EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 21st day of
June, 1995, is entered into by Physicians Quality Care, Inc., a Delaware
corporation with its principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, residing at ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇").
The Company recognizes that the future growth, profitability and
success of the business of the Company will be enhanced by the employment of
▇▇▇▇▇. The Company desires therefore to secure the benefit of ▇▇▇▇▇'▇ experience
and ability. In order to retain the services of ▇▇▇▇▇, the Company desires to
offer ▇▇▇▇▇ a compensation package which recognizes the significance of her
individual contribution to the future growth, profitability and success of the
Company and allows her to share in the same while allowing her to draw a salary
commensurate with her knowledge and experience.
NOW, THEREFORE, on the basis of the foregoing facts and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ ▇▇▇▇▇ and ▇▇▇▇▇
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hereby accepts employment with the Company, upon the terms and subject to the
conditions hereinafter set forth.
2. Term. The term of this Agreement (the "Term") shall commence on
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June 21, 1995 (the "Commencement Date"), and shall continue in effect for a
period of thirty-six (36) months, expiring on June 21, 1998 unless otherwise
extended as hereinafter provided. The Term shall be automatically extended for
additional twelve-month periods on June 21, 1998 and on each June 21 thereafter,
unless the Company notifies ▇▇▇▇▇ in writing that such extension shall not take
place, ninety (90) days prior to any such June 21 extension date; provided
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that, if a Change of Control of the Company (as defined in Section 15(b)) shall
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have
occurred during the original or extended Term of this Agreement, this Agreement
shall continue in effect for a period of not less than twenty-four (24) months
beyond the month in which such Change of Control occurred, as provided in
Section 15(a).
3. Position; Duties.
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(a) The Company and ▇▇▇▇▇ agree that, subject to the provisions of
this Agreement and subject to the direction of the Board of Directors of the
Company (the "Board"), the Company shall, during the Term, employ ▇▇▇▇▇ and
▇▇▇▇▇ shall serve as President and Chief Executive Officer or in such other
position as the Board may determine from time to time. ▇▇▇▇▇ shall be subject to
the supervision of, and shall have such authority as is delegated to her by the
Board. ▇▇▇▇▇ shall be based at the Company's headquarters in Massachusetts and
shall not be obligated to relocate outside the metropolitan Boston area to
perform her duties and responsibilities without her prior written consent.
(b) ▇▇▇▇▇ hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such other duties
and responsibilities as the Board shall from time to time reasonably assign to
her. ▇▇▇▇▇ agrees to devote her entire business time, attention and energies to
the business and interests of the Company during the Term. ▇▇▇▇▇ agrees to abide
by the written rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.
4. Member of the Board. Throughout the Term, ▇▇▇▇▇ shall be eligible
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to serve as a Director of the Company and a member of the Board. The Company
agrees that it shall nominate ▇▇▇▇▇ for election as a Director of the Company at
all elections of the members of the Board during the Term unless ▇▇▇▇▇ declines
to stand for election.
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5. Compensation. As compensation for ▇▇▇▇▇'▇ employment hereunder, the
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Company shall pay to ▇▇▇▇▇ a base salary payable in equal semi-monthly
installments at the annual rate of $240,000 or such greater base salary as the
Board may from time to time approve, commencing on December 1, 1995.
6. Bonus. The Company intends to adopt a management incentive program
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under which executives of the Company such as ▇▇▇▇▇ would be entitled to receive
bonus payments of up to 100% of their base salary based upon (i) the achievement
of certain performance targets by the Company as set by the Board and (ii) the
achievement of certain individual performance targets agreed upon between the
Board and ▇▇▇▇▇ (collectively, the "Officer Incentive Bonus"). ▇▇▇▇▇ shall be
eligible to receive an Officer Incentive Bonus during each calendar year during
the Term, the amount of such Officer Incentive Bonus to be set and approved by
the Board. For the calendar year 1995, ▇▇▇▇▇ shall be entitled to receive a pro
rata portion (five-twelfths) of the annual Officer Incentive Bonus for 1995
based upon her commencement of employment on June 21, 1995.
