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                                  EXHIBIT 10(I)

                            LINDSAY MANUFACTURING CO.

                              AMENDED AND RESTATED
                          2001 LONG-TERM INCENTIVE PLAN

         The Lindsay Manufacturing Co. 2001 Long-Term Incentive Plan (the
"Plan"), as originally adopted by the Board of Directors of Lindsay
Manufacturing Co. as of the 18th day of December, 2000, and approved by the
shareholders of the Company on January 30, 2001 (the "Original Plan"), is hereby
amended and restated in its entirety as provided herein by this Amended and
Restated 2001 Long-Term Incentive Plan (the "Plan") as of the 27th day of July,
2001.

                                    ARTICLE I

                                     PURPOSE

         SECTION 1.01. OFFICERS AND KEY EMPLOYEES. The Plan is intended to
advance the interests of Lindsay Manufacturing Co., its shareholders and its
subsidiaries by attracting, retaining and stimulating the performance of
officers and other key employees upon whose judgment, initiative and effort
Lindsay Manufacturing Co. is largely dependent for the successful conduct of its
business, and to encourage and enable such officers and other key employees
("Employee Participants") to acquire and retain a proprietary interest in
Lindsay Manufacturing Co. by ownership of its stock. Options granted may, if so
intended by the Committee, be Incentive Stock Options designed to meet the
requirements of Section 422 of the Internal Revenue Code of 1986.

         SECTION 1.02. NONEMPLOYEE DIRECTORS. The Plan is also intended to
promote the interests of Lindsay Manufacturing Co. by offering nonemployee
members of the Board of Directors ("Director Participants") of the Company the
opportunity to receive Nonqualified Stock Options to provide them with
significant incentives to remain in the service of the Company. Only
Nonqualified Stock Options will be granted to Director Participants under this
Plan.

                                   ARTICLE II

                                   DEFINITIONS

         "Automatic Grant Date" shall be September 3 of each year, beginning
with September 3, 2001, provided, that in the event the Common Stock is not sold
in the regular way on the New York Stock Exchange or other national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on September 3 of a particular year, the Automatic
Grant Date shall be the first preceding day on which there were such sales.
Automatic Grant as used in the Plan shall mean the automatic grant which occurs
on the Automatic Grant Date.

         "Award" means a grant of an Incentive Stock Option, Nonqualified Stock
Option, Restricted Stock, SAR or Performance Award under this Plan.

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         "Board" means the Board of Directors of the Company.

         "Change in Control" shall mean any one of the following events: (a) a
dissolution or liquidation of the Company, (b) a sale of substantially all of
the assets of the Company, (c) a merger or combination involving the Company
after which the owners of Common Stock of the Company immediately prior to the
merger or combination own less than 50% of the outstanding shares of common
stock of the surviving corporation, or (d) the acquisition of more than 50% of
the outstanding shares of Common Stock of the Company, whether by tender offer
or otherwise, by any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934) other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company. The decision
of the Committee as to whether a Change in Control has occurred shall be
conclusive and binding.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Committee" means the Compensation Committee of the Board; provided
that the Committee is intended to consist solely of persons who, at the time of
their appointment, each qualified as a "Non-Employee Director" under Rule
16b-3(b)(3)(i) promulgated under the Securities Exchange Act of 1934 and, to the
extent that relief from the limitation of Section 162(m) of the Code is sought,
as an "Outside Director" under Section 1.162-27(e)(3)(i) of the Treasury
Regulations issued under Section 162 of the Code.

         "Common Stock" means the Company's $1.00 par value common stock.

         "Company" means Lindsay Manufacturing Co., a Delaware corporation.

         "Date of Grant" means the date on which an Award is granted under the
Plan to an Employee Participant or Director Participant.

         "Director Participant" means a Director who is not an employee of the
Company or any of its Subsidiaries to whom a Nonqualified Stock Option, which
has not expired, has been granted under the Plan.

         "Employee Participant" means an officer or key employee (or any person
who agrees to become an officer or key employee) of the Company or its
Subsidiaries to whom an Award, which has not expired, has been granted under the
Plan.

         "Fair Market Value" means the last price per share at which the Common
Stock is sold in the regular way on the New York Stock Exchange or other
national securities exchange or NASDAQ on the Date of Grant or, in the absence
of any reported sales on such day, the first preceding day on which there were
such sales.

         "Incentive Stock Option" means a stock option granted to an Employee
Participant under the Plan which is intended to meet the requirements of Section
422 of the Internal Revenue Code of 1986.

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         "Long-Term Incentive Plan Agreement" means an agreement between the
Company and an Employee Participant or Director Participant under which the
Participant may receive an Award under this Plan.

         "Nonqualified Stock Option" means a stock option granted to either an
Employee Participant or Director Participant that is not intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986.

         "Option" means a Nonqualified Stock Option or an Incentive Stock Option
granted under the Plan.

          "Options" when granted to Director Participants under the Plan shall
be limited to a Nonqualified Stock Options received on an Automatic Grant Date.

         "Performance Award" means a grant of Restricted Stock, SARs, cash
payments or stock awards which are contingent on the achievement of performance
or other objectives during a specified period.

         "Period of Restriction" means the period starting from the Date of
Grant, during which the transfer of shares of Restricted Stock is restricted
pursuant to Article VIII of this Plan, or other such period that may be assigned
to any Options granted under the Plan.

