Document:

executiveseveranceplan.htm

Exhibit 10.1

WELLCARE HEALTH PLANS, INC.

EXECUTIVE SEVERANCE PLAN

(Effective as of November 17, 2011)

 

	
1.

	
Purpose of the Plan

 

The Board believes that it is in the best interests of the Company to encourage the continued employment and dedication of certain officers by providing economic security to such individuals in the event of certain terminations of employment, and the Plan has been established for this purpose. The Plan is intended to be a “welfare plan” under ERISA providing benefits to a select group of management or highly compensated employees as described in DOL Regulation section 2520.104-24.  The Plan is separate from the WellCare Health Plans, Inc. Severance Plan, as amended from time to time.  Capitalized terms used in the Plan are defined in Section 10, except as otherwise specified.

 

	
2.

	
Effective Date

 

The Plan shall be effective only with respect to a termination of employment covered by the Plan that occurs on or after November 17, 2011 (the “Effective Date”).

 

	
3.

	
Administration

 

(a)           The Committee shall act as the plan administrator and the “named fiduciary” of the Plan for purposes of ERISA. Before a Change in Control, the Committee has sole and absolute discretion and authority to administer the Plan, including the sole and absolute discretion and authority to:

 

(i)             adopt such rules as it deems advisable in connection with the administration of the Plan, and to construe, interpret, apply and enforce the Plan and any such rules and to remedy ambiguities, errors or omissions in the Plan;

 

(ii)            determine questions of eligibility and entitlement to benefits and any other terms of the Plan applicable to the Participants; the Committee’s determinations are conclusive and binding on all parties affected by its determinations;

 

(iii)           act under the Plan on a case-by-case basis; the Committee’s decisions under the Plan need not be uniform with respect to similarly situated Participants; and

 

(iv)           delegate its authority under the Plan to any director, officer, employee, or group of directors, officers and/or employees of the Company.

 

(b)           If any person with administrative authority becomes eligible or makes a claim for Plan benefits, that person will have no authority with respect to any matter specifically affecting his/her individual interest under the Plan, and the Committee will designate another person to exercise such authority.

  

 

  

(c)           Notwithstanding anything in the Plan to the contrary, after a Change in Control, neither the Committee nor the Board nor any other person or entity shall have discretionary authority in the administration of the Plan, and any court or tribunal that adjudicates any dispute, controversy or claim in connection with any severance benefits under this Plan will apply a de novo standard of review to any determinations made by the Committee or Board following such Change in Control. Such de novo standard shall apply notwithstanding the grant of full discretion hereunder to the Committee, Board, or any person or entity or characterization of any decision by the Committee, Board, or by such person or entity as final, binding or conclusive on any party.

 

	
4.

	
Participation

 

Eligibility under the Plan is limited to Company employees designated by the Board as “executive officers” of WellCare within the meaning of Rule 3b-7 of the Exchange Act.  A Participant will cease being eligible for benefits under the Plan and immediately cease being a Participant if, prior to a Change in Control, the Board revokes such designation; a Participant shall not cease being eligible for benefits under the Plan if he ceases to be an “executive officer” following a Change in Control.  If an executive officer of the Company is covered by any plan, program, policy or agreement with the Company that provides severance benefits upon termination of employment, then he or she will not be a Participant in this Plan.  To become a Participant, the employee must also become a party to a restrictive covenants agreement in the form provided by the Company.

 

	
5.

	
Severance Benefits

 

(a)           Before a Change in Control.  If a Participant’s employment with the Company is terminated after the Effective Date and before a Change in Control either (i) by the Company for reasons other than Cause, death, or Disability, or (ii) by the Participant for Good Reason, then the Participant shall receive: (x) payment of the Accrued Obligations, (y) the Cash Severance benefit described in this Section 5(a) based on the Participant’s title, and (z) Health Benefit Continuation described in this Section 5(a) based on the Participant’s title.

 

	
Title as of Termination Date

	
Cash Severance

	
Health Benefit Continuation

(months)

	
Chief Executive Officer

	
Base Salary Portion: 1.5 x Base Salary plus

 

Bonus Portion: 1.5 x Bonus

 

	
18

	
Chief Financial Officer, Chief Administrative Officer, 

General Counsel, and President, National Health Plans

	
Base Salary Portion: 1 x Base Salary plus

 

Bonus Portion: 1 x Bonus

 

	
12

	
Other Executive Officers

	
Base Salary Portion: 1 x Base Salary plus

 

Bonus Portion: 1 x Bonus

 

	
12

  

2

  

The Company shall pay the Participant’s Base Salary Portion in installments in accordance with the Company’s normal payroll schedule over 12 months beginning no later than the first regular payroll period following the expiration of any period during which a Participant may revoke the waiver and release of claims executed pursuant to Section 6(a), so long as that waiver and release is signed by the Participant and returned to the Company no later than 30 days after the Participant’s termination of employment and the Participant does not revoke such waiver and release of claims.

The Company shall pay the Participant’s Bonus Portion on the first anniversary of the Participant’s termination of employment, so long as the waiver and release has become effective and irrevocable as described above.

If a Change in Control occurs while payments of the Cash Severance are being made, the payments will continue to be paid as scheduled.

(b)           In Contemplation of a Change in Control.  If a Participant’s employment with the Company is terminated after the Effective Date and before a Change in Control by the Company for reasons other than Cause, death, or Disability, the Participant begins to receive severance in accordance with Section 5(a), a Change in Control occurs, and the Participant provides clear and convincing evidence to the Committee within 30 days after the Change in Control to support a claim that the Participant was terminated In Contemplation of a Change in Control, then within 70 days after the Change in Control, the Participant shall receive (i) a single lump sum cash payment equal to the Cash Severance determined in accordance with Section 5(c) less the amount of Cash Severance already paid to the Participant under Section 5(a), and (ii) Health Benefit Continuation for the duration described in Section 5(c) based on the Participant’s title less the months of Health Benefit Continuation already provided under Section 5(a).

 

               (c)           After a Change in Control.  If a Participant’s employment with the Company is terminated within 24 months after a Change in Control either (i) by the Company for reasons other than Cause, death, or Disability, or (ii) by the Participant for Good Reason, then the Participant shall receive: (x) payment of the Accrued Obligations, (y) the Cash Severance benefit described in this Section 5(c) based on the Participant’s title as in effect on the date of the Change in Control, and (z) Health Benefit Continuation described in this Section 5(c) based on the Participant’s title as in effect on the date of the Change in Control.

 

	
Title as of Termination Date

	
Cash Severance

	
Health Benefit Continuation

(months)

	
Chief Executive Officer

	
Base Salary Portion: 2.5 x Base Salary plus

 

Bonus Portion: 2.5 x Bonus

 

	
18

	
Chief Financial Officer, Chief Administrative Officer, General Counsel, and President, National Health Plans

	
Base Salary Portion: 2 x Base Salary plus

 

Bonus Portion: 2 x Bonus

 

	
18

	
Other Executive Officers

	
Base Salary Portion: 1.5 x Base Salary plus

 

Bonus Portion: 1.5 x Bonus

 

	
18

 

  

3

  

The Company shall pay the Participant’s Base Salary Portion and Bonus Portion in a single lump sum cash payment no later than the first regular payroll period following the expiration of any period during which a Participant may revoke the waiver and release of claims executed pursuant to Section 6(a), so long as that waiver and release is signed by the Participant and returned to the Company no later than 30 days after the Participant’s termination of employment and the Participant does not revoke such waiver and release of claims.

