WELLPOINT, INC. EXECUTIVE SEVERANCE PLAN

Exhibit 10.7

 

W ELL P OINT , I NC .

 

 

 

EXECUTIVE SEVERANCE PLAN

WellPoint, Inc.

Executive Severance Plan

Effective January 1, 2006

 

ARTICLE 1

ESTABLISHMENT, PURPOSE AND INTENT

 

1.1 Establishment, Purpose and Intent .    WellPoint, Inc., an Indiana corporation with its principal place of business in Indianapolis, Indiana (“ WellPoint ”) hereby establishes this WellPoint, Inc. Executive Severance Plan (“ Plan ”), effective as of January 1, 2006 (“Effective Date”). The Plan is intended to protect key executive employees of WellPoint and its subsidiaries and affiliates (collectively, the “ Company ”) against an involuntary loss of employment so as to attract and retain such employees, and motivate them to enhance the value of the Company. The Plan is intended to be an unfunded welfare plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); or to the extent it is a pension plan subject to ERISA, as an unfunded pension plan maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees. Words and phrases used with initial capitals in the Plan and not otherwise defined in the Plan have the meanings defined for them in Article 8.

 

ARTICLE 2

ELIGIBILITY AND PARTICIPATION

 

2.1 Participation .

 

(a) Each Executive shall become a Participant (“Participant”) upon mutual execution by the eligible Executive and the Company of an agreement (an “ Employment Agreement ”) substantially in the form of that attached as Exhibit A . Each such executed Employment Agreement shall form part of this Plan and is incorporated into this Plan by this reference. As soon as practicable after the later of the Effective Date or the date that the individual becomes an Executive, the Committee shall deliver a copy of the Plan to the Executive, advise the Executive of his or her eligibility, and offer him or her for a period of thirty (30) days the opportunity to enter into an Employment Agreement substantially in the form of that attached as Exhibit A. If an Executive does not enter into an Employment Agreement within thirty (30) days of such advice the Executive shall have no further opportunity to become a Participant in the Plan unless the Chief Executive Officer of the Company in his or her sole discretion affords the Executive a new or extended opportunity to become a Participant in the Plan.

 

(b) If an Executive who is advised of his or her eligibility for this Plan has at that time an employment or severance benefit agreement with the Company that is not substantially in the form of Exhibit A (a “ Prior Agreement ”), or if an Executive is entitled to severance benefits under the WellPoint Health Networks, Inc. Officer Change-in-Control Plan (the “ Prior WellPoint Plan ”), then the Executive shall only become a Participant in this Plan as provided below. During the time such Executive is not a Participant in this Plan, the provisions of the Prior Agreement or Prior WellPoint Plan shall govern the Executive’s severance pay, if any, until the first to occur of (i) termination of the Prior Agreement or Prior WellPoint Plan as to such Executive in accordance with its terms, (including any termination by mutual consent) or (ii) for an Executive covered by the Prior WellPoint Plan, the Executive is offered and accepts

 

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participation in this Plan pursuant to subsection (c). The period for such an Executive to enter into an Employment Agreement and become a Participant in this Plan shall not end earlier than thirty (30) days after the date the Prior Agreement or Prior WellPoint Plan terminates or is terminated as to such Executive.

 

(c) In the event an Executive covered by the Prior WellPoint Plan executes an Employment Agreement prior to the stated expiration date of the post-change-of-control protection period under the Prior Plan (“ Prior Protection Period ”), then notwithstanding anything to the contrary in subsection (b) of this Plan, in the Employment Agreement, or in the Prior WellPoint Plan, such Executive shall become a Participant in this Plan, on the terms of this subsection (c).

 

(i) If the present value of the Severance Pay and other benefits to which an Executive would be entitled under Articles 3.2, 3.3, and, if applicable, 4.2, 4.4, and 4.5 of this Plan exceeds the present value of the severance pay and benefits to which an Executive would be entitled under Articles 3.2, 3.3, 3.4, 3.5, 3.7 and 3.8 of the Prior WellPoint Plan, the Executive shall receive Severance Pay and other benefits exclusively under this Plan, and all the terms and provisions of this Plan and the Employment Agreement (and none of the terms and provisions of the Prior WellPoint Plan) will apply. The discount rate used to determine the present value shall be the prime rate (as published in The Wall Street Journal ) in effect on the date of Executive’s Eligible Separation from Service.

