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Exhibit 10.11
EMPLOYMENT AGREEMENT
 
This Employment Agreement (“Agreement”) is made the 18th day of May, 2010, by
and between Coventry Health Care, Inc., a Delaware corporation (the “Company”)
and Michael Dean Bahr (the “Executive”).  For purposes of this Employment
Agreement (“Agreement”), “Company” shall also include all subsidiaries and
affiliates of Coventry Health Care, Inc.
 
WHEREAS, the Employer employs the Executive pursuant to an Employment Agreement
dated July 9, 2003, and the parties desire to amend the terms of such employment
as set forth herein;
 
NOW, THEREFORE, in consideration of the premises hereof and of the mutual
promises and agreements contained in the Agreement, the parties hereby agree as
follows:
 
1.           TERM AND DUTIES
 
1.1           The term of the Executive’s employment will continue on a
year-to-year basis until the Executive’s employment is terminated as outlined in
Section 4 herein.
 
1.2           The Executive shall continue to serve in the capacity of Executive
Vice President, Commercial Business, and shall be responsible for the
establishment and implementation of policies and directives, formulation of long
range plans, goals and objectives, effective management of employees, and such
other powers and duties normally associated with such position or as may be
delegated or assigned to the Executive by the Chief Executive
Officer.    Executive shall report to the Chief Executive Officer (CEO) or other
executive, at the discretion of the CEO.  During the Initial Term or any Renewal
Term, the Executive shall serve, without additional compensation, in such other
offices of the Company or its subsidiaries or affiliates to which he may be
elected or appointed.
 
2.           COMPENSATION AND BENEFITS
 
2.1           The Company shall pay the Executive a base salary (“Base Salary”)
of not less than Four Hundred Fifty Thousand Dollars ($450,000) per annum,
subject to applicable withholdings.  The Base Salary shall be payable in
accordance with the customary payroll practices of the Company.  The Base Salary
shall be reviewed annually and shall be subject to increase by the Chief
Executive Officer from time to time.
 
2.2           The Executive shall be eligible for an annual bonus (“Bonus”) in
accordance with the Company’s performance-based plan for the purposes of Section
162(m) of the Internal Revenue Code, as amended (the “Code”), which is currently
administered as the Company’s Executive Management Incentive Plan. During the
Initial Term, the Executive’s target annual bonus shall equal 75% of his base
salary.
 
 
 

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2.3           The Executive will continue to be entitled to participate in all
employee benefit plans or programs and receive all benefits to which any
salaried employee is eligible under any existing or future plan or program for
salaried employees, including, without limitation, all plans developed for
executive officers of the Company.  These plans or programs may include group
health care, dental care, vision care, life or other insurance, tax qualified
retirement, savings, thrift and profit sharing plans, sick leave plans, travel
or accident insurance, disability insurance, and contingent compensation plans,
including capital accumulation programs, deferred compensation plans, restricted
stock programs, stock purchase programs and stock option plans. Nothing in this
Agreement will preclude the Company from amending or terminating any of the
plans or programs applicable to salaried employees or executive officers.
 
2.4           The Executive will continue to be eligible for four (4) weeks of
annual paid vacation.
 
 
2.5           The Company will continue to reimburse the Executive for all
reasonable travel and other expenses incurred by the Executive in connection
with the performance of his duties upon proper documentation in accordance with
Company policies.
 
3.           DEATH AND DISABILITY COMPENSATION
 
3.1           In the event of the Executive’s death during Executive’s
employment, the Agreement terminates and all payments under the Agreement shall
cease as of the date of death, except for the following benefits to be paid to
the Executive’s beneficiaries:
 
(a)           any earned but unpaid Base Salary and a lump sum payment equal to
the average annual bonus compensation of the two (2) calendar years immediately
preceding the year of death of Executive; and
 
(b)           for twelve (12) months following the date of the Executive’s
death, the Company shall pay the cost of medical, dental, and vision premiums as
in effect at the date of the Executive’s death for Executive’s surviving spouse,
subject to a formal election by the spouse;
 
(c)           the Executive’s designated beneficiary will be entitled to receive
the proceeds of any life or other insurance or other death benefit programs
provided or referred to in this Agreement;
 
(d)           all unvested outstanding stock options will fully vest; and
 
(e)           all unvested restricted shares will vest in full.
 
