Exhibit 10.1

 

DIPLOMAT PHARMACY, INC.

EXECUTIVE SEVERANCE PLAN

 

(Effective March 7, 2019)

 

In order to secure the continued services of certain key management employees of
Diplomat Pharmacy, Inc. (the “Company”) and to ensure their continued dedication
to their assigned duties without distraction in circumstances arising from the
possibility of certain terminations of employment and in the event of any threat
or occurrence of a Change in Control of the Company, the Compensation Committee
of the Board of Directors of the Company (the “Committee”) has adopted this
Executive Severance Plan (as it may be amended pursuant to the terms hereof,
this “Plan”).

 

SECTION 1.  Definitions.  For purposes of this Plan, the following terms shall
have the meanings set forth below:

 

“Accrued Bonus” shall mean a Participant’s accrued, but unpaid as of a
Participant’s Termination Date, annual cash bonus for any completed fiscal year
of the Company preceding a Participant’s Termination Date.

 

“Affiliate(s)” shall mean, with respect to the Company, a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Company, including each subsidiary of the
Company within the meaning of Section 424(f) of the Code.

 

“Annual Bonus” shall mean Participant’s target annual cash bonus for the
calendar year in which the Qualifying Termination occurs; provided, however,
that, with respect to a CIC Qualifying Termination, such target annual cash
bonus shall in no event be less than the highest target annual cash bonus of
Participant under any such annual cash bonus plan for any calendar year
commencing since the Effective Date and prior to the termination of the Plan in
accordance with Section 8(l).  For the avoidance of doubt, Annual Bonus shall
include annual cash bonus received by the Participant from the Company and all
of its Affiliates.

 

“Beneficiary” shall mean the person or entity designated by Participant, by
written instrument delivered to the Company, to receive the benefits payable
under this Plan in the event of Participant’s death.  If Participant fails to
designate a Beneficiary, or if no Beneficiary survives Participant, such death
benefits shall be paid as follows:  (i) to Participant’s surviving spouse;
(ii) if there is no surviving spouse, to Participant’s living descendants per
stirpes; or (iii) if there is neither a surviving spouse nor descendants, to
Participant’s duly appointed and qualified executor or personal representative.

 

“Cause” shall mean the definition of such term contained in a written employment
agreement in effect between the Participant and the Company or an Affiliate or,
if there is no such employment agreement in effect or if any such employment
agreement does not define the term “Cause,” the term “Cause” shall mean a
Participant’s (i) commission of a crime of moral turpitude or a felony that
involves financial misconduct or moral turpitude or has resulted, or reasonably
could be expected to result, in imprisonment of the Participant or any adverse
publicity regarding the Participant or the Company or any of its Affiliates or
economic injury to the Company or any

 

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of its Affiliates, (ii) dishonesty or willful commission or omission of any
action that has resulted, or reasonably could be expected to result, in any
adverse publicity regarding the Participant or the Company or any of its
Affiliates or has caused, or reasonably could be expected to cause, demonstrable
and serious economic injury to the Company or any of its Affiliates, or
(iii) material breach of this Agreement or any other material agreement entered
into between a Participant and the Company or any of its Affiliates, or the
Company’s or any of its Affiliates’ written policies and procedures as may be
implemented from time to time after notice and a reasonable opportunity to cure
(if such breach can be cured).

 

“Change in Control” shall have the same meaning as such term is defined under
the Omnibus Plan, or any successor thereto.

 

“CIC Agreement” shall have the meaning set forth in Section 2.

 

“CIC Qualifying Termination” shall mean a Qualifying Termination that occurs
within twelve (12) months following the consummation of a Change in Control.

 

“CIC Severance Multiple” shall be the multiple specified as the “CIC Severance
Multiple” in the Participation and Restrictive Covenant Agreement for a
Participant.

 

“CIC Severance Period” shall be the period of time specified as the “CIC
Severance Period” in the Participation and Restrictive Covenant Agreement for a
Participant.

 

“Claimant” shall have the meaning set forth in Section 4(c).

 

“COBRA” shall mean the Consolidated Budget Reconciliation Act of 1985, as
amended from time to time, and the regulations promulgated thereunder.

 

“COBRA Benefits” shall have the meaning set forth in Section 3(a)(vi).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.

 

“Cure Period” shall have the meaning set forth in the “Good Reason Process”
definition.

 

“Effective Date” shall mean March 7, 2019.

 

“Employment” shall mean employment with the Company or any Affiliate of the
Company.  A Participant’s Employment shall be deemed to have continued
notwithstanding a transfer of employment between the Company and any of its
Affiliates, or between any two Affiliates.