7. Benefits. Upon meeting all applicable eligibility requirements,
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▇▇▇▇▇ shall be entitled to receive an automobile allowance not to exceed $600
per month, and such other benefits, compensation or rights as are generally made
available to other members of senior management of the Company including,
without limitation, sick pay, participation in any medical, disability,
retirement and dental insurance plans that may be adopted by the Company and
participation in equity incentive plans, including stock option plans, of the
Company; provided that, in the event ▇▇▇▇▇ fails to qualify for any medical or
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disability insurance plan that may be adopted by the Company, the Company shall
pay to ▇▇▇▇▇ an amount which would enable her to purchase an insurance plan from
another carrier which provides substantially similar benefits to those provided
to other members of senior
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management under the Company's plans; provided however, that such amount may be
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capped by the Board in its discretion. ▇▇▇▇▇ represents that on the date hereof,
she has no knowledge of any medical condition which might prevent her from
qualifying as a beneficiary under a standard medical or disability plan. During
the Term, ▇▇▇▇▇'▇ benefits shall be maintained at least at the same level as are
presently in effect on the date hereof.
8. Vacation. ▇▇▇▇▇ shall be entitled to four (4) weeks of vacation
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time each year, to be pro-rated monthly for partial years, during the Term. If
▇▇▇▇▇ does not utilize all vacation in the year earned, the unused vacation time
in any year shall not carry over to the next year.
9. Expenses. The Company shall reimburse ▇▇▇▇▇ for all reasonable
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travel, entertainment and other expenses incurred or paid by ▇▇▇▇▇ in connection
with, or related to, the performance of her duties, responsibilities or services
under this Agreement, upon presentation by ▇▇▇▇▇ of documentation, expense
statements, vouchers and/or such other supporting information as the Company may
request, provided, however, that the amount available for such travel,
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entertainment and other expenses may be fixed in advance by the Board.
10. Restricted Stock Award. Pursuant to the Company's 1995 Restricted
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Stock Plan (the "Restricted Stock Plan"), the Company shall issue to ▇▇▇▇▇
4,162,500 shares of Common Stock of the Company, $.01 par value per share (the
"Founder's Shares"), at a purchase price of $.01 per share, subject to vesting
and the Company's right to repurchase at $.01 per share, in the event that all
of ▇▇▇▇▇'▇ Founder Shares do not vest and are forfeited in accordance with the
Restricted Stock Plan (which shall provide for, among other things, a vesting
schedule based on (i) performance targets for the Company as set by the Board,
(ii) performance targets for executive recipients as agreed to between the Chief
Executive Officer
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of the Company or the Board and such executive, and (iii) the duration of such
executive's employment with the Company). On the date hereof, ▇▇▇▇▇ and the
Company shall enter into a Restricted Stock Agreement substantially in the form
attached hereto as Exhibit A (the "Restricted Stock Agreement").
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11. Termination of ▇▇▇▇▇ Without Cause or by ▇▇▇▇▇ With Good Reason.
(a) At any time prior to expiration of the Term, the Board may
terminate ▇▇▇▇▇'▇ employment without Cause (as defined in Section 13(b)), at any
time, and ▇▇▇▇▇ may terminate her employment with Good Reason (as defined in
Subsection (b) of this Section 11, subject to payment by the Company of the
severance amounts set forth in Subsections (c) and (d) of this Section 11.
(b) For purposes of this Section 11, "Good Reason" shall mean:
(i) the failure of the Company to nominate ▇▇▇▇▇ for
election as a Director of the Company at any election unless ▇▇▇▇▇ declines to
stand for election;
(ii) any purported termination of ▇▇▇▇▇'▇ employment for
Cause which is not effected pursuant to a notice described in Section 13 of this
Agreement;
(iii) without ▇▇▇▇▇'▇ express written consent, the assignment
to ▇▇▇▇▇ of any duties materially inconsistent with the offices held hereunder,
or a material alteration or diminution in the nature or status of her
responsibilities; or an adverse and material alteration in her reporting
responsibilities, titles or offices, or any removal of her or failure to re-
elect her to any of such positions, except in connection with the termination of
her employment or retirement (which shall mean her voluntary termination of
employment after having attained age 70);
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(iv) any reduction in ▇▇▇▇▇'▇ annual base salary or a
material reduction in fringe benefits as in effect on the date hereof or as the
same may be increased during the Term; and
(v) any material breach by the Company of any material
provision of this Agreement which the Company fails to correct within thirty
(30) working days after receiving written notice thereof.
(c) In the event ▇▇▇▇▇ is terminated by the Company without Cause
or ▇▇▇▇▇ terminates her employment with Good Reason, the Company shall pay to
▇▇▇▇▇ an amount equal to two (2) times ▇▇▇▇▇'▇ annual base salary (based on
▇▇▇▇▇'▇ base salary prevailing at the time of the termination).
(d) Payment pursuant to Section 11(c) shall be made in twenty-four
(24) equal monthly installments on the last day of each month after termination
of this Agreement pursuant to this Section 11.