 
 

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3.2           Notwithstanding the short-term disability of the Executive, the
Company will continue to pay the Executive pursuant to Section 2 hereof during
Executive’s employment, unless the Executive’s employment is earlier terminated
in accordance with this Agreement.  In the event the Executive becomes disabled
(as defined by the Company’s long-term disability plan), the Executive’s
employment will be terminated and the Company will pay the Executive the
following:
 
(a)           any earned but unpaid Base Salary and a lump sum payment equal to
the average annual bonus compensation of the two (2) calendar years immediately
preceding the year in which the Executive’s termination due to disability
occurs;
 
(b)           for twelve (12) months following the date of the Executive’s
termination due to disability, the cost of the Executive’s (or his spouse’s in
the event of Executive’s death during such period) medical, dental, and vision
insurance premiums in effect at the date of the Executive’s termination, subject
to a formal election by the Executive;
 
(c)           all of the Executive’s unvested outstanding stock options will
fully vest; and
 
(d)           all of the Executive’s unvested restricted shares will vest in
full.
 
3.3           During the period the Executive is receiving payments following
his disability and as long as he is physically and mentally able to do so, the
Executive will furnish information and assistance to the Company and from time
to time will make himself available to the Company to undertake assignments
consistent with his position or prior position with the Company and his physical
and mental health.
 
3.4           For purposes of this Agreement, the term “disabled” or
“disability” will have the same meaning as is attributed to such term, or any
substantially similar term, in the Company’s long-term disability income plan in
effect from time to time.  The Company’s group long-term disability policy in
existence at the time of disability shall be considered to be a part of this
Agreement.
 
4.           TERMINATION OF EMPLOYMENT
 
4.1           The Company may terminate this Agreement with or without cause at
any time during the Executive’s employment with thirty (30) days prior written
notice. However, except in the case of a two (2) year period following a Change
in Control (hereinafter defined), if the Executive suffers a Termination Without
Cause (hereinafter defined) or a Constructive Termination (hereinafter defined),
the Company will pay the Executive the following:
 
(a)           twelve (12) months of base pay in installments similar to those
being received by Executive at the time of termination of employment;
 
 
 

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(b)           for twelve (12) months, the cost of the Executive’s medical,
dental, and vision insurance in effect at the date of termination, subject to a
formal election by the Executive;
 
(c)           credit for twelve (12) months accelerated vesting of all
outstanding unvested stock options and restricted shares.
 
4.2           If the Executive suffers a Termination Without Cause or
Constructive Termination within two (2) years following a Change in Control, the
Company will pay to the Executive the following:
 
(a)           his then-current Base Salary paid through the date of termination
plus a lump sum payment equal to his Base Salary and target annual incentive
bonus under the Company’s Executive Management Incentive Plan for the year in
which the termination occurs;
 
(b)           for twelve (12) months, the cost of the Executive’s medical,
dental, and vision insurance in effect at the date of termination, subject to a
formal election by the Executive;
 
(c)           all of the Executive’s unvested outstanding stock options and
restricted stock shares will vest in full.
 
4.3           The Executive may terminate his employment hereunder at any time
during the term of this Agreement with thirty (30) days prior written
notice.  If the Executive suffers a Termination with Cause or the Executive
terminates his employment with the Company not due to a Constructive
Termination, death or disability (as defined in Section 3.4) (a “Voluntary
Termination”), then the Company will not be obligated to pay the Executive any
amounts of compensation or benefits following the date of termination, except
earned but unpaid Base Salary through the date of termination.  The stock
options and any other outstanding equity awards granted to the Executive shall
be governed by the applicable award agreements and incentive plans.
 
