Form of Aveta Inc. Key Employee Retention Plan

AVETA INC.
KEY EMPLOYEE RETENTION PLAN


(EFFECTIVE AS OF DECEMBER 30, 2005)


INTRODUCTION


The purpose of this Aveta Inc. Key Employee Retention Plan is to induce a selected group of key employees of the Company to remain employed by the Company, by paying such individuals certain retention compensation, thereby reinforcing their efforts for, and commitment to, the Company. Capitalized terms and phrases used herein shall have the meanings ascribed thereto in Article I.


ARTICLE I.
DEFINITIONS


1.1 "ACCELERATION EVENT" shall have the meaning set forth in Section 2.2(b).


1.2 "AFFILIATE" shall mean, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.


1.3 "BOARD" shall mean the Board of Directors of the Company.


1.4 "CAUSE" shall mean a Participant's: (a) willful or gross negligence with regard to the Company or Participant's duties; (b) willful or gross misconduct with regard to the Company or Participant's duties; or (c) commission of (i) a felony or (ii) a misdemeanor, crime or offense involving fraud, dishonesty or moral turpitude. Determination of Cause shall be made by the Company in its sole discretion.


1.5 "CHANGE OF CONTROL" shall be deemed to occur following any transaction if: (a) any Person (other than (i) Daniel Straus and/or Joseph Mark, or any Person they control by virtue of having the right to directly or indirectly select or elect a majority of the Board or other controlling Persons of the Company, (ii) the Company, (iii) any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or (iv) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of common stock of the Company), becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the combined voting power of the then outstanding securities of the Company (or its successor corporation); or (b) the stockholders of the Company approve a plan of complete liquidation of the Company or the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets other than (i) the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, at least 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale, or (ii) pursuant to a spinoff type transaction, directly or indirectly, of such assets to the stockholders of the Company. Notwithstanding the foregoing, a merger or consolidation


effected solely to implement a recapitalization of the Company shall not constitute a Change of Control.


1.6 "CODE" shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder.


1.7 "COMMITTEE" shall mean a committee appointed by the Board from time to time to administer the Plan. The Committee may delegate any of its powers, duties and responsibilities and any of its discretionary authorities under the Plan to any officer of the Company. Notwithstanding the foregoing, if, and to the extent that no Committee exists which has the authority to administer the Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall be deemed to be references to the Board. The Committee (or its designee) shall have the exclusive right, power, and authority, in its sole discretion, to administer, apply and interpret the Plan and any other Plan documents and to decide all matters arising in connection with the operation or administration of the Plan. Without limiting the generality of the foregoing, the Committee shall have the sole and absolute discretionary authority: (a) to take all actions and make all decisions with respect to the eligibility for, and the amount of, the Retention Bonus payable under the Plan; (b) to formulate, interpret and apply rules, regulations and policies necessary to administer the Plan in accordance with its terms; (c) to decide questions, including legal or factual questions, relating to the calculation and payment of the Retention Bonus under the Plan; (d) to resolve and/or clarify any ambiguities, inconsistencies and omissions arising under the Plan or other Plan documents; (e) to decide for purposes of paying benefits hereunder, whether, based on the terms of the Plan, a Termination of Employment is for Cause; and (f) to process and approve or deny benefit claims and rule on any benefit exclusions. All interpretations, determinations and decisions made by the Committee (or any delegate) with respect to any matter arising under the Plan and any other relevant documents shall be final, conclusive and binding on all parties.


1.8 "COMPANY" shall mean Aveta Inc. and any successors as provided in Article V hereof.


1.9 "COMPANY GROUP" shall mean the Company its parent entities, predecessors or its or their Affiliates.


1.10 "COMPETING BUSINESS" shall mean any Person or entity in the Commonwealth of Puerto Rico, the state of California or Cook County, Illinois that: (a) operates or manages a Health Plan; (b) performs or arranges for medical services for a Health Plan (either on a capitated, risk sharing or fee for service basis); or (c) provides services to or on behalf of a Health Plan in the areas of medical management, risk adjustment, medical network operations or administration, plan design, pricing, utilization or quality control would be in direct competition with the Company.


1.11 "CONFIDENTIAL RECORDS" shall have the meaning set forth in Section 2.7(c).


1.12 "DISABILITY" shall mean with respect to a Participant's Termination of Employment, a permanent and total disability as defined in Section 22(e)(3) of the Code. A Disability shall only be deemed to occur at the time of the determination by the Committee of the


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Disability. Notwithstanding the foregoing, for payments under the Plan that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.


1.13 "EBITDA" shall mean the consolidated net income of the Company, determined based on the regularly prepared audited financial statements of the Company; prepared under generally accepted accounting principles applied on a consistent basis throughout the term of the applicable measurement period, plus the sum, without duplication and only to the extent such amounts are deducted from total revenues in determining net income, of (a) consolidated interest expense, (b) state, commonwealth and local consolidated income taxes, (c) consolidated depreciation of tangible assets, (d) consolidated interest expenses and income, and (e) consolidated amortization of intangible assets. The Board may, in its sole discretion, adjust the EBITDA target, or the factors that enter into the calculation of EBITDA, to reflect any actual or projected increases or decreases in the Company's EBITDA that result or are expected to result from any recapitalization, merger, consolidation, spin-off, split-off, split-up, reorganization, partial or complete liquidation, or other distribution of assets, or any acquisition or distribution of assets by the Company, or any other corporate transaction or extraordinary event having an effect similar to any of the foregoing.


1.14 "EFFECTIVE DATE" shall mean December 30, 2005.


1.15 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.


1.16 "HEALTH PLAN" shall mean a health plan operated by the Company and authorized pursuant to the Medicare + Choice or Medicare Advantage program.


1.17 "PARTICIPANT" shall mean each key employee of the Company selected by the Committee in its sole discretion and designated in writing as a participant in the Plan. Any such designated individual shall only become a Participant on receipt of the Retention Bonus Agreement.


1.18 "PERSON" shall mean any "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act.


1.19 "PLAN" shall mean the Aveta Inc. Key Employee Retention Plan, as amended from time to time.


1.20 "PROPRIETARY INFORMATION" shall have the meaning set forth in Section 2.7(b).


1.21 "RESTRICTED PERIOD" shall have the meaning set forth in Section 2.7(a).


1.22 "RETENTION BONUS" shall mean the amount set forth in the Retention Bonus Agreement.


1.23 "RETENTION BONUS AGREEMENT" shall mean the letter from the Company in the form of an agreement informing an employee of the Company of his or her selection as a Participant and setting forth any additional terms and conditions of participation in the Plan.


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1.24 "TERMINATION OF EMPLOYMENT" shall mean a termination of employment (for reasons other than a military or perso ...