Document:

Exhibit 10.1

 

HEALTHWAYS, INC.

AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

 (EXECUTIVE OFFICERS AND OTHER SENIOR OFFICERS)

This RESTRICTED STOCK UNIT AWARD AGREEMENT (the "Agreement"), dated GRANT DATE, is by and between Healthways, Inc., a Delaware corporation (the "Company"), and PARTICIPANT NAME (the "Grantee"), under the Company's Amended and Restated 2014 Stock Incentive Plan (the "Plan").  Terms not otherwise defined herein shall have the meanings given to them in the Plan.

Section 1.                          Restricted Stock Unit Award.  The Grantee is hereby granted NUMBER OF SHARES restricted stock units (the "Restricted Stock Units").  Each Restricted Stock Unit represents the right to receive one share of the Company's Common Stock, $.001 par value (the "Stock"), subject to the terms and conditions of this Agreement and the Plan.

Section 2.                          Vesting of the Award.  Except as otherwise provided in Section 3 and Section 5 below, the Restricted Stock Units will vest at such times (the "Vesting Date") and in the percentages set forth below, as long as the Grantee is serving as an employee of the Company on the Vesting Date.

	
Vesting Date

	 	
Award Percentage of 

Restricted Stock Units

	
One Year from Grant Date

Two Years from Grant Date

Three Years from Grant Date

Four Years from Grant Date

 

	 	
25%

25%

25%

25%

The Company shall issue one share of Stock to the Grantee in settlement of each vested Restricted Stock Unit (the "Distributed Shares") at the time the Restricted Stock Unit vests pursuant to any provision of this Agreement. The Distributed Shares shall be represented by a certificate or by a book-entry.

Section 3.                          Forfeiture on Termination of Employment.

3.1.            Termination by the Company for Cause.  If the Grantee's employment with the Company is involuntarily terminated for Cause, then all Restricted Stock Units that have not vested prior to the date of termination of Grantee's employment will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

3.2.            Termination by Reason of Retirement.  If the Grantee's employment by the Company terminates by reason of Retirement (as defined in the Plan), the Restricted Stock Units granted hereunder shall not be forfeited but shall be settled in Stock to the Grantee on the same schedule as provided in Section 2 (or otherwise) as if the Grantee had continued employment through each such Vesting Date (or such other vesting event pursuant to Section 3.4 or Section 5.2).

3.3.            Termination by the Company without Cause or by the Grantee for Good Reason.  If Grantee's employment with the Company (a) is involuntarily terminated by the Company for any reason other than termination for Cause, or (b) is terminated by the Grantee for Good Reason, then all Restricted Stock Units that have not vested prior to the date of termination of Grantee's employment described in this Section 3.3 shall immediately vest.  For purposes of this Section 3.3, the term "Good Reason" shall mean (i) a material reduction in the Grantee's base salary (unless such reduction is part of an across the board reduction affecting all Company executives with a comparable title), or (ii) a requirement by the Company to relocate the Grantee to a location that is greater than 25 miles from the location of the office in which the Grantee performs his or her duties at the time of such relocation.

3.4.            Termination by Death or Disability.  If the Grantee's employment by the Company terminates by reason of death or Disability (as defined in the Plan), the Restricted Stock Units granted hereunder shall immediately vest.

3.5.            Other Termination.  If the Grantee's employment by the Corporation is terminated for any reason other than as described in Sections 3.1 through 3.4 above, then all Restricted Stock Units that have not vested prior to the date of termination of Grantee's employment will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

Section 4.                          Voting Rights and Dividends.  Prior to each Vesting Date, the Grantee shall be credited with cash dividend equivalents with respect to the Restricted Stock Units at the time of any payment of dividends to stockholders on shares of Common Stock in accordance with the terms set forth in the Plan, and such dividend equivalents shall be paid (in cash, without interest) to the Grantee when the Restricted Stock Units to which they relate are settled in accordance with this Agreement.  The Grantee shall not have any voting rights with respect to the Stock underlying the Restricted Stock Units prior to the vesting of the Restricted Stock Units and the issuance of the Stock as set forth in Section 2.  A holder of Distributed Shares shall have full dividend and voting rights as a holder of Stock.

Section 5.                          Restrictions on Transfer; Change in Control.

5.1.            General Restrictions.  The Restricted Stock Units shall not be transferable by the Grantee (or his or her personal representative or estate) other than by will or by the laws of descent and distribution.  The terms of this Agreement shall be binding on the executors, administrators, heirs and successors of the Grantee.

