Exhibit 10.2

 

PERMANENT RELEASE

AND

SEVERANCE AGREEMENT

 

This Permanent Release and Severance Agreement (“Agreement”) is entered into, as
of the last date of execution by the parties, by and between Diplomat
Pharmacy, Inc. and its affiliated entities (collectively the “Company”) and Sean
Whelan (“Employee”).  For purposes of this Agreement, the Company includes its
past and present successors, assigns, divisions, departments, parents,
subsidiaries, related or affiliated entities, and all current or former
officers, directors, shareholders, members, benefit plans, attorneys, employees
and agents in their capacities as such, including, without limitation, any and
all management, administrative, or supervisory employees in their capacities as
such.

 

RECITALS

 

WHEREAS, Employee was an at-will employee employed as the Chief Financial
Officer by the Company and also serves as a member of the Company’s Board of
Directors (the “Board”); and

 

WHEREAS, Employee and Company have mutually agreed to terminate the Employee’s
employment with the Company effective December 31, 2016, and Employee has agreed
to resign as a member of the Board effective as of such date (the “Last Day of
Employment”); and

 

WHEREAS, Employee agrees to waive recovery of any damages and other claims
relating to or arising out of employment with the Company or the separation
there from, in consideration for the agreements herein, as well as for the
severance benefits set forth in this Agreement to which Employee is not
otherwise entitled; and

 

WHEREAS, the Company agrees to provide the severance benefits specified herein,
which Employee is not otherwise entitled to receive, in exchange for the
promises set forth in this Agreement; and

 

WHEREAS, the Company has obtained all necessary approvals of the Company’s Board
of Directors to perform its obligations to Employee specified herein;

 

NOW, THEREFORE, in consideration of the foregoing and of the terms, conditions
and agreements hereinafter set forth, the Company and Employee agree as follows:

 

1.              Consideration Paid to Employee. In exchange for Employee
executing this Agreement and provided it is not revoked as provided herein, the
Company shall pay or provide to Employee the following consideration, which
Employee acknowledges is extra and in addition to benefits Employee is otherwise
entitled to receive:

 

a.              Within fifteen (15) days of the later of (i) the Last Day of
Employment or (ii) expiration of the Employee’s right of revocation and in
accordance with the next

 

1

--------------------------------------------------------------------------------

 

scheduled payroll date thereafter, the Company will pay to Employee a lump-sum
severance benefit of Two Hundred Fifty Thousand Dollars ($250,000.00). All
severance payments shall be subject to applicable state and federal or other
lawful withholdings.  It is understood that the Company will not be withholding
or making any 401K contributions on the severance payments, since Employee will
no longer be employed with the Company.  Employee shall not be entitled to any
payments until Company has received a fully executed original of this Agreement
and the seven-day revocation period described in Paragraph 4 has expired without
Employee exercising the right to revoke.

 

b.              Immediately following the Last Day of Employment, and
notwithstanding any terms of any Option Award Agreement to the contrary, 50,000
of the unvested options granted to Employee on October 9, 2014, shall vest and
be immediately exercisable.

 

c.               All other unvested options from Employee’s 2015 and 2016 annual
equity awards shall terminate immediately following the Last Day of Employment,
in accordance with Section 6(i) of the Company’s 2014 Omnibus Incentive Plan
(the “2014 Plan”) and the applicable award agreements issued thereunder.

 

d.              Notwithstanding any terms to the contrary in Section 6(i)(iv) of
the 2014 Plan and, as applicable, Section 8(c) of the Company’s 2007 Option Plan
(the “2007 Plan”), each of Employee’s vested options (including the options
accelerated under Paragraph 1.b. above) shall terminate 180 days after the Last
Day of Employment.

 

e.               On the Last Day of Employment, Company shall have caused its
stock transfer agent (at the time of execution of this Agreement, Computershare
Limited) to implement the benefits, set forth in Paragraphs 1.b and 1.d above,
in Employee’s account with said stock transfer agent.

