Document:

exv10w2

Exhibit 10.2

AMENDMENT NO. 1

TO THE

PHARMACY BENEFIT MANAGEMENT SERVICES AGREEMENT

     This Amendment No. 1 to the Pharmacy Benefit Management Services Agreement (“Amendment”) is
entered into as of August 20, 2010, and shall be effective as of January 1, 2010, and amends the
Pharmacy Benefit Management Services Agreement (“Agreement”) entered into by WellPoint, Inc., on
behalf of itself and its Designated Affiliates (hereinafter referred to collectively as
“WellPoint”), and Express Scripts, Inc. on behalf of itself and its subsidiaries (“PBM”)
(collectively, WellPoint and PBM are referred to as the “Parties,” and each separately as a
“Party”).

     WHEREAS, the Parties desire to modify the terms of the Agreement;

     NOW, THEREFORE, the Parties agree to amend the Agreement as follows:

     1. Exhibit H. The Exhibit H contained in the Agreement is hereby deleted in its
entirety and replaced by the new Exhibit H attached hereto.

     The parties acknowledge and agree that the Agreement, except as expressly modified by this
Amendment, and any other amendments entered into by the parties, shall otherwise remain in full
force and effect.

     IN WITNESS WHEREOF, the Parties’ authorized representatives hereby execute this Amendment.

	 	 	 	 	 	 	 	 	 	 	 

	WELLPOINT, INC.	 	EXPRESS SCRIPTS, INC.
	On behalf of itself and its Designated	 	On behalf of itself and its subsidiaries
	Affiliates	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Tracy Nolan
	 	By:
	 	/s/ Jeff Hall	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Printed Name:

Tracy Nolan

	 	Printed Name:

Jeff Hall	 	 	 	 
	Title:

Vice President

	 	Title:

Exec. VP & CFO	 	 	 	 

 

 

EXHIBIT H

FEHB SERVICES ADMINISTRATION

This Exhibit sets forth the duties and obligations of PBM with respect to WellPoint’s FEHBP
operations.

I. FEDERAL SUBCONTRACT PROVISIONS

Federal Acquisition Regulation Clauses (FAR)

This Agreement is a subcontract under a federal procurement contract of the United States
Government (The Office of Personnel Management) with WellPoint. This Agreement is subject to
certain federal procurement clauses pursuant to 48 C.F.R. Chapter 16.

This Agreement incorporates by reference the clauses set forth herein with the same force and
effect as if they were given in full text. Upon request, FEP will make their full text available
to PBM.

The clauses are applicable to this Agreement and to its lower tier contracts if the cost of this
Agreement or lower tier agreements are equal to or greater than the amount required by the listed
clause, unless specifically exempted by applicable rules, regulations, or Executive Agreements.
References in the Federal Acquisition Regulation clauses to the “Government” shall be deemed to be
references to WellPoint, as appropriate, and references to the “contractor” shall be deemed to be
references to PBM, as appropriate

In the event of a conflict between the terms of this Exhibit and other terms in the Agreement, the
terms of this Exhibit shall control.

II. FAR CLAUSES APPLICABLE TO THIS AGREEMENT

The clauses in FAR Subpart 52.2 referenced in subparagraph (a), the clauses applicable at the
dollar thresholds in subparagraphs (b) and (c), those clauses referenced and checked in
subparagraph (d), and those clauses in subparagraph (e) for Underwriting Agreements, in effect on
the date of this Agreement, are incorporated herein and made a part of this Agreement. Certain
clauses in the above-identified subparagraphs will not be incorporated if the Agreement does not
meet the threshold characteristic set forth in parentheses after the name and date of the clause.
To the extent that an earlier version of any such clause is included in the Prime Contract or
agreement under which this Agreement is issued, the date of the clause as it appears in such Prime
Contract or agreement shall be controlling and said version shall be incorporated herein. PBM
agrees to abide by the provisions of the FEHB and FAR regulations applicable to subcontractors.

     (a) The following clauses are applicable to this Agreement regardless of dollar amount:

	 	 	 
	FAR Reference	 	Title of Clause
	52.202-1

	 	Definitions (Jul 2004)
	52.209-6

	 	Protecting the Government’s Interest when Subcontracting With Contractors Debarred,
Suspended, or Proposed for Debarment (Sept 2006) (only applicable if agreement exceeds
$30,000)
	52.222-4

	 	Contract Work Hours And Safety Standards Act-Overtime Compensation (Jul 2005)
	52.222-21

	 	Prohibition Of Segregated Facilities (Feb 1999)
	52.222-26

	 	Equal Opportunity (Mar 2007)

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	FAR Reference	 	Title of Clause
	52.222-36

	 	Affirmative Action for Workers with Disabilities (Jun 1998) (only applicable if agreement exceeds $10,000)
	52.222-50

	 	Combating Trafficking in Persons (August 2007)
	52.247-63

	 	Preference for U.S. Flag Air Carriers (June 2003)
	52-247-64

	 	Preference for Privately owned U.S. Flag Commercial Vessels (February 2006)

FEHBAR CLAUSES APPLICABLE TO THIS AGREEMENT:

	 	 	 

	1652.203-70

	 	Misleading, Deceptive or Unfair Advertising (Jan 1991)
	1652.204-70

	 	Contractor Records Retention (July 2005)
	1652.204-74

	 	Large Provider Agreements (Oct 2005)
	1652.222-70

	 	Notice of Significant Events (July 2005)
	1652.232-72

	 	Non-Commingling of FEHBP Funds (Jan 1991) (applicable only to agreements in excess of
$25,000) (substitute “contractor and/or subcontractor” for “Carrier and/or its Underwriter”)
	1652.246-70

	 	FEHB Inspection (July 2005)
	1652.249-71

	 	FEHBP Termination for Convenience of the Government — Negotiated Benefits Contracts
(Jan 1998)
	1652.249-72

	 	FEBHP Termination for Default-Negotiated Benefits Contracts (Jan 1998)

     (b) The following FAR clauses are applicable to this Agreement if it exceeds $100,000:

	 	 	 
	FAR Reference	 	Title of Clause
	52.203-7

	 	Anti-Kickback Procedures (Jul 1995)
	52.203-12

	 	Limitation on Payments to Influence Certain Federal Transactions (Sept 2007)
	52.222-35

	 	Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans (Sept 2006) (only applicable to agreements of $100,000 or more)
	52.222-37

	 	Employment Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans (Sept 2006) (only applicable to agreements of $100,000 or more)
	52.222-39

	 	Notification of Employee Rights Concerning Payment of Union Dues or Fees (Dec 2004)
	52.227-1

	 	Authorization and Consent (Dec 2007)
	52.227-2

	 	Notice And Assistance Regarding Patent and Copyright Infringement (Dec 2007)

     (c) The following FAR clauses are applicable to this Agreement if it exceeds $650,000:

	 	 	 
	FAR Reference	 	Title of Clause
	52.215-10

	 	Price Reduction for Defective Cost or Pricing Data (Oct 1997)
	52.215-12

	 	Subcontractor Cost or Pricing Data (Oct 1997)
	52.215-13

	 	Subcontractor Cost or Pricing Data-Modifications (Oct 1997)
	52.219-8

	 	Utilization of Small Business Concerns (May 2004)
	52-219-9

	 	Small Business Subcontracting Plan (July 2005)
	52.215-15

	 	Pension Adjustments and Asset Reversions (Oct 2004)
	52.215-18

	 	Reversion or Adjustment of Plans For Postretirement Benefits (PRB) Other than Pensions
(Jul 2005)

     (d) The following FEHBAR clauses are applicable to all underwriting agreements:

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	FAR Reference	 	Title of Clause
	1652.203-70

	 	Misleading, Deceptive, or Unfair Advertising (Jan 1991) (All Underwriting) (substitute
“Underwriter” wherever “Carrier” is utilized in the clause)
	1652.215-71

	 	Investment Income (Jan 1998) (All Underwriting) (substitute “Underwriter” wherever
“Carrier” is utilized in the clause)
	1652.232-72

	 	Non-commingling of FEHBP Funds (Jan 1991) (only applies to agreements in excess of
$25,000) (substitute “Underwriter” wherever “Carrier” is utilized in the clause)
	1652.246-70

	 	FEHB Inspection (Jan 2005) (All Underwriting and Administrative Services) (substitute
“Underwriter” wherever “Carrier” is utilized in the clause)

	(e)	 	Business Ethics and Conduct. This clause will only apply if the aggregate value of this
Agreement exceeds $5 million and lasts for more than 120 days.

