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Exhibit 10.1
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the " Agreement ") is
made as of April 1, 2008 by and among WELLCARE HEALTH
PLANS, INC., a Delaware corporation (" WellCare "),
COMPREHENSIVE HEALTH MANAGEMENT, INC., a Florida corporation
(the " Corporation "),
and THOMAS F. O’NEIL III, an individual (" Executive "), with
respect to the following facts and circumstances:
RECITALS
WHEREAS,
WellCare and the Corporation desire for the Corporation to
employ Executive as its Senior Vice President, General Counsel
and Secretary and for the Executive to be appointed as the
Senior Vice President, General Counsel and Secretary of
WellCare, and Executive desires to accept such employment and
appointment;
NOW,
THEREFORE, in consideration of the mutual promises, covenants
and agreements set forth herein, the parties hereto agree as
follows:
ARTICLE 1
EMPLOYMENT, TERM AND DUTIES
1.1
Employment
. The Corporation will hereby employ Executive as
Senior Vice President, General Counsel and Secretary of the
Corporation, upon the terms and conditions set forth in this
Agreement. During the Term, Executive also shall be
appointed as Senior Vice President, General Counsel and
Secretary of WellCare. Executive shall report
directly to the Chief Executive Officer of
WellCare.
1.2
Term
. The Corporation will employ Executive, and
Executive will serve as Senior Vice President, General Counsel
and Secretary of the Corporation commencing upon the
Executive’s first day of employment on or about April 1,
2008 (the “Effective
Date” ) and continuing thereafter for a term (the
" Term
") of four (4) years, unless earlier terminated under Article
4; provided
, that the Term shall automatically renew for additional
one-year periods unless either the Corporation or Executive
gives notice of non-renewal at least ninety (90) days prior to
expiration of the Term (as it may have been extended by any
renewal period).
1.3
Duties
. Executive shall perform all the duties and
obligations reasonably associated with the positions of Senior
Vice President, General Counsel and Secretary and consistent
with the Bylaws of WellCare and the Corporation as in effect
from time to time, subject to the supervision of the Chief
Executive Officer of WellCare, and such other executive duties
consistent with the foregoing as are mutually agreed upon from
time to time by Executive and the Chief Executive Officer of
WellCare. Executive shall perform the services
contemplated herein faithfully and
diligently. Executive shall devote substantially
all his business time and efforts to the rendition of such
services; provided
, that Executive may participate in social, civic, charitable,
religious, business, educational or professional
associations
and, with the prior approval of the Board of Directors of
WellCare (the “Board”
), serve on the boards of directors of companies, so long as
such participation does not materially interfere with the
duties and obligations of Executive hereunder.
1.4
Primary Work
Location . Executive will perform the
services hereunder at the Corporation's offices located in the
metropolitan area of Tampa, Florida. Executive
acknowledges and agrees that the nature of the Corporation's
business will require travel from time to time. The
Corporation will pay or reimburse Executive for expenses
incurred in traveling between Baltimore, Maryland and Tampa,
Florida.
ARTICLE 2
COMPENSATION
2.1
Salary
. In consideration for Executive's services
hereunder, the Corporation shall pay Executive an annual
salary at the rate of not less than $500,000 per year during
each of the years of the Term, payable in accordance with the
Corporation's regular payroll schedule from time to time (less
any deductions required for Social Security, state, federal
and local withholding taxes, and any other authorized or
mandated similar withholdings). The annual salary
shall be reviewed by the Compensation Committee of the Board
(the " Committee "), or
if there is none, the Board no less frequently than annually
and may be increased (but not decreased) from its
then-existing level at the discretion of the Committee or the
Board.
2.2
Bonus
.