         "Plan" means the Lindsay Manufacturing Co. 2001 Long-Term Incentive
Plan.

         "Restricted Stock" means Common Stock granted to an Employee
Participant pursuant to Article VIII of this Plan.

         "Serious Misconduct" means embezzlement or misappropriation of
corporate funds, other acts of dishonesty, significant activities harmful to the
reputation of the Company or its Subsidiaries, a significant violation of
Company or Subsidiary policy, willful refusal to perform or substantial
disregard of the duties properly assigned to the Employee or Director
Participant, or a significant violation of any contractual, statutory or common
law duty of loyalty to the Company or its Subsidiaries.

         "Stock Appreciation Right" or "SAR" is the right of an Employee
Participant to receive, without payment to the Company, a number of shares of
Common Stock, cash or any combination thereof, the amount of which is determined
pursuant to the formula set forth in Article VII.

         "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 424 of the Internal Revenue
Code of 1986.

                                  ARTICLE III

                                  PARTICIPANTS

         SECTION 3.01. EMPLOYEE PARTICIPANTS. The Committee may grant Restricted
Stock, Options, or SARs to Employee Participants as it shall determine in its
sole discretion from time to time in accordance with the terms and conditions of
the Plan.

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         SECTION 3.02. DIRECTOR PARTICIPANTS. Automatic grants of Nonqualified
Stock Options will be granted to each person who, on or after September 3, 2001,
is or becomes a Director Participant as provided in Section 6.02 hereof.

                                   ARTICLE IV

                                 ADMINISTRATION

         SECTION 4.01. COMMITTEE. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan, the Committee shall
have sole discretion and authority to determine, from among eligible officers
and other key employees (or persons who agree to become officers or key
employees) those to whom and the time or times at which Awards may be granted to
any Employee Participants and the number of shares of Restricted Stock that may
be awarded or the number of shares of Common Stock to be subject to each Option
or SAR. Subject to the express provisions of the Plan, the Committee shall also
have complete authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the details and provisions of
each Long-Term Incentive Plan Agreement, and to make all the determinations
necessary or advisable in the administration of the Plan as it relates to
Employee and Director Participants. All such actions and determinations by the
Committee shall be conclusively binding for all purposes and upon all persons.

         SECTION 4.02. MAJORITY RULE. A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority present at a
meeting at which a quorum is present or any action taken without a meeting
evidenced by a writing executed by a majority of the whole Committee shall
constitute the action of the Committee.

         SECTION 4.03. COMPANY ASSISTANCE. The Company shall supply full and
timely information to the Committee on all matters relating to eligible
employees, their employment, death, retirement, disability or other termination
of employment, and such other pertinent facts as the Committee may require. The
Company shall furnish the Committee with such clerical and other assistance as
is necessary in the performance of its duties.

                                   ARTICLE V

                         SHARES OF STOCK SUBJECT TO PLAN

         SECTION 5.01. LIMITATIONS; AGGREGATE. Subject to adjustment pursuant to
the provisions of Section 5.04 hereof, the number of shares of Common Stock
which may be issued to Employee and Director Participants hereunder shall be
900,000 shares of Common Stock. All such shares may be issued pursuant to
Incentive Stock Options. No more than 180,000 shares of Common Stock may be
issued to Employee Participants other than as Options having an exercise price
of not less than the Fair Market Value of the underlying shares. Such shares may
be either authorized but unissued shares, shares issued and reacquired by the
Company or shares bought on the market for the purposes of the Plan. Automatic
awards of Nonqualified Stock Options to Director Participants shall be counted
for purposes of the limitations in this Section 5.01. The number of shares of
Common Stock which may be issued to Employee Participants and Director
Participants hereunder shall not be increased (except as provided for in Section
5.04 hereto) without the approval of the Company's stockholders. Notwithstanding
the foregoing limitations, shares of Common Stock which are again available for
grant pursuant to Section 5.03 of this Plan shall not be counted for purposes of
the limitations in this Section 5.01.

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         SECTION 5.02. LIMITATIONS; INDIVIDUAL. No Employee Participant or
Director Participant may receive an Award under this Plan if such Award results
in the Employee Participant or Director Participant receiving an Option or
Restricted Stock of more than 350,000 shares of Common Stock during any rolling
36-month period. No Employee Participant or Director Participant may receive any
cash awards under this Plan in excess of $5,000,000 in any rolling 36-month
period.

         SECTION 5.03. RESTRICTED STOCK AND OPTIONS GRANTED UNDER PLAN. Shares
of Common Stock with respect to which Restricted Stock shall have vested or
Options granted to Employee Participants or Nonqualified Stock Options granted
to Director Participants hereunder that have been exercised shall not again be
available for grant hereunder; provided, however, that shares of Common Stock
exercised and immediately surrendered to the Company as payment of the exercise
price or applicable taxes may again be available for grant hereunder. If
Restricted Stock or an Option granted to Employee Participants or Nonqualified
Stock Options granted to Director Participants hereunder (or such awards which
are outstanding as of December 1, 2000 under the Company's Amended and Restated
1988 and 1991 Long-Term Incentive Plans or the stock options for 350,000 shares
of Common Stock granted to Richard W. Parod on March 8, 2000) shall terminate
for any reason without being wholly vested or exercised, the number of shares to
which such Restricted Stock or Option termination relates shall again be
available for grant hereunder.

