EXECUTION COPY
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MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the 30th
day of August 1996 by and between Physicians Quality Care, Inc., a Delaware
corporation (the "Company") and ▇▇▇▇ Capital Partners V, L.P., a Delaware
limited partnership ("Bain").
Whereas, subject to the terms and conditions of this Agreement, the
Company desires to retain Bain to provide certain management and advisory
services to the Company, and Bain desires to provide such services;
Now, therefore, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Services. Bain hereby agrees to, during the term of this Agreement
(the "Term"):
a. provide the Company with advice in connection with the negotiation and
consummation of agreements, contracts, documents and instruments
necessary to provide the Company with financing from banks or other
financial institutions or other entities on terms and conditions
satisfactory to the Company; and
b. provide the Company with financial, managerial and operational advice in
connection with its day-to-day operations, including, without
limitation:
i. advice with respect to the investment of funds;
ii. advice with respect to the development and implementation of
strategies for improving the operating, marketing and financial
performance and the capitalization of the Company;
iii. advice with respect to the development, structuring and
implementation of strategic acquisitions and physician practice
affiliations; and
iv. advice in respect of telecommunications and information system and
accounting and administration.
2. Payment of Fees. The Company hereby agrees to:
a. during the Term, pay to Bain (or an affiliate of Bain designated by it)
a management fee of $500,000 per annum in exchange for the services
provided to the Company by Bain, as more fully described in Section 1 of
this Agreement, such fee being payable by the Company quarterly in
advance, the first such payment to be made at the closing of the first
Equity Investment; and
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b. during the Term, allow Bain to participate in the negotiation and
consummation of financing for the Company or any of its direct or
indirect subsidiaries or affiliates, and pay to Bain (or an affiliate of
Bain designated by it) a fee in connection therewith equal to one
percent (1%) of the gross amount of such financings, such fee to be due
and payable for the foregoing services at the closing of such financing;
provided, however, that the foregoing fee shall not be payable in
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respect of the following financings: (i) debt facilities provided by a
lender which is a bank under the Bank Holding Company Act to satisfy
working capital and other similar requirements; (ii) capital lease
obligations; (iii) equipment lease financings; (iv) letters of credit;
(v) financing provided by the Bain Funds, Bain or ▇▇▇▇ Capital, Inc;
(vi) up to an aggregate of [800,000] shares of capital stock to ▇. ▇▇▇▇
Price Threshold Fund; and (vii) shares of capital stock issued to the
owners of physician group practices in connection with the affiliations
thereto or acquisitions therewith by the Company.
Each payment made pursuant to this Section 2 shall be paid by wire transfer
of immediately available federal funds to the account specified on Schedule
1 hereto, or to such other account(s) as Bain may specify to the Company in
writing prior to such payment.
3. Term. This Agreement shall continue in full force and effect, unless and
until terminated by mutual consent of the parties, for so long as Bain (or
any successor or permitted assign, as the case may be) continues to carry
on the business of providing services of the type described in Section 1
above; provided, however, that (i) this Agreement shall terminate on the
later to occur of (a) the five year anniversary of the date hereof and (b)
twelve (12) months after the date of a Qualified Public Offering (as
defined in the Restated Certificate of Incorporation of the Company); and
provided further either party may terminate this Agreement following a
material breach of the terms of this Agreement by the other party hereto
and a failure to cure such breach within 30 days following written notice
thereof; and provided further that each of (i) the obligations of the
Company under Section 4 below, (ii) any and all accrued and unpaid
obligations of the Company owed under Section 2 above and (iii) the
provisions of Section 7 shall survive any termination to the maximum extent
permitted under applicable law.
4. Expenses; Indemnification.
a. Expenses. Whether any of the transactions contemplated by this Agreement
or any other agreement executed in connection herewith shall be
consummated, the Company agrees to pay on demand all expenses incurred
by Bain, the Bain Funds and ▇▇▇▇ Capital, Inc. (or any of them) in
connection with this Agreement and such other transactions and all
operations hereunder or otherwise incurred in connection with the
Company, including but not limited to (i) the fees and disbursements of:
(A) Ropes & ▇▇▇▇, special counsel to ▇▇▇▇ Capital, Inc. and the Bain
Funds, (B) Price Waterhouse LLP, accountant to Bain
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Capital, Inc. and the Bain Funds, and (C) any other third party
consultants or advisors retained by Bain, ▇▇▇▇ Capital, Inc., the Bain
Funds or either of the parties identified in clauses (A) and (B) arising
in connection therewith (including but not limited to the preparation,
negotiation and execution of this Agreement and any other agreement
executed in connection herewith or the consummation of the other
transactions contemplated hereby (and any and all amendments,
modifications, restructurings and waivers, and exercises and
preservations of rights and remedies hereunder or thereunder) and the
operations of the Company and any of its subsidiaries), and (ii) any out
of-pocket expenses incurred by Bain in connection with the provision of
services hereunder or the attendance at any meeting of the board of
directors (or any committee thereof) of the Company or any of its
affiliates, such fees and disbursements in (i) and (ii) above not to
exceed $100,000 per annum without the consent of the Company.
b. Indemnity and Liability. In consideration of the execution and delivery
of this Agreement by Bain, the Company hereby agrees to indemnify,
exonerate and hold each of Bain, ▇▇▇▇ Capital, Inc. and each Bain Fund,
and each of their respective partners, shareholders, affiliates,
directors, officers, fiduciaries, employees and agents and each of the
partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents of each of the foregoing (collectively, the
"Indemnitees") free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnitees or any of them as a result of, or arising
out of, or relating to the execution, delivery, performance, enforcement
or existence of this Agreement, except for any such Indemnified
Liabilities arising on account of such Indemnitee's gross negligence,
bad faith or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. None of the Indemnitees shall be liable to the
Company or any of its affiliates, agents, advisors, representatives, or
accountants for any act or omission suffered or taken by such Indemnitee
that does not constitute gross negligence, bad faith or willful
misconduct. The Indemnitees agree that none of them will enter into a
settlement agreement for any Indemnified Liabilities without the prior
Consent of the Company. The Company shall have the right to participate
in any action which shall be the subject of this paragraph 4(b) at its
own cost and expense.
