EXHIBIT 10.16

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of July 9, 2012 and effective
upon the Agreement Date (specified on Schedule A hereto), between WellPoint,
Inc., an Indiana corporation (“WellPoint”) with its headquarters and principal
place of business in Indianapolis, Indiana (WellPoint, together with its
subsidiaries and affiliates are collectively referred to herein as the
“Company”), and the person listed on Schedule A (“Executive”).

 

W I T N E S S E T H

 

WHEREAS, WellPoint has entered into an agreement and plan of merger with
AMERIGROUP Corporation, a Delaware corporation, pursuant to that certain
Agreement and Plan of Merger, dated as of July 9, 2012, by and among AMERIGROUP
Corporation, WellPoint and WellPoint Merger Sub, Inc. (the “Merger Agreement”);

 

WHEREAS, the “Closing Date” shall have the meaning specified in the Merger
Agreement; and

 

WHEREAS, the Company desires to retain the services of Executive following the
Closing Date and to provide Executive an opportunity to receive certain
retention payments and severance protection in return for the diligent and loyal
performance of Executive’s duties and Executive’s agreement to reasonable and
limited restrictions on Executive’s post-employment conduct to protect the
Company’s investments in its intellectual property, employee workforce, customer
relationships and goodwill.

 

NOW THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1. POSITION/DUTIES.

 

(a) During the Employment Period (as defined in Section 2 below), Executive
shall serve in the position set forth on Schedule A, or in such other position
of comparable duties, authorities and responsibilities commensurate with the
skills and talents of Executive to which the Company may from time to time
assign Executive. In this capacity, Executive shall have such duties,
authorities and responsibilities as the Company shall designate that are
commensurate with Executive’s position.

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(b) During the Employment Period, Executive shall comply with Company policies
and procedures, and shall devote all of Executive’s business time, energy and
skill, best efforts and undivided business loyalty to the performance of
Executive’s duties with the Company. Executive further agrees that while
employed by the Company he shall not perform any services for remuneration for
or on behalf of any other entity without the advance written consent of the
Company; provided, that Executive may (within reasonable demands on his time)
engage in community charitable and educational activities and may continue
serving on any boards of directors on which he currently serves.

 

2. EMPLOYMENT PERIOD. The initial term of Executive’s employment under this
Agreement shall commence on the Agreement Date and end on the anniversary date
which is two (2) years after the Agreement Date (the “Initial Term”) unless
terminated earlier by either party in accordance with the termination provisions
hereinafter provided. After the Initial Term, Executive shall be offered
participation in the WellPoint, Inc. Executive Agreement Plan, as amended from
time to time (or any successor plan as in effect from time to time) at the level
provided to similarly situated executives of the Company. For the avoidance of
doubt, in the event that Executive declines participation in the WellPoint, Inc.
Executive Agreement Plan, the employment relationship shall continue on an “at
will” basis. The period beginning on the Agreement Date and ending on the
expiration of the Initial Term, or earlier as provided in Section 8 of this
Agreement, shall constitute the “Employment Period” for purposes of this
Agreement.

 

3. BASE SALARY. During the Employment Period, the Company agrees to pay
Executive a base salary at an annual rate set forth on Schedule A, payable in
accordance with the regular payroll practices of the Company. Executive’s Base
Salary shall be subject to annual review for increase by the Company. The base
salary as determined herein from time to time shall constitute “Base Salary” for
purposes of this Agreement.

 

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4. BONUS. During the Employment Period, for each fiscal year, Executive shall be
eligible to receive an annual bonus upon such terms as adopted from time to time
by the Company, provided such terms are no less favorable to Executive as such
terms apply to similarly situated executives of the Company; and provided,
further, that Executive is not already participating in an AMERIGROUP annual
bonus plan for such fiscal year. Subject to the immediately preceding proviso,
the minimum target bonus for which Executive shall be eligible for each fiscal
year during the Employment Period is specified in Schedule A to this Agreement.

 

5. SPECIAL RSU AWARD. On the first business day of the month concurrent with or
following the Closing Date, WellPoint shall grant Executive a special restricted
stock unit award (the “Special RSU Award”) under the WellPoint Incentive
Compensation Plan, with a grant date fair market value equal to the Special
Retention Bonus, as specified in Schedule A to this Agreement. The Special RSU
Award will vest on the first anniversary of the Closing Date, unless sooner
provided in the applicable award agreement, provided Executive remains in the
continuous employ of the Company until such date. The terms and conditions of
the restricted stock unit award (including the right to dividend equivalents)
shall be in substantially the form of such award attached hereto as Exhibit A.
Executive will also be entitled to participate in the Company’s cash and equity
incentive compensation plans for senior management, as in effect from time to
time, in accordance with the terms and conditions of the plans, and shall be
treated no less favorably than other similarly situated Company executives.

 

6. BENEFITS. During the Employment Period, Executive, his spouse and their
eligible dependents shall be entitled to participate in any employee benefit
plan that the Company (or, to the extent the Company determines otherwise,
AMERIGROUP Corporation, until employees of AMERIGROUP Corporation generally are
transferred to the Company’s plans) has adopted or may adopt, maintain or
contribute to for the benefit of its executives at a level commensurate with
Executive’s position, subject to satisfying the applicable eligibility
requirements therefor. Notwithstanding the foregoing, the Company may modify or
terminate any employee benefit plan at any time in accordance with its terms.
The Company shall reimburse Executive for reasonable and necessary out-of-pocket
expenses incurred in connection with his duties hereunder in accordance with the
Company’s expense reimbursement plans and policies applicable to similar
situated executives of the Company. In addition, for causes of action which
arose in whole or in part out of events that took place during the Employment
Period, Executive shall be entitled to indemnification and coverage under a
directors’ and officers’ liability insurance policy on terms and conditions no
less favorable than those that apply to similarly situated executives of the
Company.

