Document:

Exhibit 10.1

 

SEPARATION AND RELEASE AGREEMENT

 

This SEPARATION AND RELEASE (“Agreement”), dated as of December 15, 2016, is entered into between and among First Choice ER, LLC, a Texas limited liability company (the “Company”) and Graham Cherrington (“Executive”) (collectively, the “Parties”).

 

WHEREAS, Executive was employed by the Company pursuant to the Employment Agreement between Executive and the Company, dated May 29, 2012, as amended by the Amendment to Employment Agreement between Executive and the Company, dated June 24, 2014 (collectively, the “Employment Agreement”);

 

WHEREAS, the Parties desire to effectuate an amicable separation of Executive’s employment with the Company in accordance with the Employment Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, the Parties agree as follows:

 

1.                                      Separation from Employment.  Executive’s last day of employment with Adeptus Health, Inc. (“Adeptus”) was December 2, 2016 (the “Separation Date”).  Executive agrees that from and after the Separation Date, he shall no longer be, and shall not hold himself out as, an officer, director, manager, representative, employee or agent of the Company, Adeptus or any of their parents, subsidiaries or affiliates.  Executive hereby resigns from all positions and titles with the Company or Adeptus as of December 2, 2016, including, without limitation, the positions and titles of President and Chief Operating Officer of Adeptus and all other positions, directorships and officerships with the Company, Adeptus or any of their parents, subsidiaries or affiliates (including the Executive’s position on any Boards of Directors).  The Company will pay Executive all unpaid salary, unused vacation and expense reimbursements that Executive accrues through the Separation Date, subject to applicable taxes and withholdings.  Executive will immediately return to the Company all property belonging to the Company or Adeptus, including, without limitation, all Confidential Information (as defined in the Employment Agreement), and Executive shall retain no copies thereof.

 

2.                                      Consideration.  If Executive signs and does not revoke this Agreement, abides by its terms and conditions and the surviving obligations of the Employment Agreement, then the Company shall provide the following benefits to Executive:

 

(a)                                 The Company shall pay Executive a severance payment (the “Severance Payment”) equal to $550,000.00, subject to applicable taxes and withholdings, payable in equal installments in accordance with the Company’s ordinary payroll schedule over a period equal to twelve (12) months, commencing on the first Company payroll date occurring after the Effective Date as defined in Section 5 (the “Severance Period”).  Neither the Company nor Adeptus shall be obligated to provide Executive with any compensation or benefits beyond the Separation Date, other than as required by this Agreement or by law.  Any obligation of the Company to make the Severance Payment shall cease pursuant to Section 9 below.

 

(b)                                 During the Severance Period, if Executive properly elects continued medical or dental coverage pursuant to, and subject to the requirements of, Sections 601 through

 

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608 of the Executive Retirement Income Security Act of 1974, as amended, and Code Section 4980B (collectively, “COBRA”), the Company will pay the employer portion of the health insurance premiums the Company would have otherwise paid on Executive’s and his dependents’ behalf for health insurance coverage had Executive remained employed by the Company during the Severance Period, provided that (i) the period during which the Company provides the above benefit shall run concurrently with the coverage period required to be made available under COBRA; and (ii) to the extent required to comply with, or to avoid excise or other taxes under, the Affordable Care Act or the Internal Revenue Code, any or all of the benefits of this paragraph will be treated as additional taxable compensation.

 

(c)                                  Company, at Company’s sole cost and expense, shall permit Executive access to, and use of, the PricewaterhouseCoopers LLC (“PWC”) agents currently engaged by Company for purposes of preparing and filing Executive’s 2016 federal tax return.  The scope of PWC’s engagement as it relates to Executive (i) shall be limited to the preparation and filing of Executive’s 2016 federal tax return, and (ii) shall be consistent with the tax services to be provided by PWC to other Company executives receiving the same benefit.

