EMPLOYMENT AND
RETIREMENT AGREEMENT
THIS EMPLOYMENT AND RETIREMENT
AGREEMENT (the “Agreement”) is made as of this 4th day
of August 2009 (the “Effective Date”), by and
between STANLEY F. BALDWIN (the “Executive”) and
AMERIGROUP CORPORATION, a Delaware corporation (the
“Company”).
RECITALS :
A. Executive is presently
employed by the Company as Executive Vice President, General
Counsel and Secretary.
B. Executive intends to retire,
and in the interest of continuity and transition planning, the
Company desires to continue Executive’s employment until
December 31, 2010 (“the “Retirement Date”)
on the terms set forth herein.
C. In recognition of
Executive’s long-term service to the Company and in
consideration of his retirement, the Company desires to provide
Executive the Special Separation Package (as defined below) and
other benefits on the terms provided herein.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and in consideration of the mutual covenants and
obligations herein contained, the parties hereto agree as
follows:
1. Employment .
Beginning on the Effective Date, the Company agrees to continue to
employ Executive, and Executive agrees to continue in his
employment, on the terms and subject to the conditions set forth
below. During the term of employment hereunder, Executive agrees to
serve as Executive Vice President, General Counsel and Secretary,
or such other position as may be determined by the Chief Executive
Officer (“CEO”) or the Board of Directors of the
Company. Executive shall at all times report to, and his activities
shall at all times be subject to the direction and control of the
CEO and the Board of Directors of the Company, and Executive shall
exercise such powers and comply with and perform, faithfully and to
the best of his ability, such directions and duties in relation to
the business and affairs of the Company as may from time to time be
vested in or reasonably requested of him by the CEO or the Board of
Directors. Executive agrees to devote his full-time attention,
services, best efforts, knowledge and skill to the business of the
Company.
2. Term of Employment .
Subject to the provisions for termination provided below, the term
of Executive’s employment under this Agreement shall commence
on the Effective Date and continue thereafter until the close of
business on the Retirement Date.
3. Compensation: Salary,
Bonus and Other Benefits .
(a) Compensation During
Term . During the term of this Agreement, the Company shall pay
Executive the following compensation, including the following
salary and other benefits:
(i) Salary . In
consideration of the services to be rendered by Executive to the
Company, beginning on the Effective Date, the Company will pay
Executive at a rate equivalent to an annual salary of three hundred
and sixty five thousand, and no/100ths ($365,000.00) dollars
(Executive’s “Base Salary”). The Compensation
Committee of the Board of Directors, in its sole discretion, may
increase Executive’s Base Salary based on Executive’s
performance. Such salary shall be payable in accordance with the
Company’s customary practices for executive compensation as
such practices shall be established or modified from time to
time.
(ii) Employee Benefits
. The Company will continue to provide Executive with all benefits
normally provided to executive officers of the Company, including,
but not limited to, medical and long-term disability insurance.
(iii) Business Expenses
. The Company shall reimburse Executive for reasonable and
necessary out-of-pocket expenses incurred in connection with his
duties hereunder, including, without limitation, business travel on
behalf of the Company (including lodging and transportation
expenses incurred in connection with such business trips).
Executive agrees to provide accurate and itemized expense records
so that the Company may receive the benefit of any and all
applicable tax deductions with respect thereto, and the Company
agrees to provide reimbursement within a reasonable time after
receipt of such documentation, each in accordance with the
Company’s policies as in effect from time to time.
(iv) Performance Based Cash
Incentive Payment . In addition to the amounts payable under
Section 3(a)(i) above, Executive shall be eligible to receive
an annual cash incentive payment (the “Cash Incentive
Payment”) under the 2007 Cash Incentive Plan or any successor
cash incentive plan (the “Cash Incentive Plan”) for the
2009 and 2010 performance years. The amount of such annual Cash
Incentive Payment shall be determined in accordance with the terms
of the Cash Incentive Plan and shall be dependent upon
(a) Executive attaining his MJOs and otherwise satisfying all
applicable conditions under the Cash Incentive Plan (other than, to
the extent provided herein, the requirement that Executive be
employed on the date Cash Incentive Payments are paid); and
(b) the Company meeting its financial goals. Any annual Cash
Incentive Payment for the performance year 2010 shall be paid to
Executive no later than March 15, 2011. Executive shall also
be eligible to receive an award under the Long Term Incentive Plan
(the “LTI Plan”) for the performance years 2009 and
2010 in accordance with the Business Rules of the LTI Plan. The
target amount of the LTI award for performance year 2009 shall be
$100,000 and the target amount of the LTI award for performance
year 2010 shall be determined in the sole discretion of the
Compensation Committee, but it shall not be less than $100,000.
