Exhibit 10.21
EHEALTH, INC.
MANAGEMENT RETENTION
AGREEMENT
This Management Retention Agreement
(the “Agreement”) is made and entered into by and
between Gary Lauer (the “Executive”) and eHealth, Inc.
(the “Company”), effective as of the date last signed
below.
RECITALS
1. It is possible that the Company
may from time to time receive acquisition proposals by other
companies. The Board of Directors of the Company (the
“Board”) recognizes that consideration of any such
proposals can be a distraction to the Executive and can cause the
Executive to consider alternative employment opportunities. The
Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have
the continued dedication and objectivity of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined herein) of the Company.
2. The Board believes that it is in
the best interests of the Company and its stockholders to provide
the Executive with an incentive to continue his or her employment
and to motivate the Executive to maximize the value of the Company
upon a Change of Control for the benefit of its
stockholders.
3. The Board believes that it is
imperative to provide the Executive with certain severance benefits
upon certain terminations of employment, including outside of a
Change of Control. These benefits will provide the Executive with
enhanced financial security and incentive and encouragement to
remain with the Company.
4. Certain capitalized terms used in
the Agreement are defined in Section 5 below.
AGREEMENT
NOW, THEREFORE, in consideration of
the mutual covenants contained herein, the parties hereto agree as
follows:
1. Term of Agreement . This
Agreement shall terminate upon the date that all of the obligations
of the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment . The
Company and the Executive acknowledge that the Executive’s
employment is and shall continue to be at-will, as defined under
applicable law.
3. Severance Benefits
.
(a) Involuntary Termination Other
than for Cause or Voluntary Termination for Good Reason During the
Change of Control Period . If within the period beginning on
the date the Company enters into a binding definitive agreement to
effect a transaction that would be a Change in
Control if consummated and ending
twelve (12) months following the date of the ensuing Change of
Control (the “Change of Control Period”) (i) the
Executive terminates his or her employment with the Company (or any
parent or subsidiary of the Company) for “Good Reason”
(as defined herein), or (ii) the Company (or any parent or
subsidiary of the Company) terminates the Executive’s
employment for other than “Cause” (as defined herein),
and the Executive signs and does not revoke a standard release of
claims with the Company in a form substantially similar to that
attached hereto as Exhibit A (the “Release”),
then the Executive shall receive the following severance benefits
from the Company:
(i) Severance Payment . The
Executive shall receive a single lump-sum cash severance payment
(less applicable withholding taxes) in an amount equal to
twenty-four (24) months of Executive’s then current
annual base salary.
(ii) Pro-Rated Annual Bonus .
A single lump-sum cash payment equal to the Executive’s then
target annual bonus, multiplied by a fraction, the numerator of
which is the number of days in the Company’s fiscal year
prior to and including the date of Executive’s termination of
employment and the denominator of which is 365.
(iii) Acceleration of Vesting of
Equity Compensation . One hundred percent (100%) of the
Executive’s outstanding and unvested awards relating to the
Company’s common stock (whether stock options, stock
appreciation rights, shares of restricted stock, restricted stock
units, performance shares or otherwise (collectively, the
“Equity Awards”)) will become vested and will otherwise
remain subject to the terms and conditions of the applicable Equity
Award agreement.
(iv) Continued Executive
Benefits . Subject to the Executive timely electing
continuation coverage under Title X of the Consolidated Budget
Reconciliation Act of 1985 (“COBRA”), the Executive
shall receive one-hundred percent (100%) Company-paid group
health, dental and vision coverage (the “Company-Paid
Coverage”). If such coverage included the Executive’s
dependents immediately prior to the Change of Control, such
dependents shall also be covered at Company expense. Company-Paid
Coverage shall continue until the earlier of (i) eighteen
(18) months from the date of termination, or (ii) the
date upon which the Executive and his dependents become covered
under another employer’s group health, dental and vision
plans that provide Executive and his dependents with comparable
benefits and levels of coverage.
(v) Assumption of Leases . To
the extent such leases have not already been assumed by the
Company, as of the later of (i) two weeks after the date of
Executive’s employment termination, or (ii) the end of
the month in which Executive’s employment termination occurs,
the Company shall assume Executive’s San Francisco Bay Area
housing and automobile leases, and Executive shall concurrently
cease to use the associated housing and automobile, such that
Executive does not incur any related costs on and after such date.
