EXECUTIVE OFFICER CONTRACT
- 1. HEALTH QUALITY MANAGEMENT, INC., of 0000 Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as CORPORATION), and Xxxxxxxx
Xxxx, of 0000 Xxxxxxxx Xx., Xxxxxxxxxxxxxx, XX, 00000 hereinafter referred to as
CHIEF FINANCIAL OFFICER), agree to the following contract, to commence when this
Contract has been signed by both parties. Upon the commencement of this
Contract, the terms hereof shall supersede any and all prior Contracts between
CORPORATION and CHIEF FINANCIAL OFFICER.
- 2. CORPORATION agrees to compensate CHIEF FINANCIAL OFFICER a BASE PAY of One
hundred seventy five thousand dollars ($175,000) per year. The BASE PAY shall be
paid Sixty nine percent (69%) in cash and Thirty one percent (31%) in stock of
the corporation at the rate of ten dollars ($10.00) per share of common stock of
the CORPORATION prior to the IPO. After the IPO the BASE PAY shall be fully
payable in cash.
- 3. BASE PAY will be paid a series of monthly PAYMENTs. Prior to the IPO, each
PAYMENT shall be in the amount of Ten thousand sixty two dollars and forty nine
cents ($10,062.49) per month (cash PAYMENT) and Five hundred sixty nine (569)
shares per month (stock PAYMENT). After the IPO, each PAYMENT shall be in the
amount of Fourteen thousand five hundred eighty three dollars and thirty three
cents ($14,583.33). Each PAYMENT will be made within 5 days of the last day of
each month. Prior to the IPO, however, in no event shall the total amount of
cash PAYMENTS made exceed 15% of Health Quality Management stock sold pursuant
to the current registered offering after the effective date of this contract.
- 4. The CHIEF FINANCIAL OFFICER shall receive a BONUS in the form of stock
options, each GROUP of which will permit CHIEF FINANCIAL OFFICER to purchase two
thousand (2,000) shares of CORPORATION's common stock at a price of ten dollars
($10.00) per share. CORPORATION shall issue CHIEF FINANCIAL OFFICER a total
maximum of options for eight thousand (8,000) share of stock in CORPORATION, a
total of four (4) GROUPS. Each GROUP shall vest the first time the CORPORATION
achieves each one of the following goals:
(1) Implementation of the billing and management of Yator/Medi-Cen
clinic in Dupont circle,
(2) Billing of a minimum of 10,000 multispecialty capitated lives,
(3) Purchase of a medical office building in Rockville,
(4) The first time total gross collections billed by CORPORATION
received in a calendar month exceeds one million dollars
($1,000,000.00),
The stock options cannot be exercised until the shares have been held for a
period of two (2) years from the date of issue and registered for sale. The
options shall expire ten (10) years
after the date of this Contract. In the event this Contract is terminated, CHIEF
FINANCIAL OFFICER shall retain his right to hold the stock options earned as of
the termination date.
- 5. CHIEF FINANCIAL OFFICER agrees to work to the best of his ability as a
CHIEF FINANCIAL OFFICER of the CORPORATION and shall perform certain specific
duties for the CORPORATION as are customary of a CHIEF FINANCIAL OFFICER and
such duties and functions as are reasonably requested from time to time by
either the Board of Directors or the CEO of the CORPORATION. This obligation is
personal in nature and may not be delegated by the CHIEF FINANCIAL OFFICER.
- 6. COVENANTS NOT TO COMPETE. CHIEF FINANCIAL OFFICER agrees that at no time
during the term of this Agreement or for a period of two (2) years immediately
following the termination, for any cause, of his employment hereunder, will he
engage directly or indirectly, either personally or as an employee, associate,
partner, manager, agent, or otherwise, or by means of any corporate or other
device, in a business similar to CORPORATION 's within a ten (10) mile area of
CORPORATION 's place of business or any of CORPORATION's client's place of
business. If any court of competent jurisdiction shall determine that the period
or geographical area covered herein, or any other term or provision of this
Agreement, is unreasonable, the said term, geographical area or provision shall
not be deemed to be null and void but shall be reformed to impose the maximum
enforceable period, geographical area, term or other provisions as the case may
be.