 

3.                                      Equity.  The Parties acknowledge that, effective on the Separation Date: (a) Executive shall hold 47,647 vested shares of restricted stock of Adeptus (the “Vested Shares”); (b) Executive shall forfeit 44,713 unvested shares of restricted stock; and (c) Executive holds no other equity or ownership interests in Adeptus, the Company, or any of their affiliates.  Subject to the foregoing, all of the above vested equity holdings remain subject to applicable grant agreements and plan rules, including the Amended and Restated Adeptus Health Inc. 2014 Omnibus Incentive Plan, the Amended and Restated Restricted Units Agreement between Executive and Adeptus Health LLC, a Delaware limited liability Company (the “Restricted Units Amendment”), the Restricted Stock Grant Notice dated February 18, 2015, and the Restricted Stock Grant Notice dated February 25, 2016.

 

4.                                      Release of Claims.  In exchange for the Company’s obligations under this Agreement, Executive, on Executive’s own behalf and on behalf of Executive’s heirs, executors, administrators, successors, and representatives, releases and discharges the Company, Adeptus and the current, former and future parents, subsidiaries, owners, affiliates and benefit plans of each of them (collectively, the “Group Company”); and all current, former and future partners, officers, directors, employees, attorneys and agents of the Group Company (together with the Group Company, the “Released Parties”) from any and all claims accruing on or before the Effective Date that Executive has or may have against them, whether such claims are known or unknown, actual or contingent, asserted or unasserted, and whether they arise under common law, statute, regulation, ordinance, or other source of law enacted by any governing body, including, without limitation, any claims arising out of Executive’s employment with the Company, and any claims for bonus or other compensation or entitlement not explicitly provided for in this Agreement; provided that this release does not extend to: (a) claims that the law does not permit Executive to waive; (b) the Vested Shares; or (c) claims under the Age Discrimination in Employment Act, as amended, and its implementing regulations (together, the “ADEA”), which are released at Section 5.

 

5.                                      ADEA Release.  In exchange for the Company’s obligations under this Agreement, including Section 2, Executive unconditionally waives, releases and discharges the

 

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Released Parties from any and all claims, whether known or unknown, from the beginning of time to the date of Executive’s execution of this Agreement, arising under ADEA.  Executive acknowledges that:

 

(a)                                 this Agreement is written in a manner calculated to be understood by Executive;

 

(b)                                 this Agreement represents Executive’s knowing and voluntary release of any and all claims that Executive might have, including, but not limited to, any claims arising under the ADEA;

 

(c)                                  Executive has not been asked to release, nor has Executive released any claim under the ADEA that may arise after the effective date of this Agreement;

 

(d)                                 the consideration that Executive will receive in exchange for this Agreement is something of value to which Executive is not otherwise entitled;

 

(e)                                  Executive is hereby advised to consult with an attorney before signing this Agreement; and

 

(f)                                   Executive understands that Executive has twenty-one (21) calendar days to consider this Agreement before signing it, and that Executive may revoke Executive’s release of ADEA claims under this Section within seven (7) calendar days of signing it by sending e-mail notice of revocation to Traci Bowen at traci.bowen@adpt.com.  If no such revocation occurs, the Agreement shall become effective on the eighth (8th) day following the Executive’s execution of this Agreement (the “Effective Date”).

 

6.                                      Confidentiality.  Subject to Section 13, each of the Parties agrees and covenants that each such Party shall not disclose to any third party (a) any of the terms of or amount paid under this Agreement; (b) any negotiation thereof; or (c) any of the details surrounding the facts giving rise to Executive’s agreement to make the Payment to the Company.

 

7.                                      No Admission.  Nothing in this Agreement shall be construed as an admission of wrongdoing or liability on the part of the Released Parties.