 

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7. ACCELERATION OF CERTAIN AMERIGROUP AWARDS. Immediately after the Effective
Time, as such term is defined in the Merger Agreement, notwithstanding anything
to the contrary in the Merger Agreement (including Section 1.11(e) of the Merger
Agreement), WellPoint shall pay to Executive in exchange for any shares of
Restricted Stock (as such term is defined in the AMERIGROUP Corporation 2009
Equity Incentive Plan, as amended and restated from time to time) that were
awarded to Executive pursuant to a certain AMERIGROUP Corporation 2009 Equity
Incentive Plan Restricted Stock Agreement, dated March 9, 2010, and that remain
unvested as of the Effective Time (the “Unvested Shares”), a lump sum cash
amount (free from vesting requirements, deferrals or restrictions) equal to the
product of (i) the total number of such Unvested Shares as existed immediately
prior to the Effective Time and the application of Section 1.11(e) of the Merger
Agreement, multiplied by (ii) the Merger Consideration, as such term is defined
in the Merger Agreement (the “RS Payment”). For the avoidance of doubt and
notwithstanding anything to the contrary herein or in any other plan, policy or
agreement (including the hereabove referenced restricted stock agreement), no
portion of the RS Payment shall be subject to claw-back, set-off, offset,
recoupment, or any similar concept.

 

8. TERMINATION. Executive’s employment and the Employment Period shall terminate
on the first of the following to occur:

 

(a) DISABILITY. Subject to applicable law, upon ten (10) days’ prior written
notice by the Company to Executive of termination due to Disability.
“Disability” shall have the meaning defined in the Company’s Long Term
Disability Plan.

 

(b) DEATH. Automatically on the date of death of Executive.

 

(c) CAUSE. The Company may terminate Executive’s employment hereunder for Cause
immediately upon written notice by the Company to Executive of a termination for
Cause. “Cause” shall mean any act or failure to act on the part of Executive
which constitutes: (i) fraud, embezzlement, theft or dishonesty against the
Company; (ii) material violation of law in

 

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connection with or in the course of Executive’s duties or employment with the
Company; (iii) commission of any felony or crime involving moral turpitude;
(iv) any violation of Section 12 of this Agreement; (v) any other material
breach of this Agreement; (vi) material breach of any written employment policy
of the Company; (vii) conduct which tends to bring the Company into substantial
public disgrace or disrepute; or (viii) a material violation of the Company’s
Standards of Ethical Business Conduct; provided, that in the case of (v),
(vi) and (viii), the Board gives Executive written notice of such breach or
violation and thirty (30) days to cure the breach or violation (if the breach is
reasonably capable of cure).

 

(d) WITHOUT CAUSE. Upon written notice by the Company to Executive of an
involuntary termination without Cause, other than for death or Disability.

 

(e) BY EXECUTIVE. Upon written notice by Executive to the Company with or
without Good Reason, provided, however, that in the event of a termination
without Good Reason, such written notice shall be given to the Company at least
thirty (30) days in advance of the termination date (provided Executive may not
give such notice prior to the five (5) month anniversary of the Agreement Date
in the absence of unforeseen personal emergency circumstances). “Good Reason”
shall mean: (1) a material reduction in Executive’s annual base salary, or in
Executive’s annual total cash compensation (including annual base salary and
target bonus), but excluding in either case any reduction applicable to
management employees generally; (2) a material adverse change without
Executive’s prior consent in Executive’s position, duties, or responsibilities
as an executive of the Company as described in this Agreement or as otherwise
provided following the Closing Date (for the avoidance of doubt, requiring
Executive to perform duties and have responsibilities commensurate with
Executive’s position listed on Schedule A shall not trigger this clause (2); nor
shall organizational changes resulting from the integration, repositioning or
realignment of duplicative AMERIGROUP business functions as a result of the
transactions contemplated by the Merger Agreement trigger this clause (2));
(3) a material breach of this Agreement by the Company; (4) a change in
Executive’s principal work location to a location more than fifty (50) miles
from his prior work location; or (5) the failure of any successor to the Company
by merger, consolidation, or acquisition of all or substantially all of the
business of the Company to assume the Company’s obligations under this
Agreement. Notwithstanding the foregoing provisions of this definition,

 

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Good Reason shall not exist if Executive has in his sole discretion agreed in
writing that such event shall not be Good Reason. A termination shall not be
considered to be for Good Reason unless (A) within sixty (60) days of the
occurrence of the events claimed to be Good Reason Executive notifies the
Company in writing of the reasons why he believes that Good Reason exists,
(B) the Company has failed to correct the circumstance that would otherwise be
Good Reason within thirty (30) days of receipt of such notice, and (C) Executive
terminates his employment within sixty (60) days of such thirty (30) day period.

 

9. CONSEQUENCES OF TERMINATION.

 

(a) In the event of termination of Executive’s employment during the Initial
Term (x) by the Company for any reason other than death, Disability or Cause or
(y) by Executive for Good Reason, Executive will be entitled to receive a lump
sum amount (“Severance Pay”) specified in Schedule A to this Agreement within
sixty (60) days following the date of termination.