4.4           For purposes of this Employment Agreement, the following terms
have the following meanings:
 
(a)           “Change in Control” shall occur if at any time, substantially all
of the assets of the Company are sold or transferred by sale, merger or
otherwise, to an entity which is not a direct or indirect subsidiary of the
Company, or if any “person” (as such term is used in Sections 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the then existing outstanding securities of
the Company.
 
 
 

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(b)           “Constructive Termination” means termination by the Executive
which follows (1) a reassignment of duties or responsibilities that are not at
least the equivalent of his then current position as set forth in Section 1.2,
or an involuntary material reduction in the compensation and benefits provided
herein, (2) the intentional or material breach by the Company of this Agreement,
or (3) a involuntary reassignment, after a Change of Control, to a geographic
location more than fifty (50) miles from the Executive’s primary office
location.  The Executive shall have a period of ninety (90) days after the
occurrence of a condition defined in 4.4(b) herein to notify the Company in
writing that such condition constitutes grounds for a Constructive Termination,
after which the Company shall have thirty (30) days to cure the condition.  If
the Company fails to cure the condition within this thirty (30) day period, the
Executive’s subsequent voluntary resignation within ninety (90) days following
the occurrence of the underlying condition shall constitute a Constructive
Termination.  The Executive’s failure to resign within the ninety (90) day
period shall be deemed to be an irrevocable waiver of the right to assert
Constructive Termination for such condition.
 
(c)           “Termination With Cause” means termination by the Company, 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 Executive’s intentional perpetration of a fraud, theft,
embezzlement or other act of dishonesty, (iii) the Executive’s intentional
breach of a trust or fiduciary duty which materially adversely affects the
Company or its shareholders, or (iv) the Executive violates or breaches his
Restrictive Covenants.
 
(d)           “Termination Without Cause” means termination by the Company other
than due to the Executive’s death or disability or Termination With Cause.
 
5.           OTHER DUTIES OF THE EXECUTIVE
 
5.1           The Executive shall devote substantially all of his working time
to the business of the Company during Executive’s employment and shall not take,
directly or indirectly, an active role in any other business without the prior
written consent of the Company; but except as provided in Section 5.4, this
Section shall not prevent the Executive from serving as a director of other
entities not affiliated with the Company, from making real estate or other
investments of a passive nature or from participating in the activities of a
charitable organization where such participation does not adversely affect the
Executive’s ability to perform his duties under this Agreement.
 
5.2           The Executive will, upon reasonable notice, during Executive’s
employment, furnish information as may be in his possession and cooperate with
the Company as may reasonably be requested in connection with any claims or
legal actions in which the Company is or may become a party.  The Executive
shall receive reasonable compensation for the time expended by him pursuant to
this Section 5.2 after termination of employment hereunder.
 
 
 

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5.3           The Executive acknowledges that certain information pertaining to
the business and operations of the Company, such as strategic plans, product
development, financial costs, pricing terms, sales data or new or developing
business opportunities (“Confidential Information”) is confidential and is a
unique and valuable asset of the Company.  Access to and knowledge of this
Confidential Information are essential to the performance of the Executive’s
duties under this Agreement.  The Executive will not during the term of this
Agreement or following termination of his employment, except to the extent
reasonably necessary in the performance of his duties under this Agreement, give
to any person, firm, association, corporation or governmental agency any
Confidential Information except as required by law.  The Executive will not make
use of this Confidential Information for his own purposes or for the benefit of
any person or organization other than the Company.  The Executive will also use
his best efforts to prevent the disclosure of this Confidential Information by
others.  All records, memoranda, etc. relating to the business of the Company
whether made by the Executive or otherwise coming into his possession will
remain the property of the Company.
 