5.2.            Change in Control.  If Grantee's employment with the Company (or its successor company) (a) is involuntarily terminated within 12 months following a Change in Control for any reason other than termination for Cause, (b) is terminated by the Grantee for Good Reason within 12 months following a Change in Control, or (c) has terminated by reason of Retirement as of the date of the Change in Control, all restrictions imposed on the Restricted Stock Units shall thereupon lapse, the Restricted Stock Units will become free of all restrictions and become fully vested, and the Company (or its successor company) shall issue the Stock underlying the Restricted Stock Units to the Grantee; provided, however, that if in connection with a Change in Control, the acquiring corporation (or other successor to the Company in the Change in Control) does not assume the Restricted Share Units, then the Restricted Share Units shall vest and be settled in Stock issued to the Grantee immediately prior to the Change in Control. For purposes of this Section 5.2, the term "Good Reason" shall mean (i) a material reduction in the Grantee's base salary or incentive compensation, (ii) a requirement by the Company (or its successor company) to relocate the Grantee to a location that is greater than 25 miles from the location of the office in which the Grantee performs his or her duties at the time of such relocation, or (iii) a failure by the successor person or entity, or the Board, either to honor the Grantee's employment agreement with the Company existing at the time a Change in Control occurs or to present Grantee with an employment agreement containing provisions substantially similar to such employment agreement or otherwise satisfactory to Grantee and which is executed by Grantee.

Section 6.                          Restrictive Agreement.  As a condition to the receipt of any Distributed Shares, the Grantee (or his or her legal representative or estate or any third party transferee), if the Company so requests, will execute an agreement in form satisfactory to the Company in which the Grantee or such other recipient of the shares represents that he or she is purchasing the shares for investment purposes, and not with a view to resale or distribution.

Section 7.                          Restricted Stock Units Award Subject to Recoupment Policy. The award of Restricted Stock Units is subject to the Healthways, Inc. Compensation Recoupment Policy (the "Policy").  The award of Restricted Stock Units, or any amount traceable to the award of Restricted Stock Units, shall be subject to the recoupment obligations described in the Policy.

Section 8.                          Adjustment.  In the event of any merger, reorganization, consolidation, recapitalization, extraordinary cash dividend, stock dividend, stock split or other change in corporate structure affecting the Stock, the number of Restricted Stock Units subject to this Agreement shall be equitably and proportionately adjusted by the Committee in accordance with the Plan without duplication of Section 4.

Section 9.                          Tax Withholding.  The Company shall have the right to require the Grantee to remit to the Company an amount necessary to satisfy any federal, state and local withholding tax requirements attributable to the vesting and payment of the Restricted Stock Units prior to the delivery of the Distributed Shares, or may withhold from the Distributed Shares an amount of Stock having a Fair Market Value equal to such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

Section 10.                          Plan.  This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan are also provisions of this Agreement.  If there is a difference or conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan will govern.  By signing this Agreement, the Grantee confirms that he or she has received a copy of the Plan.

Section 11.                          Confidentiality, Non-Solicitation and Non-Compete.  It is in the interest of all colleagues to protect and preserve the assets of the Company. In this regard, in consideration for granting the Restricted Stock Units and as conditions of Grantee's ability to receive the Distributed Shares, Grantee acknowledges and agrees that:

(a)            Confidentiality. In the course of Grantee's employment, Grantee will have access to trade secrets and other confidential information of the Company and its clients.  Accordingly, Grantee agrees that, without the prior written consent of the Company, Grantee will not, other than in the normal conduct of the Company's business affairs, divulge, furnish, publish or use for personal benefit or for the direct or indirect benefit of any other person or business entity, whether or not for monetary gain, any trade secrets or confidential or proprietary information of the Company or its clients, including, without limitation, any information relating to any business methods, marketing and business plans, financial data, systems, customers, suppliers, policies, procedures, techniques or research developed for the benefit of the Company or its clients.  Proprietary information includes, but is not limited to, information developed by the Grantee for the Company while employed by the Company.  The obligations of the Grantee under this paragraph will continue after the Grantee has left the employment of the Company.  Grantee agrees that upon leaving the employment of the Company, Grantee will return to the Company all property and confidential information in the Grantee's possession and agrees not to copy or otherwise record in any way such information.

