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Exhibit 10.1
HEALTHSPRING, INC.
EMPLOYMENT AGREEMENT
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 ").
2. Position and
Duties .
(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.
4. Term .
(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 any work performed by
Executive
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