EMPLOYMENT AGREEMENT
Exhibit
10.1
This
EMPLOYMENT AGREEMENT (the "Agreement") is made as
of April 1, 2008 by and among WELLCARE HEALTH PLANS, INC., a Delaware
corporation ("WellCare"), COMPREHENSIVE
HEALTH MANAGEMENT, INC., a Florida corporation (the "Corporation"), and XXXXXX X.
X’XXXX III, an individual ("Executive"), with respect to
the following facts and circumstances:
RECITALS
WHEREAS,
WellCare and the Corporation desire for the Corporation to employ Executive as
its Senior Vice President, General Counsel and Secretary and for the Executive
to be appointed as the Senior Vice President, General Counsel and Secretary of
WellCare, and Executive desires to accept such employment and
appointment;
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 will hereby employ Executive as Senior Vice President, General
Counsel and Secretary of the Corporation, upon the terms and conditions set
forth in this Agreement. During the Term, Executive also shall be
appointed as Senior Vice President, General Counsel and Secretary of
WellCare. Executive shall report directly to the Chief Executive
Officer of WellCare.
1.2 Term. The
Corporation will employ Executive, and Executive will serve as Senior Vice
President, General Counsel and Secretary of the Corporation commencing upon the
Executive’s first day of employment on or about April 1, 2008 (the “Effective Date”) and
continuing thereafter for a term (the "Term") of four (4) years,
unless earlier terminated under Article 4; 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).
1.3 Duties. Executive
shall perform all the duties and obligations reasonably associated with the
positions of Senior Vice President, General Counsel and Secretary and consistent
with the Bylaws of WellCare and the Corporation as in effect from time to time,
subject to the supervision of the Chief Executive Officer of WellCare, and such
other executive duties consistent with the foregoing as are mutually agreed upon
from time to time by Executive and the Chief Executive Officer of
WellCare. 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
and, with the prior approval of the Board of Directors of WellCare (the “Board”), serve on the boards
of directors of companies, so long as such participation does not materially
interfere with the duties and obligations of Executive hereunder.
1.4 Primary Work
Location. Executive will 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 will pay or reimburse Executive for expenses incurred in traveling
between Baltimore, Maryland 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 $500,000 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 Compensation Committee of the Board (the "Committee"), or if there is
none, the Board no less frequently than annually and may be increased (but not
decreased) from its then-existing level at the discretion of the Committee or
the Board.
2.2 Bonus.
2.2.1 Annual
Bonuses. 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 Committee or the
Board after consultation with Executive, with a targeted bonus of fifty percent
(50%) of Executive's annual salary for such fiscal year (or partial fiscal
year). Any such bonus earned by Executive shall be paid annually
within thirty (30) days after the delivery of audited financial statements by
the Corporation's outside auditing firm. Executive may also receive
special bonuses in additional to his annual bonus eligibility at the discretion
of the Committee. Notwithstanding the foregoing, Executive will earn
a minimum guaranteed bonus of two hundred fifty thousand dollars ($250,000) for
the initial calendar year of his employment which shall be paid within thirty
(30) days after December 31, 2008 and not subject to the delivery of audited
financial statements.
2.2.2 Sign on
Bonus. Executive shall be entitled to a one-time sign on bonus
of $100,000 payable in a lump sum within thirty days of the Effective
Date.
2.3 Incentive
Awards.
2.3.1 Initial Equity
Compensation. As an additional element of compensation to
Executive, in consideration of the services to be rendered hereunder, on the
Effective Date, WellCare shall grant to Executive 50,000 restricted shares of
WellCare's
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common
stock (the "Restricted
Stock") and
an option to purchase 100,000 shares of WellCare's common stock for an exercise
price per share equal to the fair market value of one share of WellCare's common
stock as of the close of business on the Effective Date (the "Option"). These
equity compensation awards shall be made as “Employee Inducement Awards” within
the meaning of Section 303A.08 of the New York Stock Exchange Listed Company
Manual. The terms and conditions of the Restricted Stock shall be
governed by a restricted stock award agreement reflecting such grant, and the
terms of the Option shall be governed by a stock option agreement reflecting
such grant and, in each case, providing for, among other things, the terms set
forth in this Section 2.3. The Option and the Restricted Stock shall
vest in equal annual installments on each of the first through fourth
anniversaries of the Effective Date.
