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Exhibit 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “
Agreement
”) is made as of July 17, 2008, by and among WELLCARE
HEALTH PLANS, INC., a Delaware corporation (“
WellCare
”), COMPREHENSIVE HEALTH MANAGEMENT, INC., a Florida
corporation (the “ Corporation
”), and Thomas Tran, 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 and Chief Financial Officer and for the Executive
to be appointed by WellCare as its Senior Vice President and
Chief Financial Officer, 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
ARTICLE 2EMPLOYMENT, TERM AND DUTIES
2.1
Employment
. The Corporation shall hereby employ Executive as
Senior Vice President, Chief Financial Officer 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 and Chief Financial Officer of
WellCare. Executive shall report directly to the Chief
Executive Officer of WellCare, unless otherwise determined by the
Board of Directors of WellCare (the “Board”
).
2.2
Term
. The Corporation shall employ Executive, and
Executive shall serve as the Senior Vice President and Chief
Financial Officer of the Corporation commencing upon the
Executive’s first day of employment on or before July
21, 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).
2.3
Duties
. Executive shall perform all the duties and
obligations reasonably associated with the positions of
Senior Vice President and Chief Financial Officer 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 (or such other
individual(s) designated by the Board), 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, 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
2.4
Primary
Work Location . Executive shall 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. To facilitate
Executive’s relocation, the Corporation shall pay all
reasonable expenses associated with a full service move by a
national moving carrier selected by the Corporation for the
purpose of transporting household goods (but excluding any
exceptional and unique furniture or other items) from
Hartford, Connecticut metropolitan area to the Tampa, Florida
area, up to a maximum of $25,000. During the Term
but only through December 31, 2009, the Corporation also
shall pay Executive $6,000 per month as an allowance for
housing in the Tampa area and as an automobile
allowance. All relocation expenses must be
repaid to the Corporation on a pro-rated basis if Executive
resigns or is terminated for Cause less than one (1) year
after the Effective Date (the “Reimbursement
Period”). The obligation to repay relocation
expenses will be based upon the number of months of the
Reimbursement Period remaining as of the date of
Executive’s termination of employment and Executive
specifically agrees that such repayment may be deducted from
any amounts owed to Executive.
ARTICLE 3
COMPENSATION
3.1
Salary
. In consideration for Executive’s services
hereunder, the Corporation shall pay Executive an annual
salary at the rate of not less than $475,000 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 “ Compensation
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 Compensation Committee or the
Board.
3.2
Bonus
.
3.2.1
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 Compensation
Committee or the Board after consultation with Executive,
with a targeted bonus of one hundred percent (100%) of
Executive’s annual salary for such fiscal year (or
partial fiscal year). Any such bonus earned by
Executive shall be paid annually by March 15 of the year
following the end of the fiscal year for which a bonus has
been earned. Executive may also receive special
bonuses in additional to his annual bonus eligibility at the
discretion of the Compensation
Committee. Notwithstanding the foregoing,
Executive shall earn a minimum guaranteed bonus of $475,000
for the initial calendar year of his employment, pro rated
for the portionof the year Executive is
employed. Executive must be employed on the bonus
payment date in order to receive the
bonus.
2
3.2.2
Sign
on Bonus . Executive shall be entitled to a
one-time sign on bonus of $75,000 payable in a lump sum
within thirty (30) days of the Effective Date, which must be
repaid to the Corporation on a pro-rated basis if Executive
resigns or is terminated for Cause (as defined in Section
4.1.2 hereof) during the Reimbursement Period. The
obligation to repay the sign on bonus will be based upon the
number of months of the Reimbursement Period remaining as of
the date of Executive’s termination of employment and
Executive specifically agrees that such repayment may be
deducted from any amounts owed to
Executive.
3.3
Incentive
Awards .
3.3.1
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 granted under and be subject to the terms of the WellCare
Health Plans, Inc. 2004 Equity Incentive Plan (the “
2004
Plan ”). The terms and conditions of
the Restricted Stock also shall be governed by a restricted
stock award agreement reflecting such grant pursuant to the
2004 Plan, and the terms and conditions of the Option also
shall be governed by a stock option agreement reflecting such
grant pursuant to the 2004 Plan 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. Notwithstanding anything in this Agreement
or the applicable stock option agreement to the contrary, the
Option cannot be exercised until WellCare is again current in
its periodic report filings with the United States Securities
and Exchange Commission (the “ SEC
”) and has filed all periodic reports required to be
filed by it with the SEC within the preceding twelve
months.