2.2.1
Annual
Bonuses . Executive shall be entitled to
earn bonuses with respect to each fiscal year (or partial
fiscal year) during the Term, based upon Executive's
achievement of performance objectives set by the Committee or
the Board after consultation with Executive, with a targeted
bonus of fifty percent (50%) of Executive's annual salary for
such fiscal year (or partial fiscal year). Any such
bonus earned by Executive shall be paid annually within thirty
(30) days after the delivery of audited financial statements
by the Corporation's outside auditing
firm. Executive may also receive special bonuses in
additional to his annual bonus eligibility at the discretion
of the Committee. Notwithstanding the foregoing,
Executive will earn a minimum guaranteed bonus of two hundred
fifty thousand dollars ($250,000) for the initial calendar
year of his employment which shall be paid within thirty (30)
days after December 31, 2008 and not subject to the delivery
of audited financial statements.
2.2.2
Sign
on Bonus . Executive shall be entitled to a
one-time sign on bonus of $100,000 payable in a lump sum
within thirty days of the Effective Date.
2.3
Incentive
Awards .
2.3.1
Initial Equity
Compensation . As an additional element of
compensation to Executive, in consideration of the services to
be rendered hereunder, on the Effective Date, WellCare shall
grant to Executive 50,000 restricted shares of
WellCare's
common
stock (the " Restricted Stock
") and an
option to purchase 100,000 shares of WellCare's common stock
for an exercise price per share equal to the fair market value
of one share of WellCare's common stock as of the close of
business on the Effective Date (the " Option
"). These equity compensation awards shall be made
as “Employee Inducement Awards” within the meaning
of Section 303A.08 of the New York Stock Exchange Listed
Company Manual. The terms and conditions of the
Restricted Stock shall be governed by a restricted stock award
agreement reflecting such grant, and the terms of the Option
shall be governed by a stock option agreement reflecting such
grant and, in each case, providing for, among other things,
the terms set forth in this Section 2.3. The Option
and the Restricted Stock shall vest in equal annual
installments on each of the first through fourth anniversaries
of the Effective Date.
2.3.2
Future
Awards . In addition to the Restricted Stock
and the Option, at appropriate times hereafter, the Committee
shall review Executive's long-term compensation and, after
consultation with Executive, shall consider granting
additional stock options, restricted stock and/or other long
term incentive compensation to Executive.
2.4
Definition of
Change of Control .
2.4.1 For
purposes of this Agreement, a " Change of Control
" shall mean the occurrence of any of the following
events:
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(a)
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The
direct or indirect acquisition by an unrelated Person or Group of
Beneficial Ownership (each as defined in Section 2.4.4) of stock
that, together with stock already Beneficially Owned by such Person
or Group, constitutes more than 50% of the voting power of
WellCare's issued and outstanding voting stock or more than 50% of
the fair market value of WellCare's issued and outstanding
stock;
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(b)
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The
direct or indirect sale or transfer by WellCare of substantially
all of its assets to one or more unrelated Persons or Groups in a
single transaction or a series of related
transactions;
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(c)
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The
merger, consolidation or reorganization of WellCare with or into
another corporation or other entity in which the Beneficial Owners
of more than 50% of the voting power of WellCare's issued and
outstanding voting securities immediately before such merger,
consolidation or reorganization do not own, directly or indirectly,
more than 50% of the voting power of the issued and outstanding
voting securities of the surviving corporation or other entity
immediately after such merger, consolidation or reorganization;
or
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(d)
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During
any consecutive 12-month period, individuals who at the beginning
of such period constituted the Board (together with any new
directors whose election to the Board or whose nomination for
election by the stockholders of WellCare was approved by a vote of
a majority of the directors on the Board then still in office who
were either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the members of the
Board then in office.
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2.4.2 Notwithstanding
Section 2.4.1, none of the events set forth in Section 2.4.1
shall constitute a Change of Control if such event is not a
"Change in Control Event" under Treasury Regulations Section
1.409A-3(i)(5) or successor guidance of the Internal Revenue
Service.
2.4.3 For
purposes of determining whether a Change of Control has
occurred, a Person or Group shall not be deemed to be
"unrelated" if: (a) such Person or Group directly or
indirectly has Beneficial Ownership of more than 50% of the
issued and outstanding voting power of WellCare's voting
securities immediately before the transaction in question, (b)
WellCare has Beneficial Ownership of more than 50% of the
voting power of the issued and outstanding voting securities
of such Person or Group, or (c) more than 50% of the voting
power of the issued and outstanding voting securities of such
Person or Group are owned, directly or indirectly, by
Beneficial Owners of more than 50% of the issued and
outstanding voting power of WellCare voting securities
immediately before the transaction in question.