2.3.2 Future
Awards. In addition to the Restricted Stock and the Option, at
appropriate times hereafter, the Committee shall review Executive's long-term
compensation and, after consultation with Executive, shall consider granting
additional stock options, restricted stock and/or other long term incentive
compensation to Executive.
2.4 Definition of Change of
Control.
2.4.1 For
purposes of this Agreement, a "Change of Control" shall mean
the occurrence of any of the following events:
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(a)
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The
direct or indirect acquisition by an unrelated Person or Group of
Beneficial Ownership (each as defined in Section 2.4.4) of stock that,
together with stock already Beneficially Owned by such Person or Group,
constitutes more than 50% of the voting power of WellCare's issued and
outstanding voting stock or more than 50% of the fair market value of
WellCare's issued and outstanding
stock;
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(b)
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The
direct or indirect sale or transfer by WellCare of substantially all of
its assets to one or more unrelated Persons or Groups in a single
transaction or a series of related
transactions;
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(c)
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The
merger, consolidation or reorganization of WellCare with or into another
corporation or other entity in which the Beneficial Owners of more than
50% of the voting power of WellCare's issued and outstanding voting
securities immediately before such merger, consolidation or reorganization
do not own, directly or indirectly, more than 50% of the voting power of
the issued and outstanding voting securities of the surviving corporation
or other entity immediately after such merger, consolidation or
reorganization; or
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(d)
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During
any consecutive 12-month period, individuals who at the beginning of such
period constituted the Board (together with any new directors whose
election to the Board or whose 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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2.4.2 Notwithstanding
Section 2.4.1, none of the events set forth in Section 2.4.1 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.
2.4.3 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.
2.4.4 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.
ARTICLE
3
EXECUTIVE
BENEFITS
3.1 Vacation. Executive
shall be entitled to not less than four weeks of vacation each calendar year,
without reduction in compensation, and otherwise in accordance with the general
policies of the Corporation applicable generally to other senior executives of
the Corporation. Notwithstanding the foregoing, during the first two years of
the Term, vacation
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not used
in one year will carry over to future years without limit. Commencing
in the third year of the Term, any vacation previously accrued will continue to
carry over without limit, but vacation earned in the third year and later will
carry over only in accordance with the general policies of the
Corporation.
3.2 Employee
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 health and disability insurance coverage
and paid sick leave. Commencing on the Effective Date and continuing
through December 2009, Executive shall receive other expense reimbursements of
$4,600 per month for expenses incurred in connection with his employment with
the Corporation.
3.3 Indemnification. Concurrently
with the execution and delivery of this Agreement, WellCare, the Corporation and
Executive are entering into an indemnification agreement (the “Indemnification
Agreement”) providing, among other things, for indemnification of Executive to
the fullest extent permitted by applicable law.
3.4 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.
ARTICLE
4
TERMINATION
4.1 Grounds for
Termination.
4.1.1 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 to effectively carry out
his duties and obligations under this Agreement or unable to effectively and
actively participate in the management of WellCare and the Corporation for a
period of 90 consecutive days or for shorter periods aggregating to 120 days
(whether or not consecutive) during any consecutive 12 months of the
Term.
4.1.2 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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(a)
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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 WellCare or the
Corporation;
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(b)
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bad
faith by 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 WellCare or the Corporation;
or
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(c)
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Executive's
conviction of, or pleading guilty or nolo contendere to, a crime that
constitutes a felony involving fraud, conversion, misappropriation, or
embezzlement under the laws of the United States or any political
subdivision thereof, which conviction has become final and
non-appealable.
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4.1.3 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"):
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(a)
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a
material diminution during the Term in Executive's authority, duties or
responsibilities, or any change in Executive's title, including the
Executive ceasing to serve as the General Counsel of the senior surviving
entity following any Change of
Control;
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(b)
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a
material diminution during the Term in Executive's base salary or bonus
opportunity;
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(c)
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a
material breach by WellCare or the Corporation of any term of this
Agreement; or
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(d)
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a
change in Executive's office location to a point more than fifty (50)
miles from Executive's offices in Tampa,
Florida.
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4.1.4 Opportunity to
Cure. Notwithstanding Sections 4.1.2 and 4.1.3, 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 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.
4.1.5 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
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this
Agreement at any time without Good Reason by giving written notice of such
termination to the Corporation.
4.2 Termination
Date. Except as provided in Section 4.1.1 with respect to
Executive's death or Disability, and subject to Section 4.1.4, any termination
under Section 4.1 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").
