WELLCARE HEALTH PLANS, INC.
EXHIBIT 10.4
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<DESCRIPTION>EXHIBIT 10.4
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 10.4</B>


<P align="center" style="font-size: 10pt"><U>PREPAYMENT AND SETTLEMENT ALLOCATION AGREEMENT</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This PREPAYMENT AND SETTLEMENT ALLOCATION AGREEMENT (this &#147;<B><I>Agreement</I></B>&#148;) is
made and entered into as of August&nbsp;31, 2004, by and among WellCare Health
Plans, Inc., a Delaware corporation and successor-in-interest to WellCare
Holdings, LLC, a Delaware limited liability company (&#147;<B><I>Parent</I></B>&#148;); WCG Health
Management, Inc., a Delaware corporation f/k/a WellCare Health Plans, Inc. and
WellCare Acquisition Company (&#147;<B><I>WellCare</I></B>&#148;); and Kiran C. Patel (the &#147;<B><I>Stockholder
Representative</I></B>&#148;), acting on behalf of Pallavi Patel, Pradip C. Patel, Swati
Patel, Rupesh Shah and Nita Shah as well as himself (collectively, the
&#147;<B><I>Stockholders</I></B>&#148;). Parent, WellCare and the Stockholder Representative are
sometimes referred to in this Agreement individually as a &#147;<B><I>Party</I></B>&#148; and
collectively as the &#147;<B><I>Parties</I></B>,&#148; and Parent, WellCare and its Subsidiaries are
sometimes referred to in this Agreement collectively as the &#147;<B><I>WellCare
Companies</I></B>&#148;.


<P align="center" style="font-size: 10pt">RECITALS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Parent, WellCare and the Stockholders are parties to that certain
Purchase Agreement, dated as of May&nbsp;17, 2002 (as subsequently amended, the
&#147;<B><I>Purchase Agreement</I></B>&#148;), pursuant to which WellCare acquired all of the
outstanding equity securities of Well Care HMO, Inc., a Florida corporation,
HealthEase of Florida, Inc., a Florida corporation, Comprehensive Health
Management, Inc., a Florida corporation, and Comprehensive Health Management of
Florida, L.C., a Florida limited liability company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;On February&nbsp;12, 2004, Parent, WellCare and the Stockholders entered
into that certain Amendment and Settlement Agreement (the &#147;<B><I>Settlement
Agreement</I></B>&#148;), pursuant to which the parties thereto settled certain disputes
among them and amended the Purchase Agreement and certain other documents
related thereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;A portion of the purchase price under the Purchase Agreement was paid
by issuance of that certain Senior Subordinated Non-Negotiable Promissory Note
dated July&nbsp;31, 2002, in the original principal amount of $53,000,000, issued by
WellCare to the Stockholder Representative on behalf of the Stockholders, as
subsequently amended and restated in its entirety by that certain Amended and
Restated Senior Subordinated Non-Negotiable Promissory Note dated February&nbsp;12,
2004, in the original principal amount of $116,240,692, issued by WellCare to
the Stockholder Representative on behalf of the Stockholders (the &#147;<B><I>Restated
Note</I></B>&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;On May&nbsp;11, 2004, Parent, WellCare and the Stockholders entered into
that certain Prepayment and Amendment Agreement (the &#147;<B><I>First Prepayment
Agreement</I></B>&#148;), pursuant to which, among other things, WellCare prepaid a portion
of the outstanding principal amount of the Restated Note and the parties
thereto amended the Restated Note.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;Also on May&nbsp;11, 2004, pursuant to the First Prepayment Agreement,
WellCare, the Stockholder Representative (acting on behalf of all of the
Stockholders) and Wachovia Bank, National Association (the &#147;<B><I>Escrow Agent</I></B>&#148;),
entered into that certain Escrow Agreement (the &#147;<B><I>Escrow Agreement</I></B>&#148;), pursuant
to which a portion of the amount prepaid pursuant to the First Prepayment
Agreement was deposited into escrow to secure a portion of the Stockholders&#146;