5.4           The Executive will not Compete with the Company (as hereinafter
defined) at any time while he is employed by the Company. Except after a Change
in Control or after non-renewal under Section 1.1, in the event of Termination
Without Cause or Constructive Termination pursuant to Section 4.1, the Executive
will not Compete with the Company for a period of one (1) year from the date of
such termination.  In the event of a termination after a Change in Control that
gives rise to payments to the Executive under Section 4.2, the Executive will
not Compete with the Company for one (1) year from the date of termination. In
the event of a Voluntary Termination in which the Executive only receives
payment as defined under Section 4.3, or which follows a Company non-extension
notice delivered pursuant to Section 1.1, there will be no restriction on the
Executive’s right to Compete with the Company after the date his employment
terminates. For the purposes of this Section 5.4, the term “Compete with the
Company” means action by the Executive, direct or indirect, either as an
officer, director, stockholder, owner, partner, employee or in any other
capacity, resulting in the Executive having any legal or equitable ownership or
other financial or non-financial interest in or employment with, any HMO,
managed care or health insurance business within a fifty (50) mile radius of any
location where the Company or any subsidiary or affiliate of the Company
conducts such business at the date of a termination of the Executive’s
employment; provided, however, that the term “Compete with the Company” shall
not include ownership (without any more extensive relationship) of a less than a
five percent (5%) interest in any publicly-held corporation or other business
entity. The Executive acknowledges that the covenants contained herein are
reasonable as to geographic and temporal scope. The Executive acknowledges that
his breach or threatened or attempted breach of any provision of this Section
5.4 may cause irreparable harm to the Company not compensable in monetary
damages and that the Company may be entitled, in addition to all other
applicable remedies, to a temporary and permanent injunction and a decree for
specific performance of the terms of this Section 5.4.
 
 
 

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5.5           The Executive agrees that, following his termination of
employment, he shall not, in any communications with the press or other media or
in any communications with any potential or actual stockholder, lender,
investor, customer, client or supplier of the Company of any of its affiliates,
criticize, ridicule or make any statement that disparages or is derogatory of
the Company or any of its affiliates or any of their respective directors,
officers or employees. The foregoing will not apply to any non-public oral
statements made by the Executive to the Company or to any of the Company’s
representatives or  any compelled testimony or production, either by legal
process, subpoena or otherwise; provided, however, in the event that the
Executive is requested pursuant to, or required by, applicable law, regulation,
or legal process to testify or otherwise respond to a request for information
from any governmental authority, the Executive will notify the Company promptly
(to the extent allowed by any such law, regulation or legal process) so that the
Company may seek a protective order or other appropriate remedy.
 
5.6           The Executive agrees that for a period of one (1) year following
the Employee’s termination of employment (whether voluntary or involuntary), he
shall not, directly or indirectly, personally or as an employee, officer,
director, partner, member, owner or consultant, induce, select, recruit or hire
any employee of the Company or otherwise interfere with the employment
relationship of any person employed by the Company.
 
6.           INDEMNIFICATION OF EXECUTIVE
 
The Company shall indemnify the Executive and shall reimburse the Executive’s
expenses under the circumstances described, and to the maximum extent provided
under the mandatory and the permissive indemnification and expense reimbursement
provisions of Delaware law.  The provisions of this Section 7.1 shall continue
in full force and effect after Executive ceases to serve as an officer,
director, employee or in any other capacity with the Company or any of its
affiliates and shall inure to the benefit of his heirs, executors or
administrators.
 
7.           MISCELLANEOUS
 
7.1           This Agreement contains the entire understanding between the
Company and the Executive with respect to the subject matter and supersedes any
prior employment or severance agreements between the Company and its affiliates
and the Executive.
 
7.2           This Agreement may not be modified or amended except in writing
signed by the parties.  No term or condition of this Agreement will be deemed to
have been waived except in writing by the party charged with waiver.  A waiver
shall operate only as to a specific term or condition waived and will not
constitute a waiver for the future or act on anything other than that which is
specifically waived.
 
7.3           Any payments to be made by the Company to the Executive hereunder
shall be made less any applicable tax withholdings.
 
