CEO Employment Agreement

This Agreement is made the 30th of December, 1998, effective as of January 1, 1999, by and between Coventry Corporation, a Delaware corporation (the "Company"), with its principal place of business at 6705 Rockledge Drive, Suite 900, Bethesda, Maryland, 20817, and Allen F. Wise (the "Executive").


WHEREAS, the Company is engaged in the business of providing comprehensive health care services;


WHEREAS, the Company desires to employ the Executive to devote full time to the business of the Company and to continue as the President and Chief Executive Officer of the Company; and


WHEREAS, the Executive desires to be employed on the terms and subject to the conditions hereinafter stated.


NOW, THEREFORE, in consideration of the mutual covenants contained in this Employment Agreement, the parties hereby agree as follows:


1
POSITION AND RESPONSIBILITIES


During the Term of this Employment Agreement, the Executive shall perform such duties for such compensation and subject to such terms and conditions as are hereinafter set forth.


2
TERM AND DUTIES


2.1 Term: Extension. The term of this Employment Agreement (the "Term of this Employment Agreement") will commence as of January 1, 1999, and shall continue through December 31, 2001. On or after January 1, 2001, but no later than September 30, 2001, the Company and the Executive shall deliberate the possible extension of this Employment Agreement. If at the end of the term of this Employment Agreement a new employment contract is not executed, the term of this Employment Agreement will continue on a year-to-year basis in the absence of notice of either party. Termination of the Executive's employment pursuant to this Employment Agreement shall be governed by Sections 4 and 5.


2.2 Duties. As President and Chief Executive Officer, the Executive shall report to the Board of Directors and shall be responsible for the overall direction, administration and leadership of the Company, including, but not limited to, the establishment and implementation of policies and directives, formulation of long range plans, goals and objectives, effective management of employees, and such other powers and duties normally associated with such position or as may be delegated or assigned to the Executive by the Company's Board of Directors. During the term of the Agreement, the Executive shall also serve without additional compensation in such other offices of the Company or its subsidiaries or affiliates to which he


Page 1 2 may be elected or appointed by the Board of Directors of the Company or its subsidiaries or affiliates, respectively.


2.3 Location. The duties of the Executive shall be performed at such locations and places as may be directed by the Board of Directors.


3
COMPENSATION AND BENEFITS


3.1 Base Compensation. The Company shall pay the Executive a base salary ("Base Salary") of $600,000 per annum, subject to applicable withholdings. The Base Salary shall be payable in equal semi-monthly payments according to the customary payroll practices of the Company. The Base Salary shall be reviewed annually and shall be subject to increase according to the policies and practices adopted by the Board of Directors from time to time.


3.2 Bonus Compensation. The Executive shall be eligible for an annual bonus ("Bonus") potential of 100% of Base Compensation, which shall be determined as follows:


(a) up to 50% shall be based upon achievement of budget and other operational performance factors, and


(b) all or any part of the remaining 50% shall be granted in the sole discretion of the Compensation and Benefits Committee ("Committee") of the Board of Directors of the Company. The Executive's bonus and performance factors shall be determined on an annual basis by the Committee.


3.3 Additional Compensation. During the period of this Agreement and as a result of employment under this Agreement, the Executive shall receive or be eligible for the following additional compensation:


(a) Company Stock Options: On the effective date of this Agreement, the Executive will be granted a nonqualified stock option to purchase 150,000 shares of the Common Stock of the Company at an exercise price per share equal to the closing price per share of the Common Stock of the Company as reported on the NASDAQ National Market on the first trading day after the effective date of this Agreement. The option will vest at a rate of one-third of the shares at the end of each anniversary date of the grant, over the next three years beginning on the date of grant, or in the event substantially all of the capital stock or assets of the Company are sold or transferred or the Company is merged into or consolidated with another unaffiliated entity, then the option will become fully vested on the date of closing. The option will expire on January 1, 2009 unless sooner terminated by the Executive terminating his employment hereunder. The option shall be granted under and in accordance with the terms and conditions of the Company's Second Amended and Restated 1993 Stock Option Plan and a letter agreement between the Executive and the Company dated as of the effective date of this Agreement. Future stock option awards may be made in the number and with the terms established by the Board.