 

f.                The Company shall continue group healthcare coverage for
Employee and any dependents through March 31, 2017.  Provided Employee makes a
timely election for continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), for the period from January 1, 2017 to
March 31, 2017, Employee shall pay and Company shall reimburse the required
premium to continue this coverage.  To receive reimbursement, Employee shall
submit an invoice to Company, such invoice shall be addressed to: Diplomat
Pharmacy, Inc. Attn: Senior Director of Human Resources, 4100 S. Saginaw, Flint,
MI 48507.  After March 31, 2017, if Employee elects to remain under the
Employer’s group health insurance plan consistent with Employee’s rights under
COBRA, Employee shall be required to pay the required premium to the Company to
continue this coverage for the COBRA continuation rights period. Employee will
receive separate notice of COBRA rights pursuant to the Company’s normal
practice.

 

2

--------------------------------------------------------------------------------

 

2.              Entire Amount of Consideration.   Employee is not otherwise
entitled to the consideration described in Paragraph 1 and the consideration is
sufficient to support the covenants and promises by Employee in this Agreement. 
Employee further agrees not to seek any further compensation from the Company
for any claimed damages, costs, or attorneys’ fees in connection with the
matters encompassed in this Agreement or any other claims.

 

3.              General Release of All Claims by Employee.  Except for the
rights and obligations expressly set forth herein, Employee, for Employee and
for each of Employee’s past and present agents, assigns, transferees, heirs,
spouses, relatives, executors, attorneys, administrators, employees,
predecessors, affiliates, successors, insurers, and representatives in their
capacities as such (“Releasors”), hereby releases and discharges the Company and
its respective past and present agents, assigns, transferees, attorneys,
administrators, officers, directors, stockholders, employees, predecessors,
subsidiaries, parents, affiliates, successors, insurers, and representatives in
their capacities as such (“Releasees”) from any and all claims and causes of
action, known or unknown, which Releasors now have or may have against any of
the Releasees arising through the date of this Agreement, including but not
limited to claims arising out of or relating to Employee’s employment or the
severance of Employee’s employment from the Company.  This release is intended
to be interpreted broadly and is intended to include, without limitation, all
common law claims (including but not limited to: breach of contract, breach of
the covenant of good faith and fair dealing, wrongful discharge in violation of
public policy, infliction of emotional distress, negligence, invasion of
privacy, interference with contractual relationship, defamation and fraud),
claims based on the Company’s incentive and/or compensation plans, as well as
any statutory claims (including but not limited to claims arising under: the Age
Discrimination in Employment Act (“ADEA”) as amended, 29 U.S.C. § 621 et seq. ,
as amended, 29 U.S.C. § 621, et seq. and as amended by the Older Workers Benefit
Protection Act of 1990; Executive Order 11246; the Rehabilitation Act of 1973;
Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of
1991, 42 U.S.C. § 2000 et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981;
the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.; the
Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq.; ; the
Reconstruction Era Civil Rights Acts, 42 U.S.C. Sections 1981-1988; the Civil
Rights Act of 1994; Employee Retirement Income Security Act of 1974, the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. § 2102 et seq., as well as
claims under  any other federal, state of Michigan, or local laws or regulations
of any kind, or any other claim whatsoever arising out of Employee’s employment
or the termination of Employee’s employment, other than those that cannot be
released as a matter of law.  This release shall not be interpreted to require
Employee to waive or release Employee’s right to file a charge with the Equal
Employment Opportunity Commission (“EEOC”) or the National Labor Relations Board
(“NLRB”).  This release also does not apply to any lawsuit brought to challenge
the validity of this Agreement under the ADEA, to enforce the terms of this
Agreement, or for claims that arise under the ADEA after the Effective Date. 
Employee and the Company expressly acknowledge and agree that neither the
Company nor Employee would enter into this Agreement but for the representation
and warranty that Employee is hereby releasing any and all claims of any nature
whatsoever, known or unknown, whether statutory or at common law, which Employee
now has or

 

3

--------------------------------------------------------------------------------

 

could assert directly or indirectly against any of the Releasees (other than as
expressly set forth herein).

 

Notwithstanding the foregoing, Employee is not releasing or waiving any claim
(a) for the sole purpose of enforcing Employee’s rights under this Agreement, or
(b) to enforce Employee’s post-employment rights under any tax qualified
employee retirement plan then maintained by the Company.

 

4.              General Release of All Claims By The Company. The Company hereby
releases and discharges Employee from any and all causes of action, liability
and claims of every kind, known or unknown, fixed, vested or contingent,
relating to or arising in any way from any act or omission of Employee during
the course of his employment with the Company.

