EXHIBIT
10.3
EMPLOYMENT
AGREEMENT
This EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made as of
February 10, 2006 (the “ Agreement Date ”) by
and between Basic Care Networks, Inc., a Delaware corporation (the
“ Company ”), and David Rapoport (“
Executive ”), with reference to the following
facts:
A.
Basic Care Networks, Inc., a
Delaware corporation (the “ Company ”), is a
health care management company that manages and operates a number
of multi-disciplinary medical clinics.
B. Executive has extensive experience in the field
of health care management.
C. The Company contemplates filing a registration
statement on Form S-1 in connection with its firm commitment
underwritten initial public offering (“IPO”), which the
Company anticipates will be declared effective in 2006 (the “
Effective Date ”).
D. The Company desires to employ Executive to
perform the duties and responsibilities described herein on the
terms and conditions hereinafter set forth.
NOW, THEREFORE,
the parties agree as follows:
1.
Employment
. The Company hereby employs
Executive and Executive hereby accepts such employment upon the
terms and conditions hereinafter set forth.
2.
Duties . Subject to the terms and provisions of this
Agreement, Executive is hereby employed by the Company as President
and Chief Operating Officer of the Company. Executive shall have
full responsibility and authority for such duties as customarily
are associated with service as the President and Chief Operating
Officer of the Company at the direction of the Board of Directors
of the Company (the “ Board ”). Executive shall
faithfully and diligently perform such duties assigned to Executive
and shall report directly to the Board. The Executive shall be
expected to work in Los Angeles, California, unless the Company and
Executive mutually agree in writing that the Executive shall based
elsewhere.
3.
Scope of Services
. Executive shall devote
substantially all of his business time, attention, energies,
skills, learning and efforts to the Company’s
business.
4.
Term . Subject to prior termination of this Agreement
as hereinafter provided, the term of this Agreement shall commence
on the Effective Date and shall continue for three (3) years,
unless earlier terminated as provided in this Agreement.
5.1
Salary . Executive’s annual compensation (“
Base Compensation ”) under this Agreement shall be
$200,000 per year, prorated for any partial year, commencing upon
the Effective Date, for the term of this Agreement. The Base
Compensation shall be payable semi-monthly in arrears from the
Effective Date in accordance with the ordinary payroll procedures
of the Company. Any increases in Base Compensation shall be in the
sole and absolute discretion of the Board.
5.2
Bonus . Executive shall be entitled to participate in
an executive bonus plan adopted by the board of directors, or an
individual bonus, which shall provide for bonus compensation of up
to two (2) times Base Compensation based on the Executive’s
achievement of appropriate performance criteria to be determined by
the board of directors (or its compensation committee).
5.3
Expenses . The Company shall reimburse Executive for all
reasonable business, entertainment and travel expenses actually
incurred or paid by Executive in the performance of his services on
behalf of the Company, in accordance with the Company’s
expense reimbursement policy as from time to time in
effect.
5.4
Options . The Executive shall be eligible to participate
in the Company’s 2005 Stock Incentive Plan, and receive
option grant(s) thereunder for the purchase common stock of the
Company (“ Options ” or “ Option
”) at the discretion of the Board of Directors. The Executive
shall receive an initial Option, provided that the IPO shall have
closed, for the purchase of a number of shares of Company common
stock representing up to two percent (2%) of the issued and
outstanding common stock of the Company at an exercise price per
share equal to the per share price in the IPO. Options granted to
the Executive shall be controlled by the terms and conditions set
forth in a Notice of Grant and Stock Option Agreement approved by
the Board of Directors (“ Option Agreement
”).
6.
Other Rights and
Benefits . Executive
shall receive all other rights and benefits, including health
insurance, life insurance, a car allowance, vacation time, sick pay
and retirement plan participation, as are made available to all
other executives of the Company and its affiliates.
7.
Termination
. Executive’s employment may
be terminated as follows:
7.1
Termination by the Company or
Executive .
(a) During the one (1) year period after the
Effective Date, this Agreement may not be terminated by either
party except pursuant to Section 7.2, 7.3 or 7.4 below.
(b) After the one (1) year period in Section 7.1(a),
for two (2) years thereafter, Executive may not be terminated by
the Company except pursuant to Section 7.2, 7.3 or 7.4 below,
provided, however that during said two year period the board of
directors of the Company may alter the responsibilities of the
Executive to other senior-level functions, and change the
Executive’s title to a mutually agreeable alternative
title.