               (d)           Form of Severance under Existing Agreement.  Participants who are covered by an existing employment or severance agreement with the Company agree that their existing rights under that agreement are terminated and replaced with the provisions of this Plan; provided, however, that for the duration of the original remaining term of the employment or severance agreement only, the timing and form of severance (i.e., lump sum or installments) in the employment or severance agreement shall supersede the timing and form of payment provisions in this Section 5 and control the timing and form of payment of the Cash Severance.

 

(e)           Employment with Successor. Notwithstanding anything to the contrary under the Plan, no severance benefits shall be paid to a Participant who is offered comparable employment by an entity that purchases a unit or asset of the Company or, following a Change in Control, by a successor to the Company. “Comparable employment” is determined based on the facts and circumstances in each case, but means employment with duties, responsibilities, Base Salary, annual short-term incentive opportunity, annual long-term incentive opportunity and location that are substantially similar in the aggregate to the Participant’s prior employment with the Company. A Participant who accepts comparable employment with a successor to the Company following a Change in Control remains entitled to receive severance benefits if the Participant’s employment is terminated as specified under Section 5(c).

(f)           Release of Claims and Restrictive Covenants.  Payment of Cash Severance and Health Benefit Continuation is subject to and contingent on the Participant’s satisfaction of the requirements of Section 6(a) (regarding waiver and release of claims) and Section 6(b) (regarding restrictive covenants).  If the period during which a Participant has discretion to execute or revoke the waiver and release of claims straddles two taxable years of the Participant, then the Company shall begin making the payment of Cash Severance in the second of such taxable years, regardless of which taxable year the Participant actually delivers the executed waiver and release to the Company.

(g)           Code Section 280G Cutback. A Participant shall bear all expense of, and be solely responsible for, all federal, state, local or foreign taxes due with respect to any payment received under the Plan, including, without limitation, any excise tax imposed by Code section 4999. Notwithstanding anything to the contrary in the Plan, in the event that any payment or benefit received or to be received by a Participant pursuant to the terms of the Plan (the “Plan Payments”) or in connection with the Participant’s termination of employment or contingent upon a Change in Control pursuant to any plan or arrangement or other agreement with the Company (together with the Plan Payments, the “Payments”) would be subject to the excise tax imposed by Code section 4999, as determined by the Committee, then the Plan Payments shall be reduced to the extent necessary to prevent any portion of the Payments from becoming nondeductible by the Participant’s employer under Code section 280G or subject to the excise tax imposed under Code section 4999, but only if, by reason of that reduction, the net after-tax benefit received by the Participant exceeds the net after-tax benefit the Participant would receive if no reduction was made. For this purpose, “net after-tax benefit” means (i) the total of all Payments that would constitute “excess parachute payments” within the meaning of Code section 280G, less (ii) the amount of all federal, state, and local income taxes payable with respect to the Payments calculated at the maximum marginal income tax rate for each year in which the Payments shall be paid to the Participant (based on the rate in effect for that year as set forth in the Code as in effect at the time of the first payment of the Payments), less (iii) the amount of excise taxes imposed on the Payments described in clause (i) above by Code section 4999.  If, pursuant to this Section, Payments are to be reduced, Payments will be reduced in this order: (1) Cash Severance, (2) Health Benefit Continuation, and (3) equity acceleration (to the extent applicable).

  

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6.

	
Other Terms and Conditions of Eligibility

 

(a)           Waiver and Release of Claims. As a condition to receiving severance benefits under the Plan, each Participant shall be required to sign and deliver to the Company, and may not revoke or violate the terms of, a general release of all claims against the Company, and the directors, officers, and employees of each of them, in the form attached as Exhibit A or such other form reasonably satisfactory to the Committee. In no case will payments be made or begin before the end of any revocation period required by applicable law or regulation in connection with any release or waiver that the Participant is asked to sign.

 

(b)           Restrictive Covenants. Any severance benefits specified under the Plan are provided, if at all, as consideration for, and are contingent upon, the Participant agreeing to, and abiding by, the restrictive covenants in the Participant’s restrictive covenants agreement with the Company.

 

(c)           At-Will Employment. Each Participant is employed by the Company on an “at will” basis and nothing in this Plan shall give any Participant any right to continue in the employ of the Company. A Participant shall have no rights under the Plan if the Participant’s employment is terminated by the Company, or any successor, with Cause or by the Participant without Good Reason, or due to the Participant’s death or Disability.

 

(d)           Nonduplication; No Impact on Benefits.

 

(i)             Payments to a Participant under the Plan shall be in lieu of any severance or similar payments that otherwise might be payable under any Company plan, program, policy or agreement with the Company that provides severance benefits upon termination of employment.

 

(ii)            Benefits payable under the Plan, whether paid in a lump sum or in periodic payments, will not increase or decrease the benefits otherwise available to a Participant under any company-sponsored retirement plan, welfare plan or any other employee benefit plan or program, unless otherwise expressly provided for in any particular plan or program.

 

(iii)           Any severance benefits specified under the Plan shall be reduced by the amount of any payment required by the Company to the Participant (A) because of insufficient advance notice of employment loss as may be required by law; or (B) under applicable law because of the termination of employment.

  

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7.

	
Benefit Claims

 

(a)           Initial Claim. Any claims concerning eligibility, participation, benefits or other aspects of the Plan must be submitted in writing and directed to the Committee, within 30 days after the communication of the determination that is the basis of the claim. Within 30 days after receiving a claim, the Committee will (i) either accept or deny the claim completely or partially and (ii) notify the Participant of acceptance or denial of the claim. If a claim is partially or wholly denied, the Committee will provide a written denial to the Participant no later than 30 days after receipt of the initial claim request. The written denial shall include specific reasons for the denial, specific references to the Plan provisions upon which the denial was based, a description of any additional material or information necessary for the Participant to perfect the claim, an explanation of why such material is necessary, and instructions on the Plan’s claim review procedure. If the Committee requires additional time to process a claim because of special circumstances, the Committee, in its sole discretion, may extend the period 30 additional days. The Committee must notify the Participant of any such extension prior to the expiration of the 30-day period commencing from the date the Committee first received written submission of the claim.

 

(b)           Appeals. The Participant may request in writing to the Board a review of a denied claim within 30 days after receipt of such denial. Such written request must contain an explanation as to why the Participant is seeking a review. For purposes of the review, the Participant has the right to (i) submit written comments, documents, records and other information relating to the claim for benefits; (ii) request, free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits; and (iii) a review that takes into account all comments, documents, records, and other information the Participant submitted relating to the claim, regardless of whether the information was submitted or considered in the initial decision. A decision on such review will be rendered in writing within 30 days of the Board’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible but no later than 60 days after receipt of the request for review provided that written notice is provided to the Participant or the Participant’s authorized representative before the extension commences. A written notice affirming the denial of a claim will set forth the specific reasons for the decision and make specific reference to Plan provisions upon which the decision or appeal is based. In preparation for filing such a request for review, the Participant or the Participant’s authorized representative may review pertinent plan documents, and as part of the written request for review, may submit issues and comments concerning the claim. No claim may be brought before or submitted to a court of law or other governmental entity unless and until the claims process under this Section 7 has been exhausted.