2.4.4 The
terms " Person ," "
Group
," " Beneficial Owner
," and " Beneficial
Ownership " shall have the meanings used in the
Securities Exchange Act of 1934, as
amended. Notwithstanding the foregoing, (a)
Persons will not be considered to be acting as a "Group"
solely because they purchase or own stock of WellCare at the
same time, or as a result of purchases in the same public
offering, (b) Persons will be considered to be acting as a
"Group" if they are owners of a corporation that enters into a
merger, consolidation, reorganization, purchase or acquisition
of stock, or similar business transaction, with WellCare, and
(c) if a Person, including an entity, owns stock both in
WellCare and in a corporation that enters into a merger,
consolidation, reorganization, purchase or acquisition of
stock, or similar transaction, with WellCare, such Person
shall be considered to be acting as a Group with other
shareholders only with respect to the ownership in such
corporation prior to the transaction.
ARTICLE 3
EXECUTIVE BENEFITS
3.1
Vacation
. Executive shall be entitled to not less than four
weeks of vacation each calendar year, without reduction in
compensation, and otherwise in accordance with the general
policies of the Corporation applicable generally to other
senior executives of the Corporation. Notwithstanding the
foregoing, during the first two years of the Term,
vacation
not
used in one year will carry over to future years without
limit. Commencing in the third year of the Term,
any vacation previously accrued will continue to carry over
without limit, but vacation earned in the third year and later
will carry over only in accordance with the general policies
of the Corporation.
3.2
Employee
Benefits . Executive shall receive all group
insurance and pension plan benefits and any other benefits on
the same basis as are available to other senior executives of
the Corporation under the Corporation personnel policies in
effect from time to time. Executive shall receive
all other such fringe benefits as the Corporation may offer to
other senior executives of the Corporation generally under the
Corporation personnel policies in effect from time to time,
such as health and disability insurance coverage and paid sick
leave. Commencing on the Effective Date and
continuing through December 2009, Executive shall receive
other expense reimbursements of $4,600 per month for expenses
incurred in connection with his employment with the
Corporation.
3.3
Indemnification
. Concurrently with the execution and delivery of
this Agreement, WellCare, the Corporation and Executive are
entering into an indemnification agreement (the
“Indemnification Agreement”) providing, among
other things, for indemnification of Executive to the fullest
extent permitted by applicable law.
3.4
Reimbursement
for Expenses . Executive shall be reimbursed
by the Corporation for all documented reasonable expenses
incurred by Executive in the performance of his duties or
otherwise in furtherance of the business of the Corporation in
accordance with the policies of the Corporation in effect from
time to time.
ARTICLE 4
TERMINATION
4.1
Grounds for
Termination .
4.1.1
Death or
Disability . Executive's employment shall
terminate immediately in the event of Executive's death or
Disability. " Disability " means
Executive is unable to engage in any substantial gainful
business activity by reason of any medically determinable
physical or mental impairment which can be expected to result
in death or that has rendered Executive unable to effectively
carry out his duties and obligations under this Agreement or
unable to effectively and actively participate in the
management of WellCare and the Corporation for a period of 90
consecutive days or for shorter periods aggregating to 120
days (whether or not consecutive) during any consecutive 12
months of the Term.
4.1.2
Cause
. The Corporation shall have the right to terminate
Executive's employment by giving written notice of such
termination to Executive upon the occurrence of any one or
more of the following events (" Cause
"):
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(a)
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any
willful act or willful omission, other than as a result of
Executive's Disability, that represents a breach of any of the
terms
of this Agreement to the material detriment of WellCare or the
Corporation;
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(b)
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bad
faith by Executive in the performance of his duties, consisting of
willful acts or willful omissions, other than as a result of
Executive's Disability, to the material detriment of WellCare or
the Corporation; or
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(c)
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Executive's
conviction of, or pleading guilty or nolo contendere to, a crime
that constitutes a felony involving fraud, conversion,
misappropriation, or embezzlement under the laws of the United
States or any political subdivision thereof, which conviction has
become final and non-appealable.
