AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”)
is made as of this 19th day of April, 2009 (the “
Effective Date ”) between HealthSpring, Inc., a
Delaware corporation (the “ Company ”), and
Gerald V. Coil (“ Executive ”).
WHEREAS , Company and Executive entered into that certain
Employment Agreement as of December 31, 2006 (the “Original
Agreement”); and,
WHEREAS, in connection with the restructuring of various
organizational reporting responsibilities, the Company has
requested Executive to assume certain new responsibilities on
behalf of the Company and Executive has agreed to do so;
and
WHEREAS , the parties wish to amend and restate the Original
Agreement in its entirety.
NOW
THEREFORE , in
consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
Employment . The Company shall employ Executive, and
Executive hereby accepts employment with the Company, upon the
terms and conditions set forth in this Agreement for the period
beginning on the Effective Date and ending as provided in
paragraph 4 hereof (the “ Employment Period
”).
(a) During
the Employment Period, Executive shall serve as the Executive Vice
President — Chief Innovation Officer of the Company and shall
have the duties, responsibilities, functions and authority of an
executive officer of the Company, subject to the power and
authority of the Company’s President to expand or limit such
duties, responsibilities, functions and authority. During the
Employment Period, Executive shall render such administrative,
financial and other executive and managerial services to the
Company and its Subsidiaries (as defined below) as the President
may from time to time reasonably direct.
(b) During
the Employment Period, Executive shall report to the
Company’s President and shall devote his full business time
and attention (except for permitted vacation periods and reasonable
periods of illness or other incapacity) to the business and affairs
of the Company and its Subsidiaries. Executive shall perform his
duties, responsibilities and functions to the Company and its
Subsidiaries hereunder in good faith in a diligent, trustworthy and
professional manner and shall comply with the Company’s and
its Subsidiaries’ policies and procedures in all material
respects. During the Employment Period, Executive shall not serve
as an officer or director of, or otherwise perform services for
compensation for, any other entity without the prior written
consent of the Board (which shall not be unreasonably withheld,
conditioned or delayed); provided that Executive may
participate on boards of charitable entities or other civic
entities so long as such service does not materially interfere with
Executive’s duties under this Agreement.
(c) For
purposes of this Agreement, “ Subsidiaries ”
shall mean any corporation or other entity of which the securities
or other ownership interests having the voting power to elect a
majority of the board of directors or other governing body are, at
the time of determination, owned by the Company, directly or
through one or more Subsidiaries.
3.
Compensation and Benefits .
(a) During
the Employment Period, Executive’s base salary shall be
$400,000 per annum or such higher rate as the Board may determine
from time to time (as adjusted from time to time, the “
Base Salary ”), which salary shall be payable by the
Company or one of its Subsidiaries in regular installments in
accordance with such entity’s general payroll practices (in
effect from time to time). In addition, during the Employment
Period, Executive shall be entitled to participate in all of the
Company’s employee benefit programs for which senior
executive employees
of the Company
and its Subsidiaries are generally eligible. During the Employment
Period, Executive shall also be entitled to 200 PTO hours each
calendar year in accordance with the Company’s policies,
which if not taken during any year may not be carried forward,
other than with respect to 40 PTO hours per year, to any subsequent
calendar year and no compensation shall be payable in lieu thereof.
The Company or one of its affiliates or Subsidiaries shall obtain
and maintain customary directors’ and officers’
liability insurance coverage covering Executive on terms reasonably
satisfactory to the Board.
(b) In
addition to the Base Salary, Executive shall be eligible for an
annual bonus in an amount up to 75% of the Base Salary then in
effect following the end of each fiscal year of the Company, based
upon the achievement by Executive of personal performance
objectives as determined in the subjective judgment of the
President and recommended to and approved by the Compensation
Committee of the Board. Such bonus shall be paid on or before
March 31 of the following year.
(c) During
the Employment Period, the Company or one of its Subsidiaries shall
reimburse Executive for all reasonable business expenses incurred
by him in the course of performing his duties and responsibilities
under this Agreement which are consistent with the Company’s
and its Subsidiaries’ policies in effect from time to time
with respect to travel, entertainment and other business expenses,
subject to the Company’s and its Subsidiaries’
requirements with respect to reporting and documentation of such
expenses.
(d) All
amounts payable to Executive as compensation hereunder shall be
subject to all required and customary withholding by the
Company.
(a) The
Employment Period will continue until the earliest to occur of
(i) December 31, 2009 (subject to the right of the
Company to extend the Employment Period until December 31,
2010 as provided herein); (ii) Executive’s resignation,
Disability (as defined in paragraph 4(f) below) or death,
and (iii) the Board decides to terminate Executive’s
employment with or without Cause (as defined in paragraph
4(e) below). Except as otherwise provided herein, any
termination of the Employment Period by the Company shall be
effective as specified in a written notice from the Company to
Executive. The Company shall have the option to extend the
Employment Period for an additional year until December 31,
2010 on written notice to Executive on or before November 30,
2009.