 

“Equity Plan” shall have the meaning set forth in Section 3(a)(v).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.

 

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“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time, and the regulations promulgated thereunder.

 

“Excise Tax” shall have the meaning set forth in Section 3(d)(i).

 

“Full Payment” shall have the meaning set forth in Section 3(d)(i).

 

“Good Reason” shall have the meaning set forth in any then applicable employment
or other similar written agreement (including such similar term or concept, as
determined by the Plan Administrator) between Participant and the Company or an
Affiliate.  If there is no such written agreement or if such agreement does not
define “Good Reason,” then “Good Reason” shall be deemed to exist if, and only
if, without Participant’s written consent: (i) there is a reduction of
Participant’s then current Monthly Base Salary by 10% or more unless such
reduction is part of a generalized salary reduction affecting similarly situated
employees; (ii) there is a change in Participant’s position with the Company
that materially reduces Participant’s duties, level of authority or
responsibility; (iii) the Company or any successor materially breaches any
employment or other material agreement between Participant and the Company or
its Affiliates (if any); or (iv) the Company conditions Participant’s continued
service with the Company or its Affiliates on Participant being transferred to a
location that would increase Participant’s one-way commute by more than fifty
(50) miles from Participant’s then principal residence.  In order to terminate
due to Good Reason, Participant must comply with the Good Reason Process
described herein.

 

“Good Reason Process” shall mean that (i) Participant reasonably determines in
good faith that a Good Reason condition has occurred, (ii) Participant notifies
the Company in writing of the occurrence of the Good Reason condition within
sixty (60) days of Participant having actual or constructive knowledge of the
occurrence of such condition, (iii) Participant cooperates in good faith with
the Company’s efforts at no cost to the Participant, for a period not less than
thirty (30) days following such notice (the “Cure Period”), to remedy the
condition, (iv) notwithstanding such efforts, the Good Reason condition
continues to exist, and (v) Participant terminates Participant’s Employment
within thirty (30) days after the expiration of the Cure Period.  For the
avoidance of doubt, if the Company cures the Good Reason condition during the
Cure Period, Good Reason shall be deemed not to have occurred.

 

“Monthly Base Salary” shall mean Participant’s monthly base salary at the rate
in effect prior to any reduction for purposes of Good Reason, or on the date of
a Qualifying Termination, whichever is higher; provided, however, that, with
respect to a CIC Qualifying Termination, such rate shall in no event be less
than the highest rate in effect for Participant at any time following the
Effective Date and prior to the termination of the Plan in accordance with
Section 8(l).  For the avoidance of doubt, Monthly Base Salary shall include
base salary received by the Participant from the Company and all of its
Affiliates.

 

“Monthly CIC Severance Amount” shall mean the sum of (i) Participant’s Monthly
Base Salary plus (ii) one-twelfth (1/12) of Participant’s Annual Bonus.

 

“Monthly Severance Amount” shall mean, as specified in the Participation and
Restrictive Covenant Agreement for a Participant, either (i) the Participant’s
Monthly Base Salary or (ii) the

 

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sum of (x) Participant’s Monthly Base Salary plus (y) one-twelfth (1/12) of
Participant’s Annual Bonus.

 

“Omnibus Plan” shall mean the Diplomat Pharmacy, Inc. 2014 Omnibus Incentive
Plan, as may be amended from time to time, or any successor plan.

 

“Payment” shall have the meaning set forth in Section 3(d)(i).

 

“Participant” shall mean any employee of the Company (or one of its Affiliates)
selected by the Plan Administrator in accordance with Section 2 who has entered
into a Participation and Restrictive Covenant Agreement and otherwise meets the
requirements of Section 2.

 

“Participation and Restrictive Covenant Agreement” shall mean the written
agreement evidencing participation under this Plan and the restrictive covenants
being agreed to as a condition to participate in this Plan between the Company
and the applicable employee.

 

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d)(3).

 

“Plan Administrator” shall mean (i) the Committee with respect to any
Participant who is subject to Section 16 of the Exchange Act and (ii) the
Company’s Chief Executive Officer or such other person as may be designated by
the Committee from time to time with respect to any Participant who is not
subject to Section 16 of the Exchange Act.

 

“Qualifying Termination” shall mean the Participant’s termination of Employment
which constitutes a termination by the Company without Cause or a resignation by
the Participant for Good Reason.

 

“Reduced Payment” shall have the meaning set forth in Section 3(d)(i).

 

“Retirement Plan” shall mean any qualified or nonqualified supplemental employee
pension benefit plan, as defined in Section 3(2) of ERISA, currently or
hereinafter made available by the Company or its Affiliates in which Participant
is eligible to participate.