         SECTION 5.04. ANTIDILUTION. In the event that the outstanding shares of
Common Stock hereafter are changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of merger, consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up, or stock dividend, or
in the event that there should be any other stock splits, stock dividends or
other relevant changes in capitalization occurring after the effective date of
this Plan:

              (a) The aggregate number and kind of Restricted Stock and shares
         subject to Options or other Awards which may be granted hereunder shall
         be adjusted appropriately; and

              (b) Rights under outstanding Restricted Stock and Options or other
         Awards granted to Employee Participants or Nonqualified Stock Options
         granted to Director Participants hereunder, both as to the number of
         subject shares and the Option price, shall be adjusted appropriately.

         Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation is involved,
each outstanding Restricted Stock award and Option granted hereunder shall
terminate, but the Employee Participant and Director Participant shall have the
right, immediately prior to such dissolution, liquidation, merger, or
combination, to receive the Common Stock or to exercise any Option in whole or
in part, to the extent that it shall not have been exercised, without regard to
any vesting restriction or installment exercise provisions.

         The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share interests.

                                   ARTICLE VI

                                     OPTIONS

         SECTION 6.01. OPTION GRANT AND AGREEMENT, EMPLOYEE PARTICIPANTS. Each
Option granted hereunder to an Employee Participant shall be evidenced by
minutes of a meeting or the written consent

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of the Committee and by a written Long-Term Incentive Plan Agreement dated as of
the Date of Grant and executed by the Company and the Employee Participant. The
Long-Term Incentive Plan Agreement shall set forth such terms and conditions as
may be determined by the Committee to be consistent with the Plan, but may
include additional provisions and restrictions, provided that they are not
inconsistent with the Plan.

         SECTION 6.02. AUTOMATIC OPTION GRANT AND AGREEMENT, DIRECTOR
PARTICIPANTS.

              (a) A Director Participant who was not a Director on September 3,
         2000 will be granted a Nonqualified Stock Option to purchase 25,312
         shares of Common Stock as of the Automatic Grant Date first occurring
         after he or she is first appointed or elected to the Board of
         Directors. All such Nonqualified Stock Options shall have an exercise
         price equal to the Fair Market Value per share as of the applicable
         Automatic Grant Date.

              (b) Director Participants as of each Automatic Grant Date after
         the first Automatic Grant Date on which a Director Participant receives
         a grant pursuant to Section 6.02(a) or under the Lindsay Manufacturing
         Co. Amended and Restated 1991 Long-Term Incentive Plan will be granted
         a Nonqualified Stock Option to purchase 5,062 shares of Common Stock.
         All such Nonqualified Stock Options shall have an exercise price equal
         to the Fair Market Value per share as of the applicable Automatic Grant
         Date.

              (c) Nonqualified Stock Options granted hereunder shall be
         evidenced by a written Long-Term Incentive Plan Agreement dated as of
         the Automatic Grant Date and executed by the Company and the Director
         Participant. The Long-Term Incentive Plan Agreement shall set forth
         such terms and conditions as consistent with the Plan, but may include
         additional provisions and restrictions, provided that they are not
         inconsistent with the Plan.

         SECTION 6.03. EXERCISE PRICE.

              (a) The exercise price per share for all Options issued under the
         Plan shall be determined by the Committee in its discretion, and may be
         at, below or above the Fair Market Value except that:

                   (i) the exercise price of any Incentive Stock Option shall
              equal or exceed the Fair Market Value of the Common Stock as of
              the Date of Grant;

                   (ii) the exercise price for any Incentive Stock Option
              granted to a "10% owner" (as defined in Article IX) shall be
              determined as provided in Article IX(a) hereof; and

                   (iii) the exercise price of any Nonqualified Stock Option
              granted to a Director Participant shall be the Fair Market Value
              as of the applicable Automatic Grant Date.

              (b) The Committee shall not without the approval of the Company's
         stockholders:

                   (i) reduce the exercise price of an Option; or

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                   (ii) cancel or settle for cash or other consideration an
              outstanding Option and grant a replacement Option at a lower
              exercise price, with six months before or after the cancellation.

         SECTION 6.04. OPTION PERIOD; EMPLOYEE PARTICIPANT. Options may be
granted to Employee Participants at any time after the effective date of the
Plan and prior to the termination of the Plan, provided that the period during
which each Option may be exercised shall be not later than 10 years from the
date such Option is granted; and provided further that Incentive Stock Options
granted to a "10% owner" (as defined in Article IX) must be exercised within
five years from the Date of Grant thereof. The period for the exercise of each
Option shall be determined by the Committee.

         SECTION 6.05. OPTION PERIOD; DIRECTOR PARTICIPANTS. Nonqualified Stock
Options will be granted to Director Participants as provided in Section 6.02 on
each Automatic Grant Date occurring prior to termination of the Plan.
Nonqualified Stock Options may be exercised as provided for in 6.06(c). The
period during which each Nonqualified Stock Option may be exercised shall not be
later than 10 years from the Date of Grant thereof.

         SECTION 6.06. OPTION EXERCISE BY DIRECTOR PARTICIPANT OR EMPLOYEE
PARTICIPANT.

