Ex - 10.10 Employment Agreement effective January 31, 2005, between Harry Creasey and Coventry Health Care, Inc
Exhibit 10.10
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| EMPLOYMENT AGREEMENT |
This Employment Agreement (“Agreement”) is entered into as of the 23rd day of December, 2004, by and between Harry Creasey (“Executive”) and Coventry Health Care, Inc. ("Employer"), a Delaware corporation with its principal place of business at 6705 Rockledge Drive, Bethesda, Maryland 20817.
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| W I T N E S S E T H: |
WHEREAS, Executive desires to enter into an employment relationship with Employer and Employer desires to employ Executive; and
WHEREAS, Executive and Employer desire to set forth in a written agreement the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the premises hereof and of the mutual promises and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment. Executive’s employment shall commence on January 31, 2005, (the “Date of Employment”). Employer hereby agrees to employ Executive to serve as Senior Vice President, New Market Development. Executive hereby agrees to such employment on and after the date hereof under the terms and conditions hereinafter set forth.
2. Duties. Executive shall report to the Executive Vice President, Health Plan Operations (the “Supervisor”). Executive’s powers and duties shall be those normally associated with such position or as may be delegated or assigned to Executive by his Supervisor or Employer’s Chief Executive Officer. During the term of this Agreement, Executive shall also serve without additional compensation in such other offices of the Employer or its subsidiaries or affiliates to which he may be elected or appointed.
3. Term. Subject to the terms and conditions set forth herein, Executive shall be employed hereunder for a period of one (1) year (the “Term”) commencing on the date hereof and shall continue on a year to year basis thereafter (the “Renewal Term”), until the Executive’s employment terminates as outlined in Sections 8 and 9 herein or until one party provides the other with a minimum of thirty (30) days prior written notice (the “Notice”) of termination.
4. Base Compensation. For all duties rendered by Executive, Employer shall pay Executive a base salary ("Base Salary") of no less than Two Hundred Seventy-five Thousand Dollars ($275,000), annually. The Base Salary shall be paid to Executive in accordance with Employer’s normal payroll policies.
5. Additional Compensation. During the period of this Agreement and as a result of employment under this Agreement, Executive shall receive or be eligible for the following additional compensation:
Bonus Compensation: Executive shall be eligible for an annual bonus (“Bonus”) with a target bonus equal to 50% of base compensation. The Bonus will be in accordance with the Company’s Performance Based 162(m) Plan.
Employer Stock Options: Executive will be granted a nonqualified stock option to purchase 25,000 shares of Common Stock of Employer and a Restricted Stock Award of 10,000 shares of Common Stock of the Company. The terms and conditions of the grant and will be under and in accordance with the terms and provisions of the Employer’s 2004 Incentive Plan.
Vacation: During each year of this Agreement, Executive shall be entitled to four (4) weeks paid vacation.
Other Benefits: Executive will be eligible for participation in employee benefit programs available to employees of Employer, including but not limited to, participation in any profit-sharing, retirement or similar plans established by Employer in which managerial employees of Employer participate, including any such plan intended to comply with Section 401(k) of the Internal Revenue Code of 1986, as amended, and any such plan providing supplemental executive retirement benefits.
Executive will be eligible to participate in the Executive Leadership Estate Planning Program in 2005. This program is reviewed on an annual basis and participation is based on performance and not guaranteed.
Relocation: Executive agrees to relocate to the Bethesda office of Coventry Health Care in the Summer of 2006. Executive will be offered the company Relocation package for executives in effect at the time of the Executive’s relocation. This relocation package will provide the Executive assistance with the sale of his primary residence and the purchase of a new home in the Washington Metropolitan area, as well as, movement of household goods and temporary housing.
6. Expenses. Executive shall be reimbursed for ordinary and necessary business expenses incurred by Executive on behalf of Employer and its subsidiaries or affiliates upon presentation of vouchers in accordance with the usual and customary procedure of Employer in relation to such expense items, except that Employer may elect, at its option, to pay such expense items directly rather than reimburse Executive therefor.
7. Extent of Service. Executive shall devote substantially all of his working time, attention and energies to the business of the Employer and shall not, during the term of this Agreement, take, directly or indirectly, an active role in any other business activity without the prior written consent of the Employer; but except as provided in Section 12(b), this Section shall not prevent Executive from serving as a director of other entities not affiliated with Employer, from making real estate or other investments of a passive nature or from participating in the activities of a nonprofit charitable organization where such participation does not require a substantial amount of time and does not adversely affect Executive’s ability to perform his duties under this Agreement.