 

“Section 409A Payment” shall have the meaning set forth in Section 5(d).

 

“Severance Benefits” shall mean the severance benefits under Section 3(a).

 

“Severance Multiple” shall be the multiple specified as the “Severance Multiple”
in the Participation and Restrictive Covenant Agreement for a Participant.

 

“Severance Payments” shall have the meaning set forth in Section 3(a)(i).

 

“Severance Period” shall be the period of time specified as the “Severance
Period” in the Participation and Restrictive Covenant Agreement for a
Participant.

 

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“Termination Date” shall mean, with respect to any Participant, the effective
date of such Participant’s termination of Employment, as determined in
accordance with Section 5(d).

 

“Welfare Plan” shall mean any health, vision or dental plan, disability plan,
survivor income plan or life insurance plan, as defined in Section 3(1) of
ERISA, currently or hereafter made available by the Company or its Affiliates in
which Participant is eligible to participate.

 

SECTION 2.  Eligibility.  The Plan Administrator shall from time to time, in its
sole discretion, select and designate in writing, which of the Company’s
(including any of its Affiliates) employees are eligible to participate in this
Plan and such employee shall become a Participant under this Plan conditioned
upon accepting and executing a Participation and Restrictive Covenant Agreement
within 30 days after such agreement is delivered to such employee.  The Plan
Administrator may, in its sole discretion, remove an employee from participation
in the Plan, with such removal to be effective upon three-months prior notice to
the impacted employee; provided, however, that if (a) a Participant is notified
of his or her removal from participation in the Plan and (b) on or within
six-months following the date on which the Participant is notified of his or her
removal from the Plan, the Company has entered into or enters into an agreement
that if consummated would constitute a Change in Control (the “CIC Agreement”),
then such individual shall remain a Participant in the Plan and remain eligible
for benefits in accordance with the terms hereof until the earlier to occur of
(i) the termination of the CIC Agreement and (ii) the 12-month anniversary of
the date on which the Participant is notified of his or her removal from the
Plan.

 

SECTION 3.  Compensation, Benefits and Effect of Termination of Employment.

 

(a)  Effect of Qualifying Termination.  Subject to Section 3(c) and
Section 3(d), upon a Participant’s Qualifying Termination, the Company shall
provide Participant the payments and benefits set forth below (the “Severance
Benefits”).  For the avoidance of doubt, a Participant shall not be entitled to
benefits under this Plan if such Participant’s Employment terminates for any
reason (including due to disability, for Cause or resignation without Good
Reason) other than as specifically set forth in the Qualifying Termination
definition or this Section 3(a).

 

(i)  The Company shall pay to Participant an amount equal to the Severance
Multiple times the Monthly Severance Amount or, in the event of a Participant’s
CIC Qualifying Termination, the CIC Severance Multiple times the Monthly CIC
Severance Amount.  Such amount shall be payable over the Severance Period or CIC
Severance Period, as applicable, in substantially equal installments in
accordance with the Company’s regular payroll policies as if Participant’s
employment had not ended (collectively, the “Severance Payments”).  Subject to
compliance with Section 3(b) below, the first installment of the Severance
Payments will be paid within 60 days following the Termination Date, with the
first payment including such amounts as would have otherwise been paid during
the period beginning on the Termination Date and ending on such payment date.

 

(ii)  The Company shall pay Participant any Accrued Bonus, with such Accrued
Bonus payable in a single lump sum no later than the March 15th following the
year in which such Accrued Bonus was earned.

 

(iii)  The Company shall pay Participant an amount equal to (i) the
Participant’s Annual Bonus multiplied by (ii) a fraction, the numerator of which
is the number of days that

 

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occurred on or before the Termination Date in the calendar year that includes
the Termination Date, and the denominator of which is the number of days in the
calendar year that includes the Termination Date, with such amount payable in a
single lump sum within sixty (60) days following the Termination Date.

 

(iv)  Participant shall receive any and all benefits accrued through the date of
termination of Employment under any Retirement Plan, Welfare Plan or other plan
or program in which Participant participates as of the Termination Date, with
the amount, form and time of payment of such benefits determined by the terms of
such Retirement Plan, Welfare Plan and other plan or program.

 

(v)  If upon the Termination Date Participant holds any awards granted under the
Omnibus Plan or the Diplomat Pharmacy, Inc. 2007 Stock Option Plan (each, an 
“Equity Plan”), including stock options, restricted stock, restricted stock
units, performance shares, performance units, and any other stock-based award,
all such awards shall be governed by the terms of the applicable Equity Plan and
the applicable award agreements and shall become vested, exercisable, and
payable only to the extent provided for under the terms of the applicable Equity
Plan and the applicable award agreements.