 
 

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7.4           This Agreement shall be deemed to conform to all requirements of
the Securities and Exchange Act of 1934, as amended, and all requirements of the
Code, including but not limited to Sections 280G and 409A of the Code.  It is
intended that (i) each payment or installment of payments provided under this
Agreement is a separate “payment” for purposes of Section 409A of the Code and
(ii) that the payments satisfy, to the greatest extent possible, the exemptions
from the application of  Section 409A of the Code, including those provided
under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals),
1.409A-1(b)(9)(iii) (regarding the two-times, two year exception), and
1.409A-1(b)(9)(v) (regarding reimbursements and other separation
pay).  Notwithstanding anything to the contrary in this Agreement, if the
Company determines (i) that on the date of the Executive’s “separation from
service” (as such term is defined under Treasury Regulation 1.409A-1(h)) or at
such other time that the Company determines to be relevant, the Executive is a
“specified employee” (as such term is defined under Treasury Regulation
1.409A-1(i)(1)) of the Company and (ii) that any payments to be provided to the
Executive pursuant to this Agreement are or may become subject to the additional
tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties
imposed under Section 409A of the Code (the “Section 409A Taxes”) if provided at
the time otherwise required under this Agreement, then such payments shall be
delayed until the date that is six (6) months after the date of the Executive’s
separation from service with the Company, or such shorter period that, as
determined by the Company, is sufficient to avoid the imposition of Section 409A
Taxes. Any payments delayed pursuant to this Section 7.3 shall be made in a lump
sum on the first day of the seventh month following the Executive’s separation
from service, or such earlier date that, as determined by the Company, is
sufficient to avoid the imposition of any Section 409A Taxes.
 
7.5           Should any part of this Agreement be declared invalid for any
reason, such invalidity shall not affect the validity of any remaining portion
hereof and such remaining portion shall continue in full force and effect as if
this Agreement had been originally executed without including the invalid
part.  Should any covenant of this Agreement be unenforceable because of its
geographic scope or term, its geographic scope or term shall be modified to such
extent as may be necessary to render such covenant enforceable.
 
7.6           Titles and captions in no way define, limit, extend or describe
the scope of this Agreement nor the intent of any provision thereof.
 
7.7           This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 
7.8           This Agreement has been executed and delivered in the State of
Maryland and its validity, interpretation, performance and enforcement shall be
governed by the laws of that state.  Any dispute among the parties hereto shall
be settled by arbitration in Bethesda, Maryland, in accordance with the rules
then obtaining of the American Arbitration Association and judgment upon the
award rendered may be entered in any court having jurisdiction thereof.  All
provisions hereof are for the protection and are intended to be for the benefit
of the parties hereto and enforceable directly by each party.  Each party hereto
agrees that the remedy at law of the other party for any actual or threatened
breach of this Employment Agreement would be inadequate and that the other party
shall be entitled to specific performance hereof or injunctive relief or both,
by temporary or permanent injunction or such other appropriate judicial remedy,
writ or orders as may be decided by a court of competent jurisdiction in
addition to any damages which the complaining party may be legally entitled to
recover.
 
 
 

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7.9           All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission to the following:
 
(i)             If to the Company, at 6705 Rockledge Drive, Suite 900, Bethesda,
Maryland, 20817, Attention: Chairman of the Compensation Committee, or at such
other address as may have been furnished to the Executive by the Company in
writing; or
 
(ii)             If to the Executive, at 6705 Rockledge Drive, Suite 900,
Bethesda, Maryland, 20817, or to the Executive’s primary home address on record
with the company, or such other address as may have been furnished to the
Company by the Executive in writing.
 
7.10         This Agreement shall be binding on the parties’ successors, heirs
and assigns.
 
7.11         The terms of this Agreement were developed consistent with current
applicable tax laws and regulations. In the event there are any future changes
to these laws and regulations affecting the terms of this Agreement and, as a
result, either party hereunder is adversely impacted, both parties agree to
cooperate to protect the current interests of each to the maximum extent
possible.
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
 

EXECUTIVE:   COVENTRY HEALTH CARE, INC:             By:
/s/ Michael Dean Bahr
  /s/ Allen F. Wise     Michael Dean Bahr   Allen F. Wise        
Chief  Executive Officer  

 
 

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