 

	
8.

	
Recoupment

 

(a)           Right of Recoupment.  If, at any time, the Board or the Committee, as the case may be, in its sole discretion determines that any action or omission by the Participant constituted (a) wrongdoing that contributed to (i) any material misstatement in or omission from any report or statement filed by the Company with the U.S. Securities and Exchange Commission or (ii) a statement, certification, cost report, claim for payment or other filing made under Medicare or Medicaid that was false, fraudulent or for an item or service not provided as claimed; (b) intentional or gross misconduct; (c) a breach of a fiduciary duty to the Company; (d) fraud; (e) a violation of the restrictive covenants; or (f) non-compliance with the Company’s Code of Conduct and Business Ethics (“Code of Conduct”), policies or procedures to the material detriment of the Company, then in each such case, the Participant’s participation in the Plan shall be immediately terminated and the Participant shall repay to the Company, upon notice to the Participant by the Company, up to 100% of the pre-tax amount paid to the Participant pursuant to this Plan. The Board or the Committee, as the case may be, shall determine in its sole discretion the date of occurrence of such action or omission and the percentage of the pre-tax amount received pursuant to this Plan that must be repaid to the Company.

  

6

  

 

(b)           Method of Recoupment. To the extent permitted by applicable law, the Company may enforce the recoupment of any or all amounts due under this Section 8 by withholding future payment of any severance benefits, seeking reimbursement of previously paid severance benefits, demanding direct cash payment, reducing any amount of compensation owed by the Company to the Participant, and/or such other means determined by the Board or Committee.

 

(c)           Nonexclusive Remedy. The Company’s right of recoupment under this Section 8 is in addition to any remedy available to the Company with respect to any Participant, including, but not limited to, the initiation of civil or criminal proceedings and any right to repayment under the Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act, and any other applicable law.

 

	
9.

	
General

 

(a)           Amendment and Termination of the Plan.  The Board or the Committee may amend or terminate the Plan in any respect (including any change to the severance benefits) only with one year notice to Participants; provided, however, that (i) any amendment or termination will not be effective if there is a Change in Control during the one year notice period, and (ii) the Plan cannot be amended or terminated during the 24 month period after a Change in Control.  A Participant ceasing to be eligible for a benefit under the Plan before a Change in Control, as described in Section 4, is not an amendment or termination of the Plan.

 

(b)           Funding. Benefits payable under the Plan will be paid only from the general assets of the Company. The Plan does not create any right to, or interest in, any specific assets of the Company.

 

(c)           No Mitigation. The Participant shall not be obligated to seek other employment in mitigation of the amounts payable under any provision of the Plan, and the obtaining of such other employment shall not effect any reduction of the Company’s obligations to pay the severance benefits provided under the Plan (unless in violation of the restrictive covenants specified under Section 6(b)).

  

7

  

(d)          Withholding. The Company may withhold from any payments made under the Plan all federal, state, local or other taxes required pursuant to any law or governmental regulation or ruling.

 

(e)           Right to Offset. To the extent permitted by law, the Company may offset against any obligation to pay any portion of the severance benefit under the Plan any outstanding amount of whatever nature that the Participant then owes to the Company in the capacity as an employee. However, no amount of “deferred compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12)) that is payable to a Participant under the Plan may be used to offset any amount that the Participant then owes to the Company.

 

(f)           Successors. All rights under the Plan are personal to the Participant and without the prior written consent of the Committee shall not be assignable by the Participant. The Plan shall inure to the benefit of and be enforceable by the Participant’s legal representative. The Plan shall inure to the benefit of, and be binding upon, the Company and its successors and assigns. Any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of WellCare shall be required to assume expressly and agree to perform the obligations set forth in the Plan in the same manner and to the same extent as the Company would be required to do so.

 

(g)          Governing Law. The Plan and all determinations made and actions taken pursuant to the Plan shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware or by United States federal law.

 

(h)           Severability. If any provision of the Plan is declared illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.

 

(i)           Notices. Notices and all other communications provided for under the Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States certified mail, return receipt requested, or by overnight courier, postage prepaid, to the Company’s corporate headquarters address, to the attention of the Committee, or to the Participant at the home address most recently communicated by the Participant to the Company in writing.

 

(j)           409A Compliance.

 

(i)             The Plan is intended to comply with, or otherwise be exempt from, Code section 409A.  The preceding provision, however, shall not be construed as a guarantee by the Company of any particular tax effect to a Participant under the Plan. The Company shall not be liable to a Participant for any payment made under the Plan, at the direction or with the consent of the Participant, which is determined to result in an additional tax, penalty or interest under Code section 409A, nor for reporting in good faith any payment made under the Plan as an amount includible in gross income under Code section 409A.

  

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(ii)            “Termination of employment,” or words of similar import, as used in this Plan means, for purposes of any payments under this Plan that are payments of deferred compensation subject to Code section 409A, the Participant’s “separation from service” as defined in Code section 409A.  For purposes of Code section 409A, the right to a series of installment payments under this Plan shall be treated as a right to a series of separate payments.

 

(iii)           With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, a Participant, as specified under this Plan: (1) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Code section 105(b); (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(iv)           If a payment obligation under the Plan arises on account of a Participant’s termination of employment while a “specified employee” (as defined under Code section 409A and the regulations thereunder and determined in good faith by the Committee), any payment of “deferred compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12)) shall be made within 15 days after the end of the six-month period beginning on the date of such termination of employment or, if earlier, within 15 days after appointment of the personal representative or executor of the Participant’s estate following the death of the Participant.

 

	
10.

	
Definitions

 

The following definitions apply to the Plan:

 

“Accrued Obligations” means (i) the Participant’s Base Salary through the date of termination of employment, (ii) any accrued but unused paid time off and floating holiday pay, and (iii) unreimbursed business expenses.  The Company will pay the Accrued Obligations to the Participant in a cash lump sum within 10 days after the Participant’s termination of employment with the Company.

 

“Affiliate” means Comprehensive Health Management, Inc. and any other entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, WellCare (including, but not limited to, joint ventures, limited liability companies, and partnerships).

 

“Base Salary” means the annual rate of base salary in effect as of the date of termination of employment, determined without regard to any reduction thereof that constitutes Good Reason.

 

“Base Salary Amount” means the amount of the Cash Severance made up of Base Salary as described in Section 5.

“Board” means the Board of Directors of WellCare.