(A) The base target amount of
the annual Cash Incentive Payment for performance year 2009 is
three hundred thousand, and no/100ths ($300,000.00) dollars, with
any adjustment thereto as may be necessary to be consistent with
the treatment of other executive officers under the Cash Incentive
Plan, as determined by the Compensation Committee in its sole
discretion. The target amount of the Cash Incentive Payment for the
performance year 2010, shall be determined by the Compensation
Committee it its sole discretion, but it shall not be less than
three hundred thousand ($300,000) dollars. The amount of the annual
Cash Incentive Payment for performance years 2009 and 2010 shall be
adjusted consistent with the treatment of the Company’s other
executive officers, taking into account the Company’s and
Executive’s performance pursuant to the Company’s
executive compensation program.
(v) Performance Based
Equity Incentive Grants. In addition to the amounts payable
above, Executive shall be eligible to receive an annual equity
grant (the “Equity Grant”) under the 2009 Equity
Incentive Plan (the “Equity Incentive Plan”) for the
2009 performance year. The amount of such Equity Grant shall be
determined in accordance with the terms of the Equity Incentive
Plan and shall be dependent upon (a) the Executive attaining
his MJOs and otherwise satisfying all other applicable condition of
the Equity Incentive Plan, and (b) the Company meeting its
financial goals. The target amount of the value of the Equity Grant
for the 2009 performance year is four hundred thousand, and
no/100ths ($400,000.00) dollars, with any adjustment thereto as may
be necessary to be consistent with the treatment of other executive
officers under the Equity Incentive Plan as determined by the
Compensation Committee in its sole discretion. The Equity Grant may
be provided to Executive in the form of options to purchase shares
of the Company’s common stock (the “Options”), or
in the form of Restricted Stock Grants (“RSGs”), or
some combination thereof with such terms, including with respect to
vesting and exercise price, as the Compensation Committee so
determines. Executive shall not be entitled to receive an Equity
Grant for the 2010 performance year. In lieu thereof, Executive
shall receive a Special Equity Grant on the Effective Date with a
value of four hundred thousand, and no/100ths ($400,000.00)
dollars. The Compensation Committee shall determine the allocation
of the value of the Special Equity Grant between Options and RSGs;
provided, however, that no less than fifty-percent of the value
shall be in the form of RSGs.
(b) Special Separation
Package .
(i) Executive shall receive the
“Special Separation Package” set forth in
Section 3(b)(ii) if Executive satisfies the Special Separation
Conditions defined in Section 3(b)(iii) below,
(ii) The Special Separation
Package shall include:
(A) a lump-sum payment (the
“Stay-for-Pay Bonus”) in the amount of
(i) Executive’s Base Salary for 2010, plus
(ii) Executive’s Annual Cash Incentive Payment target
for the performance year 2010, which shall be paid within thirty
(30) days of the expiration of all revocation periods
applicable to the Release (defined below), but not later than
December 31, 2010;
(B) a lump sum payment equal to
the sum of all installments accrued and funded under the LTI Plan
for performance years 2008, 2009 and 2010 (which shall not exceed
the first, second and third installments for the LTI award for
performance year 2008, the first and second installments for the
LTI award for performance year 2009 and the first installment for
the LTI award for performance year 2010, plus any enhancement
approved for Executive for any such LTI Plan), which shall be paid
to Executive no later than March 15, 2011;
(C) all unvested equity
previously awarded to Executive pursuant to the agreements set
forth on Exhibit A attached hereto and any agreement
evidencing the Equity Grants under Section 3(a)(v) (collectively,
the “Equity Agreements”) shall be accelerated so that
on the Retirement Date or the effective date of termination of
employment under Section 4(a)(iii) below, as applicable, all
Options will vest and all the restrictions on the RSGs will
lapse;
(D) a lump sum payment equal to
all accrued but unpaid PAL, which shall be paid no later than
December 31, 2010; and
(E) if Executive elects
continuation coverage of group health benefits under the
Consolidated Omnibus Reconciliation Act of 1986, as amended
(“COBRA Coverage”), a lump sum payment (after-tax) in
an amount equal to the product of twelve (12) times the dollar
amount of the subsidy provided by the Company in respect of the
group health plan(s) coverage of active Company employees who have
the same type and level of coverage as Executive’s elected
COBRA Coverage, reduced by withholding pursuant to
Section 3(c), which shall be paid no later than
December 31, 2010.