4.3 Effect of
Termination.
4.3.1 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.
4.3.2 Termination without Cause or
with Good Reason. In the event that Executive's employment is
terminated by the Corporation without Cause or by Executive for Good
Reason:
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(a)
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The
Corporation shall pay all Accrued Obligations to Executive in a lump sum
in cash within ten (10) days the Termination
Date;
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(b)
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The
Corporation shall pay to Executive, in a lump sum in cash no later than
the Severance Payment Deadline (as defined in Section 4.3.4), an amount
equal to one (1) times (or, if the Termination Date occurs within one year
after a Change in Control, two (2) times) the sum of (a) Executive's
annual salary as in effect on the Termination Date and (b) the average of
the two highest bonuses earned by the Executive
over the three prior years or, if Executive has not been employed for
three years, the target bonus for the year of the Termination
Date.
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(c)
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For
the duration of the applicable COBRA period, the Corporation shall
continue to provide medical, dental and vision care and life insurance
benefits to Executive and/or Executive's family at least equal to those
which would have been provided to them in accordance with Section 3.2;
provided,
further,
that Executive agrees to elect
COBRA
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coverage
to the extent available under the Corporation's health insurance plans
(and the Corporation shall reimburse the cost of any premiums for such
coverage on an after-tax basis). Any payment or reimbursement
under this Section 4.3.2(c) 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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4.3.3 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.
4.3.4 Waiver and Release
Agreement. In consideration of the severance payments and
other benefits described in clauses (b) and (c) of Section 4.3.2, 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 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 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) and (c) of
Section 4.3.2. The timing of severance payments under clause (b) of
Section 4.3.2 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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(a)
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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
within 10 days after the Release becomes effective and such revocation
rights have lapsed.
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(b)
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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 taxable years of
Executive depending on when Executive executes and delivers the Release,
payments conditioned on execution of the Release shall be made within 10
days after 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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4.4 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 of the Code and the regulations promulgated
thereunder ("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 termination, except in the event of Executive's
death. Within thirty (30) days following the end of such six-month
period, 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-month period but for this Section 4.4. Such
catch-up payment shall bear simple interest at the prime rate of interest as
published by the Wall Street Journals' bank survey as of the first day of the
six 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.
4.5 Additional
Payments.
4.5.1 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 4.5) (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 4.5.1, 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
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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 will 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.
4.5.2 Gross-Up
Determinations. Subject to the provisions of
Section 4.5.3, below, all determinations required to be made under this
Section 4.5, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a nationally recognized accounting firm
selected by Executive and reasonably acceptable to the Corporation (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the Corporation and Executive
within fifteen (15) business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by the
Corporation. All fees and expenses of the Accounting Firm shall be
borne solely by the Corporation. Any Gross-Up Payment, as determined
pursuant to this Section 4.5, shall be paid by the Corporation to Executive
within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax
is payable by Executive, it shall furnish Executive with a written opinion that
failure to report the Excise Tax on Executive's applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty. Any good faith determination by the Accounting Firm shall be
binding upon the Corporation and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Corporation should have
been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 4.5.3,
below, and Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Corporation to
or for the benefit of Executive.
4.5.3 Claims. Executive
shall notify the Corporation in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Corporation of a
Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after Executive is
informed in writing of such claim and shall apprise the Corporation of the
nature of such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration of
the thirty (30)-day period following the date on which Executive gives such
notice to the Corporation (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
Corporation notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall: (a) give the
Corporation any information reasonably requested by the Corporation relating to
such claim, (b) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time, including,
without limitation, accepting
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legal
representation with respect to such claim by an attorney reasonably selected by
the Corporation, (c) cooperate with the Corporation in good faith in order
effectively to contest such claim, and (d) permit the Corporation to participate
in any proceedings relating to such claim; provided, however, that the
Corporation shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this
Section 4.5.3, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner; and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided
further, however, that if the
Corporation directs Executive to pay such claim and xxx for a refund, the
Corporation shall (to the extent permitted by law) advance the amount of such
payment to Executive on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided,
further, that
any extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore,
the Corporation's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
4.5.4 Refunds. If,
after the receipt by Executive of an amount advanced by the Corporation pursuant
to Section 4.5.3, Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to the Corporation's complying
with the requirements of said Section 4.5.3) promptly pay to the
Corporation the amount of such refund (together with any interest paid or
credited thereon, after taxes applicable thereto). If, after the
receipt by Executive of an amount advanced by the Corporation pursuant to
Section 4.5.3, a determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Corporation does not notify
Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance shall
be forgiven and shall not be required to be repaid; and the amount of such
advance shall offset, to the extent thereof, the amount of the Gross-Up Payment
required to be paid.
