AMENDED AND RESTATED EMPLOYMENT AGREEMENTEmployment Agreement |
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Exhibit 10.25 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “ Agreement ”) is made as of June 3, 2009 (the “ Effective Date ”), by and among WELLCARE HEALTH PLANS, INC., a Delaware corporation (“ WellCare ”), COMPREHENSIVE HEALTH MANAGEMENT, INC., a Florida corporation (the “ Corporation ”), and Timothy S. Susanin, an individual (“ Executive ”), with respect to the following facts and circumstances:
RECITALS
WHEREAS, WellCare, the Corporation and Executive entered into an Employment Agreement dated as of October 2, 2008 (the “Existing Agreement”) pursuant to which Executive is serving as Vice President and Chief Counsel – Dispute Management of the Corporation;
WHEREAS, WellCare, the Corporation and Executive wish to amend and restate the Employment Agreement, as set forth herein, effective June 3, 2009, to provide that Executive will cease to serve as Vice President and Chief Counsel – Dispute Management of the Corporation on such effective date and instead will thereafter serve as Senior Vice President and General Counsel of WellCare and the Corporation on the terms and conditions set forth herein.
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 shall hereby employ Executive as Senior Vice President and General Counsel of the Corporation, upon the terms and conditions set forth in this Agreement. Executive shall also serve as Senior Vice President and General Counsel of WellCare. Executive shall report directly to the President and Chief Executive Officer of WellCare.
1.2 Term . This Agreement shall continue from the Effective Date until November 3, 2012 (the “ Term ”), unless earlier terminated under Article 5 ; 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). Prior to the Effective Date, the Existing Agreement shall remain in effect in accordance with its terms.
1.3 Duties . Executive shall perform all the duties and obligations reasonably associated with the positions of Senior Vice President and General Counsel subject to the supervision of the President and Chief Executive Officer of WellCare, and such other executive duties consistent with the foregoing as are mutually agreed upon by Executive and the President and Chief Executive Officer. 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, so long as such participation does not materially interfere with the duties and obligations of Executive hereunder.
1.4 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. The Corporation also shall pay Executive $4,000 per month as a temporary housing allowance for housing in the Tampa area and $500 per month as an automobile allowance through November 3, 2010. During the Term, the Corporation will pay Executive $1,800 per month for expenses incurred in traveling between Philadelphia, Pennsylvania 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 $385,000 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 Corporation, no less frequently than annually and may be increased (but not decreased) from its then-existing level at the discretion of the Corporation.
2.2 Annual Bonus . 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 Corporation, with a targeted bonus of sixty percent (60%) of Executive’s annual salary for such fiscal year (or partial fiscal year). For 2009, the Executive’s targeted bonus will be sixty percent (60%) of $385,000. 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.
2.3 Incentive Awards . 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 of the Board of Directors of the Corporation (the “ Compensation Committee ”) or the Board of Directors of the Corporation (the “ Corporation Board ”) after consultation with Executive. 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, remains in the sole and absolute discretion of the Compensation Committee or the Corporation Board, subject to the terms of the Plan. Until such time as the Compensation Committee or the Corporation Board approves a future award, Executive is not entitled by this Agreement or otherwise to receive any such award.
ARTICLE 3
EXECUTIVE BENEFITS
3.1 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. Unused vacation shall carry over in accordance with the general policies of the Corporation.
3.2 Executive 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 life, health and disability insurance coverage and paid sick leave.
3.3 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 3.3 that is taxable to Executive shall be made by December 31 of the calendar year following the calendar year in which Executive incurred the expense. !
ARTICLE 4
INDEMNIFICATION
WellCare, the Corporation and Executive have heretofore entered into a separate indemnification agreement (the “ Indemnification Agreement ”).
! 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.
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 ”):
5.1.4 Change of Control . For purposes of this Agreement, a “ Change of Control ” shall mean the occurrence of any of the following events:
Notwithstanding the terms of this Section 5.1.4, none of the foregoing events 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.
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.
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.
5.1.5 Opportunity to Cure . Notwithstanding Sections 5.1.2 and 5.1.3, 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 5.1.1 with respect to Executive’s death or Disability, and subject to Section 5.1.5, any termination under Section 5.1 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 annual 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; provided , however , vacation pay will not in any event be based on more than the maximum number of vacation days that Executive may be entitled to in a single year.
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 with Good Reason:
“ Annual Salary ” shall mean Executive’s highest annual salary over the 12 months prior to the Termination Date.
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 5.3.2 , 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 fifty (50) 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 within fifty (50) 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 5.3.2 . The timing of severance payments under clause (b) of Section 5.3.2 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 ”):
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, 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 “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Corporation, except in the event of Executive’s death. On the first day of the seventh month following the date of separation from service with the Corporation, 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 (6)-month period but for this Section 5.4 . 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 Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Whenever a payment under this Agreement specifies a payment period with reference to a number of days ( e.g ., “payment shall be made within thirty (30) days after termination of employment”), the actual date of payment within the specified period shall be within the sole discretion of the Corporation.
5.5 Additional Payments .
5.5.1 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 5.5 ) (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 foregoing provisions of this Section 5.5.1 , in the event the amount of Payments subject to the Excise Tax exceeds the product (the “ Parachute Payment Limit ”) of 2.99 and Executive’s applicable “base amount” (as such term is defined for purposes of Section 4999 of the Code) by less than ten percent (10%) of Executive’s base salary, Executive shall be treated as having waived such rights with respect to Payments designated by Executive to the extent required such that the aggregate amount of Payments subject to the Excise Tax is less than the Parachute Payment Limit; provided , however, that to the extent necessary to comply with Section 409A of the Code, the waiver shall be performed in the order in which each dollar of value subject to a Payment reduces the amount in excess of the Parachute Payment Limit to the greatest extent.
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