 

(ii) If the present value of the Severance Pay and other benefits to which an Executive would be entitled under Articles 3.2, 3.3, and, if applicable, 4.2, 4.4, and 4.5 of this Plan is equal to or less than the present value of the severance pay and benefits to which an Executive would be entitled under Articles 3.2, 3.3, 3.4, 3.5, 3.7 and 3.8 of the Prior WellPoint Plan, the Executive shall receive the Basic Benefit and other benefits exclusively under the Prior WellPoint Plan, and all the terms and provisions of the Prior WellPoint Plan (and none of the terms and provisions of this Plan or the Employment Agreement) will apply. The discount rate used to determine the present value shall be the prime rate (as published in The Wall Street Journal ) in effect on the date of Executive’s Eligible Separation from Service.

 

2.2 Termination of Participation .    A Participant’s participation in the Plan shall automatically terminate, without notice to or consent of the Participant, upon the earliest to occur of the following events:

 

(a) termination of the Participant’s employment with the Company for any reason (including but not limited to death, disability, Transfer of Business or other disposition of the subsidiary of the Company which employs the Participant) that is not an Eligible Separation from Service (as defined in Section 3.1);

 

(b) expiration of the Employment Agreement.

 

ARTICLE 3

SEVERANCE BENEFITS

 

3.1 Eligible Separation from Service .    Each Participant shall be entitled to severance and other benefits under the Plan in the amount set forth in Sections 3.2 and 3.3 below (“ Severance Benefits ”) if the Participant incurs an Eligible Separation from Service. Entitlement

 

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to Severance Benefits is subject to the Participant’s compliance with Sections 3.6 and 3.7 of the Plan and the other terms and conditions of this Plan, and subject to the execution and delivery of a valid and unrevoked Waiver and Release Agreement as required by Section 3.5 and to the other conditions set forth below. For this purpose an “ Eligible Separation from Service ” is:

 

(a) a Separation from Service by reason of a termination of the Participant’s employment by the Company for any reason other than death, disability, Cause, or Transfer of Business;

 

(b) a Separation from Service within the thirty-six (36) month period after a Change in Control by reason of a termination of the Participant’s employment by the Participant for Good Reason;

 

(c) a Separation from Service during an Imminent Change in Control Period by reason of a termination of the Participant’s employment by the Company for any reason other than death, disability, Cause, or Transfer of Business.

 

No Severance Benefits shall be payable in respect of a Separation from Service that is not an Eligible Separation from Service. For avoidance of doubt, none of the following shall be an Eligible Separation from Service: (i) termination of the Participant’s employment upon death or disability, (ii) termination of the Participant’s employment by the Company for Cause or upon Transfer of Business, (iii) termination of the Participant’s employment by the Participant for Good Reason that does not occur within the thirty-six (36) month period following a Change in Control, or (iv) any voluntary resignation not described in clause (iii). No Severance Benefits shall be payable merely upon termination of an Employment Agreement without a Separation from Service.

 

3.2 Amount of Severance Pay .

 

(a) The amount of severance pay (“ Severance Pay ”) to which the Participant is entitled under the Plan shall be the product of the amount described in (i) multiplied by the percentage described in (ii), with such product reduced by the amount described in (iii):

 

(i) the sum of the Participant’s Annual Salary and Annual Target Bonus;

 

(ii) the applicable percentage set forth in subsection (b) below opposite the Participant’s employment classification at the time of Separation from Service (disregarding any adverse change in employment classification during an Imminent Change in Control Period or after a Change in Control);

 

(iii) the sum of (A) severance or similar payments made pursuant to any Federal, state or local law, including but not limited to payments under the Federal Worker Adjustment and Retraining Notification Act (WARN), and (B) any termination or severance payments under any other termination or severance plans, policies or programs of the Company or any of its subsidiaries and affiliates that the Participant receives notwithstanding subsection (c) below.