EXTENSION OF LIMITATION PERIOD. The parties acknowledge that if CHIEF
FINANCIAL OFFICER violates any of the protective covenants hereunder and
CORPORATION brings legal action for injunctive or other relief hereunder,
CORPORATION shall, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full Limitation Period of these protective
covenants. Accordingly, the Limitation Period shall be deemed to have the full
duration of the period stated therein, computed from the date relief is granted,
but reduced by the time between the period when the restriction began to run at
the termination of CHIEF FINANCIAL OFFICER 's employment hereunder and the date
of the first violation of the covenant by CHIEF FINANCIAL OFFICER.
- 7. Either party may terminate this Contract for any reason with thirty (30)
days written notice to the other party. In the event of termination, CHIEF
FINANCIAL OFFICER must leave all records at the office of CORPORATION, and both
parties agree that the records, contact and resource lists, and any work product
generated by, for or on behalf of CORPORATION are particularly confidential,
valuable and proprietary to CORPORATION. If the CORPORATION terminates this
agreement without cause after the IPO the CHIEF FINANCIAL OFFICER shall continue
to receive his BASE PAY for one year after termination. All the terms of
Sections 6 and 8 shall remain in full force and effect for a period of two (2)
years after the termination of CHIEF FINANCIAL OFFICER's employment.
- 8. a. CHIEF FINANCIAL OFFICER expressly acknowledges and agrees that CHIEF
FINANCIAL OFFICER will be given access to and become familiar with business
methods,
trade secrets, and other proprietary information developed at CORPORATION's
expense (the "TRADE SECRETS"), which are valuable, unique, and essential to the
performance of CHIEF FINANCIAL OFFICER 's duties hereunder, as well as being
essential to the overall continued success and business goodwill of CORPORATION.
CHIEF FINANCIAL OFFICER expressly acknowledges and agrees that the TRADE SECRETS
are proprietary and confidential and if any of the TRADE SECRETS were imparted
to or became known by any persons, including CHIEF FINANCIAL OFFICER engaging in
a business in any way competitive with that of CORPORATION 's, such would result
in hardship, loss, irreparable injury and damage to CORPORATION, the measurement
of which would be difficult, if not impossible, to determine. Accordingly, CHIEF
FINANCIAL OFFICER expressly agrees that CORPORATION has a legitimate interest in
protecting the TRADE SECRETS and its business from such hardship, loss,
irreparable injury and damage, that the following covenant is a reasonable means
by which to accomplish that purpose, and that violation of any of the protective
covenants contained herein shall constitute a breach of trust and is grounds for
immediate dismissal and for appropriate legal action for damages, enforcement
and/or injunction.
a. CHIEF FINANCIAL OFFICER acknowledges that the TRADE SECRETS give
CORPORATION an advantage over its competitors, and that the same is not
available to or known by CORPORATION's competitors or the general public. CHIEF
FINANCIAL OFFICER further acknowledges that CORPORATION has devoted substantial
time, money, and effort in the development of the Trade Secrets and in
maintaining the proprietary and confidential nature thereof. CHIEF FINANCIAL
OFFICER further acknowledges CHIEF FINANCIAL OFFICER 's position with
CORPORATION is one of the highest trust and confidence by reason of CHIEF
FINANCIAL OFFICER 's knowledge of, access to, and contact with the Trade
Secrets. CHIEF FINANCIAL OFFICER agrees to use CHIEF FINANCIAL OFFICER 's best
efforts and exercise of utmost diligence to protect and safeguard the TRADE
SECRETS. CHIEF FINANCIAL OFFICER covenants that, during the term of this
Agreement regardless of which party terminates this Agreement and whether such
termination is for cause, CHIEF FINANCIAL OFFICER will not disclose, disseminate
or distribute to another, nor induce any other person to disclose, disseminate
or distribute, any TRADE SECRETS of CORPORATION, directly or indirectly, either
for CHIEF FINANCIAL OFFICER 's own benefit or for the benefit of another, nor
will CHIEF FINANCIAL OFFICER use or cause to be used any TRADE SECRETS in any
way except as is required in the course of CHIEF FINANCIAL OFFICER 's employment
with CORPORATION. CHIEF FINANCIAL OFFICER acknowledges and covenants that all
TRADE SECRETS relating to the business of CORPORATION shall remain the exclusive
property of CORPORATION, shall not be copied or otherwise reproduced in whole or
in part, and shall not be removed from the premises of CORPORATION, under any
circumstances whatsoever without the prior written consent of CORPORATION. All
the terms of Section 8 shall remain in full force and effect for a period of two
(2) years after the termination of CHIEF FINANCIAL OFFICER's employment.