(b)            Non-Solicitation.  While employed by the Company and for a period of two years thereafter, Grantee shall not, upon Grantee's own behalf or on behalf of any other person or entity, directly or indirectly,

- hire or solicit to leave the employ of the Company any person employed by or under contract as an independent contractor to the Company; or

- contact, solicit, entice away, or divert any healthcare and/or well-being support services, coaching or management business from any person or entity who is a client or with whom the Company was engaged in discussions as a potential client within one year prior to the date of termination of Grantee.

(c)            Non-Compete.  While employed by the Company and continuing during the period while any amounts are being paid to Grantee by the Company and for a period of 18 months thereafter, Grantee will not own or be employed by or assist anyone else in the conduct of any business (i) which is in competition with any business conducted by the Company or (ii) which Grantee knows the Company was actively evaluating for possible entry, in either case in the United States or in any other jurisdiction in which the Company is engaged in business or has been engaged in business during Grantee's employment by the Company, or in such jurisdictions where Grantee knows the Company is actively pursuing business opportunities at the time of Grantee's termination of employment with the Company; provided that ownership of five percent (5%) or less of the voting stock or other ownership interests of any business entity that is listed on a national securities exchange shall not constitute a violation hereof.

In the event Grantee breaches any provisions of this Section 11, the Restricted Stock Units shall immediately expire, and the Company shall be entitled to seek other appropriate remedies it may have available in connection with such breach.

Section 12.                          Miscellaneous.

12.1.            Entire Agreement.  This Agreement and the Plan contain the entire understanding and agreement between the Company and the Grantee concerning the Restricted Stock Units granted hereby, and supersede any prior or contemporaneous negotiations and understandings.  The Company and the Grantee have made no promises, agreements, conditions, or understandings relating to the Restricted Stock Units, either orally or in writing, that are not included in this Agreement or the Plan.

12.2.            Employment.  By establishing the Plan, granting awards under the Plan, and entering into this Agreement, the Company does not give the Grantee any right to continue to be employed by the Company or to be entitled to any remuneration or benefits not set forth in this Agreement or the Plan.

12.3.            Captions.  The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience.  They do not define, limit, construe, or describe the scope or intent of the provisions of this Agreement.

12.4.            Counterparts.  This Agreement may be executed in counterparts, each of which when signed by the Company and the Grantee will be deemed an original and all of which together will be deemed the same Agreement.

12.5.            Notice.  All notices required to be given under this Agreement shall be deemed to be received if delivered or mailed as provided for herein, to the parties at the following addresses, or to such other address as either party may provide in writing from time to time.

 

	
To the Company:

	
Healthways, Inc.

	
 

	
701 Cool Springs Blvd

	 	
Franklin, Tennessee 37067

	 	 

 

	
To the Grantee:

	
PARTICIPANT NAME

	
(Grantee name and address)

	
Address on File

	 	
at Healthways

	 	 

12.6.            Amendment.  Subject to the restrictions contained in the Plan, the Committee may amend the terms of this Agreement, prospectively or retroactively, but, subject to Section 8 above, no such amendment shall impair the rights of the Grantee hereunder without the Grantee's consent.

12.7.            Governing Law.  This Agreement shall be governed and construed exclusively in accordance with the law of the State of Delaware applicable to agreements to be performed in the State of Delaware to the extent it may apply.

12.8.            Validity; Severability.  If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.  If any court determines that any provision of this Agreement is unenforceable but has the power to reduce the scope or duration of such provision, as the case may be, such provision, in its reduced form, shall then be enforceable.

12.9.            Interpretation; Resolution of Disputes; Section 409A.

(a)            It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Grantee.  Any dispute or disagreement which may arise under, or as a result of, or in any way related to, the interpretation, construction or application of this Agreement shall be determined by the Board.  Any determination made hereunder shall be final, binding and conclusive on the Grantee and the Company for all purposes.

(b)            Notwithstanding anything herein to the contrary, to the maximum extent permitted by applicable law, the settlement of the Restricted Stock Units (including any dividend equivalent rights) to be made to the Grantee pursuant to this Agreement is intended to qualify as a "short-term deferral" pursuant to Section 1.409A-1(b)(4) of the U.S. Treasury Regulations and this Agreement shall be interpreted consistently therewith.  However, under certain circumstances, settlement of the Restricted Stock Units or any dividend equivalent rights may not so qualify, and in that case, the Committee shall administer the grant and settlement of such Restricted Stock Units and any dividend equivalent rights in strict compliance with Section 409A of the Code.  Further, notwithstanding anything herein to the contrary, if at the time of a Participant's termination of employment with the Company, the Participant is a "specified employee" as defined in Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of service is necessary in order to prevent the imposition of any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Participant) to the minimum extent necessary to satisfy Section 409A of the Code until the date that is six months and one day following the Participant's termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code), if such payment or benefit is payable upon a termination of employment.  Each payment of Restricted Stock Units (and related dividend equivalent rights) constitutes a "separate payment" for purposes of Section 409A of the Code.

