THIS
AGREEMENT is made as of this 29th day of December, 2006 (the
“ Effective Date ”) between HealthSpring, Inc.,
a Delaware corporation (the “ Company ”), and
Gerald V. Coil (“ Executive ”). 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 Operating Officer of the
Company and shall have the normal duties, responsibilities,
functions and authority of an executive officer of the Company,
subject to the power and authority of the Company’s Chief
Executive Officer 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) which are consistent with Executive’s position as the
Board or Chief Executive Officer may from time to time reasonably
direct.
(b)
During the Employment Period, Executive shall report to the
Company’s Chief Executive Officer 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 five weeks of paid vacation 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 one week 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,
beginning with the fiscal year ending December 31, 2007, based
upon the achievement by Executive and the Company and its
Subsidiaries of budgetary and other objectives set 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
(i) Executive’s resignation, Disability (as defined in
paragraph 4(f) below) or death, or (ii) 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.
(b)
If the Employment Period is terminated by the Company without Cause
or upon Executive’s resignation with Good Reason (as defined
in paragraph 4(g) below), Executive shall be entitled to
(x) continue to receive his Base Salary payable in regular
installments and (y) continue to participate in employee benefit
programs for senior executive employees (other than
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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 ”) 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. The
amounts payable pursuant to the first sentence of this paragraph
4(b) shall be reduced by the amount of any compensation
Executive receives with respect to any other employment during the
Severance Period; provided that Executive shall have no duty or
obligation to seek other employment during the Severance Period or
otherwise mitigate damages hereunder. Upon request from time to
time, Executive shall furnish the Company with a true and complete
certificate specifying any such compensation earned or received by
him during the Severance Period. In the event that, within twelve
months of the Effective Date, there is a Sale of the Company (as
defined below), and within twelve months of the Sale of the Company
the Employment Period is terminated by the Company (or its
successor) without Cause or upon Executive’s resignation for
Good Reason, in lieu of the special severance payments described
above, Executive shall be entitled to a lump sum payment in an
amount equal to two times his Base Salary in effect as of the date
of termination. 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. For purposes of this Agreement,
“ Sale of the Company ” shall mean the sale of
the Company to an Independent Third Party or group of Independent
Third Parties pursuant to which such party or parties acquire
(y) 50% or more of the common stock of the Company (“
Common Stock ”) outstanding at the time of such
transaction or series of transactions or (z) all or
substantially all of the Company’s assets determined on a
consolidated basis. For purposes of this Agreement, “
Independent Third Party ” shall mean any person who,
immediately prior to the contemplated transaction, does not own in
excess of 5% of the Common Stock on a fully-diluted basis (a
“ 5% Owner ”), who is not controlling,
controlled by or under common control with any such 5% Owner and
who is not the spouse or descendant (by birth or adoption) of any
such 5% Owner or a trust for the benefit of such 5% Owner and/or
such other persons.
(c)
If the Employment Period is terminated by the Company for Cause or
is terminated pursuant to clause (a)(i) above (other than
termination by Executive with Good Reason), 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.
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(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.
(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 Chief
Executive Officer, 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
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Company and its
Subsidiaries (“ Third Party 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 Chief Executive Officer 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
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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
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