4.5.5 Timing of Gross-Up
Payment. Subject to the foregoing provisions of this Section
4.5 that may require earlier payment, any Gross-Up Payment shall be paid to or
for the benefit of Employee by December 31 of the calendar year following the
calendar year in which the Excise Tax is remitted, or, if no Excise Tax is
remitted, by December 31
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of the
calendar year following the calendar year in which there is a final and
nonappealable settlement or other resolution of an audit or litigation relating
to the Excise Tax.
4.6 Non-Exclusivity of
Rights. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Corporation or its subsidiaries and for which Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
Executive may have under any other contract or agreement with the Corporation or
its subsidiaries at or subsequent to the Termination Date, which shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement, except as explicitly modified by this Agreement.
4.7 No Set-Off or
Mitigation. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment,
defense, or other claim, right or action that the Corporation may have against
Executive or others, except to the extent of the mitigation and setoff
provisions provided for in this Agreement. In no event shall
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not Executive
obtains other employment. The Corporation agrees to pay as incurred,
to the full extent permitted by law, all legal fees and expenses that Executive
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Corporation, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by
Executive about the amount of any payment pursuant to this Agreement), plus, in
each case, interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
ARTICLE
5
RESTRICTIVE
COVENANTS
5.1 Confidential
Information.
5.1.1 Obligation to Maintain
Confidentiality. Executive acknowledges that, by reason of
Executive's employment by the Corporation, the Executive will have access to
confidential information (collectively, "Confidential Information") of
WellCare, the Corporation and their respective subsidiaries (collectively, the
"WellCare
Companies"). Executive acknowledges that such Confidential
Information is a valuable and unique asset of the WellCare Companies and
covenants that, both during and after the Term, Executive will not disclose any
Confidential Information to any Person (except as Executive's duties as a
director, officer or employee of WellCare and the Corporation require) without
the prior written authorization of the Board. The obligation of
confidentiality imposed by this Section 5.1 shall not apply to Confidential
Information that otherwise becomes known to the public through no act of
Executive in breach of this Agreement or which is required to be disclosed by
court order, applicable law or regulatory requirements, nor shall it apply
to
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Executive's
disclosure of Confidential Information to his attorneys and advisors in
connection with a dispute between Executive and a WellCare Company.
5.1.2 WellCare Company
Property. All records, designs, business plans, financial
statements, customer lists, manuals, memoranda, lists, research and development
plans, Intellectual Property and other property delivered to or compiled by
Executive by or on behalf of any WellCare Company or its providers, clients or
customers that pertain to the business of any WellCare Company shall be and
remain the property of such WellCare Company and be subject at all times to its
discretion and control. Likewise, all correspondence, reports,
records, charts, advertising materials and other similar data pertaining to the
business, activities, research and development, Intellectual Property or future
plans of a WellCare Company that is collected by the Executive shall be
delivered promptly to such WellCare Company without request by it upon
termination of Executive's employment. For purposes of this Section
5.1.2, "Intellectual
Property" shall mean patents, copyrights, trademarks, trade dress, trade
secrets, other such rights, and any applications therefor.
5.2 Inventions. Executive
is hereby retained in a capacity such that Executive's responsibilities may
include the making of technical and managerial contributions of value to the
WellCare Companies. Executive hereby assigns to the applicable
WellCare Company all rights, title and interest in such contributions and
inventions made or conceived by Executive alone or jointly with others during
the Term that relate to the business of such WellCare Company. This
assignment shall include (a) the right to file and prosecute patent applications
on such inventions in any and all countries, (b) the patent applications filed
and patents issuing thereon, and (c) the right to obtain copyright, trademark or
trade name protection for any such work product. Executive shall
promptly and fully disclose all such contributions and inventions to the
Corporation and assist the Corporation or any other WellCare Company, as the
case may be, in obtaining and protecting the rights therein (including patents
thereon), in any and all countries; provided, however, that said
contributions and inventions will be the property of the applicable WellCare
Company, whether or not patented or registered for copyright, trademark or trade
name protection, as the case may be. Notwithstanding the foregoing,
no WellCare Company shall have any right, title or interest in any work product
or copyrightable work developed outside of work hours and without the use of any
WellCare Company's resources that does not relate to the business of any
WellCare Company and does not result from any work performed by Executive for
any WellCare Company.