8. Termination of Employment. Employer may terminate this Agreement with or without cause at any time with notice (as defined in Section 3). However, except in the case of a Termination With Cause (as defined in Section 21), if the Executive suffers a Termination Without Cause (as defined in Section 21) or a Constructive Termination (as defined in Section 21) the following provisions will apply:
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| (a) | Employer shall during the Severance Period (as defined in Section 21), continue to pay Executive an amount equal to the Executive's Base Salary at the time of termination of employment. Such amount will be paid during the Severance Period in installments similar to those being received by Executive at the date of termination of employment, and will commence as soon as practicable following the date of termination of employment. |
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| (b) | During the Severance Period Executive and his spouse and family will continue to be covered by all Welfare Plans (as defined in Section 21), maintained by Employer in which he or his spouse or family were participating immediately prior to the date of his termination as if he continued to be an employee of Employer; provided that, if participation in any one or more of such Welfare Plans is not possible under the terms thereof, Employer will provide substantially identical benefits to the extent possible. If, however, Executive obtains employment with another employer during the Severance Period, such coverage shall be provided until the earlier of: (i) the end of the Severance Period or (ii) the date on which the Executive and his spouse and family can be covered under the plans of a new employer without being excluded from full coverage because of any actual pre-existing condition. Executive’s eligibility for and the Employer match to the 401(k) Plan, Supplemental Executive Retirement Plan and/or any other retirement savings program in which the Employee participates shall end at the date of termination of employment. |
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| (c) | During the Severance Period Executive shall not be entitled to accrue any additional vacation, sick or floating holiday time. |
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| (d) | During the Severance Period Executive shall not be entitled to reimbursement for fringe benefits such as car allowance, dues and expenses related to club memberships, and expenses for professional services. |
Compensation under Section 8(a) and (b) hereof is contingent upon Executive's compliance with Section 12 hereof.
9. Termination by Executive. Executive may terminate his employment hereunder at any time upon thirty (30) days prior written notice (the “Notice”). Upon such termination by Executive, the Employer shall pay the Executive only his Base Salary due through the date on which his employment is terminated at the rate in effect at the time of notice of termination. The Employer shall then have no further obligation to Executive under this Agreement, except for the payout of benefits accrued under any Employee Benefit Plans or other employee benefits.
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| 10. | Setoff. |
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| (a) | With respect to Section 8, payments or benefits payable to or with respect to Executive or his spouse pursuant to this Agreement shall be reduced by the amount of any claim of Employer against Executive or his spouse or any debt or obligation of Executive or his spouse owing to Employer. |
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| (b) | With respect to Section 8, payments or benefits payable to or with respect to Executive pursuant to this Agreement shall be reduced by any amount Executive may earn or receive from employment with another employer or other professional services, except as expressly provided in Section 8(b). Employee shall notify Employer immediately in writing of the date upon which such services or other work commenced and shall provide Employer with such documentation as Employer shall require to determine the amount of any such setoff. Employee’s failure to provide such written notice and documentation as required herein shall immediately release Employer from its obligations under this Agreement and Employer shall have the right to recover all amounts payable beginning at the point of employment with another employer or at the point other professional services are rendered. |
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| 11. | Death. If Executive dies during the Severance Period: |
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| (a) | All amounts payable hereunder to Executive shall, during the remainder of the Severance Period, be paid to his designated beneficiary. On the death of the survivor of Executive and his designated beneficiary, no further benefits will be paid under the Agreement. |
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| (b) | The designated beneficiary (or beneficiaries covered by a Trust) of Executive shall, during the remainder of the Severance Period, be covered under all Welfare Plans (as defined in Section 21(d)), made available by Employer to Executive immediately prior to the date of his death to the extent possible. |
Any benefits payable under this Section 11 are in addition to any other benefits due to Executive or his beneficiaries (or Trust), from Employer, including, but not limited to, payments under any Incentive Plans.
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| 12. | Restrictive Covenants. |
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| (a) | Confidential Information. Executive agrees not to disclose, either during the time he is employed by the Employer and for a period of twelve months following termination of employment in accordance with the terms of Section 8 herein, to any person (other than a person to whom disclosure is necessary in connection with the performance of his duties as an employee of Employer or to any person specifically authorized by the President and Chief Executive Officer of Employer) any material confidential information concerning the Employer or any of its Affiliates, including, but not limited to, strategic plans, customer lists, contract terms, financial costs, pricing terms, sales data or business opportunities whether for existing, new or developing businesses. |
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| (b) | Non-Competition. During the term of employment provided hereunder and for a period of twelve months following termination of employment in accordance with the terms of Section 8 herein, Executive will not directly or indirectly own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director or otherwise with, or any have financial interest in, or aid or assist anyone else in the conduct of, any business which is in competition with any business conducted by the Employer or any Affiliate of Employer in any state in which the Employer or any Affiliate of Employer is conducting business on the date of termination or expiration of this Agreement, provided that ownership of 5% or less of the voting stock of any public corporation shall not constitute a violation hereof. In the event Executive enters into any of the foregoing arrangements in competition with Employer or any Affiliate of Employer, Executive shall forfeit all rights to payments and other benefits under Section 8 above, and not yet paid to Executive under this Agreement, as of the violation of the terms of this Section 12(b). Such forfeiture shall be Employer’s sole remedy against Executive for violation of this Section 12(b). |