(e) The parties hereto expressly acknowledge and agree that the
compensation and benefits payable to ▇▇▇▇▇ upon a termination as specified in
this Section 11 will constitute full, reasonable and adequate compensation for
any such termination and that the payment of such compensation and benefits
shall fully satisfy and discharge any and all obligations of the Company to
▇▇▇▇▇ in connection with such termination.
12. Termination By ▇▇▇▇▇ Without Cause. ▇▇▇▇▇ may terminate her
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employment hereunder without Cause and without Good Reason, provided that ▇▇▇▇▇
first gives to the Company a written notice of intent to terminate at least
ninety (90) days prior to the effective date of any such termination. All rights
of ▇▇▇▇▇ under this Agreement shall terminate upon the effective date of the
termination of employment; provided, however, the Company shall pay to ▇▇▇▇▇ any
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base salary earned through the effective date of the termination and a
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pro-rata share of the Officer Incentive Bonus earned during the calendar year in
which the termination of employment occurs.
13. Termination of ▇▇▇▇▇ For Cause
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(a) Notwithstanding anything in this Agreement to the contrary,
the Company shall have the right to terminate ▇▇▇▇▇'▇ employment hereunder for
Cause (as defined in Subsection (b) of this Section 13) by giving to ▇▇▇▇▇
written notice of such termination as of a date (not earlier than ten (10) days
after such notice) to be specified in such notice, and her employment hereunder
shall terminate on the date so specified, whereupon ▇▇▇▇▇ shall be entitled to
receive her salary at the rate provided in Section 5 and any other compensation
or benefits provided in Sections 6, 7 and 8, only to the date on which
termination shall take effect.
(b) For purposes of this Section 13, "Cause" shall mean (i)
▇▇▇▇▇'▇ willful and continued failure materially to perform her duties with the
Company (other than any such failure resulting from her incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a notice by ▇▇▇▇▇ of termination for Good Reason), which is not
remedied within a reasonable period after a written demand for performance is
delivered to ▇▇▇▇▇ which specifically identifies the manner in which it is
believed that ▇▇▇▇▇ has not materially performed her duties; (ii) the willful
engagement by ▇▇▇▇▇ in misconduct materially and demonstrably injurious to the
Company, or (iii) ▇▇▇▇▇'▇ conviction of a felony or of a fraud or embezzlement
of the Company's property. For purposes of this Subsection (b), no act or
failure to act by ▇▇▇▇▇ shall be considered "willful" unless done, or omitted to
be done, by ▇▇▇▇▇ without good faith and without reasonable belief that ▇▇▇▇▇'▇
action or omission was in the best interest of the Company. For purposes of this
Agreement, ▇▇▇▇▇ shall not be deemed to have been terminated for Cause unless
and until there shall
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have been delivered to ▇▇▇▇▇ a copy of a resolution, duly adopted by the
affirmative vote of not less than 66 2/3% of the entire membership of the Board
of the Company (excluding ▇▇▇▇▇) at a meeting called and held for this purpose
after reasonable written notice to ▇▇▇▇▇ and an opportunity for her, together
with her counsel, to be heard by the Board, finding, in the good faith opinion
of the Board, misconduct of the type described in this Section 13(b), and
specifying the particulars thereof in detail.
14. Termination In the Event of Disability or Death.
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(a) Disability. In the event that ▇▇▇▇▇ shall fail, because of
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illness or injury, to render the services contemplated by this Agreement for six
(6) consecutive calendar months or for shorter periods aggregating one hundred
eighty (180) or more business days in any twelve (12) month period, the Company
shall have the right to terminate ▇▇▇▇▇'▇ employment hereunder by giving to
▇▇▇▇▇ written notice of termination. In the event ▇▇▇▇▇'▇ employment is
terminated within the meaning of this Section 14(a), ▇▇▇▇▇ shall receive her
salary at the rate provided in Section 5 and any other compensation and benefits
provided in Sections 6, 7 and 8, to the effective date of such termination. Such
termination pursuant to this Section 14(a) shall not affect any rights which
▇▇▇▇▇ may have at the time of termination pursuant to any insurance or other
death benefit, bonus, retirement, severance pay or stock award plans or
arrangements of the Company, or any equity incentive plan or any restricted
stock award or options thereunder, which rights shall continue to be governed by
the terms and provisions of any such plans and agreements.