	 	1.	 	Definitions. As used in this clause—

	 	a.	 	“Agent” means any individual, including a director, an officer, an employee, or
an independent contractor, authorized to act on behalf of the organization.
	 
	 	b.	 	“Full cooperation” means disclosure to the Government of the information
sufficient for law enforcement to identify the nature and extent of the offense and the
individuals responsible for the conduct. It includes providing timely and complete
response to Government auditors’ and investigators’ request for documents and access to
employees with information. Full cooperation does not foreclose any subcontractor
rights arising in law, the FAR, or the terms of the contract. It does not require the
subcontractor to waive its attorney-client privilege or the protections afforded by the
attorney work product doctrine. It does not require any officer, director, owner, or
employee of the subcontractor, including a sole proprietor, to waive his or her
attorney client privilege or Fifth Amendment rights. It does not restrict a
subcontractor from conducting an internal investigation or defending a proceeding or
dispute arising under the contract or related to a potential or disclosed violation.
	 
	 	c.	 	“Principal” means an officer, director, owner, partner, or a person having
primary management or supervisory responsibilities within a business entity (e.g.,
general manager; plant manager; head of a subsidiary, division, or business segment;
and similar positions).

	 	2.	 	Code of business ethics and conduct. Within 30 days after contract award, unless
WellPoint establishes a longer time period, PBM shall—

	 	a.	 	Have a written code of business ethics and conduct; and
	 
	 	b.	 	Make a copy of the code available to each employee engaged in performance of
this Agreement.

	 	3.	 	PBM shall—

	 	a.	 	Exercise due diligence to prevent and detect criminal conduct; and
	 
	 	b.	 	Otherwise promote an organizational culture that encourages ethical conduct and
a commitment to compliance with the law.
	 
	 	c.	 	Timely disclose, in writing, to the agency Office of Inspector General (OIG),
with a copy to the agency Contracting Officer, whenever, in connection with the award,
performance, or closeout of this Agreement or any subcontract thereunder, PBM has
credible evidence that a principal, employee, agent, or subcontractor of PBM has
committed—

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	 	(i)	 	A violation of Federal criminal law involving fraud, conflict of
interest, bribery, or gratuity violations found in Title 18 of the United States
Code; or
	 
	 	(ii)	 	A violation of the civil False Claims Act (31 U.S.C.
3729-3733).

	 	4.	 	The Government and WellPoint shall, to the extent permitted by law and regulation,
safeguard and treat information obtained pursuant to the PBM’s disclosure as confidential
where the information has been marked “confidential” or “proprietary” by PBM. To the extent
permitted by law and regulation, such information will not be disclosed to the public
pursuant to a Freedom of Information Act request, 5 U.S.C. Section 552, without
prior notification to PBM. WellPoint may transfer documents provided by PBM to any
department or agency within the Executive Branch of the United States Government if the
information relates to matters within the organization’s jurisdiction.
	 
	 	5.	 	PBM shall establish the following within 90 days after the effective date of this
Agreement, unless WellPoint establishes a longer time period:

	 	a.	 	An ongoing business ethics awareness and compliance program.

	 	(i)	 	This program shall include reasonable steps to communicate periodically
and in a practical manner PBM’s standards and procedures and other aspects of PBM’s
business ethics awareness and compliance program and internal control system, by
conducting effective training programs and otherwise disseminating information
appropriate to an individual’s respective roles and responsibilities.
	 
	 	(ii)	 	The training conducted under this program shall be provided to PBM’s
principals and employees, and as appropriate, PBM’s agents and subcontractors.

	 	b.	 	An internal control system.

	 	(i)	 	PBM’s internal control system shall establish standards and procedures
to facilitate timely discovery of improper conduct in connection with this
Agreement; and ensure corrective measures are promptly instituted and carried out.
	 
	 	(ii)	 	At a minimum, PBM’s internal control system shall provide for the
following:

	 	A.	 	Assignment of responsibility at a sufficiently high level and
adequate resources to ensure effectiveness of the business ethics awareness and
compliance program and internal control system.
	 
	 	B.	 	Reasonable efforts not to include an individual as a principal,
whom due diligence would have exposed as having engaged in conduct that is in
conflict with PBM’s code of business ethics and conduct.
	 
	 	C.	 	Periodic reviews of company business practices, procedures,
policies, and internal controls for compliance with PBM’s code of business
ethics and conduct and the special requirements of Government contracting,
including—

	 	(i)	 	Monitoring and auditing to detect criminal conduct;
	 
	 	(ii)	 	Periodic evaluation of the effectiveness of the
business ethics awareness and compliance program and internal control
system, especially if criminal conduct has been detected; and
	 
	 	(iii)	 	Periodic assessment of the risk of criminal conduct,
with appropriate steps to design, implement, or modify the business ethics
awareness and compliance program and the internal control system as
necessary to reduce the risk of criminal conduct identified through this
process.

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	 	D.	 	An internal reporting mechanism, such as a hotline, which
allows for anonymity or confidentiality, by which employees may report
suspected instances of improper conduct, and instructions that encourage
employees to make such reports.
	 
	 	E.	 	Disciplinary action for improper conduct or for failing to take
reasonable steps to prevent or detect improper conduct.

	 	6.	 	Subcontracts. PBM shall include the substance of this clause, including this paragraph
(d), in subcontracts that have a value in excess of $5,000,000 and a performance period of
more than 120 days.

(f) AUDIT AND RECORDS-NEGOTIATION (JUN 2009) (FAR 52.215-2).

	 	1.	 	As used in this clause, “records” includes books, documents, accounting procedures and
practices, and other data, regardless of type and regardless of whether such items are in
written form, in the form of computer data, or in any other form.
	 
	 	2.	 	Examination of costs. If this is a cost- reimbursement, incentive, time-and-materials,
labor-hour, or price redeterminable contract, or any combination of these, the PBM shall
maintain and the authorized representative of the United States Office of Personnel
Management (“OPM Representative”), shall have the right to examine and audit all records
and other evidence sufficient to reflect properly all costs claimed to have been incurred
or anticipated to be incurred directly or indirectly in performance of this contract. This
right of examination shall include inspection at all reasonable times of the PBM’s plants,
or parts of them, engaged in performing the contract.
	 
	 	3.	 	Cost or pricing data. If the PBM has been required to submit cost or pricing data in
connection with any pricing action relating to this contract, the OPM Representative, in
order to evaluate the accuracy, completeness, and currency of the cost or pricing data,
shall have the right to examine and audit all of the PBM’s records, including computations
and projections, related to—

	 	a.	 	The proposal for the contract, subcontract, or modification;
	 
	 	b.	 	The discussions conducted on the proposal(s), including those related to
negotiating;
	 
	 	c.	 	Pricing of the contract, subcontract, or modification; or
	 
	 	d.	 	Performance of the contract, subcontract or modification.