              (a) Options granted hereunder may not be exercised unless and
         until the Employee Participant shall have been or remained in the
         employ of the Company or its Subsidiaries, or Director Participant
         shall have been or remained a Director of the Company, for six months
         (or such longer time as may be established by the Committee) from and
         after the Date of Grant, except as otherwise provided in the Plan.

              (b) Options may be exercised in whole or part (but only with
         respect to whole shares of Common Stock and only for a minimum of the
         lesser of (i) 50 shares of Common Stock or (ii) all shares of Common
         Stock which are then vested and eligible to be exercised) at any time
         within the period permitted for the exercise thereof, and shall be
         exercised by written notice of intent to exercise the Option delivered
         to the Secretary of the Company at its principal executive offices.

              (c) Unless otherwise determined by the Committee, Options granted
         to a Director Participant pursuant to Section 6.02 will become
         exercisable by him at the rate of 20% per year beginning on the first
         anniversary of the applicable Automatic Grant Date and continuing at
         the rate of 20% per year thereafter, subject to other provisions as
         provided in the Plan.

              (d) The Committee may impose such restrictions or conditions on
         the exercise of any Option or on any shares of Common Stock acquired
         pursuant to the exercise of an Option under this Plan as it may deem
         advisable, including, without limitation, restrictions imposed by
         applicable federal or state securities laws or the requirements of any
         stock exchange on which such shares of Common Stock are then listed. In
         that regard, the Committee may require as a condition to the exercise
         of any Option that the exercising Employee Participant or Director
         Participant (or his heirs, legatees, or legal representative, as the
         case may be) deliver to the Company a written representation of present
         intention to purchase the Common Stock for investment purposes only and
         not with a view for distribution. In the event such representation is
         required to be delivered, an appropriate legend may be placed upon each
         certificate evidencing the Common Stock issued upon the exercise of
         such Option.

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         SECTION 6.07. PAYMENT. The exercise price for shares of Common Stock
purchased upon exercise of Options by Employee Participants or Director
Participants shall be paid in cash, in shares of Common Stock of the Company
(not subject to limitations on transfer) valued at the then Fair Market Value of
such shares, in a combination of cash and Common Stock, or in any other manner
approved by the Committee. In addition to, and at the time of payment of, the
exercise price, Employee Participants and Director Participants shall pay to the
Company in cash or in Common Stock of the Company the minimum amount of all
federal and state withholding or other employment taxes applicable to the
taxable income resulting from such exercise which are required to be withheld.
Notwithstanding the foregoing, no shares of Common Stock of the Company may be
used as payment of the exercise price of any Option or for withholding and other
employment taxes unless such shares have been owned by the Employee Participant
or Director Participant for at least 6 months prior to exercise of the Options.

         SECTION 6.08. NONTRANSFERABILITY OF OPTION. No Option shall be
transferred by an Employee Participant or Director Participant otherwise than by
will or the laws of descent and distribution or designation of a beneficiary in
a form acceptable to the Committee. During the lifetime of an Employee
Participant or Director Participant the Option shall be exercisable only by him,
or, in the case of an Employee Participant or Director Participant who is
mentally incapacitated, the Option shall be exercisable by his guardian or legal
representative. Notwithstanding the foregoing, the Committee may approve certain
transfers of Nonqualified Stock Options to a family member or trust benefiting a
family member of an Employee Participant or Director Participant.

         SECTION 6.09. EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYEE
PARTICIPANT.

              (a) Except as otherwise provided in this Section 6.09, if, prior
         to a date six months from the Date of Grant of an Option (or such
         longer time as may be established by the Committee), an Employee
         Participant's employment with the Company and its Subsidiaries shall be
         terminated by the Company or Subsidiary for any reason, or by the act
         of the Employee Participant, the Employee Participant's right to
         exercise such Option shall terminate and all rights thereunder shall
         cease, unless otherwise determined by the Committee.

              (b) If, on or after six months from the Date of Grant of an Option
         (or such longer time as may be established by the Committee), an
         Employee Participant's employment with the Company or its Subsidiaries
         shall be terminated for any reason other than death, retirement,
         permanent and total disability or serious misconduct, the Employee
         Participant shall have the right, during the period ending upon the
         shorter of 60 days after such termination or the remaining time
         available under the Option, to exercise such Option to the extent that
         it was exercisable at the date of such termination of employment and
         shall not have been exercised, unless otherwise determined by the
         Committee.

              (c) If an Employee Participant shall die while in the employ of
         the Company or its Subsidiaries or within 60 days after termination of
         such employment, the executor or administrator of the estate of the
         decedent or the person or persons to whom an Option granted hereunder
         shall have been validly transferred by the executor or the
         administrator pursuant to will or the laws of descent and distribution
         or pursuant to a proper designation of beneficiary by the Employee
         Participant shall have the right, during the period ending upon the
         shorter of one year after the date of the Employee Participant's death
         or the remaining time available under the Option, to exercise the
         Employee Participant's Option to the extent that it was exercisable at
         the date of death and shall not have been exercised, unless otherwise
         determined by the Committee.

<PAGE>

              (d) If an Employee Participant shall retire after attaining age 65
         or become permanently and totally disabled while in the employ of the
         Company, the Employee Participant (or in the case of an Employee
         Participant who is mentally incapacitated, his guardian or legal
         representative) shall have the right, during a period ending upon the
         shorter of one year after such retirement or permanent and total
         disability or the remaining time available under the Option, to
         exercise such Option to the extent that it was exercisable at the date
         of termination of employment due to retirement or permanent and total
         disability and shall not have been exercised, unless otherwise
         determined by the Committee.

