Document:

exv10w1

Exhibit 10.1

IN THE CIRCUIT COURT FOR THE TWENTIETH JUDICIAL CIRCUIT

ST. CLAIR COUNTY, ILLINOIS

	 	 	 	 	 	 	 

	KATHLEEN ROCHE, D.C., individually

	 	 	)	 	 	 
	and on behalf of others similarly situated,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Plaintiff,

	 	 	)	 	 	No. 05 L 101
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	Judge Lloyd A. Cueto
	 

	 	 	)	 	 	 
	CORVEL CORPORATION,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Defendant.

	 	 	)	 	 	 

SETTLEMENT AGREEMENT AND GENERAL RELEASE

     This Settlement Agreement and General Release (“Settlement Agreement” or “Agreement” or
“Settlement”) is entered into on this 29th day of October, 2010, between Plaintiff, Kathleen Roche
(“Plaintiff” or “Class Plaintiff”) and CorVel Corporation (“CorVel”). The foregoing Plaintiff and
CorVel shall be collectively referred to as the “Parties.”

     WHEREAS, Plaintiff filed the above-captioned action (the “Litigation”) on February 15, 2005,
in the Circuit Court for the Twentieth Judicial Circuit, St. Clair County, Illinois (the “Court”),
alleging that CorVel improperly advised its payor clients that they could apply PPO discounts to
the bills of medical providers who had signed preferred provider agreements, because CorVel and the
payor clients allegedly did not adequately refer or channel patients to the providers as a
condition of the PPO reduction taken; Plaintiff also alleges in the Litigation that CorVel used
biased computer software in reviewing whether the medical bills were usual and customary and
otherwise constituted proper charges; and

 

 

     WHEREAS, Plaintiff’s motion for certification of a class of Illinois medical provider,
excluding hospitals, on the breach of contract claims in Counts I and II was heard by the Court on
October 29, 2007; and

     WHEREAS, the Court granted Plaintiff’s motion for class certification on December 19, 2007,
and CorVel’s petitions for leave to appeal the certification order to the Illinois Appellate Court,
Fifth District and Illinois Supreme Court were denied; and

     WHEREAS, Plaintiff and her counsel have conducted an extensive examination of the facts and
documents relating to the Litigation, including thousands of pages of documents produced by CorVel,
deposition testimony, and responses to written discovery requests; and

     WHEREAS, CorVel denies the claims and allegations made in the Litigation and denies any
wrongdoing and any liability in connection with the claims asserted in the Litigation; and

     WHEREAS, the Litigation, if it continued, would likely result in expensive and protracted
litigation and appeals, and continued uncertainty as to outcome; and

     WHEREAS, Plaintiff and her counsel have concluded that this Settlement Agreement provides
substantial benefits to Plaintiff and to members of the Settlement Class (as defined below), and
resolves all issues that were or could have been raised in the Litigation without prolonged
litigation and the risks and uncertainties inherent in litigation; and

     WHEREAS, Plaintiff and her counsel have concluded that this Settlement Agreement is fair,
reasonable, adequate and in the best interest of the Settlement Class; and

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     WHEREAS, this Settlement Agreement was reached after several months of protracted,
arm’s-length negotiations; and

     WHEREAS, after negotiating the relief for the Settlement Class, the Parties then engaged in
arm’s-length negotiations and reached agreement regarding incentive payments along with attorneys’
fees and expenses; and

     WHEREAS, CorVel consents to the Settlement to avoid the expense, inconvenience and inherent
risk of litigation, as well as the concomitant disruption of its business operations; and

     WHEREAS, nothing in this Settlement Agreement shall be construed as an admission or concession
by CorVel of the truth of any allegations raised in the Litigation, or of any fault, wrongdoing, or
liability of any kind.

     NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants, promises, and
general release set forth below, the Parties agree as follows:

Definitions

     1. In addition to the terms defined above, the following terms have the meaning set forth
below:

     a. “Claims” means claims, causes of action, allegations, demands, disputes, suits,
debts, liens, liabilities, interest, costs, expenses, losses, or counterclaims, whether
arising under law or equity, whether asserted or unasserted, known or unknown, suspected or
unsuspected, foreseen or unforeseen, actual or contingent, liquidated or unliquidated.

     b. “Class Counsel” means Freed & Weiss LLC, and Becker, Paulson, Hoerner & Thompson,
P.C.

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     c. “CorVel” means CorVel Corporation and its present, former, and future parent,
subsidiary and affiliate entities, and all of the aforementioned entities’ present, former,
and future respective partners, predecessors, successors, assigns, divisions, officers,
directors, shareholders, employees, attorneys, and agents.

     d. “Effective Final Judgment Date” shall mean the fifth business day after the date
when the time to appeal the Final Judgment and Order and the dismissal of this action has
expired, and no document has been filed within that time seeking appeal, review, rehearing,
reconsideration or any other action regarding the Final Judgment and Order. If any such
document is filed seeking an appeal, review, rehearing, reconsideration or any other
action, then the Effective Final Judgment Date shall mean the fifth business day after the
date upon which (i) all appellate and/or other proceedings resulting from such document
have been finally terminated in such a manner as to permit no further judicial action, and
(ii) the Settlement, Preliminary Approval Order, and Final Judgment and Order have been
affirmed and approved in all material respects.

     e. “Final Judgment and Order” means the order finally approving the Settlement.

     f. “Notice” means the class notice described in paragraph 14 of this Agreement.

     g. “PPO Reduction” means a reduction or discount taken under CorVel’s preferred
provider agreements, CorVel’s PPO network, and/or any PPO network utilized or leased by
CorVel.

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     h. “Preliminary Approval Order” means the Court order granting preliminary approval to
the Settlement.

     i. “Provider Agreement” means any contract between a healthcare provider (or
association of healthcare providers) and CorVel pursuant to which the healthcare provider
agrees to participate in any preferred provider network operated by CorVel, including but
not limited to the Corcare Preferred Provider Organization Agreement.

     j. “Released Claims” means all those Claims described in paragraphs 11 and 12 of this
Agreement.

     k. “Released Persons” means CorVel and its present, former, and future agents,
assigns, employees, attorneys, partners, predecessors, successors, parents, subsidiaries,
affiliates, divisions, officers, directors, and shareholders. Released Persons do not
include any payor who took a PPO Reduction or Usual and Customary Reduction.

     l. “Releasing Parties” means Plaintiff and each member of the Settlement Class (except
a person who has obtained proper and timely exclusion from the Settlement Class pursuant to
paragraph 16 of this Settlement Agreement), on their own behalf and on behalf of their
spouses and former spouses, as well as their present, former, and future administrators,
agents, assigns, employees, attorneys, executors, heirs, partners,
predecessors-in-interest, successors, parents, subsidiaries, affiliates, divisions,
officers, directors, and shareholders.

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     m. “Settlement Class” means all Illinois licensed medical providers, excluding
hospitals, that between February 15, 1995 and September 24, 2008 (i) were members of
CorVel’s CorCare PPO Network pursuant to a pre-2006 CorCare provider contract and (ii) had
their medical bills reduced by application of a PPO Reduction and/or a Usual and Customary
Reduction. Each member of the Settlement Class that submitted bills under a single Tax
Identification Number (“TIN”) shall be considered a single member of the Settlement Class
for purposes of this Agreement, including the notice provisions in paragraph 14 and the
provisions regarding the one-time payment of $100, $300, or $500 payment to each TIN
pursuant to paragraph 7 of this Agreement.

     n. “Settlement Payments” means the payments made to members of the Settlement Class
according to the terms of paragraph 7 of this Agreement.

     o. “Usual and Customary Reduction” means any reduction applied to a medical bill or
other request for payment based on a review of that bill or request to determine whether it
reflects usual and customary charges and otherwise reflects appropriate and correct charges
and complies with billing standards and procedures, whether performed by CorVel or by a
payor using CorVel software or data.

Proposed Class for Settlement Purposes

     2. Settlement Class. For settlement purposes only, the Parties agree to the certification of
the Settlement Class.

     3. Settlement Purposes Only. CorVel does not agree to certification of the Settlement Class
for any purpose other than to effectuate the Settlement Agreement.

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     4. No Admission of Liability. By entering into this Agreement, the Parties agree that CorVel
and the Released Persons are not admitting any liability to the Class Plaintiff, the Settlement
Class, or any other person or entity, and CorVel and the Released Persons expressly deny all such
liability. CorVel’s sole motivation for entering into this Agreement is to dispose expeditiously
of the claims that have been asserted against it in the Litigation by settlement and compromise
rather than incur the expense and uncertainty of protracted litigation. The Settlement Agreement,
its terms, the documents related to it, and the negotiations or proceedings connected with it shall
not be offered or received into evidence in the Litigation or any other action or proceeding to
establish any liability or admission by CorVel.

     5. Vacating Settlement Certification. The certification of the Settlement Class shall be
binding only with respect to the settlement of the Litigation. In the event that the Settlement
Agreement is terminated pursuant to its terms, or is not approved in all material respects by the
Court, or such approval is reversed, vacated or modified in any material respect by the Court or
any other court, the certification of the Settlement Class shall be deemed vacated, the Litigation
shall proceed as if the Settlement Class had not been certified, and no reference to the
Settlement Class, this Settlement Agreement, or any documents, communications or negotiations
related in any way hereto shall be made for any purpose in the Litigation, or in any other action
or proceeding.

Benefit to the Class

     6. Benefits to Class. Class Plaintiff and Class Counsel have concluded, under the
circumstances and considering the pertinent facts and applicable law, that it is in Class
Plaintiff’s best interests and in the best interests of the Settlement Class to enter

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into this Settlement Agreement to avoid the uncertainties of litigation and to ensure a
benefit to Class Plaintiff and all members of the Settlement Class. Class Plaintiff and Class
Counsel consider this Settlement Agreement to be fair, reasonable, and adequate and in the best
interests of the members of the Settlement Class.