  

9

  

“Bonus” means, (i) with respect to any Participant who has been employed by the Company for a period of time in which he or she participated in the two (2) most recently completed annual short-term incentive bonus cycles that ended before his or her date of termination of employment, the average of the two (2) annual short-term incentive bonuses, if any, paid by the Company to the Participant with respect to those annual short-term incentive bonus cycles, provided that, if the first annual short-term incentive bonus included in the calculation was pro rated to reflect the portion of the performance period in which the Participant was employed with the Company, then the amount of that first annual short-term incentive bonus shall be annualized solely for the calculation of the Bonus hereunder; and, (ii) with respect to any Participant who has not been employed by the Company for a period of time in which he or she participated in the two (2) most recently completed annual short-term incentive bonus cycles that ended before his or her date of termination, the Participant’s short-term incentive bonus target in effect on the Participant’s date of termination of employment.

 

“Bonus Amount” means the amount of the Cash Severance made up of Bonus as described in Section 5.

“Cash Severance” means the sum of the Base Salary Amount and the Bonus Amount as described in Section 5.

“Cause” means the occurrence of any one or more of the following events or conditions:

(i)             any willful act or willful omission, other than as a result of the Participant’s Disability, that constitutes a breach of any agreement to which the Company is a party or the Participant’s non-compliance with the Company’s Code of Conduct, policies or procedures to the material detriment of the Company;

 

(ii)            bad faith by the Participant in the performance of his duties, consisting of willful acts or willful omissions, other than as a result of the Participant’s Disability, to the material detriment of the Company;

 

(iii)          the Participant’s repeated failure to follow the reasonable and lawful directions of the Board (or committee of the Board) or Chief Executive Officer which is not cured within fifteen (15) days after written notice to the Participant; or

 

(iv)           the Participant’s commission of a crime that constitutes a felony involving fraud, conversion, misappropriation, or embezzlement under the laws of the United States or any political subdivision thereof.

 

It shall be a condition precedent to the Company’s right to terminate the Participant’s employment for Cause as defined in (i) or (ii) that (x) the Company shall have first given the Participant written notice stating with reasonable specificity the breach on which such termination is premised within ninety (90) days after the Company becomes aware of such breach, and (y) if such breach is susceptible of cure or remedy, such breach has not been cured or remedied within fifteen (15) days after the Participant’s receipt of such notice.

  

10

  

“Change in Control” means the effective date of the occurrence of any of the following events:

(i)             any Person or Group is or becomes the Beneficial Owner, directly or indirectly, of securities of WellCare representing more than 50% of either (A) the then fair market value of the then outstanding securities of WellCare or (B) the combined voting power of the then outstanding securities of WellCare;

 

(ii)            the direct or indirect sale or transfer by WellCare of all or substantially all of its assets in a single transaction or a series of related transactions;

 

(iii)           the merger, consolidation or reorganization of WellCare with or into another corporation or other entity, in which the shareholders of more than 50% of the voting power of WellCare’s voting securities immediately before such merger, consolidation or reorganization do not own more than 50% of the voting power of the voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

 

(iv)           during any consecutive 12-month period, individuals who at the beginning of such period constitute the Board of Directors of WellCare (together with any new directors whose election by the Board of Directors of WellCare or nomination for election by the stockholders of WellCare was approved by a vote of a majority of the directors on the Board of Directors of WellCare then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors of WellCare then in office.

 

Notwithstanding the terms of this Section, none of the foregoing events shall constitute a Change in Control if such event is not a “Change in Control Event” under Treasury regulation section 1.409A-3(i)(5) or successor guidance of the Internal Revenue Service.

 

For purposes of determining whether a Change in Control has occurred, a Person or Group shall not be deemed to be “unrelated” if: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of WellCare’s voting securities immediately before the transaction in question, (B) WellCare has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of WellCare voting securities immediately before the transaction in question.

 

The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Exchange Act. Notwithstanding the foregoing, (A) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of WellCare at the same time, or as a result of purchases in the same public offering, (B) Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, reorganization, purchase or acquisition of stock, or similar business transaction, with WellCare, and (C) if a Person, including an entity, owns stock both in WellCare and in a corporation that enters into a merger, consolidation, reorganization, purchase or acquisition of stock, or similar transaction, with WellCare, such Person shall be considered to be acting as a Group with other shareholders only with respect to the ownership in such corporation prior to the transaction.

 

  

11

  

 

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and Treasury guidance promulgated under it.

 

“Committee” means the Compensation Committee of the Board.  The Committee may delegate some or all of its authority under the Plan to any person, persons or subcommittee, in which event, the term “Committee” includes such person, persons or subcommittee to the extent of such delegation.

 

“Company” means WellCare and any Affiliate.

 

“Disability” means the Participant is unable to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or that has rendered the Participant unable effectively to carry out his/her duties and obligations to the Company or unable to participate effectively and actively in the management of the Company for a period of 90 consecutive days or for shorter periods aggregating to 120 days (whether or not consecutive) during any consecutive 12 months.

 

“Effective Date” has the meaning specified in Section 2.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and guidance promulgated under it.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and guidance promulgated under it.

 

“Good Reason” means, without the Participant’s consent:

 

(a) the occurrence of either of the following conditions which occurs prior to a Change in Control: (i) a material diminution in the Participant’s Base Salary, annual short-term incentive opportunity or annual long-term incentive opportunity, except as applicable generally to other similarly situated senior executives of the Company; or (ii) the Company requiring the Participant to be based at any office or location outside of fifty miles from the Participant’s current employment location, except for travel reasonably required in the performance of the Participant’s responsibilities; or

 

(b) the occurrence of any of the following conditions which occurs following a Change in Control: (i) a material diminution in the Participant’s Base Salary, annual short-term incentive opportunity or annual long-term incentive opportunity; (ii) the Company requiring the Participant to be based at any office or location outside of fifty miles from the Participant’s current employment location, except for travel reasonably required in the performance of the Participant’s responsibilities; or (iii) a material diminution in the Participant’s authority, duties or responsibilities, provided, however, that with respect to Participants other than the Chief Executive Officer, Chief Financial Officer and General Counsel, the Participant shall not have Good Reason solely because the Participant’s duties and responsibilities are in respect of an entity that is not the most senior entity following the Change in Control.

 

  

12

  

 

It shall be a condition precedent to the Participant’s right to terminate Participant’s employment for Good Reason (before or after a Change in Control) that (I) the Participant shall have first given the Company written notice stating with reasonable specificity the breach on which such termination is premised within ninety (90) days after the Participant becomes aware or should have become aware of such breach, and (II) if such breach is susceptible of cure or remedy, such breach has not been cured or remedied within forty-five (45) days after receipt of such notice.

 

“Health Benefit Continuation” means reimbursement by the Company of the portion of the Participant’s COBRA premium that exceeds the amount of the premium paid by active employees for the same coverage for the period following the Participant’s termination of employment with the Company designated in Section 5.  The Company will include the reimbursements in the Participant’s taxable income and no gross-up will be provided.

 

“In Contemplation of a Change in Control” means the termination of the Participant’s employment by the Company for reasons other than Cause, death, or Disability within the 6 months prior to a Change in Control if the Participant demonstrates by clear and convincing evidence that the termination (i) was at the request of a third party who had taken steps reasonably calculated or intended to effect a Change in Control, or (ii) otherwise arose in contemplation or in anticipation of a Change in Control.