(b) Upon
(i) the expiration of the Employment Period, (ii) the
termination of the Employment Period by the Company without Cause,
or (iii) upon Executive’s resignation for any reason
(including Disability or death) on or before December 31,
2009, or for Good Reason (as defined in paragraph 4(g) below),
after December 31, 2009, Executive, or his estate, as
applicable, shall be entitled to (x) continue to receive his
Base Salary payable in regular installments and to participate in
employee benefit programs for senior executive employees (other
than bonus and incentive compensation plans), at the
Company’s cost, to the extent permitted under the terms of
such programs and under applicable law, as special severance
payments from the date of termination for a period of twelve months
thereafter (the “ Severance Period ”) and (y)
$100,000 in cash, payable on the date that is six months and one
day following termination of the Employment Period, if and only if
Executive has executed and delivered to the Company the General
Release substantially in form and substance as set forth in
Exhibit A attached hereto and the General Release has
become effective, and only so long as Executive has not revoked or
breached the provisions of the General Release or breached the
provisions of paragraphs 5 , 6 or 7 hereof and
does not apply for unemployment compensation chargeable to the
Company or any Subsidiary during the Severance Period, and
Executive shall not be entitled to any other salary, compensation
or benefits after termination of the Employment Period, except as
specifically provided for in the Company’s employee benefit
plans or as otherwise expressly required by applicable
law.
In
the event the receipt of amounts payable pursuant to this
paragraph 4(b) within six months of the date of the
Executive’s termination would cause the Executive to be
subject to tax under Section 409A of the Internal Revenue Code
of 1986, as amended, then payment of such amounts shall be delayed
until the date that is six months following Executive’s
termination date.
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(c) If
the Employment Period is terminated by the Company for Cause or is
terminated pursuant to clause (a)(ii) above (other than termination
by Executive pursuant to clause (b)(iii) above), Executive shall
only be entitled to receive his Base Salary through the date of
termination and shall not be entitled to any other salary,
compensation or benefits from the Company or any of its
Subsidiaries thereafter, except as otherwise specifically provided
for under the Company’s employee benefit plans or as
otherwise expressly required by applicable law.
(d) Except
as otherwise expressly provided herein, all of Executive’s
rights to salary, bonuses, employee benefits and other compensation
hereunder which would have accrued or become payable after the
termination of the Employment Period shall cease upon such
termination, other than those expressly required under applicable
law (such as COBRA). The Company may offset any amounts Executive
owes the Company or any of its Subsidiaries against any amounts the
Company or any of its Subsidiaries owes Executive hereunder. Upon
the expiration or termination of the Employment Period in
accordance with this Agreement, all stock options, restricted
stock, or equity awards previously granted to Executive will be
governed by the terms of the respective award agreements and plans
governing such awards; provided, however, that if the Employment
Period is terminated by the Company for any reason other than for
Cause or by the Employee for any reason, with respect to any shares
of Company common stock purchased by Executive under the
HealthSpring 2008 Management Stock Purchase Plan (the
“MSPP”), for which restrictions have not lapsed,
Executive shall be entitled to receive the greater of (i) the
fair market value of the shares on the date of termination, or
(ii) the cash value of the bonus amount deferred (in
accordance with the terms of the MSPP).
(e) For
purposes of this Agreement, “ Cause ” shall mean
with respect to Executive one or more of the following:
(i) the conviction of a felony or other crime involving moral
turpitude or the commission of any other act or omission involving
material dishonesty or fraud with respect to the Company or any of
its Subsidiaries, (ii) reporting to work under the influence
of illegal drugs, the use of illegal drugs (whether or not at the
workplace) or other repeated conduct causing the Company or any of
its Subsidiaries substantial public disgrace or disrepute or
substantial economic harm, which is not cured within 20 days
following written notice thereof to the Executive,
(iii) material and repeated failure to perform his duties as
reasonably directed by the Board or the Company’s President,
which is not cured within 20 days following written notice
thereof to the Executive, (iv) breach of fiduciary duty or
engaging in gross negligence or willful misconduct with respect to
the Company or any of its Subsidiaries or (v) any other
material breach of this Agreement which is not cured within
20 days after written notice thereof to Executive.
(f) For
purposes of this Agreement, “ Disability ” shall
mean the disability of Executive caused by any physical or mental
injury, illness or incapacity as a result of which Executive is
unable to effectively perform or fails to perform the essential
functions of Executive’s duties for 90 consecutive days or
120 days during any 12-month period.
(g) For
purposes of this Agreement, “ Good Reason ”
shall mean if Executive resigns from employment with the Company
and its Subsidiaries prior to the end of the Employment Period as a
result of one or more of the following reasons: (i) the
Company reduces the amount of the Base Salary, (ii) the
Company materially reduces his responsibilities, in each case which
is not cured within 20 days after written notice thereof to
the Company, (iii) the relocation of the Company’s
principal executive offices and/or the location at which Executive
provides services pursuant to this Agreement to a location outside
the metropolitan Nashville, Tennessee area, or (iv) the
Company’s material breach of this Agreement; provided that
written notice of Executive’s resignation for Good Reason
must be delivered to the Company within 45 days after the
occurrence of any such event in order for Executive’s
resignation with Good Reason to be effective hereunder.