 

(b) Reference is made to Section 5(d) (Section 280G) of the AMERIGROUP
Corporation Amended and Restated Change in Control Benefit Policy and such
Section 5(d) is incorporated by reference herein. The terms and conditions of
such Section 5(d) shall apply to the extent that any portion of the Severance
Pay (or any other “Payment” described under such Section 5(d)) would constitute
an “excess parachute payment” within the meaning of Section 280G(b) of the
Internal Revenue Code of 1986, as amended from time to time, (“Code”) as a
result of a Change in Control of AMERIGROUP Corporation; provided, however, that
the second sentence of Section 5(d)(i) shall apply only with respect to Payments
that do not constitute deferred compensation under Code Section 409A after
taking into account all exceptions applicable under the regulations and other
guidance issued thereunder.

 

(c) Entitlement to the Severance Pay is subject to Executive’s compliance with
Sections 12 and 13 of this Agreement and the other terms and conditions of this
Agreement, and subject to the execution and delivery of a valid and unrevoked
waiver and release agreement in favor of the Company as required by Section 11
and to the other conditions set forth below.

 

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(d) For the avoidance of doubt, no Severance Pay shall be payable in respect of:
(i) termination of Executive’s employment upon death or Disability,
(ii) termination of Executive’s employment by the Company for Cause, or
(iii) any voluntary resignation that does not constitute a termination of
Executive’s employment for Good Reason. In cases of all terminations, he will be
entitled to receive all accrued but unpaid base salary and vacation pay (to be
paid within thirty (30) days of his termination date) and vested payments under
any of the benefit plans and other policies or agreements of the Company
(including death and disability benefits) or AMERIGROUP Corporation (other than
severance plans maintained by either the Company or AMERIGROUP Corporation) to
which Executive is entitled and any statutory payments or benefits to which
Executive is entitled under any applicable law (all such amounts shall be paid
or provided as provided in such plans, agreements, policies or legal
requirements).

 

10. CHANGE IN CONTROL. Reference is made to Article 4 (Additional Change in
Control Benefits) of the WellPoint, Inc. Executive Agreement Plan (as amended
from time to time) (the “Plan”), and such Article 4 is incorporated herein by
reference (for avoidance of doubt, its provisions will only apply after a
“Change in Control”, as such term is defined in such plan, of WellPoint). In the
event of a “Change in Control” of WellPoint during the term of Executive’s
employment under this Agreement, Executive will be eligible for the benefits
contemplated thereunder and on the same terms and conditions as if he were a
“Participant” in such Plan, except that all of the restrictive covenants
provided for in such Plan shall be replaced with the restrictive covenants
contained herein.

 

11. RELEASE. Any and all amounts payable and benefits or additional rights
provided pursuant to this Agreement beyond accrued benefits (including but not
limited to those provided under Sections 9 and Section 10 above) shall only be
payable if Executive delivers to the Company and does not revoke a general
release of all claims (in substantially the form set forth on Schedule B to this
Agreement) and such general release is valid, binding and in full force and
effect by no later than sixty (60) days following the date of termination;
provided, that the Company shall have delivered an execution version of such
release to Executive within seven (7) business days following his date of
termination.

 

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12. RESTRICTIVE COVENANTS.

 

(a) CONFIDENTIALITY.

 

(i) Executive recognizes that the Company derives substantial economic value
from information created and used in its business which is not generally known
by the public, including, but not limited to, plans, designs, concepts, computer
programs, formulae, and equations; product fulfillment and supplier information;
customer and supplier lists, and confidential business practices of the Company,
its affiliates and any of its customers, vendors, business partners or
suppliers; profit margins and the prices and discounts the Company obtains or
has obtained or at which it sells or has sold or plans to sell its products or
services (except for public pricing lists); manufacturing, assembling, labor and
sales plans and costs; business and marketing plans, ideas, or strategies;
confidential financial performance and projections; employee compensation;
employee staffing and recruiting plans and employee personal information; and
other confidential concepts and ideas related to the Company’s business
(collectively, “Confidential Information”). Executive expressly acknowledges and
agrees that by virtue of his employment with the Company, Executive will have
access and will use in the course of Executive’s duties certain Confidential
Information and that Confidential Information constitutes trade secrets and
confidential and proprietary business information of the Company, all of which
is the exclusive property of the Company. For purposes of this Agreement,
Confidential Information includes the foregoing and other information protected
under the Indiana Uniform Trade Secrets Act (the “Act”), or to any comparable
protection afforded by applicable law, but does not include information that
Executive establishes by clear and convincing evidence, is or may become known
to Executive or to the public from sources outside the Company and through means
other than a breach of this Agreement.

 

(ii) Executive agrees that Executive will not for himself or for any other
person or entity, directly or indirectly, without the prior written consent of
the Company, while employed by the Company and thereafter: (1) use Confidential
Information for the benefit of any person or entity other than the Company or
its affiliates; (2) remove, copy,

 

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duplicate or otherwise reproduce any document or tangible item embodying or
pertaining to any of the Confidential Information, except as required to perform
Executive’s duties for the Company or its affiliates; or (3) while employed and
thereafter, publish, release, disclose or deliver or otherwise make available to
any third party any Confidential Information by any communication, including
oral, documentary, electronic or magnetic information transmittal device or
media. Upon termination of employment, Executive shall return all Confidential
Information and all other property of the Company. This obligation of
non-disclosure and non-use of information shall continue to exist for so long as
such information remains Confidential Information.