     7. Settlement Payments. CorVel agrees to make Settlement Payments totaling up to Two Million
One Hundred Thousand Dollars ($2,100,000) to members of the Settlement Class. Members of the
Settlement Class who submitted bills under a single TIN shall be considered a single member of the
Settlement Class entitled to a one-time payment of $500, $300 or $100 for each TIN as follows: (i)
the approximately 7,000 members of the Settlement Class will be ranked in order of the total dollar
amount of combined PPO and Usual and Customary Reductions from February 15, 1995, to September 24,
2008, and then divided into three groups; (ii) the first group with the largest total dollar
amounts of PPO and Usual and Customary Reductions during this period (consisting of approximately
one-third of the members of the Settlement Class) will be sent by U.S. Postal Service first class
mail a one-time payment of Five Hundred Dollars ($500); (iii) the second group with the next
largest total dollar amounts of PPO and Usual and Customary Reductions during this period
(consisting of approximately one-third of the members of the Settlement Class) will be sent by U.S.
Postal Service first class mail a one-time payment of Three Hundred Dollars ($300); and (iv) the
third group with the lowest total dollar amounts of PPO and Usual and Customary Reductions during
this period (consisting of approximately one-third of the members of the Settlement Class) will be
sent by U.S. Postal Service first class mail a one-time payment of One Hundred Dollars ($100).

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     a. Remaining Funds: Undistributed Settlement Payments. Any undistributed funds
remaining after Settlement Payments are sent out first class mail by U.S. Postal Service to
the members of the Settlement Class pursuant to this paragraph will be defined as Remaining
Funds and deposited by CorVel with the Clerk of the Court pending further order of this
Court. From the Remaining Funds, Corvel will first be reimbursed for the costs of Notice
and settlement and administrative expenses. Any Remaining Funds remaining after
reimbursement to Corvel of the costs of Notice, will then be subject to distribution by the
Court pursuant to the provisions of 735 ILCS 5/2-807.

     b. Distribution of Funds: Checks Not Cashed Within Three Months. If a member of the
Settlement Class receives a Settlement Payment and the check is not cashed within three (3)
months, then it shall be null and void. A second check for Settlement Payment will then be
mailed to these Settlement Class members within thirty (30) days after the expiration of
the three (3) month period. If a member of the Settlement Class receives a second
Settlement Payment and the second check is not cashed within three (3) months after
mailing, then it shall be null and void. All funds remaining un-cashed after a second
distribution as herein provided shall be considered Remaining Funds under Paragraph 7.a.
and distributed according to the terms of that subparagraph, and CorVel shall have no
further obligation to make Settlement Payment to that Settlement Class member.

     c. Distribution of Funds: Settlement Payments Returned Undeliverable. In the event a
Settlement Payment is returned as undeliverable to

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CorVel, then, within thirty (30) days after receipt by CorVel of the undeliverable
Settlement Payment, CorVel will attempt to re-mail such Settlement Payment by the U.S.
Postal Service. In the event a Settlement Payment cannot be re-mailed, or it is returned a
second time by the U.S. Postal Service, then such Settlement Payment shall be considered
Remaining Funds under Paragraph 7.a. and distributed according to the terms of that
subparagraph and Corvel shall have no further obligation to make Settlement Payment to that
Settlement Class member.

     8. Incentive Award, Attorneys’ Fees and Expenses. CorVel agrees to pay Five Thousand Dollars
($5,000) in total incentive payments to Plaintiff along with Seven Hundred Thousand Dollars
($700,000) in attorneys’ fees and expenses to Class Counsel, and, therefore, CorVel will not oppose
Class Counsels’ application for an incentive payment up to a total of $5,000 for Plaintiff, along
with an award of attorneys’ fees and expenses of up to $700,000. Subject to Court approval, CorVel
will pay or cause to be paid to Class Counsel, for distribution as appropriate thereafter, all
amounts awarded by the Court, up to the maximum of $5,000 as the total incentive payment to
Plaintiff and $700,000 in attorneys’ fees and expenses. All amounts awarded by the Court shall be
paid separately, without reducing the amount available for Settlement Payments.

     9. Notice and Administration Costs. CorVel agrees to pay up to Fifty Thousand Dollars
($50,000) for reasonable notice and administration costs of the Settlement.

     10. Total Financial Commitment. CorVel’s total financial commitment under this Settlement
Agreement, including, but not limited to the amounts set forth in

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paragraphs 7, 8, and 9, shall not exceed a total of Two Million Eight Hundred Fifty Five
Thousand Dollars ($2,855,000) under any circumstances.

Release

     11. Release by Plaintiff and the Settlement Class. Upon the Effective Final Judgment Date,
the Releasing Parties hereby release, relinquish and discharge the Released Parties of and from the
following Released Claims: any and all Claims alleged, or which could have been alleged, in the
Litigation; and any and all Claims by members of the Settlement Class, whether legal, equitable,
statutory or any other type or form, which were brought or potentially could have been brought, in
an individual, representative or any other capacity based on, that arise out of, or are related in
any way to any or all of the acts, omissions, facts, matters, transactions, or occurrences that
were directly or indirectly alleged, asserted, described, set forth, or referred to in the
Litigation. Released Claims include Claims of members of the Settlement Class relating to
reductions or discounts taken under CorVel’s provider agreements, CorVel’s PPO network, any PPO
network utilized or leased by CorVel, a bill review performed by CorVel, and/or a bill review
performed by a Payor using CorVel software or data on medical bills or other requests for payment.
Released Claims include all of the above Claims whether known or unknown, suspected or unsuspected,
asserted or unasserted, foreseen or unforeseen, actual or contingent, or liquidated or
unliquidated. The parties acknowledge that the Released Claims do not include, nor were they
intended to include Claims unrelated to PPO Reductions and Usual and Customary Reductions.
Released Claims do not include any Claims that the members of the Settlement Class may have against
any payor who took a PPO Reduction or a Usual and Customary Reduction as

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Claims against payors are expressly excluded from Released Claims, and no payor shall be
considered as a Released Person under this Settlement Agreement.

     12. Release of Unknown Claims. The Releasing Parties acknowledge that they may have Claims
that are currently unknown, and that the release in this Agreement is intended to and will fully,
finally and forever discharge all Released Claims that now exist, or heretofore existed or may
hereafter exist, which, if known, might have affected the decision of the Releasing Parties to
enter into this Agreement. Each Releasing Party shall be deemed to waive any and all provisions,
rights, and benefits conferred by any law of the United States, any state or territory of the
United States, or any state or territory of any other country, or principle of common law or
equity, which governs or limits a person’s release of unknown Claims. In making this waiver, the
Releasing Parties understand and acknowledge that they may hereafter discover facts in addition to
or different from those that are currently known or believe to be true with respect to the subject
matter of this release, but agree that they have taken that possibility into account in reaching
this Settlement Agreement, and that, notwithstanding the discovery or existence of any such
additional or different facts, as to which the Releasing Parties expressly assume the risk, they
fully, finally and forever settle and release any and all Released Claims, asserted or unasserted,
known or unknown, suspected or unsuspected, foreseen or unforeseen, actual or contingent, and
liquidated or unliquidated, which now exist, or heretofore exited, or may hereafter exist, and
without regard to the subsequent discovery or existence of such additional or different facts.

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Settlement Notice and Administration

     13. Settlement Administrator. Class Counsel and CorVel agree that Epiq Systems will be hired
to serve as the Settlement Administrator to perform services to effectuate the terms of this
Settlement Agreement. If Epiq Systems cannot serve as the Settlement Administrator, Class Counsel
and CorVel shall agree on another firm that shall serve as Settlement Administrator. CorVel shall
be responsible for all payments owed to the Settlement Administrator.

     14. Class Notice. Plaintiff and CorVel agree that, if the Court authorizes the Long-Form
Notice to be disseminated to the members of the Settlement Class as provided for in this Agreement,
the Settlement Administrator will mail the Long-Form Notice substantially in form of Exhibit A
hereto, via first class mail to the one address for the unique TIN for the members of the
Settlement Class. Prior to the mailing, CorVel or the Settlement Administrator, as applicable,
will create a list of all such members of the Settlement Class (and provide a copy to Class
Counsel), which will, as necessary, utilize an address refreshing service to obtain the most
current available address for each such member of the Settlement Class. It is agreed, subject to
approval of the Court, that there shall be a single mailing to each such member of the Settlement
Class as set forth herein. CorVel shall pay all costs of providing and mailing of the Long-Form
Notice, as provided herein. The Long-Form Notice will contain an email address where members of
the Settlement Class can request copies of the complaint in the Litigation, the Long-Form notice,
and the Settlement Agreement, which shall be provided to them by CorVel or the Settlement
Administrator as attachments in an email responding to the request within seven business days.

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Settlement Approval Process

     15. Preliminary Approval Order. The Parties agree to petition the Court after execution of
this Settlement Agreement for a Preliminary Approval Order. A copy of the form of order agreed to
by the Parties is attached as Exhibit B hereto. That order shall provide, inter alia, that:

     a. There is probable cause to believe that the Settlement has been negotiated at arm’s
length and is preliminarily determined to be fair, reasonable, adequate and in the best
interests of the Settlement Class for settlement purposes;

     b. Subject to the Court’s consideration of additional evidence regarding Notice at the
fairness hearing, and based on the documents submitted to the Court in connection with
preliminary approval, the Notice and the proposed plan for giving notice fully complies
with the requirements of 735 ILCS 5/2-803 and due process, constitutes the best notice
practicable under the circumstances, and is due and sufficient notice to all persons
entitled to notice of this Settlement;

     c. The Settlement Class is conditionally certified, with Plaintiff serving as class
representative and the attorneys and law firms identified in paragraph 1(b) serving as
Class Counsel, on the condition that the certification and designations shall be
automatically vacated if the Settlement is terminated or is disapproved in whole or in part
by the Court, any appellate court, or any of the Parties pursuant to paragraph 21;

     d. A final hearing on the settlement proposed in this Agreement shall be held before
the Court to determine whether the proposed settlement is fair, reasonable, and adequate,
and whether it should be approved by the Court;

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     e. In further aid of the Court’s jurisdiction to implement and enforce the proposed
settlement, Plaintiff and members of the Settlement Class shall be preliminarily enjoined
and barred from commencing or prosecuting any action asserting any of the Released Claims,
either directly, representatively, derivatively or in any other capacity, whether by a
complaint, counterclaim, defense, or otherwise, in any local, state, or federal court, or
in any agency or other authority or forum wherever located. Any person or entity that
knowingly violates such injunction shall pay the attorneys’ fees and costs incurred by
CorVel or any other Released Party as a result of the violation.