	 	4.	 	Comptroller General — (1) The Comptroller General of the United States, or an
authorized representative, shall have access to and the right to examine any of the PBM’s
directly pertinent records involving transactions related to this contract or a subcontract
hereunder and to interview any current employee regarding such transactions. (2) This
paragraph may not be construed to require the PBM to create or maintain any record that the
PBM or subcontractor does not maintain in the ordinary course of business or pursuant to a
provision of law.
	 
	 	5.	 	Reports. If the PBM is required to furnish cost, funding, or performance reports, the
OPM Representative, in lieu of WellPoint, shall have the right to examine and audit the
supporting records and materials, for the purpose of evaluating— (1) The effectiveness of
the PBM’s policies and procedures to produce data compatible with the objectives of these
reports and (2) The data reported.
	 
	 	6.	 	Availability. The PBM shall make available at its office at all reasonable times the
records, materials, and other evidence described in paragraphs (a), (b), (c), (d), and (e)
of this clause, for examination, audit, or reproduction, until 3 years after final payment
under this contract or for any shorter period specified in Subpart 4.7, PBM Records
Retention, of the Federal Acquisition Regulation (FAR), or for any longer period required
by statute or by other clauses of this contract. In addition—(1) If this contract is
completely or partially terminated, the PBM shall make available the records relating to
the work terminated until 3 years after any resulting final termination settlement; and (2)
The PBM shall make available records relating to appeals under

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	 	 	 	the Disputes clause or to litigation or the settlement of claims arising under or relating
to this contract until such appeals, litigation, or claims are finally resolved.
	 
	 	7.	 	The PBM shall insert a clause containing all the terms of this clause, including this
paragraph (g), in all subcontracts under this contract that exceed the simplified
acquisition threshold and—

	 	a.	 	That are cost-reimbursement, incentive, time-and-materials, labor-hour, or
price-redeterminable type or any combination of these;
	 
	 	b.	 	For which cost or pricing data are required; or
	 
	 	c.	 	That require the subcontractor to furnish reports as discussed in paragraph (e)
of this clause.

The clause may be altered only as necessary to identify properly the contracting parties and the
OPM Representative under the Government prime contract.

(g) SUBCONTRACTS FOR COMMERCIAL ITEMS (DEC 2009) (FAR 52.244-6).

	 	1.	 	Definitions. As used in this clause—
	 
	 	 	 	“Commercial item” has the meaning contained in Federal Acquisition Regulation 2.101,
Definitions.
	 
	 	 	 	“Subcontract” includes a transfer of commercial items between divisions, subsidiaries, or
affiliates of PBM or subcontractor at any tier.
	 
	 	2.	 	To the maximum extent practicable, PBM shall incorporate, and require its
subcontractors at all tiers to incorporate, commercial items or nondevelopmental items as
components of items to be supplied under this contract.
	 
	 	3.	 	a. The following provisions are hereby incorporated by reference and PBM shall insert
them in any subcontracts for commercial items:

	 	(i)	 	52.203-13, Contractor Code of Business Ethics and Conduct (Dec 2008)
	 
	 	(ii)	 	52.203-15, Whistleblower protections Under the American Recovery and
Reinvestment Act of 2009 (Section 1553 of Pub. L. 111-5), if the subcontract is
funded under the Recovery Act.
	 
	 	(iii)	 	52.219-8, Utilization of Small Business Concerns (May 2004) (15 U.S.C.
637(d)(2) and (3)), in all subcontracts that offer further subcontracting
opportunities. If the subcontract (except subcontracts to small business concerns)
exceeds $550,000 ($1,000,000 for construction of any public facility), the
subcontractor must include 52.219-8 in lower tier subcontracts that offer
subcontracting opportunities.
	 
	 	(iv)	 	52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246).
	 
	 	(v)	 	52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of
the Vietnam Era, and Other Eligible Veterans (Sep 2006) (38 U.S.C. 4212(a));
	 
	 	(vi)	 	52.222-36, Affirmative Action for Workers with Disabilities (June 1998)
(29 U.S.C. 793).
	 
	 	(vii)	 	52.222-39, Notification of Employee Rights Concerning Payment of Union
Dues or Fees (Dec 2004) (E.O. 13201). Flow down as required in accordance with
paragraph (g) of FAR clause 52.222-39).
	 
	 	(viii)	 	52.222-50, Combating Trafficking in Persons (Feb 2009) (22 U.S.C. 7104(g))
	 
	 	(ix)	 	52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels
(Feb 2006) (46 U.S.C. App. 1241 and 10 U.S.C. 2631) (flow down required in
accordance with paragraph (d) of FAR clause 52.247-64).

	 	b.	 	While not required, PBM may flow down to subcontracts for commercial items a
minimal number of additional clauses necessary to satisfy its contractual obligations

	 	 	(h) EMPLOYMENT ELIGIBILITY VERIFICATION (JAN 2009) (FAR 52.222-54).

	 	1.	 	Definitions. As used in this clause—

	 	a.	 	Commercially available off-the-shelf (COTS) item—

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	 	(i)	 	Means any item of supply that is—

	 	(a)	 	A commercial item (as defined in paragraph (1) of the definition at 2.101);
	 
	 	(b)	 	Sold in substantial quantities in the commercial marketplace;
and
	 
	 	(c)	 	Offered to the Government, without modification, in the same
form in which it is sold in the commercial marketplace; and

	 	(ii)	 	Does not include bulk cargo, as defined in section 3 of the Shipping
Act of 1984 (46 U.S.C. App. 1702), such as agricultural products and petroleum
products. Per 46 CFR 525.1(c)(2), ``bulk cargo’’ means cargo that is loaded and
carried in bulk onboard ship without mark or count, in a loose unpackaged form,
having homogenous characteristics. Bulk cargo loaded into intermodal equipment,
except LASH or Seabee barges, is subject to mark and count and, therefore, ceases
to be bulk cargo.

	 	b.	 	Employee assigned to the contract means an employee who was hired after November 6,
1986, who is directly performing work, in the United States, under a contract that is
required to include the clause prescribed at 22.1803. An employee is not considered to be
directly performing work under a contract if the employee—

	 	(i)	 	Normally performs support work, such as indirect or overhead functions;
and
	 
	 	(ii)	 	Does not perform any substantial duties applicable to the contract.

	 	c.	 	Subcontract means any contract, as defined in 2.101, entered into by a
subcontractor to furnish supplies or services for performance of a prime contract or a
subcontract. It includes but is not limited to purchase orders, and changes and
modifications to purchase orders.
	 
	 	d.	 	Subcontractor means any supplier, distributor, vendor, or firm that furnishes
supplies or services to or for a prime PBM or another subcontractor.
	 
	 	e.	 	United States, as defined in 8 U.S.C. 1101(a)(38), means the 50 States, the
District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.

	 	2.	 	Enrollment and verification requirements.

	 	a.	 	If the PBM is not enrolled as a Federal PBM in E-Verify at time of contract award,
the PBM shall—

	 	(i)	 	Enroll. Enroll as a Federal PBM in the E-Verify program within 30
calendar days of contract award;
	 
	 	(ii)	 	Verify all new employees. Within 90 calendar days of enrollment in the
E-Verify program, begin to use E-Verify to initiate verification of employment
eligibility of all new hires of the PBM, who are working in the United States,
whether or not assigned to the contract, within 3 business days after the date of
hire (but see paragraph (b)(3) of this section); and
	 
	 	(iii)	 	Verify employees assigned to the contract. For each employee assigned
to the contract, initiate verification within 90 calendar days after date of
enrollment or within 30 calendar days of the employee’s assignment to the contract,
whichever date is later (but see paragraph (b)(4) of this section).

	 	b.	 	If the PBM is enrolled as a Federal PBM in E-Verify at time of contract award, the
PBM shall use E-Verify to initiate verification of employment eligibility of—

	 	(i)	 	All new employees.