 

(b) DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND IMPROVEMENTS. Without prejudice
to any other duties express or implied imposed on Executive hereunder it shall
be part of Executive’s normal duties at all times to consider in what manner and
by what methods or devices the products, services, processes, equipment or
systems of the Company and any customer or vendor of the Company might be
improved and promptly to give to the Chief Executive Officer of the Company or
his or her designee full details of any improvement, invention, research,
development, discovery, design, code, model, suggestion or innovation
(collectively called “Work Product”), which Executive (alone or with others) may
make, discover, create or conceive in the course of Executive’s employment.
Executive acknowledges that the Work Product is the property of the Company. To
the extent that any of the Work Product is capable of protection by copyright,
Executive acknowledges that it is created within the scope of Executive’s
employment and is a work made for hire. To the extent that any such material may
not be a work made for hire, Executive hereby assigns to the Company all rights
in such material. To the extent that any of the Work Product is an invention,
discovery, process or other potentially patentable subject matter (the
“Inventions”), Executive hereby assigns to the Company all right, title, and
interest in and to all Inventions. The Company acknowledges that the assignment
in the preceding sentence does not apply to an Invention that Executive develops
entirely on his own time without using the Company’s equipment, supplies,
facilities or trade secret information, except for those Inventions that either:

 

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  (1) relate at the time of conception or reduction to practice of the Invention
to the Company’s business, or actual or demonstrably anticipated research or
development of the Company, or

 

  (2) result from any work performed by Executive for the Company.

 

Execution of this Agreement constitutes Executive’s acknowledgment of receipt of
written notification of this Section and of notice of the general exception to
assignments of Inventions provided under the Uniform Employee Patents Act, in
the form adopted by the state having jurisdiction over this Agreement or
provision, or any comparable applicable law.

 

(c) NON-COMPETITION. During the Employment Period, and any period in which
Executive is employed by the Company during or after the Employment Period, and,
except if Executive is terminated by the Company without Cause or Executive
terminates for Good Reason, for the period of twelve (12) months after
Executive’s termination of employment, Executive will not, without prior written
consent of the Company, directly or indirectly seek or obtain a Competitive
Position in a Restricted Territory and perform a Restricted Activity with a
Competitor, as those terms are defined herein.

 

(i) “Competitive Position” means any employment or performance of services with
a Competitor (A) in which Executive has executive level duties for such
Competitor, or (B) in which Executive will use any Confidential Information of
the Company.

 

(ii) “Restricted Territory” means any geographic area in which the Company does
business and in which Executive had responsibility for, or Confidential
Information about, such business within the thirty-six (36) months prior to
Executive’s termination of employment from the Company.

 

(iii) “Restricted Activity” means any activity for which Executive had
responsibility for the Company within the thirty-six (36) months prior to
Executive’s termination of employment from the Company or about which Executive
had Confidential Information.

 

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(iv) “Competitor” means any entity or person that provides, or is planning to
provide, a Covered Product or Service in competition with a Covered Product or
Service that an AMERIGROUP Company is actively developing, marketing, providing
or selling; provided, that “AMERIGROUP Company” and “AMERIGROUP Companies” shall
mean AMERIGROUP Corporation and its subsidiaries.

 

(v) A “Covered Product or Service” shall mean a managed health care product or
service (A) offered or provided to any beneficiary of and/or participant in any
Medicare, Medicare-related, Medicaid or Medicaid-related program, any
government-funded children’s health insurance program or any federal and/or
state sponsored health care program that is substantially similar to any of such
programs, (B) offered or provided to any beneficiary of and/or participant in
any government-funded, government sponsored or government subsidized health care
program that directly competes or will directly compete with any managed health
care product or service offered or being developed to be offered by any
AMERIGROUP Company or (C) that directly competes or will directly compete with
any commercial managed health care product or service offered or being developed
to be offered by any AMERIGROUP Company.

 

(d) NON-SOLICITATION OF CUSTOMERS. During the Employment Period, and any period
in which Executive is employed by the Company during or after the Employment
Period, and for the period of twelve (12) months after Executive’s termination
of employment, Executive will not, either individually or as an employee,
partner, consultant, independent contractor, owner, agent, or in any other
capacity, directly or indirectly, for a Competitor of the Company as defined in
Section 12(c)(iv) above: (i) solicit business from any client or account of the
Company or any of its affiliates with which Executive had contact, or
responsibility for, or about which Executive had knowledge of Confidential
Information by reason of Executive’s employment with the Company, or
(ii) solicit business from any client or account which was pursued by the
Company or any of its affiliates and with which Executive had contact, or
responsibility for, or about which Executive had knowledge of Confidential
Information by reason of Executive’s employment with the Company, within the
twelve (12) month period prior to termination of employment. For purposes of
this provision, an individual policyholder in a plan maintained by the Company
or by a client or account of the Company under which individual policies are
issued, or a certificate holder in such plan under which group policies are
issued, shall not be considered a client or account subject to this restriction
solely by reason of being such a policyholder or certificate holder.

 

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(e) NON-SOLICITATION OF EMPLOYEES. During the Employment Period, and any period
in which Executive is employed by the Company during or after the Employment
Period, and for the period of twelve (12) months after Executive’s termination
of employment, Executive will not, either individually or as an employee,
partner, independent contractor, owner, agent, or in any other capacity,
directly or indirectly solicit, hire, attempt to solicit or hire, or participate
in any attempt to solicit or hire, for any non-Company affiliated entity, any
person who on or during the six (6) months immediately preceding the date of
such solicitation or hire is or was an officer or employee of the Company, or
whom Executive was involved in recruiting while Executive was employed by the
Company.

 

(f) NON-DISPARAGEMENT. Executive agrees that he will not, nor will he cause or
assist any other person to, make any statement to a third party or take any
action which is intended to or would reasonably have the effect of disparaging
or harming the Company or the business reputation of the Company’s directors,
employees, officers and managers. Further, Executive will not at any time make
any negative verbal or written statement to any media outlet regarding the
Company. The Company agrees that its directors and senior executive officers
shall not make any statement to a third party or take any action which is
intended to or would reasonably have the effect of disparaging or harming
Executive.