 

8.                                      Voluntary Acknowledgement.  This Agreement has been reached by mutual and purely voluntary agreement between Executive and the Company.  Executive acknowledges that Executive fully understands the terms of the Agreement, that Executive has not been under any duress, coercion or undue influence to execute the Agreement, and that Executive is executing it in exchange for consideration to which Executive would not otherwise be entitled.  Executive acknowledges that Executive has freely, knowingly and voluntarily decided to accept these benefits, and that this Agreement has binding legal effect.

 

9.                                      Acknowledgments.  Executive acknowledges that: (a) Executive remains bound by the surviving obligations of the Employment Agreement and the Restricted Units Amendment, including, without limitation, the confidentiality, non-solicitation and non-competition obligations contained therein; (b) such obligations are supported by adequate

 

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consideration, including employment with the Company, the Vested Shares awarded to Executive, and the Severance Payment; (c) such obligations are reasonable and necessary to protect the Group Company’s legitimate business interests; and (d) should Executive breach any such obligations, Executive shall thereby automatically forfeit the Severance Benefits and shall immediately repay to the Company the Severance Payment, except for the first installment of the Severance Payment, which Executive acknowledges constitutes adequate consideration for this Agreement.

 

10.                               Representations.  Executive represents and warrants that:  (a) Executive has filed no pending claims with any court or government agency against any of the Released Parties; and (b) Executive has not breached any terms of any agreement between Executive and the Company regarding confidential information, competition or solicitation of clients or employees of the Group Company, including the Employment Agreement.

 

11.                               Non-Disparagement.  Subject to the terms of this Agreement, Executive will not make, publish or communicate to any third party any defamatory or disparaging remarks, comments or statements concerning the Released Parties.

 

12.                               Cooperation.  The Parties agree that certain matters in which Executive has been involved during Executive’s employment may necessitate Executive’s cooperation with the Company in the future.  To the extent reasonably requested by the Company, Executive shall cooperate with the Company in connection with matters arising out of Executive’s service to the Company; provided that the Company shall make reasonable efforts to minimize disruption of Executive’s other activities.

 

13.                               Permitted Communications.  Nothing in this Agreement shall be construed to prohibit Executive from providing truthful information to any government agency in connection with an investigation by such agency into a suspected violation of law.  Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  The Parties may disclose this Agreement in confidence to their respective attorneys, accountants, auditors, tax preparers and financial advisors.

 

14.                               Entire Agreement.  Except as provided in this Agreement, this Agreement constitutes the entire agreement among the Parties regarding the subject matter hereof, and it supersedes and cancels all prior and contemporaneous written and oral agreements among them, if any.  Executive affirms that, by entering into this Agreement, Executive is not relying upon any other oral or written promise or statement made by anyone at any time on behalf of the Company.  This Agreement may not be changed or altered, except by a writing signed by the Parties.

 

15.                               409A.  The Parties intend this Agreement to be either exempt from or compliant with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated under that section (“Section 409A”), and this Agreement will be interpreted and

 

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administered accordingly, provided, that the Company shall not have any obligation to prevent, minimize, or make a gross-up payment to offset any negative consequences to Executive under Section 409A and shall not have any liability to Executive for such negative consequences.  To the extent any payment or benefit under this Agreement is subject to Section 409A, the following conditions will apply:

 

(a)                                 The parties designate each payment hereunder as a separate payment.

 

(b)                                 “Termination of employment,” or words to that effect used in this Agreement, means Executive’s “separation from service” (as defined under Section 409A) to the extent the termination triggers a payment, a change in the time and form of payment, or both.

 

(c)                                  Any amount payable within the six-month period after Executive’s separation from service as a “specified employee” (as defined under Section 409A) of the Company will accumulate without interest and be paid on the Company’s first regularly scheduled payroll date after the end of such six-month period or, if earlier, within ten business days after the appointment of a personal representative or executor of the estate after Executive’s death.

 

16.                               Counterparts.  This Agreement may be executed, including execution by facsimile or electronically transmitted signature, in multiple counterparts, each of which will be deemed an original and all of which together will be deemed to be one and the same instrument.