(b) Death. During the Term of this Agreement, the Company shall
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maintain a life insurance policy in the amount of $500,000, to be paid to
▇▇▇▇▇'▇ named beneficiaries in accordance with standard policy terms and
conditions. This Agreement in all other respects will terminate upon the death
of ▇▇▇▇▇ except for the payment of ▇▇▇▇▇'▇ base
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salary at the rate provided in Section 5 and any other compensation and benefits
provided in Sections 6, 7 and 8 to the date of her death.
15. Termination in the Event of a Change of Control.
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(a) In the event a Change in Control (as defined in Subsection (b)
below) shall occur during the Term and ▇▇▇▇▇'▇ employment with the Company is
subsequently terminated or terminates for any reason within twenty-four (24)
months after such Change in Control other than by reason of (i) disability or
death, (ii) termination by the Company for Cause or (iii) termination by ▇▇▇▇▇
other than for Good Reason, ▇▇▇▇▇ shall be entitled to receive the payments as
set forth in Subsections (c) and (d) of Section 11 (all to the same extent and
with the same effect as if such termination occurred by ▇▇▇▇▇ for Good Reason)
and the vesting of the Founder's Shares and the exercisability of stock options
▇▇▇▇▇ then holds as set forth in Subsection (c) of this Section 15.
(b) A "Change in Control" shall occur or be deemed to occur if
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any of the following events occur:
(i) any individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") is or becomes the "beneficial owner"
(as defined in Rule l3d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding voting securities entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the following
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acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
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controlled by the Company, or (D) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of paragraph (iii)
below;
(ii) Individuals who, as of the Commencement Date, constitute
the Board (as of such date, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
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individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board, excluding any individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) the stockholders of the Company approve a
reorganization, merger or consolidation of the Company with any other
corporation or the sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership of the Outstanding Company
Voting
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Securities immediately prior to such Business Combination, (B) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 50% or more of the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (C)
at least a majority of the members of the Board of Directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) The ▇▇▇▇▇ Stock Restriction Agreement and all stock options
for the purchase of the Company's Common Stock granted to ▇▇▇▇▇ by the Company
under any of the Company's stock option plans shall provide for acceleration of
the vesting of the Founder's Shares and the full and immediate exercisability of
each such option upon the occurrence of a Change of Control.
(d) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by ▇▇▇▇▇ in
connection with a Change of Control or the termination of ▇▇▇▇▇'▇ employment
(all such payments and benefits, including those set forth in Subsections (c)
and (d) of Section 11 and Section 15(c) being hereafter called "Total
Payments"), would be subject (in whole or part), to the excise tax imposed under
Section 4999 of the Internal Revenue Code ("IRC") (the "Excise Tax"), then
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the Total Payments may be reduced, in such order and manner as ▇▇▇▇▇ may elect,
so that no portion of the Total Payments is subject to the Excise Tax if (i) the
net amount of such Total Payments, as so reduced (and after deduction of the net
amount of federal, state and local income tax on such reduced Total Payments) is
greater than (ii) the excess of (A) the net amount of such Total Payments,
without reduction (but after deduction of the net amount of federal, state and
local income tax on such Total Payments), over (B) the amount of Excise Tax to
which ▇▇▇▇▇ would be subject in respect of such Total Payments. For purposes of
determining whether and the extent to which the Total Payments will be subject
to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment
of which ▇▇▇▇▇ shall have effectively waived in writing prior to the date of her
termination shall be taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by the
Company does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the IRC (including by reason of Section 280G(b) (4) (A) of the
IRC) and, in calculating the Excise Tax, no portion of such Total Payments shall
be taken into account which constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b) (4) (B) of the IRC, and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Company in accordance
with the principles of Sections 280G(d) (3) and (4) of the IRC. Prior to the
payment of any of the Total Payments, the Company shall provide ▇▇▇▇▇ with its
calculation of the amounts referred to in this Section and such supporting
materials as are reasonably necessary for ▇▇▇▇▇ to evaluate the Company's
calculations.
16. Indemnification. ▇▇▇▇▇ shall be fully indemnified by the Company
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in her capacity as an officer and director of the Company to the extent
permitted by Delaware law.
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17. Non-Compete.
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(a) So long as ▇▇▇▇▇ is employed by the Company and for a period
of two years after the termination or expiration of her employment, ▇▇▇▇▇ will
not directly or indirectly:
(i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one percent (1%)
of the total outstanding stock of a publicly held company), engage directly or
indirectly in any business or entity which (i) operates, develops or manages
physician practice management entities or (ii) develops, designs, produces,
markets or sells managed care products or services, of the kind or type
developed or which were being developed, produced, marketed or sold by the
Company while ▇▇▇▇▇ was employed by the Company, to the extent such engagement
assists such business or entity in competing with the business conducted by the
Company in any city in which the Company conducts material operations; or
(ii) recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company; or
(iii) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company which
were contacted, solicited or served by ▇▇▇▇▇ while employed by the Company.
