment and will make
himself
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available for consultation with the Employer on other matters
otherwise of interest to the Employer. The Employer agrees
that such requests shall be reasonable in number and will
consider Executive's time required for other employment and/or
employment search.
(e) Enforcement. Executive and the Employer acknowledge and agree
that any of the covenants contained in this Section 13 may be
specifically enforced through injunctive relief but such right
to injunctive relief shall not preclude the Employer 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 13 shall not
terminate upon Executive's termination of his employment with
the Employer or upon the termination of this Agreement under
any other provision of this Agreement.
14. VACATION. During each year of this Agreement, Executive shall be
entitled to four (4) weeks paid vacation.
15. HEALTH AND WELFARE BENEFITS; PROFIT-SHARING PLANS. In addition to
the benefits specifically provided for herein, Executive and his family shall be
entitled to participate in all health and welfare benefit plans maintained by
the Employer for executive or managerial employees generally according to the
terms of such plans, including Executive Long Term Disability coverage (which is
an individual medically underwritten policy and subject to a physical
examination for eligibility). Executive shall be entitled to participate in any
profit-sharing, retirement or similar plans established by Employer in which
executive or managerial employees of Employer participate, including any such
plan intended to comply with Section 401(k) of the Internal Revenue Code of
1986, as amended, and any such plan providing supplemental executive retirement
benefits.
16. EXECUTIVE ASSIGNMENT. No interest of Executive or his spouse or any
other beneficiary under this Agreement, or any right to receive any payment or
distribution hereunder, shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, nor may such interest or right to receive a payment or distribution
be taken, voluntarily or involuntarily, for the satisfaction of the obligations
or debts of, or other claims against, Executive or his spouse or other
beneficiary, including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
17. BENEFITS UNFUNDED. All rights of Executive and his spouse or other
beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Executive nor his
spouse or other beneficiary shall have any interest in or
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rights against any specific assets of Employer, and Executive and his spouse or
other beneficiary shall have only the rights of a general unsecured creditor of
Employer.
18. 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 Executive, or to its principal office in
the case of the Employer and the date of receipt shall be deemed the date which
such notice has been provided.
19. 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.
20. ASSIGNMENT. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer. The Executive acknowledges that the services to be
rendered by him are unique and personal, and Executive may not assign any of his
rights or delegate any of his duties or obligations under this Agreement.
21. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes all other prior agreements, 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.
22. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Tennessee, without giving effect to the principles of conflicts of law
thereof.
23. 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.
24. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" shall have the meaning set forth in Rule 144(a)(1)
promulgated under the Securities Act of 1933, as amended.
(b) "Good Cause" shall be deemed to exist if, and only if:
(i) Executive engages in material acts or omissions
constituting dishonesty, breach of fiduciary
obligation or intentional wrongdoing, malfeasance or
non-compliance with written directives approved by
the Board of Directors which are demonstrably
injurious to Employer;
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(ii) Executive is convicted of a violation involving fraud
or dishonesty; or
(iii) Executive's unexcused failure to report to work for
twenty (20) consecutive days, except in the event of
time taken for vacation, disability, sickness or
business travel; or
(iv) Executive materially breaches this Agreement (other
than by engaging in acts or omissions enumerated in
paragraphs (i) and (ii) above), or materially fails
to satisfy the conditions and requirements of his
employment with Employer, and such breach or failure
by its nature is incapable of being cured, or such
breach or failure remains uncured for more than 30
days following receipt by Executive of written notice
from Employer specifying the nature of the breach or
failure and demanding the cure thereof. For purposes
of this paragraph (iv), inattention by Executive to
his duties shall be deemed a breach or failure of
cure.
Without limiting the generality of the foregoing, if Executive
acted in good faith and in a manner he reasonably believed to
be in, and not opposed to, the best interest of Employer and
had no reasonable cause to believe his conduct was unlawful in
connection with any action taken by Executive in connection
with his duties, it shall not constitute Good Cause.
(c) "Severance Period" shall mean the period beginning on the date
the Executive's employment with Employer terminates without
Good Cause under circumstances described in Section 9 and
ending on the date that follows the number of months remaining
in the initial term of this Agreement, if any, plus 6 months
thereafter.
(d) "Welfare Plans" shall mean any health and dental plan,
disability plan, survivor income plan and life insurance plan
or arrangement currently or hereafter made available by
Employer in which Executive is eligible to participate.
25. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
26. SEVERABILITY. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby. In the event that Section 13(b) is determined by a court of
competent jurisdiction to be invalid due to overbreadth, such Section 13(b)
shall be constructed as narrowly as necessary to be enforceable.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
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Xxx Xxxxxxx
COVENTRY CORPORATION
By:
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Xxxxx X. Xxxx
President and Chief Executive Officer
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