12.10.            Successors in Interest.  This Agreement shall inure to the benefit of and be binding upon any successor to the Company.  This Agreement shall inure to the benefit of the Grantee's legal representative and permitted assignees.  All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs, executors, administrators, successors and assignees.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Award Agreement to be duly executed as of the day and year first written above.

 

	 	 	
HEALTHWAYS, INC.

	 	 	
 

 

By:        /s/ Alfred Lumsdaine

Name:        Alfred Lumsdaine

Title:            Chief Financial Officer

 

	 	 	 

 

GRANTEE: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature RequirementExhibit 10.2

 

SEPARATION, NON-COMPETITION AND RELEASE AGREEMENT

 This SEPARATION, NON-COMPETITION AND RELEASE AGREEMENT (this "Agreement") is entered into as of November 1, 2015 by and between Healthways, Inc. (the "Company") and Michael R. Farris ("Executive") (together, the "Parties").

RECITALS

WHEREAS, Executive is employed by the Company pursuant to the terms of the Amended and Restated Employment Agreement between the Company and Executive, dated September 2, 2014 (the "Employment Agreement");

WHEREAS, pursuant to the terms of that certain Purchase Agreement, dated as of October 28, 2015, among American Healthways Services, LLC (a wholly owned subsidiary of the Company) ("AHS"), Executive and NAVCO Acquisition, LLC (the "Purchase Agreement"), as a condition to the consummation of the transactions contemplated by the Purchase Agreement, Executive must execute and deliver this Agreement; and

 WHEREAS, in connection with the transactions contemplated by the Purchase Agreement, the Company and Executive have agreed to terminate Executive's employment pursuant to the Employment Agreement by the mutual written agreement of the Company and Executive.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth hereinafter, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

1.            EXECUTIVE'S SEPARATION. Executive's employment with the Company shall terminate on the date on which the transactions contemplated by the Purchase Agreement are consummated (the "Separation Date").  As of the Separation Date, Executive shall resign from and no longer be an employee, officer, director and/or manager (or any equivalent position) of the Company or any subsidiaries or affiliates thereof, and Executive agrees he shall execute all documents necessary to effect such resignations.  The Parties hereby agree that, for purposes of the Employment Agreement, Executive's termination of employment will be treated as a termination by Executive without Good Reason (as defined in the Employment Agreement) pursuant to Section V.G of the Employment Agreement; provided, however, that the Company hereby waives the 90-day notice of resignation requirement set forth in Section V.G.1 of the Employment Agreement.

2.            SEPARATION PAYMENTS AND BENEFITS. In full and final satisfaction of any and all amounts and benefits due or which could become due to Executive pursuant to the Employment Agreement, any employee benefit or incentive plans or agreements in which Executive participates or is a party (including, without limitation, (i) any of the Company's equity incentive or stock option plans and (ii) all cash, equity and equity-based award agreements between the Company and Executive (each agreement listed in clause (ii), an "Award Agreement" and, collectively, the "Award Agreements")), it is agreed as follows:

a.            Executive will receive from the Company (i) a lump sum cash payment equal to any accrued yet unpaid Base Salary (as defined in the Employment Agreement) through the Separation Date and (ii) any group medical and life insurance benefits accrued through the Separation Date, in each case, payable within 30 days following the Separation Date;

b.            Executive will receive from the Company a pro-rated portion, based upon the number of days during which Executive was employed during the 2015 fiscal year, of the 2015 Bonus (as defined in the Employment Agreement), which amount will be determined for the period beginning on January 1, 2015 and ending on the Separation Date.  As soon as practicable after the Company's audited financial statements for the applicable period become available, but no later than March 31, 2016, the Company shall calculate the amount of the 2015 Bonus to which Executive was entitled pursuant to the immediately preceding sentence based on such audited financial statements.  Subject to Section 3, the Company shall pay Executive the 2015 Bonus no later than April 15, 2016;

c.            Executive will receive from the Company a pro-rated portion (at the rate of $41,666 per month), based upon the number of days during which Executive was employed during the 2015 fiscal year (including the Separation Date), of the Retention Payment (as defined in the Employment Agreement); and

d.            Executive will receive from the Company the $250,000.00 bonus based upon achievement of Hawaii Medical Services Association's 2015 budgeted contribution margin and the execution of a binding long-term renewal of the Hawaii Medical Service Association relationship.