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| (c) | Non-Solicitation. During the term of employment provided for hereunder and for a period of twelve months following termination of employment in accordance with the terms of Section 8 herein, Executive will not (i) directly or indirectly solicit business which could reasonably be expected to conflict with the interest of Employer or any Affiliate of Employer from any entity, organization or person which has contracted with the Employer or any Affiliate of Employer, which has been doing business with the Employer or any Affiliate of Employer, from which the Employer or any Affiliate of Employer was soliciting business at the time of the termination of employment or from which Executive knew or had reason to know that Employer or any Affiliate of Employer was going to solicit business at the time of termination of employment, or (ii) employ, solicit for employment, or advise or recommend to any other persons that they employ or solicit for employment, any employee of the Employer or any Affiliate of Employer. |
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| (d) | Consultation. Executive shall, at the Employer's written request, for a period of twelve months following termination of his employment, in accordance with the terms of Section 8 herein, cooperate with the Employer in concluding any matters in which Executive was involved during the term of his employment and will make himself available for consultation with the Employer on other matters otherwise of interest to the Employer. The Employer agrees that such requests shall be reasonable in number and will consider Executive's time required for other employment and/or employment search. In the event of voluntary termination by Executive, Employer agrees to pay Executive a reasonable fee for any such consultation services requested by Employer; provided, however, Executive agrees to cooperate with Employer and if there is no conflict with Executive’s new employer, in concluding any matters in which Executive was involved during the term of his employment. |
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| (e) | Enforcement. Executive and the Employer acknowledge and agree that any of the covenants contained in this Section 12 herein, with the exception of Section 12(b), may be specifically enforced through injunctive relief but such right to injunctive relief shall not preclude the Employer from other remedies which may be available to it. |
13. Executive Assignment. No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against, Executive or his spouse or other beneficiary, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings.
14. Benefits Unfunded. All rights of Executive and his spouse or other beneficiaries under this Agreement shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of Employer for payment of any amounts due hereunder. Neither Executive nor his spouse or other beneficiaries shall have any interest in or rights against any specific assets of Employer, and Executive and his spouse or other beneficiary shall have only the rights of a general unsecured creditor of Employer.
15. Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and sent by registered or certified mail to his primary residence in the case of Executive, or to its principal office in the case of the Employer and the date of receipt shall be deemed the date which such notice has been provided.
16. Waiver of Breach. The waiver by either party of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by the other party.
17. Assignment. The rights and obligations of the Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Employer. The Executive acknowledges that the services to be rendered by his are unique and personal, and Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement.
18. Entire Agreement. This instrument contains the entire agreement of the parties and supersedes all other prior agreements, employment contracts and understandings, both written and oral, express or implied with respect to the subject matter of this Agreement and may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.
19. Applicable Law. This Agreement shall be governed by the laws of the State of Maryland, without giving effect to the principles of conflicts of law thereof.
20. Headings. The sections, subjects and headings of this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
21. Definitions. For purposes of this Agreement:
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| (a) | "Affiliate" shall have the meaning set forth in Rule 144(a)(1) promulgated under the Securities Act of 1933, as amended. |
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| (b) | “Constructive Termination” shall mean termination by the Executive which follows (i) reassignment of duties, responsibilities, title, or reporting relationships that are not at least the equivalent of his then current position as set forth in Section 1.2, (ii) the intentional or material breach by the Company of this Agreement, or (iii) a reassignment to a geographic location more than fifty (50) miles from Bethesda, Maryland. The Executive shall have a period of ninety (90) days after termination of his employment to assert against the Employer that he suffered a Constructive Termination, and after the expiration of such ninety (90) day period, the Executive shall be deemed to have irrevocably waived the right to such assertion. |
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| (c) | "Severance Period" shall mean the period beginning on the day after the Executive's employment with Employer ends after a Termination Without Cause or Constructive Termination, as described in Section 8, and ending on the date that follows twelve months thereafter. |
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| (d) | “Termination With Cause” shall mean termination by the Employer, acting in good faith, by written notice to the Executive specifying the event relied upon for such termination, due to; (i) the Executive’s indictment or conviction of a felony, (ii) the Executives’ intentional perpetration of a fraud, theft, embezzlement or other acts of dishonesty, (iii) the Executive’s intentional breach of a trust of fiduciary duty which materially affects the Employer or its shareholders. |
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| (e) | “Termination Without Cause” shall mean termination by the Employer other than due to the Executive’s death or “Termination With Cause”. |
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| (f) | "Welfare Plans" shall mean any medical, vision and dental coverage made available by Employer in which Executive is eligible to participate. |
22. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
23. Severability. In the event any provision of this Agreement is held illegal or invalid, the remaining provisions of this Agreement shall not be affected thereby. In the event that Section 12(b) is determined by a court of competent jurisdiction to be invalid due to overbreadth, such Section 12(b) shall be constructed as narrowly as necessary to be enforceable.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first written above.
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| /s/ E. H. Creasey | ||
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| Harry Creasey |
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| COVENTRY HEALTH CARE, INC. |
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| By: | /s/ Francis S. Soistman | ||
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| Francis S. Soistman |
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| Senior Vice President |
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