5. Assignment, etc. Neither party shall have the right to assign this
Agreement. Bain acknowledges that its services under this Agreement are
unique. Accordingly, any purported assignment by Bain shall be void.
Notwithstanding the foregoing, (a) Bain may assign all or part of its
rights and obligations hereunder to any affiliate of Bain which provides
services similar to those called for by this Agreement which shall be
acceptable to the Company in its reasonable discretion, in which event Bain
shall
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be released of all of its rights and obligations hereunder, and (b) the
provisions hereof for the benefit of the Bain Funds shall inure to the
benefit of their successors and assigns.
6. Amendments and Waivers. No amendment or waiver of any term, provision or
condition of this Agreement shall be effective, unless in writing and
executed by each of ▇▇▇▇ and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or
remedy on any future occasion. No course of dealing of any person nor any
delay or omission in exercising any right or remedy shall constitute an
amendment of this Agreement or a waiver of any right or remedy of any party
hereto.
7. Additional Services. Nothing contained herein shall limit the right of the
Bain Funds, Bain or ▇▇▇▇ Capital, Inc. to provide for consideration to any
person, including the Company, any additional services and advice in
connection with the sale or merger of the Company, its subsidiaries or any
affiliates thereof or any securities of such entities.
8. Miscellaneous.
a. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice or conflict of law
provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof shall be brought and maintained exclusively in the
federal and state courts of The Commonwealth of Massachusetts. Each of
the parties hereto by execution hereof (i) hereby irrevocably submits to
the jurisdiction of the federal and state courts in The Commonwealth of
Massachusetts for the purpose of any action, suit or proceeding arising
out of or based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable law, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that it is
immune from extraterritorial injunctive relief or other injunctive
relief, that its property is exempt or immune from attachment or
execution, that any such action, suit or proceeding may not be brought
or maintained in one of the above-named courts, that any such action,
suit or proceeding brought or maintained in one of the above-named
courts should be dismissed on grounds of forum non conveniens, should be
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transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named courts, or
that this Agreement or the subject matter hereof may not be enforced in
or by any of the above-named courts. Each of the parties hereto hereby
consents to service of process in any such suit, action or
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proceeding in any manner permitted by the laws of The Commonwealth of
Massachusetts, agrees that service of process by registered or certified
mail, return receipt requested, at the address specified in or pursuant
to Section 9 is reasonably calculated to give actual notice and waives
and agrees not to assert by way of motion, as a defense or otherwise, in
any such action, suit or proceeding any claim that service of process
made in accordance with Section 9 does not constitute good and
sufficient service of process. The provisions of this Section 7(b) shall
not restrict the ability of any party to enforce in any court any
judgment obtained in a federal or state court of The Commonwealth of
Massachusetts.
c. Waiver of Jury Trial. To THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto
acknowledges that it has been informed by each other party that the
provisions of this Section 7(c) constitute a material inducement upon
which such party is relying and will rely in entering into this
Agreement and the transactions contemplated hereby. Any of the parties
hereto may file an original counterpart or a copy of this Agreement with
any court as written evidence of the consent of each of the parties
hereto to the waiver of its right to trial by jury.
9. Merger/Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes any
prior communication or agreement with respect thereto.
10. Notice. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and
such other party's copied persons as specified below by personal delivery
to the address set forth for it below or to such other address as such
party shall have specified by notice to each other party or by mailing a
copy thereof by certified or registered mail, or by Federal Express or any
other reputable overnight courier service, postage prepaid, with return
receipt requested, addressed to such party and copied persons at such
addresses. In the case of service by personal delivery, it shall be deemed
complete on the first business day after the date of actual delivery to
such address. In case of service by mail or by overnight courier, it shall
be deemed complete, whether or not received, on the third day after the
date of mailing as shown by the registered or certified mail receipt or
courier service receipt. Notwithstanding the foregoing, notice to any party
or copied person of change of address shall be deemed complete only upon
actual receipt by an officer or agent of such party or copied person.
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If to the Company, to it at:
Physicians Quality Care, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
If to Bain, to it at:
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
With a Copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
11. Severability. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then
such unenforceable provision shall be deemed eliminated from this Agreement
for the purpose of such proceedings to the extent necessary to permit the
remaining provisions to be enforced. To the full extent, however, that the
provisions of any applicable law may be waived, they are hereby waived to
the end that this Agreement be deemed to be valid and binding agreement
enforceable in accordance with its terms, and in the event that any
provision hereof shall be found to be invalid or unenforceable, such
provision shall be construed by limiting it so as to be valid and
enforceable to the maximum extent consistent with and possible under
applicable law.
12. Counterparts. This Agreement may be executed in any number of counterparts
and by each of the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
THE COMPANY: PHYSICIANS QUALITY CARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title
BAIN: ▇▇▇▇ CAPITAL PARTNERS V, L.P.
By: ▇▇▇▇ Capital Investors V, Inc.,
its general partner
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title:
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Schedule 1 to
Management Agreement
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Wire Transfer Instructions for
▇▇▇▇ Capital Partners V, L.P.
Bankers Trust Company, NY
ABA # 021 001 033
For: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇
Account # 015 01 026
Account Name: ▇▇▇▇ Capital Partners V, L.P.
Acct. # 810512-4