Exhibit 10.13
EXECUTION COPY
EMPLOYMENT
AGREEMENT
THIS AGREEMENT (the
“Agreement”) is made and entered into at Knoxville,
Tennessee as of the 23 rd day of November, 2005, by and
between Team Health, Inc., a Tennessee corporation (the
“Company”), and H. Lynn Massingale, M.D.
(“Employee”) as an amendment and restatement of the
employment agreement between the parties dated March 11, 1999,
and amended October 1, 2002 and April 15, 2005 (the
“Prior Agreement”).
WITNESSETH:
WHEREAS, Employee has served as the
chief executive officer to the Company; and
WHEREAS, in connection with the
transactions contemplated by the Agreement and Plan of Merger dated
as of October 11, 2005 by and among Team Health Holdings,
L.L.C., the Company, Team Finance LLC, Team Health MergerSub, Inc.,
Ensemble Parent LLC and Ensemble Acquisition (the “Merger
Agreement”), the Company and Employee wish to amend and
restate the Prior Agreement effective upon, and conditioned upon
the occurrence of, the Recapitalization Effective Time (as defined
in the Merger Agreement);
NOW THEREFORE, based upon these
premises, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties do
hereby agree upon the terms and conditions of Employee’s
employment with the Company that are set forth herein, and do
hereby acknowledge that this instrument completely supercedes all
previous writings as amendment and restatement of Employee’s
employment agreement:
1. Effectiveness/Employment and
Term .
(a) This Agreement constitutes a
binding obligation of the parties as of the date hereof; provided
that notwithstanding any other provision of this Agreement, the
operative provisions of this Agreement shall become effective only
upon the occurrence of the Recapitalization Effective Time (such
date being hereinafter referred to as the “Effective
Date”), at which time, this Agreement shall supercede the
Prior Agreement which shall thereupon be deemed to be terminated
without further force or effect. In the event the Merger Agreement
is terminated for any reason without the Recapitalization Effective
Time having occurred, this Agreement shall be terminated without
further obligation or liability of either party, in which event the
Prior Agreement will remain in full force and effect in accordance
with its terms.
(b) The Company agrees to employ
Employee and Employee agrees to be employed by the Company pursuant
to the terms of this Agreement, and for the term of this Agreement,
as Chief Executive Officer to perform the duties assigned to
Employee by the Company; provided that the Company and Employee
acknowledge that it is currently anticipated that a successor Chief
Executive Officer, mutually acceptable to the Company and Employee,
may be appointed during the term (a “Successor CEO
Appointment”), in which event Employee would continue to
serve in another senior executive capacity. The Company and
Employee agree that the Employee will also serve as the Chairman of
the board of directors of the Company (the “Board”)
during the time in which and so long as Employee serves as the
Chief Executive Officer of the Company. The term of this Agreement
shall be for a period of five (5) years
commencing with the Effective Date,
subject to earlier termination pursuant to this Agreement.
Thereafter, this Agreement shall automatically renew for successive
one (1) year terms unless (i) sooner terminated pursuant
to the terms of this Agreement or (ii) either party gives the
other party written notice of its intention not to renew at least
one hundred eighty (180) days prior to the expiration of the
then current term.
2. Duties . Employee will
perform all duties customarily incident to Employee’s
position and such duties that are properly assigned to from time to
time by the board of directors of the Company (the
“Board”). Employee shall devote Employee’s entire
business time, attention and effort to the affairs of the Company
and shall use his reasonable best efforts to promote the interests
and success of the Company, and shall cooperate fully with the
Board in the advancement of the best interests of the Company.
Provided, however, Employee may serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking
engagements, or manage personal investments, provided that such
activities do not individually or in the aggregate significantly
interfere with, or are otherwise not inconsistent with, the
performance of Employee’s duties under this Agreement.
Nothing herein shall prevent Employee from engaging in certain
passive investments so long as the same do not require
Employee’s management efforts, are passive, are not
inconsistent with Executive’s duties hereunder and are not
prohibited by the restrictive covenants of
Section 7.
3. Compensation .
3.1 Salary . Employee shall
receive an annualized salary of Five Hundred Thirty-Five Thousand,
Six-Hundred Twelve and 50/100 Dollars ($535,612.50) per year,
payable biweekly. The Board will annually review Employee’s
total compensation and may, in its sole discretion, increase
Employee’s salary from time to time without the necessity of
further action to amend this Agreement. Employee’s base
salary as in effect at any time is hereinafter referred to as the
“Base Salary”.