	 	(a)	 	Enrolled 90 calendar days or more. The PBM shall initiate
verification of all new hires of the PBM, who are working in the United States,
whether or not assigned to the contract, within 3 business days after the date of
hire (but see paragraph (b)(3) of this section); or
	 
	 	(b)	 	Enrolled less than 90 calendar days. Within 90 calendar days after
enrollment as a Federal PBM in E-Verify, the PBM shall initiate verification of
all new hires of the PBM, who are working in the United States, whether or not
assigned to the contract, within 3 business days after the date of hire (but see
paragraph (b)(3) of this section); or

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	 	(ii)	 	Employees assigned to the contract. For each employee assigned to the
contract, the PBM shall initiate verification within 90 calendar days after date of
contract award or within 30 days after assignment to the contract, whichever date is
later (but see paragraph (b)(4) of this section).

	 	c.	 	If the PBM is an institution of higher education (as defined at 20 U.S.C. 1001(a));
a State or local government or the government of a Federally recognized Indian tribe; or
a surety performing under a takeover agreement entered into with a Federal agency
pursuant to a performance bond, the PBM may choose to verify only employees assigned to
the contract, whether existing employees or new hires. The PBM shall follow the
applicable verification requirements at (b)(1) or (b)(2), respectively, except that any
requirement for verification of new employees applies only to new employees assigned to
the contract.
	 
	 	d.	 	Option to verify employment eligibility of all employees. The PBM may elect to
verify all existing employees hired after November 6, 1986, rather than just those
employees assigned to the contract. The PBM shall initiate verification for each existing
employee working in the United States who was hired after November 6, 1986, within 180
calendar days of—

	 	(i)	 	Enrollment in the E-Verify program; or
	 
	 	(ii)	 	Notification to E-Verify Operations of the PBM’s decision to exercise this
option, using the contact information provided in the E-Verify program Memorandum of
Understanding (MOU).

	 	e.	 	The PBM shall comply, for the period of performance of this contract, with the
requirements of the E-Verify program MOU.

	 	(i)	 	The Department of Homeland Security (DHS) or the Social Security
Administration (SSA) may terminate the PBM’s MOU and deny access to the E-Verify
system in accordance with the terms of the MOU. In such case, the PBM will be
referred to a suspension or debarment official.
	 
	 	(ii)	 	During the period between termination of the MOU and a decision by the
suspension or debarment official whether to suspend or debar, the PBM is excused from
its obligations under paragraph (b) of this clause. If the suspension or debarment
official determines not to suspend or debar the PBM, then the PBM must reenroll in
E-Verify.

	 	3.	 	Web site. Information on registration for and use of the E-Verify program can be
obtained via the Internet at the Department of Homeland Security Web site:
http://www.dhs.gov/E-Verify.
	 
	 	4.	 	Individuals previously verified. The PBM is not required by this clause to perform
additional employment verification using E-Verify for any employee—

	 	a.	 	Whose employment eligibility was previously verified by the PBM through the
E-Verify program;
	 
	 	b.	 	Who has been granted and holds an active U.S. Government security clearance for
access to confidential, secret, or top secret information in accordance with the
National Industrial Security Program Operating Manual; or
	 
	 	c.	 	Who has undergone a completed background investigation and been issued
credentials pursuant to Homeland Security Presidential Directive (HSPD)-12, Policy for
a Common Identification Standard for Federal Employees and PBMs.

	 	5.	 	Subcontracts. The PBM shall include the requirements of this clause, including this
paragraph (e) (appropriately modified for identification of the parties), in each
subcontract that-

	 	a.	 	Is for—

	 	(i)	 	Commercial or noncommercial services (except for commercial services
that are part of the purchase of a COTS item (or an item that would be a COTS item,
but for minor modifications), performed by the COTS provider, and are normally
provided for that COTS item); or
	 
	 	(ii)	 	Construction;

	 	b.	 	Has a value of more than $3,000; and
	 
	 	c.	 	Includes work performed in the United States.

Page 8 of 11

 

III. ADDITIONAL TERMS AND CONDITIONS

	 	(a)	 	PBM certifies that it is not majority-owned or majority-controlled by a pharmaceutical
manufacturing company.
	 
	 	(b)	 	PBM agrees to credit WellPoint either as a price reduction, a credit, or by cash refund
all Manufacturer Payments to the extent negotiated and received by WellPoint from PBM
solely with respect to the FEHBP plans. For purposes of this section, Manufacturer
Payments are any and all compensation or remuneration PBM receives from a pharmaceutical
manufacturer, including but not limited to, discounts; credits; rebates, regardless of how
categorized; market share incentives, commissions, and administrative or management fees.
The term also includes any fees received for sales of utilization data to a pharmaceutical
manufacturer. This term does not include purchase discounts based upon invoiced purchase
terms.
	 
	 	(c)	 	To the extent WellPoint has negotiated with PBM to receive all or a portion of
Manufacturer Payments as described in (b) above, PBM will provide WellPoint with quarterly
and annual Manufacturer Payment Reports identifying the following information solely with
respect to the FEHBP plan. This information shall be presented for both the total of all
prescription drugs dispensed through PBM, acting as a mail order pharmacy, and its retail
network and [in the aggregate for the 25 brand name drugs that represent the greatest cost
to the FEHBP plan or such number of brand name drugs that together represent 75% of the
total cost to the FEHBP plan, whichever is the greater number]

	 	1.	 	the dollar amount of Total Product Revenue for the reporting period, with
respect to the FEHBP plan. Total Product Revenue is the PBM’s net revenue with respect
to the FEHBP plan which consists of sales of prescription drugs to clients, either
through retail networks or PBM-owned or controlled mail order pharmacies. Net revenue
is recognized at the prescription price negotiated with clients and associated
administrative fees;
	 
	 	2.	 	the dollar amount of total drug expenditures for the FEHBP plan;
	 
	 	3.	 	the dollar amount of all Manufacturer Payments earned by the PBM with respect
to the FEHBP plan for the reporting period;
	 
	 	4.	 	the percentage of all Manufacturer Payments earned by the PBM with respect to
the FEHBP plan for the reporting period that were Manufacturer Formulary Payments,
which are payments the PBM receives from a manufacturer in return for formulary
placement and/or access, or payments that are characterized as “formulary” or “base”
rebates or payments pursuant to the PBM’s agreements with pharmaceutical manufacturers;
and
	 
	 	5.	 	the percentage of all Manufacturer Payments received by the PBM during the
reporting period that were Manufacturer Additional Payments, which are all Manufacturer
Payments other than Manufacturer Formulary Payments.

	 	(d)	 	PBM agrees to provide WellPoint, at least annually, with all financial and utilization
information requested by WellPoint relating to the provision of benefits to eligible
enrollees solely with respect to the FEHBP plan through the PBM and all financial and
utilization information relating to services provided to Carrier solely with respect to the
FEHBP plan.
	 
	 	(e)	 	PBM agrees that WellPoint may provide any information it receives from PBM, including a
copy of its contract with the PBM, to OPM. PBM providing information to WellPoint under
this subsection may designate that information as confidential commercial information.
PBM, by contracting with WellPoint, consents to the disclosure of this information to OPM.
PBM acknowledges and agrees that, although its information may be marked as confidential
commercial information, the information may be subject to FOIA disclosure under 5 U.S.C.
Section 552. PBM agrees that WellPoint is not liable for any release of information under
FOIA.
	 
	 	(f)	 	Integrity Standard. PBM agrees to adopt and adhere to a code of ethics promulgated by
a national professional association, such as the Code of Ethics of the American Pharmacists
Association (dated October 27, 1994), for their employed pharmacists.
	 