 

(vi)  If Participant timely elects COBRA continuation coverage, Participant
shall pay and the Company shall reimburse Participant for such health insurance
coverage through the earlier of (x) the Severance Period or, in the event of a
Participant’s CIC Qualifying Termination, the CIC Severance Period, and
(y) Participant becoming eligible for health insurance coverage under another
employer’s plan (whether through the Participant or as a dependent) at the same
rate as it pays for health insurance coverage for its active employees (with
Participant required to pay for any employee-paid portion of such coverage)
(such amounts to be referred to herein as the “COBRA Benefits”).

 

(vii)  During the Severance Period or, in the event of a Participant’s CIC
Qualifying Termination, the CIC Severance Period, Participant shall not be
entitled to reimbursement for fringe benefits, including without limitation,
dues and expenses related to club memberships, automobile expenses, expenses for
professional services and other similar perquisites.

 

(b)  Release of Claims.  The obligations of the Company and its Affiliates under
this Section 3 (except upon such Participant’s death) shall be subject to such
Participant’s execution, within 45 days after the Termination Date, of a general
release and waiver substantially in a form prescribed by the Company, which has
become irrevocable following any revocation period permitted by the Company.

 

(c)  Recoupment.  Notwithstanding any provisions in this Plan to the contrary,
the Plan Administrator may, in its sole and absolute discretion, in the event of
Participant’s material breach of a material obligation of Participant to the
Company pursuant to any award or agreement between Participant and the Company,
including a material breach of the Participation and Restrictive Covenant
Agreement or a determination that an event constituting Cause has occurred,
regardless of whether this determination happened prior to or following the
Termination Date: (i) terminate the right of such Participant to receive any
payment under this Section 3, to the extent it has not been paid; and (ii) seek
the recoupment of any payment paid to such Participant under this Section 3,
including through exercise rights of set-off, forfeiture or cancellation, to the
full extent

 

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permitted by law, with respect to any other awards, benefits or payments
otherwise due Participant from the Company or any of its Affiliates, to the
extent the Plan Administrator in its sole discretion deems appropriate after
considering the relevant facts and circumstances.  Any termination and/or
recoupment of a Participant’s benefits under this Plan shall be in addition and
without prejudice to any other remedies that the Company might elect to assert.

 

(d)  Code Section 280G.

 

(i)  If any payment or benefit (including payments and benefits pursuant to this
Plan) Participant would receive in connection with or as a result of a Change in
Control from the Company or otherwise (the “Payment”) would (i) constitute a
“parachute payment” within the meaning of Section 280G of the Code, and (ii) but
for this paragraph, be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then the Company shall cause to be determined, before
any amounts of the Payment are paid to Participant, which of the following two
alternative forms of payment shall be paid to Participant: (A) payment in full
of the entire amount of the Payment (a “Full Payment”), or (B) payment of only a
part of the Payment so that Participant receives the largest payment possible
without the imposition of the Excise Tax (a “Reduced Payment”).  A Full Payment
shall be made in the event that the amount received by Participant on a net
after-tax basis is greater than what would be received by Participant on a net
after-tax basis if the Reduced Payment were made, otherwise a Reduced Payment
shall be made.  If a Reduced Payment is made, (i) the Payment shall be paid only
to the extent permitted under the Reduced Payment alternative, and Participant
shall have no rights to any additional payments and/or benefits constituting the
Payment, and (ii) reduction in payments and/or benefits shall occur in the
following order: (A) reduction of cash payments (in the reverse chronological
order in which such cash would otherwise be paid); (B) cancellation of
accelerated vesting of equity awards other than stock options (in the reverse
chronological order in which such equity awards would vest in the absence of a
Change in Control); (C) cancellation of accelerated vesting of stock options (in
the reverse chronological order in which such stock options would vest in the
absence of a Change in Control); and (D) reduction of other benefits paid to
Participant (in the reverse chronological order in which such benefits would
otherwise be provided).

 

(ii)  The independent registered public accounting firm engaged by the Company
for general audit purposes as of the day prior to the effective date of the
Change in Control, or a nationally recognized law firm selected by the Plan
Administrator, shall make all determinations required to be made under
Section 3(d)(i).  If the independent registered public accounting firm so
engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall appoint a
nationally recognized law firm or independent registered public accounting firm
to make the determinations required hereunder.  The Company shall bear all
expenses with respect to the determinations by such independent registered
public accounting firm or law firm required to be made hereunder.  Any good
faith determinations of the accounting firm or law firm made hereunder shall be
final, binding and conclusive upon the Company and Participant.