 

(g) CESSATION AND RECOUPMENT OF SEVERANCE PAYMENTS AND OTHER BENEFITS. If at any
time (prior to the six (6) year anniversary of Executive’s termination of
employment date) Executive breaches any provision of this Section 12 or
Section 13 below, then: (i) the Company shall cease to provide any further
Severance Pay or other similar benefits receivable under this Agreement and
Executive shall repay to the Company all Severance Pay and other similar
benefits, (ii) all unexercised Company stock options under any Designated Plan
(as defined below) whether or not otherwise vested shall cease to be exercisable
and shall immediately terminate; (iii) Executive shall forfeit any outstanding
restricted stock or other outstanding equity award made under any Designated
Plan and not

 

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otherwise vested on the date of breach; and (iv) Executive shall pay to the
Company (A) for each share of common stock of the Company (“Common Share”)
acquired on exercise of an option under a Designated Plan within the twenty-four
(24) months prior to such breach, the excess of the fair market value of a
Common Share on the date of exercise over the exercise price, and (B) for each
share of restricted stock that became vested under any Designated Plan within
the twenty-four (24) months prior to such breach, the fair market value (on the
date of vesting) of a Common Share. Any amount to be repaid pursuant to this
Section 12(g) shall be held by Executive in constructive trust for the benefit
of the Company and shall, upon written notice from the Company, within ten
(10) days of such notice, be paid by Executive to the Company with interest from
the date such Common Share was acquired or the share of restricted stock became
vested, as the case may be, to the date of payment, at 120% of the applicable
federal rate, determined under Section 1274(d) of the Code. Any amount described
in clauses (i), (ii) or (iii) that Executive forfeits as a result of a breach of
the provisions of Sections 12 and 13 shall not reduce any money damages that
would be payable to the Company as compensation for such breach. The amount to
be repaid pursuant to this Section 12(g) shall be determined on a gross basis,
without reduction for any taxes incurred, as of the date of the realization
event, and without regard to any subsequent change in the fair market value of a
Common Share. The Company shall have the right to offset such gain against any
amounts otherwise owed to Executive by the Company (whether as wages, vacation
pay, or pursuant to any benefit plan or other compensatory arrangement other
than any amount pursuant to any nonqualified deferred compensation plan under
Section 409A of the Code). For purposes of this Section 12(g), a “Designated
Plan” is each annual bonus and incentive plan, stock option, restricted stock,
or other equity compensation or long-term incentive compensation plan, deferred
compensation plan, or supplemental retirement plan listed on Schedule A. The
provisions of this Section 12(g) shall apply to awards described in clauses (i),
(ii), (iii) and (iv) of this Section earned or made after the Agreement Date,
and does not apply to awards earned or made on or prior to the Agreement Date.

 

(h) EQUITABLE RELIEF AND OTHER REMEDIES—CONSTRUCTION.

 

(i) Executive acknowledges that each of the provisions of this Agreement are
reasonable and necessary to preserve the legitimate business interests of the
Company, its

 

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present and potential business activities and the economic benefits derived
therefrom; that they will not prevent him from earning a livelihood in
Executive’s chosen business and are not an undue restraint on the trade of
Executive, or any of the public interests which may be involved.

 

(ii) Executive agrees that beyond the amounts otherwise to be provided under
this Agreement, the Company will be damaged by a violation of this Agreement and
the amount of such damage may be difficult to measure. Executive agrees that if
Executive commits or threatens to commit a breach of any of the covenants and
agreements contained in Sections 12 and 13 to the extent permitted by applicable
law, then the Company shall have the right to seek and obtain all appropriate
injunctive and other equitable remedies, without posting bond therefor, except
as required by law, in addition to any other rights and remedies that may be
available at law or under this Agreement, it being acknowledged and agreed that
any such breach would cause irreparable injury to the Company and that money
damages would not provide an adequate remedy. Further, if Executive violates
Section 12(c)—(e) hereof Executive agrees that the period of violation shall be
added to the period in which Executive’s activities are restricted.

 

(iii) Notwithstanding the foregoing, the Company will not seek injunctive relief
to prevent an Executive residing in California from engaging in post termination
competition in California under Section 12(c) or 12(d) of this Agreement
provided that the Company may seek and obtain relief to enforce Section 12(g) of
this Section with respect to such Executives.

 

(iv) The parties agree that the covenants contained in this Agreement are
severable. If an arbitrator or court shall hold that the duration, scope, area
or activity restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope, area or activity
restrictions reasonable and enforceable under such circumstances shall be
substituted for the stated duration, scope, area or activity restrictions to the
maximum extent permitted by law. The parties further agree that the Company’s
rights under Section 12(g) should be enforced to the fullest extent permitted by
law irrespective of whether the Company seeks equitable relief in addition to
relief provided thereon or if the arbitrator or court deems equitable relief to
be inappropriate.

 

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(i) SURVIVAL OF PROVISIONS. The obligations contained in this Section 12 and
Section 13 below shall survive the cessation of the Employment Period and
Executive’s employment with the Company and shall be fully enforceable
thereafter. For the avoidance of doubt, the immediately preceding sentence shall
not be interpreted to provide that other provisions which by their terms survive
the cessation of the Employment Period do not so survive.