- 9. The IPO for the purposes of this contract shall be defined as the day the
CORPORATION lists its stock on a national stock exchange for public trading as
defined by 13(a) or 15(d) of the Securities Act of 1934, as amended, with a firm
commitment underwriter.
a. After the IPO the CORPORATION shall purchase life insurance for the
CHIEF FINANCIAL OFFICER in the amount of three times his annual salary.
- 10. UNIT(S) or SHARES of stock in CORPORATION cannot be sold unless they are
registered under the Securities Act of 1933, as amended (the "ACT") (and the
securities laws of the state of residence, if applicable) or an exemption from
such registration is available. No UNITS or SHARES will be sold, assigned, or
otherwise transferred unless a registration statement under the ACT (and the
securities laws of the state of residence, if applicable) with respect thereto
is in effect, or the CORPORATION has received a written opinion of counsel
satisfactory to the CORPORATION that, after an investigation of the relevant
facts, which shall be recited in such opinion, such counsel is of the opinion
that such sale, assignment, or transfer does not involve a transaction requiring
registration thereof under the ACT (and the securities laws of the state of
residence, if applicable) governing resale's of securities acquired from an
issuer thereof.
- 11. All notices required or permitted under this Contract shall be in writing
and shall be deemed given when delivered in person or when sent via registered
or certified U.S. Mail, return receipt requested, or via facsimile transmission
followed by mail to the addresses and parties set forth above, or to such other
address of which any party hereto may from time to time have been notified by
the other in compliance with the notice provisions hereof.
- 12. This is the entire agreement between the parties and no other oral or
written representations have been made. This Contract cannot be amended except
by a writing, signed by both parties. This Contract shall not have binding
effect unless and until signed by both parties. This Contract may be signed and
executed in counterpart. The Contract is governed by Maryland law. Each party
shall notify the other party in writing of any address or name change. In
addition to the remedies cited herein, CORPORATION shall be entitled to
injunctive relief against CHIEF FINANCIAL OFFICER from the violation of the
terms of Sections 6 and 8 of this Agreement. Each provision of this Contract
shall be enforced to the fullest extent allowed by law. If any part of this
Contract is deemed invalid, unenforceable, void, or voidable under the governing
law, then that part may be severed and the remainder left to stand as if the
part was not present.
SIGNATURES
The following signatures signify consent and agreement to the foregoing CHIEF
FINANCIAL OFFICER CONTRACT consisting of 12 Paragraphs between HEALTH QUALITY
MANAGEMENT, INC. and Xxxxxxxx Xxxx.
/s/ [ILLEGIBLE] 8-5-96
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CHIEF FINANCIAL OFFICER - Date
/s/ [ILLEGIBLE} 8-5-96
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For the CORPORATION - HEALTH QUALITY MANAGEMENT, INC. Date
Stock Option Certificate
This stock option certificate provides that ____________________________ is the
registered holder of an option to purchase ____________ shares of common stock
in HEALTH QUALITY MANAGMENT, INC., incorporated under the laws of the State of
Maryland in 1994, for a price of ten dollars ($10.00) per share.
This option may only be exercised two years after the date of this option.
This option must be exercised within 10 years of the commencement date of the
employment contract, after time which this option will expire. To exercise this
option send this option with a check to "HEALTH QUALITY MANAGEMENT, INC." for
ten dollars ($10.00) per share to be purchased to HEALTH QUALITY MANAGEMENT,
INC., 0000 Xxxxxxxxxx Xx, Xxxxx 000, Xxxxxxxx, XX, 00000.