              (e) If an Employee Participant's employment with the Company or
         its Subsidiaries shall be terminated by the Company or a Subsidiary for
         Serious Misconduct, the Employee Participant's right to exercise any
         Option shall immediately terminate and all rights thereunder shall
         cease, unless otherwise determined by the Committee.

              (f) No transfer of an Option by an Employee Participant shall be
         effective to bind the Company unless the Company shall have been
         furnished with written notice thereof and such other evidence as the
         Committee may reasonably deem necessary to establish the validity of
         the transfer and the acceptance by the transferee or transferees of the
         terms and conditions of such Option.

         SECTION 6.10. EFFECT OF DEATH OR OTHER TERMINATION OF DIRECTOR
PARTICIPANT.

              (a) Except as otherwise provided in this Section 6.10 and Section
         11.04, if, prior to a date six months from an Automatic Grant Date
         relating to any Nonqualified Stock Option, a Director Participant
         ceases to be a member of the Company's Board of Directors for any
         reason, the Director Participant's right to exercise such Nonqualified
         Stock Option shall terminate and all rights thereunder shall cease,
         unless otherwise determined by the Committee.

              (b) If, on or after six months from an Automatic Grant Date
         relating to any Nonqualified Stock Option, a Director Participant
         ceases to be a member of the Company's Board of Directors for any
         reason other than death, retirement, permanent and total disability or
         serious misconduct, the Director Participant shall have the right,
         during the period ending upon the shorter of 60 days after such
         termination or the remaining time available under the Nonqualified
         Stock Option, to exercise such Nonqualified Stock Option to the extent
         that it was exercisable at the date of such cessation of membership and
         shall not have been exercised, unless otherwise determined by the
         Committee.

              (c) If a Director Participant shall die while a Director of the
         Company or within 60 days after termination as a Director of the
         Company, the executor or administrator of the estate of the decedent or
         the person or persons to whom any Nonqualified Stock Option granted
         hereunder shall have been validly transferred by the executor or the
         administrator pursuant to will or the laws of descent and distribution
         or pursuant to a proper designation of beneficiary by the Director
         Participant shall have the right, during the period ending upon the
         shorter of one year after the date of the Director Participant's death
         or the remaining time available under the Nonqualified Stock Option, to
         exercise any Nonqualified Stock Option to the extent that it was
         exercisable at the date of death and shall not have been exercised,
         unless otherwise determined by the Committee.

              (d) If a Director Participant shall retire after attaining age 70
         or become permanently and totally disabled while a Director of the
         Company, the Director Participant (or in the case of a

<PAGE>

          Director Participant who becomes mentally incapacitated, his guardian
          or legal representative) shall have the right, during the period
          ending upon the shorter of one year after such retirement or permanent
          and total disability or the remaining time available under the
          Nonqualified Stock Option, to exercise such Option to the extent that
          it was exercisable at the date of termination as a Director due to
          retirement or permanent and total disability, and shall not have been
          exercised, unless otherwise determined by the Committee.

              (e) If a Director Participant's membership on the Board of
         Directors shall be terminated by the Company for Serious Misconduct,
         the Director Participant's right to exercise any Nonqualified Stock
         Option shall immediately terminate and all rights thereunder shall
         cease, unless otherwise determined by the Committee.

              (f) No transfer of a Nonqualified Stock Option by a Director
         Participant shall be effective to bind the Company unless the Company
         shall have been furnished with written notice thereof and such other
         evidence as the Committee may deem necessary to establish the validity
         of the transfer and the acceptance by the transferee or transferees of
         the terms and conditions of a Nonqualified Stock Option.

         SECTION 6.11. RIGHTS AS SHAREHOLDER; EMPLOYEE PARTICIPANT. An Employee
Participant or a transferee of an Option shall have no rights as a shareholder
with respect to any shares subject to such Option prior to the purchase of such
shares by exercise of such Option as provided herein.

         SECTION 6.12. RIGHTS AS SHAREHOLDER; DIRECTOR PARTICIPANT. A Director
Participant or a transferee of a Nonqualified Stock Option shall have no rights
as a shareholder with respect to any shares subject to such Nonqualified Stock
Option prior to the purchase of such shares by exercise of such Nonqualified
Stock Option as provided herein. Nothing contained herein or in any Long-Term
Incentive Plan Agreement shall be construed or interpreted so as to affect
adversely or otherwise impair the right to remove any Director Participant from
service on the Board of Directors of the Company at any time in accordance with
the provisions of applicable law.

                                  ARTICLE VII

                            STOCK APPRECIATION RIGHTS

         SECTION 7.01. SAR GRANTS. An SAR may be granted to Employee
Participants (a) with respect to any Option granted under this Plan, either
concurrently with the grant of such Option or at such later time as determined
by the Committee (as to all or any portion of the shares of Common Stock subject
to the Option), or (b) alone, without reference to any related Option. Each SAR
granted by the Committee under this Plan shall be subject to the terms and
conditions contained in this Article VIII.