(b) If any restriction set forth in this Section 17 is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to
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extend only over the maximum period of time, range of activities or geographic
area as to which it may be enforceable.
(c) The restrictions contained in this Section 17 are necessary
for the protection of the business and goodwill of the Company and are
considered by ▇▇▇▇▇ to be reasonable for such purpose. ▇▇▇▇▇ agrees that any
breach of this Section 17 will cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek
specific performance and injunctive relief.
18. Proprietary Information and Developments.
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(a) Proprietary Information.
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(i) ▇▇▇▇▇ agrees that all information and know-how, whether
or not in writing, of a private, secret or confidential nature concerning the
Company's business, business relationships or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and customer and
supplier lists and contracts at or knowledge of customers or prospective
customers of the Company. ▇▇▇▇▇ will not disclose any Proprietary Information to
others outside the Company or use the same for any unauthorized purposes without
written approval by an officer of the Company, either during or after her
employment, unless and until such Proprietary Information has become public
knowledge without fault by ▇▇▇▇▇.
(ii) ▇▇▇▇▇ agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written,
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photographic, or other tangible material containing Proprietary Information,
whether created by ▇▇▇▇▇ or others, which shall come into her custody or
possession, shall be and are the exclusive property of the Company to be used by
▇▇▇▇▇ only in the performance of her duties for the Company.
(iii) ▇▇▇▇▇ agrees that her obligation not to disclose or use
information, know-how and records of the types set forth in Subsection (a) of
this Section 18 also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to ▇▇▇▇▇ in the course of the Company's business.
(b) Developments.
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(i) ▇▇▇▇▇ will make full and prompt disclosure to the Company of
all inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by ▇▇▇▇▇ or under her direction or jointly with
others during her employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(ii) ▇▇▇▇▇ agrees to assign and does hereby assign to the Company
(or any person or entity designated by the Company) all her right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, Subsection (b) of
this Section 18 shall not apply to Developments which do not relate to the
present or planned business or research and development of the Company and which
are made and conceived by ▇▇▇▇▇ not during normal working hours,
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not on the Company's premises and not using the Company's tools, devices,
equipment or Proprietary Information.
(iii) ▇▇▇▇▇ agrees to cooperate fully with the Company, both
during and after her employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. ▇▇▇▇▇ shall sign
all papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
(c) Other Agreements. ▇▇▇▇▇ hereby represents that she is not
----------------
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of her employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. ▇▇▇▇▇ further represents that her performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by her in confidence or in trust prior to her employment with the
Company.
19. Assignment. Neither this Agreement nor any rights or benefits
----------
hereunder shall be subject to execution, attachment or similar process nor may
this Agreement or any rights or benefits hereunder be assigned, delegated,
transferred, pledged or hypothecated, without the written consent of both
parties hereto, and any such assignment, delegation, transfer, pledge,
hypothecation, execution, attachment or similar process shall be null and void.
-16-
20. Successors; Binding Agreement.
-----------------------------
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
in writing and to agree to perform its obligations under this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain an
assumption of this Agreement prior to the effectiveness of succession shall be a
breach of this Agreement. As used in this Agreement, "the Company" shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
▇▇▇▇▇'▇ personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. Any amounts payable by
the Company to ▇▇▇▇▇ after the date of her death, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to her
devisee, legatee or other designee, or if there is no such designee, to her
estate.
21. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement is found to be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
22. Notices. All notices, requests, demands and other communication
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if mailed by United States Postal Service certified or
registered mail, prepaid, to the parties or
-17-
their permitted assignees at the Company, in the case of the Company, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.,
▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such address
as shall constitute the Company's headquarters and in the case of ▇▇▇▇▇ at the
last address shown in the personnel records of the Company, or at such other
address as shall be given in writing by either party to the other. The date of
such personal delivery or the third business day following the date of mailing
shall be deemed to be the date of such notice, demand or communication.
22. Waiver and Modification. Any waiver, alteration or modification of
-----------------------
any of the terms of this Agreement shall be valid only if made in writing and
signed by the parties hereto. Each party hereto from time to time may waive any
of her or its rights hereunder without affecting a waiver with respect to any
subsequent occurrences or transactions hereunder.