The security evidenced by this certificate has not been registered under the
Securities and Exchange Act of 1933, or any applicable state law, and no
interest therein may be sold, distributed, assigned, offered, pledged, or
otherwise transferred unless (a) there is an effective registration statement
under such Act and applicable state securities laws covering any such
transaction involving said securities, or (b) this corporation receives an
opinion of legal counsel for the holder of these securities (concurred in by
legal counsel for this corporation) stating that such transaction is exempt from
registration, or this corporation otherwise satisfies itself that that such
transaction is exempt from registration.
Unless this Option has been executed by manual signature, this Option shall not
be entitled to any benefit, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Option to be duly executed under
its corporate seal.
Dated: 08/05/96
HEALTH QUALITY MANAGEMENT, INC.
By:
---------------------------------
Chief Executive Officer
Attest:
----------------------------------
Secretary
AMENDMENT TO
EXECUTIVE OFFICER CONTRACT
- 1. HEALTH QUALITY MANAGEMENT, INC., of 0000 Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as CORPORATION), and Xxxxxxxx
Xxxx, of 0000 Xxxxxxxx Xx., Xxxxxxxxxxxxxx, XX 00000 (hereinafter referred to as
CHIEF FINANCIAL OFFICER), agree to the following amendment to the EXECUTIVE
OFFICER CONTRACT between CORPORATION and CHIEF FINANCIAL OFFICER, dated August
5, 1996 (hereinafter referred to as EXECUTIVE OFFICER CONTRACT), to commence
when this Amendment has been signed by both parties. This Amendment shall
supersede the EXECUTIVE OFFICER CONTRACT, to the extent that their terms
conflict.
- 2. After CORPORATION begins processing the xxxxxxxx for the Xxxxx Medical
Group, P.C., prior to the IPO as defined in paragraph 9 of the EXECUTIVE OFFICER
CONTRACT, the cash portion of the BASE PAY which CORPORATION shall pay EXECUTIVE
OFFICER monthly shall be the greater of :
(a) five thousand, thirty-one dollars and twenty-five cents ($5,031.25);
or
(b) 15% of the CORPORATION's stock sold pursuant to the current
registered offering after the effective date of the EXECUTIVE
OFFICER CONTRACT, up to an average of ten thousand, sixty-two
dollars and fifty cents ($10,062.50) per month from the date of the
EXECUTIVE OFFICER CONTRACT.
SIGNATURES
The following signatures signify consent and agreement to the foregoing
AMENDMENT TO EXECUTIVE OFFICER CONTRACT consisting of 2 Paragraphs between
HEALTH QUALITY MANAGEMENT, INC. and Xxxxxxxx Xxxx.
/s/ Xxxxxxxx Xxxx 10-24-96
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CHIEF FINANCIAL OFFICER - Xxxxxxxx Xxxx Date
/s/ [ILLEGIBLE], CEO 10-24-96
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For the CORPORATION - HEALTH QUALITY MANAGEMENT, INC. Date
1
AMENDMENT TO
EXECUTIVE OFFICER CONTRACT
- 1. HEALTH QUALITY MANAGEMENT, INC., of 0000 Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as CORPORATION), and Xxxxxxxx
Xxxx, of 0000 Xxxxx Xxxx Xxxxxx, #000, Xxxxxxxxx, 00000 (hereinafter referred to
as CHIEF FINANCIAL OFFICER), agree to the following amendment to the EXECUTIVE
OFFICER CONTRACT between CORPORATION and CHIEF FINANCIAL OFFICER, dated August
5, 1996 (hereinafter referred to as EXECUTIVE OFFICER CONTRACT), to commence
when this Amendment has been signed by both parties. This Amendment shall
supersede the EXECUTIVE OFFICER CONTRACT, to the extent that their terms
conflict.
- 2. Paragraph 2 of the EXECUTIVE OFFICER CONTRACT is hereby amended to replace
"Five hundred sixty nine (569) shares per month (stock PAYMENT)" with "Four
hundred fifty two (452) per month (stock PAYMENT)".