5.3 Unfair
Competition.
5.3.1 Scope of
Covenant. Executive agrees that during the Term, and for the
one-year period beginning on the Termination Date, Executive shall not, directly
or indirectly, for himself or on behalf of or in conjunction with any other
Person, without the prior written consent of the Board:
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(a)
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engage
as an officer, director, shareholder, owner, partner, joint venturer, or
in any managerial capacity, whether as an employee, independent
contractor, consultant or advisor
(paid
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or
unpaid), or as a sales representative, or otherwise participate, in each
case, in any business that sells, markets, or provides any benefits or
services within any state in which a WellCare Company is doing business at
the time Executive ceases to be employed by the Corporation that are in
direct competition with the benefits or services provided by such WellCare
Company in such state;
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(b)
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recruit,
hire or solicit any employee or former employee of any WellCare Company or
encourage any employee of any WellCare Company to leave such WellCare
Company's employ, unless such former employee has not been employed by the
WellCare Group for a period in excess of six months; provided, however, that
the provisions of this clause (b) shall not apply to any member of
Executive's immediate family;
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(c)
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call
upon any Person who is at the time Executive ceases to be employed by the
Corporation, or who was at any time during the one year period prior to
the date Executive ceases to be employed by the Corporation, a provider,
customer or agent of any WellCare Company for the purpose of soliciting or
selling benefits or services that would violate clause (a) above;
or
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(d)
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request
or advise any provider, customer or agent of any WellCare Company to
withdraw, curtail or cancel its business dealings with such WellCare
Company;
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provided, however, that nothing
in this Section 5.3.1 shall be construed to preclude Executive from making any
investment in the securities of any business enterprise whether or not engaged
in competition with any WellCare Company, to the extent that such securities are
actively traded on a national securities exchange or in the over-the-counter
market in the United States or on any foreign securities exchange, but only if
such investment does not exceed two percent (2%) of the outstanding voting
securities of such enterprise, provided that such permitted activity shall not
relieve the Executive from any other provisions of this Agreement.
5.3.2 Reasonableness. It
is agreed by the parties that the foregoing covenants in this Section 5.3 impose
a reasonable restraint on Executive in light of the activities and business of
the WellCare Companies on the date of the execution of this Agreement and the
current plans of the WellCare Companies. Executive acknowledges that
the covenants in this Section 5.3 shall not prevent Executive from earning a
livelihood upon the termination of employment hereunder, but merely prevents
unfair competition with the WellCare Companies for a limited period of
time.
5.3.3 Severability. The
covenants in this Section 5.3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. In the event any court of competent jurisdiction
shall determine that the
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scope,
time or territorial restrictions set forth herein are unreasonable, then it is
the intention of the parties that such restrictions be enforced to the fullest
extent that such court deems reasonable, and this Agreement shall thereby be
reformed.
5.3.4 Enforcement by the
Corporation not Limited. All of the covenants in this Section
5.3 shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of Executive
against any WellCare Company, whether predicated in this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Corporation or WellCare
of such covenants.
5.4 Breach of Restrictive
Covenants. The parties agree that a breach or violation of
this Article 5 will result in immediate and irreparable injury and harm to the
innocent party, and that such innocent party shall have, in addition to any and
all remedies of law and other consequences under this Agreement, the right to
seek an injunction, specific performance or other equitable relief to prevent
the violation of the obligations hereunder.
ARTICLE
6
ARBITRATION
6.1 General. Except
for an action for equitable relief that is permitted to be sought pursuant to
Section 5.4, any
controversy, dispute, or claim between the parties to this Agreement, including
any claim arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled
exclusively by arbitration, before a single arbitrator, in accordance with this
Article 6 and the then most applicable rules of the American Arbitration
Association. Judgment upon any award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction
thereof. Such arbitration shall be administered by the American
Arbitration Association. Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its
nature. Notwithstanding the foregoing, either party may in an
appropriate matter apply to a court for provisional relief, including a
temporary restraining order or a preliminary injunction, on the ground that the
award to which the applicant may be entitled in arbitration may be rendered
ineffectual without provisional relief. Unless mutually agreed by the
parties otherwise, any arbitration shall take place in Tampa,
Florida.