     16. Right of Exclusion. All members of the Settlement Class who properly file a timely
written Request for Exclusion from the Settlement shall be excluded from the Settlement Class,
shall have no rights as members of the Settlement Class pursuant to this Settlement Agreement, and
shall receive no payments as provided herein. A Request for Exclusion from the Settlement Class
must be made according to the terms of the Preliminary Approval Order. A Request for Exclusion must
be in writing and state the name of the Class Member, and any former name if applicable, a current
address and former address if applicable and the applicable Tax Identification Number(s) (TIN) used
by the provider in connection with any CorVel preferred provider network. The Request for
Exclusion must be signed by the Class Member. Each Request must state that: “I hereby request to
be excluded from the Settlement Class and I understand that by excluding myself I will not receive
any benefits from the Settlement.” The Request for Exclusion must be mailed to the address
provided and by the post marked date specified by the Court. Any Request for Exclusion not
complying with these requirements will be

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invalid. No Class Member may assert a right of exclusion for any other Class Member, nor for
any group of Class Members, nor may an agent or representative for any Class Member, or group of
Class Members file a Request for Exclusion.

CorVel or the Settlement Administrator shall promptly forward copies of all Requests for Exclusion
to Settlement Class Counsel.

     17. Right to Object or Comment. Any member of the Settlement Class may comment in support of
or in opposition to the settlement according to the terms of the Preliminary Approval Order. Any
such comment or objection shall meet all the requirements specified by the Preliminary Approval
Order. Corvel or the Settlement Administrator shall promptly forward copies of all comments and
objections to Settlement Class Counsel.

     18. Final Judgment and Order. If the Settlement Agreement is preliminarily approved by the
Court following a hearing, the Parties shall jointly request at the fairness hearing that the Court
enter the Final Judgment and Order. The fairness hearing shall be held no earlier than fourteen
(14) days after the deadline for all members of the Settlement Class to opt out or object under
paragraphs 16 and 17 of this Agreement. A copy of the form of the proposed Final Judgment and
Order agreed to by the Parties is attached hereto as Exhibit C. That order shall provide, inter
alia, that:

     a. The Settlement Agreement is fair, reasonable, adequate, and in the best interests
of the Settlement Class;

     b. The Notice fully complied with the requirements of 735 ILCS 5/2-803 and due
process, constituted the best notice practicable under the

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circumstances, and was due and sufficient notice to all persons entitled to notice of
this Settlement;

     c. The Released Claims and the Litigation are dismissed with prejudice as to all
Released Parties, without fees or costs except as provided in this Settlement Agreement;

     d. Plaintiff and members of the Settlement Class are permanently enjoined and barred
from commencing or prosecuting any action asserting any of the Related Claims, either
directly, representatively, derivatively, or in any other capacity, whether by a complaint,
counterclaim, defense, or otherwise, in any local, state, or federal court, or in any
agency or other authority or forum wherever located. Any person or entity who knowingly
violates such injunction shall pay the attorneys’ fees and costs incurred by CorVel or any
other Released Party as a result of the violation; and

     e. The Court shall retain exclusive jurisdiction over this Litigation, the Parties,
and all members of the Settlement Class to determine all matters relating in any way to the
Final Judgment and Order, the Preliminary Approval Order, or the Settlement Agreement,
including but not limited to the administration, implementation, interpretation, or
enforcement of such orders or Agreement.

     19. Finality of Judgment. The Final Judgment and Order shall be deemed final on the Effective
Final Judgment Date.

     20. Dates of Payment Obligations. CorVel shall have no obligation to make any payments under
this Settlement Agreement unless and until the Court enters the

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Preliminary Approval Order. Once the Preliminary Approval Order is entered and before the
Effective Final Judgment Date, and subject to the limits set forth in paragraph 9, CorVel shall pay
reasonable notice costs and any administrative costs that must be incurred prior to the Effective
Final Judgment Date. CorVel shall have no obligation to make any Settlement Payments until at
least 90 days after the Effective Final Judgment Date and shall have a total of 180 days from the
Effective Final Judgment Date to complete the initial Settlement Payments to members of the
Settlement Class. Any fees and expenses awarded to Settlement Class Counsel shall be paid within
ten (10) days after the Effective Final Judgment Date, or in the event the Court has not yet
awarded attorneys’ fees as of the Effective Final Judgment Date, within ten (10) days of the date
such attorneys’ fee award is made and the time to appeal such award expires. CorVel shall pay any
incentive awards and attorneys’ fees and expenses awarded by the Court in accordance with written
instructions from Class Counsel.

     21. Option to Withdraw. CorVel and Class Counsel, on behalf of the Settlement Class, shall
have the option to withdraw from the Settlement Agreement, and thereby render this Settlement null
and void, if (i) Plaintiff or CorVel breaches any material provision of the Settlement Agreement or
the Preliminary Approval Order, or fails to fulfill any material obligation thereunder; (ii) if 700
or more members of the Settlement Class file timely Requests for Exclusion from the Settlement
Class; (iii) if members of the Settlement Class having $5 million or more in PPO and Usual and
Customary Reductions during the period from February 5, 1995, and September 24, 2008, file timely
Requests for Exclusion; (iv) the Court fails to give final approval to any portion of the
Settlement Agreement or any material aspect of the settlement; (v) the

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attorney general or other authorized officer of the United States or any state, or any
representative of any local, state, or federal agency or branch of government, intervenes in the
Litigation or advises the Court in writing of opposition to the terms of the Settlement Agreement;
or (vi) upon such other grounds as may be agreed by the Parties or permitted by the Court.

     22. Effect of Withdrawal/Rejection. In the event that (i) CorVel or Class Counsel withdraws
from the Settlement Agreement pursuant to paragraph 21; (ii) the Settlement Agreement, Preliminary
Approval Order, and Final Judgment and Order are not approved in all material respects by the
Court; or (iii) the Settlement Agreement, Preliminary Approval Order, or Final Judgment and Order
are reversed, vacated, or modified in any material respect by this or any other court; then (a) the
Settlement Agreement shall become null and avoid; (b) CorVel shall cease to have any payment
obligations, except for reasonable notice and administrative costs properly incurred as of the date
that CorVel or the Settlement Administrator is notified that the Settlement Agreement has become
null and void; (c) the Litigation may continue; and (d) any and all orders entered pursuant to the
Settlement Agreement shall be deemed vacated, including, without limitation, any order certifying
or approving certification of the Settlement Class; provided, however, that if the Parties hereto
agree to appeal jointly such ruling and the Settlement Agreement and Final Judgment and Order are
upheld on appeal, then the Settlement Agreement and Final Judgment and Order shall be given full
force and effect according to their terms.

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Additional Provisions

     23. Interpretation. This Settlement Agreement contains the entire agreement among the Parties
hereto and supersedes any prior agreements or understandings among them. All terms are contractual
and not mere recitals. In the event of an alleged ambiguity, there will be no presumption or
construction against either side as the drafter.

     24. Binding Effect. The terms are and shall be binding upon each of the Parties hereto, their
administrators, agents, assigns, attorneys, executors, heirs, partners, representatives,
predecessors-in-interest, and successors, and upon all other persons claiming any interest in the
subject matter hereto through any of the Parties hereto including any members of the Settlement
Class.

     25. Headings. The headings contained in this Settlement Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Settlement Agreement.

     26. No Rescission on Grounds of Mistake. The Parties acknowledge that they have made their
own investigation of the matters covered by this Settlement Agreement to the extent they have
deemed it necessary to do so. Therefore, the Parties agree that they will not seek to set aside
any part of the Settlement Agreement on the grounds of mistake. Moreover, the Parties understand,
agree, and expressly assume the risk that any fact not recited, contained, or embodied in the
Settlement Agreement may turn out hereinafter to be other than, different from, or contrary to the
facts now known to them or believed by them to be true, and further agree that the Settlement
Agreement shall be effective in all respects notwithstanding and shall not be subject to
termination, modification, or rescission by reason of any such difference in facts.

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     27. Amendment. This Settlement Agreement may be amended or modified only by a written
instrument signed by the Parties or their counsel. Amendments and modifications may be made
without notice to the Settlement Class unless notice is required by law or by the Court.

     28. Construction. For the purpose of construing or interpreting this Settlement Agreement,
the Parties agree that it is to be deemed to have been drafted equally by all Parties hereto and
shall not be construed strictly for or against any Party.

     29. Integration of Exhibits. The exhibits to this Settlement Agreement are an integral and
material part of the settlement and are hereby incorporated and made a part of the Settlement
Agreement.

     30. Jurisdiction. The Circuit Court of the Twentieth Judicial Circuit, St. Clair County,
Illinois, has jurisdiction over the Parties to this Settlement Agreement and Settlement Class.

     31. No Admission. Neither this Settlement Agreement, nor any of its provisions, nor any of
the documents (including, but not limited to, drafts of the Settlement Agreement, the Preliminary
Approval Order, or the Final Judgment and Order), negotiations, or proceedings relating in any way
to the Settlement, shall be construed as or deemed to be evidence of an admission or concession by
any person, including CorVel, and shall not be offered or received into evidence, or subject to
discovery, in this or any other action or proceeding except in an action brought to enforce its
terms or except as may be required by law or court order. The provisions of this paragraph shall
become effective when the Settlement Agreement has been signed by the Parties and shall be binding
on the Parties and their counsel regardless of whether the

21

 

Settlement Agreement is approved by this Court or any other court and regardless of whether
the Settlement Agreement is otherwise rendered null and void pursuant to paragraphs 21 or 22.