 

5.              Waiver and Release of Claim for Age Discrimination.  Employee
acknowledges that Employee is forty (40) years of age or older. Employee intends
and does hereby waive, release and forever give up any recovery of damages for
violations of Employee’s rights under the Age Discrimination in Employment Act
(“ADEA”), as amended. The ADEA is a federal law that protects Employee’s
employment rights by making it unlawful for an employer to discriminate against
Employee because of Employee’s age.

 

a.              Employee is advised to consult with an attorney prior to signing
this Agreement releasing any claim for age discrimination. Employee understands
that whether or not to do so is Employee’s decision.

 

b.              Employee acknowledges that Employee was advised that Employee
had twenty-one (21) days to consider this Agreement before signing it, but could
sign it earlier if Employee freely and voluntarily chose to do so, and that no
change to this Agreement, whether material or immaterial, will restart the
running of this twenty-one (21) day review period.

 

c.               Employee further acknowledges that Employee has seven (7) days
after signing this Agreement to change Employee’s mind and revoke the
Agreement.  To be effective, any revocation must be in writing and either
(i) mailed to Diplomat Pharmacy, Inc., Attn: General Counsel, 4100 S. Saginaw,
Flint MI 48507, and postmarked within seven (7) days from the date on which
Employee signed this Agreement, or (ii) hand delivered to the Company within
seven (7) days from the date on which Employee signed this Agreement.  If
revocation is made by mail, mailing by certified mail return receipt requested
is required as proof of mailing.  Employee acknowledges that the Company
provided ample opportunity to ask questions, obtain information, and seek
understanding regarding the waiver and release of Employee’s protections from
age discrimination. Employee affirms that the Company did not pressure, coerce,
or threaten Employee to obtain the execution of this Agreement. Employee entered
into this Agreement of Employee’s own free will, knowingly, and only after
careful deliberation and forethought.  Employee acknowledges that the
consideration paid for this

 

4

--------------------------------------------------------------------------------

 

Agreement, as provided in Paragraph 1, is extra and in addition to those amounts
to which Employee was otherwise entitled.

 

6.              No Admission of Liability. The Company and Employee agree that
neither the negotiations nor the signing of this Agreement shall constitute an
admission by the Company that it has acted wrongfully with respect to Employee
or any other person or that Employee has any rights whatsoever against the
Company.  The Company specifically disclaims any liability to, or wrongful acts
against, Employee or any other person, on the part of itself, its directors,
officers, employees, and agents, and Employee disclaims any liability to or
wrongful or unlawful conduct against the Company.  Employee further agrees that
he or she will not state, represent, suggest, or imply to anyone that the
Company is liable or at fault or has admitted liability or any wrongful acts
affecting Employee.

 

7.              Confidentiality.

 

a.              Employee acknowledges that during the course of his employment
with the Company, Employee acquired knowledge of and had access to:
(1) confidential information belonging to the Company, (2) proprietary
information belonging to the Company, (3) trade secrets of the Company,
(4) other information which was disclosed to the Company on a confidential
basis, and (5) material non-public information concerning the Company’s business
and financial condition (collective the “Company Information”).  Employee
agrees, following Employee’s last day of employment with the Company, he or she
will not, directly or indirectly, make use of or disclose any Company
Information to any individual who is not either employed by or retained by the
Company without the consent of the Company.  Notwithstanding the proceeding
sentence, Employee may disclose Company Information in response to a demand for
disclosure contained in a subpoena or in discovery proceedings concerning a
matter before an administrative or judicial proceeding if such disclosure is, in
the reasonable opinion of legal counsel for Employee, required by applicable
law; provided Employee shall provide the Company notice of such demand as soon
as is reasonably feasible after receiving the demand and consulting with legal
counsel and shall cooperate with any effort by the Company to bar discovery or
disclosure of the Company Information through a protective order or injunctive
relief.  Employee’s duty to cooperate does not require that he incur any cost or
expense in furtherance of the Company’s effort to bar discovery or disclosure
and does not require that he violate or ignore a lawfully entered order of a
court.  Company agrees to indemnify and hold harmless Employee from any
liability, cost or expense that he may incur as the result of Company’s efforts
to bar disclosure or discovery of the Company Information.