 

17.                               Assignment.  The Released Parties may assign this Agreement at any time, and the Agreement shall inure to the benefit of their respective successors and assigns.  This Agreement may not otherwise be assigned, provided that this Agreement shall inure to Executive’s heirs and estate.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, each of the arties has caused this Agreement to be duly executed and delivered under seal, by its authorized officers or individually, as of the Effective Date.

 

	
 
    	
 
    	
First Choice ER, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Traci Bowen
    
	
 
    	
 
    	
Its:
    	
Senior Vice President,   Human Resources
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
12/15/2016
    
	
 
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Graham Cherrington
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Graham Cherrington
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
12/15/2016
    
	
 
    	
 
    	
Date
    

 

6tcon-ex101_6.htm

Exhibit 10.1

 

TRACON PHARMACEUTICALS, INC.

BONUS PLAN

 

 

The TRACON Pharmaceuticals, Inc. (“TRACON” or the “Company”) Bonus Plan (the “Plan”) is designed to reward eligible employees for the achievement of corporate objectives, as well as measured individual objectives that are consistent with and support the overall corporate objectives.

 

ELIGIBILITY

 

All regular employees are eligible to participate in the Plan.  In order to be eligible, a participant must have been in an eligible position for at least three (3) full months prior to the end of the Plan year, and the participant must remain employed through the end of the Plan year and until awards are paid.  If the participant is not employed on the date awards are paid, the participant will not have earned any bonus.  If the participant has been subject to any performance improvement plan or other disciplinary procedure during the Plan year, any award to such individual will be at the discretion of the President/CEO or the Compensation Committee of the Board of Directors (the “Compensation Committee”), and may be reduced or withheld regardless of corporate performance as outlined below. 

 

Change in Status During the Plan Period:

 

	
 
	
a.
	
Participants hired during the Plan year:

	
 
	
•
	
Participants hired during the Plan year are eligible for a prorated award based on the number of calendar days employed in an eligible position.

	
 
	
•
	
Participants hired during the months of October through December are not eligible to participate for the Plan year. 

	
 
	
•
	
If an employee has worked in a temporary or consulting capacity for TRACON, this time will NOT impact the eligibility start date which is the date of hire.  Only as an exception and with approval by the Compensation Committee or the Board of Directors will time worked as a consultant be considered when determining the bonus award proration for an employee.

	
 
	
b.
	
Promotion/change in level: 

	
 
	
•
	
Participants promoted during the Plan year with a change to bonus target and/or bonus corporate and individual performance factor percentages are eligible for an award that will be prorated based on the number of calendar days employed in each eligible position.

	
 
	
c.
	
Termination of employment: 

	
 
	
•
	
If a participant’s employment is terminated voluntarily prior to the date awards are paid, the participant will not be eligible to receive an award. 

	
 
	
•
	
If a participant’s employment is terminated involuntarily prior to the date awards are paid, it will be at the absolute discretion of the Company whether or not an award payment is made.

	
 
	
d.
	
Leave of absence:  

	
 
	
•
	
Bonus award will be prorated to reflect the calendar days on a leave of absence that exceed 60 calendar days in the Plan year.

 

AWARD CALCULATION

 

Awards will be determined by applying a “bonus percentage” to the participant’s base salary that is in effect at the end of the Plan year, regardless if the salary has changed at any point during the calendar year. 

 

The President/CEO will present to the Compensation Committee/Board of Directors a list of the overall corporate objectives for the applicable Plan year, which are subject to approval by the Compensation Committee/Board of Directors.  All participants in the Plan whose performance is measured in part based on individual performance factors will then develop a list of key individual objectives, which must be approved by the responsible Vice President, Senior Vice President, Chief Officer, or President/CEO.