3.            RELEASE OF CLAIMS.  The Company shall not be required to make the payments and provide the benefits specified in Section 2, other than those set forth in Section 2(a) (the "Accrued Amounts"), unless Executive has executed and delivered to the Company the Release of Claims attached as Exhibit A hereto (the "Release") within 30 days following the Separation Date.  Any payments or benefits specified in Section 2, other than the Accrued Amounts, payable during such 30-day period shall be withheld and shall be paid to Executive on the first payroll date following the 30th day following the Separation Date as long as Executive executed and delivered to the Company the Release in accordance with this Section 3. In the event the Release is not executed and delivered to the Company in accordance with this Section 3, the payments and benefits specified in Section 2, other than the Accrued Amounts, shall be forfeited.

4.            NO OTHER PAYMENTS OR BENEFITS.  Except for the payments and benefits provided for in Section 2 of this Agreement, any 401(k) plan or other vested benefits due to Executive pursuant to the terms and conditions of any employee benefit plan in which Executive was a participant on or prior to the Separation Date (but not including the Award Agreements) and any benefits that are due or may become due to Executive under any health or welfare plan of the Company in which Executive was a participant on or prior to the Separation Date, Executive acknowledges and agrees that he is entitled to no other compensation, payments or benefits from the Company and/or its subsidiaries and affiliates of any kind or nature whatsoever, including, without limitation, pursuant to the Employment Agreement or the Award Agreements, and/or for salary, severance pay, medical benefits, fringe benefits, vacation pay, bonuses, incentive compensation, sick pay, insurance, disability insurance, medical benefits, paid or unpaid leave, vesting of cash, equity or equity-based awards or any other allowance, payment, grant, award or benefit of any nature or description.

5.            TAX WITHHOLDING. The Company shall be entitled to withhold from any amounts otherwise payable hereunder to Executive any amounts required to be withheld in respect of federal, state or local taxes, and Executive shall be responsible for all taxes on amounts received under or related to this Agreement.

6.            REPRESENTATIONS.  Executive and the Company make the following representations, each of which is an important consideration to the other party's willingness to enter into this Agreement:

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a.            Executive understands and agrees that he has been advised to consult with an attorney of his choice concerning the legal consequences of this Agreement.  Executive hereby acknowledges that prior to signing this Agreement, he had the opportunity to consult, and did consult, with an attorney of his choosing regarding the effect of each and every provision of this Agreement.

b.            Executive acknowledges and agrees that he knowingly and voluntarily entered into this Agreement with complete understanding of all relevant facts and that he was neither fraudulently induced nor coerced to enter into this Agreement.

c.            Each of the Parties represents and warrants to the other that such Party has the capacity or authority, as applicable, to enter into this Agreement and be bound by its terms and that, when executed, this Agreement will constitute a valid and binding agreement of such Party enforceable against such Party in accordance with its terms.

7.            CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION.

a.            The Company and Executive acknowledge and agree that the terms and conditions described in Section VIII of the Employment Agreement shall terminate and be of no further force or effect as of the Separation Date, and that such terms and conditions are replaced in their entirety by the provisions of this Section 7.

b.            For purposes of this Agreement, the term:

	
(i)

	
"Business" means the provision of certain healthcare consulting and advisory services provided by Navvis Healthcare, LLC and its Subsidiaries (as defined in the Purchase Agreement) in the Ordinary Course of Business (as defined in the Purchase Agreement), including, without limitation, the consulting and advisory services described in the customer contracts listed on Exhibit A to the Purchase Agreement.  To ensure clarity, the Business does not include the promotion, sale or operation of the Dean Ornish Program for the reversal of heart disease or the promotion, sale or operation of Company's Well-Being Improvement Solutions (as defined in the Purchase Agreement);

	
(ii)

	
"Restricted Business" shall mean the delivery of care support services, health support services and population health management services that are the same as or substantially similar to the care support services, health support services and population health management services being offered by the Company or any of its subsidiaries or affiliates as of the Separation Date; and

	
(iii)