23. Captions and Headings. Captions and section headings used herein
---------------------
are for convenience only, are not a part hereof and shall not be used in
construing this Agreement.
24. Entire Agreement. This Agreement constitutes and embodies the
----------------
entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the employment
of ▇▇▇▇▇ by the Company.
25. Governing Law. This Agreement shall be governed by and interpreted
-------------
in accordance with the laws of the Commonwealth of Massachusetts, except where
Federal law governs.
26. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
-18-
IN WITNESS WHEREOF, the parties have executed this Agreement below:
DATED: June 21, 1995 PHYSICIANS QUALITY CARE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
DATED: June 21, 1995 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-19-
AMENDMENT TO
EMPLOYMENT AGREEMENT
WHEREAS, pursuant to an Employment Agreement dated as of June 21,
1995 (the "Agreement"), Physicians Quality Care, Inc. (the "Company") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") entered into an employment relationship.
WHEREAS, the Company and ▇▇▇▇▇ wish to clarify the Agreement and to
provide for certain additional terms of the Agreement.
NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Section 5 of the Agreement is hereby amended to provide that ▇▇▇▇▇
shall be paid a base annual salary of $250,000 retroactively effective as of
June 21, 1995.
2. Section 6 of the Agreement is hereby clarified to correct the
reference to a pro-rata portion of the annual Officer Incentive Bonus for 1995
from "five-twelfths" to "six- twelfths" (i.e., the six month period from July
21, 1995 through December 31, 1995, being the six full calendar months of 1995
▇▇▇▇▇ has worked for the Company).
3. Section 8 of the Agreement is hereby amended to add a new clause at
the end thereof, as follows: "; provided, however, that upon receipt of approval
from the Company's Compensation Committee or, if there is no Compensation
Committee, the Company's Board of Directors, ▇▇▇▇▇ may elect to receive
additional salary in lieu of any unused vacation time at a rate per week equal
to her annual base salary divided by fifty-two."
4. Section 14(b) of the Agreement is hereby amended by inserting a new
sentence after the first sentence thereof, as follows: "Such life insurance
policy shall be a group term policy or such other form of insurance as may be
mutually satisfactory to the parties; provided, however, that such policy shall
contain a so-called conversion provision permitting ▇▇▇▇▇ to continue coverage
at her own expense at the same benefit level after termination of the Agreement.
IN WITNESS WHEREOF, authorized signatories of the parties have hereunto
set their hands as of this day of January, 1996.
---
PHYSICIANS QUALITY CARE, INC. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(the "Company") ("▇▇▇▇▇")
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------ ----------------------
Its:
Agreement
This Agreement (the "Agreement") is entered into as of the 30th day of
August 1996 by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Executive") and Physicians Quality
Care, Inc., a Delaware corporation (the "Company").
Whereas, Executive and the Company have entered into an Employment
Agreement dated as of June 21, 1995 (the "Employment Agreement") and a
Stock Restriction Agreement dated as of June 21, 1995 (the "Stock
Restriction Agreement").
Whereas, ▇▇▇▇ Capital Fund V, L.P., a Delaware limited partnership,
▇▇▇▇ Capital Fund V-B, L.P., a Delaware limited partnership, BCIP
Associates, a Delaware partnership, and BCIP Trust Associates, L.P., a
Delaware limited partnership (collectively "Bain") are providing equity
financing to the Company, and in connection therewith the Company and
certain stockholders thereof have entered into a Stockholders Agreement
dated the date hereof (the "Stockholders Agreement"); and
Whereas, the parties hereto desire to make certain modifications to
the Employment Agreement and the Stock Restriction Agreement and to enter
into certain other agreements in respect to the Shares originally issued to
the Executive (it being agreed and understood that the term "Shares," as
used herein, means the shares of Common Stock listed on Schedule A hereto
and does not include any of the shares of Series A Preferred Stock and
Warrants to Purchase Common Stock owned by the Executive);
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. Certain Definitions. Terms defined in the Stockholders Agreement and
-------------------
not otherwise defined herein are used herein as so defined.