3.2 Bonus . For fiscal each
year of Company, Employee will be eligible to earn a bonus payment
based on performance, determined in accordance with Exhibit
A (the “Bonus”). The Bonus, if any, shall be paid
to Employee within two and one-half (2.5) months after the end
of the applicable fiscal year.
3.3. Taxes and Other Applicable
Deductions . From all compensation paid to Employee, the
Company shall withhold all applicable sums for all state, federal
and local taxes, and such other amounts as are necessary and
applicable or agreed to by Employee.
4. Employee Benefits . In
addition to Employee’s salary, Employee shall be entitled to
all standard benefits normally provided by the Company to its
similarly situated executive officers, which may be sponsored,
developed or established by the Company from time to time in the
sole discretion of the Company. Notwithstanding the above, Employee
shall receive, at a minimum, the following benefits:
4.1. Medical Coverage . The
Company shall provide a standard medical benefit package, as
offered to other employees of the Company, throughout the term of
this Agreement,
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to cover the Employee and his
eligible dependents in his immediate family at no cost to
Employee.
4.2 Dental Coverage . The
Company shall provide a standard dental benefit package, as offered
to other employees of the Company, throughout the term of this
Agreement, to cover the Employee and his eligible dependents in his
immediate family at no cost to Employee.
4.3 Life Insurance . The
Company will obtain and maintain a life insurance policy on the
life of Employee in the face amount that is equivalent to
Employee’s Base Salary specified in Section 3.1, as
adjusted from time to time, multiplied by three; provided, that the
amount of premiums paid by the Company is limited to insurance
rates applicable to a healthy individual of like age. The Company
agrees to pay all such premiums, if any, on the policy during the
term of employment provided herein.
4.4 Vacation . Employee is
entitled to take up to six (6) weeks of fully compensated
vacation per annum.
4.5 Professional
Fees/Journals/Society Memberships Stipend . The Company shall
pay Employee One Thousand Dollars ($1,000.00) per annum to help
defray Employee’s miscellaneous costs in maintaining
professional relationships.
4.6 Directors and Officers
Insurance . The Company shall provide Employee with a standard
directors and officers insurance policy, as provided by the Company
to other directors and/or officers of the Company, its affiliates
and subsidiaries.
4.7 Personal Financial Planning
Assistance . Effective with the onset of this Agreement, the
Company shall pay Employee Eight Hundred Dollars ($800.00) per
annum as a stipend to help defray costs for personal tax
preparation and/or other personal and family financial planning
costs.
4.8 Long-Term Disability
Insurance Benefit . At a minimum, the Company shall acquire for
Employee long-term disability insurance coverage throughout the
term of this Agreement, for which protection to Employee shall
apply after ninety (90) days of continuous disability with
protection to age sixty-five (65) years and at sixty percent
(60%) of Employee’s Base Salary, plus integration of
benefits with government and certain other disability benefit
programs (which may, inclusively, approximate sixty-five percent
(65%) of Employee’s Base Salary).
4.9 Sabbatical Leave Benefit
. After each consecutive five (5) year period of employment,
Employee shall be entitled at Employee’s option to a three
(3) week sabbatical, off salary, provided Employee serves the
Company with three (3) months advance notice.
4.10 Medical Insurance Coverage,
If Disabled . The Company shall continue to provide and pay for
Employee’s existing medical insurance coverage, if Employee
becomes fully disabled, up until age sixty-five (65) years, or
until Employee becomes eligible for any alternative medical
benefits program, if sooner.
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4.11 Automobile Expense . The
Company shall pay Employee One Thousand Dollars ($1,000.00) per
month as an automobile allowance.
4.12 Company Aircraft . To
the extent the Company owns or leases on a full-time basis an
aircraft for business use, Employee is entitled to reasonable
personal use of aircraft that is leased, owned or maintained by the
Company; provided, that such use does not interfere with bona-fide
business of the Company. For purposes of this Section, reasonable
use shall include up to twenty (20) hours of flight time per
year, with any unused hours in one year being available for use in
a later year. The charge for such personal use shall be accounted
for consistently with past practices of the Company. Employee shall
not be entitled to any remuneration for unused hours hereunder upon
termination of employment or otherwise.