	
"Permitted Services" shall mean (A) the services and activities performed by the Company and its Subsidiaries in the conduct of the Business, (B) providing consulting and advisory services to health systems, physician groups and health plans controlled by health systems ("Permitted Clients") regarding the design, implementation and operation of (i) care models (including transitions of care) for the management of insured and self-insured populations and (ii) health system and physician payment programs such as ACOs, bundled payments, episodes of care, performance contracts and risk contracts, (C) offering and selling to Permitted Clients, solely through a product distribution or commission arrangement with a third party vendor, software whose primary purpose is to support the administration and management of such care models and payment programs ("Permitted Software") and (D) providing consulting and advisory services to managed Medicare and managed Medicaid health plans related to revenue optimization, care models (including transitions of care) and care coordination, health system payment methodologies and physician payment methodologies, and offering and selling Permitted Software to such health plans, solely through a product distribution or commission arrangement with a third party vendor of such Permitted Software.

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c.            The Executive acknowledges:

	
i.

	
that the Restricted Business is intensely competitive and that the Executive's employment by the Company required that the Executive have access to and knowledge of confidential information of the Company relating to its business plans, financial data, marketing programs, client information, contracts and other trade secrets, in each case other than as and to the extent such information is generally known or publicly available through no violation of this Agreement by Executive;

	
ii.

	
the use or disclosure of such information other than in furtherance of the Restricted Business may place the Company at a competitive disadvantage and may do damage, monetary or otherwise, to the Restricted Business; and

	
iii.

	
the engaging by Executive in any of the activities prohibited by this Section 7(c) shall constitute improper appropriation and/or use of such information. Executive expressly acknowledges the trade secret status of the Company's or its subsidiaries' or affiliates' confidential information and that the confidential information constitutes a protectable business interest of the Company and its subsidiaries and affiliates.  Executive expressly agrees not to use such confidential information or divulge such confidential information to anyone outside the Company without prior permission by the Company.

d.            The Company (which shall be construed to include the Company, its subsidiaries and their respective affiliates) and Executive agree that for a period beginning on the date hereof and ending on December 31, 2016, Executive shall not:

	
i.

	
directly or indirectly engage in Competition (as defined below), with the Company or its subsidiaries or affiliates within any market where the Company is conducting the Restricted Business on the date hereof.  For purposes of this Agreement, "Competition" by Executive shall mean Executive's being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of or permitting his name to be used in connection with the activities of any person or entity engaged in the Restricted Business, provided that, (A) it shall not be a violation of this subsection for Executive to become the registered or beneficial owner of less than five percent (5%) of any class of the capital stock of any one or more competing corporations registered under the 1934 Act, provided that, the Executive does not participate in the business of such corporation until such time as this covenant expires and (B) Executive is expressly permitted to engage in Permitted Services; and

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ii.

	
Executive further agrees that he will not, directly or indirectly, for his benefit or for the benefit of any other person or entity, do any of the following:

	
a.

	
solicit from any customer doing business with the Company as of Executive's termination business of the same or of a similar nature to the Restricted Business with such customer, provided, however, Executive shall not be restricted from soliciting such customers for Permitted Services;

	
b.

	
solicit from any potential customer of the Company business of the same or of a similar nature to that which, to the knowledge of Executive, has been the subject of a written or oral bid, offer or proposal by the Company, or of substantial preparation with a view to making such a bid, proposal or offer, within 18 months prior to the Separation Date, provided, however, Executive shall not be restricted from soliciting such customers for Permitted Services;

	
c.

	
except as contemplated by the Purchase Agreement, recruit or solicit the employment or services of any person who was employed by the Company as of the Separation Date and is employed by the Company at the time of such recruitment or solicitation; or

	
d.

	
make comments, whether oral or in writing, that disparage or injure the Company, its officers, directors, agents, employees, products and services.

	
iii.

	
Executive acknowledges that the services that were rendered by Executive to the Company were of a special and unique character, which causes this Agreement to be of significant value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and that a breach or threatened breach by the Executive of any of the provisions contained in this Section 7 will cause the Company irreparable injury.  Executive therefore agrees that the Company will be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining Executive from any such violation or threatened violations. Executive acknowledges that the terms of this Section 7 and his obligations are reasonable and will not prohibit Executive from being employed or employable in the health care industry.

e.            If any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the fullest extent permitted by law.