<P align="center" style="font-size: 10pt">&nbsp;
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<P align="left" style="font-size: 10pt">indemnification obligations under the Purchase Agreement with respect to
the E.S. Thomas Claim and any E.S. Thomas Losses (as such terms are defined in
the Settlement Agreement).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;The Parties now desire to provide for the settlement of the E.S. Thomas
Claim, the allocation of their respective obligations with respect to all E.S.
Thomas Losses and the prepayment of a portion of the remaining principal amount
of the Restated Note, and to provide for certain other matters, all as set
forth herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the covenants and promises set forth
herein, and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), intending to be legally bound,
the Parties agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definitions</U>. Capitalized terms used and not defined herein
shall have the respective meanings ascribed to them in the Purchase Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Prepayment</U>. Upon the execution of this Agreement by each of the
Parties, WellCare shall pay to the Stockholder Representative, on behalf of the
Stockholders, the sum of $3,240,692 (the &#147;<B><I>Prepayment</I></B>&#148;), as a prepayment of
principal under the Restated Note. Notwithstanding anything to the contrary in
the Restated Note, the full amount of the Prepayment shall be deemed to be a
prepayment of principal under the Restated Note. As a result of the
Prepayment, the remaining outstanding principal amount under the Restated Note
shall be $25,000,000. All payments to the Stockholder Representative under
this Agreement shall be made by wire transfer of immediately available funds to
an account designated by the recipient.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>E.S. Thomas Settlement</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Each of the Parties (i)&nbsp;acknowledges receipt of the proposed
Settlement Agreement, to be entered into on or about the date hereof, between
one or more of the WellCare Companies and E.S. Thomas &#038; Associates, Inc. (the
&#147;<B><I>E.S. Thomas Settlement Agreement</I></B>&#148;), pursuant to which the E.S. Thomas Claim
will be settled in full in consideration for the payment described therein (the
&#147;<B><I>E.S. Thomas Settlement Payment</I></B>&#148;), and (ii)&nbsp;acknowledges, agrees and consents,
pursuant to Section&nbsp;9.2(e) of the Purchase Agreement, to the settlement of the
E.S. Thomas Claim pursuant to the terms set forth in the E.S. Thomas Settlement
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Stockholder Representative acknowledges that the WellCare
Companies have incurred attorneys&#146; fees and expenses in connection with the
E.S. Thomas Claim in the amount of $2,452,198 (the &#147;<B><I>E.S. Thomas Legal Fees</I></B>&#148;),
and that $2,000,000 of such amount, together with the E.S. Thomas Settlement
Payment, constitutes Indemnifiable Losses pursuant to the Purchase Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Parties stipulate and agree that (i) $2,000,000 of the E.S. Thomas
Legal Fees shall be applied against, and shall satisfy in full, the Buyer
Indemnification Threshold, (ii)&nbsp;notwithstanding anything to the contrary
contained in the Purchase Agreement or the Settlement Agreement, the WellCare
Companies shall be responsible for the amount of the E.S. Thomas Legal Fees in
excess of $2,000,000, subject to the provisions of Section 3(e) below, and
(iii) <U>Exhibit&nbsp;A</U> attached hereto and incorporated herein sets forth the
final amount of the Stockholder Indemnification Cap and shall constitute the
&#147;Cap Determination Notice&#148; for all