     32. Governing Law. This Settlement Agreement shall be governed by and construed in accordance
with the internal laws (as opposed to the conflicts of law provisions) of the State of Illinois.

     33. Notices. Any notice required under the Settlement Agreement, other than the Notice
described in paragraph 14, shall be sent by overnight delivery to Paul M. Weiss, Freed & Weiss LLC,
111 W. Washington Street, Suite 1331, Chicago, Illinois 60602, on behalf of Plaintiff and the
Settlement Class, and to James H. Bowhay, Figliulo & Silverman, P.C., 10 South LaSalle Street,
Suite 3600, Chicago, Illinois 60603, on behalf of CorVel.

     34. Counterparts. This Settlement Agreement may be executed in counterparts, and may be
executed by facsimile, and as so executed shall constitute one agreement.

	 	 	 	 	 	 	 

	Class Representative and	 	CorVel Corporation
	Settlement Class Counsel
 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Paul M. Weiss	 	James H. Bowhay
	Freed & Weiss LLC	 	Figliulo & Silverman, P.C.
	111 W. Washington Street	 	10 S. LaSalle Street
	Suite 1331	 	Suite 3600
	Chicago, Illinois 60602	 	Chicago, Illinois 60603

Richard J. Burke

Freed & Weiss LLC

1010 Market Street

Suite 660

St. Louis, Missouri 63101

22

 

Kevin T. Hoerner

Becker, Paulson, Hoerner & Thompson, P.C.

511 West Main Street

Belleville, Illinois 62226

23

 

EXHIBIT A

 

 

IN THE CIRCUIT COURT FOR THE TWENTIETH JUDICIAL CIRCUIT

ST. CLAIR COUNTY, ILLINOIS

If You Are an Illinois Medical Provider (Excluding Hospitals) Who Was a Member of CorVel

Corporation’s Preferred Provider Organization (“PPO”) That Treated a Patient and Had Your Bill

Reduced by the Application of a PPO Reduction or a Usual and Customary Reduction, You May Be

Entitled to Benefits Under This Settlement. Please Read This Notice Carefully,

As It Affects Your Legal Rights

The Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, authorized this

notice. This is not a solicitation from a lawyer.

	•	 	The lawsuit (Kathleen Roche, D.C. v. CorVel Corporation, Case No.
05 L 101, Circuit Court for the Twentieth Judicial Circuit, St.
Clair County, Illinois), was filed on February 15, 2005, and
concerns PPO discounts taken pursuant to CorVel’s PPO (or PPOs
leased by CorVel) and bill reviews performed by CorVel or
utilizing CorVel’s software. The lawsuit alleges that CorVel
Corporation (Defendant) improperly advised its insurance
company/payor clients that they could apply PPO discounts to the
bills of medical providers who had signed preferred provider
agreements, because Defendant and the payor clients allegedly did
not adequately refer or channel patients to the providers. The
lawsuit also alleges that Defendant used biased computer software
in reviewing whether the medical bills were usual and customary
and otherwise reflected proper charges. Defendant denies the
claims and allegations made in the lawsuit.
	 
	•	 	Under the terms of the Settlement, class members will receive a
cash payment as compensation for any PPO or Usual and Customary
reductions taken by Defendant. The proposed Settlement will not
release any claims you may have against Defendant’s insurance
company/payor clients.
	 
	•	 	Your legal rights are affected whether you act or don’t act.
Please read this Notice carefully.

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLMENT

	 	 	 

	Do Nothing And
You Automatically
Participate in the
Settlement

	 	

If you do nothing and the Court grants
final approval of the Settlement, you will
automatically be included in the Settlement
Class and will automatically be sent a check
without having to fill out any claim forms. It also means

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	 	you are
bound by the Court’s orders in the case and give up your right to
be part of any other lawsuit concerning the claims in this case.
You will receive monetary relief even if you do nothing, unless
you exclude yourself from the Settlement, as described below.
	 
	 	 
	Exclude Yourself

	 	You can ask the Court to exclude you
from the settlement. If you do so, you
will not be entitled to participate in the
Settlement, you will not receive any
money, and you will not release you right
to sue the Defendant. Instructions for
filing a Request for Exclusion are
provided below.
	 
	 	 
	Object or Comment
While Remaining

	 	 
	in the Class

	 	You may comment on the Settlement or you may object to the
Settlement, but you may not also file a request for exclusion from
the Settlement. If you comment or object, you will still receive
the Settlement payments, if they are approved by the Court, and
your claims against the Defendant will be released. Instructions
for filing a comment or objection are provided below.
	 
	 	 
	Attend the Hearing 

	 	You can attend the Final Approval Hearing
and ask to speak to the Court about the fairness of the Settlement.

	•	 	These rights and obligations — and the deadlines to
exercise them — are explained in this Notice.
	 
	•	 	The Court in charge of this case still has to decide
whether or not to approve the Settlement at the Final
Approval Hearing. The payment of the Settlement
Benefits must be approved by the Court and may be
delayed if an appeal is taken. Please be patient.

1. The Litigation. The lawsuit (Kathleen Roche, D.C. v. CorVel Corporation, Case No. 05 L 101,
Circuit Court for the Twentieth Judicial Circuit, St. Clair County, Illinois), was filed on
February 15, 2005, and concerns PPO discounts taken pursuant to Defendant’s PPO (or PPOs leased by
Defendant) and bill reviews performed by Defendant or utilizing Defendant’s software, including
Usual and Customary Reductions.

The lawsuit alleges that Defendant improperly advised its insurance company/payor clients that they
could apply PPO discounts to the amounts of medical bills paid to healthcare providers who had
signed preferred provider agreements with CorVel, when those insurance company/payor clients
allegedly did not adequately refer or channel
patients to the providers. The lawsuit also alleges that Defendant used biased computer

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2

 

software
in reviewing whether the medical bills were usual and customary and otherwise reflected proper
charges.

2. Defendant’s Position. Defendant has denied and continues to deny these claims asserted in the
lawsuit. Defendant contends that the PPO discounts and Usual and Customary Reductions taken by its
payor clients fully complied with its preferred provider agreements and applicable law and that its
bill review services were proper.

3. Purpose of This Notice. This notice is designed to inform members of the class defined below of
the pendency of this litigation and of the proposed Settlement, and to describe class members’
rights and options.

4. Settlement Class. The Court has certified for settlement purposes a class (hereinafter, the
“Class”) consisting of:

All Illinois licensed medical providers, excluding hospitals, that between February 15, 1995 and
September 24, 2008 (i) were members of Defendant’s PPO network pursuant to a pre-2006 provider
contract and (ii) who had their medical bills reduced by application of one or more PPO reductions
and/or usual and customary reductions.

To represent the above Class for purposes of the Settlement, the Court has appointed the named
plaintiff in this lawsuit as the class representative and has appointed the following attorneys to
serve as Class Counsel: Freed & Weiss LLC, and Becker, Paulson, Hoerner & Thompson, P.C.

5. Settlement Benefits. The Settlement Benefits to be paid in this case are more fully described
in the Class Action Settlement Agreement, a copy of which is on file with the Court, and will be
available on line at www.freedweiss.com. Under the Settlement, Defendant will mail checks to each
member of the Settlement Class described above based on the Tax Identification Number used by the
member. Members of the Settlement Class who submitted bills under a single Tax Identification
Number (“TIN”) shall be considered a single member of the Settlement Class entitled to a one-time
payment of $500, $300 or $100 for each TIN as follows: (i) the approximately 7,000 members of the
Settlement Class will be ranked in order of the total dollar amount of PPO and usual and customary
reductions taken from February 15, 1995 to September 24, 2008 and then divided into three groups;
(ii) the first group with the largest total dollar amounts of PPO and usual and customary
reductions during this period (consisting of approximately one-third of the members of the
Settlement Class) will receive a one-time payment of $500; (iii) the second group with the next
largest total dollar amounts of PPO and usual and customary reductions during this period
(consisting of approximately one-third of the members of the Settlement Class) will receive a
one-time payment of $300; and (iv) the third group with the lowest total dollar amounts of PPO and
usual and customary reductions during this period (consisting of approximately one-third of the
members of the Settlement Class) will receive a one-time payment of $100. Total Settlement
Payments by CorVel under this Settlement will be approximately $2,100,000.00. This

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3

 

amount is in
addition to other payments to be made by CorVel, including all the attorneys’ fees and costs.

6. Attorneys’ Fees and Expenses. From the filing of the litigation in 2005 to the present, Class
Counsel has not received any payment for their services in prosecuting the case, nor have they been
reimbursed for any out-of-pocket costs. If the Court approves the proposed Settlement, Class
Counsel will apply to the Court for an award of attorneys’ fees and reimbursement of expenses in
the total amount of $700,000 based upon the monetary benefit of approximately $2,100,000 the Class
will receive. Class Counsel will also ask the Court to have Corvel pay Kathleen Roche, the Class
Representative an incentive award of $5,000 for the work she has devoted in pursing the litigation
on behalf of the class. Any award of attorneys’ fees and expense and any incentive award will be
paid by Defendant, and will not come out of Class Settlement Benefits but be in addtion to them
Under no circumstances will you be personally liable for Class Counsel’s attorneys’ fees or
expenses or any incentive award.

7. Result If Court Approves Settlement. If the Court approves the Settlement the Court will enter
a judgment ordering the Defendant to make the payments to the Class, dismiss the lawsuit , and
releasing any and all claims that you may have against Defendant for matters raised in the
litigation concerning the PPO and usual and customary reductions taken from the payment of your
medical bills.