5.
Confidential Information .
(a) Executive
acknowledges that the information, observations and data (including
trade secrets) obtained by him while employed by the Company and
its Subsidiaries concerning the business or affairs of the Company
or any Subsidiary (“ Confidential Information ”)
are the property of the Company or such Subsidiary. Therefore,
Executive agrees that, except as set forth in, and pursuant to,
this paragraph 5(a) , he shall not disclose to any
unauthorized person or entity or use for his own purposes any
Confidential Information or any confidential or proprietary
information of other persons or entities in the possession of the
Company and its Subsidiaries (“ Third Party
3
Information ”), without the prior written consent of
the Board, unless and to the extent that the Confidential
Information or Third Party Information becomes generally known to
and available for use by the public other than as a result of
Executive’s acts or omissions. In the event that Executive is
requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any
Confidential Information, such Executive shall notify the Company
promptly of the request or requirement so that the Company may seek
an appropriate protective order or waive compliance with the
provisions of this Section. If, in the absence of a protective
order or the receipt of a waiver hereunder, Executive is, on the
advice of counsel, compelled to disclose any Confidential
Information to any tribunal, such Executive may disclose the
Confidential Information to the tribunal; provided that such
disclosing Executive shall use his best efforts to assist the
Company to obtain, at the request of the Company (and at the
Company’s sole expense), an order or other assurance that
confidential treatment shall be accorded to such portion of the
Confidential Information required to be disclosed as the Company
shall designate. Executive shall deliver to the Company at the
termination of the Employment Period, or at any other time the
Company may request, all memoranda, notes, plans, records, reports,
computer files, disks and tapes, printouts and software and other
documents and data (and copies thereof) embodying or relating to
Third Party Information, Confidential Information, Work Product (as
defined below) or the business of the Company or any of its
Subsidiaries which he may then possess or have under his
control.
(b) Executive
shall be prohibited from using or disclosing any confidential
information or trade secrets that Executive may have learned
through any prior employment. If at any time during this employment
with the Company or any Subsidiary, Executive believes he is being
asked to engage in work that will, or will be likely to, jeopardize
any confidentiality or other obligations Executive may have to
former employers, Executive shall immediately advise the President
so that Executive’s duties can be modified appropriately.
Executive represents and warrants to the Company that Executive
took nothing with him which belonged to any former employer when
Executive left his prior position and that Executive has nothing
that contains any information which belongs to any former employer.
If at any time Executive discovers this is incorrect, Executive
shall promptly return any such materials to Executive’s
former employer. The Company does not want any such materials, and
Executive shall not be permitted to use or refer to any such
materials in the performance of Executive’s duties
hereunder.
6.
Intellectual Property, Inventions and Patents .
Executive
acknowledges that all discoveries, concepts, ideas, inventions,
innovations, improvements, developments, methods, designs,
analyses, drawings, reports, patent applications, copyrightable
work and mask work (whether or not including any Confidential
Information) and all registrations or applications related thereto,
all other proprietary information and all similar or related
information (whether or not patentable) which relate to the
Company’s or any of its Subsidiaries’ actual or
anticipated business, research and development or existing or
future products or services and which are conceived, developed or
made by Executive (whether alone or jointly with others) while
employed by the Company and its Subsidiaries, whether before or
after the date of this Agreement (“ Work Product
”), belong to the Company or such Subsidiary. Executive shall
promptly disclose all patentable inventions and other material Work
Product to the Board and, at the Company’s expense, perform
all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments). Executive acknowledges
that all Work Product shall be deemed to constitute “works
made for hire” under the U.S. Copyright Act of 1976, as
amended. In accordance with Title 19, Section 805 of the
Delaware Code, Executive is hereby advised that this paragraph
6 regarding the Company’s and its Subsidiaries’
ownership of Work Product does not apply to any invention for which
no equipment, supplies, facilities or trade secret information of
the Company or any Subsidiary was used and which was developed
entirely on Executive’s own time, unless (i) the
invention relates to the business of the Company or any Subsidiary
or to the Company’s or any Subsidiaries’ actual or
demonstrably anticipated research or development or (ii) the
invention results from any work performed by Executive for the
Company or any Subsidiary.
7.
Non-Compete, Non-Solicitation .
(a) In
further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that during the course of his
employment with the Company and its Subsidiaries he shall become
familiar with the Company’s and its Subsidiaries’ trade
secrets and with other Confidential Information concerning the
Company and
4
its
predecessors and Subsidiaries and that his services have been and
shall continue to be of special, unique and extraordinary value to
the Company and its Subsidiaries, and therefore Executive agrees
that, during the Employment Period and for twelve months thereafter
(the “ Noncompete Period ”), he shall not
directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, be employed in
an exec
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