For the sake of clarity, in the event that the Company has assumed
either or both of such leases prior to Executive’s employment
termination, Executive shall be permitted to use the leased
automobile and housing through the later of (i) two weeks
after the date of Executive’s employment termination, or
(ii) the end of the month in which Executive’s
employment termination occurs.
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(b) Involuntary Termination Other
than for Cause or Voluntary Termination for Good Reason Outside the
Change of Control Period . If during the term of this Agreement
and other than during the Change in Control Period, (i) the
Executive terminates his or her employment with the Company (or any
parent or subsidiary of the Company) for “Good Reason”
(as defined herein), or (ii) the Company (or any parent or
subsidiary of the Company) terminates the Executive’s
employment for other than “Cause” (as defined herein),
and the Executive signs and does not revoke the Release, then the
Executive shall receive the following severance benefits from the
Company:
(i) Severance Payment . The
Executive shall receive a single lump-sum severance payment (less
applicable withholding taxes) in an amount equal to twenty-four
(24) months of Executive’s then current annual base
salary.
(ii) Pro-Rated Annual Bonus .
A single lump-sum cash payment equal to the Executive’s then
target annual bonus, multiplied by a fraction, the numerator of
which is the number of days in the Company’s fiscal year
prior to and including the date of Executive’s termination of
employment and the denominator of which is 365.
(iii) Continued Executive
Benefits . Subject to the Executive timely electing
continuation coverage under COBRA, the Executive shall receive
one-hundred percent (100%) Company-Paid Coverage. If such
coverage included the Executive’s dependents immediately
prior to the Change of Control, such dependents shall also be
covered at Company expense. Company-Paid Coverage shall continue
until the earlier of (i) eighteen (18) months from the
date of termination, or (ii) the date upon which the Executive
and his dependents become covered under another employer’s
group health, dental and vision plans that provide Executive and
his dependents with comparable benefits and levels of
coverage.
(iv) Assumption of Leases .
To the extent such leases have not already been assumed by the
Company, as of the later of (i) two weeks after the date of
Executive’s employment termination, or (ii) the end of
the month in which Executive’s employment termination occurs,
the Company shall assume Executive’s San Francisco Bay Area
housing and automobile leases, and Executive shall concurrently
cease to use the associated housing and automobile, such that
Executive does not incur any related costs on and after such date.
For the sake of clarity, in the event that the Company has assumed
either or both of such leases prior to Executive’s employment
termination, Executive shall be permitted to use the leased
automobile and housing through the later of (i) two weeks
after the date of Executive’s employment termination, or
(ii) the end of the month in which Executive’s
employment termination occurs.
(c) Voluntary Resignation;
Termination for Cause; Death or Disability; Notice . If the
Executive’s employment with the Company terminates
(i) voluntarily by the Executive other than for Good Reason
(ii) for Cause by the Company, or (iii) due to
Executive’s death or Disability (as defined hereunder), then
the Executive shall not be entitled to receive severance or other
benefits except for those (if any) as may then be established under
the Company’s then existing severance and benefits plans and
practices or pursuant to other written agreements with the Company.
Executive agrees to provide the Company with six (6) months
written notice in the event of his voluntary termination of
employment other than for Good Reason.
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(d) Exclusive Remedy . The
provisions of this Section 3 are intended to be and are the
Executive’s exclusive rights to severance payments and
benefits in the event of termination of service and shall supersede
in their entirety the severance provisions in the Executive’s
offer letter dated November 30, 1999, as amended from time to
time (the “Offer Letter”). The parties hereto agree
that nothing herein is intended to result in duplication of
severance or any other benefits.
(e) Code Section 409A
.
(i) Any amount paid under this
Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of
the regulations issued under Section 409A of the Code (the
“Treasury Regulations”) shall not constitute Deferred
Compensation Separation Benefits for purposes of
Section 3(f)(ii) below, and consequently shall be paid to
Executive promptly following termination as otherwise required by
this Agreement.