 

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(e)  Death. If Participant’s Employment terminates under circumstances described
in Section 3(a), then upon Participant’s subsequent death, all unpaid amounts
payable to Participant under Section 3(a)(i), (ii), (iii) or (vi), if any, shall
be paid to Participant’s Beneficiary.

 

SECTION 4.  Administration of Plan; Claims Procedure.

 

(a)  General.  Except as specifically provided herein, this Plan shall be
administered by the Plan Administrator.  The Plan Administrator may delegate any
administrative duties, including, without limitation, duties with respect to the
processing, review, investigation, approval and payment of benefits under this
plan to designated individuals or committees.  The Plan Administrator shall be
the “administrator” and a “named fiduciary” under this Plan for purposes of
ERISA.

 

(b)  Interpretations and Variations.  The Plan Administrator shall have the duty
and authority to interpret and construe, in its sole discretion, the terms of
this Plan in regard to all questions of eligibility, the status and rights of
Participants, and the manner, time and amount of any payment under this Plan. 
The Plan Administrator or its representative shall decide any issues arising
under this Plan, and the decision of the Plan Administrator shall be binding and
conclusive on Participants and the Company.  Any variations from this Plan may
be made only by the Plan Administrator in its sole discretion.

 

(c)  Filing a Claim.  Although it is not normally necessary to file a claim in
order to receive benefits under this Plan, if a Participant (the “Claimant”)
feels he or she has been improperly denied benefits under this Plan, any claim
for payment of such benefits shall be signed, dated and submitted to the Company
in accordance with Section 8(a).  All claims relating to this Plan must be filed
within 90 days following Participant’s Termination Date, unless the Plan
Administrator otherwise specifies in writing.  The Plan Administrator shall then
evaluate the claim and notify the Claimant of the approval or disapproval in
accordance with the provisions of this Plan not later than 90 days after the
Company’s receipt of such claim unless special circumstances require an
extension of time for processing the claims.  If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the Claimant prior to the termination of the initial 90-day period which shall
specify the special circumstances requiring an extension and the date by which a
final decision will be reached (which date shall not be later than 180 days
after the date on which the claim was filed).  If the Claimant does not provide
all the necessary information for the Plan Administrator to process the claim,
the Plan Administrator may request additional information and set deadlines for
the Claimant to provide that information.

 

(d)  Notice of Initial Determination.  The Claimant shall be given a written
notice in which the Claimant shall be advised as to whether the claim is granted
or denied, in whole or in part.  If a claim is denied, in whole or in part, the
Claimant shall be given written notice which shall contain (i) the specific
reasons for the denial, (ii) specific references to pertinent Plan provisions on
which the denial is based, (iii) a description of any additional material or
information necessary to perfect the claim and an explanation of why such
material or information is necessary and (iv) an explanation of this Plan’s
appeal procedures, which shall also include a statement of the Claimant’s right
to bring a civil action under Section 502(a) of ERISA following a denial of the
claim upon review.

 

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(e)  Right to Appeal.  If a claim for payment of benefits under this Plan made
in accordance with the procedures specified in this Plan is denied, in whole or
in part, the Claimant shall have the right to request that the Plan
Administrator review the denial, provided that the Claimant files a written
request for review with the Plan Administrator within 60 days after the date on
which the Claimant received written notification of the denial.  The Claimant
may review or receive copies, upon request and free of charge, any documents,
records or other information “relevant” (within the meaning of Department of
Labor Regulation 2560.503-1(m)(8)) to the Claimant’s claim.  The Claimant may
also submit written comments, documents, records and other information relating
to his or her claim.

 

(f)  Review of Appeal.  In deciding a Claimant’s appeal, the Plan Administrator
shall take into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial review of the claim.  If
the Claimant does not provide all the necessary information for the Plan
Administrator to decide the appeal, the Plan Administrator may request
additional information and set deadlines for the Claimant to provide that
information.  Within 60 days after a request for review is received, the review
shall be made and the Claimant shall be advised in writing of the decision on
review, unless special circumstances require an extension of time for processing
the review, in which case the Claimant shall be given a written notification
within such initial 60-day period specifying the reasons for the extension and
when such review shall be completed (provided that such review shall be
completed within 120 days after the date on which the request for review was
filed).