         SECTION 7.02. NUMBER. Each SAR granted to any Employee Participant
shall relate to such number of shares of Common Stock as shall be determined by
the Committee, subject to adjustment as provided in Section 5.04. In the case of
an SAR granted with respect to an Option, the number of shares of Common Stock
to which the SAR pertains shall be reduced in the same proportion that the
Employee Participant exercises the related Option.

         SECTION 7.03. DURATION. Subject to earlier termination as provided in
Section 6.04 or 6.09(e), the term of each SAR shall be determined by the
Committee, but shall not exceed 10 years from the Date of Grant. Unless
otherwise provided by the Committee, each SAR shall become exercisable at such
time or times, to such extent and upon such conditions as the Option, if any, to
which it relates is exercisable.

<PAGE>

No SAR may be exercised during the first six months of its term (or such longer
period as may be established by the Committee), unless otherwise determined by
the Board. Except as provided in the preceding sentence, the Committee may in
its discretion accelerate the exercisability of any SAR in the manner described
in Section 6.04.

         SECTION 7.04. EXERCISE. An SAR may be exercised, in whole or in part,
by giving written notice to the Company, specifying the number of SARs which the
Employee Participant wishes to exercise. Upon receipt of such written notice,
the Company shall, within 90 days thereafter, deliver to the exercising Employee
Participant certificates for the shares of Common Stock or cash or both, as
determined by the Committee, to which the holder is entitled pursuant to Section
7.05.

         SECTION 7.05. PAYMENT. Subject to the right of the Committee to deliver
cash in lieu of shares of Common Stock (which, as it pertains to officers of the
Company, shall comply with all requirements of the Securities Exchange Act of
1934, as amended, and regulations adopted thereunder), the number of shares of
Common Stock which shall be issuable upon the exercise of an SAR shall be
determined by dividing:

              (a) the number of shares of Common Stock as to which the SAR is
         exercised multiplied by the amount of the appreciation in such shares
         (for this purpose, the "appreciation" shall be the amount by which the
         Fair Market Value of the shares of Common Stock subject to the SAR on
         the exercise date exceeds (i) in the case of an SAR related to an
         option, the purchase price of the shares of Common Stock under the
         Option or (ii) in the case of an SAR granted alone, without reference
         to a related Option, an amount which shall be determined by the
         Committee at the time of grant, subject to adjustment under Section
         5.04); by

              (b) the Fair Market Value of a share of Common Stock on the
         exercise date.

In lieu of issuing only shares of Common Stock upon the exercise of a SAR, the
Committee may elect to pay the holder of the SAR cash or any combination of cash
or Common Stock equal to the Fair Market Value on the exercise date of any or
all of the shares which would otherwise be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of an SAR; instead, the holder of
the SAR shall be entitled to receive a cash adjustment equal to the same
fraction of the Fair Market Value of a share of Common Stock on the exercise
date or to purchase the portion necessary to make a whole share at its Fair
Market Value on the date of exercise.

         SECTION 7.06. EMPLOYMENT TAXES. The Company shall retain the minimum
required amount of all federal and state withholding or other employment taxes
applicable to the taxable income of the Employee Participant resulting from the
exercise of the SAR.

                                  ARTICLE VIII

                                RESTRICTED STOCK

         SECTION 8.01. GRANT OF RESTRICTED STOCK. The Committee, at any time and
from time to time, may grant shares of Restricted Stock under the Plan to such
Employee Participants and in such amounts as it shall determine. Each grant of
Restricted Stock shall be evidenced by minutes of a meeting or the written
consent of the Committee and by a written Long-Term Incentive Plan Agreement
dated as of the Date of Grant and executed by the Company and the Employee
Participant. The Long-Term Incentive Plan Agreement shall specify the Period(s)
of Restriction and the time or times at which such period(s) shall lapse with
respect to a specified number of shares of Restricted Stock and shall set forth
such other terms and conditions as may be determined by the Committee to be
consistent with the Plan, but may

<PAGE>

include additional provisions and restrictions, provided that they are not
inconsistent with the Plan. The Periods of Restriction shall not exceed 10 years
from the Date of Grant of the Restricted Stock.

         SECTION 8.02. NONTRANSFERABILITY. Except as provided in Section 8.08
hereof, the shares of Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated for such
period of time as shall be specified in the Long-Term Incentive Plan Agreement,
or upon earlier satisfaction of other conditions as specified by the Committee
in its sole discretion and set forth in the Long-Term Incentive Plan Agreement.

         SECTION 8.03. OTHER RESTRICTIONS. The provisions of Section 6.06(d)
shall be applicable to grants of Restricted Stock.

         SECTION 8.04. VOTING RIGHTS. Employee Participants holding shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those shares during the Period of Restriction.

         SECTION 8.05. DIVIDENDS, STOCK SPLITS AND OTHER DISTRIBUTIONS. During
the Period of Restriction, Employee Participants holding shares of Restricted
Stock granted hereunder shall be entitled to receive all dividends, stock splits
and other distributions paid with respect to those shares while they are so
held. If any such dividends or distributions are paid in shares of Common Stock,
those shares shall be subject to the same restrictions on transferability as the
shares of Restricted Stock with respect to which they were paid.