2. Amendment to Employment Agreement, etc.
---------------------------------------
a. Section 15(b) of the Employment Agreement is hereby amended to add
the following subparagraph (v) immediately following subparagraph (iv):
"(v) Notwithstanding any provision of Section 15(b) to the
contrary, for purposes of this Agreement, a Change of Control shall
not occur or be deemed to occur as a result of any one or more of
the following: (a) the beneficial or other ownership by ▇▇▇▇ Capital
Fund V, L.P., ▇▇▇▇ Capital Fund V-B, L.P., BCIP Associates, BCIP
Trust Associates, L.P. or the affiliates of any of them
(collectively, "Bain") of shares of capital stock of the Company or
securities or other rights to purchase or subscribe for or acquire
shares of capital stock of the Company or securities exchangeable
for or convertible into shares of capital stock of the Company; (b)
the election to the Board of Directors of the Company of the
individuals and representatives provided for in the stockholders
agreement dated August 30, 1996 to which the Company, Bain and
certain other stockholders are party and in the Company's Restated
Certificate of Incorporation; and (c) the exercise by Bain or
any of its representatives of any rights or obligations
relating to (a) or (b) above, including without limitation any
rights or remedies under the Company's Restated Certificate of
Incorporation."
b. The Stock Restriction Agreement is hereby amended by deleting
Sections 2, 3, 4, 10 and 11 in their entirety.
c. Executive hereby releases and forever discharges the Company, its
stockholders, directors, officers and representatives, including without
limitation Bain and its Affiliates, and their respective partners, stockholders,
directors, officers, employees and representatives (collectively, the
"Releasees") from any and all claims, demands, proceedings, causes of
action, orders, obligations, agreements, debts and liabilities whatsoever, in
law and at equity, which Executive now has, ever had, or may hereafter have
against the respective Releasees arising contemporaneously with or prior to the
Initial Closing A (as defined in the Purchase Agreement) including, but not
limited to any rights to receive salary and bonus or reimbursement from the
Company prior to August 1, 1996.
d. The Company and Executive hereby confirm that Executive's annual
salary for 1996 is payable at the rate of $250,000 per annum for periods from
and after August 1, 1996 and that the Executive is eligible to receive a bonus
payment for calendar year 1996 based upon achieving agreed upon performance
objectives determined by the Board.
3. Options to Purchase.
--------------------
a. Call Options. Upon any termination of the employment by the Company
------------
of Executive, the Company (or its designee) shall have the right to purchase
Shares held by the Executive or originally issued to Executive but held by one
or more Permitted Transferees of Executive (collectively, the "Call
Stockholder Group") on the following terms:
i. Termination by Company for Cause. If such termination is
--------------------------------
the result of termination of Executive's employment by the Company for
Cause, the Company (or its designee), upon written notice delivered within
90 days of termination, (a) may purchase 50% of the Shares that are vested
in accordance with Schedule A hereto ("Vested Shares") at a price equal to
the Fair Market Value of such securities and (b) may purchase all Shares
that are unvested in accordance with Schedule A hereto at Cost (without any
rate of return). If such termination is a result of termination of
Executive's employment by the Company without Cause, the Company shall have
no right to purchase any of the Vested Shares.
ii. Resignation of the Executive. If such termination is the
----------------------------
result of Executive's resignation, the Company (or its designee), upon
written notice delivered within 90 days of termination, (a) may purchase
all or any portion of 35% of the Vested Shares at a price equal to the Fair
Market Value of such securities and (b) may purchase all Shares that are
unvested in accordance with Schedule A hereto at Cost (without any rate of
return).
-2-
iii. Voting Trust. Upon termination of Executive's employment
------------
with the Company for any reason, Executive agrees to deposit all Shares not
purchased by the Company (or its designee) pursuant to Section 3 hereof in
a voting trust mutually agreeable to Executive, the Company and Bain
containing the following terms and conditions (a) the voting trust shall
terminate upon the earlier to occur of (i) five years from the date it was
entered into and (ii) the date of a Qualified Public Offering, (b) the
trustee shall exercise all voting and other rights with respect to the
Shares subject to the voting trust as directed by Bain, and (c) Executive
shall have the right to transfer all or any portion of her beneficial
interest in the voting trust subject to restrictions analogous to the
restrictions on transfers of Shares contained in the Stockholders
Agreement.
iv. Sale or IPO. In the event the Company consummates the
-----------
initial Public Offering of its Shares or sells the Company or substantially
all of its assets within twelve months of termination of Executive's
employment, the Company shall promptly pay Executive with respect to each
Share purchased at Fair Market Value pursuant to Section 3.1.2 hereof the
positive difference, if any, between (a) the price that would have been
paid for such Share if the Fair Market Value of a Share were equal to the
net proceeds received by the Company with respect to each Share sold in the
Public Offering or in the case of a sale of the Company, the amount per
share paid to the shareholders of the Company (appropriately adjusted for
stock splits, reverse stock splits, stock dividends and the like), and (b)
the amount previously paid to Executive with respect to such Share pursuant
to Section 3 hereof.
