Exhibit 10.22

 

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Confidential

 

October 27, 2016

 

Via Hand Delivery

 

Thomas Kloster

[ADDRESS]

[ADDRESS]

 

Re:          Executive Separation Agreement and Release (the “Agreement”)

 

Dear Tom,

 

This confirms that your Chief Financial Officer Position (“CFO”) with
Inovalon, Inc. and Inovalon Holdings, Inc. (collectively, the “Company”) will
terminate effective October 31, 2016.  If you agree to the terms and conditions
in this Agreement, you will remain an employee of the Company through
December 2, 2016 (the “Termination Date”).  You will receive regular pay through
that date.

 

The Company is prepared to enter into this Agreement with you, which provides
you certain benefits to which you otherwise are not entitled, provided that you
agree to all the terms set forth below.

 

1.             Severance.  In addition to regular pay through December 2, 2016,
the Company is prepared to make an additional payment to you, subject to the
terms and conditions in this Agreement. Specifically, the Company will pay you
$268,753.85, representing (i) an amount equivalent to 36(1) weeks of regular pay
($256,153.85) (the “Regular Pay”) and (ii) an additional payment of $12,600 (the
“Additional Pay”) (the Regular Pay and the Additional Pay, collectively the
“Severance Amount”), less applicable taxes and withholding.  Provided that you
have executed the Agreement, fulfilled the obligations described below, and the
revocation period described in paragraph 15 below has already expired, the
Regular Pay will be paid out over the course of 36 weeks in accordance with
Company’s regular payroll schedule, and the Additional Pay will be paid out in
equal increments beginning January 1, 2017 through July 31, 2017 in accordance
with the Company’s regular payroll schedule.

 

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(1)  It is acknowledged that you requested an extension to your termination date
of November 11, 2016 to December 2, receiving 3 additional weeks of regular pay,
in lieu of 3 weeks of severance pay.

 

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Through October 31, you agree that you have fulfilled your current
responsibilities to the Company as CFO, including, without limitation, approving
the third quarter Form 10-Q and signing the related third quarter financial
statements and audit documents as appropriate, and participating in the Audit
Committee call on October 31.  Although you will not be required to come into
the office after October 31, you also agree that you will be available through
the Termination Date to assist with any transitional matters, and that after the
Termination Date, you will cooperate with the Company, as reasonably requested,
with respect to questions and outstanding matters that were part of your
responsibilities while in the CFO role. The Company will reimburse you for any
out-of-pocket expenses you may incur in connection with providing this
assistance. Please know that Inovalon views you with respect and appreciation
and understands that you will handle this process professionally.

 

During the time period that you are receiving payments against the Severance
Amount, if you are rehired by the Company, your severance pay will cease and you
will not be paid the remaining portion of the Severance Amount. The Company will
issue a Form W2 to you covering any payment of the Severance Amount.

 

2.             Unemployment Compensation.   The Company agrees not to contest
any claim you may make for unemployment compensation benefits based upon the
fact of your termination.  However, the Company reserves the right to make
truthful statements to correct any inaccuracies.

 

3.             Benefit Continuation.  If you currently participate in any
Company health benefits plans, your current coverage will continue until the end
of the month in which your employment terminates.  You may elect to continue at
your own expense your current group medical and/or dental insurance coverage for
up to 18 months following the Termination Date, provided that you or your
eligible dependents remain eligible for such coverage under the federal law
known as the Consolidated Omnibus Reconciliation Act (COBRA).  Except as
provided herein, your right to any and all Company benefits will terminate on
the Termination Date.

 

4.             Full and Complete Compensation.  The payments and benefits
described above satisfy and are in lieu of: (a) all obligations which the
Company and/or any of the Inovalon Parties (defined in paragraph 6 below) may
have owed to you or which may be owed to you; (b) all compensation, vacation
pay, and benefits which may be owing to you; and (c) all claims which you may
have against any of the Inovalon Parties (defined in paragraph 6 below) based on
any act, conduct, policy, practice, or omission occurring prior to the date that
you execute this Agreement.  You agree you have received all payments (other
than the benefits described in this Agreement) owed to you by the Company and
the full benefit of, any policy of the Company or any agreement between you and
any of the Inovalon Parties (defined below).

 

5.             Confidentiality.  You will keep the terms of this Agreement
confidential, except that you may disclose this Agreement to: (1) your spouse
and your parents, provided they agree

 

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to keep the terms of this Agreement confidential; (2) your accountant or
attorney, in which case, you agree not to waive any applicable privilege
regarding that discussion; and (3) any other person to whom disclosure is
necessary in order to comply with a legal duty, such as a duty that may arise
under the Internal Revenue Service or Social Security regulations or statutes.
You agree that if you (or anyone to whom you permissibly disclose the terms of
this Agreement) disclose the terms, manner, amount, conditions and/or substance
of this Agreement, you will be liable to the Company for liquidated damages in
the amount of $5,000 for each disclosure, up to a maximum of $20,000.  You agree
that these liquidated damages in the amount above represent compensation, not a
penalty, and although the Company’s damages for your breach of this paragraph
are incapable of being accurately measured at this time, this liquidated damage
amount is a reasonable estimation of damage to the Company in the event of such
breach.