 

“Participant” means a person who has become a participant pursuant to Section 4 of the Plan.

 

“Plan” means this WellCare Health Plans, Inc. Executive Severance Plan.

 

 “WellCare” means WellCare Health Plans, Inc., a Delaware corporation.

 

  

13

  

 

 

EXHIBIT A

 

WAIVER AND RELEASE AGREEMENT

 

THIS WAIVER AND RELEASE AGREEMENT (this “Release”) is entered into as of [__________], by [________________] (the “Executive”) in consideration of severance pay and benefits (the “Severance”) provided to the Executive by WellCare Health Plans, Inc., a Delaware corporation (the “Corporation”), pursuant to the WellCare Health Plans, Inc. Executive Severance Plan (the “Severance Plan”).

 

1.           Waiver and Release.  Subject to the last sentence of the first paragraph of this Section 1, the Executive, on his own behalf and on behalf of Executive’s heirs, executors, administrators, attorneys and assigns, hereby unconditionally and irrevocably releases, waives and forever discharges the Corporation and each of its affiliates, parents, successors, predecessors, and the subsidiaries, directors, owners, members, shareholders, officers, agents, and employees of the Corporation and its affiliates, parents, successors, predecessors, and subsidiaries (collectively, all of the foregoing are referred to as the “Employer”), from any and all causes of action, claims and damages, including attorneys’ fees, whether known or unknown, foreseen or unforeseen, presently asserted or otherwise arising through the date of Executive’s signing of this Release, concerning Executive’s employment or separation from employment.  Subject to the last sentence of the first paragraph of this Section 1, this Release includes, but is not limited to, any payments, benefits or damages arising under any federal law (including, but not limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, Executive Order 11246, the Family and Medical Leave Act, and the Worker Adjustment and Retraining Notification Act, each as amended); any claim arising under any state or local laws, ordinances or regulations (including, but not limited to, any state or local laws, ordinances or regulations requiring that advance notice be given of certain workforce reductions); and any claim arising under any common law principle or public policy, including, but not limited to, all suits in tort or contract, such as wrongful termination, defamation, emotional distress, invasion of privacy or loss of consortium.  Notwithstanding any other provision of this Release to the contrary, this Release does not encompass, and Executive does not release, waive or discharge, the obligations of the Corporation or any affiliate (a) to make the payments and provide the other benefits contemplated by the Severance Plan, or (b) under any restricted stock agreement, option agreement or other agreement pertaining to Executive’s equity ownership, or (c) under any indemnification or similar agreement with Executive.

 

The Executive understands that by signing this Release, Executive is not waiving any claims or administrative charges which cannot be waived by law.  Executive is waiving, however, any right to monetary recovery or individual relief should any federal, state or local agency (including the Equal Employment Opportunity Commission) pursue any claim on Executive’s behalf arising out of or related to Executive’s employment with and/or separation from employment with the Corporation or any affiliate.

 

The Executive further agrees without any reservation whatsoever, never to sue the Employer or become a party to a lawsuit on the basis of any and all claims of any type lawfully and validly released in this Release.

 

  

  

  

 

2.           Acknowledgments.  The Executive is signing this Release knowingly and voluntarily.  Executive acknowledges that:

 

(a)           Executive is hereby advised in writing to consult an attorney before signing this Release;

 

(b)           Executive has relied solely on Executive’s own judgment and/or that of Executive’s attorney regarding the consideration for and the terms of this Release and is signing this Release knowingly and voluntarily of Executive’s own free will;

 

(c)           Executive is not entitled to the Severance unless Executive agrees to and honors the terms of this Release;

 

(d)           Executive has been given at least twenty-one (21) calendar days to consider this Release, or Executive has expressly waives Executive’s right to have at least twenty-one (21) days to consider this Release;

 

(e)           Executive may revoke this Release within seven (7) calendar days after signing it by submitting a written notice of revocation to the Employer.  Executive further understands that this Release is not effective or enforceable until after the seven (7) day period of revocation has expired without revocation, and that if Executive revokes this Release within the seven (7) day revocation period, Executive will not receive the Severance;

 

(f)           Executive has read and understands the Release and further understands that, subject to the limitations contained herein, it includes a general release of any and all known and unknown, foreseen or unforeseen claims presently asserted or otherwise arising through the date of Executive’s signing of this Release that Executive may have against the Employer; and

 

(g)           No statements made or conduct by the Employer has in any way coerced or unduly influenced Executive to execute this Release.

 

3.           No Admission of Liability.  This Release does not constitute an admission of liability or wrongdoing on the part of the Employer, the Employer does not admit there has been any wrongdoing whatsoever against Executive, and the Employer expressly denies that any wrongdoing has occurred.

 

4.           Entire Agreement.  There are no other agreements of any nature between the Employer and the Executive with respect to the matters discussed in this Release, except as expressly stated herein, and in signing this Release, the Executive is not relying on any agreements or representations, except those expressly contained in this Release.

 

5.           Execution.  It is not necessary that the Employer sign this Release following the Executive’s full and complete execution of it for it to become fully effective and enforceable.

 

  

-2-

  

 

6.           Severability.  If any provision of this Release is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or controlling law, the remainder of this Release shall continue in full force and effect.

 

7.           Governing Law.  This Release shall be governed by the laws of the State of Florida, excluding the choice of law rules thereof.

 

8.           Headings.  Section and subsection headings contained in this Release are inserted for the convenience of reference only.  Section and subsection headings shall not be deemed to be a part of this Release for any purpose, and they shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

IN WITNESS WHEREOF, the undersigned has duly executed this Release as of the day and year first herein above written.

 

	  	  	 	
EXECUTIVE:

 

 

	
 

	 	 	 	
[_______]

	 

 

-3-MOTR 2011.9.30 EX 10.13

FIRST AMENDMENT 
TO THE APPCENTER SERVICE EXHIBIT NO. 20100607.090.S.002

This First Amendment (this “First Amendment”) to the AppCenter Service Exhibit No. 20100607.090.S.002 of October 1, 2010 between Motricity, Inc., (“Motricity” or “Supplier”) and AT&T Services, Inc. (“AT&T Services” or “AT&T”) (the “Agreement”), is made and entered into this 1st day of September 2011 (“First Amendment Effective Date”).  Such parties are referred to herein individually as a “Party,” and collectively as the “Parties”.

WHEREAS, Motricity has provided certain Services to AT&T Mobility pursuant to the Agreement;

WHEREAS, Motricity and AT&T desire to perpetuate and continue their relationship, by doing business under the terms of the Agreement, as amended and set forth herein.

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Parties hereto agree as follows:
		
	1.
	Except as otherwise provided herein, all of the terms, covenants and conditions used, but not defined, herein shall have the meanings ascribed to them in the Agreement. In the event of a conflict between the terms and conditions hereof, and the terms and conditions of the Agreement, the specific terms and conditions set forth in this Fourth Amendment shall govern.

		
	2.
	Section 1 “Definitions” of the Agreement shall be amended to add/delete/modify the following definitions (as noted below).  Additional definitions may be found within the Agreement and related Amendments. 