(iii) As used herein,
“Special Separation Conditions” means:
(A) Executive remains an active
full-time employee of the Company until the close of business on
the Retirement Date and terminates his employment with the Company
and any of its affiliates on the Retirement Date,
(B) Executive devotes his full
time and attention to his duties through the Retirement Date;
(C) Executive loyally performs
his assigned duties through the Retirement Date; and
(D) Executive executes and
delivers to the Company on the Retirement Date of a release in the
form attached hereto as Exhibit B (the
“Release”) and does not revoke all or any portion of
the Release and all revocation periods applicable to the Release
have lapsed.
(c) Withholding . All
payments hereunder shall be subject to all applicable federal and
state withholding, payroll and other taxes.
4. Termination; Effect
.
(a) Executive’s
employment under this Agreement may be terminated prior to the
Retirement Date under the following circumstances:
(i) At Executive’s
Option : Executive may terminate his employment, with or
without cause, at any time upon at least ninety
(90) days’ advance written notice to the Company. Upon
receipt of such notice, Company can require that the effective date
of Executive’s termination of employment occur at any time
during the 90 day notice period.
(ii) At the Election of the
Company for Cause . The Company may, immediately and
unilaterally, terminate Executive’s employment immediately
hereunder for Cause (defined below) at any time during the term of
this Agreement upon written notice to Executive. As used herein,
“Cause” shall mean conduct involving one or more of the
following: (A) the substantial and continuing failure of the
Executive to render services to the Company in accordance with the
Participant’s obligations and position with the Company after
30 days’ notice from the CEO, such notice setting forth
in reasonable detail the nature of such failure, and in the event
the Executive fails to cure such breach or failure within
30 days of notice, if such breach or failure is capable of
cure; (B) dishonesty, gross negligence, breach of fiduciary
duty; (C) the commission by the Executive of an act of fraud
or embezzlement, as found by a court of competent jurisdiction,
which results in material loss, damage or injury to the Company or
any subsidiary or affiliate, whether directly or indirectly, or the
commission by the Executive of any other action with the intent to
injure materially the Company or any subsidiary or affiliate which
could, in the reasonable opinion of the CEO of the Company, result
in material harm to the Company or any subsidiary or affiliate;
(D) the conviction of the Executive of a felony, either in
connection with the performance of his obligations to the Company,
subsidiary or affiliate or which shall materially adversely affect
the Executive’s ability to perform his obligations to the
Company, subsidiary or affiliate; or (E) material breach of
the terms of this Agreement or any other agreement with the Company
or any subsidiary or affiliate, provided that the Company or any
subsidiary or affiliate provides the Executive with notice of such
breach and the Executive fails to cure such breach within thirty
(30) days after receipt of such notice.
(iii) At the Election of
the Company for Reasons Other than for Cause . The Company may
unilaterally terminate Executive’s employment hereunder at
any time during the term of this Agreement without Cause by giving
thirty (30) days written notice to Executive of the
Company’s election to terminate.
(iv) Death or
Disability . Executive’s employment under this Agreement
shall terminate automatically upon Executive’s death or
Disability. “Disability” shall be as that term is
defined in the LTI Plan.