	 	(g)	 	Performance Standards. PBM shall develop and apply a quality assurance program
specifying

Page 9 of 11

 

	 	 	 	procedures for ensuring contract quality on the following standards at a minimum and submit
reports to WellPoint on their performance. PBM must meet, at minimum, the member inquiry,
telephone customer service, paper claims processing, and other applicable standards set for
WellPoint under its applicable contracts with OPM. All other standards discussed below will
have specific target goals PBM is expected to achieve. WellPoint may permit PBM to measure
compliance using statistically valid samples for PBM’s book of business.
	 
	 	(h)	 	Retail Pharmacy Standards

	 	1.	 	Point of Service (POS) system response time. PBM’s network electronic
transaction system provides rapid response to network pharmacies.
	 
	 	2.	 	POS system availability. PBM’s network electronic transaction system generally
is available to, and accessible by, network pharmacies.
	 
	 	3.	 	Licensing — PBM verifies the appropriate licensing of its network pharmacies.

	 	(i)	 	Mail Service Pharmacy Standards

	 	1.	 	Dispensing accuracy — PBM dispenses its prescriptions to the correct patient
and for the correct drug, drug strength and dosage in accordance with the physician’s
prescription not less than 99.9% of the time.
	 
	 	2.	 	Turnaround time — PBM promptly dispenses and ships at least 98% on average of
all prescriptions not requiring intervention or clarification within 3 business days or
meets an equivalent measure approved by OPM.

	 	(j)	 	Prior Approval — if applicable — PBM promptly reviews and responds to requests for
prior approval for specific drugs following receipt of all required information.
	 
	 	(k)	 	Alternative Drug Options. PBM shall, at a minimum, utilize the following protocols for
PBM initiated drug interchanges (any change from the original prescription) other than
generic substitutions:

	 	1.	 	PBM must treat the prescribing physician, and not itself, as the ultimate
decision-maker. Furthermore, to the extent appropriate under the circumstances, the
PBM must allow the patient input into that decision-making process. At a minimum, PBM
must provide the patient with a written notice in the package sent to the patient that
the drug interchange has occurred with the approval of the Prescriber.
	 
	 	2.	 	PBM will obtain authorization for a drug interchange only with the express,
verifiable authorization from the Prescriber as communicated directly by the
Prescriber, in writing or verbally, or by a licensed medical professional or other
physician’s office staff member as authorized by the Prescriber.
	 
	 	3.	 	PBM must memorialize in appropriate detail all conversations with patients and
physicians in connection with drug interchanging requests, including the identity of
the contact person at the physician’s office and the basis for his or her authority.
	 
	 	4.	 	PBM will only interchange a patient’s drug from a lower priced drug to a higher
priced drug to patient or Plan when authorized by WellPoint or the Plan.
	 
	 	5.	 	PBM will permit pharmacists to express their professional judgment to both PBM
and physicians on the impact of drug interchanges and to answer physicians’ questions
about dosing. PBM will not require pharmacists to, and will not penalize pharmacists
for refusing to, initiate calls to physicians for drug interchanges that in their
professional judgment should not be made.
	 
	 	6.	 	PBM will offer to disclose, and if requested, will disclose to physicians,
WellPoint, and patients (i) the reason(s) why it is suggesting a drug interchange and
(ii) how the interchange will affect the patients financially.

	 	(l)	 	PBM understands that any information it provides to WellPoint under this Exhibit,
including a copy of this Agreement, may be provided to OPM. PBM has the sole obligation to
designate any

Page 10 of 11

 

	 	 	 	information provided under this Exhibit as confidential. PBM consents to the disclosure of
this information to OPM. PBM acknowledges and agrees that, although its information may be
marked as confidential commercial information, the information may be subject to FOIA
disclosure under 5 U.S.C. Section 552. PBM agrees that WellPoint is not liable for any
release of information under FOIA.
	 
	 	(m)	 	Quality of Drug Therapy — The quality assurance program implemented by PBM contractor
must include a process to measure the quality of its drug therapy provided to FEP
enrollees. Specific areas to be addressed include achievement of quality targets measured
by both internal and external metrics; identification and appropriate use of best
practices; and application of evidence-based medicine, as appropriate. 
	 
	 	(n)	 	Patient Safety Standard — PBM shall establish drug utilization management,
formulary process and procedures that have distinct systems for identifying and rectifying
consumer safety issues including:

	 	(i)	 	A system for identifying and communicating drug and consumer safety issues at
point-of-service; and
	 
	 	(ii)	 	A system of drug utilization management tools, such as prospective and
concurrent drug utilization management that identifies situations which may compromise
the safety of the consumer.

	 	(o)	 	Safety and Accessibility for Consumers — PBM shall meet the following standards
related to pharmacy network management and consumer access to medications:

	 	(1)	 	PBM shall define the scope of its services with respect to:

	 	(a)	 	The distribution channels offered (e.g. pharmacy network, mail order
pharmacies, or specialty pharmacies);
	 
	 	(b)	 	The types of pharmacy services offered within each distribution
channel; and
	 
	 	(c)	 	The geographic area served by each distribution channel.

	 	(2)	 	For each distribution channel provided by PBM, PBM shall:

	 	(a)	 	Establishes criteria and measures actual performance in comparison to
those criteria: and
	 
	 	(b)	 	Makes improvements where necessary to maintain the pharmacy network and
meet contractual requirements.

	 	(3)	 	PBM shall establish a quality and safety mechanism for each distribution
channel in order to identify and address concerns related to:

	 	(a)	 	Quality and safety of drug distribution; and
	 
	 	(b)	 	Quality of service.

(p) Additional Costs. If, in complying with the requirements of this Exhibit H, PBM should incur
significant additional costs that are not otherwise covered by Section 3.20 of the Agreement,
WellPoint agrees to work with PBM in good faith to recover those costs from the United States
Office of Personnel Management (“OPM”) in accordance with the applicable federal laws and
regulations. The parties agree that any such funding request will be in the form of an
administrative payment request and/or a request for equitable adjustment. The parties agree
that the decision of OPM to reimburse PBM for such costs shall be final and that in no event
shall WellPoint have any liability to PBM for such costs.

Page 11 of 11Exhibit 10.1

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is effective November 1, 2010, by and between
Executive (“Executive”) and ABM Industries Incorporated, a Delaware corporation (“Company” or
“ABM”).

	 	1.	 	EMPLOYMENT. In consideration of the terms and commitments contained in this agreement,
Executive agrees to and acknowledges the following:

	 	2.	 	TERM, RESPONSIBILITIES AND TITLE. This agreement shall end on October 31, 2012, unless
sooner terminated pursuant to Section 7 (“Initial Term”). The term of this Agreement may
be extended pursuant to Section 6 (“Extended Term”). Executive shall assume and perform
such duties, functions and responsibilities relating to Executive’s employment with Company
as may be assigned from time to time by the Company. Executive’s title shall be [Title] of
Company, subject to modification as determined by the Company’s Board of Directors
(“Board”).

	 	3.	 	COMPENSATION. Company agrees to compensate Executive, and Executive agrees to accept
as compensation in full, a base salary. Employee will also be eligible for short-term
incentive awards pursuant to the terms of the Performance Incentive Program or any
applicable successor plan (“Bonus”), and eligible to receive awards under the 2006 Equity
Incentive Program, as amended and restated, or any applicable successor plan and for such
perquisites as are from time to time received by similarly situated executives.