 

 

 

The relative weight between “corporate and individual performance factors” varies based on the individual’s assigned level within the organization.  The bonus percentage and/or the weighting may be reviewed periodically and may be adjusted for any Plan year by the Compensation Committee.  The bonus percentages and weighting for the performance factors will initially be as follows:

 

	
Level/Position
	
 

	
 
	
 
	
 
	
Individual Factors

	
 
	
Bonus Percentage 
	
Corporate Factor
	
Core Competency
	
Individual Goal Achievement

	
President and CEO
	
50%
	
100%
	
 
	
 

	
Chief Officer
	
30%
	
75%
	
10%
	
15%

	
Senior Vice President
	
30%
	
75%
	
10%
	
15%

	
Vice President
	
25%
	
60%
	
16%
	
24%

	
Senior Director
	
20%
	
40%
	
24%
	
36%

	
Director
	
20%
	
40%
	
24%
	
36%

	
Associate Director
	
20%
	
40%
	
24%
	
36%

	
Senior Manager II, I
	
20%
	
25%
	
30%
	
45%

	
Manager II, I
	
20%
	
25%
	
30%
	
45%

	
Individual Contributor II, I
	
20%
	
25%
	
30%
	
45%

	
Support
	
20%
	
25%
	
30%
	
45%

 

Performance Award Multiplier

 

Separate award multipliers will be established for both the corporate and the individual components of each award.  The award multiplier for the corporate component will be determined by the Compensation Committee/Board of Directors each Plan year, in its sole discretion, based on the achievement of the approved corporate objectives for the Plan year.  The same award multiplier for the corporate component of the award shall be used for all such Plan participants.  

 

The award multiplier for the individual component shall be approved by the responsible Chief Officer or President/CEO and consists of the Core Competency Assessment and the achievement of Individual goals, each weighted 40% and 60%, respectively.

 

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The ratings used for the Annual Performance Core Competency Assessment is as follows: 

 

5 = Exceptional; Far exceeds all goals and objectives on a consistent basis

4 = Exceeds; Consistently exceeds goals and objectives

3 = Meets; Consistently meets goals and objectives

2 = Marginal; Met some goals and objectives but requires improvement

1 = Unsatisfactory

 

	
Numerical Rating Scale
	
Multiplier for Core Competency Individual Performance

	
5
	
120.00%

	
4.9
	
118.37%

	
4.8
	
116.70%

	
4.7
	
115.03%

	
4.6
	
113.36%

	
4.5
	
111.69%

	
4.4
	
110.02%

	
4.3
	
108.35%

	
4.2
	
106.68%

	
4.1
	
105.01%

	
4
	
103.34%

	
3.9
	
101.67%

	
3.8
	
100.00%

	
3.7
	
97.50%

	
3.6
	
95.00%

	
3.5
	
92.50%

	
3.4
	
90.00%

	
3.3
	
87.50%

	
3.2
	
85.00%

	
3.1
	
82.50%

	
3
	
80.00%

	
2.9
	
72.00%

	
2.8
	
64.00%

	
2.7
	
56.00%

	
2.6
	
48.00%

	
2.5
	
40.00%

	
2.4
	
32.00%

	
2.3
	
24.00%

	
2.2
	
16.00%

	
2.1
	
8.00%

	
2
	
0.00%

 

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For Executives (Vice President level and above):  The actual performance bonus awarded in any year, if any, may be more or less than the applicable target, depending primarily on the Compensation Committee’s determination of the award multiplier for the corporate component and the executive’s individual performance with respect to the corporate objectives. Whether or not performance bonus is paid for any year is within the discretion of the Compensation Committee/Board of Directors based on such achievement.  