b. Determination of Fair Market Value. (a) For purposes of this Section
----------------------------------
3, the term "Fair Market Value" shall mean, as of any date, the fair value of
any Share as of the applicable date on the basis of a sale of such Share in an
arms length private sale between a willing buyer and a willing seller, neither
acting under compulsion, as determined by the Board; (b) at any time when more
than 15% of the Shares then outstanding has been offered and sold pursuant to
one or more Public Offerings, the Fair Market Value of any Share shall be equal
to the average of the sum of the closing prices of the Shares for the 30 trading
days immediately prior to the date on which Share becomes subject to repurchase
under this Section 3. In determining Fair Market Value, the Board shall (a)
consider, in addition to other factors that it determines in good faith to be
relevant, the purchase price of the Shares in recent (i) arms-length sales of
Shares by the Company, (ii) transfers of Shares by a Stockholder in an
arms-length transaction and (b) not give effect to any discount which may
otherwise be attributable to the fact that such Shares which are the subject of
such valuation (i) constitute less than a majority of the Shares outstanding
and/or (ii) are restricted as to transfer as provided herein.
c. "Cause" shall mean for purposes of Section 3 of this Agreement, in
-----
the context of termination of the employment of the Executive, any of the
following events or conditions: (i) Executive's gross negligence or willful
misconduct which causes material injury to the Company or any of its Affiliates
and is not cured within twenty-one (21) days after written notice by the Company
to Executive, (ii) any act of fraud, embezzlement or other material dishonesty,
(iii) conviction of, or plea of nolo contendere to, any felony or any other
crime involving fraud, dishonesty or moral turpitude, or (iv) willful conduct
which causes criminal
-3-
or material civil liabilities to the Company or its Affiliates thereof. For
purposes of (iv) above, no act or failure to act on the part of the Executive
shall be considered "willful" unless it is done or omitted to be
done by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and its
Subsidiaries. The cessation of employment of the Executive shall not be deemed
to be for Cause unless and until (i) a written notice has been delivered to the
Executive by the Board which specifically identifies the Cause which is the
Board's basis for termination and (ii) the Board has delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board (excluding the Executive) at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive has engaged in the conduct described in the
Board's notice and specifying the particulars thereof in detail.
d. Period. The foregoing provisions of this Section 3 shall
------
expire on the date of a Qualified Public Offering.
e. Construction. The foregoing provisions of this Section 3 are not
------------
intended, and shall not be construed, to eliminate, waive or otherwise affect
(a) the restrictions on transfer, vesting requirements or termination provisions
which may apply to any Share or Option by its terms or under provisions of the
Company's 1995 Restricted Stock Plan, Equity Incentive Plan or other equity or
option plan pursuant to which such Share or Option was granted or other
governing documentation, or (b) any provisions of the Stockholders Agreement
except Section 5.1 thereof. Without limiting the foregoing, Sections 5.4 and 10
of the Stockholders Agreement shall be applicable to all matters contemplated by
Section 3 hereof.
4. Assignment, etc. None of the parties shall have the right to assign
---------------
this Agreement.
5. 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 the Company, the Executive and Bain (which is
an intended third party beneficiary hereof). 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.
6. 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. Permitted Transferees. Executive agrees that no Transfer of Shares
---------------------
will be made to a Permitted Transferee until the Permitted Transferee has
delivered a written acknowledgment and agreement in form and substance
reasonably satisfactory to the
-4-
Company that such Shares are subject to all of the provisions of this Agreement
applicable thereto prior to such Transfer and that such Permitted Transferee is
bound hereby and a party hereto to the same extent as Executive.
7. 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.
8. 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.
If to the Company, to it at:
Physicians Quality Care, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Operating Officer
If to Bain, to it at:
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
With a Copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-5-
If to the Executive, to her at:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to another stockholder, to him, her or it at the address
set forth in the stock record book of the Company.
9. 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.
10. Counterparts. This Agreement may be executed in any number of counter-
-------------
parts 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.
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.
EXECUTIVE: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The Company: PHYSICIANS QUALITY CARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Title:
-6-
Schedule A
----------
SCHEDULE OF VESTED STOCK
------------------------
Date Vested Shares
----------- ----------
On or prior to 6/30/96 3,468,750*
6/21/97 346,875
6/21/98 346,875
---------
4,162,500
=========
*The parties agree that this number of Shares has vested as of August 30, 1996.