Page 2 3
(b) Benefits. The Executive will be entitled to participate in all employee benefit plans or programs and receive all benefits and perquisites to which any salaried employee is eligible under any existing or future plan or program established by the Company for salaried employees, including, without limitation, all plans developed for executive officers of the Company. The Executive will participate to the extent permissible under the terms and provisions of such plans or programs in accordance with program provisions. These plans or programs may include group hospitalization, health care, dental care, life or other insurance, tax qualified pension, car allowance, savings, thrift and profit sharing plans, termination pay programs, sick leave plans, travel or accident insurance, disability insurance, and contingent compensation plans, including capital accumulation programs, restricted stock programs, stock purchase programs and stock option plans. Nothing in this Agreement will preclude the Company from amending or terminating any of the plans or programs applicable to salaried employees or executive officers. The Executive will be entitled to four (4) weeks of annual paid vacation.


3.4 Business Expenses. The Company will reimburse the Executive for all reasonable travel and other expenses incurred by the Executive in connection with the performance of his duties and obligations under this Employment Agreement upon the Executive's submitting proper documentation in accordance with the Company policies for expense reimbursement. In addition, in lieu of charging any auto mileage for business use, the Executive will be provided a leased automobile, and all reasonable operating costs, including insurance, gas, maintenance, and repairs, will be paid by the Company. To the degree that the Executive is accountable for any income taxes arising from this Section, he will have sole responsibility for calculating and paying such taxes.


3.5 Withholding. The Company may directly or indirectly withhold from any payments under this Employment Agreement all federal, state, city or other taxes that shall be required pursuant to any law or governmental regulation.


4
DEATH AND DISABILITY COMPENSATION


4.1 Payment in Event of Death. In the event of the death of the Executive during the Term of this Employment Agreement, the Company's obligation to make payments under this Employment Agreement shall cease as of the date of death, except for the following benefits to be paid to the Executive's beneficiaries:


(a) any earned but unpaid base salary and bonus (pro-rated for that year);


(b) for thirty-six (36) months following the date of the Executive's death, the Company shall reimburse the Executive's designated beneficiary for the cost of the designated beneficiary's medical and dental insurance as in effect at the date of the Executive's death;


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(c) the exercisability of stock options granted to the Executive shall be governed by any applicable stock option agreements and the terms of the respective stock option plans; and


(d) the Executive's designated beneficiary will be entitled to receive the proceeds of any life or other insurance or other death benefit programs provided or referred to in this Employment Agreement.


4.2 Payment in Event of Disability. Notwithstanding the disability of the Executive, the Company will continue to pay the Executive pursuant to Section 3 hereof during the Term of this Employment Agreement, unless the Executive's employment is earlier terminated in accordance with this Employment Agreement. In the event the disability continues for a period of three (3) months, the Company may thereafter terminate this Employment Agreement and the Executive's employment. Following such termination, the Company will pay the Executive amounts equal to the following:


(a) his regular installments of Base Salary, as of the time of termination, for a period not to exceed the commencement of payments under any Company provided long-term disability plan;


(b) a lump sum payment equal to the average annual bonus compensation for the two (2) calendar years immediately preceding the year of termination due to disability, prorated for the year the disability occurs;


(c) for thirty-six (36) months following the date of the Executive's termination due to disability, the Company shall reimburse the Executive for the cost of the Executive's medical and dental insurance as in effect at the date of the Executive's termination; and


(d) if the Executive is receiving disability benefits under the Company's qualified long-term disability program, the Executive will receive a monthly payment equal to 60% multiplied by pre-disability earnings (as defined by the qualified long-term disability plan) less any monthly benefit paid under the qualified long-term disability program. Such payments shall continue to the earlier of 1) age 62, or 2) cessation of payments under the Company's qualified long-term disability program.


(e) the exercisability of stock options granted to the Executive shall be governed by any applicable stock option agreements and the terms of the respective stock option plans.


4.3 Responsibilities in the Event of Disability. During the period the Executive is receiving payments following his disability and as long as he is physically and mentally able to do so, the Executive will furnish information and assistance to the Company and from time to time will make himself available to the Company to undertake assignments consistent with his position or prior position with the Company and his physical and mental health. If the Company fails to make a payment or provide a benefit required as part of this


Page 4 5 Employment Agreement, the Executive's obligation to provide information and assistance will cease.


4.4 Definition of Disability. For purposes of this Employment Agreement, the term "disability" will have the same meaning as is attributed to such term, or any substantially similar term, in the Company's long-term disability income plan as in effect from time to time. The Company's group long-term disability policy in existence at the time of disability shall be considered to be a part of this Agreement.


5
TERMINATION OF EMPLOYMENT


Notwithstanding anything herein to the contrary, this Employment Agreement and the Executive's e ...