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8.            TAX MATTERS; SECTION 409A. Notwithstanding any provision of this Agreement, this Agreement shall be construed and interpreted to comply with or otherwise be exempt from Section 409A of the Internal Revenue Code of 1986 (the "Code"), as amended, and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or regulations thereunder.  For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the Section 409A of the Code deferral election rules and the exclusion from Section 409A of the Code for certain short-term deferral amounts.  Executive may not, directly or indirectly, designate the calendar year of any payment due hereunder.  Any amounts payable solely on account of an involuntary separation from service within the meaning of Section 409A of the Code shall be excludible from the requirements of Section 409A of the Code, either as involuntary separation pay or as short-term deferral amounts (e.g., amounts payable under the schedule prior to March 15 of the calendar year following the calendar year of involuntary separation) to the maximum possible extent.  If, as of the Separation Date, Executive is a "specified employee" as determined by the Company, then to the extent that any amount or benefit that would be paid or provided to Executive under this Agreement within six (6) months of his "separation from service" (as determined under Section 409A) constitutes an amount of deferred compensation for purposes of Section 409A and is considered for purposes of Section 409A to be owed to Executive by virtue of his separation from service, then such amount or benefit will not be paid or provided during the six-month period following the date of Executive's separation from service and instead shall be paid or provided on the first business day that is at least seven months following the date of Executive's separation from service, except to the extent that, in the Company's reasonable judgment, payment during such six-month period would not cause Executive to incur additional tax, interest or penalties under Section 409A.  Further, any reimbursements or in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

9.            RETURN OF COMPANY PROPERTY. Upon the Separation Date, Executive shall return to the Company all files, records, credit cards, keys, equipment and all other Company property or documents maintained by Executive for the Company's use or benefit.

10.            GOVERNING LAW.  This Agreement, its Exhibits and all rights, duties and remedies hereunder shall be governed by and construed and enforced in accordance with the laws of the State of Tennessee, without reference to its choice of law rules, except as preempted by federal law.

11.            SUCCESSORS AND ASSIGNS.  This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive's death and (b) any successor of the Company.  Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose, "successor" means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.  None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution.  Any other attempted assignment, transfer, conveyance or other disposition of Executive's right to compensation or other benefits will be null and void.

6

12.            AMENDMENTS.  This Agreement may not be amended or modified other than by a written instrument signed by an authorized representative of the Company and Executive.

13.            INTERPRETATION.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Each of the Parties has participated in the drafting and negotiation of this Agreement. If any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if it is draft by both Parties, and no presumption or burden of proof share arise favoring or disfavoring any Party by virtue of authorship of any of the provisions of this Agreement.

14.            COUNTERPARTS.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  Facsimile and .pdf signatures will suffice as original signatures.

15.             NOTICES.  All notices hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid and return receipt requested.

If to the Company:

Attn: General Counsel

Healthways, Inc.

701 Cool Springs Blvd.

Franklin, TN 37067

If to Executive:

Michael R. Farris

[address on file]

16.            ENTIRE AGREEMENT.  This Agreement and its Exhibits, together with any other obligations specifically preserved herein and the specific terms of the Award Agreements referenced herein, set forth the entire agreement and understanding of the Parties relating to the subject matter hereof and merges and supersedes all prior discussions, agreements, and understandings of every kind and nature between the Parties hereto, and neither Party shall be bound by any term or condition other than as expressly set forth or provided for in this Agreement.

17.            SEVERABILITY.  If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.

18.            WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 18 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

[Signature Page Follows]

7

 

IN WITNESS WHEREOF, the Parties, intending to be legally bound, have caused this Agreement to be executed as of the dates set forth below.

	
COMPANY

HEALTHWAYS, INC.

	 	
EXECUTIVE

 

	 	 	 	 	 
	
By:

	
/s/ Alfred Lumsdaine

	 	
/s/ Michael R. Farris

	
Name:

	
Alfred Lumsdaine

	 	
Michael R. Farris

	
Title:

	
Chief Financial Officer

	 	 
	 	 	 	 
	
Date:

	
11/1/2015

	 	
Date:

	
10/28/15

  

8

Exhibit A

RELEASE OF CLAIMS

 In exchange for the payments described in Section 2 and 3 of the Separation, Non-Competition and Release Agreement (the "Separation Agreement") by and between Healthways, Inc. (the "Company") and Michael R. Farris ("Executive") (together, the "Parties") and in accordance with the terms of the Employment Agreement (as defined in the Separation Agreement), Executive hereby agrees as follows:

	
1.