(ii) Notwithstanding anything to the
contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A of the
Code, and the final regulations and any guidance promulgated
thereunder (“Section 409A”) at the time of
Executive’s separation from service (as such term is defined
in Section 409A), then the cash severance benefits payable to
Executive under this Agreement along with any other severance
payments or separation benefits that may be considered deferred
compensation under Section 409A (together, the “Deferred
Compensation Separation Benefits”) that are otherwise due to
Executive on or within the six (6) month period following
Executive’s separation from service shall accrue during such
six (6) month period and shall become payable in a lump sum
payment on the date six (6) months and one (1) day
following the date of Executive’s separation from service.
All subsequent payments, if any, shall be payable in accordance
with the payment schedule applicable to each payment or benefit.
Notwithstanding anything herein to the contrary, if Executive dies
following his separation from service but prior to the six
(6) month anniversary of his date of separation from service,
then any payments delayed in accordance with this Section shall be
payable in a lump sum as soon as administratively practicable after
the date of Executive’s death and all other Deferred
Compensation Separation Benefits shall be payable in accordance
with the payment schedule applicable to each payment or
benefit.
(iii) Any amount paid under this
Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
does not exceed the Section 409A Limit (as defined below)
shall not constitute Deferred Compensation Separation Benefits for
purposes of Section 3(f)(ii) above. For purposes of this
Section 3(f), “Section 409A Limit” will mean the
lesser of two (2) times: (i) Executive’s annualized
compensation based upon the annual rate of pay paid to Executive
during the Company’s taxable year preceding the
Company’s taxable year of Executive’s termination of
employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1); or (ii) the maximum amount that may
be taken into account under a qualified plan pursuant to
Section 401(a)(17) of the Code for the year in which
Executive’s employment is terminated.
(iv) It is the intent of this
Agreement to comply with the requirements of Section 409A so
that none of the severance payments and benefits to be provided
hereunder shall be subject to the additional tax imposed under
Section 409A, and any ambiguities herein shall be interpreted
to so comply. The Company and Executive agree to work together in
good faith to consider amendments to this Agreement and to take
such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income
recognition under Section 409A prior to actual payment to
Executive.
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(v) Notwithstanding
any other provisions of this Agreement, Executive’s receipt
of severance payments and benefits under this Agreement is
conditioned upon Executive signing and not revoking the Release and
subject to the Release becoming effective within sixty
(60) days following Executive’s termination of
employment (the “Release Period”). No severance will be
paid or provided until the Release becomes effective. No severance
will be paid or provided unless the Release becomes effective
during the Release Period. Any severance payments to which
Executive is entitled under this Agreement shall be paid by the
Company to Executive in cash and in full arrears on the sixty-first
(61 st ) day following
Executive’s employment termination date or such later date as
is required under Section 12 hereof.
4. Golden Parachute Excise Tax
Best Results . If any payment or benefit Executive would
receive pursuant to this Agreement or otherwise
(“Payment”) would (i) constitute a
“parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then such Payment shall be reduced
to the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would
result in no portion of the Payment being subject to the Excise Tax
or (y) the largest portion, up to and including the total, of
the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal
rate), results in Executive’s receipt, on an after-tax basis,
of the greater amount of the Payment notwithstanding that all or
some portion of the Payment may be subject to the Excise Tax. If a
reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced
Amount, reduction shall occur in the following order: (A) cash
payments shall be reduced first and in reverse chronological order
such that the cash payment owed on the latest date following the
occurrence of the event triggering such excise tax will be the
first cash payment to be reduced; (B) accelerated vesting of
stock awards shall be cancelled/reduced next and in the reverse
order of the date of grant for such stock awards (i.e., the vesting
of the most recently granted stock awards will be reduced first);
and (C) employee benefits shall be reduced last and in reverse
chronological order such that the benefit owed on the latest date
following the occurrence of the event triggering such excise tax
will be the first benefit to be reduced.
The Company shall appoint a
nationally recognized accounting firm to make the determinations
required hereunder and perform the foregoing calculations. The
Company shall bear all expenses with respect to the determinations
by such accounting firm required to be made hereunder.
The accounting firm engaged to make
the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to the
Compa