“AT&T Stakeholder(s)” means an AT&T individual/organization including, but is not limited to product realization, engineering, customer support, operations and marketing.

“ATT Vendor(s)” means the AT&T business partners under contract with AT&T to provide services that the parties may agree from time to time are appropriate to include as part of the Lifecycle Managed Services.

“Incident” is as defined in the Service Level Agreement for the AppCenter Service. 

“Lifecycle Managed Services” means the services, roles and responsibilities for Content Management, Release Management and Lifecycle Management, etc. as detailed in Section B (9) of Schedule E-1 Services.

“Lifecycle Manager(s)” means the Motricity individual(s) assigned to AT&T to perform the Lifecycle Managed Services

“SPOC” means a single point of contact for AT&T Stakeholders to engage Motricity support

“Storefront” means the AT&T AppCenter where AT&T Subscribers can access digital content.

		
	3.
	The Agreement is hereby amended to add Schedule E-1 Services: Content Management and Customer Lifecycle Management Services

		
	4.
	The Agreement is hereby amended to add Schedule B-1 Commercial Terms: Lifecycle Management Services

		
	5.
	Schedule E-1 Services: Content Management and Customer Lifecycle Management Services, Schedule B-1, Commercial Terms for Lifecycle Managed Services, Appendices 1, 2 and 3 are incorporated into the Agreement by this reference.

		
	6.
	The terms and conditions of the Agreement in all other respects remain unmodified and in full force and effect.

IN WITNESS WHEREOF, Motricity and AT&T have each caused this First Amendment to be executed by its duly authorized representative, which may be in duplicate counterparts, each of which will be deemed to be an original instrument, as of the First Amendment Effective Date above.

	
				
	Motricity, Inc.
	AT&T Services, Inc.

	 
	 
	On behalf of its Affiliate AT&T Mobility LLC

	 
	 
	 
	 

	By:
	/s/ James R. Smith, Jr.
	By:
	***

	 
	 
	 
	 

	Print Name:
	James R. Smith, Jr.
	Print Name:
	***

	 
	 
	 
	 

	Title:
	Interim CEO
	Title:
	***

	 
	 
	 
	 

	 
	October 21, 2011
	 
	October 20, 2011

	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

SCHEDULE E-1 – SERVICES

Schedule E – Services is amended to add the following terms in support of the AppCenter Services, which are in addition to the Services Motricity is already providing to AT&T under the Agreement.

For the avoidance of doubt, the terms of this Schedule E-1 controls in the event of any conflict with other provisions of the Agreement, solely as it pertains to the Lifecycle Managed Services.

		
	A.
	 Lifecycle Managed Services

Motricity will provide AT&T with the Lifecycle Managed Services in support of the AppCenter Services (referred to individually as a "Service" or collectively as "Services") and in conformance with the terms and conditions of this Schedule E-1.  

		
	B.
	Description of Services. 

		
	9.
	Lifecycle Manage Services.  The following provisions collectively define the Lifecycle Managed Services to be performed by the Lifecycle Manager and are hereby incorporated into Schedule E.

9.1     Release Management 
Motricity will serve as AT&T’s release manager for the System that supports the AppCenter Services (collectively Release Management) as detailed in this Section 9.1:  

All activities defined herein apply once a Statement of Work, Change Request or Work Order has been executed by the parties. AT&T reserves the right to recall Release Management activities for specific projects or efforts.

Standard Support:

		
	◦
	Release management will include supporting internal work efforts driven by AT&T data service and network teams, changes to sustain the Motricity systems, change requests and other activities managed via standard maintenance releases.

		
	◦
	Requirements – initial – Motricity will coordinate review of the core requirements for the request submitted in the Work Request based on internal System / Service Request.

		
	•
	Motricity will provide initial draft of requirements for Work Requests 

		
	•
	Motricity will ensure final requirements are in alignment with AT&T Stakeholders

		
	•
	Motricity will engage/manage work efforts with AT&T Vendors as applicable, final requirements, milestones, wireframes and report mock-ups as appropriate for AT&T approval. These will be updated if scope changes. 

		
	•
	Motricity will adhere to AT&T release processes

		
	◦
	Ensure wireframes, test cases and requirements are updated should work result in changes to the user experience.

		
	◦
	Maintain a roadmap and communicate roadmap status  as part of weekly meeting

		
	◦
	Coordinate AT&T quality engineering test team engagement resources for user acceptance testing which includes providing AT&T product management the scope of the needed validation.  AT&T product management will engage AT&T quality engineering test teams and ensure funding, resource availability and scheduling. 

		
	◦
	Release Manager to coordinate remaining tasks for the collaborative efforts between AT&T quality engineering test teams, AT&T product team and Motricity

		
	◦
	Serve as AT&T representative during development and through night of release

		
	•
	Managing testing efforts and ensuring short interval schedule milestones are met

		
	•
	Key stakeholder for AT&T business go/ no go decision

		
	•
	Provide release updates to key AT&T stakeholders

		
	•
	Manage post user acceptance testing and release defects found in production

Non-Standard Support
Where requested by AT&T and agreed upon by Motricity, the parties will execute a Work Order or Change Request for the Lifecycle Manager to perform non-standard support to include applicable fees (if any).

		
	9.2
	Lifecycle Management  

Motricity will provide AT&T with lifecycle management services as described below and collectively referred to as “Lifecycle Management”: 

		
	◦
	Develop Key Performance Indicator (KPI) reporting template for monthly delivery to AT&T with specifics as mutually agreed upon between the AT&T Vendor and AT&T.

		
	◦
	Manage AT&T Vendors for AppCenter Services to the terms and conditions of the service level agreement. See Appendix 2 for the current contact information for AT&T and the  AT&T Vendors

		
	◦
	Host and facilitate meetings and/or calls with AT&T and AT&T Vendor personnel

		
	◦
	Track and move to resolution all Service Issues, Service Defects/ or Incidents

		
	◦
	Serve as incident manager for Sev1 and Sev2 Incidents on Motricity, other AT&T Vendor and/or AT&T Incident bridges.  

		
	◦
	Escalate within AT&T and the AT&T Vendor as appropriate

		
	◦
	Review AT&T Vendor service level agreement reports and root cause analyses and provide executive summary with recommendation to the respective AT&T Stakeholders (to include product teams and his/her delegates) concerning the reports.

		
	◦
	Track/report NPC’s.

		
	◦
	Provide AT&T internal communications for end user or revenue impacting events

		
	◦
	Manage communication RACI (Responsible, accountable, consulted and Informed) for AT&T internal stakeholders. Used to communicate larger issues to AT&T Stakeholders during major impacting events.  Communication frequency is dependent on the issue. The AT&T communication process will be as follows 

Serve as SPOC for AT&T Stakeholders
		
	◦
	Review and facilitate Work Requests to/from AT&T Vendors

		
	•
	Requests to be reviewed and clearly defined to the AT&T Vendor within 1 business day from receipt of final requirements from AT&T marketing

		
	◦
	Facilitate reporting requests to vendors

		
	•
	Requests to be reviewed and clearly defined to the vendor within 1 business day from receipt of final requirements from AT&T marketing

		
	◦
	Monthly reporting meetings

		
	◦
	Weekly/ monthly operations calls

		
	•
	Validate data relayed is accurate according to tracked items from the month

		
	•
	Follow up/ agreement/ track any non performance compensation’s post receipt

		
	◦
	Weekly marketing calls

		
	◦
	Report on operations status

		
	◦
	Quarterly capacity Review

		
	◦
	SPOC and escalation point for all internal AT&T Stakeholders to engage Motricity support teams.