6.2 Selection of
Arbitrator. In the event the parties are unable to agree upon
an arbitrator, the parties shall select a single arbitrator from a list of nine
arbitrators drawn by the parties at random from the "Independent" (or "Gold
Card") list of retired judges or, at the option of Executive, from a list of
nine persons (which shall be retired judges or corporate or litigation attorneys
experienced in executive employment agreements) provided by the office of the
American Arbitration Association having jurisdiction over Tampa,
Florida. If the parties are unable to agree upon an arbitrator from
the list so drawn, then the parties shall each strike names alternately from the
list, with the first to strike being determined by lot. After each
party has used four strikes, the remaining name on the list shall be the
arbitrator. If such person is unable to serve for any reason, the
parties shall repeat this process until an arbitrator is selected.
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6.3 Applicability of
Arbitration; Remedial Authority. This agreement to resolve any
disputes by binding arbitration shall extend to claims against any parent,
subsidiary or affiliate of each party, and, when acting within such capacity,
any officer, director, stockholder, employee or agent of each party, or of any
of the above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common
law. In the event of a dispute subject to this paragraph the parties
shall be entitled to reasonable discovery subject to the discretion of the
arbitrator. The remedial authority of the arbitrator (which shall
include the right to grant injunctive or other equitable relief) shall be the
same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute. The arbitrator
shall, upon an appropriate motion, dismiss any claim without an evidentiary
hearing if the party bringing the motion establishes that he or it would be
entitled to summary judgment if the matter had been pursued in court
litigation. In the event of a conflict between the applicable rules
of the American Arbitration Association and these procedures, the provisions of
these procedures shall govern.
6.4 Fees and
Costs. Any filing or administrative fees shall be borne
initially by the party requesting arbitration. The Corporation shall
be responsible for the costs and fees of the
arbitration. Notwithstanding the foregoing, the prevailing party in
such arbitration, as determined by the arbitrator, and in any enforcement or
other court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party's costs
(including but not limited to the arbitrator's compensation), expenses, and
attorneys' fees.
6.5 Award Final and
Binding. The arbitrator shall render an award and written
opinion, and the award shall be final and binding upon the
parties. If any of the provisions of this paragraph, or of this
Agreement, are determined to be unlawful or otherwise unenforceable, in whole or
in part, such determination shall not affect the validity of the remainder of
this Agreement, and this Agreement shall be reformed to the extent necessary to
carry out its provisions to the greatest extent possible and to insure that the
resolution of all conflicts between the parties, including those arising out of
statutory claims, shall be resolved by neutral, binding
arbitration. If a court should find that the arbitration provisions
of this Agreement are not absolutely binding, then the parties intend any
arbitration decision and award to be fully admissible in evidence in any
subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.
ARTICLE
7
MISCELLANEOUS
7.1 Amendments. The
provisions of this Agreement may not be waived, altered, amended or repealed in
whole or in part except by the signed written consent of the parties sought to
be bound by such waiver, alteration, amendment or repeal.
7.2 Entire
Agreement. This Agreement, the Indemnification Agreement, and
any agreements pertaining to the Restricted Stock and the Option constitute the
total and complete agreement of the parties with respect to the subject matter
hereof and thereof and
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supersede
all prior and contemporaneous understandings and agreements heretofore made, and
there are no other representations, understandings or agreements.
7.3 Counterparts. This
Agreement may be executed in one of more counterparts, each of which shall be
deemed and original, but all of which shall together constitute one and the same
instrument.
7.4 Severability. Each
term, covenant, condition or provision of this Agreement shall be viewed as
separate and distinct, and in the event that any such term, covenant, condition
or provision shall be deemed by an arbitrator or a court of competent
jurisdiction to be invalid or unenforceable, the court or arbitrator finding
such invalidity or unenforceability shall modify or reform this Agreement to
give as much effect as possible to the terms and provisions of this
Agreement. Any term or provision which cannot be so modified or
reformed shall be deleted and the remaining terms and provisions shall continue
in full force and effect.
7.5 Waiver or
Delay. The failure or delay on the part of the Corporation or
Executive to exercise any right or remedy, power or privilege hereunder shall
not operate as a waiver thereof. A waiver, to be effective, must be
in writing and signed by the party making the waiver. A written
waiver of default shall not operate as a waiver of any other default or of the
same type of default on a future occasion.