 

(g)  Notice of Appeal Determination.  The decision on review shall be forwarded
to the Claimant in writing and, in the case of a denial, shall include
(i) specific reasons for the decision, (ii) specific references to the pertinent
Plan provisions upon which the decision is based, (iii) a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records or other information relevant
to the Claimant’s claim and (iv) a statement of the Claimant’s right to bring a
civil action under Section 502(a) of ERISA following a wholly or partially
denied claim for benefits.  The Plan Administrator’s decision on review shall be
final and binding on all persons for all purposes.  If a Claimant shall fail to
file a request for review in accordance with the procedures herein outlined,
such Claimant shall have no right to review and shall have no right to bring an
action in any court, and the denial of the claim shall become final and binding
on all persons for all purposes.  Any notice and decisions by the Plan
Administrator under this Section 4 may be furnished electronically in accordance
with Department of Labor Regulation 2520.104b-1(c)(i), (iii) and (iv).

 

(h)  Statute of Limitations.  No Claimant may bring any legal action to recover
benefits under this Plan until he or she has exhausted the internal
administrative claims and appeals process described above.  No legal action may
be commenced at all, unless commenced no later than one year following the
issuance of a final decision on the claim for benefits, or the expiration of the
appeal decision period if no decision is issued.  This one-year statute of
limitations on suits for all benefits available under this Plan shall apply in
any forum where such legal action is initiated.

 

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SECTION 5.  Section 409A Compliance; Changes in Law.

 

(a)  It is the intention of the Company that the provisions of this Plan comply
with Section 409A of the Code, and all provisions of this Plan shall be
construed and interpreted in a manner consistent with Section 409A of the Code. 
In the event that the Company determines that any provision of this Plan does
not comply with Section 409A of the Code or any such rules, regulations or
guidance and that as a result any Participant may become subject to a tax under
Section 409A of the Code, notwithstanding Section 8(l), the Company shall have
the discretion to amend or modify such provision to avoid the application of
such tax, and in no event shall any Participant’s consent be required for such
amendment or modification.  Notwithstanding any provision of this Plan to the
contrary, each Participant shall be solely responsible and liable for the
satisfaction of all taxes and penalties that may arise in connection with
amounts payable pursuant to this Plan (including any taxes arising under
Section 409A of the Code), and the Company not shall have any obligation to
indemnify or otherwise hold such Participant harmless from any or all of such
taxes.

 

(b)  In the event that the Company determines that any provision of this Plan
violates, or would result in any material liability (other than liabilities for
the Severance Benefits) to the Company under, any law, regulation, rule or
similar authority of any governmental agency the Company shall be entitled,
notwithstanding Section 8(l), to amend or modify such provision as the Company
determines in its discretion to be necessary or desirable to avoid such
violation or liability, and in no event shall any Participant’s consent be
required for such amendment or modification.

 

(c)  The payments under this Plan are designated as separate payments for
purposes of the short-term deferral rule under Treasury Regulation
Section 1.409A-1(b)(4), the exemption for involuntary terminations under
separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), and
the exemption for medical expense reimbursements under Treasury Regulation
Section 1.409A-1(b)(9)(v)(B).  As a result, (i) payments that are made on or
before the 15th day of the third month of the calendar year following the year
that includes Participant’s Termination Date, (ii) any additional payments that
are made on or before the last day of the second calendar year following the
year of Participant’s Termination Date and do not exceed the lesser of two times
Participant’s annual rate of pay in the year prior to the Termination Date or
two times the limit under Code Section 401(a)(17) then in effect, and
(iii) continued medical expense reimbursements during the applicable COBRA
period, are intended to be exempt from the requirements of Section 409A of the
Code.

 

(d)  To the extent any amounts under this Plan are payable by reference to a
Participant’s termination of Employment, such term and similar terms shall be
deemed to refer to such Participant’s “separation from service,” within the
meaning of Section 409A of the Code.  Notwithstanding any other provision in
this Plan, to the extent any payments hereunder constitute “nonqualified
deferred compensation,” within the meaning of Section 409A of the Code (a
“Section 409A Payment”), and Participant is a specified employee, within the
meaning of Treasury Regulation Section 1.409A-1(i), as determined by the Company
in accordance with any method permitted under Section 409A of the Code, as of
the date of Participant’s separation from service, each such Section 409A
Payment that is payable upon such Participant’s separation from service and
would have been paid prior to the six-month anniversary of such Participant’s
separation from

 

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service, shall be delayed until the earlier to occur of (i) the six-month
anniversary of Participant’s separation from service and (ii) the date of
Participant’s death.  Further, to the extent that any amount is a Section 409A
Payment and such payment is conditioned upon Participant’s execution of a
release or Participation and Restrictive Covenant Agreement and which is to be
paid or provided during a designated period that begins in one taxable year and
ends in a second taxable year, then such Section 409A Payment shall be paid or
provided in the later of the two taxable years.