         SECTION 8.06. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. In the event
that an Employee Participant terminates his employment on or after his
sixty-fifth birthday, the Periods of Restriction applicable to the Restricted
Stock pursuant to Section 8.02 hereof shall lapse automatically and, except as
otherwise provided in Section 8.03, the shares of Restricted Stock shall thereby
be free of restrictions and freely transferable. In the event that an Employee
Participant terminates his employment with the Company or its Subsidiaries by
retiring prior to his sixty-fifth birthday, all shares of Restricted Stock shall
be forfeited and returned to the Company; provided, however, that the Committee
in its sole discretion may waive the restrictions remaining on any or all shares
of Restricted Stock.

         SECTION 8.07. TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In
the event an Employee Participant's employment with the Company or its
Subsidiaries terminates because of his death or permanent and total disability
during the Periods of Restriction, the restrictions applicable to the shares of
Restricted Stock pursuant to Section 8.02 hereof shall lapse automatically and
the shares of Restricted Stock shall thereby be free of restrictions and freely
transferable.

         SECTION 8.08. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH,
DISABILITY, OR RETIREMENT. In the event that an Employee Participant's
employment with the Company or its Subsidiaries is voluntarily terminated by the
Employee Participant for any reason other than those set forth in Section 8.06
and 8.07 during the Periods of Restriction, any shares of Restricted Stock still
subject to restrictions at the date of such termination automatically shall be
forfeited and returned to the Company. In the event of termination of the
employment of an Employee Participant by the Company other than a termination
for serious misconduct as defined in Section 6.09(e), the Committee in its sole
discretion may waive the automatic forfeiture of any or all Restricted Stock and
may waive any and all restrictions.

         SECTION 8.09. EMPLOYMENT TAXES. The Company shall retain the minimum
required amount of all federal and state withholding or other employment taxes
applicable to the taxable income of the Employee Participant resulting from such
exercise.

<PAGE>

                                   ARTICLE IX

                               TEN-PERCENT OWNERS

Notwithstanding any other provisions of this Plan, the following terms and
conditions shall apply to Incentive Stock Options granted hereunder to a "10%
owner." For this purpose, a "10% owner" shall mean an Employee Participant who,
at the time the Incentive Stock Option is granted, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of any Subsidiary. With respect to a 10% owner:

               (a) the price at which shares of stock may be purchased under an
         Incentive Stock Option granted pursuant to this Plan shall be not less
         than 110% of the Fair Market Value thereof; and

               (b) the period during which any such Incentive Stock Option may
         be exercised, to be fixed by the Committee in the manner described in
         Section 6.04, above, shall expire not later than five years from the
         date the Incentive Stock Option is granted.

                                   ARTICLE X

                                  ANNUAL LIMITS

Incentive Stock Options shall not be granted to any individual pursuant to this
Plan, the effect of which would be to permit such person to first exercise
Incentive Stock Options, in any calendar year, for the purchase of shares having
a Fair Market Value in excess of $100,000 (determined at the time of the grant
of the Incentive Stock Options). An Employee Participant hereunder may exercise
Incentive Stock Options for the purchase of shares valued in excess of $100,000
(determined at the time of grant of the Incentive Stock Options) in a calendar
year, but only if the right to exercise such Incentive Stock Options shall have
first become available in prior calendar years. Nothing in this Article X is
intended to prohibit an Employee Participant from exercising all of his
Incentive Stock Options which may be accelerated as a result of a Change in
Control.

                                   ARTICLE XI

                           OTHER TERMS AND CONDITIONS

         SECTION 11.01. INCENTIVE STOCK OPTIONS. Any Incentive Stock Option
granted hereunder shall contain such other and additional terms, not
inconsistent with the terms of this Plan, which are deemed necessary or
desirable by the Committee, which such terms, together with the terms of this
Plan, shall constitute such Incentive Stock Option as an "Incentive Stock
Option" within the meaning of Section 422 of the Code and lawful regulations
thereunder.

         SECTION 11.02. PERFORMANCE AWARDS. The Committee may designate whether
any Performance Award to any Employee Participant is intended to be
"performance-based compensation" as that term is used in Section 162(m) of the
Code. Any such Performance Awards designated as intended to be
"performance-based compensation" shall be conditioned on the achievement of one
or more performance measures, to the extent required by Section 162(m) of the
Code. The performance measures that may be used by the Committee for such
Performance Awards shall be based on any one or more of the following, as
selected by the Committee: earnings per share and/or growth in earnings per
share in relation to target objectives, excluding the effect

<PAGE>

of extraordinary or nonrecurring items; operating cash flow and/or growth in
operating cash flow in relation to target objectives; cash available in relation
to target objectives; net income and/or growth in net income in relation to
target objectives, excluding the effect of extraordinary or nonrecurring items;
revenue and/or growth in revenue in relation to target objectives; total
shareholder return (measured as the total of the appreciation of and dividends
declared on the Common Stock) in relation to target objectives; economic value
added; stock price; return on invested capital in relation to target objectives;
return on shareholder equity in relation to target objectives; return on assets
in relation to target objectives; and return on common book equity in relation
to target objectives.

         If the Committee determines that, as a result of a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which the Company conducts its business, or any other events or
circumstances, the Performance Goals are no longer suitable, the Committee may
in its discretion modify such Performance Goals or the related minimum
acceptable level of achievement, in whole or in part, with respect to a period
as the Committee deems appropriate and equitable. For Performance Awards and the
establishment of the performance measures shall be made during the period
required under Section 162(m) of the Code.