 

b.              In addition to all other remedies provided in law or equity, the
provisions of this Paragraph 7 may be enforced through an independent action for
an injunction and/or to recover from Employee all consideration provided for in
Paragraph 1.

 

5

--------------------------------------------------------------------------------

 

c.               Employee understands and acknowledges that failure to comply
with this Paragraph 7 will be deemed a material breach of this Agreement and
shall entitle the Company to pursue all remedies provided in law or equity and
shall require Employee to repay all money paid to Employee pursuant to this
Agreement.

 

8.              Covenant not to Compete.  Employee acknowledges that Employee
has become familiar with Company Information.  Employee further acknowledges and
agrees that the Company and its subsidiaries and affiliates would be irreparably
damaged if Employee were to provide services to any person competing with the
Company or any of its subsidiaries or affiliates or engaged in a similar
business and that such competition by the Employee would result in a significant
loss of goodwill by the Company and its subsidiaries or affiliates. Therefore,
in further consideration of the benefits provided in Paragraph 1, Employee
agrees that until the first anniversary of the date of this Agreement (the
“Restricted Period”), Employee shall not directly, either for himself or through
or for any other person, own any interest in, manage, control, participate in
(including any direct or indirect interest in any enterprise, whether as an
officer, director, manager, employee, partner, equity holder, member, agent,
representative, shareholder, partner, joint venturer, franchisor, franchisee or
otherwise) consult with, or render services to or for, any person that is in any
business which competes with any business that the Company and/or its affiliates
or subsidiaries conduct or has specific plans to conduct at the end of the
Restricted Period, in any foreign jurisdiction in which the Company or any of
its affiliates has operations or anywhere in the United States; provided,
however, that the foregoing shall not restrict Employee from passively owning
less than two percent (2%) of the stock of a publicly held corporation so long
as neither Employee nor any of his affiliates has any active participation in
the business of such corporation; and provided further, nothing in this
Agreement shall prevent Employee from seeking and becoming employed by a
pharmaceutical manufacturer or in non-specialty retail pharmacy, long-term care,
hospital pharmacy or any other non-competing pharmacy.

 

9.              Company Property. Employee warrants and represents, that before
Company is obligated to pay any consideration pursuant to Paragraph 1of this
Agreement, Employee shall return to the Company all Company Information and all
other Company property including, without limitation, Company reports, files,
memoranda, records, software, credit cards, door and file keys, computer access
codes, disks, and instructional manuals, and other physical or personal property
which Employee received, prepared, or helped to prepare in connection with his
employment with the Company, and that he will not retain any copies, duplicates,
reproductions, or excerpts thereof.  Employee also agrees to provide the Company
with all computer passwords necessary to access computer-stored Company
Information.

 

10.       Duty to Cooperate.  Employee agrees to voluntarily cooperate with and
provide any requested information to the Company or its legal representatives in
connection with the Company’s defense of any claims, charges, or lawsuits
currently pending or asserted in the future against the Company.  This shall
include making Employee available to meet with the Company’s legal
representatives and appearing to testify truthfully as a witness

 

6

--------------------------------------------------------------------------------

 

in administrative or court proceedings or in depositions when requested by the
Company.  The Company agrees to reimburse Employee for all reasonable travel
expenses, lost wages and attorney’s fees and costs incurred by Employee as a
result of Employee’s cooperation with the Company’s legal representatives.

 

11.       Indemnification.  The Company agrees to defend and indemnify Employee
for any and all claims or causes of action brought against Employee by a third
party arising out of or in connection with his employment with the Company,
provided that Company is not obliged to indemnify Employee in connection with
any judgment entered against him based upon Employee’s gross negligence,
intentional misconduct, fraud, or criminal misconduct.  Employee may select
counsel to defend the claim or cause of action and shall notify the Company of
any such claim or cause of action within ten (10) days of his knowledge of such
claim or cause of action.  Company is not obliged to reimburse Employee for any
costs of defense incurred prior to its receipt of notice of the claim or cause
of action and is not obliged to indemnify Employee against any loss or liability
under this paragraph if it receives notice after the ten (10) day period and the
defense of the claim or cause of action was materially prejudiced by such
delayed notice.