	 	4.	 	COMPLIANCE WITH LAWS AND POLICIES. Executive shall dedicate his/her full business time
and attention to the performance of duties hereunder, perform his/her duties in good faith
and to a professional standard, and fully comply with all laws and regulations pertaining to
the performance of his/her responsibilities, all ethical rules, ABM’s Code of Business
Conduct and Ethics, ABM’s Recoupment Policy as well as any and all of policies, procedures
and instructions of Company. [including but not limited to the provisions of Section 304 of
the Sarbanes-Oxley Act of 2002. (CFO and CEO only). ]

	 	5.	 	RESTRICTIVE COVENANTS. In consideration of the compensation, contract term, potential
Severance Benefits, continued employment provided by Company, as well as the access Company
will provide Executive to its Confidential Information, as defined below, and current and
prospective customers, all as necessary for the performance of Executive’s duties hereunder,
Executive hereby agrees to the following during his/her employment and thereafter as
provided:

 

 

 

	 	5.1	 	CONFIDENTIAL INFORMATION DEFINED. Confidential Information includes but is
not limited to (i) Company and its subsidiary companies’ trade secrets, know-how,
ideas, applications, systems, processes and other confidential information which is
not generally known to and/or readily ascertainable through proper means by the
general public; (ii) plans for business development, marketing, business plans and strategies, budgets and financial statements of any
kind, costs and suppliers, including methods, policies, procedures, practices,
devices and other means used by Company and its subsidiaries in the operation of its
business, pricing plans and strategies, as well as information about Company and
affiliated entity pricing structures and fees, unpublished financial information,
contract provisions, training materials, profit margins and bid information; (iii)
information regarding the skills, abilities, performance and compensation of other
employees of the Company or its subsidiaries, or of the employees of any company
that contracts to provide services to the Company or its subsidiaries; (iv)
information of third parties to which Executive had access by virtue of Executive’s
employment, including, but not limited to information on customers, prospective
customers, and/or vendors, including current or prospective customers’ names,
contact information, organizational structure(s), and their representatives
responsible for considering the entry or entering into agreements for those
services, and/or products provided by Company and its subsidiaries; customer leads
or referrals; customer preferences, needs, and requirements (including customer
likes and dislikes, as well as supply and staffing requirements) and the manner in
which they have been met by Company or its subsidiaries; customer billing
procedures, credit limits and payment practices,; and customer information with
respect to contract and relationship terms and conditions, pricing, costs, profits,
sales, markets, plans for future business and other development; purchasing
techniques; supplier lists; (v) information contained in Company’s LCMS database,
JDE , LMS or similar systems; (vii) any and all information related to past, current
or future acquisitions between Company or Company-affiliated entities including
information used or relied upon for said acquisition (“Confidential Information.”)

	 	5.2	 	NON-DISCLOSURE. Company and Executive acknowledge and agree that Company has
invested significant effort, time and expense to develop its Confidential Information.
Except in the proper performance of this Agreement, Executive agrees to hold all
Confidential Information in the strictest confidence, and to refrain from making any
unauthorized use or disclosure of such information both during Executive’s employment
and at all times thereafter. Except in the proper performance of this Agreement,
Executive shall not directly or indirectly disclose, reveal, transfer or deliver to
any other person or business, any Confidential Information which was obtained directly
or indirectly by Executive from, or for, Company or its subsidiaries or by virtue of
Executive’s employment. This Confidential Information has unique value to the Company
and its subsidiaries, is not generally known or readily available by proper means to
their competitors or the general public, and could only be developed by others after
investing significant effort, time, and expense. Executive understands that Company
or its subsidiaries would not make such Confidential Information available to
Executive unless Company was assured that all such Confidential Information will be
held in trust and confidence in accordance with this Agreement and applicable law.
Executive hereby acknowledges and agrees to use
this Confidential Information solely for the benefit of Company and its affiliated
entities.

 

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	 	5.3	 	NON-SOLICITATION OF EMPLOYEES. Executive acknowledges and agrees that
Company has developed its work force as the result of its investment of substantial
time, effort, and expense. During the course and solely as a result of Executive’s
employment with Company, Executive will come into contact with employees of Company
and affiliated-entities, develop relationships with and acquire information regarding
their knowledge, skills, abilities, salaries, commissions, benefits, and other matters
that are not generally known to the public. Executive further acknowledges and agrees
that hiring, recruiting, soliciting, or inducing the termination of such employees may
cause increased expenses and a loss of business. Accordingly, Executive agrees that
while employed by Company and for a period of one year following the termination of
Executive’s employment (whether termination is voluntary or involuntary), Executive
will not directly or indirectly solicit, hire, recruit or otherwise encourage, assist
in or arrange for any employee to terminate employment with Company or any other
Company-affiliated entity except in the proper performance of this Agreement. This
prohibition against solicitation shall include but not be limited to: (i) identifying
to other employers or their agents, recruiting or staffing firms, or other third
parties the Company employee(s) who have specialized knowledge concerning Company’s
business, operations, processes, methods, or other confidential affairs or who have
contacts, experience, or relationships with particular customers; (ii) disclosing or
commenting to other employers or their agents, recruiting or staffing firms, or other
third parties regarding the quality or quantity of work, specialized knowledge, or
personal characteristics of any person still employed by Company or any other
Company-affiliated entity; and (iii) providing such information to prospective
employers or their agents, recruiting or staffing firms, or other third parties
preceding possible employment.

	 	5.4	 	NON-SOLICITATION OF CUSTOMERS. Executive acknowledges and agrees that
Company and its subsidiaries have identified, solicited, and developed their customers
and developed customer relationships as the result of their investment of significant
time, effort, and expense and that Company has a legitimate business interest in
protecting these relationships. Executive further acknowledges that he or she would
not have been privy to these relationships were it not for Executive’s employment by
Company. Executive further acknowledges and agrees that the loss of such customers
and clients would damage Company and potentially cause Company great and irreparable
harm. Consequently, Executive covenants and agrees that during and for one year
following the termination of Executive’s employment with Company (whether such
termination is voluntary or involuntary), Executive shall not, directly or indirectly,
for the benefit of any person or entity other than the Company, attempt to seek, seek,
attempt to solicit, solicit, or accept work from any customer, client or active
customer prospect with whom Executive developed a relationship while
employed by Company or otherwise obtained Confidential Information about for the
purpose of diverting business from Company or an affiliated entity. In addition,
Executive agrees that at all times after the voluntary or involuntary termination of
Executive’s employment, Executive shall not attempt to seek, seek, attempt to
solicit, solicit, , or accept work from of any customer or active customer prospect
of Company or any other Company-affiliated entity through the direct or indirect use
of any Confidential Information or by any other unfair or unlawful business
practice.

 

3

 

	 	5.5	 	POST EMPLOYMENT COMPETITION. Executive agrees that while employed by Company
and for a period of twelve months following Executive’s termination of employment
(whether such termination is voluntary or involuntary), Executive shall not work,
perform services for, or engage in any business, enterprise, or operation that calls
for, requires, or contemplates Executive providing any work, services, or effort that
(i) requires Executive to provide any work, service, or effort that could or would
require the application, disclosure, reliance, or use of the Confidential Information
or other legitimate business interest, including relationships, of Company for any
third-party, or (ii) is substantially similar to those services or work Executive
performed on the Company’s behalf which compete directly or indirectly with the
Company or any Company-affiliated entity of which Executive had information or
knowledge by providing goods, products, or services that are the same or substantially
similar to those provided by Company in the twelve month period preceding the
effective date of Executive’s termination of employment. The Executive acknowledges
that the Company and its subsidiaries are engaged in business in various states
throughout the U.S. Accordingly, and in view of the nature of Executive’s nationwide
position and responsibilities, Executive agrees that the provisions of this Section’s
restrictions shall be applicable to Executive in each state and each foreign country
in which the Executive performed work, services, or engaged in business activity on
behalf of the Company or Executive was provided confidential or proprietary
information regarding the Company’s business activities in those areas within the
twelve-month period preceding the effective date of Executive’s termination of
employment. This Section 5.5 shall not apply if the State of Employment is California.

	 	5.6	 	NON-DISPARAGEMENT. During Executive’s employment with Company and
thereafter, Executive agrees not to make any statement or take any action which
disparages, defames, or places in a negative light Company, Company-affiliated
entities, or its or their reputation, goodwill, commercial interests or past and
present officers, directors and employees.