 

(b) In the event the Participant’s Eligible Separation from Service occurs outside an enhanced benefit period described below, the applicable percentage shall be the percentage set forth in column (A) below and the applicable severance period (“ Severance Period ”) shall be the period set forth in column (B) below. In the event the Participant’s Eligible Separation from Service occurs within an enhanced benefit period described below, the applicable percentage

 

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shall be the percentage set forth in column (C) below and the applicable Severance Period shall be the period set forth in column (D) below. Each of the following shall be an enhanced benefit period:

 

(i) an Imminent Change in Control Period, provided the contemplated Change in Control occurs within one year of the Participant’s Eligible Separation from Service, and

 

(ii) the 36-month period following a Change in Control.

 

 

(c) There shall be no duplication of severance benefits in any manner. Severance Pay under this Plan shall be in lieu of any termination or severance payments to which the Participant may be entitled under any other termination or severance plans, policies or programs of the Company or any of its subsidiaries and affiliates. No Participant shall be entitled to Severance Pay hereunder for more than one position with the Company.

 

(d) A Participant shall not be obligated to secure new employment, but each Participant shall report promptly to the Company any actual employment obtained during the Severance Period. Severance Pay under the Plan shall not be subject to mitigation except as provided (i) in Section 3.2(a) and (c) hereof for other severance pay from the Company and (ii) in Section 3.3 for determining continuing eligibility for health and life benefits coverage. Severance Pay shall be subject to Section 3.7.

 

(e) Severance Periods shall be measured from the date of the Eligible Separation from Service.

 

3.3 Other Benefits .

 

(a) A Participant entitled to Severance Pay pursuant to Section 3.2 shall be entitled to continue during the applicable Severance Period the following additional benefits:

 

(i) continued participation for him or her (and for his or her eligible dependents) in the Company’s health and life insurance benefit plans on the same basis (including payment of contributions) as apply to active employees from time to time; provided that this coverage shall terminate prior to the end of the Severance Period when the Participant (or his or her eligible dependents, as applicable) becomes entitled to health and life insurance benefit plan coverage (whether or not comparable to plans of the Company) from any successor employer; and

 

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(ii) continuation of Directed Executive Compensation monthly cash payments; and

 

(iii) if financial planning services are available to the active employees at the Participant’s Executive level, an annual payment in an amount equal to the last annual reimbursement for financial planning services which the Executive received prior to the Separation from Service, or, if none, equal to the maximum annual reimbursement for financial planning services to which Executive was then entitled. The annual payment shall be made on the last day of each calendar year ending during the Severance Period, and the last such payment shall be made on the last day of the Severance Period. Such annual payment shall be prorated if less than 365 days have elapsed in the Severance Period or if less than 365 days have elapsed since the most recent prior payment. The prorated amount shall be the amount of such annual payment multiplied by a fraction, the numerator of which is the number of days elapsed in the Severance Period, or the number of days elapsed since the most recent prior payment, as applicable and the denominator of which is 365.

 

Neither Executive nor his dependents shall be eligible for continued participation in any disability income plan, travel accident insurance plan or tax-qualified retirement plan. Nothing herein shall be deemed to restrict the right of the Company to amend or terminate any plan in a manner generally applicable to active employees.

 

(b) The Severance Period and the period of continuation coverage to which the Participant is entitled under Section 601 et seq. of ERISA (the “COBRA Continuation Period”) shall be co-extensive. In the event that the Severance Period is less than the COBRA Continuation Period, the Participant (and his or her eligible dependents) may at the end of the Severance Period elect COBRA coverage for the remaining balance of the COBRA Continuation Period.

 

(c) Eligible Participants shall be entitled to outplacement counseling with an outplacement firm of the Company’s selection, for a period not to exceed six months after termination of employment.