 

Example:

 

	
Step # 1:    Potential bonus award calculation
	
 
	
 
	
 
	
 

	
Position:
	
 
	
Manager
	
 

	
Base salary at end of calendar year:
	
 
	
$
	
100,000
	
 

	
Target bonus percentage:
	
 
	
 
	
20%
	
 

	
Potential base bonus:
	
 
	
$
	
20,000
	
 

 

	
Step # 2:    Split award target amount based on weighting of performance factors 

	
Potential corporate performance bonus (25%):
	
 
	
$
	
5,000
	
 

	
Target individual performance bonus (75%):
	
 
	
 
	
 
	
 

	
Core Competency (40% of 75%, or 30%)
	
 
	
$
	
6,000
	
 

	
Personal Goal Achievement (60% of 75%, or 45%)
	
 
	
$
	
9,000
	
 

	
 
	
 
	
$
	
20,000
	
 

 

	
Step # 3:    Actual bonus award calculation

	
Payment multipliers are determined and approved based on assessment of corporate and

	
individual performance, for example:

	
 

	
Corporate multiplier
	
 
	
 
	
25.0%
	
 
	
 

	
Core Competency Assessment multiplier
	
 
	
 
	
116.7%
	
  - performance assessed at 4.8
	
 

	
Personal Goal Objective Performance
	
 
	
 
	
85.0%
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Corporate component
	
 
	
$
	
3,750
	
   ($5,000 x 25.0%)
	
 

	
Individual component:
	
 
	
 
	
 
	
 

	
Core Competency Assessment
	
 
	
$
	
7,002
	
   ($6,000 x 116.7%)
	
 

	
Individual Goals Achieved
	
 
	
$
	
7,650
	
   ($9,000 x 85.0%)
	
 

	
Total Award
	
 
	
$
	
18,402
	
 
	
 

 

AWARD PAYMENTS

 

Bonus award payments may be made in cash, through the issuance of stock, stock options or another form of equity award, or by a combination of cash, stock, stock options and/or another form of equity award, at the discretion of the Compensation Committee.  All bonus award payments are subject to applicable tax withholdings.  In the event that the Compensation Committee and/or the Board of Directors elect to pay bonus awards in stock or stock options, the Compensation Committee, in its sole discretion, will make a determination as to the number of shares of stock or stock options to be issued to each Plan participant based, in part, upon the overall corporate performance and each participant’s individual performance, as described.  The issuance of stock and stock options may also be subject to the approval of the Company’s stockholders, and any stock options issued will be subject to the terms and conditions of the Company’s equity incentive award plan, as amended from time to time by the Company.

 

Payment of bonus awards will be made as soon as practicable after the Company’s year-end, but not later than December 31 of the year following the Plan year.   Payments will not be impacted by any benefits, with the exception of elected 401(k) contributions which will be applied. 

 

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PLAN PROVISIONS

 

Governance

 

The Plan will be governed by the Compensation Committee.  The President and/or CEO of TRACON will be responsible for the administration of the Plan.  The Compensation Committee will be responsible for recommending to the Board of Directors a bonus amount for the President and/or CEO (unless such compensation is intended to be qualified, performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended).  Additionally, the Compensation Committee will be responsible for approving any compensation or incentive awards to other executive officers of the Company and all other officers who are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.  All determinations of the Compensation Committee, under the Plan, shall be final and binding on all Plan participants.

 

Compensation Committee’s Absolute Right to Alter or Abolish the Plan

 

The Compensation Committee reserves the right in its absolute discretion to terminate the Plan, or any portion of the Plan, at any time or to alter the terms and conditions under which a bonus will be paid. In the event of the Plan’s termination prior to the payment of a bonus, such bonus will not be payable under this Plan. Such discretion may be exercised any time before, during, and after the Plan year is completed. No participant shall have any vested right to receive any compensation hereunder until actual delivery of such compensation.  Participation in the Plan at any given time does not guarantee ongoing participation.

 

Employment Duration/Employment Relationship

 

This Plan does not, and TRACON’s policies and practices in administering this Plan do not, constitute an express or implied contract or other agreement concerning the duration of any participant’s employment with the Company.  The employment relationship of each participant is “at will” and may be terminated at any time by TRACON or by the participant, with or without cause.

 

 

 

 

 

Any questions pertaining to this Plan should be directed to the Human Resources Department.

 

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