SEPARATION OF EMPLOYMENT
AGREEMENT
AND GENERAL
RELEASE
This Separation of Employment
Agreement and General Release (“Agreement”) is entered
into between Coventry Health Care, Inc. (“Coventry”)
and Dale B. Wolf (“Mr. Wolf”).
WHEREAS, Mr. Wolf was employed by
Coventry as Chief Executive Office pursuant to an Employment
Agreement, as amended, dated December 19, 2007 (“2007
Employment Agreement”);
WHEREAS, Mr. Wolf’s employment
by Coventry is being terminated as of April 30, 2009
(“Separation Date”); and
WHEREAS, Coventry and Mr. Wolf
desire to resolve any and all issues relating to Mr. Wolf’s
employment with and termination of employment from
Coventry;
NOW THEREFORE, Coventry and Mr.
Wolf, intending to be legally bound, do hereby agree as
follows:
1. The 2007 Employment
Agreement is incorporated herein by reference.
2. Coventry shall
continue to pay Mr. Wolf his current base compensation and benefits
through the Separation Date of April 30, 2009.
3. Coventry shall
pay to Mr. Wolf twenty-four (24) monthly payments for the two-year
period from May 1, 2009 through April 30, 2011 of One Hundred Sixty
Seven Thousand, Nine Hundred, Sixteen Dollars and Sixty Seven Cents
($167,916.67) each (which is equal to 1/24 of two times the
aggregate of (a) Mr. Wolf’s current base salary; and (b) the
average bonus compensation for Mr. Wolf for the calendar years 2007
and 2008 under Coventry’s 162(m) plan). Payments shall
commence on May 1, 2009, subject to the six-month delay described
in Section 16 below (which means that the delayed payment for the
first six months will be made on November 13, 2009, the first pay
period date of the seventh month following the Separation
Date).
4. Mr. Wolf’s
accounts under the Mid-Term Executive Retention Program and any
predecessor program (other than amounts credited for the current
program year ending June 30, 2009) shall become fully vested on the
Separation Date and shall be distributed within thirty (30) days
after the Separation Date.
5. Coventry shall
pay to Mr. Wolf, on May 15, 2009, the lump sum payout of four weeks
of accrued but unused vacation days earned by Mr. Wolf through
April 30, 2009.
6. Coventry shall
pay Mr. Wolf for non-reimbursed business, auto, and travel expenses
incurred by Mr. Wolf through April 30, 2009, and Mr. Wolf shall
submit such expenses to Coventry no later than June 15,
2009.
7. Coventry shall
continue to provide medical, dental and vision insurance for Mr.
Wolf and his dependents for the two-year period from May 1, 2009
through April 30, 2011, under the terms of the plans applicable to
executive officers of Coventry. If Mr. Wolf elects such continued
coverage, he shall pay the COBRA cost of such coverage and Coventry
shall reimburse Mr. Wolf for the COBRA cost paid by Mr.
Wolf.
8. All
outstanding stock options and restricted stock that were granted to
Mr. Wolf and that would have vested through April 30, 2010 if Mr.
Wolf had remained employed shall become vested (and, in the case of
options, exercisable) as of the Separation Date. Coventry and Mr.
Wolf agree that Mr. Wolf’s stock and vested stock options
will be treated in the same manner as such equity of all other
executive officers of Coventry in the event of a Change in Control
of Coventry (as defined in Section 4.4(a) of the 2007 Employment
Agreement or a Change in Control under the 2004 Stock Incentive
Plan (or a predecessor plan) (the “Equity
Plan”).
9. Coventry
acknowledges that Mr. Wolf is entitled to an Early Retirement
Benefit under the Equity Plan of three years of exercise credit for
vested stock options following termination by reason of Mr. Wolf
being age 55 with more than 10 years of service as of April 30,
2009. As a result, all of Mr. Wolf’s vested stock options
(including options that vest pursuant to Section 8 above) shall
remain outstanding and exercisable for three years after the
Separation Date (or until the expiration of the applicable option
term, if earlier).
10. Coventry shall match any
contribution by Mr. Wolf to the Coventry Health Care, Inc. 401(k)
Restoration and Deferred Compensation Plan made according to plan
terms for 2008, with the match credited no later than April 30,
2009 or such earlier date as such match is credited to other
executive officers of Company. All of Mr. Wolf’s
matching contributions under the Coventry Health Care, Inc. 401(k)
Restoration and Deferred Compensation Plan will become fully vested
as of the Separation Date. Coventry shall provide a lump sum
payout of Mr. Wolf’s accrued benefits under such Plan during
the seven month after the Separation Date and no later than
November 13, 2009.
11. Mr. Wolf shall be allowed
to roll over his Coventry Health Care, Inc. Retirement Savings Plan
balance by June 30, 2009.
12. Mr. Wolf shall resign from
all officer and director positions with Coventry, and any
subsidiaries and affiliates of Coventry, effective April 30,
2009.
13. In the event of Mr.
Wolf’s death, Coventry shall continue payout of all benefits
provided under the Separation Agreement to Mr. Wolf’s
designated beneficiary(ies), and Mr. Wolf’s dependents may
continue family medical, dental, and vision insurance benefits
through April 30, 2012 and receive COBRA and tax reimbursements as
described in Section 7 above.
14. Coventry and Mr. Wolf agree
that the post-employment restrictions contained in Section 6.4 of
the 2007 Employment Agreement, incorporated herein by reference,
shall remain in effect through April 30, 2011. Coventry and Mr.
Wolf further agree that all