 

During your employment with Company you have had access to confidential Company
and employee-related information.  This Agreement, as well as the Employment
Agreement that you executed on or about March 24, 2014 and fully incorporated
herein, prohibits you from disclosing or using, either directly or indirectly,
any confidential information of Company or its employees or retaining or
removing any confidential information of Company or its employees. Additionally,
you must return all confidential and proprietary information obtained during
your employment with Company. Please be advised that your obligation not to
disclose any proprietary and/or confidential information of Company continues
after the Termination Date and you must not either directly or indirectly
disclose any confidential or proprietary information of Company or its
employees.  Notwithstanding anything to the contrary in this Agreement, you are
not prohibited from reporting possible violations or participating in an
investigation of U.S. federal law or regulation to any U.S. governmental agency
or entity, including but not limited to the U.S. Department of Justice, the U.S.
Securities and Exchange Commission, the U.S. Congress, and any U.S. agency
Inspector General, or making other disclosures that are protected under the
whistleblower provisions of U.S. federal law or regulation.  Accordingly, you do
not need the prior authorization of the Company to make any such reports or
disclosures and is not required to notify the Company that you have made any
such reports or disclosures.

 

6.             General Release.  You release, relinquish, and give up any and
all claims, suits and causes of action, known or unknown, which you may have or
hold against any of the Inovalon Parties in any way arising out of, relating to,
or resulting from: (a) your employment with any of the Inovalon Parties or the
termination thereof; (b) any fact, statement, or conduct made or occurring prior
to the execution of this Agreement by you; (c) any employment or business
custom, practice, or policy of any of the Inovalon Parties; or (d) any conduct
or decision of any of the Inovalon Parties which in any way affected you, or
discussions leading up to and/or culminating in this Agreement, or your rights,
if any, to any benefit due you under any pension plan based upon your service
with the Company through the Termination Date.

 

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This is a general release of all claims and you knowingly and voluntarily
release and forever discharge Company, and its affiliates, subsidiaries,
divisions, and related companies, and its and their present, former, and future
successors and assignees, and all of its and their current, former, and future
owners, officers, stockholders, employees, officers, attorneys, accountants,
directors, assigns, and agents thereof, both individually and in their
representative capacities, and insurers, Company employee benefit plans,
programs, arrangements and their administrators, functionaries and fiduciaries
(collectively, the “Inovalon Parties”), of any and from any and all claims,
known and unknown, asserted and unasserted, foreseeable and unforeseeable which
against the Inovalon Parties, you, your heirs, executors, administrators,
successors, and assigns have or may have as of the date of the execution of this
Agreement by you, including but not limited to, any alleged violation of: the
National Labor Relations Act, as amended; Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991, as amended; the Americans with
Disabilities Act of 1990, as amended; the Family and Medical Leave Act, as
amended; the Age Discrimination in Employment Act, as amended; the Occupational
Safety and Health Act of 1990, as amended; the Sarbanes-Oxley Act of 2002; the
Maryland Occupational Safety and Health Laws, as amended; the Maryland Equal Pay
Law, as amended; the Maryland Human Rights Act, as amended; and any other
federal, state or local civil or human rights law or any other federal, state or
local law, regulation or ordinance; any public policy, contract, tort, or common
law; or any allegations for compensation, damages, costs, fees, or other
expenses, including attorneys’ fees incurred in these matters.

 

7.             Claims Not Subject to Waiver.  This general release may not be
construed to waive any right that is not subject to waiver by private agreement,
including without limitation, any claims arising under state unemployment
insurance or workers compensation laws.  Nothing in this Agreement may be
construed to prohibit you from filing a charge or with participating in any
investigation or proceeding conducted by the U.S. Securities and Exchange
Commission, National Labor Relations Board, Equal Employment Opportunity
Commission, or comparable state or local agency.  You agree, however, to waive
your right to recover monetary damages in any charge, complaint or lawsuit filed
by you or anyone on your behalf.

 

8.             No Current Filings.  You affirm that you have not filed, caused
to be filed, or presently are a party to any claim, complaint, or action against
the Company in any forum or form.  You further affirm that you have been paid
and/or have received all leave (paid and unpaid), compensation, wages, bonuses,
and/or benefits that are due to you, except as provided in this Agreement.  You
furthermore affirm that you have no known workplace injuries and have been
provided and/or have not been denied any leave requested under the Family and
Medical Leave Act.  You have not been retaliated against for reporting any
allegations of wrongdoing by the Company or its officers, including any
allegations of corporate fraud.