 

4

 

	 	5.7	 	COOPERATION WITH LEGAL MATTERS. During Executive’s employment with Company
and thereafter, Executive shall cooperate with Company and any Company-affiliated
entity in its or their investigation, defense or prosecution of any potential, current
or future legal matter in any forum, including but not limited to lawsuits,
administrative charges, audits, arbitrations, and internal and
external investigations. Executive’s cooperation shall include, but is not limited
to, reviewing and preparing documents and reports, meeting with attorneys
representing any Company-affiliated entity, providing truthful testimony, and
communicating Executive’s knowledge of relevant facts to any attorneys, experts,
consultants, investigators, employees or other representatives working on behalf of
an Company-affiliated entity. Except as required by law, Executive agrees to treat
all information regarding any such actual or potential investigation or claim as
confidential. Executive also agrees not to discuss or assist in any litigation,
potential litigation, claim, or potential claim with any individual (or their
attorney or investigator) who is pursuing, or considering pursuing, any claims
against the Company or an Company-affiliated entity unless required by law. In
performing the tasks outlined in this Section 5.7, Executive shall be bound by the
covenants of good faith and veracity set forth in ABM’s Code of Business Conduct and
Ethics and by all legal obligations. Nothing herein is intended to prevent
Executive from complying in good faith with any subpoena or other affirmative legal
obligation. Executive agrees to notify the Company immediately in the event there
is a request for information or inquiry pertaining to the Company, any
Company-affiliated entity, or Executive’s knowledge of or employment with the
Company. In performing responsibilities under this Section, Executive shall be
compensated for Executive’s time at an hourly rate of $250 per hour. However, during
any period in which Executive is an employee of ABM or during the severance period,
Executive shall not be so compensated.

	 	5.8	 	REMEDIES AND DAMAGES. The parties agree that compliance with Sections 5.1 –
5.7 of the Agreement is necessary to protect the business and goodwill of Company,
that the restrictions contained herein are reasonable and that any breach of this
Section will result in irreparable and continuing harm to Company, for which monetary
damages will not provide adequate relief. Accordingly, in the event of any actual or
threatened breach of any covenant or promise made by Executive in Section 5, Company
and Executive agree that Company shall be entitled to all appropriate remedies,
including temporary restraining orders and injunctions enjoining or restraining such
actual or threatened breach. Executive hereby consents to the issuance thereof
forthwith by any court of competent jurisdiction.

	 	5.9	 	LIMITATIONS. Nothing in this Agreement shall be binding upon the parties to
the extent it is void or unenforceable for any reason in the State of Employment,
including, without limitation, as a result of any law regulating competition or
proscribing unlawful business practices; provided, however, that to the extent that
any provision in this Agreement could be modified to render it enforceable under
applicable law, it shall be deemed so modified and enforced to the fullest extent
allowed by law.

 

5

 

	 	6.	 	EXTENSION OF EMPLOYMENT.

	 	6.1	 	RENEWAL. Absent at least 60 days written notice of termination of employment
or notice of non-renewal from Company to Executive prior to expiration of the then
current Initial or Extended Term, as applicable, of this Agreement, employment
hereunder shall continue for an Extended Term (or another Extended Term, as applicable)
of one year.

	 	6.2	 	NOTICE OF NON-RENEWAL. In the event that notice of non-renewal is given 60 days
prior to the expiration of the then Initial or Extended Term, as applicable, of this
Agreement, employment shall continue on an “at will” basis following the expiration of
such Initial or Extended Term. In such event, Company shall have the right to terminate
Executive’s employment, position or compensation. Executive shall remain eligible for
Severance Benefits pursuant to ABM’s Severance Policy.

	 	7.	 	TERMINATION OF EMPLOYMENT.

	 	7.1	 	TERMINATION FOR CAUSE. Company may terminate Executive’s employment hereunder at
any time without notice upon a good faith determination by the Board of Cause. “Cause”
means the occurrence of one of the following: (i) Executive’s serious misconduct,
dishonesty, disloyalty, or insubordination; (ii) Executive’s conviction (or entry of a
plea bargain admitting criminal guilt) of any felony or a misdemeanor involving moral
turpitude; (iii) drug or alcohol abuse that has a material or potentially material
effect on the Company’s reputation and/or on the performance of Executive’s duties and
responsibilities under this Agreement; (iv) Executive’s failure to substantially perform
Executive’s duties and responsibilities under this Agreement for reasons other than
death or Disability, as defined below; (v) Executive’s repeated inattention to duty for
reasons other than death or Disability; and, (vi) any other material breach of this
Agreement by Executive. Executive shall not be eligible for a prorated Bonus, or any
Severance Benefits, as defined below, in the event his/her employment is terminated for
Cause.

	 	7.2	 	VOLUNTARY TERMINATION BY EXECUTIVE. At any time, Executive may terminate
employment hereunder by giving Company 60 days prior written notice. Executive may
terminate employment upon such shorter period of notice as may be reasonable under the
circumstances. For a voluntary termination for reasons other than the Executive’s
Disability, Executive will not receive any prorated Bonus. Executive shall not be
eligible for any Severance Benefits, as defined below, in the event of his/her
resignation. Company reserves the right to relieve Executive of his/her duties at the
Company’s discretion following notice of Executive’s intent to resign.

 

6

 

	 	7.3	 	DISABILITY OR DEATH. Employment hereunder shall automatically terminate upon the
death of Executive and may be terminated at the Company’s discretion as a result of
Executive’s Disability. “Disability” means Executive’s substantial
inability to perform Executive’s essential duties and responsibilities under this
Agreement for either 90 consecutive days or a total of 120 days out of 365
consecutive days as a result of a physical or mental illness, injury or impairment,
all as determined in good faith by the Company. Upon termination due to death or
Disability, Company shall pay when due to Executive, or, upon death, Executive’s
designated beneficiary or estate, as applicable, any and all previously earned, but
as yet unpaid, salary, and reimbursement of business expenses which would have
otherwise been payable to Executive under this Agreement, through the end of the
month in which Disability or death occurs. In the event of termination due to death
or Disability, Company shall pay to Executive, or, in the event of death, to
Executive’s designated beneficiary or estate, as applicable, a prorated Bonus based
on the length of performance in the applicable performance period prior to
Disability or death. Any prorated Bonus payable under this paragraph shall be paid
at the end of the applicable performance period when such payments are made to other
participants and in accordance with the terms of the applicable plan or program.
Executive shall not be eligible for Severance Benefits, as defined below, in the
event of separation from employment due to Executive’s death or Disability.

	 	7.4	 	TERMINATION WITHOUT CAUSE. Company may terminate Executive’s employment
hereunder without Cause at any time during the then-current Initial or Extended Term of
this Agreement, as applicable, by giving Executive 90 days written notice. Upon such
termination without Cause, Executive’s right to a prorated Bonus or severance benefits,
if any, shall be governed by the terms of the ABM Severance Policy or any policy or plan
of the Company as in effect from time to time that provides for payment of severance
amounts or bonuses upon such a termination of employment (“Severance Benefits”).
Executive must execute, without exercising any right of revocation, a full release of
all claims within 21 days following termination of employment in order to be eligible
for Severance Benefits.

	 	7.5	 	CONDITIONS TO PAYMENT AND ACCELERATION; CODE SECTION 409A. Notwithstanding
anything contained herein to the contrary, Executive shall not be considered to have
terminated employment with the Company for purposes of this Agreement and no payments
shall be due to Executive under this Agreement or any policy or plan of the Company as
in effect from time to time, providing for payment of amounts on termination of
employment unless Executive would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A. To the extent required in
order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts
that would otherwise be payable and benefits that would otherwise be provided pursuant
to this Agreement during the six-month period immediately following Executive’s
termination of employment shall instead be paid on the first business day after the date
that is six months following Executive’s termination of employment (or upon Executive’s
death, if earlier).