	
Except as set forth in the Purchase Agreement, dated as of October 28, 2015, among American Healthways Services, LLC ("AHS"), Executive and NAVCO Acquisition, LLC (the "Purchase Agreement") or any of the other Transaction Documents (as defined in the Purchase Agreement), Executive hereby forever releases and discharges the Company, and each of its predecessors, assigns, former and current employees, representatives, agents,  partners, owners,  parent companies, subsidiaries, affiliates, successors, including any and all persons acting with any of them (collectively, "Released Parties" or individually, "Released Party"), from any claims or causes of action, known or unknown ("Claims"), which Executive had, now has or claims to have, or may hereafter claim to have against any of the Released Parties.  Such Claims include those under any local, state or federal law, Executive Order, or at common law including, but not limited to, for wrongful termination, breach of an express or implied contract (including, without limitation, the Employment Agreement), breach of the covenant of good faith and fair dealing, breach of fiduciary duty, employment discrimination (including harassment, fraud, misrepresentation, defamation, slander, infliction of emotional distress, disability and loss of future earnings), and any claims pursuant to any Tennessee state law, and all claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 1981(a), the Employment Retirement Income Security Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the National Labor Relations Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Immigration Reform Control Act, the Genetic Information Non-Discrimination Act and the Equal Pay Act, as well as all federal and state executive orders including Executive Order 11246 and all claims under other applicable federal, state and local codes, laws, regulations or ordinances concerning his employment with the Company or the termination thereof. Such Claims also include any claims that may be made by Executive or his affiliates pursuant to the Purchase Agreement, dated as August 24, 2011, among Executive, AHS, Navvis Healthcare, LLC and other parties thereto.  This Release further specifically encompasses all claims related to compensation, benefits, incentive packages and/or any other form of compensation Executive may or may not have received during his employment.  This provision does not include the release of claims with respect to any rights to indemnification, contribution or advancement of expenses Executive may have under the Company's certificate of incorporation or bylaws, in each case as currently in effect and as may be in effect from time to time, including any rights Executive may have under directors' and officers' insurance policies.

	
2.

	
In compliance with the Older Worker Benefit Protection Act, Executive acknowledges that he is specifically waiving any claims under the federal Age Discrimination in Employment Act of 1967, as amended.

	
3.

	
Executive represents and agrees that he is fully aware of his rights and has been advised in this writing and otherwise to discuss any and all aspects of the Separation Agreement and this Release with his attorney or counselor of his choice, that he has carefully read and fully understands all of the provisions of the Separation Agreement and that before the execution of this Agreement he has been provided a period of twenty-one (21) days within which to consider each and every provision of the Separation Agreement and this Release in consultation with counsel of his choosing.  Executive acknowledges and agrees that he knowingly and voluntarily entered into the Separation Agreement and this Release with complete understanding of all relevant facts, and that he was neither fraudulently induced nor coerced to enter into the Separation Agreement or this Release.

 

A-1

 

	
4.

	
Executive further understands that even after signing this Release, he shall have a period of seven (7) days to reconsider and change his mind and revoke this Release.  This Release shall become effective and binding only on the 8th calendar day after he has signed this Release and only in the absence of an effective waiver (the "Effective Date").

	
5.

	
Executive represents that, he has not filed any other complaint(s), charge(s) or Lawsuit(s) against the Company or any other Released Party with the United States Equal Employment Opportunity Commission (the "EEOC") or with any other local, state or federal agency or court.  This Agreement will not affect Executive's right to hereafter file a charge with the EEOC relating to matters outside the scope of this Agreement or to participate in an investigation or proceeding conducted by the EEOC; however, while this Agreement shall not act to prevent Executive from filing a charge of discrimination with or participating in an investigation or proceeding conducted by the EEOC, by signing this Agreement, Executive waives his right to recover any damages or other relief in any claim or suit brought by or through the EEOC or any other state or local agency on his behalf under any federal, state, or local anti-discrimination law against the Company or any other Released Party for any event which occurred as of the date of hereof, except where prohibited by law.  Executive further agrees that if any state or federal agency or court assumes jurisdiction of any complaint(s), charge(s) or lawsuit(s) against the Company or any other Released Party on behalf of Executive, Executive will request such agency or court withdraw from the matter, and Executive will refuse any benefits derived therefrom and hereby waives his right to recover any damages or other relief with respect thereto.

ACCEPTED AND AGREED,

as of the date set forth below:

/s/ Michael R. Farris

Michael R. Farris

Date: 11/1/15_____________________________________

 

A-2

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