Exhibit 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into this 1st day of October,
2001, by and between American Healthways, Inc., a Delaware corporation
("Company") and Xxxx 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 and Chief
Financial Officer of the Company. Her powers and duties in that capacity shall
be those normally associated with the position of Executive Vice President and
Chief Financial Officer. 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 she may be elected or appointed by the
Board of Directors or by the Chief Executive Officer of the Company. If a Good
Reason For Termination exists then it shall be considered, at Officer's option,
Termination Without Just Cause and in such event Officer shall receive the
payments and benefits set forth in Section VIII hereof, with the date of
termination for purposes of Section VIII hereof being the date Officer delivers
written notice of her exercise of this option. Officer may exercise this option
by delivering written notice to the Company at any time within a 30-day period
following her receipt of notice of the existence of a Good Reason For
Termination.
III. Term. Subject to the terms and conditions set forth herein,
Officer shall be employed hereunder for a term beginning on October 1, 2001 and
terminating on September 30, 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 minimum salary of $200,000 per year ("Minimum Salary"), payable in
equal monthly installments at the end of each month. In addition thereto,
commencing October 1, 2002, one year from the start of this Agreement and
annually thereafter
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should this Agreement be extended, the Minimum Salary shall be increased and
adjusted upward, based upon any increase in the Consumer Price Index for Urban
Wage Earners and Clerical Workers, U.S. All City Average Report, of the U.S.
Bureau of Labor Statistics (the "Consumer Price Index") or such index fulfilling
the same or similar purpose in the event the Consumer Price Index is no longer
maintained, in an amount not to exceed 5%. For purposes of determining the
increase in the Minimum Salary, the base month used in the Consumer Price Index
shall be the first full month preceding the commencement of this Agreement. Such
increase shall not be made retroactive for the first year and such increase
shall be made, no more frequently than annually, based upon any such increased
in the Consumer Price Index. In determining the amount of the annual increase
based on any increase in the Consumer Price Index, the percentage of increase in
the Consumer Price Index shall be multiplied times the Minimum Salary plus all
other salary increases previously granted by the Board of Directors to Officer
and plus all previous adjustments based upon increases in the Consumer Price
Index ("Base Salary"). In addition thereto, each year beginning October 1, 2002,
Officer's compensation will be reviewed by the Chief Executive Officer of the
Company and, after taking into consideration performance, the Chief Executive
Officer of the Company may increase Officer's Base Salary. Should such increase
be equal to or greater than the cost of living increase, or 5%, no cost of
living increase will be granted for that year. Officer shall participate in the
Company's performance bonus plan and any bonuses paid under such plan shall be
in addition to the Base Salary provided for in this Agreement but shall not be
included as part of Base Salary for the purpose of determining the increase or
adjustment based upon the Consumer Price Index. 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 her
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 her ability to perform her duties under this
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 her
duties hereunder as a result of incapacity due to physical or mental illness,
Officer shall continue to receive her Base Salary until her employment is
terminated hereunder. In the case of incapacity due to physical or mental
illness resulting in Officer being absent from her 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
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permanently and totally disabled from performing her 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
coverage's. 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 gross negligence by Officer in the performance of her duties as an
officer 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.
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
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Termination Notice (as defined in Section III), (iii) by Officer at any time
within twelve (12) months following the occurrence of a Change In Control (as
defined in Section XIX herein), or (iv) by Officer within 30 days of an event
that provides Good Reason For Termination (as defined in Sections II and XIX).
Officer's termination date shall be deemed the date Officer receives her written
notice of termination or Termination Notice from the Company or the date the
Company receives notice from the Officer of her 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 from the termination
date for a total of one (1) year or the remaining term of this
Agreement, whichever is greater, except in the event Officer
terminates this Agreement pursuant to Section VIII(iii),
following a change of control, payment shall be for two (2)
years in an amount equal to her monthly Base Salary. In
addition, Officer will be paid any unpaid vacation pay earned by
her, up to and including the date of termination, on the
termination date.
b. Officer shall cease as of the termination date her 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 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.
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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 her 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) and
(iv) herein, the Company shall pay the Officer her Base Salary due through the
date on which her 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 her Base Salary due through the date of her
death at the rate in effect at the time of her death. The Company shall then
have no further obligations to Officer or any representative of her estate or
her 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. Officer agrees not to
disclose, either during the time she is employed by the
Company or following termination of her employment
hereunder, to any person other than a person to whom
disclosure is necessary in connection with the
performance of her 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, 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
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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 she 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 her 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 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 her
employment with the Company or upon the termination of
this Agreement under any other provision of this
Agreement.
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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 her 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 her
rights or delegate any of her 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.
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, the following
definitions shall apply:
(a) A "Change of Control" shall be deemed to mean:
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(i) 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
(ii) 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).
(b) A "Good Reason For Termination" shall exist if:
(i) there is a change in Officer's title, Officer no
longer reports to Company's Chief Executive
Officer or there is a significant change in the
nature or scope of the Officer's authority, or
responsibilities or title unacceptable to
Officer;
(ii) there is a reduction in Officer's rate of base
salary (for reasons other than Company
performance) or overall compensation, including
benefit programs, including, but not limited to,
any stock option plan, investment plan, savings
plan, incentive compensation plan or life
insurance, medical plans or disability plans
provided by the Company to the Officer and in
which the Officer is participating or under
which the Company is covered unless such changes
apply to all Officers of the Executive Vice
President level.
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(iii) the Company changes the principal location in
which Officer is required to perform services
outside a twenty-mile radius of Metropolitan
Nashville without Officer's consent;
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written.
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Xxxx X. Xxxxxx
AMERICAN HEALTHWAYS, INC.
By:
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Title: Chairman and Chief Executive Officer
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