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4.1.3
Good
Reason . Executive may terminate his
employment under this Agreement by giving written notice to
the Corporation upon the occurrence of any one or more of the
following events (" Good Reason
"):
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(a)
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a
material diminution during the Term in Executive's authority,
duties or responsibilities, or any change in Executive's title,
including the Executive ceasing to serve as the General Counsel of
the senior surviving entity following any Change of
Control;
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(b)
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a
material diminution during the Term in Executive's base salary or
bonus opportunity;
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(c)
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a
material breach by WellCare or the Corporation of any term of this
Agreement; or
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(d)
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a
change in Executive's office location to a point more than fifty
(50) miles from Executive's offices in Tampa, Florida.
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4.1.4
Opportunity to
Cure . Notwithstanding Sections 4.1.2 and
4.1.3, it shall be a condition precedent to a party's right to
terminate Executive's employment for Cause or Good Reason, as
applicable, that (a) such party shall have first given the
other party written notice stating with reasonable specificity
the breach on which such termination is premised within 90
days after the party providing such notice becomes aware of
such breach, and (b) if such breach is susceptible of cure or
remedy, such breach has not been cured or remedied within
forty-five (45) days after receipt of such
notice.
4.1.5
Any
Other Reason . Notwithstanding anything to
the contrary herein, the Corporation shall have the right to
terminate Executive's employment under this Agreement at any
time without Cause by giving written notice of such
termination to Executive, and Executive shall have the right
to terminate Executive's employment under
this
Agreement at any time without Good Reason by giving written
notice of such termination to the Corporation.
4.2
Termination
Date . Except as provided in Section 4.1.1
with respect to Executive's death or Disability, and subject
to Section 4.1.4, any termination under Section 4.1 shall be
effective upon receipt of notice by Executive or the
Corporation, as the case may be, of such
termination or upon such other later date as may be provided
herein or specified by the Corporation or Executive in the
notice (the " Termination Date
").
4.3
Effect of
Termination .
4.3.1
Termination with
Cause or without Good Reason . In the event
that Executive's employment is terminated by the Corporation
with Cause or by Executive without Good Reason, the
Corporation shall pay all Accrued Obligations to Executive in
a lump sum in cash within ten (10) days after the Termination
Date. " Accrued
Obligations " means the sum of (a) Executive's base
salary hereunder through the Termination Date to the extent
not theretofore paid, (b) the amount of any incentive
compensation, deferred compensation and other cash
compensation accrued by Executive as of the Termination Date
to the extent not theretofore paid, and (c) any vacation pay,
expense reimbursements and other cash entitlements accrued by
Executive as of the Termination Date to the extent not
theretofore paid.
4.3.2
Termination
without Cause or with Good Reason . In the
event that Executive's employment is terminated by the
Corporation without Cause or by Executive for Good
Reason:
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(a)
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The
Corporation shall pay all Accrued Obligations to Executive in a
lump sum in cash within ten (10) days the Termination
Date;
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(b)
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The
Corporation shall pay to Executive, in a lump sum in cash no later
than the Severance Payment Deadline (as defined in Section 4.3.4),
an amount equal to one (1) times (or, if the Termination Date
occurs within one year after a Change in Control, two (2) times)
the sum of (a) Executive's annual salary as in effect on the
Termination Date and (b) the average of the two highest bonuses
earned by the Executive
over the three prior years or, if Executive has not been employed
for three years, the target bonus for the year of the Termination
Date.
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(c)
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For
the duration of the applicable COBRA period, the Corporation shall
continue to provide medical, dental and vision care and life
insurance benefits to Executive and/or Executive's family at least
equal to those which would have been provided to them in accordance
with Section 3.2; provided ,
further , that
Executive agrees to elect COBRA
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coverage
to the extent available under the Corporation's health insurance
plans (and the Corporation shall reimburse the cost of any premiums
for such coverage on an after-tax basis). Any payment or
reimbursement under this Section 4.3.2(c) that is taxable to
Executive or any of his family members shall be made (subject to
the provisions of such health care plans that may require earlier
payment) by December 31 of the calendar year following the calendar
year in which Executive or such family member incurred the
expense.