5. Business Expenses . The
Company will reimburse Employee, within 60 days following
submission by Employee to the Company of appropriate supporting
documentation) for Employee’s usual and customary business
expenses incurred in the course of Employee’s employment in
accordance with the Company’s applicable policies and
procedures, including expenditure limits and substantiation
requirements, in effect from time to time regarding reimbursement
of expenses incurred by similar situated employees of the Company;
provided claims for such reimbursement (accompanied by supporting
documentation) are submitted to the Company within 90 days
following the date such claims are incurred.
6. Termination .
Notwithstanding any other provision of this Agreement, the
provisions of this Section 6 shall exclusively govern
Employee’s rights under this Agreement upon termination of
employment with the Company and its affiliates.
6.1 Mutual Agreement/Resignation
without Good Reason/Death or Disability . Employee’s
employment shall terminate upon the occurrence of either of the
following events:
(a) The Company and Employee shall
mutually agree to termination in writing or Employee shall resign
without Good Reason; provided that Employee shall be
obligated to give the Company at least 90 days advance written
notice of any resignation without Good Reason. Except as otherwise
provided in Section 6.6(a)(i), upon Employee’s
termination of employment due to mutual agreement, or the
resignation of employment by Employee without Good Reason (as
defined herein), Company will pay to Employee the amount of any
unpaid Base Salary owed through the date of termination, and shall
reimburse Employee for any unreimbursed expenses pursuant to
Section 5 for expenses incurred in the performance of his
duties hereunder prior to termination.
(b) The death of Employee or
termination by the Company due to Employee’s Disability.
Disability for purposes of this Agreement shall be the inability of
Employee to materially perform his duties hereunder due to a
physical or mental condition for a period of 90 consecutive days,
as reasonably determined by the Board in good faith. Upon
Employee’s termination of employment for death or disability,
Company will pay to Employee the amount of any unpaid Base Salary
owed through the date of termination, and shall reimburse Employee
for any unreimbursed expenses pursuant to Section 5 for
expenses incurred in the performance of his duties hereunder prior
to termination. In addition, Employee shall be entitled to the
severance compensation and rights described in
Section 6.5(b).
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6.2 Termination for Cause .
Employee’s employment may be terminated by the Company for
“Cause” upon the occurrence of any of the following
events:
(a) Employee’s conviction of
or the entering of a guilty plea or plea of no contest with respect
to a felony, the equivalent thereof, or any other crime involving
fraud, dishonesty or moral turpitude which in the reasonable
judgment of the Board is materially detrimental to the Company or
materially affects Employee’s ability to perform his duties
pursuant to this Agreement;
(c) Employee’s intentional
neglect of or material inattention to Employee’s duties,
which neglect or inattention remains uncorrected for more than 10
days following written notice from the Board detailing such neglect
or inattention;
(d) Employee commits an intentional
and material act (i) to defraud the Company or its affiliates,
or (ii) of embezzlement or dishonesty against the Company or
its affiliates; or
(e) Employee willfully impedes or
endeavors to influence, obstruct or impede or fails to materially
cooperate with an investigation authorized by the Board, a
self-regulatory organization or a governmental department or
agency.
Upon the Company’s termination
of employment for Cause, Company will pay to Employee the amount of
any unpaid Base Salary owed through the date of termination, and
shall reimburse Employee for any unreimbursed expenses pursuant to
Section 5 for expenses incurred in the performance of his
duties hereunder prior to termination, and Company will have no
other liability to Employee hereunder. Such termination shall be
without prejudice to any other remedy to which the Company may be
entitled, either by law, or in equity, or under the terms of this
Agreement.
6.3 Termination Without Cause
. In the event that the Company terminates Employee’s
employment without Cause, Company will pay to Employee the amount
of any unpaid Base Salary owed through the date of termination, and
shall reimburse Employee for any unreimbursed expenses pursuant to
Section 5 for expenses incurred in the performance of his
duties hereunder prior to termination. In addition, Employee shall
be entitled to the severance compensation and rights described in
Section 6.5(a).