 

13. COOPERATION. Executive agrees that while employed by the Company and for two
(2) years after the termination of Executive’s employment for any reason, upon
the receipt of reasonable notice from the Company (including from outside
counsel to the Company), Executive will reasonably respond and provide
information with regard to matters in which Executive has knowledge as a result
of his employment with the Company, and will provide reasonable assistance to
the Company, its affiliates and their respective representatives in defense of
any claims that may be made against the Company or its affiliates, and will
reasonably assist the Company and its affiliates in the prosecution of any
claims that may be made by the Company or its affiliates, to the extent that
such claims may relate to the period of Executive’s employment with the Company
(or any predecessor); provided, that with respect to periods after the
termination of Executive’s employment, the Company shall reimburse Executive for
any out-of-pocket expenses incurred in providing such assistance (including if
necessary for reasonable attorney fees, provided the Company has reasonably
approved the retention of such attorney for the relevant matter) and if
Executive is required to provide more than twenty (20) hours of assistance per
year after his termination of employment then the Company shall pay Executive a
reasonable amount of money for his services at a rate reasonably agreed to
between the Company and Executive; and provided further that after Executive’s
termination of employment with the Company such assistance shall not
unreasonably interfere with Executive’s business or personal obligations.
Executive agrees to promptly inform the Company (to the extent Executive is
legally permitted to do so) if Executive is asked to assist in any investigation
of the Company or its affiliates (or their actions), regardless of whether a
lawsuit or other proceeding has then been filed against the Company or its
affiliates with respect to such investigation, and shall not so assist unless
legally required.

 

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14. NOTIFICATION OF EXISTENCE OF AGREEMENT. Executive agrees that in the event
that Executive is offered employment with another employer (including service as
a partner of any partnership or service as an independent contractor) at any
time during the existence of this Agreement, or such other period in which post
termination obligations of this Agreement apply, Executive shall immediately
advise said other employer (or partnership) of the existence of this Agreement
and shall immediately provide said employer (or partnership or service
recipient) with a copy of Sections 12 and 13 of this Agreement.

 

15. NOTIFICATION OF SUBSEQUENT EMPLOYMENT. Executive shall report promptly to
the Company any employment with another employer (including service as a partner
of any partnership or service as an independent contractor or establishment of
any business as a sole proprietor) obtained during the period in which
Executive’s post termination obligations set forth in Section 12(c)—(e) apply.

 

16. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered by hand,
(ii) on the date of transmission, if delivered by confirmed facsimile or e-mail,
(iii) on the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the fourth business day
following the date delivered or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

If to Executive:

 

At the address (or to the facsimile number) shown on the records of the Company

 

If to the Company:

 

Randal L. Brown

 

Executive Vice President and Chief Human Resources Officer

 

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WellPoint, Inc.

 

120 Monument Circle

 

Indianapolis, IN 46204

 

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

 

17. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement. In the event of any
inconsistency between the terms of this Agreement and any form, award, plan or
policy of the Company, the terms of this Agreement shall control.

 

18. SUCCESSORS AND ASSIGNS—BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns, as the case may be. The Company may assign this Agreement to any
successor or assign of all or a substantial portion of the Company’s business.
Executive may not assign or transfer any of his rights or obligations under this
Agreement (except for economic rights hereunder to his successors or
beneficiaries, in case of his death).

 

19. SEVERABILITY. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

 

20. DISPUTE RESOLUTION.

 

(a) Any dispute arising out of or relating to this Agreement, including the
breach, termination or validity thereof shall be finally resolved by arbitration
in accordance with the CPR Rules for Non-Administered Arbitration then currently
in effect, by a sole arbitrator. The Company shall be initially responsible for
the payment of any filing fee and advance in costs required by CPR or the
arbitrator, provided, however, if Executive initiates the claim, Executive will
contribute an amount not to exceed $250.00 for these purposes. During the
arbitration, each party shall pay for its own costs and attorneys fees, if any.

 

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(b) The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.
§§ 1-16, and judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof. The arbitrator shall not have the
right to award speculative damages or punitive damages to either party except as
expressly permitted by statute (notwithstanding this provision by which both
parties hereto waive the right to such damages) and shall not have the power to
amend this Agreement. The arbitrator shall be required to follow applicable law.
The place of arbitration shall be Virginia Beach, Virginia. Any application to
enforce or set aside the arbitration award shall be filed in a state or federal
court located in Virginia Beach, Virginia.

 

(c) Notwithstanding the foregoing provisions of this Section, an action to
enforce this Agreement shall be filed within eighteen (18) months after the
party seeking relief had actual or constructive knowledge of the alleged
violation of this Agreement or any party shall be able to seek immediate,
temporary, or preliminary injunctive or equitable relief from a court of law or
equity if, in its judgment, such relief is necessary to avoid irreparable
damage. To the extent that any party wishes to seek such relief from a court,
the parties agree to the following with respect to the location of such actions.
Such actions brought by Executive shall be brought in a state or federal court
located in Virginia Beach, Virginia. Such actions brought by the Company shall
be brought in a state or federal court located in Indianapolis, Indiana;
Executive’s state of residency; or any other forum in which Executive is subject
to personal jurisdiction. Executive specifically consents to personal
jurisdiction in the State of Indiana for such purposes.

 

(d) IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, THEN EACH
PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER MATTER INVOLVING THE PARTIES HERETO.