7.6 Successors and
Assigns. This Agreement shall be binding on and shall inure to
the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns, except as otherwise provided
herein. Neither this Agreement nor any of the rights, benefits,
obligations or duties hereunder may be assigned or transferred by Executive
except by operation of law. Without the prior written consent of
Executive, this Agreement shall not be assigned by the
Corporation. The Corporation will require any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
7.7 Necessary
Acts. Each party to this Agreement shall perform any further
acts and execute and deliver any additional agreements, assignments or documents
that may be reasonably necessary to carry out the provisions or to effectuate
the purpose of this Agreement.
7.8 Governing Law. This
Agreement shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Delaware.
7.9 Notices. All
notices, requests, demands and other communications to be given under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service, if personally served on the party to whom notice is to be
given, or 48 hours after mailing, if mailed to the party to whom notice is to be
given by certified or registered mail, return receipt requested, postage
prepaid, and properly addressed to the
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party at
his address set forth as follows or any other address that any party may
designate by written notice to the other parties:
| To Executive: |
Xxxxxx X.
X’Xxxx III
On file
with the Corporation
|
| To WellCare or the Corporation: |
0000
Xxxxxxxxx Xxxx
Xxxxxxxxxxx
Xxx
Xxxxx,
XX 00000
Attn:
Chief Executive Officer
Facsimile: (000)
000-0000
|
7.10 Headings and
Captions. The headings and captions used herein are solely for
the purpose of reference only and are not to be considered as construing or
interpreting the provisions of this Agreement.
7.11 Construction. All
terms and definitions contained herein shall be construed in such a manner that
shall give effect to the fullest extent possible to the express or implied
intent of the parties hereby.
7.12 Counsel. Executive
has been advised by WellCare and the Corporation that he should consider seeking
the advice of counsel in connection with the execution of this Agreement and the
other agreements contemplated hereby and Executive has had an opportunity to do
so. Executive has read and understands this Agreement, and has sought the advice
of counsel to the extent he has determined appropriate. The
Corporation shall reimburse Executive for the reasonable fees and expenses of
Executive's counsel(s) in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other agreements contemplated
hereby.
7.13 Withholding of
Compensation. Executive hereby agrees that the Corporation may
deduct and withhold from the compensation or other amounts payable to Executive
hereunder or otherwise in connection with Executive's employment any amounts
required to be deducted and withheld by the Corporation under the provisions of
any applicable Federal, state and local statute, law, regulation, ordinance or
order.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
|
WELLCARE
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| By: /s/ Xxxxx Xxxxxxxxx | |
| Name: Xxxxx Xxxxxxxxx | |
|
Title:
President & CEO
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CORPORATION
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COMPREHENSIVE
HEALTH MANAGEMENT, INC.
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| By: /s/ Xxxxx Xxxxxxxxx | |
| Name: Xxxxx Xxxxxxxxx | |
|
Title:
President & CEO
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| EXECUTIVE | |
|
/s/ Xxxxxx
X. X’Xxxx III
Xxxxxx X.
X’Xxxx III
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EXHIBIT
A
WAIVER
AND RELEASE AGREEMENT
THIS
WAIVER AND RELEASE AGREEMENT (this "Release") is entered into as
of [TO BE DETERMINED AT TERMINATION OF EMPLOYMENT] (the "Effective Date"), by Xxxxxx X.
X’Xxxx III (the "Executive") in consideration
of severance pay and benefits (the "Severance Payment") provided
to the Executive by Comprehensive Health Management, Inc., a Florida corporation
(the "Corporation"),
pursuant to clauses (b) and (c) of Section 4.3.2 of the Employment Agreement by
and between the Corporation and the Executive (the "Employment
Agreement").