(b) The effect of each such
termination shall be as follows:
(i) In the event that Executive
terminates his employment pursuant to Section 4(a)(i) (at
Executive’s option) or the Company terminates
Executive’s employment pursuant to Section 4(ii) (for
Cause), Executive shall be entitled to no further compensation or
other benefits under this Agreement, except for any unpaid salary
earned by him up to and including the effective date of such
termination and any accrued and unpaid PAL.
(ii) In the event that
Executive’s employment is terminated pursuant to
Section 4(a)(iii) or 4(a)(iv), Executive (or his estate or
personal representative, if applicable) shall be entitled to
receive the following:
(A) The Company shall pay
Executive a cash lump sum equal to the sum of (1) all unpaid
salary earned by him up to and including the effective date of such
termination, death or disability (the “Termination
Date”) and all accrued and unpaid PAL, (2) an amount
equal to the amount of Base Salary that would have been paid to
Executive under Section 3(a)(i) from the Termination Date
through December 31, 2010 at the rate in effect on the
Termination Date, and (3) an amount equal to the annual Cash
Incentive Payments that he would have been entitled to receive if
he had been employed through the Retirement Date under
Section 3(a)(iv) above and had attained his MJO’s and
otherwise satisfied all applicable conditions under the Cash
Incentive Plan, and if the base target amount of annual Cash
Incentive Payment for 2010, if not previously established, was
three hundred thousand ($300,000.00) dollars;
(B) Unless previously awarded
for the 2009 performance year, the Company shall award the
Executive the target Equity Grant under Section 3(a)(v) above
effective as of the Termination Date, based on the assumption that
Executive has satisfied all applicable conditions of the Equity
Incentive Plan and that the Company has met its financial
goals.
(C) The Company shall pay and
provide to the Executive the Special Separation Package set forth
in Section 3(b)(ii) (assuming for purposes of calculating
these payments that all outstanding installments relating to
incomplete performance years under the LTI Plan as of the
Termination Date have been accrued and funded under the LTI Plan
for performance years 2008, 2009 and 2010; that Executive’s
base salary for 2010, if not previously established, is equal to
Executive’s annual base salary rate in effect on the
Termination Date; and that the target amount of Executive’s
Cash Incentive Payment for the performance year 2010, if not
previously established, is $300,000, which shall be paid and
provided in accordance with Section 4(b)(iii) notwithstanding
anything in Section 3(b)(ii) to the contrary); and
(D) The Company shall provide a
release executed by the Company, which causes the applicable
noncompetition restrictions contained in the Noncompetition,
Nondisclosure and Developments Agreement executed by Executive, as
well as any outstanding equity agreements, to be deemed null and
void and of no further force and effect as of the date of such
release.
(iii) Notwithstanding the
foregoing, the payment of any amounts to the Executive pursuant to
Section 4(b)(ii) as a result of the termination of his
employment under Section 4(a)(iii) or 4(a)(iv) above are
contingent upon the execution and delivery of the Release in
accordance with this Section 4(b)(iii). If Executive or his
personal representative or estate, as applicable, fails to execute
and deliver the Release to the Company within ten (10) days
after the Termination Date (or executes and delivers it and then
revokes it within seven (7) days), Executive or his estate or
personal representative, as applicable, shall be deemed to have
waived all rights under this Agreement, including this
Section 4(b). Further, except as specifically provided above,
all amounts payable under Section 4(b)(ii) shall be paid at
such time as Executive, or Executive’s personal
representative or his estate, as applicable, has delivered to the
Company an executed Release and such release has become effective
(and has not been revoked), but in no event later than sixty
(60) days after the Termination Date.
5. Change in Control .
In the event that a Change in Control (as defined in the
Company’s Change in Control Benefit Policy dated as of
February 12, 2007, and amended and restated on
November 8, 2008, as amended from time to time (the “CIC
Policy”)) occurs during the term of this Agreement such that
Executive would be entitled to payments under Section 5 of the
CIC Policy, Executive will continue to be eligible for all benefits
under this Agreement in accordance with the terms of this
Agreement. Notwiths