 

21. TAXES; SECTION 409A. All amounts payable hereunder are subject to applicable
federal, state and local tax withholding. The intent of the Company is that
payments and benefits under this Agreement comply with Section 409A of the Code
to the extent subject thereto, and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted

 

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and administered to be in compliance therewith. Each amount to be paid or
benefit to be provided under this Agreement shall be construed as a separate
identified payment for purposes of Section 409A, and any payments described in
Section 9 of this Agreement that are due within the “short term deferral period”
within the meaning of Section 409A shall not be treated as deferred compensation
unless applicable law requires otherwise. If current or future regulations or
guidance from the Internal Revenue Service dictates, or the Company’s counsel
determines, that any payments or benefits due to Executive hereunder would cause
the application of an accelerated or additional tax under Section 409A, amounts
that would otherwise be payable and benefits that would otherwise be provided
pursuant to this Agreement during the six (6) month period immediately following
Executive’s “separation from service” shall instead be paid on the first
business day after the date that is six (6) months following Executive’s
separation from service (or upon Executive’s death, if earlier). To the extent
required to avoid an accelerated or additional tax under Section 409A, amounts
reimbursable to Executive under this Agreement shall be paid to Executive on or
before the last day of the year following the year in which the expense was
incurred and the amount of expenses eligible for reimbursement (and in-kind
benefits provided to Executive) during any one year may not affect amounts
reimbursable or provided in any subsequent year; provided, however, that with
respect to any reimbursements for any taxes to which Executive would become
entitled to under the terms of this Agreement, the payment of such
reimbursements shall be made by the Company no later than the end of the
calendar year following the calendar year in which Executive remits the related
taxes.

 

22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of Indiana applicable to contracts made and
to be performed entirely within that State, without regard to its conflicts of
law principles.

 

23. ATTORNEYS’ FEES. If Executive commences a legal action to enforce any of the
obligations of the Company under this Agreement, and it is ultimately determined
that Executive is entitled to any payment or benefits under this Agreement, the
Company shall pay Executive the amount necessary to reimburse him in full for
all reasonable expenses (including reasonable attorney’s fees and legal
expenses) incurred by Executive with respect to such action. In all other
instances, the parties hereto shall be responsible for paying their own legal
fees and expenses.

 

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24. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and such officer or director as may be designated by the
Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement together with all exhibits and schedules thereto
sets forth the entire agreement of the parties hereto in respect of the subject
matter contained herein. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. This Agreement
may be executed through the use of separate signature pages or in any number of
counterparts, with the same effect as if the parties executing such counterparts
had executed one counterpart. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment, defense
or other claim, right or action that the Company may have against Executive,
unless otherwise specifically provided herein. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to him under this Agreement and such amounts shall not be
reduced whether or not Executive obtains other employment.

 

25. Absence of Presumption. No rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall be employed in
the interpretation of this Agreement (including all of the exhibits and
schedules) or any amendments hereto.

 

26. OTHER EMPLOYMENT AND SEVERANCE ARRANGEMENTS; NO DUPLICATION OF BENEFITS. Any
employment, severance or change in control plan or agreement or other similar
agreements or arrangements entered into between Executive and AMERIGROUP
Corporation and/or its affiliates or maintained for the benefit of Executive
(including without limitation the AMERIGROUP Corporation Amended and Restated
Change in Control Benefit Policy), shall, effective as of the Agreement Date, be
superseded by this Agreement and shall therefore terminate and be null and void
and of no force or effect, unless otherwise expressly provided herein. This
Agreement and any other plans, policies and

 

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arrangements of the Company (or its affiliates) in which Executive participates
from time to time shall be interpreted and operated in a manner that avoids
duplication of benefits. For the avoidance of doubt (and notwithstanding the
terms of any equity awards or other applicable Company documents, whether
currently in effect or become effective later), unless and until Executive
executes a new employment agreement with the Company, this Agreement shall
contain the only restrictive covenants to which Executive shall be subject.

 

27. EFFECT OF MERGER AGREEMENT TERMINATION. This Agreement shall be null and
void and of no force or effect if the Merger Agreement terminates for any
reason.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

WELLPOINT, INC.

By:

  /s/ Wayne S. DeVeydt

Name:

  Wayne S. DeVeydt

Its:

  Executive Vice President

Date:

  7/9/12 EXECUTIVE /s/ Richard C. Zoretic

Date:

  7/9/12

 

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SCHEDULE A

 

1. Name of Executive

   Richard C. Zoretic

2. Position

   COO AMERIGROUP Business

3. Agreement Date

   The effective date of this Agreement shall be the Closing Date of the
transactions contemplated by the Merger Agreement.

4. Base Salary

   $575,000

5. Annual Bonus Target Opportunity

   Executive’s target annual bonus shall be at least 100% of Executive’s Base
Salary.

6. Special Retention Bonus

   $2,500,000

7. Severance Pay shall equal

   The greater of (x) two (2) times the sum of Base Salary and target annual
cash bonus in the year of termination and (y) $2,300,000

8. Designated Plans

  

WellPoint Annual Incentive Plan or equivalent cash bonus plan of AMERIGROUP
Corporation (to the extent continuing after the Closing Date)

 

WellPoint Incentive Compensation Plan or equivalent long term incentive plan of
AMERIGROUP Corporation (to the extent continuing after the Closing Date)

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SCHEDULE B

 

Form of General Release and Waiver

 

This is a Waiver and Release (this “Release”) between             (“Executive”)
and WellPoint, Inc. (the “Company”). The Company and Executive agree that they
have entered into this Release voluntarily, and that it is intended to be a
legally binding commitment between them.

 

1. In consideration for the promises made herein by Executive, the Company
agrees to pay to Executive severance or change of control payments in the amount
set forth in Executive’s employment agreement dated July 9, 2012 (the
“Employment Agreement”). The Company will also pay Executive accrued but unused
vacation pay for all of his or her accrued but unused vacation days.