 

(e)  Any reimbursements payable to a Participant pursuant to this Plan or
otherwise shall be paid to such Participant in no event later than the last day
of the calendar year following the calendar year in which such Participant
incurred the reimbursable expense.  Any amount of expenses eligible for
reimbursement, or in-kind benefit provided, during a calendar year shall not
affect the amount of expenses eligible for reimbursement, or in-kind benefit to
be provided, during any other calendar year.  The right to any reimbursement or
in-kind benefit pursuant to this Plan shall not be subject to liquidation or
exchange for any other benefit.

 

SECTION 6.  Covenants. Each Participant’s participation in this Plan is
conditioned upon Participant’s execution of a Participation and Restrictive
Covenant Agreement within thirty (30) days after such agreement is delivered to
such Participant (or such later date as permitted by the Plan Administrator). 
If a Participant breaches any of the covenants in the Participation and
Restrictive Covenant Agreement, including any non-competition, non-solicitation,
non-disparagement or confidentiality covenants contained therein,
(i) Participant’s entitlement to Severance Benefits shall be null and void,
(ii) all rights to receive or continue to receive Severance Benefits shall
thereupon cease and (iii) Participant shall immediately repay to the Company all
amounts theretofore paid to, and the value of all benefits theretofore received
by, Participant.  The foregoing shall not limit any other rights or remedies the
Company may have existing in its favor, including injunctive relief.

 

SECTION 7.  Offset; No Mitigation.

 

(a)  To the extent permitted by Section 409A of the Code, the amount of a
Participant’s payments under this Plan shall be reduced to the extent necessary
to defray amounts owed by Participant due to unused expense account balances,
overpayment of salary, awards or bonuses, advances or loans.

 

(b)  In no event shall any Participant be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Participant
under any of the provisions of this Plan and, such amounts shall not be reduced
whether or not Participant obtains other employment, except as expressly
provided in Sections 3(a)(vi) and 3(c).

 

SECTION 8.  Miscellaneous.

 

(a)  Notices.  All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if delivered in writing
in person or by telecopy (or similar electronic means with a copy following by
nationally recognized overnight courier) or sent by nationally-recognized
overnight courier or first class registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at the address set forth
below or at such other address as may hereafter be designated in writing by such
party to the other parties.

 

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If to the Company:

 

Diplomat Pharmacy, Inc.

 

 

4100 S. Saginaw St.

 

 

Flint, MI 48507

 

 

Attention: General Counsel

 

 

 

If to a Participant:

 

At the most recent address

 

 

on file with the Company

 

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any
notice under this Plan shall be deemed to have been given when so delivered,
sent or mailed.

 

(b)  Choice of Law.  This Plan shall be deemed to be made in Michigan, and, to
the extent not preempted by ERISA or other federal law, the validity,
interpretation, construction and performance of this plan in all respects shall
be governed by the laws of Michigan without regard to its principles of
conflicts of law.  By participating in this Plan, each Participant and the
Company hereby (i) irrevocably consent to, and agree not to object or assert any
defense or challenge to, the jurisdiction and venue of the state and federal
courts located in Michigan, and agree that any claim which, subject to Section 4
above, may be brought in a court of law or equity may be brought in any such
Michigan court, and (ii) knowingly, voluntarily and intentionally waive any
rights such party may have to a trial by jury in respect of any litigation based
hereon or arising out of or in connection with this Plan.  This provision is a
material inducement for the Participant to be a Participant hereunder.

 

(c)  No Waiver.  No failure by the Company or a Participant at any time to give
notice of any breach by the Company or a Participant, or to require compliance
with, any condition or provision of this Plan shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

 

(d)  Severability.  If a court of competent jurisdiction determines that any
provision of this Plan is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Plan, and all other provisions
shall remain in full force and effect.

 

(e)  Withholding of Taxes and Other Employee Deductions.  The Company may
withhold from any benefits and payments made pursuant to this Plan all federal,
state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to the Company’s employees generally.

 

(f)  Headings.  The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

 

(g)  Interpretations.  For purposes of this Plan, the words “include” and
“including,” and variations thereof, shall not be deemed to be terms of
limitation but rather shall be deemed to be followed by the words “without
limitation”.  The term “or” is not exclusive.  The word “extent” in the phrase
“to the extent” shall mean the degree to which a subject or other thing extends,
and such phrase shall not mean simply “if.”  Wherever the context so requires,
the masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.

 

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(h)  Successors.  This Plan shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including without limitation any
person, association, or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of the Company by any means whether
direct or indirect, by purchase, merger, consolidation, or otherwise and the
Company shall require any such acquirer successor to assume this Plan and the
obligations and liabilities contemplated thereunder, including, but not limited
to the amendment and termination obligations contemplated under Section 8(l). 
Participants’ rights, benefits and obligations under this Plan are personal and
shall not be voluntarily or involuntarily assigned, alienated, or transferred,
whether by operation of law or otherwise, without the prior written consent of
the Company.