         SECTION 11.03. DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award may provide
an Employee Participant or Director Participant with the right to receive
dividend payments or dividend equivalent payments with respect to Common Stock
subject to the Award (both before and after the Common Stock subject to the
Award is earned, vested or acquired), which payments may be either made
currently or credited to an account for such Employee Participant or Director
Participant, and may be settled in cash or shares of Common Stock, as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Common Stock, may be subject
to such conditions, restrictions and contingencies as the Committee shall
establish, including the reinvestment of such credited amounts in shares of
Common Stock.

         SECTION 11.04. CHANGE IN CONTROL. Notwithstanding any other provision
of this Plan to the contrary, all unvested or unexercisable Awards shall
automatically vest and become exercisable without further action by the Board or
Committee upon a Change in Control, except as may be otherwise provided in any
Long-Term Incentive Plan Agreement.

                                  ARTICLE XII

                               STOCK CERTIFICATES

         SECTION 12.01. CONDITIONS. The Company shall not be required to issue
or deliver any certificate for shares of Common Stock received pursuant to a
grant of Restricted Stock or other Award purchased upon the exercise of any
Option granted to Employee Participants or Nonqualified Stock Options granted to
Director Participants hereunder or any portion thereof prior to fulfillment of
all of the following conditions:

              (a) The completion of any registration or other qualification of
         such shares under any federal or state law or under the rulings or
         regulations of the Securities and Exchange Commission or any other
         governmental regulatory body, which the Committee shall in its sole
         discretion deem necessary or advisable;

              (b) The obtaining of any approval or other clearance from any
         federal or state governmental agency which the Committee shall in its
         sole discretion determine to be necessary or advisable;

<PAGE>

              (c) The lapse of such reasonable period of time following the
         Period of Restriction or the exercise of the Option as the Committee
         from time to time may establish for reasons of administrative
         convenience;

              (d) Satisfaction by the Employee Participant or Director
         Participant of all applicable withholding taxes or other withholding
         liabilities; and

              (e) Specific requirements as provided for in Section 6.06(d).

         SECTION 12.02. LEGENDS. The Company reserves the right to legend any
certificate for shares of Common Stock conditioning sales of such shares upon
compliance with applicable federal and state securities laws and regulations.

                                  ARTICLE XIII

                TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN

         The Board may at any time, upon recommendation of the Committee,
terminate, and may at any time and from time to time and in any respect amend or
modify, the Plan; provided, however, that no such action shall impair the rights
of any holder of an Award theretofore granted; and further provided, that no
such action of the Board or Committee without approval of the shareholders of
the Company may: (a) increase the total number of shares of Common Stock subject
to the Plan, except as contemplated in Sections 5.03 and 5.04 hereof or (b)
amend Sections 5.01 or 6.03 of this Plan.

         No termination, amendment, or modification of the Plan shall in any
manner adversely affect any Restricted Stock or Option theretofore granted under
the Plan without the consent of the Employee Participant or Director Participant
holding such Restricted Stock or Option.

                                  ARTICLE XIV

                                  MISCELLANEOUS

         SECTION 14.01. EMPLOYMENT OR BOARD MEMBERSHIP. Nothing in the Plan or
in any Award granted hereunder or in any Long-Term Incentive Plan Agreement
relating thereto shall confer upon any employee the right to continue in the
employ of the Company or any Subsidiary, or any Director the right to remain on
the Board of the Company.

         SECTION 14.02. OTHER COMPENSATION PLANS. Except as provided in Section
14.08 hereof, the adoption of the Plan shall not affect any other stock option
or long-term incentive or other compensation plans in effect for the Company or
any Subsidiary, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees of the Company or
any Subsidiary.

         SECTION 14.03. PLAN BINDING ON SUCCESSORS. The Plan shall be binding
upon the Company, its successors and assigns, and on each Employee Participant
or Director Participant, his executor, administrator and permitted transferees.

         SECTION 14.04. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender.

<PAGE>

         SECTION 14.05. HEADINGS NO PART OF PLAN. Headings of Articles and
Sections hereof are inserted for convenience and reference; they constitute no
part of the Plan.

         SECTION 14.06. REPURCHASE OF SHARES. Nothing contained herein or in any
Long-Term Incentive Plan Agreement shall create an obligation on the part of the
Company to repurchase any shares of Common Stock issued hereunder.

         SECTION 14.07. EFFECTIVE DATE. Subject to the approval of the Company's
stockholders prior to December 1, 2001, the Plan shall be effective as of
December 1, 2000; provided, however, that to the extent Awards are granted under
the Plan prior to its approval by the Company's stockholders, the Awards shall
be contingent on approval of the Plan by the Company's stockholders prior to
December 1, 2001.

         SECTION 14.08. PRIOR PLANS. Upon shareholder approval of this Plan
pursuant to Section 14.07, no new awards will be granted under the Company's
1988 and 1991 Long-Term Incentive Plans, and any awards for shares of stock
granted under those Plans after December 1, 2000 will reduce the number of
shares available under this Plan.<PAGE>
                                                                   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.

<PAGE>

         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

<PAGE>

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

<PAGE>

                        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.

<PAGE>

                (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,

<PAGE>

                        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.

<PAGE>

                (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:

<PAGE>

                (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.

<PAGE>

                  (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

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