 

3.4 Payment .    Severance Pay shall commence as soon as practicable after the Eligible Separation from Service and be paid in substantially equal monthly (or more frequent periodic installments corresponding to the Company’s normal payroll practices for Executive employees) over the Severance Period. Notwithstanding the preceding sentence, in the event Severance Pay or any other payment or distribution of a benefit under this Plan is deferred compensation subject to additional taxes or penalties under Section 409A of the Code if paid on or commencing on the date specified in this Plan, such payment or distribution shall not be made or commence prior to the earliest date on which Section 409A permits such payment or commencement without additional taxes or penalties under Section 409A. In the event payment is deferred under the preceding sentence, any installments that would have been paid prior to the deferred payment or commencement date but for Section 409A shall be paid in a single lump sum on such earliest payment or commencement date, together with interest at the prime rate (as published in The Wall Street Journal ) in effect on the date of Separation from Service.

 

3.5 Waiver and Release .    In order to receive benefits under the Plan, a Participant must execute and deliver to the Company a valid Waiver and Release Agreement within sixty (60) days of his or her date of Separation from Service, in a form tendered by the Company, which shall be substantially in the form of the Waiver and Release Agreement attached hereto as Exhibit B, with any changes thereto approved by WellPoint’s counsel prior to execution. No

 

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benefits shall be paid under the Plan until the Participant has executed his or her Waiver and Release Agreement and the period within which a Participant may revoke his or her Waiver and Release Agreement has expired without revocation. A Participant may revoke his or her signed Waiver and Release Agreement within seven (7) days (or such other period provided by law) after his or her signing the Waiver and Release Agreement. Any such revocation must be made in writing and must be received by the Company within such seven (7) day (or such other) period. A Participant who does not submit a signed Waiver and Release Agreement to the Company within sixty (60) days of his or her Separation from Service shall not be eligible to receive any Severance Benefits under the Plan. A Participant who timely revokes his or her Waiver and Release Agreement shall not be eligible to receive any Severance Benefits under the Plan.

 

3.6 Restrictive Covenants .    As a condition of participation in this Plan each Participant agrees as follows:

 

(a) Confidentiality .

 

(i) The Participant recognizes that the Company derives substantial economic value from information created and used in its business which is not generally known by the public, including, but not limited to, plans, designs, concepts, computer programs, formulae, and equations; product fulfillment and supplier information; customer and supplier lists, and confidential business practices of the Company, its affiliates and any of its customers, vendors, business partners or suppliers; profit margins and the prices and discounts the Company obtains or has obtained or at which it sells or has sold or plans to sell its products or services (except for public pricing lists); manufacturing, assembling, labor and sales plans and costs; business and marketing plans, ideas, or strategies; confidential financial performance and projections; employee compensation; employee staffing and recruiting plans and employee personal information; and other confidential concepts and ideas related to the Company’s business (collectively, “Confidential Information”). The Participant expressly acknowledges and agrees that by virtue of his or her employment with the Company, the Participant will have access and will use in the course of the Participant’s duties certain Confidential Information and that Confidential Information constitutes trade secrets and confidential and proprietary business information of the Company, all of which is the exclusive property of the Company. For purposes of this Agreement, Confidential Information includes the foregoing and other information protected under the Indiana Uniform Trade Secrets Act (the “Act”), or to any comparable protection afforded by applicable law, but does not include information that the Participant establishes by clear and convincing evidence is or may become known to the Participant or to the public from sources outside the Company and through means other than a breach of this Agreement.

 

(ii) The Participant agrees that the Participant will not for himself or herself or for any other person or entity, directly or indirectly, without the prior written consent of the Company, while employed by the Company and thereafter: (i) use Confidential Information for the benefit of any person or entity other than the Company or its affiliates; (ii) remove, copy, duplicate or otherwise reproduce any document or tangible item embodying or pertaining to any of the Confidential Information, except as required to perform the Participant’s duties for the Company or its affiliates; or (iii) while employed and thereafter, publish, release, disclose or deliver or otherwise make available to any third party any Confidential Information by any communication, including oral, documentary, electronic or magnetic information transmittal device or media. Upon

 

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termination of employment, the Participant shall return all Confidential Information and all other property of the Company. This obligation of non-disclosure and non-use of information shall continue to exist for so long as such information remains Confidential Information.

 

(b) Disclosure and Assignment of Inventions and Improvements .