 

7

 

	 	7.6	 	EXCESS PARACHUTE PAYMENTS. Subject to a Severance Agreement between Executive and
the Company approved by the Board of Directors or the Compensation Committee of ABM
Industries Incorporated, if any amount or benefit to be paid or provided under the ABM
Severance Policy, an equity award, and/or any other agreement between Executive and the
Company would be an Excess Parachute Payment but for the application of this sentence,
then the payments and benefits to be paid or provided under the Severance Program,
equity award, and/or any other agreement will be reduced to the minimum extent necessary
(but in no event to less than zero) so that no portion of any such payment or benefit,
as so reduced, constitutes an Excess Parachute Payment; provided, however, that the
foregoing reduction will not be made if such reduction would result in Executive
receiving an amount determined on an after-tax basis, taking into account the excise tax
imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any
tax imposed by any comparable provision of state law and any applicable federal, state
and local income and employment taxes (the “After-Tax Amount”) less than 90% of the
After-Tax Amount of the severance payments Executive would have received under the
Company’s Severance Policy or under any other agreement without regard to this clause.
Whether requested by the Executive or the Company, the determination of whether any
reduction in such payments or benefits to be provided under this Agreement or otherwise
is required pursuant to the preceding sentence, and the value to be assigned to the
Executive’s covenants in Section 5 hereof for purposes of determining the amount, if
any, of the “excess parachute payment” under Section 280G of the Code will be made at
the expense of the Company by the Company’s independent accountants or benefits
consultant. The fact that Executive’s right to payments or benefits may be reduced by
reason of the limitations contained in this paragraph will not of itself limit or
otherwise affect any other rights of Executive under any other agreement. In the event
that any payment or benefit intended to be provided is required to be reduced pursuant
to this paragraph, Executive will be entitled to designate the payments and/or benefits
to be so reduced in order to give effect to this paragraph, provided, however, that
payments that do not constitute deferred compensation within the meaning of Section 409A
will be reduced first. The Company will provide Executive with all information
reasonably requested by Executive to permit Executive to make such designation. In the
event that Executive fails to make such designation within 10 business days after
receiving notice from the Company of a reduction under this paragraph, the Company may
effect such reduction in any manner it deems appropriate. The term “Excess Parachute
Payment” as used in this paragraph means a payment that creates an obligation for
Executive to pay excise taxes under Section 280G of the Internal Revenue Code of 1986,
as amended, or any successor statute.

	 	7.7	 	ACTIONS UPON TERMINATION. Upon termination of employment hereunder, Executive
shall immediately resign as an officer and/or director of Company and of any Company
subsidiaries or affiliates, including any LLCs or joint ventures, as applicable. At
Company’s request, Executive also agrees to resign from the
board of any Taft-Hartley trust fund joined during Executive’s employment with
Company. Executive shall promptly return and release all Company property and
Confidential Information, in all forms, in Executive’s possession to Company.
Company shall pay Executive when due any and all previously earned, but as yet
unpaid, salary and reimbursement of business expenses submitted in accordance with
Company policy as in effect.

 

8

 

	 	7.8	 	WITHHOLDING AUTHORIZATION. To the fullest extent permitted under the laws of the
State of Employment hereunder, Executive authorizes Company to withhold from any
Severance Benefits otherwise due to Executive and from any other funds held for
Executive’s benefit by Company, any damages or losses sustained by Company as a result
of any material breach or other material violation of this Agreement by Executive,
pending resolution of any underlying dispute.

	 	8.	 	NOTICES.

	 	8.1	 	ADDRESSES. Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and delivered in person, or sent prepaid by certified
mail, overnight express, or electronically to the party named at the address set forth
below or at such other address as either party may hereafter designate in writing to the
other party:

	Executive:	 	(Executive Name)

(Home Address)

(City, ST Zip)

Email: (email)
	 
	Company:	 	(Legal Company Name)

551 Fifth Avenue, Suite 300New York, NY 10176 Attention: 
Chief Executive Officer
	 
	Copy:	 	 ABM Industries Incorporated

551 Fifth Avenue, Suite 300

New York, NY 10176

Attention: Senior Vice President of Human Resources

	 	8.2	 	RECEIPT. Any such notice shall be assumed to have been received when delivered
in person or 48 hours after being sent in the manner specified above.

	 	9.	 	GENERAL PROVISIONS.

	 	9.1	 	GOVERNING LAW. This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Employment, which, for purposes of this Agreement, shall
mean the state where Executive is regularly and customarily employed and where
Executive’s primary office is located.

	 	9.2	 	NO WAIVER. Failure by either party to enforce any term or condition of this
Agreement at any time shall not preclude that party from enforcing that provision, or
any other provision of this Agreement, at any later time.

 

9

 

	 	9.3	 	SEVERABILITY. It is the desire and intent of the parties that the provisions of
this Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought. Accordingly, in
the event that any provision of this Agreement would be held in any jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be either automatically deemed so
narrowly drawn, or any court of competent jurisdiction is hereby expressly authorized to
redraw it in that manner, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.

	 	9.4	 	SURVIVAL. All terms and conditions of this Agreement which by reasonable
implication are meant to survive the termination of this Agreement, including but not
limited to the provisions of Sections 5.1 – 5.7 of this Agreement, shall remain in full
force and effect after the termination of this Agreement.

	 	9.5	 	REPRESENTATIONS BY EXECUTIVE. Executive represents and agrees that Executive has
carefully read and fully understands all of the provisions of this Agreement, that
Executive is voluntarily entering into this Agreement and has been given an opportunity
to review all aspects of this Agreement with an attorney, if Executive chooses to do so.
Executive also represents that he/she will not make any unauthorized use of any
confidential or Confidential Information of any third party in the performance of
his/her duties under this Agreement and that Executive is under no obligation to any
prior employer or other entity that would preclude or interfere with the full and good
faith performance of Executive’s obligations hereunder.

	 	9.6	 	ENTIRE AGREEMENT. Unless otherwise specified herein, this Agreement sets forth
every contract, understanding and arrangement as to the employment relationship between
Executive and Company, and may only be changed by a written amendment signed by both
Executive and an authorized representative of Company.

	 	9.6.a	 	NO EXTERNAL EVIDENCE. The parties intend that
this Agreement speak for itself, and that no evidence with respect to
its terms and conditions other than this Agreement itself may be
introduced in any arbitration or judicial proceeding to interpret or
enforce this Agreement.

 

10

 

	 	9.6.b	 	OTHER AGREEMENTS. It is specifically
understood and agreed that this Agreement supersedes all oral and
written agreements between Executive and Company prior to the date of
this Agreement, provided, however, that any Change in Control Agreement
shall remain in full force and effect according to its terms. It is
also expressly understood that, notwithstanding any provision to the
contrary contained in this Agreement (whether explicit or implicit),
the terms and restrictions set forth in any prior agreement regarding
assignment of intellectual property or restrictions on competition,
solicitation of employees, or solicitation of customers, including, but
not limited to, any such provision in any Asset Purchase Agreement,
Merger Agreement, Stock Purchase Agreement or any agreement ancillary
thereto entered into by and between Executive and any
Company-affiliated entity setting forth Executive’s duties under a
Covenant Not To Compete in connection with the sale of such assets,
shall also remain in full force and effect during employment and
thereafter.

	 	9.7.c	 	AMENDMENTS. This Agreement may not be amended
except in a writing approved by the Board and signed by the Executive
and the President or Chief Executive of Company.

 

11

 

IN WITNESS WHEREOF, Executive and Company have executed this Agreement as of the date set forth
above.

	 	 	 	 	 	 	 	 	 
	Executive:	 	(Executive Name)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	Date:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Company:	 	ABM Industries Incorporated	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Signature:
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

12

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