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4.3.3
Termination Due
to Death or Disability . In the event that
Executive's employment is terminated due to Executive's death
or Disability the Corporation shall pay all Accrued
Obligations to Executive or Executive’s estate in a lump
sum in cash within ten (10) days after the Termination
Date.
4.3.4
Waiver and
Release Agreement . In consideration of the
severance payments and other benefits described in clauses (b)
and (c) of Section 4.3.2, to which severance payments and
benefits Executive would not otherwise be entitled, and as a
precondition to Executive becoming entitled to such severance
payments and other benefits under this Agreement, Executive
agrees to execute and deliver to the Corporation within 30
days after the applicable Termination Date a Waiver and
Release Agreement in the form attached hereto as Exhibit A
without alteration or addition other than to include the date
(the " Release
"). If Executive fails to execute and deliver the
Release Agreement within 30 days after the applicable
Termination Date, or if Executive revokes such Release as
provided therein, the Corporation shall have no obligation to
provide any of the severance payments and other benefits
described in clauses (b) and (c) of Section
4.3.2. The timing of severance payments under
clause (b) of Section 4.3.2 upon Executive's execution and
delivery of the Release shall be further governed by the
following provisions (the last date on which such payments may
be made, the " Severance Payment
Deadline "):
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(a)
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In
any case in which the Release (and the expiration of any revocation
rights provided therein) could only become effective in a
particular tax year of Executive, payments conditioned on execution
of the release shall be made within 10 days after the Release
becomes effective and such revocation rights have
lapsed.
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(b)
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In
any case in which the Release (and the expiration of any revocation
rights provided therein) could become effective in one of two
taxable years of Executive depending on when Executive executes and
delivers the Release, payments conditioned on execution of the
Release shall be made within 10 days after the Release becomes
effective and such revocation rights have lapsed, but not earlier
than the first business day of the later of such tax
years.
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4.4
Required Delay For Certain Deferred Compensation and Section
409A . In the event that any compensation with
respect to Executive's termination is "deferred compensation"
within the meaning of Section 409A of the Code and the regulations
promulgated thereunder (" Section 409A "), the
stock of WellCare, the Corporation or any affiliate is publicly
traded on an established securities market or otherwise, and
Executive is determined to be a "specified employee," as defined in
Section 409A(a)(2)(B)(i) of the Code, payment of such compensation
shall be delayed as required by Section 409A. Such delay
shall last six (6) months from the date of Executive's termination,
except in the event of Executive's death. Within thirty
(30) days following the end of such six-month period, or, if
earlier, Executive's death, the Corporation will make a catch-up
payment to Executive equal to the total amount of such payments
that would have been made during the six-month period but for this
Section 4.4. Such catch-up payment shall bear simple
interest at the prime rate of interest as published by the Wall
Street Journals' bank survey as of the first day of the six month
period, which such interest shall be paid with the catch-up
payment. Wherever payments under this Agreement are to
be made in installments, each such installment shall be deemed to
be a separate payment for purposes of Section
409A.
4.5
Additional
Payments .
4.5.1
Gross Up for
Excise Tax . Anything in this Agreement to
the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation
or WellCare to or for the benefit of Executive (whether paid
or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section
4.5) (a " Payment ") would
be subject to the excise tax imposed by Section 4999 of the
Code, or if any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being
hereinafter collectively referred to as the " Excise Tax "),
then Executive shall be entitled to receive an additional
payment (a " Gross-Up Payment
") in an amount such that, after payment by Executive of all
taxes (including interest or penalties imposed with respect to
such taxes, but not including interest and penalties imposed
by reason of Executive's failure to file timely tax returns or
to pay taxes shown due on such returns and any interest,
additions, increases or penalties unrelated to the Excise Tax
or the Gross-Up Payment), including, without limitation,
the Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the
Payment. Notwithstanding the fore
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