8. Your Options. If you are a member of the Class, you have the following options:

a. Participate in the Settlement — Receive a Payment of $100, $300 or $500. If you wish
to participate in the proposed Settlement, you do not have to do anything. You will
receive the Settlement Payments ordered by the Court.

b. Request to be Excluded from the Settlement. If you do not want to participate in the
Settlement, then you must send a written Request for Exclusion postmarked no later than
_________________, 2010, to CorVel Corporation, [address]. Your Request for Exclusion
request must include (i) your full name, address, and telephone number; (ii) your Taxpayer
Identification Number; (iii) a statement “I hereby request to be excluded from the
Settlement Class and I understand that by excluding myself I will not receive any benefits
from the Settlement.”; and (iv) your signature. If you properly and timely file your
Request for Exclusion :from the Class: (1) you will be excluded from the Class; (2) you
will not be bound by the terms of the Settlement, the judgment dismissing the lawsuit, or
the release of claims provided by the Settlement; and (4) you will not be entitled to
comment on or object to the Settlement, or be heard at the fairness hearing described in
paragraph 9 below.

c. Object or Comment. If you are a member of the Settlement Class and you do not request
to be excluded, you may still object to or comment on the terms of the Settlement including
objections or comments regarding Class
Counsel’s request for attorneys’ fees and expenses or the incentive award. You

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4

 

may, but
need not, enter an appearance through counsel of your choice. If you do, you will be
responsible for your own attorneys’ fees and costs.

If you object to the Settlement, you must, on or before ________________, 2010: (1) file
your objection with the Clerk of the Circuit Court, Twentieth Judicial Circuit, St. Clair
County, Illinois, located at the St. Clair County Building, 10 Public Square, Belleville,
Illinois 62220, and (2) serve on Paul M. Weiss, Freed & Weiss LLC, 111 W. Washington St.,
Suite 1331, Chicago, Illinois 60602 (Class Counsel) and James H. Bowhay, Figliulo &
Silverman, P.C., 10 S. LaSalle St., Suite 3600, Chicago, Illinois 60603 (Defendant’s
Counsel), a written objection, including (i) your full name, address, and telephone number;
(ii) your Taxpayer Identification Number; (iii) a statement confirming that you are a
member of the Settlement Class; (iv) a written statement of all grounds for your objection,
accompanied by any legal support for your objection; (v) copies of any papers, briefs, or
other documents on which the objection is based; (vi) a list of all person who will be
called to testify in support of your objection (if any); (vii) a statement of whether you
intend to appear at the fairness hearing; and (viii) your signature or your counsel’s
signature. Also, in your objection please include a reference to Roche v. CorVel
Corporation, Case No. 05-L-101. If you intend to appear at the fairness hearing through
counsel, your objection must also state the identity of all attorneys representing you who
will appear at the fairness hearing and they must enter their appearance no later than
_____, 2010. Class members who do not timely make their objections in this manner will be
deemed to have waived all objections and shall not be heard at the fairness hearing or have
the right to appeal from approval of the Settlement.

9. Fairness Hearing. On _____________, 2010, at _________ .m., in the courtroom of the Honorable
Lloyd A. Cueto, or any judge sitting in his stead, Twentieth Judicial Circuit, St. Clair County,
Illinois, located at the St. Clair County Building, 10 Public Square, Belleville, Illinois 62220,
the Judge will hold a fairness hearing for the purpose of deciding (a) whether the Settlement
should be approved as fair, reasonable, and adequate for the class; (b) whether a judgment granting
approval of the Settlement and dismissing the lawsuit with prejudice should be entered; and (c)
whether Class Counsel’s application for attorneys’ fees and expenses and the incentive award should
be granted. The hearing may be postponed, adjourned, or rescheduled by the Court without further
notice to the class. You do not need to attend this hearing to remain a class member or
participate in the Settlement.

10. Examination of Papers Filed in the Case. This Notice is a summary and does not describe all
details of the Settlement. For full details of the matters discussed in this Notice, you may wish
to review the Class Action Settlement Agreement dated ________________, 2010, available upon
request made to [insert email address]. A complete copy of the Class Action Settlement Agreement
and all other pleadings and papers filed in the lawsuit are also available for inspection and
copying during regular business hours at the Office of the Clerk of the Circuit Court, Twentieth
Judicial Circuit,

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5

 

St. Clair County, Illinois, located at the St. Clair County Building, 10 Public Square, Belleville,
Illinois 62220.

11. Additional Information. You can obtain a copy of the Complaint, the Class Action Settlement
Agreement, and this Notice at www.freedweiss.com; copies of the requested document(s) will be sent
to you as attachments to an email responding to the address from which the request was made. You
can also direct inquiries to Class Counsel at Info@FreedWeiss.com or by mail at Paul M. Weiss,
Freed & Weiss LLC, 111 West Washington Street, Suite 1331, Chicago, Illinois 60602. Please include
the reference Roche v. CorVel Corporation, Case No. 05-L-101.

PLEASE DO NOT CONTACT THE COURT WITH QUESTIONS ABOUT THIS NOTICE

	 	 	 	 	 
	DATED:                                          	BY ORDER OF THE

CIRCUIT COURT FOR THE

 TWENTIETH JUDICIAL CIRCUIT, 
ST. CLAIR COUNTY,
ILLINOIS
 

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6

 

EXHIBIT B

 

 

IN THE CIRCUIT COURT FOR THE TWENTIETH JUDICIAL CIRCUIT

ST. CLAIR COUNTY, ILLINOIS

	 	 	 	 	 	 	 

	KATHLEEN ROCHE, D.C., individually

	 	 	)	 	 	 
	and on behalf of others similarly situated,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Plaintiff,

	 	 	)	 	 	No. 05 L 101
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	Judge Lloyd A. Cueto
	 

	 	 	)	 	 	 
	CORVEL CORPORATION,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Defendant.

	 	 	)	 	 	 

PRELIMINARY APPROVAL ORDER

     This matter having come before the Court on Plaintiff’s motion for preliminary approval of a
proposed class action Settlement Agreement and General Release, dated October __, 2010 (“Settlement
Agreement”), between plaintiff, Kathleen M. Roche, D.C. (“Plaintiff”), on the one hand, and
defendant, CorVel Corporation (“CorVel”), on the other hand, the Court, having duly considered the
papers and arguments of counsel, hereby finds and orders as follows:

     1. Unless defined herein, all defined terms in this Order shall have the same meanings that
the same terms have in the Settlement Agreement.

     2. The Court has conducted a preliminary evaluation of the settlement by reviewing the
Settlement Agreement, the arguments of counsel, and the record in this action. Based on that
evaluation, the Court finds that there is probable cause to believe that the settlement is fair,
adequate, and reasonable, and has been negotiated at arm’s-length. The Court, therefore, grants
preliminary approval of the settlement.

     3. The Court preliminarily finds that, for settlement purposes, the requirements of 735 ILCS
5/2-801, et seq., have been satisfied. The Settlement Class is

 

 

so numerous that joinder of all members is impracticable; there are questions of fact or law
common to the Settlement Class, which common questions predominate over any questions affecting
only individual members; the Plaintiff will fairly and adequately protect the interests of the
Settlement Class; and a class action settlement is an appropriate method for the fair and efficient
resolution of the controversy.

     4. For settlement purposes only, the Court conditionally certifies the proposed Settlement
Class, consisting of all Illinois licensed medical providers, excluding hospitals, that between
February 15, 1995 and September 24, 2008 (i) were members of CorVel’s CorCare PPO Network pursuant
to a pre-2006 CorCare provider contract and (ii) had their medical bills reduced by application of
a PPO Reduction and/or a Usual and Customary Reduction. Each member of the Settlement Class that
submitted bills under a single Tax Identification Number (“TIN”) shall be considered a single
member of the Settlement Class for purposes of this settlement. Excluded from the Settlement Class
are all persons who submitted valid requests for exclusion from the Settlement Class.

     5. For settlement purposes only, the Court hereby appoints Plaintiff Kathleen Roche, D.C. as
representative of the Settlement Class and preliminarily appoints Freed & Weiss LLC and Becker,
Paulson, Hoerner & Thompson, P.C. as settlement class counsel.

     6. On                     , 2010, at                      a.m./p.m., this Court will hold a fairness hearing on
the fairness, adequacy, and reasonableness of the Settlement Agreement and proposed settlement, and
to determine whether (a) final approval of the Settlement should be granted; (b) settlement class
counsel’s application for attorney’s fees and expenses should be granted, and in what amount; and
(c) whether the request for incentive awards for Plaintiff should be granted, and in what amount.
No later than seven

2

 

(7) calendar days before the fairness hearing, Plaintiff must file her papers in support of
final settlement approval and in response to any objections filed to date. Defendant may (but is
not required to) file papers in support of final settlement approval, so long as it does so no
later than seven (7) calendar days before the fairness hearing.

     7. Subject to the Court’s consideration of additional evidence regarding the issue of notice
at the fairness hearing, and based on the documents subjected and information provided to the Court
in connection with preliminary approval, the Court approves the proposed plan for giving notice to
the Settlement Class. The plan for giving notice, in form, method, and content, fully complies
with the requirements of circumstances, and is due and sufficient notice to all persons entitled to
notice of the settlement. The Court hereby directed the parties and Settlement Administrator to
carry out the notice plan in accordance with the Settlement Agreement.

     8. All persons who meet the definition of the Settlement Class and who wish to exclude
themselves from the Settlement Class and the settlement must submit an exclusion request postmarked
by                     , 2011. The request for exclusion in writing and state the name of the class
member, and any former name if applicable, a current address and former address, if applicable, and
the applicable Tax Identification Number(s) used by the provider in connection with any CorVel
preferred provider network. The request for exclusion must be signed by the class member. Each
request must state that: “I hereby request to be excluded from the Settlement Class and I
understand that by excluding myself I will not receive any benefits from the Settlement.” The
request for exclusion must be mailed to the address provided and must be postmarked no later than
                    , 2011. Any request for exclusion not complying

3

 

with these requirements will be invalid. No member of the Settlement Class may assert a right
of exclusion for any other member of the Settlement Class, nor for any group of Settlement Class
members, nor may an agent or representative for any Settlement Class member, or group of Settlement
Class members, file a request for exclusion.