 

(i) Without prejudice to any other duties express or implied imposed on the Participant hereunder it shall be part of the Participant’s normal duties at all times to consider in what manner and by what methods or devices the products, services, processes, equipment or systems of the Company and any customer or vendor of the Company might be improved and promptly to give to the Chief Executive Officer of the Company or his or her designee full details of any improvement, invention, research, development, discovery, design, code, model, suggestion or innovation (collectively called “Work Product”), which the Participant (alone or with others) may make, discover, create or conceive in the course of the Participant’s employment or within one (1) year thereafter. The Participant acknowledges that the Work Product is the property of the Company. To the extent that any of the Work Product is capable of protection by copyright, the Participant acknowledges that it is created within the scope of the Participant’s employment and is a work made for hire. To the extent that any such material may not be a work made for hire, the Participant hereby assigns to the Company all rights in such material. To the extent that any of the Work Product is an invention, discovery, process or other potentially patentable subject matter (the “Inventions”), the Participant hereby assigns to the Company all right, title, and interest in and to all Inventions. The Company acknowledges that the assignment in the preceding sentence does not apply to an Invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities or trade secret information, except for those Inventions that either:

 

(A) relate at the time of conception or reduction to practice of the Invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or

 

(B) result from any work performed by the Participant for the Company.

 

Execution of the Employment Agreement constitutes the Participant’s acknowledgment of receipt of written notification of this Section and of notice of the general exception to assignments of Inventions provided under the Uniform Employee Patents Act, in the form adopted by the state having jurisdiction over this Plan or provision, or any comparable applicable law.

 

(ii) the Participant shall sign such further documents as the Company may request to carry out the purposes of this Plan.

 

(c) Non-Competition .    During the Employment Period and any period in which the Participant is employed by the Company during or after the Employment Period, and during a period of time after the Participant’s termination of employment (the “ Restriction Period ”) which is eighteen (18) months for Executive Vice Presidents, fifteen (15) months for Senior Vice President, and one (1) year for all other Participants, the Participant will not, without prior written consent of the Company, directly or indirectly seek or obtain a Competitive Position in a Restricted Territory and perform a Restricted Activity with a Competitor, as those terms are defined herein.

 

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(i) Competitive Position means any employment or performance of services with a Competitor (A) in which the Participant has executive level duties for such Competitor, or (B) in which the Participant will use any Confidential Information of the Company.

 

(ii) Restricted Territory means any geographic area in which the Company does business and in which the Participant had responsibility for, or Confidential Information about, such business, within the thirty-six (36) months prior to the Participant’s termination of employment from the Company.

 

(iii) Restricted Activity means any activity for which the Participant had executive responsibility for the Company within the thirty-six (36) months prior to the termination of the Participant’s employment from the Company or about which the Participant had Confidential Information.

 

(iv) Competitor means any entity or individual (other than the Company or its affiliates) engaged in management of network-based managed care plans and programs, or the performance of managed care services, health insurance, long term care insurance, dental, life and disability life insurance, behavioral health, vision, flexible spending accounts and COBRA administration or other product or services substantially the same or similar to those offered by the Company while the Participant was employed, or other products or services offered by the Company within twelve (12) months after the termination of Participant’s employment if the Participant had responsibility for, or Confidential Information about, such other products or services while the Participant was employed by the Company.

 

(d) Non-Solicitation of Customers .    During the Employment Period and any period in which the Participant is employed by the Company during or after the Employment Period, and during the Restriction Period after the Participant’s termination of employment, the Participant will not, either individually or as an employee, partner, consultant, independent contractor, owner, agent, or in any other capacity, directly or indirectly, for a Competitor of the Company as defined in subsection (c) above: (i) solicit business from any client or account of the Company or any of its affiliates with which the Participant had contact, participated in the contact, or responsibility for, or about which the Participant had knowledge of Confidential Information by reason of the Participant’s employment with the Company, (ii) solicit business from any client or account which was pursued by the Company or any of its affiliates and with which the Participant had contact, or responsibility for, or about which the Participant had knowledge of Confidential Information by reason of the Participant’s employment with the Company, within the twelve (12) month period prior to termination of employment. For purposes of this provision, an individual policyholder in a plan maintained by the Company or by a client or account of the Company under which individual policies are issued, or a certificate holder in such plan under which group policies are issued, shall not be considered a client or account subject to this restriction solely by reason of being such a policyholder or certificate holder.