1. Waiver
and Release. Subject to the
last sentence of the first paragraph of this Section 1, the Executive, on his
own behalf and on behalf of his heirs, executors, administrators, attorneys and
assigns, hereby unconditionally and irrevocably releases, waives and forever
discharges the Corporation and each of its affiliates, parents, successors,
predecessors, and the subsidiaries, directors, owners, members, shareholders,
officers, agents, and employees of the Corporation and its affiliates, parents,
successors, predecessors, and subsidiaries (collectively, all of the foregoing
are referred to as the "Employer"), from any and all
causes of action, claims and damages, including attorneys' fees, whether known
or unknown, foreseen or unforeseen, presently asserted or otherwise arising
through the date of his signing of this Release, concerning his employment or
separation from employment. Subject to the last sentence of the first
paragraph of this Section 1, this Release includes, but is not limited to, any
payments, benefits or damages arising under any federal law (including, but not
limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Employee Retirement Income Security Act of 1974, the
Americans with Disabilities Act, Executive Order 11246, the Family and Medical
Leave Act, and the Worker Adjustment and Retraining Notification Act, each as
amended); any claim arising under any state or local laws, ordinances or
regulations (including, but not limited to, any state or local laws, ordinances
or regulations requiring that advance notice be given of certain workforce
reductions); and any claim arising under any common law principle or public
policy, including, but not limited to, all suits in tort or contract, such as
wrongful termination, defamation, emotional distress, invasion of privacy or
loss of consortium. Notwithstanding any other provision of this Release to
the contrary, this Release does not encompass, and Executive does not release,
waive or discharge, the obligations of WellCare and/or the Corporation (a) to
make the payments and provide the other benefits contemplated by the Employment
Agreement, or (b) under any restricted stock agreement, option agreement or
other agreement pertaining to Executive's equity ownership, or (c) under any
indemnification or similar agreement with Executive.
The
Executive understands that by signing this Release, he is not waiving any claims
or administrative charges which cannot be waived by law. He is
waiving, however, any right to monetary recovery or individual relief should any
federal, state or local agency (including the Equal Employment Opportunity
Commission) pursue
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any claim
on his behalf arising out of or related to his employment with and/or separation
from employment with the Corporation.
The
Executive further agrees without any reservation whatsoever, never to xxx the
Employer or become a party to a lawsuit on the basis of any and all claims of
any type lawfully and validly released in this Release.
2. Acknowledgments. The Executive is
signing this Release knowingly and voluntarily. He acknowledges
that:
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(a)
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He
is hereby advised in writing to consult an attorney before signing this
Release Agreement;
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(b)
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He
has relied solely on his own judgment and/or that of
his attorney regarding the consideration for and the terms of
this Release and is signing this Release Agreement knowingly and
voluntarily of his own free will;
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(c)
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He
is not entitled to the Severance Payment unless he agrees to and honors
the terms of this Release;
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(d)
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He
has been given at least twenty-one (21) calendar days to consider this
Release, or he or she expressly waives his right to have at least
twenty-one (21) days to consider
this Release;
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(e)
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He
may revoke this Release within seven (7) calendar days after signing it by
submitting a written notice of revocation to the Employer. He
further understands that this Release is not effective or enforceable
until after the seven (7) day period of revocation has expired without
revocation, and that if he or she revokes this Release within the seven
(7) day revocation period, he will not receive the Severance
Payment;
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(f)
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He
has read and understands the Release and further understands that, subject
to the limitations contained herein, it includes a general release of any
and all known and unknown, foreseen or unforeseen claims presently
asserted or otherwise arising through the date of his signing of this
Release that he may have against the Employer;
and
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(g)
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No
statements made or conduct by the Employer has in any way coerced or
unduly influenced him or her to execute this
Release.
|
3. No
Admission of Liability. This Release does
not constitute an admission of liability or wrongdoing on the part of the
Employer, the Employer does not
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admit
there has been any wrongdoing whatsoever against the Executive, and the Employer
expressly denies that any wrongdoing has occurred.
4. Entire
Agreement. There are no
other agreements of any nature between the Employer and the Executive with
respect to the matters discussed in this Release Agreement, except as expressly
stated herein, and in signing this Release, the Executive is not relying on any
agreements or representations, except those expressly contained in this
Release.
5. Execution. It is not
necessary that the Employer sign this Release following the Executive's full and
complete execution of it for it to become fully effective and
enforceable.
6. Severability. If any provision
of this Release is found, held or deemed by a court of competent jurisdiction to
be void, unlawful or unenforceable under any applicable statute or controlling
law, the remainder of this Release shall continue in full force and
effect.
7. Governing
Law. This Release
shall be governed by the laws of the State of Florida, excluding the choice of
law rules thereof.
8. Headings. Section and
subsection headings contained in this Release are inserted for the convenience
of reference only. Section and subsection headings shall not be
deemed to be a part of this Release for any purpose, and they shall not in any
way define or affect the meaning, construction or scope of any of the provisions
hereof.
IN
WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the day
and year first herein above written.
|
EXECUTIVE:
/s/ Xxxxxx X. X’Xxxx III
XXXXXX
X. X’XXXX III
|
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