     9. Any member of the Settlement Class may comment in support of or in opposition to the
settlement. A Settlement Class member who objects to the settlement need not appear at the
fairness hearing for his or her comments to be considered by the Court; however, all arguments,
papers, briefs, and any evidence that any objector would like the Court to consider must be filed
with the Court, with a copy mailed to counsel for the Settlement Class and CorVel, by
                    , 2011. Written objections must include: (i) the objector’s name, address, telephone
number, and Tax Identification Number; (ii) the name of this Litigation and case number; (iii) a
statement of each objection; (iv) a written brief detailing the specific reasons, if any, for each
objection; and (v) any factual support that the objector wishes to bring to the Court’s attention
and any evidence the objector wishes to introduce in support of the objection(s). Objecting
members of the Settlement Class who appear by counsel or who intend to testify in support of their
objection either in person or by affidavit must also make themselves available for deposition by
counsel for the Settlement Class or CorVel in their county of residence, between the time the
objection is filed and fourteen (14) days before the date of the fairness hearing. Any objecting
member of the Settlement Class who files and serves a written objection, as described in this
paragraph, may appear at the fairness hearing, either in person or through personal counsel hired
at the Settlement Class

4

 

member’s expense, to object to the fairness, reasonableness, or adequacy of the settlement.

     10. Any Settlement Class member who fails to object in the manner prescribed in paragraph 9
shall be deemed to have waived his or her objections and forever be barred from making any such
objections in this Litigation or in any other action or proceeding. If a Settlement Class member
does not submit a written comment on the proposed settlement or the application of Plaintiff’s
counsel for incentive awards, attorney’s fees and expenses in accordance with the deadline and
procedure set forth in the Notice, and the Settlement Class member is not granted relief by the
Court, the Settlement Class member will waive his or her right to be heard at the fairness hearing.

     11. In further aid of the Court’s jurisdiction to implement and enforce the settlement,
Plaintiffs and members of the Settlement Class are preliminarily enjoined and barred from
commencing or prosecuting any action or proceeding asserting any of the Released Claims either
directly, derivatively, or in any other capacity, whether by a complaint, counterclaim, defense, or
otherwise, in any local, state or federal court, or in any agency or other authority or forum
wherever located. Any person or entity that knowingly violates such injunction shall pay the costs
and attorneys’ fees incurred by any Released Party as a result of such violation.

     12. The Settlement Agreement and the proceedings taken and statements made pursuant to the
Settlement Agreement or papers filed seeking approval of the Settlement Agreement, and this Order,
are not and shall not in any event be construed as, offered in evidence as, received in evidence
as, and/or deemed to be evidence of a presumption, concession, or admission of any kind by any of
the parties of (i) the truth of

5

 

any fact alleged or the validity of any claim or defense that has been, could have been, or in
the future might be asserted in the Litigation, or any other litigation, court of law or equity,
proceeding, arbitration, tribunal, investigation, government action, administrative proceeding, or
other forum, or (ii) any liability, responsibility, fault, wrongdoing, or other allegedly wrongful
act or omission of CorVel. CorVel has denied and continues to deny the claims asserted by
Plaintiff. Nothing contained herein shall be construed to prevent a party from offering the
Settlement Agreement into evidence for purposes of enforcement of the Settlement Agreement.

     13. The preliminary certification of the Settlement Class shall be binding only with respect
to the settlement of this Litigation. In the event that the Settlement Agreement is terminated
pursuant to its terms or is not approved in all material respects by the Court, or such approval is
reversed, vacated, or modified in any material respect by this or any other court, the
certification of the Settlement Class shall be deemed vacated, the Litigation shall proceed as if
the Settlement Class has never been certified, and no reference to the Settlement Class, the
Settlement Agreement, or any documents, communications, or negotiations related in any way thereto
shall be made for any purpose in this Litigation or any other action or proceeding.

	 	 	 	 	 	 	 

	 

	 	IT IS SO ORDERED.	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Dated:                     , 2010	 	 	 	 
	 

	 	 	 	 

Hon. Lloyd A. Cueto
	 	 
	 

	 	 	 	Judge Presiding	 	 

6

 

EXHIBIT C

 

 

IN THE CIRCUIT COURT FOR THE TWENTIETH JUDICIAL CIRCUIT

ST. CLAIR COUNTY, ILLINOIS

	 	 	 	 	 	 	 

	KATHLEEN ROCHE, D.C., individually

	 	 	)	 	 	 
	and on behalf of others similarly situated,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Plaintiff,

	 	 	)	 	 	No. 05 L 101
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	Judge Lloyd A. Cueto
	 

	 	 	)	 	 	 
	CORVEL CORPORATION,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Defendant.

	 	 	)	 	 	 

FINAL JUDGMENT AND ORDER

     This matter having come before the Court on Plaintiff’s motion for final approval of a
proposed class action Settlement Agreement and General Release, dated October __, 2010 (“Settlement
Agreement”), between plaintiff, Kathleen M. Roche, D.C. (“Plaintiff”), on the one hand, and
defendant, CorVel Corporation (“CorVel”), on the other hand, and the Court, having held a farness
hearing on the fairness, adequacy, and reasonableness of the settlement and considered all of the
written submissions and oral arguments made in connection with final settlement approval, the Court
hereby finds and orders as follows:

     1. Unless defined herein, all defined terms in this Final Judgment and Order shall have the
same meanings that the same terms have in the Settlement Agreement.

     2. Notice to the Settlement Class has been provided in accordance with the Court’s
Preliminary Approval Order. The notice, in form, method, and content, fully complies with the
requirements of 735 ILCS 5/2-803 and due process, constituted the best notice practicable under the
circumstances, and constituted due and sufficient notice to all persons entitled to notice of the
settlement.

 

 

     3. The settlement consideration provided under the Settlement Agreement constitutes fair
value given in exchange for the releases. The Court finds that the consideration to be paid to
members of the Settlement Class is reasonable, considering the facts and circumstances of the
claims and affirmative defenses asserted in the Litigation, and the potential risks and likelihood
of success of alternatively pursing a trial on the merits.

     4. The Settlement Agreement was arrived at through good-faith bargaining at arm’s-length,
without collusion, conducted by counsel with substantial experience in prosecuting and resolving
class actions.

     5. Accordingly, the Court finds that the Settlement Agreement is fair, adequate, and
reasonable, and in the best interests of the Settlement Class in light of the complexity, expense,
and duration of litigation and the risks involved in establishing liability and damages and in
maintaining the class action through trial and appeal.

     6. The persons listed on Exhibit A hereto are found to have validly excluded themselves from
the Settlement Class and the settlement in accordance with the provisions of the Preliminary
Approval Order.

     7. All Settlement Class members who failed to submit an objection to the Settlement in
accordance with the deadline and procedure set forth in the Preliminary Approval Order are deemed
to have waived and are forever foreclosed from raising the objection.

     8. The parties, the Released Parties, and each Settlement Class member who did not timely
exclude himself or herself from the Settlement Class have irrevocably submitted to the exclusive
jurisdiction of this Court for any suit, action, proceeding, or

2

 

dispute relating in any way to, or arising out of, the Released Claims, the Settlement
Agreement, the Preliminary Approval Order, or this Final Judgment and Order.

     9. The parties are directed to consummate the Settlement Agreement in accordance with its
terms. The parties and any and all Settlement Class members who did not timely exclude themselves
from the Settlement Class are bound by the terms and conditions of the Settlement Agreement and
this Order.

     10. The Court makes final its previous conditional certification of the Settlement Class,
defined as all Illinois licensed medical providers, excluding hospitals, that between February 15,
1995 and September 24, 2008 (i) were members of CorVel’s CorCare PPO Network pursuant to a pre-2006
CorCare provider contract and (ii) had their medical bills reduced by application of a PPO
Reduction and/or a Usual and Customary Reduction. Each member of the Settlement Class that
submitted bills under a single Tax Identification Number (“TIN”) shall be considered a single
member of the Settlement Class for purposes of this settlement.

     11. The Court finds that, for settlement purposes, the requirements of 735 ILCS 5/2-801, et
seq., and due process have been satisfied. The Settlement Class is so numerous that joinder of all
members is impracticable; there are questions of fact or law common to the Settlement Class, which
common questions predominate over any questions affecting only individual members; the Plaintiff
will fairly and adequately protect the interests of the Settlement Class; and a class action
settlement is an appropriate method for the fair and efficient resolution of the controversy.

     12. The preliminary appointment of Plaintiff Kathleen Roche, D.C. as representative of the
Settlement Class and preliminarily appointment of Freed & Weiss

3

 

LLC and Becker, Paulson, Hoerner & Thompson, P.C. as settlement class counsel is hereby made
final. Settlement class counsel are experienced in class litigation, including litigation of
similar claims in other cases, and have fairly and adequately protected the interests of the
Settlement Class.

     13. The Litigation is hereby dismissed with prejudice and without costs, except as provided in
the Settlement Agreement.

     14. By operation of this Final Judgment and Order, the Releasing Parties hereby release the
Released Parties from all Released Claims; provided, however, that the release of the Released
Parties does not include any Claims that the members of the Settlement Class may have against any
payor who took a PPO Reduction or a Usual and Customary Reduction.

     a. As used in this Order, the “Releasing Parties” mean Plaintiff and each member of
the Settlement Class (except a person who has obtained proper and timely exclusion from the
Settlement Class pursuant to the terms of the Preliminary Approval Order), on their own
behalf and on behalf of their spouses and former spouses, as well as their present, former,
and future administrators, agents, assigns, employees, attorneys, executors, heirs,
partners, predecessors-in-interest, successors, parents, subsidiaries, affiliates,
divisions, officers, directors, and shareholders.

     b. As used in this Order, the “Released Parties” means CorVel and its present, former,
and future agents, assigns, employees, attorneys, executors, heirs, partners,
predecessors-in-interest, successors, parents, subsidiaries, affiliates, divisions,
officers, directors, and shareholders. “Released Persons do

4

 

not include any payor that took a PPO Reduction or Usual and Customary Reduction.

     c. As used in this Order, “Released Claims means all those Claims described in
paragraphs 11 and 12 of the Settlement Agreement.