6.4 Termination for Good
Reason . Employee may voluntarily resign his employment for
“Good Reason” upon the occurrence of any of the
following:
(a) The assignment to Employee of
duties that represent a Substantial Adverse Alteration in the
nature or status of his responsibilities. A “Substantial
Adverse Alteration” of Employee’s status or
responsibilities shall include, but not be limited to, (i) any
change in Employee’s authority whereby Employee does not
report directly to the Board, (ii) if any other employee or
person is given authority by the Board whereby such person is
senior to or otherwise entitled to exercise authority over
Employee, or Employee reports to such person, or (c) in the
event the Company causes Employee to cease to be a director or
Chief Executive Officer of the Company without Employee’s
consent.
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(b) Any reduction in his annual Base
Salary or his bonus computation formula.
(c) The required relocation to a
place of business more than 50 miles away from Employee’s
current place of business.
(d) Any material breach by the
Company of this Agreement or any other agreement with, or
obligation to or for the benefit of, Employee, including but not
limited to any stock option or benefit plan, or the Ensemble
Acquisition LLC Agreement, in each case that is adverse to
Employee.
(e) The Company provides notice of
non-renewal of the term of the Agreement pursuant to
Section 1(b).
Notwithstanding the foregoing, no
event shall constitute Good Reason unless and until Employee shall
have notified the Company in writing describing the event which
constitutes Good Reason and then only if the Company shall fail to
cure such event with ten (10) days following its receipt of
such written notice.
Upon Employee’s termination of
employment for Good Reason, Company will pay to Employee the amount
of any unpaid Base Salary owed through the date of termination, and
shall reimburse Employee for any unreimbursed expenses pursuant to
Section 5 for expenses incurred in the performance of his
duties hereunder prior to termination. In addition, Employee shall
be entitled to the severance compensation and rights described in
Section 6.5(a).
6.5 Severance Compensation and
Other Obligations .
(a) If Employee’s employment
is terminated by the Company without Cause or by Employee for Good
Reason, then, subject to Employee’s continued compliance with
the provisions of Section 7 and 8 of this Agreement, the
Company shall provide to Employee the following:
(i) Employee will receive an amount
equal to three (3) times Employee’s Base Salary, payable
in twelve (12) equal monthly installments, beginning on the
date of termination.
(ii) Employee will receive an amount
equal to three (3) times the average annual Bonuses paid to
Employee pursuant to Section 3.2 of this Agreement (or
Section 3.2 of the Prior Agreement, as applicable) for the two
most recently completed Measuring Periods (as defined in Exhibit
A), payable in twelve (12) equal monthly installments,
beginning on the date of termination.
(iii) Payment or reimbursement of
all premiums for medical benefits elected by Employee pursuant to
the continuation of medical coverage under section 4980B of the
Internal Revenue Code and sections 601 through 608, inclusive, of
ERISA (collectively, “ COBRA ”) and, upon the
expiration of COBRA continuation coverage, a lump sum cash payment
in an amount equal to the COBRA premiums due for
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medical benefits elected by Employee
for a period of 36 months, less the period for which COBRA
continuation coverage was actually in effect.
(b) If Employee’s employment
is terminated due to Employee’s death or by the Company due
to Employee’s Disability, then subject to Employee’s
continued compliance with the provisions of Section 7 and 8 of
this Agreement, the Company shall provide to Employee the
following:
(i) Employee will receive continued
payment of Employee’s Base Salary, payable in equal monthly
installments, for a period of two years following the date of
termination;
(ii) Employee will receive an amount
equal to two (2) times the average annual Bonuses paid to
Employee pursuant to Section 3.2 of this Agreement (or
Section 3.2 of the Prior Agreement, as applicable) for the two
most recently completed Measuring Periods (as defined in Exhibit
A), payable in equal monthly installments for two years following
the date of termination.
(iii) Payment or reimbursement of
all premiums for medical benefits elected by Employee pursuant to
the continuation of medical coverage under section 4980B of the
Internal Revenue Code and sections 601 through 608, inclusive, of
ERISA (collectively, “ COBRA ”) and, upon the
expiration of COBRA continuation coverage, a lump sum cash payment
in an amount equal to the COBRA premiums due for medical benefits
elected by Employee for a period of 24 months, less the period for
which COBRA continuation coverage was actually in
effect.
; provided that the amount of
severance compensation under this Section 6.5(b) shall be
reduced by the amount of insurance proceeds received by Employee
from any life insurance or disability plan or policy maintained for
Employee by
