Exhibit 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement entered into this 1st day of September, 2000,
by and between American Healthways, Inc., a Delaware corporation with its
principal place of business at 3841 Green Hills Village Drive, Nashville,
Tennessee 37215 ("Company"), and Mary D. Hunter (" Officer").
W I T N E S S E T H:
1. Employment. In consideration of the mutual promises and agreements
contained herein and, as additional compensation for entering into this
Employment Agreement, the grant by the Company, simultaneously with this
Employment Agreement, to the Officer of an option to purchase 20,000 shares of
American Healthways, Inc.'s common stock, the Company employs Officer and
Officer hereby accepts employment under the terms and conditions hereinafter set
forth.
2. Duties. Officer is engaged as Senior Vice President and Chief
Operating Officer, Hospital Group. Her powers and duties in that capacity shall
be those normally associated with the position. 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. A significant change in the title or duties of Officer
or a change in the location in which such duties are to be performed to a
location outside of the Metropolitan Nashville Statistical Area without the
written consent of Officer 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 8 hereof, with the date of termination for
purposes of Section 8 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
receipt of notice of such change.
3. Term. Subject to the terms and conditions set forth herein, Officer
shall be employed hereunder for a term beginning on September 1, 2000, and
terminating on August 31, 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 beginning on August 31, 2001 and
on each August 31 thereafter (so that on each August 31 anniversary date the
term of this Agreement shall be extended automatically to be three years and no
more), unless the Company notifies Officer in writing (the "Termination Notice")
on or before sixty (60) days prior to August 31 of the then current contract
year that this automatic extension provision is canceled and is of no further
force and effect. 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.
4. Compensation. For all duties rendered by Officer, the Company shall
pay Officer a minimum salary of $187,000 per year ("Minimum Salary"), payable in
equal monthly installments at the end of each month. In addition thereto,
commencing September 1, 2001, 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. For purposes of determining the increase in the Minimum Salary, the
base month used in the Consumer Price Index shall be August, 2000. Such increase
shall not be made retroactive for the first year, but commencing September 1,
2001, such increase shall be made, no more frequently than annually, based upon
any such increase 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 September 1, 2001, 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. 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.
5. 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 the Company and its affiliates without prior approval of the Chief
Executive Officer of the Company.
6. 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 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 8 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 physician or mental illness and, therefore, disabled shall
be made by the Chief Executive Officer of the Company upon advice of a licensed
physician.
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.
7. 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 in the
conduct of the Company's business, (iii) conviction of a crime involving moral
turpitude, or (iv) willful and continued neglect or gross negligence by Officer
in the performance of her duties as an officer. For purposes of this Section 7,
"willful" shall be determined by the Chief Executive Officer of the Company. In
making such determination, the Chief Executive Officer of the Company shall not
act unreasonably or arbitrarily.
8. 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 Officer at any time within
twelve (12) months following the occurrence of a Change in Control (as defined
in Section 19 herein) for Good Reason (as defined in Section 19) and (iii) by
Officer for Any Reason (as defined in Section 19 herein). Officer's termination
date shall be deemed the date Officer receives her written notice of termination
from the Company or the date the Company receives notice from the Officer of her
termination in accordance with Section 8 (ii) or 8 (iii) herein. In the event of
such termination:
(a) If Officer has been terminated by the Company pursuant
to 8(i) above prior to a Change of Control and subject
to compliance by Officer with the provisions of Section
11 herein, the Company shall pay Officer from the
termination date, for a total of two (2) years or the
remaining term of this Agreement, whichever is greater,
monthly during her lifetime, an amount equal to her
monthly base salary on the termination date. If Officer
has been terminated by the Company pursuant to 8(i)
above after a Change of
Control has occurred or the Officer terminates her
employment pursuant to 8(ii) above, the Company shall
pay to Officer in one lump sum, within 30 days of the
Officer's termination date, an amount equal to 24 months
of Officer's base salary or base salary for the
remaining months left in the term of this contract,
whichever is greater, calculated using the Officer's
monthly base salary on the termination date. If
employment is terminated pursuant to 8 (iii) above, the
Company shall pay to officer in one lump sum within 30
days of the Officer's termination date, an amount equal
to the greater of 12 months salary or an amount equal to
the salary for one half of the remaining months under
the unexpired term of this Agreement all calculated
using the Officer's monthly base salary 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
8(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 for the
remaining payment term of this contract 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 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 or
character shall be made to Officer after Officer becomes
sixty five (65) years of age.
(e) The Company shall be entitled to offset and reduce any
payments due to Officer hereunder if the Company has
terminated the Officer's employment pursuant to 8(i)
above prior to a Change of Control by the amount earned
by Officer in any active employment that she may receive
during the remaining unexpired payment term of this
Agreement from any other source whatsoever, except said
funds shall not include income from dividends,
investments or passive income. As a condition for
Officer receiving payments from the Company pursuant to
termination pursuant to 8(i) above prior to a Change of
Control, she agrees to furnish Company annually with
full information regarding such other employment, to
permit inspection of her records regarding any such
employment and to provide a copy of her federal income
tax returns for such periods on a timely basis.
(f) The Company shall be entitled to offset and reduce any
payments due to Officer hereunder by the amounts of
unemployment insurance, social security insurance or
like benefits received by Officer if employment has been
terminated pursuant to 8 (i) above prior to a Change of
Control.
(g) All payments hereunder will cease upon the death of
Officer.
9. 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 8(ii) or 8(iii)
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 than have no further obligation to
Officer under this Agreement.
10. 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.
11. Restrictive Covenants.
(a) Confidential Information. In the course of Officer's
employment, Officer will have access to trade secrets
and confidential information of the Company and its
clients. Accordingly, 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, its
customers and its employees,
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. Officer will return to the
Company all property and confidential information in the
Officer's possession and agrees not to copy or otherwise
record in anyway such information.
(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 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 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 11 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 11
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.
12. Vacation. During each year of this Agreement, Officer shall be
entitled to vacation in accordance with Company policy in effect from time to
time.
13. 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.
14. 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.
15. 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.
16. 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 her are unique and personal, and Officer may not assign any of her
rights or delegate any of her duties or obligations under this Agreement.
17. 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. This Agreement shall be
governed by the laws of the State of Tennessee.
18. 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.
19. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) A "Change of Control" shall be deemed to mean:
(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. 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).
(iii) The sale by the Company of the Hospital Group.
(b) A "Good Reason" shall exist if after the occurrence of
a Change of Control:
(i) there is a significant change in the nature or
scope of the Officer's authority and
responsibilities;
(ii) there is a reduction in Officer's rate of Base
Salary or (for reasons other than Company
performance) overall compensation; or
(iii) the Company changes the principal location in
which Officer is required to perform services
outside a fifteen mile radius of the present
location without Officer's consent.
(c) "For Any Reason" shall mean, after a Change of Control
at the sole discretion of Officer.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written.
------------------------------------------
Mary D. Hunter
AMERICAN HEALTHWAYS, INC.
By:
------------------------------------------
Title: President & Chief Executive Officer