3.3.2 Future
Awards . In addition to the Restricted Stock and
the Option, during the Term, Executive shall be entitled to earn
equity compensation awards granted under and subject to the terms
of the WellCare Health Plans, Inc. 2004 Equity Incentive Plan, or a
successor thereto, based upon Executive’s achievement of
performance objectives set by the Compensation Committee or the
Board after consultation with Executive, with an annual equity
compensation award target of one hundred fifty percent (150%) of
Executive’s annual salary for such fiscal year (with a
minimum guaranteed annual equity compensation award in 2009 of one
hundred fifty percent (150%) of Executive’s annual salary for
2008, prorated for the portion of the year employed). The
number of options, shares of restricted stock or other equity
awards granted will be based on the standard valuation
methodologies used by WellCare under FAS 123(R) and applicable
internal policies. The exact terms of any future awards, as
well as the determination as to whether or not future awards will
be granted (other than the minimum guaranteed annual equity
compensation award in 2009), remains in the sole and absolute
discretion of the Compensation Committee or the Board, subject to
the terms of the Plan. Until such time as the Compensation
Committee or the Board approves a future award, Executive is not
entitled by this Agreement or otherwise to receive any such
award.
3
ARTICLE 4
EXECUTIVE BENEFITS
4.1
Vacation
. Executive shall be entitled to vacation each
calendar year in accordance with the general policies of the
Corporation applicable generally to other senior executives
of the Corporation, provided that Executive shall be entitled
to at least four weeks of vacation per
year. Unused vacation shall carry over in
accordance with the general policies of the
Corporation.
4.2
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.
4.3
Indemnification
. Concurrently with the execution and delivery of this
Agreement, WellCare, the Corporation and Executive are entering
into an indemnification agreement (the “ Indemnification
Agreement ”).
4.4
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. Any
reimbursement under this Section 3.4 that is taxable to
Executive shall be made as soon as reasonably practicable but
in any event by December 31 of the calendar year
following the calendar year in which Executive incurred the
expense.
ARTICLE 5
TERMINATION
5.1 Grounds
for Termination.
5.1.1
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 effectively to carry
out his duties and obligations under this Agreement or unable to
participate effectively and actively in the management of WellCare
and the Corporation for a period of ninety (90) consecutive days or
for shorter periods aggregating to one hundred twenty (120) days
(whether or not consecutive) during any consecutive twelve (12)
months of the Term.
4
5.1.2
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
”):
5.1.3 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”):
5
5.1.4
Change
of Control . For purposes of this Agreement, a
“ Change of
Control ” shall mean the occurrence of any of the
following events:
For purposes of this Agreement, “Exempt
Person” shall mean (i) Soros Private Equity
Investors LP, (ii) any person, entity or group controlled by
or under common control with any party included in clause
(i), or (iii) any employee benefit plan of WellCare or any
Subsidiary, as defined below, or a trustee or other
administrator or fiduciary holding securities under an
employee benefit plan of WellCare or any Subsidiary, as
defined below.
For purposes of this Agreement, “Subsidiary”
shall mean a corporation or other entity of which outstanding
shares or ownership interests representing 50% or more of the
combined voting power of such corporation or other entity
entitled to elect the management thereof, or such lesser
percentage as may be approved by the Compensation Committee,
are owned directly or indirectly by
WellCare.
6
5.1.5
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 ninety (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.
5.1.6
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.
5.2
Termination
Date . Except as provided in Section
4.1.1
with respect to
Executive’s death or Disability, and subject to Section
4.1.5, 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 ”).
5.3
Effect
of Termination .
5.3.1
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.
5.3.2
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:
7
5.3.3
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.
5.3.4 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 thirty (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 thirty (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 ”):
8
5.4
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 (6)-month period, or, if earlier,
Executive’s death, the Corporation shall make a catch-up
payment to Executive equal to the total amount of such payments
that would have been made during the six (6)-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 Journal ’s bank survey as of the first day of
the six (6)-month period, which such interest shall be paid with
the catch-up payment. Wherever payments under
this
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