 

(e) Non-Solicitation of Employees .    During the Employment Period and any period in which the Participant is employed by the Company during or after the Employment Period, and during the Restriction Period after the Participant’s termination of employment as set forth on Schedule A to the Employment Agreement, the Participant will not, either individually or as an employee, partner, independent contractor, owner, agent, or in any other capacity, directly or

 

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indirectly solicit, hire, attempt to solicit or hire, or participate in any attempt to solicit or hire, for any non-Company affiliated entity, any person who on or during the six (6) months immediately preceding the date of such solicitation or hire is or was an officer or employee of the Company, or whom the Participant was involved in recruiting while the Participant was employed by the Company.

 

(f) Non-Disparagement .    The Participant agrees that he or she will not, nor will he or she cause or assist any other person to, make any statement to a third party or take any action which is intended to or would reasonably have the effect of disparaging or harming the Company or the business reputation of the Company’s directors, employees, officers and managers.

 

3.7 Return of Consideration .

 

(a) If at any time a Participant breaches any provision of Section 3.6 or Section 3.10, then: (i) the Company shall cease to provide any further Severance Pay or other benefits under Section 3.2 or Section 3.3 and the Participant shall repay to the Company all Severance Pay and other benefits previously received under Section 3.2 or Section 3.3; (ii) all unexercised Company stock options under any Designated Plan (defined below) whether or not otherwise vested shall cease to be exercisable and shall immediately terminate; (iii) the Participant shall forfeit any outstanding restricted stock or other outstanding equity award made under any Designated Plan and not otherwise vested on the date of breach; and (iv) the Participant shall pay to the Company (A) for each share of common stock of the Company (“ Common Share ”) acquired on exercise of an option under a Designated Plan within the 24 months prior to such breach, the excess of the fair market value of a Common Share on the date of exercise over the exercise price, and (B) for each share of restricted stock that became vested under any Designated Plan within the 24 months prior to such breach, the fair market value (on the date of vesting) of a Common Share. Any amount to be repaid pursuant to this Section 3.7 shall be held by the Participant in constructive trust for the benefit of the Company and shall be paid by the Participant to the Company with interest at the prime rate (as published in The Wall Street Journal ) as of the date of breach plus two (2) percentage points; or, if less, the maximum interest rate permitted by law, upon written notice from the Committee, within 10 days of such notice.

 

(b) The amount to be repaid pursuant to this Section 3.7 shall be determined on a gross basis, without reduction for any taxes incurred, as of the date of the realization event, and without regard to any subsequent change in the fair market value of a Common Share. The Company shall have the right to offset such amount against any amounts otherwise owed to the Participant by the Company (whether as wages, vacation pay, or pursuant to any benefit plan or other compensatory arrangement).

 

(c) For purposes of this Section 3.7, a “Designated Plan” is each annual bonus and incentive plan, stock option, restricted stock, or other equity compensation or long-term incentive compensation plan, deferred compensation plan, or supplemental retirement plan, listed on Exhibit C.

 

(d) The provisions of this Section 3.7 shall apply to awards described in clauses (i), (ii), (iii), and (iv) of subsection (a) earned or made after the date the Executive becomes a Participant in this Plan and executes an Employment Agreement, and to awards earned or made prior thereto which by their terms are subject to cessation and recoupment under terms similar to those of this Section 3.7

 

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3.8 Equitable Relief and Other Remedies .    As a condition of participation in this Plan:

 

(a) The Participant acknowledges that each of the provisions of Section 3.6 and 3.7 of the Plan are reasonable and necessary to preserve the legitimate business interests of the Company, its present and potential business activities and the economic benefits derived therefrom; that they will not prevent him or her from earning a livelihood in the Participant’s chosen business and are not an undue restraint on the trade of the Participant, or any of the public interests which may be involved.