Device Client / Onboarding Support Obligations
		
	◦
	Support weekly call to share technical approval dates and other needed information that cannot be sent in email

		
	◦
	Support AT&T quality engineering test teams escalations for Motricity support

		
	◦
	Engage device team as needed for issues such as user agent headers needing to be added, escalated defects etc.  Support may require Motricity to open and track salesforce cases

		
	◦
	Devices to be sent directly to Motricity instead of AT&T, adhering to current AT&T process

		
	◦
	Device issues sent directly to Motricity for resolution, adhering to current AT&T process

Merchandising and content provider support
		
	◦
	Weekly content calls with marketing Leads 

		
	◦
	Review salesforce case report and/ or queue to ensure there is either no delay on Motricity or AT&T marketing side in order to resolve.

		
	◦
	Marketing to escalate directly to Motricity

		
	◦
	Investigate user interface issues

		
	◦
	Manage AT&T Dev Central site updates to documentation and developer support

		
	◦
	Ensure merchandising recommendations are being delivered as expected

Revenue investigations
		
	◦
	Proactively track all Key Metrics Indicators (KPI) and present in weekly meetings

		
	•
	Revenue – overall and by category (Omniture/ Partner BI)

		
	◦
	Identify and research anomalies 

		
	◦
	Communicate changes in trends to AT&T

		
	◦
	Engage operations (Motricity Carrier Care/ ATT operations) if there appears to be a revenue leak.

		
	◦
	Engage marketing if needed

Incident management
		
	◦
	Extended communication

		
	•
	Provide AT&T internal communications for end user or revenue impacting events

		
	•
	Drive incident calls from a business perspective including focus on user experience, revenue and business impact to ensure the level is correct and working team has all the impact data. 

		
	•
	Confirm service level agreement terms are complied with as defined post event and all open action items are tracked.

Cross functional support
		
	◦
	Manage all escalations from internal AT&T teams

		
	◦
	Manage work requests from internal AT&T teams

		
	◦
	Manage prioritization of work streams in-life

		
	◦
	SPOC and Escalation point for all internal teams to engage Motricity Support teams.

3rd Party partner manager for the following: 
		
	◦
	Support and track open items with 3rd parties. 

		
	◦
	Confirm any hosting or invoice impacting items are tracked for review at end of month

		
	◦
	***

		
	•
	bi-weekly operations call

		
	•
	manage incidents

		
	◦
	***

		
	◦
	***

		
	◦
	Content Providers

		
	◦
	SPOC and escalation point for all AT&T internal teams to engage Motricity support teams.

AT&T asset tagging portal hardware
		
	◦
	Manage resource that AT&T contracts for the tagging

	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

Serve as SPOC for AT&T Product Management Center – Tier 2 Customer Care (PMC) and business care groups
		
	◦
	These teams will engage Carrier Care directly for issues but there are deliverables for lifecycle team

		
	•
	Escalation contact – should PMC experience issues etc they will engage the Lifecycle manager

		
	•
	Support for processes – work with M&P (Methods and Procedures) to ensure the data is accurate for end user facing triage steps and subsequent processes.

		
	◦
	SPOC and escalation point for all internal teams to engage Motricity Support teams.

		
	9.3. 
	Lifecycle Managed Services – Transition from AT&T to Supplier 

Motricity will provide a Lifecycle Manager within one (1) week from the Fourth Amendment Effective Date (the “Transition Start Date”) to begin training and transitioning of the described functions as described in this Section 9. A tracking sheet will be created and each task will be reviewed weekly with the relevant AT&T personal for transition status. The status will be recorded as a percentage of completion of the transition. The intent is to be fully transitioned within thirty (30) days of the Transition Start Date, depending on the availability of AT&T resources to support the training and transition (the “Transition Period”). 

At the end of the Transition Period either party has a ten (10) day window (e.g., between day 30 and day 40) in which to terminate the Lifecycle Managed Services in whole or in part,  if the party reasonably believes the combined teams are unable to overcome material transition difficulties.  The termination will be effective 5 days after the party’s receipt of written notice.

		
	9.4.
	 Lifecycle Manager Role / General Terms

Motricity will have a designated primary and secondary Lifecycle Manager, and point of escalation for AT&T. The Lifecycle Manager will maintain a report for AT&T, including status on open actions for related to the services described in Section C. The report will be reviewed with a designated AT&T person. 

		
	•
	The Lifecycle Manager will acknowledge all requests and inquiries in one (1) business day. 

		
	•
	The Lifecycle Manager will proactively communicate all events causing an end user or revenue impact to stakeholders. Communication initiation and frequency is dependent on level of impact.

		
	•
	Lifecycle Manager to support weekly/monthly lifecycle and operations meetings within month period, unless meetings are mutually agreed to be cancelled 

		
	•
	Lifecycle Manager to communicate “known” major events to AT&T Stakeholders within one (1) hour during business hours and one (1) day prior for scheduled downtime scheduled within 24 hours. 

		
	•
	Downtime events - The Lifecycle Manager (primary or secondary) will join Incident calls within fifteen (15) minutes of being contacted.

		
	•
	Lifecycle Manager to validate, ensure delivery and storage of the reports on SLA performance indicators as defined in the vendor Service Level Agreements. 

		
	•
	Release Management – Specific to Releases in support of the in-life/ sustainment system not releases currently managed by Product Realization. Lifecycle Manager to manage work 

efforts and deliver updates for maintenance activities outside a statement of work as defined in section C (i.e. a work request implemented into production without a point release).
		
	•
	The primary or secondary Lifecycle Manager will be attend the Release calls during launch and as defined in this Section 9.

9.5. Lifecycle Managed Service Intake and Non-performance Credits 

AT&T Stakeholders identify issues, performance concerns of AppCenter Service and provide written notification to the Lifecycle Manager which may be in the form of emails, entry via sales force case tool, etc.  (“Service Issues”) along with the level of importance for the Service Issue (referred to as a “Priority” or “Priority Level”)

Services Issues will be captured in weekly report and presented to the AT&T Stakeholders (marketing and product owners). The frequency of the report delivery and/ or alignment call with the AT&T Stakeholders may change dependent on the needs of the business and upon mutual agreement of the parties.  A sample report is included in Appendix 3. 

Should a change in Priority (P1, P2, P3, and P4) be needed (adjusted up/down) then approval will be obtained from the AT&T submitter (e.g., AT&T Marketing).  Motricity will use best efforts to meet the priority needs of all AT&T submitters.  In the event there are competing priorities that impact priorities between AT&T submitters, is potentially NPC impacting  and the Life Cycle Manager cannot resolve, the Lifecycle Manager may escalate the issue to the product realization owner for the AppCenter Service for resolution.

