Exhibit 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 29TH DAY OF
OCTOBER, 2003, by and between American Healthways, Inc., a Delaware corporation
("Company") and ▇▇▇▇▇ ▇▇▇▇, MD ("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 MEDICAL OFFICER of the Company. His powers and duties in that capacity
shall be those normally associated with the position of Executive Vice President
and Chief Medical 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 he 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 his 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 his 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 29, 2003 and
terminating on OCTOBER 31, 2005 (the "Expiration Date") unless sooner terminated
or further extended as hereinafter set forth. Unless Officer is notified to the
contrary by the Company within sixty (60) days of the end of the first year of
the initial term of this Agreement, the Expiration Date shall be extended one
additional year. If extended, the Expiration Date would be considered October
31, 2006. Thereafter, 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, unless the Company notifies Officer in writing (the
"Termination Notice") on or before sixty (60) days prior to any 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.
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IV. Compensation. For all duties rendered by Officer, the Company
shall pay Officer a minimum salary of $287,500 per year ("Minimum Salary"),
payable in equal monthly installments at the end of each month. In addition
thereto, commencing OCTOBER 22, 2004, and annually thereafter 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, 2004,
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
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
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
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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
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 his 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.
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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), (iii) by
Officer at any time within twelve (12) months following the occurrence of a
Change In Control (as defined in Section XX herein), or (iv) by Officer within
30 days of an event that provides Good Reason For Termination (as defined in
Sections II and XX). 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 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 In Control, payment shall be for
two (2) years in an amount equal to his Base Salary payable
monthly. 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 coverages during the time that payments are
made under this Agreement in an amount equal to the amount
contributed by the Company for these coverages 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 after obtaining new
employment following termination of this Agreement, the full
cost of the COBRA health insurance coverage shall be the
responsibility of the Officer. In addition,
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upon obtaining new employment following termination of this
Agreement, 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) and
(iv) herein, 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. Officer agrees not to
disclose, either during the time he is employed by
the Company 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 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. The
provisions of this Section XI(a) shall not apply to
any information which (i) is generally available to
and known by the public other than as a result of
disclosure by the Officer; (ii) is independently
obtained by Officer without violating his obligations
under this Agreement; (iii) is available to Officer
from a source that is not prohibited from disclosing
the information by a legal, contractual, or fiduciary
obligation to the Company; or (iv) is
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required to be disclosed by Officer pursuant to a
validly issued subpoena or court order. Section XI(a)
also shall not apply to Officer's general expertise
in disease management gained prior to the date of
this Agreement.
(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)
materially, 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 directly in competition with any
business conducted by the Company as of the
termination of this Agreement or which Officer knew
or had reason to know the Company was actively
evaluating for possible entry as of the termination
of this Agreement, provided that ownership of five
(5) percent or less of the voting stock of any public
corporation shall not constitute a violation hereof.
This Section XI will not prevent Officer from (i)
engaging in the private practice of medicine; or (ii)
serving as the medical director of or otherwise
providing services to a health plan that has a
disease management component to its healthcare
programs, so long as Officer is not primarily
responsible for developing, managing, or operating
the disease management component of any such program.
(c) Non-Solicitation. During the term of this Agreement
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
this Agreement or from which Officer knew or had
reason to know that Company was going to solicit
business at the time of termination of this
Agreement, 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 this
Agreement and
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will make himself 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 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 four (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 on 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
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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; Governing Law. 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. 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 In Control" shall be deemed to mean:
(i) a transaction or series of transactions
(occurring within 24 months of each other)
in which all or substantially all (defined
as more than fifty percent (50%) of the
Company's assets are acquired through a
merger, business combination, purchase or
similar transaction by any entity or person,
other than an entity controlled by American
Healthways; or
(ii) a transfer or series of transfers (occurring
within 24 months of each other) in which
securities representing control of American
Healthways ("control" being defined as
greater than fifty percent (50%) of the
voting power of the outstanding securities
of American Healthways) 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
reasonably unacceptable to Officer;
(ii) there is a reduction in Officer's rate of
Base Salary (for reasons other than Company
performance) or overall
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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.
(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.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, M.D.
AMERICAN HEALTHWAYS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Chairman
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