Exhibit 10.1
SEVERANCE
AGREEMENT
This SEVERANCE AGREEMENT (the “
Agreement ”) is made as of July 30, 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 Adam Miller, an individual
(“ Executive ”), with respect to the following
facts and circumstances:
ARTICLE 1
TERM
This Agreement shall continue from the Effective
Date for a term (the “ Term ”) of three (3)
years, unless earlier terminated under Article 3; 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).
In the event of a Change of Control (as defined in
Section 3.1.4), if the remaining Term is less than one (1) year,
the Term will be extended so that the Term is a one-year period
from the date of the Change of Control; provided, however, that in
the occurrence of a Change of Control, the Term will not
automatically renew for any additional period
thereafter.
ARTICLE 2
INDEMNIFICATION
WellCare, the Corporation and Executive have
heretofore entered into a separate indemnification agreement (the
“ Indemnification Agreement ”).
ARTICLE 3
TERMINATION
3.1
Grounds for Termination .
3.1.1
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.
3.1.2
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
”):
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any willful act
or willful omission, other than as a result of Executive’s
disability, that represents a breach of any of the terms of this
Agreement to the material detriment of the Corporation;
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bad faith by
the Executive in the performance of his duties, consisting of
willful acts or willful omissions, other than as a result of
Executive’s disability, to the material detriment of the
Corporation; or
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Executive’s conviction of, or pleading
nolo contendere to, a crime that constitutes a felony involving
fraud, conversion, misappropriation, or embezzlement under the laws
of the Untied States or any political subdivision thereof, which
conviction has become final and non-appealable.
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3.1.3
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 following a Change of Control (“ Good Reason
”):
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a material
diminution during the Term in Executive’s authority, duties
or responsibilities;
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a material
diminution during the Term in Executive’s base salary or
annual bonus opportunity;
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a material
breach by the Corporation or WellCare of any term of the Agreement;
or
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the
Corporation’s or WellCare’s requiring Executive to be
based at any office or location outside of fifty miles from
Executive’s current employment, except for travel reasonably
required in the performance of Executive’s
responsibilities.
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provided , however , that prior to a Change of
Control only the occurrence of any one or more of the following
events will constitute Good Reason:
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a material
diminution during the Term in Executive’s base salary or
annual bonus opportunity, except as applicable generally to other
similarly situated senior executives of the Corporation;
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a material
breach by the Corporation or WellCare of any term of the Agreement;
or
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the
Corporation’s or WellCare’s requiring Executive to be
based at any office or location outside of fifty miles from
Executive’s current employment, except for travel reasonably
required in the performance of Executive’s
responsibilities.
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3.1.4
Change of Control . For purposes of this
Agreement, a “ Change of Control ” shall mean
the occurrence of any of the following events:
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if any person
or group is or becomes the beneficial owner, directly or
indirectly, of securities of WellCare representing more than 50% of
either the then fair market value of the then outstanding
securities of WellCare or the combined voting power of
the then outstanding securities of WellCare;
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the direct or
indirect sale or transfer by WellCare of substantially all of its
assets in a single transaction or a series of related
transactions;
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the merger,
consolidation or reorganization of WellCare with or into another
corporation or other entity, in which the shareholders of more than
50% of the voting power of WellCare’s voting securities
immediately before such merger, consolidation or reorganization do
not own more than 50% of the voting power of the voting securities
of the surviving corporation or other entity immediately after such
merger, consolidation or reorganization; or
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during any
consecutive 12-month period, individuals who at the beginning of
such period constitute the Board of Directors of WellCare (the
“ Board ”) (together with any new directors
whose election by the Board or nomination for election by the
stockholders of WellCare was approved by a vote of a majority of
the directors on the Board then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the Board then in
office.
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Notwithstanding
the terms of this Section 3.1.4, 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.
3.1.5
Opportunity to Cure . Notwithstanding Sections
3.1.2 and 3.1.3, 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.
3.1.6
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.
3.2
Termination Date . Except as provided in Section
3.1.1 with respect to Executive’s death or Disability, and
subject to Section 3.1.5, any termination under Section 3.1 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 ”).
3.3
Effect of Termination .
3.3.1
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; 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.
3.3.2
Termination without Cause or with Good Reason
. In the event that Executive’s employment is
terminated by the Corporation without Cause or by the Executive
with Good Reason:
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The Corporation
shall pay all Accrued Obligations to Executive in a lump sum in
cash within ten (10) days after the Termination Date;
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The Corporation
shall pay to Executive, no later than the Severance Payment
Deadline (as defined in Section 3.3.4) an amount equal to one (1)
times the Executive’s Annual Salary as in effect on the
Termination Date, as salary continuation, payable over a period of
twelve (12) months in equal installments per the
Corporation’s regular payroll dates and procedures, less
deductions as required by law or authorized by the
Executive. The first installment shall be paid on the
first regular payroll date of the Company after the effective date
of the Release set forth in Section 3.3.4, and the last installment
when the entire amount is paid. To the extent any such
payment is not “deferred compensation” for purposes of
Section 409A of the Code and the regulations promulgated thereunder
(“ Section 409A ”), then such payment shall
commence upon the first due date for such salary continuation
immediately after the date the release is executed and no longer
subject to revocation (the “ Release Effective Date
”). The first such payment shall include payment
of all amounts that otherwise would have been due prior to the
Release Effective Date under the terms of this Agreement applied as
though such payments commenced immediately upon the Termination
Date, and any payments made thereafter shall
continue as
provided herein;
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The Corporation
shall pay to Executive, in a lump sum in cash, on the one (1) year
anniversary of the Termination Date, and in any event, no later
than the Severance Payment Deadline, the average of the two (2)
highest annual cash bonuses earned by Executive for the three (3)
prior years or, if Executive has not been employed for three (3)
years, the annual cash target bonus for the year of the Termination
Date; and
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For a one (1)
year period beginning on the Termination Date, the Corporation
shall reimburse Executive for the COBRA premiums above
Executive’s employee contribution in order to provide medical
and dental insurance benefits to Executive and/or Executive’s
family at least equal to those which were provided at the
Termination Date; provided , further , that Executive
agrees to elect COBRA coverage to the extent available under the
Corporation’s health insurance plans. Any payment
or reimbursement under this Section 3.3.2(d) that is taxable to
Executive or any of his family members shall be made (subject to
the provisions of such health care plans that may require earlier
payment) by December 31 of the calendar year following the calendar
year in which Executive or such family member incurred the
expense.
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“
Annual Salary ” shall mean Executive’s highest
annual salary over the 12 months prior to the Termination
Date.
3.3.3
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.
3.3.4
Waiver and Release Agreement . In consideration
of the severance payments and other benefits described in clauses
(b), (c) and (d) of Section 3.3.2, 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), (c) and (d) of Section 3.3.2. The timing
of severance payments under clause (b) and (c) of Section 3.3.2
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 ”):
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In any case in
which the Release (and the expiration of any revocation rights
provided therein) could only become effective in a particular tax
year of Executive, payments conditioned on execution of the release
shall be made by the end of the year in which the Release becomes
effective and such revocation rights have lapsed.
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In any case in
which the Release (and the expiration of any revocation rights
provided therein) could become effective in one of two (2) taxable
years of Executive depending on when Executive executes and
delivers the Release, payments conditioned on execution of the
Release shall be made by the end of the year in which the Release
becomes effective and such revocation rights have lapsed, but not
earlier than the first business day of the later of such tax
years.
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3.4
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 de