 

12.       Non-Disparagement.

 

a.              Employee represents and warrants that he or she shall refrain
from any action that materially harms the reputation or goodwill of the Company,
including its subsidiaries or affiliates and any of its officers, directors,
employees, agents or shareholders, including, but not limited to, making
derogatory comments to the Company’s employees, lenders, suppliers, customers,
and others in the trade about the character and ability of the Company’s
directors, officers, executives, employees, representatives and agents, and the
manner in which the Company conducts its business.  The Company represents and
agrees that persons then serving as an officer or director of the Company shall
refrain from any action that materially harms the reputation or goodwill of
Employee, including but not limited to making derogatory comments to the
Company’s employees, lenders, shareholders, suppliers, customers, and others in
the Company’s trade about the character and ability of Employee or regarding the
manner in which Employee carried out his duties or otherwise performed on behalf
of the Company.  This sub-section shall not be construed to prohibit or to limit
any statements made by Employee to the EEOC or any other state or federal agency
in the course of participating in any agency proceeding.

 

b.              Each party understands and acknowledges that failure to comply
with this Paragraph 12 will be deemed a material breach of this Agreement, and
shall entitle the non-breaching party to all remedies provided in law or equity.

 

13.       No Reemployment. Employee agrees not to apply or reapply for
employment at any time in the future with, or provide any personal services to
or for the Company or any of the entities covered as a releasee, and Employee
agrees that this Permanent Release and

 

7

--------------------------------------------------------------------------------

 

Severance Agreement shall be sufficient grounds and a legitimate,
non-discriminatory basis alone to reject any such application.

 

14.       Applicable Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan. By execution hereof, Employee
hereby waives any right he or she may have to arbitration as against the
Company, and, as to any dispute with regard to this Agreement, Company and
Employee hereby submit to the jurisdiction of the state and federal courts
located in the State of Michigan.

 

15.       Severability of Provisions.  Should any provision of this Agreement be
declared or be determined by any court to be illegal or invalid, the validity of
the remaining parts, terms or provisions shall not be affected thereby and said
illegal part, term or provision shall be deemed not to be a part of this
Agreement.

 

16.       Remedies for Breach.  In addition to any right to damages the
non-breaching party may have, the non-breaching party shall have the right to
seek injunctive relief.

 

17.       Miscellaneous Provisions.

 

a.              This Agreement contains the entire agreement between the Company
and Employee with respect to the subject matter hereof. This Agreement may not
be modified or cancelled in any manner except by a writing signed by both
Employee and an authorized Company official.  Employee acknowledges that the
Company has made no promises to Employee other than those in this Agreement.

 

b.              This Agreement shall extend to, be binding upon, and inure to
the benefit of the parties and, as applicable, their respective successors,
assigns, heirs and personal representatives.

 

c.               This Agreement may be executed simultaneously in counterparts,
each of which shall be deemed an original and that a signed, facsimile or
scanned email version of this Agreement shall be treated as a true and correct
original and be legally enforceable.

 

8

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, and intending to be legally bound hereby, the Employee and
the Company have executed this Permanent Release and Severance Agreement,
totaling nine (9) pages, as set forth below.

 

/s/ Sean Whelan

 

October 25, 2016

EMPLOYEE

 

Date of Execution by Employee

 

 

 

/s/ Philip Hagerman

 

October 25, 2016

 

 

Date of Execution by the Company

 

 

 

Diplomat Pharmacy, Inc.

 

 

 

ELECTION TO EXECUTE PRIOR TO EXPIRATION OF
TWENTY-ONE DAY CONSIDERATION PERIOD
(To be signed only if Permanent Release and Severance Agreement is signed
prior to expiration of 21 days after it is presented to employee)

 

I understand that I have up to twenty-one (21) days within which to consider and
execute the foregoing Permanent Release and Severance Agreement.  However, after
having had sufficient time to consider the matter and to consult with counsel, I
have freely and voluntarily elected to execute the Permanent Release and
Severance Agreement before the twenty-one (21) day period has expired.

 

/s/ Sean Whelan

 

Sean Whelan

 

 

 

Date:

October 25, 2016

 

 

9

--------------------------------------------------------------------------------