     15. The releases in this Order and Settlement Agreement include Claims that are currently
unknown, and the releases are intended to and will fully, finally and forever discharge all
Released Claims that now exist, or heretofore existed or may hereafter exist, which, if known,
might have affected the decision of the Releasing Parties to enter into this Agreement. Each
Releasing Party is deemed to waive any and all provisions, rights, and benefits conferred by any
law of the United States, any state or territory of the United States, or any state or territory of
any other country, or principle of common law or equity, which governs or limits a person’s release
of unknown claims. In making this waiver, the Releasing Parties understand and acknowledge that
they may hereafter discover facts in addition to or different from those that are currently known
or believe to be true with respect to the subject matter of this release, but agree that they have
taken that possibility into account in reaching this Settlement Agreement, and that,
notwithstanding the discovery or existence of any such additional or different facts, as to which
the Releasing Parties expressly assume the risk, they fully, finally and forever settle and release
any and all Released Claims, asserted or unasserted, known or unknown, suspected or unsuspected,
foreseen or unforeseen, actual or contingent, and liquidated or unliquidated, which now exist, or
heretofore exited, or may hereafter exist, and without regard to the subsequent discovery or
existence of such additional or different facts.

5

 

     16. The Releasing Parties are permanently enjoined and barred from commencing or prosecuting
any action or proceeding asserting any of the Released Claims, either directly, representatively,
derivatively, or in any other capacity, whether by a complaint, counterclaim, defense, or
otherwise, in any local, state or federal court, or in any agency or other authority or forum
wherever located. Any person or entity that knowingly violates such injunction shall pay the costs
and attorneys’ fees incurred by any Released Party as a result of such violation.

     17. The Court makes the following awards to Plaintiff and Settlement Class Counsel:

	 	a.	 	$                     as attorney’s fees and costs to Settlement
Class Counsel, an award that the Court finds reasonable after considering all
relevant factors (including the time and labor expended by counsel, their
skill in handling the questions raised in the case, and the amount in
controversy and results obtained), to be distributed in their discretion; and
	 
	 	b.	 	$                     as an incentive award to Plaintiff.

     18. Without affecting the finality of this Final Judgment and Order, the Court retains
exclusive jurisdiction over this Litigation, the parties, and all Settlement Class members to
determine all matters relating in any way to the Released Claims, Final Judgment and Order, the
Preliminary Approval Order, or the Settlement Agreement, including but not limited to the
administration, implementation, interpretation, or enforcement of such Settlement Agreement or
Orders.

6

 

     19. The Settlement Agreement and the proceedings taken and statements made pursuant to the
Settlement Agreement or papers filed seeking approval of the Settlement Agreement, and this Order,
are not and shall not in any event be construed as, offered in evidence as, received in evidence
as, and/or deemed to be evidence of a presumption, concession, or admission of any kind by any of
the parties of (i) the truth of any fact alleged or the validity of any claim or defense that has
been, could have been, or in the future might be asserted in the Litigation, or any other
litigation, court of law or equity, proceeding, arbitration, tribunal, investigation, government
action, administrative proceeding, or other forum, or (ii) any liability, responsibility, fault,
wrongdoing, or other allegedly wrongful act or omission of CorVel. CorVel has denied and continues
to deny the claims asserted by Plaintiff. Nothing contained herein shall be construed to prevent a
party from offering the Settlement Agreement into evidence for purposes of enforcement of the
Settlement Agreement.

     20. The certification of the Settlement Class shall be binding only with respect to the
settlement of this Litigation. In the event that the Settlement Agreement is terminated pursuant
to its terms or is not approved in all material respects by the Court, or such approval is
reversed, vacated, or modified in any material respect by this or any other court, the
certification of the Settlement Class shall be deemed vacated, the Litigation shall proceed as if
the Settlement Class has never been certified, and no reference to the Settlement Class, the
Settlement Agreement, or any documents, communications, or negotiations related in any way thereto
shall be made for any purpose in this Litigation or any other action or proceeding.

7

 

     21. Neither Settlement Class Counsel’s application for incentive awards, attorney’s fees and
expenses, nor any order or proceedings relating to such application, nor any appeal from any order
relating thereto or reversal or modification thereof, shall in any way affect or delay the finality
of this Judgment, and all such matters shall be considered separate from this Final Judgment and
Order.

     22. The Court directs the Clerk to enter final judgment.

	 	 	 	 	 	 	 

	 

	 	IT IS SO ORDERED.	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Dated:                     , 2011
	 	 

Hon. Lloyd A. Cueto
	 	 
	 

	 	 	 	Judge Presiding	 	 

8Exhibit 10.1

Exhibit 10.1

MOLYCORP, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

WHEREAS, [OPTIONEE NAME] (the “Optionee”) is an employee of Molycorp, Inc. or one of its
Subsidiaries;

WHEREAS, the grant of an Option Right was authorized by a resolution of the Compensation
Committee of the Board (the “Compensation Committee”) that was duly adopted on                           , 20     
(the “Date of Grant”), and the execution of an Option Right agreement substantially in the form
hereof (this “Agreement”) to evidence such grant was authorized by a resolution of the Compensation
Committee that was duly adopted on                           , 20     ;

WHEREAS, pursuant to the Company’s 2010 Equity and Performance Incentive Plan (the “Plan”),
and subject to the terms and conditions thereof and the terms and conditions hereinafter set forth,
the Company has granted to Optionee as of the Date of Grant an Option Right (the “Option”) to
purchase                     _____shares of Common Stock at a price of $                     per share, which represents at
least the Market Value Per Share on the Date of Grant (the “Option Price”); and

WHEREAS, the Option is intended as a nonqualified stock option and shall not be treated as an
“incentive stock option” within the meaning of that term under Section 422 of the Code.

NOW, THEREFORE, the Company and Optionee agree as follows:

1. Right to Exercise.

(a) Subject to Sections 1(b) and (c), Section 3 and Section
5 below, the Option will become exercisable to the extent of one-third of the total
number of shares of Common Stock underlying the Option on each of the first three
anniversaries of the Date of Grant if (i) Optionee remains continuously employed by either
the Company or any Subsidiary until each such time or (ii) if Optionee’s employment with the
Company or any Subsidiary has terminated by reason of Optionee’s Normal Retirement. To the
extent the Option is exercisable, it may be exercised in whole or in part.

(b) Notwithstanding Section 1(a) above, the Option shall become immediately
exercisable in full if, at any time prior to the termination of the Option, (i) a Change of
Control shall occur and (ii) in connection with such Change of Control, the successor
corporation does not assume the Option or substitute an award with rights equivalent to the
rights granted under the Option. Subject to the following sentence, if the successor
corporation assumes the Option or substitutes an award with rights equivalent to the rights
granted under the Option, then no such acceleration shall apply and the terms of this
Agreement shall apply to the assumed or substituted award, except as may otherwise be
provided in a written agreement between Optionee and the Company. Notwithstanding the
foregoing, if, following a Change of Control, (x) the

 

 

 

successor corporation assumes the Option or provides Optionee with a substitute award
with rights equivalent to the rights provided under this Agreement and (y) during the
two-year period following the Change of Control, the Company or any Subsidiary terminates
Optionee’s employment without Cause or Optionee terminates his or her employment for Good
Reason, then the Option or any substitute award shall become immediately exercisable in full
upon such termination of employment.

(c) Notwithstanding Section 1(a) above, if Optionee should die or Optionee’s
employment is terminated because Optionee becomes Disabled while in the employ of the
Company or any Subsidiary, the Option shall immediately become exercisable in full and shall
remain exercisable until terminated in accordance with Section 3 below.

2. Payment. The Option Price shall be payable (a) in cash or by check or by wire
transfer of immediately available funds, as acceptable to the Company, (b) by actual or
constructive transfer to the Company of nonforfeitable, unrestricted shares of Common Stock owned
by Optionee, or (c) by a combination of such methods of payment. The requirement of payment in
cash shall be deemed satisfied if Optionee shall have made arrangements satisfactory to the Company
with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to
sell on the exercise date a sufficient number of the shares being purchased so that the net
proceeds of the sale transaction will at least equal the Option Price plus payment of any
applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the
full Option Price plus payment of any applicable withholding taxes to the Company on a date
satisfactory to the Company, but not later than the date on which the sale transaction will settle
in the ordinary course of business.

3. Termination. This Option shall terminate on the earliest of the following dates:

(a) The date on which Optionee ceases to be an employee of the Company or any
Subsidiary, if Optionee’s employment with the Company or a Subsidiary is terminated for
Cause;

(b) Three (3) months after Optionee ceases to be an employee of the Company or a
Subsidiary, unless Optionee ceases to be such employee by reason of death, becoming
Disabled, Normal Retirement or termination for Cause;

(c) Three (3) years after the death of the Optionee if the Optionee dies while an
employee of the Company or a Subsidiary (in which case the Option becomes immediately
exercisable in full pursuant to Section 1(c) herein);

(d) Three (3) years after Optionee’s employment terminates because Optionee becomes
Disabled while an employee of the Company or a Subsidiary (in which case the Option becomes
immediately exercisable in full pursuant to Section 1(c) herein);

(e) Six (6) years after the Date of Grant if Optionee retires pursuant to a Normal
Retirement during the three-year period following the Date of Grant;

 

2

 

(f) Three (3) years after Optionee’s employment terminates by reason of Normal
Retirement if such Normal Retirement occurs after the third anniversary of the Date of
Grant; and

(g) Ten (10) years from the Date of Grant.