- 3. Paragraph 4 of the EXECUTIVE OFFICER CONTRACT is hereby amended to replace:
"The stock options cannot be exercised until the shares have been held for
a period of two years from the date of issue and registered for sale. The
options shall expire ten (10) years after the date of this Contract."
with:
"The stock options cannot be exercised until the shares have been held for
a period of two (2) years from the date of the options. The options shall
expire five (5) years after the date of the options."
SIGNATURES
The following signatures signify consent and agreement to the foregoing
AMENDMENT TO EXECUTIVE OFFICER CONTRACT consisting of 3 Paragraphs between
HEALTH QUALITY MANAGEMENT, INC. and Xxxxxxxx Xxxx.
/s/ Xxxxxxxx Xxxx 12-20-96
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CHIEF FINANCIAL OFFICER - Xxxxxxxx Xxxx Date
/s/ [ILLEGIBLE], CEO 12-20-96
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For the CORPORATION - HEALTH QUALITY MANAGEMENT, INC. Date
ADDENDUM T0 EXECUTIVE OFFICER CONTRACT
THIS ADDENDUM T0 EXECUTIVE OFFICER CONTRACT, made this 30th day of
December, 1997, is by and between MEDI-CEN MANAGEMENT, INC. (formerly known as
Health Quality Management, Inc.) ("Corporation") and XXXXXXXX X. XXXX
("Employee").
INTRODUCTORY STATEMENT
Pursuant to the Executive Officer Contract dated August 5, 1996 between
Employee and Corporation, as amended (the "Employment Agreement"), Employee
agreed to render certain services to the Corporation. The parties wish to
clarify and amend the terms of the Employment Agreement as set forth herein.
NOW, THEREFORE, WITNESSETH, for and in consideration of the sum of Ten
Dollars ($10.00), the receipt of which is hereby acknowledged and the mutual
covenants contained herein, the parties do hereby agree to amend the Employment
Agreement as follows:
1. Lock-Up Agreement. The parties agree to execute a lockup agreement
("Lockup Agreement") in the event Corporation elects to make an Initial Public
Offering ("IPO") at any time within two (2) years of the date of this Addendum
in the form provided by the Underwriter of such IPO, provided that such Lockup
Agreement shall be substantially the same form executed by all officers,
directors and principal stockholders of Corporation. In the event Employee shall
fail to execute such Lockup Agreement within five (5) days after request for
same by Corporation, Employee does hereby appoint any officer of Corporation as
the attorney-in-fact to execute such agreement on its behalf. The power of
attorney granted herein shall be irrevocable and coupled with an interest.
2. Compensation of Employee. Pursuant to Section 4 of the Employment
Agreement, Corporation has granted eight thousand (8,000) Stock Options to
Employee. As of the date hereof, two thousand (2,000) of the Stock Options have
vested. The remainder of the Stock Options shall vest in accordance with the
terms of the Employment Agreement. The options are intended by Corporation and
Employee to be exercisable at an exercise price that equals or is greater than
the fair market value of the common stock of Corporation at the time of the
grant. The exercise price of Ten Dollars ($10.00) per share was determined by
the Board of Directors of Corporation based upon a variety of factors that it
deemed to be relevant in making such a determination. If it is determined at a
later date that in fact the exercise price is less than the fair market value of
the common stock at the time of the grant, then the exercise price shall be
adjusted as of the date of the grant of the options to a price that equals the
fair market value of the common stock as of the date of the grant.
3. Full Force and Effect. Except as provided herein, the Employment
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
date first above written.
WITNESS: EMPLOYER:
MEDI-CEN MANAGEMENT, INC,. a
Maryland corporation
/s/ [Illegible] By: /s/ [Illegible] (SEAL) 12/31/97
------------------------- ------------------------------------
12-30-97
Name: [Illegible]
Title: CEO
WITNESS: EMPLOYEE:
/s/ [Illegible] 12-30-97 /s/ Xxxxxxxx X. Xxxx 12-30-97 (SEAL)
------------------------- ----------------------------------------
Xxxxxxxx X. Xxxx
2