 

2. In consideration for and contingent upon Executive’s right to receive the
severance pay described in the Employment Agreement and this Release, Executive
hereby agrees as follows:

 

 

(a) General Waiver and Release. Except as provided in Paragraph 2(f) below,
Executive and any person acting through or under Executive hereby release, waive
and forever discharge the Company, its past subsidiaries and its past and
present affiliates, and their respective successors and assigns, and their
respective present or past officers, trustees, directors, shareholders,
executives and agents of each of them, from any and all claims, demands,
actions, liabilities and other claims for relief and remuneration whatsoever
(including without limitation attorneys’ fees and expenses), whether known or
unknown, absolute, contingent or otherwise (each, a “Claim”), arising or which
could have arisen up to and including the date of his execution of this Release,
arising out of or relating to Executive’s employment or cessation and
termination of employment, or any other written or oral agreement, any change in
Executive’s employment status, any benefits or compensation, any tortious
injury, breach of contract, wrongful discharge (including any Claim for
constructive discharge), infliction of emotional distress, slander, libel or
defamation of character, and any Claims arising under Title VII of the Civil
Rights Act of 1964 (as amended by the Civil Rights Act of 1991), the Americans
With Disabilities Act, the Rehabilitation Act of 1973, the Equal Pay Act, the
Older Workers Benefits Protection Act, the Age Discrimination in Employment Act,
the Employee Retirement Income Security Act of 1974, or any other federal, state
or local statute, law, ordinance, regulation, rule or executive order, any tort
or contract claims, and any of the claims, matters and issues which could have
been asserted by Executive against the Company or its subsidiaries and
affiliates in any legal, administrative or other proceeding. Executive agrees
that if any action is brought in his or her name before any court or
administrative body, Executive will not accept any payment of monies in
connection therewith.

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(b) Waiver Under Section 1542 of the California Civil Code. Executive, for
Executive’s predecessors, successors and assigns, hereby waives all rights which
Executive may have under Section 1542 of the Civil Code of the State of
California, which reads as follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

This waiver is not a mere recital but is a knowing waiver of the rights and
benefits otherwise available under said Section 1542.

 

(c) Miscellaneous. Executive agrees that this Release specifies payment from the
Company to himself or herself, the total of which meets or exceeds any and all
funds due him or her by the Company, and that he or she will not seek to obtain
any additional funds from the Company with the exception of non-reimbursed
business expenses. This covenant does not preclude Executive from seeking
workers compensation, unemployment compensation, or benefit payments under the
Company’s employee benefit plans that could be due him or her.

 

(d) Non-Competition, Non-Solicitation and Confidential Information and
Inventions. Executive warrants that Executive has, and will continue to comply
fully with Sections 12 and 13 of the Employment Agreement, if applicable.

 

(e) THE COMPANY AND EXECUTIVE AGREE THAT THE SEVERANCE PAY DESCRIBED IN THIS
RELEASE ARE CONTINGENT UPON THE EXECUTIVE SIGNING THIS RELEASE. EXECUTIVE
FURTHER UNDERSTANDS AND AGREES THAT IN SIGNING THIS RELEASE, EXECUTIVE IS
RELEASING POTENTIAL LEGAL CLAIMS AGAINST THE COMPANY. THE EXECUTIVE UNDERSTANDS
AND AGREES THAT IF HE OR SHE DECIDES NOT TO SIGN THIS RELEASE, OR IF HE OR SHE
REVOKES THIS RELEASE, THAT HE OR SHE WILL IMMEDIATELY REFUND TO THE COMPANY ANY
AND ALL SEVERANCE PAYMENTS AND OTHER BENEFITS HE OR SHE MAY HAVE ALREADY
RECEIVED.

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(f) The waiver contained in Section 2(a) and (b) above does not apply to any
Claims with respect to:

 

(i) Any claims under employee benefit plans subject to the Employee Retirement
Income Security Act of 1974 (“ERISA”) or other vested benefits and entitlements
in accordance with the terms of the applicable employee benefit plan (including
vested benefits and entitlements under the Employment Agreement),

 

(ii) Any Claim under or based on a breach of this Release or the Employment
Agreement,

 

(iii) Rights or Claims that may arise under the Age Discrimination in Employment
Act after the date that Executive signs this Release or that otherwise cannot be
released by law, and

 

(iv) Any right to indemnification or directors and officers liability insurance
coverage to which Executive is otherwise entitled in accordance with the
Company’s articles or by-laws or other applicable agreements of the Company and
any rights to contribution in case of joint and several liability between the
Executive and the released parties hereunder.

 

EXECUTIVE ACKNOWLEDGES THAT HE OR SHE HAS READ AND IS VOLUNTARILY SIGNING THIS
RELEASE. EXECUTIVE ALSO ACKNOWLEDGES THAT HE OR SHE IS HEREBY ADVISED TO CONSULT
WITH AN ATTORNEY, HE OR SHE HAS BEEN GIVEN AT LEAST 30 DAYS TO CONSIDER THIS
RELEASE BEFORE THE DEADLINE FOR SIGNING IT, AND HE OR SHE UNDERSTANDS THAT HE OR
SHE MAY REVOKE THE RELEASE WITHIN SEVEN (7) DAYS AFTER SIGNING IT. IF NOT
REVOKED WITHIN SUCH PERIOD, THIS RELEASE WILL BECOME EFFECTIVE ON THE EIGHTH
(8) DAY AFTER IT IS SIGNED BY EXECUTIVE.

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BY SIGNING BELOW, BOTH THE COMPANY AND EXECUTIVE AGREE THAT THEY UNDERSTAND AND
ACCEPT EACH PART OF THIS RELEASE.

 

     (Executive)    DATE

WELLPOINT, INC.

   By:    DATE

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EXHIBIT A

 

[Form of Notice of RSU Grant and RSU Award Agreement]