4. Option Nontransferable. This Option is not transferable by Optionee otherwise than
by will or the laws of descent and distribution.

5. Compliance with Law. The Company shall make reasonable efforts to comply with all
applicable federal and state securities laws; provided, however, that
notwithstanding any other provision of this Agreement, this Option shall not be exercisable if such
exercise would result in a violation of any such law.

6. Adjustments. The Board shall make any adjustments in the Option Price and in the
number or kind of shares of Common Stock or other securities covered by the Option that the Board
may determine to be equitably required to prevent any dilution or expansion of Optionee’s rights
under this Agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure of the Company,
(b) merger, consolidation, spin-off, split-off, spin-out, split-up, separation, reorganization,
partial or complete liquidation involving the Company or other distribution of assets, issuance of
rights or warrants to purchase securities of the Company, or (c) other transaction or event having
an effect similar to any of those referred to in Section 6(a) or 6(b) hereof.
Furthermore, in the event that any transaction or event described or referred to in the immediately
preceding sentence shall occur, the Board may provide in substitution of any or all of Optionee’s
rights under this Agreement such alternative consideration as the Board may determine in good faith
to be equitable under the circumstances. In addition, if the Option Price is greater than the
consideration offered in connection with any such transaction or event, the Board may in its sole
discretion elect to cancel the Option without any payment to Optionee.

7. No Dividend Equivalents. Optionee shall not be entitled to dividend equivalents.

8. Forfeiture of Awards. In the event that Optionee shall intentionally commit an act
that the Compensation Committee determines to be materially adverse to the interests of the Company
or any Subsidiary, Optionee’s right to exercise any unexercised portion of the Option shall be
forfeited at the time of that determination notwithstanding any other provision of this Agreement.

9. Taxes and Withholding. If the Company shall be required to withhold any federal,
state, local or foreign tax in connection with the exercise of this Option, it shall be a condition
to such exercise that Optionee pay or make arrangements satisfactory to the Company for payment of
all such taxes. Optionee may elect that all or any part of such withholding requirement be
satisfied by retention by the Company of a portion of the shares purchased upon exercise of this
Option. If such election is made, the shares so retained shall be credited against such
withholding requirement at the Market Value Per Share on the date of exercise. In no event,
however, shall the Company accept shares of Common Stock for payment of taxes in excess of the
minimum amount of taxes required to be withheld.

 

3

 

10. Continuous Employment. For purposes of this Agreement, the continuous employment
of Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and
Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary, by
reason of (a) the transfer of Optionee’s employment among the Company and its Subsidiaries or (b)
an approved leave of absence.

11. No Employment Contract. This Option is a voluntary, discretionary award being
made on a one-time basis and it does not constitute a commitment to make any future awards. This
Option and any payments made hereunder will not be considered salary or other compensation for
purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing
in this Agreement will give Optionee any right to continue employment with the Company or any
Subsidiary, as the case may be, or interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of Optionee.

12. Information. Information about Optionee and Optionee’s participation in the Plan
may be collected, recorded and held, used and disclosed for any purpose related to the
administration of the Plan. Optionee understands that such processing of this information may need
to be carried out by the Company and its Subsidiaries and by third party administrators whether
such persons are located within Optionee’s country or elsewhere, including the United States of
America. Optionee consents to the processing of information relating to Optionee and Optionee’s
participation in the Plan in any one or more of the ways referred to above.

13. Relation to Plan. This Agreement is subject to the terms and conditions of the
Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the
Plan shall govern. All terms used herein with initial capital letters and not otherwise defined
herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The
Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time,
shall, except as expressly provided otherwise herein, have the right to determine any questions
that arise in connection with the grant of the Option hereunder. The interpretation and
construction by the Compensation Committee of any provision of the Plan or this Agreement and any
determination by the Compensation Committee pursuant to any provision of the Plan or this Agreement
will be final and conclusive.

14. Compliance with Section 409A of the Code. To the extent applicable, it is
intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code,
so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to Optionee.
This Agreement and the Plan shall be administered in a manner consistent with this intent.
Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as
amended, and will also include any regulations or any other formal guidance promulgated with
respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

15. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this
Agreement to the extent that the amendment is applicable hereto; provided, however,
that no amendment shall adversely affect the rights of Optionee under this Agreement without
Optionee’s consent (provided, however, that Optionee’s consent shall not be
required to an amendment that is deemed necessary by the Company to ensure compliance with Section
409A
of the Code or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any
regulations promulgated thereunder).

 

4

 

16. Severability. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable or otherwise
illegal, the remainder of this Agreement and the application of such provision to any other person
or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or
otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.

17. Successors and Assigns. Without limiting Section 4 hereof, the provisions
of this Agreement shall inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of Optionee, and the successors and
assigns of the Company.

18. Governing Law. This Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of Delaware, without giving effect to any
principles of conflict of laws thereof.

19. Definitions. As used in this Agreement,

(a) “Cause” shall have the meaning ascribed to it in any employment agreement between
Optionee and the Company or any Subsidiary; provided that if Optionee does not have
an employment agreement with the Company or any of its Subsidiaries that includes a
definition of “Cause,” then a termination for “Cause” shall mean the termination by the
Company or any Subsidiary of Optionee’s employment with the Company or any Subsidiary as a
result of (i) the commission by Optionee of a felony or a fraud, (ii) gross negligence or
gross misconduct by Optionee with respect to the Company or any Subsidiary or affiliate of
the Company, (iii) Optionee’s failure to follow the directions of the Board or Chief
Executive Officer of the Company, which failure is not cured within three days after written
notice thereof to Optionee, (iv) Optionee’s violation of any non-competition,
non-solicitation or non-disclosure agreement with the Company or any Subsidiary, (v)
Optionee’s breach of a material employment policy of the Company, which breach is not cured
within three days after written notice thereof to Optionee, or (vi) any other breach by
Optionee of any agreement with the Company or any Subsidiary that is material and is not
cured within thirty days after written notice thereof to Optionee.

(b) “Change of Control” means the occurrence of any of the following events:

	 	(i)	 	the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company where such acquisition causes
such Person to own more than 50% of the combined voting power of the then
outstanding voting securities of the Company

 

5

 

	 	 	 	entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not be
deemed to result in a Change of Control: (A) any acquisition directly from
the Company that is approved by the Incumbent Board (as defined in
subsection (ii) below), (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(D) any acquisition by any corporation pursuant to a transaction that
complies with clauses (A), (B) and (C) of subsection (iii) below;
provided, further, that if any Person’s beneficial ownership
of the Outstanding Company Voting Securities exceeds 50% as a result of a
transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities
of the Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own more than 50% of the Outstanding
Company Voting Securities; and provided, further, that if at
least a majority of the members of the Incumbent Board determines in good
faith that a Person has acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the
Outstanding Company Voting Securities inadvertently, and such Person divests
as promptly as practicable a sufficient number of shares so that such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) less than or equal to 50% of the Outstanding Company Voting
Securities, then no Change of Control shall have occurred as a result of
such Person’s acquisition;

	 	(ii)	 	individuals who, as of September 30, 2010, constitute the Board
(the “Incumbent Board” as modified by this subsection (ii)) cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
September 30, 2010 whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (either by specific vote or by approval of
the proxy statement of the Company in which such person is named as a nominee
for director, without objection to such nomination) shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;

 

6

 

	 	(iii)	 	the consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation or other
transaction (“Business Combination”) excluding, however, such a Business
Combination pursuant to which (A) the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the entity resulting from such Business Combination (including, without
limitation, an entity that as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries), (B) no Person (excluding any employee
benefit plan (or related trust) of the Company, the Company or such entity
resulting from such Business Combination) beneficially owns, directly or
indirectly, more than 50% of the combined voting power of the then
outstanding securities entitled to vote generally in the election of
directors of the entity resulting from such Business Combination and (C) at
least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
	 
	 	(iv)	 	approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of subsection (iii)
above.

(c) “Disabled” means, as a result of injury or sickness, Optionee is unable for a
period of 180 days to perform with reasonable continuity the essential duties necessary to
pursue Optionee’s occupation in the usual or customary way.

(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, as such law, rules and regulations may be amended from time to
time.

(e) “Good Reason” means Optionee’s termination of his or her employment as a result of
(i) any material diminution in Optionee’s authority, duties or responsibilities or (ii) a
relocation of Optionee’s principal office to a location that is in excess of fifty (50)
miles from its location as of the Date of Grant. Notwithstanding the foregoing, no
termination of employment by Optionee shall constitute a termination for “Good Reason”
unless (A) Optionee gives the Company or any Subsidiary employing Optionee notice of the
existence of an event described in clause (i) or (ii) above within sixty (60) days following
the occurrence thereof, (B) the Company or any Subsidiary employing Optionee does not remedy
such event within thirty (30) days of receiving the notice described in the preceding clause
(A), and (C) Optionee terminates employment within five (5) days of the end of the cure
period specified in clause (B), above.

 

7

 

(f) “Normal Retirement” shall mean, unless the Board determines otherwise, termination
of employment (other than by death or disability and other than in the event of termination
for Cause) by Optionee after attaining age 65 and completing 5 or more years of combined
service with the Company and its affiliates.

[SIGNATURES ON FOLLOWING PAGE]

 

8

 

Executed in the name and on behalf of the Company, as of the                      day of                     , 20     .

	 	 	 	 	 
	 	MOLYCORP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement
and accepts the Option Rights or other securities covered hereby, subject to the terms and
conditions of the Plan and the terms and conditions herein above set forth.

	 	 	 

	 

	 	 
	 

	 	 
	 

	 	Optionee
	 
	 	 
	 

	 	Date:

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