 

(b) The Participant agrees that beyond the amounts otherwise to be provided under this Plan and the Employment Agreement, the Company will be damaged by a violation of this the terms of this Plan and the amount of such damage may be difficult to measure. The Participant agrees that if the Participant commits or threatens to commit a breach of any of the covenants and agreements contained in Sections 3.6 or 3.10 to the extent permitted by applicable law, then the Company shall have the right to seek and obtain all appropriate injunctive and other equitable remedies, without posting bond therefor, except as required by law, in addition to any other rights and remedies that may be available at law or under this Plan, it being acknowledged and agreed that any such breach would cause irreparable injury to the Company and that money damages would not provide an adequate remedy. Further, if the Participant violates Section 3.6 hereof the Participant agrees that the period of violation shall be added to the period in which the Participant’s activities are restricted.

 

(c) Notwithstanding the foregoing, the Company will not seek injunctive relief to prevent a Participant residing in California from engaging in post termination competition in California under Section 3.6(c) or (d) of this Plan, provided that the Company may seek and obtain relief to enforce Section 3.7 of this Plan with respect to such Participants.

 

(d) The parties agree that the covenants contained herein are severable. If an arbitrator or court shall hold that the duration, scope, area or activity restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope, area or activity restrictions reasonable and enforceable under such circumstances shall be substituted for the stated duration, scope, area or activity restrictions to the maximum extent permitted by law. The parties further agree that the Company’s rights under Section 3.7 should be enforced to the fullest extent permitted by law irrespective of whether the Company seeks equitable relief in addition to relief provided therein or if the arbitrator or court deems equitable relief to be inappropriate.

 

3.9 Survival of Provisions .    The obligations contained in Sections 3.6, 3.7, 3.8 and Section 3.10 below shall survive the cessation of the Employment Period (as defined in the Employment Agreement) and the Participant’s employment with the Company and shall be fully enforceable thereafter.

 

3.10 Cooperation .    Upon the receipt of reasonable notice from the Company (including from outside counsel to the Company), the Participant agrees that while employed by the Company and for two years (or, if longer, for so long as any claim referred to in this Section remains pending) after the termination of Participant’s employment for any reason, the Participant will respond and provide information with regard to matters in which the Participant has knowledge as a result of the Participant’s employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its affiliates, and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of the Participant’s

 

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employment with the Company (or any predecessor); provided, that with respect to periods after the termination of the Participant’s employment, the Company shall reimburse the Participant for any out-of-pocket expenses incurred in providing such assistance and if the Participant is required to provide more than ten (10) hours of assistance per week after his termination of employment then the Company shall pay the Participant a reasonable amount of money for his services at a rate agreed to between the Company and the Participant; and provided further that after the Participant’s termination of employment with the Company such assistance shall not unreasonably interfere with the Participant’s business or personal obligations. The Participant agrees to promptly inform the Company if the Participant becomes aware of any lawsuits involving such claims that may be filed or threatened against the Company or its affiliates. The Participant also agrees to promptly inform the Company (to the extent the Participant is legally permitted to do so) if the Participant is asked to assist in any investigation of the Company or its affiliates (or their actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates with respect to such investigation, and shall not do so unless legally required.

 

ARTICLE 4

ADDITIONAL CHANGE IN CONTROL BENEFITS

 

4.1 Equity Vesting Upon Change in Control .

 

(a) If the conditions of Section 4.1(b) are satisfied, then as of the date of the Change in Control (or as soon thereafter as permitted by Section 4.1(c)), all Options and SARs of a Participant shall become fully and immediately exercisable, all Restricted Stock shall become fully vested and nonforfeitable and forthwith delivered to a Participant if not previously delivered, and there shall be paid out in cash to the Participant within 30 days following the Effective Date of the Change in Control the value of the Performance Shares to which the Participant would have been entitled if performance achieved 100% of the target performance goals established for such Performance Shares.

 

(b) Both of the following conditions must be satisfied in order for Section 4.1(a) to apply:

 

(i) upon a Change in Control WellPoint ceases to exist; and

 

(ii) the successor to WellPoint in such Change in Control has not on or prior to such Change in Control assumed and continued the following awards without economic change: (A) any and all outstanding options (“Options”) to purchase Common Shares (or stock that has been converted into Common Shares), (B) any and all stock appreciation rights (“SARs”) ba