7.2
Termination for Death
. Executive’s employment shall
terminate immediately upon Executive’s death.
7.3
Termination Upon
Disability .
Executive’s employment shall terminate if Executive should
become totally and permanently disabled. For purposes of this
Agreement, Executive shall be considered “totally and
permanently disabled” if Executive is treated as permanently
“disabled” under any permanent disability insurance
policy maintained by the Company and is entitled to full benefits
payable under such policy upon a total and permanent disability. In
the event any such policy is either not in force or the benefits
are not available under such policy, then “total and
permanent disability” shall mean the inability of Executive,
as a result of substance abuse, any mental, nervous or psychiatric
disorder, or physical condition, injury or illness to perform
substantially all of his current duties on a full-time basis for a
period of six (6) consecutive months, as determined by a licensed
physician selected by the Board.
7.4
Termination by Company for
“Cause” . The
Company may terminate this Agreement for “Cause” upon
three days written notice so long as the Company has given
Executive written notice describing the Cause pursuant to
subsections (c) and/or (e) Executive has not cured such Cause
within a reasonable time, but no less than 14 days. For purposes of
this Agreement, “Cause” shall mean the existence or
occurrence of any of the following:
(a) Executive’s conviction for or pleading of
nolo contendre to any felony involving the Company or moral
turpitude.
(b) Executive’s misappropriation of Company
assets.
(c) Executive’s willful violation of a Company
policy or a directive of the Board previously delivered to him in
writing.
(d) Executive’s breach of his obligations set
forth in Sections 11, 12, or 13 below.
(e) Any willful neglect or material breach of duty
by Executive under this Agreement, or any failure by Executive to
perform under this Agreement.
8.
Change in Control
. If this Agreement is not assumed
upon a Change in Control, Company shall pay Executive the balance
of all Base Compensation for the remainder of the term set forth in
Section 4, less all appropriate federal and state income and
employment taxes, promptly upon such Change in Control. If the
Executive’s employment is terminated by Executive without
Cause or terminated by the Company for Cause, death or disability
of Executive, Executive shall not be entitled to any severance pay
or other benefits, except as mandated by law. For purposes of this
Agreement, a “ Change in Control ”
means a change in ownership or control of
the Company after the effective date of the IPO effected through
the direct or indirect acquisition by any person or related group
of persons of securities possessing more than fifty percent (50%)
of the total combined voting power of the Company’s
outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders which a majority of
the directors on the board of directors who are not affiliates of
the offeror do not recommend such stockholders accept.
9.
Representations and
Warranties . Executive
hereby represents and warrants to Company that as of the date of
execution of this Agreement: (i) this Agreement will not cause or
require Executive to breach any obligation to, or agreement or
confidence with, any other person; (ii) Executive is not
representing, or otherwise affiliated in any capacity with, any
other lines of products, manufacturers, vendors or customers of the
Company; and (iii) Executive has not been induced to enter into
this Agreement by any promise or representation other than as
expressly set forth in this Agreement.
10.1
Non-Solicitation of
Employees . Executive
agrees that he will not, while employed by the Company and for a
period of two (2) years following termination of such
employment:
(a) directly solicit, encourage, or take any other
action which is intended to induce any other employee of the
Company to terminate his or her employment with the Company;
or
(b) directly interfere in any manner with the
contractual or employment relationship between the Company and any
such employee of the Company.
The foregoing
shall not prohibit Executive or any entity with which Executive may
later be affiliated from hiring a former or existing employee of
the Company or any of its subsidiaries, provided that such hiring
does not result from the direct actions of Executive. For purposes
of this Article 10, Article 11, Article 12 and Article 13, any
reference to the Company shall include all of the Company’s
Affiliates. As used herein, “Affiliate” means any
person or entity controlling, controlled by or under common control
with another person or entity.
10.2
Non-Solicit of Customers with
respect to Competitive Business Activity . Executive agrees that he will not, while
employed by the Company and for a period of two (2) years following
termination of such employment, directly or indirectly, whether for
his own account or for the account of any other individual or
entity, solicit the business or patronage of any customers of the
Company with respect to products and/or services directly related
to a Competitive Business Activity. “ Competitive Business
Activity ” shall mean engaging in, whether independently
or as an employee, agent, consultant, advisor, independent
contractor, partner, stockholder, officer, director or otherwise,
any business which is materially competitive with the business of
the Company as conducted or actively planned to be conducted by the
Company during his employment by it, provided that Executive shall
not be deemed to engage in a Competitive Business A