For purposes of this Schedule E-1 Supplier’s span of control is defined as action items the Lifecycle Manager has accepted and excludes delays due to AT&T internal teams and third parties. The intent is to ensure appropriate level of focus on events as classified by AT&T Stakeholders and the Lifecycle Manager.

In addition to the performance criteria and service levels set forth otherwise in the Agreement, Supplier’s performance of the Lifecycle Managed Services shall be measured, in part, by the performance metrics set forth in Table A below:

Table A.  Service Issue Performance Metrics
	
				
	Priority
Level
	Task
	Interfaces with AT&T Stakeholders
Note 2
	Expectation

	1
	Service Issue support, prioritization and management to be tracked and documented in a manner approved by AT&T
	Emails / Motricity Salesforce (SF) Case tool / AT&T Quality Center and Motricity Carrier Care
	Service Issues assigned Priority Level 1 will be closed or moved to established Service/Incident management tools ***. 

	2
	Service Issue support, prioritization and management to be tracked and documented in a manner approved by AT&T
	Emails/ Motricity Salesforce (SF) Case tool / AT&T Quality Center and Motricity Carrier Care
	Service Issues assigned Priority Level 2 will be closed or moved to established Service/Incident management tools ***. 

	3
	Service Issue support prioritization and management to be tracked and documented in a manner approved by AT&T
	Emails/Motricity Salesforce (SF) Case tool/ AT&T Quality Center
	Service Issues assigned Priority Level 3 will be closed or moved to established Service/Incident management tools ***. 

	1
	Device Support / On-Boarding Obligations
	AT&T Quality Center
	Service Issues for new Devices must be resolved by ***. Note 1

Note 1: Device on boarding defects are pre set for severity type based on test cases and are non-negotiable unless a feature has been changed and the test case requiring an update. AT&T marketing and product teams will need to approve test case changes. 
Note 2 Particular interface/communication methods will be determined by the applicable AT&T Stakeholder and the Lifecycle Manager. 

NPCs for Service Issues

In the event Supplier fails to meet the   performance metrics for Service Issues set forth in Table A above, six (6) times within a calendar month then Supplier shall ***
	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

9.6 Service Level Reporting 
Unless otherwise agreed in writing, Supplier will provide AT&T with service level reporting for Lifecycle Managed Services on a monthly basis.  The reports are due by the tenth (10th) business day following the monthly reporting period (e.g. September report to be provided by October 10th). These reports will include:
		
	•
	List of Content Management – Service Issues/ Service Defects / Incidents which includes but is not limited to unique identification of the Service Defect/Incident for a calendar  month, timeframe elapsed (as measured against each respective Content Management Service Level set forth above).

		
	•
	List of all other Lifecycle Managed Service Issues / Service Defects / Incidents for the calendar month, the related performance metric target and Supplier’s actual performance where performance metric target not met, reason for not 

meeting performance metric /service level and corrective action being taken.
		
	•
	Non Performance Compensation Reports that include detailed and summary level information for Service Issues / Defects / Incidents in which NPCs apply.

9.7  AT&T Termination .

		
	A.
	Termination for Convenience: In addition to the termination rights set forth in Section 9.3 of this First Amendment,  AT&T reserves the right to terminate the Lifecycle Managed Services in whole or in part upon *** advance written notice, with termination to take effect on the last day of the month in which the *** period expired.  For example, AT&T provides its written notice of termination on September 15, 2011.  The termination effective date would be ***.

		
	B.
	Termination for Cause:  As it pertains to the Lifecycle Managed Services, AT&T may terminate the Lifecycle Managed Services upon Motricity failure to perform its Lifecycle Managed Services as set forth in this Fourth Amendment, provided that (a) Motricity receives written notice describing the non-performance in reasonable detail and demanding that it be cured, (b) Motricity does not cure the non-performance within *** following its receipt of such notice, and (c) following the expiration of the *** cure period, AT&T sends a second written notice to Motricity that it has terminated the Lifecycle Managed Services.  

		
	C.
	Lifecyle Managed Services Transfer:  Upon AT&T’s written request, the parties will support a Transfer of the Lifecycle Managed Services back to AT&T or another service provider, subject to the applicable provisions of Section 7.5 Obligations upon Termination or Transition of Service as set forth in Agreement.

		
	D.
	Chronic Failures means Motricity has had *** of non-performance issues with the Lifecycle Managed Services within *** period, in which AT&T has communicated its performance issues in writing with Supplier personnel and management personnel (“Chronic Failure”).  AT&T shall have the right, in its sole discretion, to terminate the Lifecycle Managed Services for cause or to provide Motricity notice of AT&T’s intent to develop a “Get Well Plan in response to a Chronic Failure.” In the event that AT&T delivers a “Get Well Plan” notice, the parties will use good faith efforts to agree to and execute on a plan for Motricity to remedy the applicable performance failures and meet the service levels set forth in this Schedule E-1.  Upon implementation of any such mutually agreed plan, a new five month measurement period to determine compliance with the service level/performance requirements will commence.          

	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

SCHEDULE B-1 – COMMERCIAL TERMS FOR 
LIFECYCLE MANAGED SERVICES
1.    Managed Service Fee:  ***
The monthly service fee for the Lifecycle Managed Services for the AppCenter Services is listed in the table below (the “Managed Service Fee”).    The Managed Service Fee begins in the first month in which the Services are provided, currently expected to be September, 2011.
	
		
	AT&T Service(s)
	Monthly Managed Service Fee

	AppCenter
	***

	ATT.Net and MEdiaNet  Note 4 
	***

Note 3: The Managed Service Fee for AppCenter Services is dependent on AT&T also procuring similar services for the AT&T  ATT.Net and MEdia Net Services.  If the AT&T no longer uses the Content Management and Customer Lifecycle Management Services for the ATT.Net and MEdia Net, the fee will be *** unless otherwise agreed by the parties.  In the event the ATT.Net and MEdia Net fees are renegotiated to include the fees for the Lifecycle Managed Services, the fees in this Schedule B-1 will remain at ***.
Note 4: Provided for informational purposes
	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

Appendix 1 [Omitted]

Appendix 2
Internal and External Partner Matrix 

	
				
	Interface
	System/Service
	AT&T Stakeholder
	Partner Contact

	Marketing Contact for changes to AppCenter
	AppCenter
	***
	***

	***
	AppCenter
	***
	***

	***
	AppCenter
	***
	***

	***
	AppCenter
	***
	***

	***
	AppCenter
	***

	***

	***
	AppCenter
	***
	***

	Storefront Content Providers
	AppCenter
	***
	***

	OEM - devices
	AppCenter
	Vendor Coordinators
	***

	***

	AppCenter
	***
	***

	WAP MyAccount
	AppCenter
	***

	***

	***

	AppCenter
	***
	***

	***
	AppCenter
	***
	***

	***
	AppCenter
	***
	*** 

	***
	AppCenter
	***
	***

	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

AT&T Agreement No. 0014249.A.004
Appendix 3 ***

	
			
	***
	 
	This redacted material has been omitted pursuant to a request for confidential treatment, and the material has been filed separately with the SEC.

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