 

(i)  Non-Duplication.  The Severance Benefits provided under this Plan are not
intended to result in any duplicative benefits to Participant and this Plan
shall be administered accordingly.  Accordingly, the Plan Administrator, in good
faith, shall exercise its discretion and to the extent permitted under
applicable law, equitably offset against Participant’s severance benefits under
this Plan against any other severance, termination, or similar benefits payable
to Participant by the Company or amounts paid to comply with, or satisfy
liability under, the Worker Adjustment and Retraining Notification Act or any
other foreign, federal, state, or local law requiring payments in connection
with any termination of Employment or workforce reduction, including, but not
limited to, amounts paid in connection with paid leaves of absence, back pay,
benefits, and other payments intended to satisfy such liability or alleged
liability.  For the avoidance of doubt, this Plan shall replace any agreements
entered into between the Company and the Participant providing the Participant
with severance or related benefits and the Participant shall not be entitled to
benefits under both this Plan and any other severance plan or policy maintained
by the Company or its Affiliates and amounts payable under this Plan shall be
reduced by any amounts received or payable under any such severance plan or
policy. To the extent that the Severance Benefits payable hereunder are deemed
to be a substitute for a Section 409A Payment provided under another agreement
with Participant, then the Severance Benefits payable hereunder shall be paid at
the same time and in the same form as such substituted Section 409A Payment to
the extent required to comply with Section 409A of the Code.

 

(j)  Deemed Resignations.  Any termination of a Participant’s Employment shall
constitute an automatic resignation of such Participant as an officer of the
Company and each Affiliate of the Company, an automatic resignation from the
board of directors, if applicable, of the Company and each Affiliate of the
Company and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which the Company or
any Affiliate holds an equity interest and with respect to which board or
similar governing body such Participant serves as the Company’s or such
Affiliate’s designee or other representative.

 

(k)  No Guarantee of Employment.  This Plan shall not be construed as creating
any contract of Employment between the Company and its Affiliates, on the one
hand, and any Participant, on the other hand, nor shall this Plan be construed
as restricting in any way the rights of the Company or any of its Affiliates to
terminate the Employment of any Participant at any time and for any reason
subject, however, to any rights of a Participant under this Plan.

 

(l)  Amendment and Termination of this Plan.  Except as specifically provided in
Section 5, the Committee may amend, modify or terminate this Plan at any time;
provided, however, that

 

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(i) no such amendment, modification or termination will be effective unless each
affected Participant has received written notice thereof at least twelve (12)
months prior to such amendment, modification or termination becoming effective
and (ii) no such amendment, modification or termination may materially impair
the rights of a Participant whose Termination Date previously occurred.  In
addition, the Committee may not amend, modify or terminate this Plan after steps
have been taken, and continue to be taken, that could lead to a Change in
Control or within twenty-four (24) months after a Change in Control without an
impacted Participant’s written consent.  The failure of the Company or a
Participant to insist upon strict adherence to any term of this Plan on any
occasion shall not be considered as a waiver of the rights of the Company or
such Participant or deprive the Company or such Participant of the right
thereafter to insist upon strict adherence to that term or any other term of
this Plan.  No failure or delay by the Company or any Participant in exercising
any right or power hereunder will operate as a waiver thereof, nor will any
single or partial exercise of any such right or power, or any abandonment of any
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  For the avoidance of
doubt, a Participation’s participation in this Plan shall terminate upon the
earliest to occur of (i) the date of termination of the Participant’s employment
by the Company if no benefits are payable under the Plan, (ii) the date the
Company satisfies its obligation, if any, to make payments and provide benefits
to the Participant pursuant to the Plan, (iii) the removal of the Participant
from participation in this Plan in accordance with Section 2, and
(iv) termination of the Plan in accordance with this Section 8(l) prior to the
date the Participant terminates employment with the Company.

 

SECTION 9.  Survival.  The provisions of this Plan, including Sections 3,
Section 4, Section 5, Section 6, Section 7 and Section 8 shall survive and
remain binding and enforceable, notwithstanding the expiration or termination of
this Plan, the termination of a Participant’s Employment for any reason or any
settlement of the financial rights and obligations arising from such
Participant’s participation hereunder, to the extent necessary to preserve the
intended benefits of such provisions.

 

* * * * * *

 

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IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its
behalf, to be effective as of the Effective Date.

 

 

DIPLOMAT PHARMACY, INC.

 

 

 

/s/ Brian T. Griffin

 

Brian T. Griffin

 

Chief Executive Officer

 

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