<P align="center" style="font-size: 10pt">2
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<P align="left" style="font-size: 10pt">purposes under the Settlement Agreement, and shall be final and binding
upon the Parties (and the Stockholder Representative hereby waives any right to
object to the Cap Determination Notice, notwithstanding any provision in the
Settlement Agreement to the contrary).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;WellCare shall be entitled to be reimbursed, from the Escrow Account
established pursuant to the Escrow Agreement, for the full amount of the E.S.
Thomas Settlement Payment, and the remainder of the Escrow Account shall be
payable to the Stockholder Representative on behalf of the Stockholders. Upon
the execution and delivery of this Agreement, WellCare and the Stockholder
Representative shall execute and deliver to the Escrow Agent a Certificate of
Instruction in the form of <U>Exhibit&nbsp;B</U> attached hereto, instructing the
Escrow Agent to disburse the proceeds of the Escrow Account in accordance with
this Section&nbsp;3(d).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Notwithstanding anything to the contrary in the Purchase Agreement, in
the event that the WellCare Companies collect any insurance proceeds with
respect to the E.S. Thomas Claim or any E.S. Thomas Losses, such proceeds shall
be allocated as follows: (i) <I>first</I>, to the WellCare Companies in reimbursement
of any costs or expenses paid or incurred to collect such insurance proceeds,
including, without limitation, attorneys&#146; fees and costs, (ii) <I>second</I>, to the
WellCare Companies to the extent of the amount of the E.S. Thomas Legal Fees in
excess of $2,000,000, and (iii) <I>third</I>, the balance, if any, shall be split
equally between the WellCare Companies, on the one hand, and the Stockholder
Representative, on behalf of the Stockholders, on the other hand.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Representations and Warranties</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Stockholder Representative hereby represents and warrants to
Parent and WellCare that (i)&nbsp;he is under no obligation or restriction that
would in any way interfere or conflict with his or her performance hereunder,
and (ii)&nbsp;the execution and delivery of this Agreement by him will not result in
a violation or breach of, or constitute (with or without the giving of notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, any Credit Agreement, note or any
other contract or agreement between any lender or any other Person, including
Bank of America, N.A., and any Stockholder.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Each of Parent and WellCare hereby represents and warrants to the
Stockholder Representative that (i)&nbsp;such Party is under no obligation or
restriction that would in any way interfere or conflict with its performance
hereunder, and (ii)&nbsp;the execution and delivery of this Agreement and/or the
Escrow Agreement by such Party will not result in a violation or breach of, or
constitute (with or without the giving of notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, any Credit Agreement, note or any other contract or
agreement between any lender or any other Person.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Confidentiality</U>. Each of the Parties hereby agrees to keep the
terms of this Agreement confidential; <I>provided</I>, <I>however</I>, that the foregoing
shall not prevent or restrict any disclosure (a)&nbsp;to such Party&#146;s professional
advisors, financing sources or prospective financing sources, (b)&nbsp;which is
required by order of court or Governmental or Regulatory Authority with
subpoena powers (provided that the Party subject thereto shall have provided
the other Parties


<P align="center" style="font-size: 10pt">3
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<P align="left" style="font-size: 10pt">with prior notice of such order and an opportunity to object
or seek a protective order and take any other available action), (c)&nbsp;in the
course of any Action or Proceeding between any of the Parties hereto or (d)&nbsp;by
WellCare or any of its affiliates to the extent required or desirable under
applicable Law or the rules of any stock exchange.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Entire Agreement; Modification</U>. This Agreement and the Exhibits
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement may be amended or modified only by an instrument in
writing duly executed by the Parties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Purchase Agreement, Restated Note, Settlement Agreement and First
Prepayment Agreement Effective</U>. Except as otherwise specifically set forth
in this Agreement, all provisions of the Purchase Agreement, the Restated Note
(including the calculation of interest as provided therein), the Settlement
Agreement and the First Prepayment Agreement which are not in conflict with the
terms of this Agreement shall remain in full force and effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Waiver</U>. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Binding Effect</U>. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties and their respective successors
and assigns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Headings</U>. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Invalid Provisions</U>. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any Party under this Agreement will not be
materially and adversely affected thereby, (a)&nbsp;such provision will be fully
severable, (b)&nbsp;this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c)&nbsp;the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d)&nbsp;in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.


<P align="center" style="font-size: 10pt">4
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Jurisdiction; Venue</U>. All actions and proceedings arising out
of or relating to this Agreement shall be heard and determined in any Florida
state or federal court sitting in the City of Tampa, Florida, and each Party
hereby irrevocably accepts and consents to the exclusive personal jurisdiction
of those courts for such purpose. In addition, each Party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any action or proceeding arising
out of or relating to this Agreement or any judgment entered by any court in
respect thereof brought in any state or federal court sitting in the city of
Tampa, Florida and further irrevocably waives any claim that any action or
proceeding brought in any such court has been brought in an inconvenient forum.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Waiver of Jury Trial</U>. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.


<P align="center" style="font-size: 10pt">&#091;SIGNATURE PAGE FOLLOWS&#093;



<P align="center" style="font-size: 10pt">5
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top">&nbsp;</TD>
    <TD colspan="3">WELLCARE HEALTH PLANS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000">By   /s/ Paul L. Behrens
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2">Paul L. Behrens&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="2">Senior Vice President and
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top">&nbsp;</TD>
    <TD colspan="3">WCG HEALTH MANAGEMENT, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000">By   /s/ Paul L. Behrens
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2">Paul L. Behrens&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="2">Senior Vice President and
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top">&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000">                                                    /s/ Kiran C. Patel
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3">Kiran C. Patel, as Stockholder&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3">Representative&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

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