 

9.             No Violations of Code of Conduct. You affirm that you are not
aware of any violations or suspected violations of the Inovalon Code of Business
Conduct and Ethics as

 

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contained within the Inovalon Employee Handbook and that if you are aware of any
such violations, you have reported that information to the Company Chief Legal
Officer, or to any of the available reporting avenues set up by the Company.

 

10.          Non-Admission.  The foregoing payments and agreements are made
without any admission as to fault, liability, wrongdoing or the validity of any
other party’s position by you or any of the Inovalon Parties, all of who
expressly deny any and all fault, liability or wrongdoing.

 

11.          Non-Disparagement.  You agree not to make or authorize the making
of any disparaging remarks, comments, or statements about the Company, including
its present or former agents, employees, officers, or directors.  The Company
agrees not to make any disparaging remarks, comments, or statements about you
and, as appropriate, will advise selected personnel to avoid disparaging
comments about you. Before the Termination Date, nothing in this Agreement
precludes you from discussing terms and conditions of employment or exercising
rights protected under federal labor law.

 

12.          Return of Company Property.  By signing this Agreement, you agree
and acknowledge that you will return to the Company prior to your Termination
Date all originals and copies of Company documents and all Company property,
including without limitation, computer files, diskettes, database information,
client information, sales documents, financial statements, budgets and
forecasts, computers, keys, and corporate credit cards.

 

13.          Agreement Void Upon Rehire.  By signing this Agreement, you agree
and acknowledge that if you accept employment with the Company or any other
employer prior to your Termination Date, this Agreement will become null and
void.

 

14.          Entire Agreement.  This Agreement contains the entire agreement
between us concerning the subject matter hereof and supersedes (except as set
forth in paragraph 6) all prior oral and written communications and agreements
between the parties concerning such subject matter.  Neither this Agreement, nor
any of its terms, may be waived, added to, changed or altered except in a
writing signed by you and an authorized representative of Company.

 

15.          Specific Release of ADEA Claims.  In further consideration of the
payments and benefits provided to you in this Agreement, you hereby irrevocably
and unconditionally fully and forever waive, release and discharge the Company
from any and all claims, whether known or unknown, from the beginning of time to
the date of your execution of this Agreement arising under the Age
Discrimination in Employment Act of 1967 (ADEA), as amended, and its
implementing regulations. By signing this Agreement, you hereby acknowledge and
confirm that: (i) you have read this Agreement in its entirety and understand
all of its terms; (ii) you have been provided with information, attached hereto,
as to the ages and job titles of individuals selected for the program in the
decisional unit and the ages of individuals in the same job classification not
selected for participation under the program; (iii) you have been advised of and

 

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have availed yourself of your right to consult with your attorney prior to
executing this Agreement; (iv) you knowingly, freely and voluntarily assent to
all of the terms and conditions set out in this Agreement including, without
limitation, the waiver, release and covenants contained herein; (v) you are
executing this Agreement, including the waiver and release, in exchange for good
and valuable consideration in addition to anything of value to which you are
otherwise entitled; (vi) you were given at least twenty-one (21) days to
consider the terms of this Agreement and consult with an attorney of your
choice, although you may sign it sooner if desired; (vii) you understand that
you have seven (7) days from the date you sign this Agreement to revoke the
release in this paragraph by delivering written notice of revocation to Patty
Donnelly, Vice President, Human Resources, at the address of the Company, 4321
Collington Road, Bowie, Maryland 20716; and (viii) you understand that the
release contained in this paragraph does not apply to rights and claims under
the ADEA or the Older Workers Benefits Protection Act that may arise after the
date on which you sign this Agreement.

 

16.          Consultation with an Attorney.  You have been advised to consult
with your attorney before signing this Agreement.  You agree, however, that
Company shall not be required to pay any of your attorneys’ fees in this or any
related matter and that the severance monies received pursuant to paragraph 1
are in full and complete settlement of all matters between you and the Company,
including, but not limited to, attorneys’ fees and costs.

 

17.          Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland, without regard to
conflicts of laws or other principles which would seek to apply the laws of any
other jurisdiction.

 

18.          At-Will Employment.  By signing this Agreement, you acknowledge
that you have been, at all times, an “at will” employee of the Company.

 

19.          Knowing and Voluntary.  By signing this Agreement, you acknowledge
that you have carefully read and fully understand all its provisions, and that
you are signing it voluntarily.  You also acknowledge that you are not relying
on any representations by any representative of the Company concerning the
meaning of any aspect of this Agreement.

 

20.          Severability.          Any provision of this Agreement which is
held to be prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

 

[Signature Page Follows]

 

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Inovalon, Inc. and Inovalon Holdings, Inc.

 

 

 

 

By:

/s/ Thomas Kloster

 

By:

/s/ Shauna L. Vernal

 

Thomas Kloster

 

Shauna L. Vernal

 

 

 

Chief Legal Officer

 

 

 

 

Date: November 4, 2016

Date: November 4, 2016

 

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