This EMPLOYMENT
AGREEMENT is dated as of January ___, 2004 by and between
HealthCare Services, Inc., a Delaware corporation (the
“Company”), and Mary Tolan (the
“Executive”).
WHEREAS,
the Company desires to employ the Executive and the Executive
desires to be employed by the Company on the terms and conditions
contained herein.
NOW,
THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby
covenant and agree as follows:
1.
Employment . The Company hereby employs the Executive, and
the Executive hereby accepts such employment with the Company
commencing on November 3, 2003, subject to the terms and
conditions provided for herein (the “Commencement
Date”). The period beginning November 3, 2003 until the
date upon which the Executive is no longer employed by the Company,
in accordance with the terms of this Agreement, shall be referred
to herein as the “Term”.
2.
At-Will Employment . Unless otherwise expressly agreed to by
the Executive and the Company in writing, the Executive’s
employment by the Company shall, notwithstanding anything to the
contrary expressed or implied herein, be terminable by either party
“at will”, for any reason or for no reason, but shall
in all other respects be subject to the terms and conditions of
this Agreement.
3.
Duties . The Executive shall be employed as the Chief
Executive Officer of the Company subject to the supervision and
direction of the Board of Directors of the Company. Executive shall
be responsible for the operation of the Company’s business
and shall faithfully and competently perform such duties and shall
also perform and discharge such other executive employment duties
and responsibilities consistent with this position as Chief
Executive Officer and as the Board of Directors of the Company may
from time to time reasonably prescribe. The Executive shall perform
her duties at such places and times as the Board of Directors of
the Company may reasonably from time to time prescribe, such duties
to be initially performed from the Company’s headquarters
which shall be located in Chicago, Illinois, or elsewhere. Except
as may otherwise be approved in advance by the Board of Directors
of the Company, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other
disability, the Executive shall devote her full time during normal
business hours throughout the Employment Period to the services
required of her hereunder. The Executive shall render her business
services exclusively to the Company during the Term and shall use
her best efforts, judgment and energy to improve and advance the
business and interests of the Company in a manner consistent with
the duties of this position.
4. Base
Salary, Bonus, Withholding and Restricted Stock .
(a)
Base Salary . As compensation for the performance by the
Executive of the services to be performed by the Executive
hereunder during the Term, the Company shall pay the Executive a
base salary at the annual rate of four hundred thousand dollars
($400,000) (said
annual amount,
together with any increases thereto as may be determined from time
to time by the Board of Directors of the Company in its sole
discretion, being hereinafter referred to as “Base
Salary”). Any Base Salary payable hereunder shall be paid in
regular intervals (but in no event less frequently than monthly) in
accordance with the Company’s payroll practices from time to
time in effect.
(b)
Performance Bonus . In addition to the Restricted Stock to
be granted to the Executive as described below, the Executive shall
be entitled to a one-time only cash performance bonus in the amount
of two hundred thousand dollars ($200,000) in the event, as
determined in the discretion of the Board of Directors, the
Executive procures a quality customer consistent with the Board of
Directors’ approved business plan. The performance bonus
shall be paid upon execution of the contract by
customer.
(c)
Withholding, Etc . The payment of any Base Salary,
performance bonus or any other cash bonus hereunder shall be
subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company’s Executive
benefit plans.
(d)
Grant of Restricted Stock . Promptly following the date
hereof, the Company shall grant to the Executive 3,000,000 shares
of the Company’s Class B Common Stock, $.01 par value
per share (the “Restricted Stock”), pursuant to the
terms and conditions of the Restricted Stock Plan of Healthcare
Services, Inc. (the “Plan”) and a Healthcare Services,
Inc. Restricted Stock Award Agreement by and between the Executive
and the Company attached hereto as Exhibit A (the
“Award Agreement”). The Restricted Stock shall vest in
equal installments of 1/48 on a monthly basis beginning as of the
Commencement Date and ending on the fourth anniversary thereof.
Until so vested (or until the occurrence of an event of forfeiture
as set forth in the Plan and Award Agreement), the Executive shall
nevertheless have the right to own for all purposes such Restricted
Stock in such manner as if such vesting had already occurred and to
possess and enjoy all beneficial ownership rights in same,
including, without limitation, the right to vote the Restricted
Stock and the right to receive all dividends and other
distributions paid or made with respect to the Restricted Stock.
The Restricted Stock shall be subject to dilution in the same
manner as all other shares of capital stock. Executive agrees and
acknowledges that, notwithstanding her right to vote the Restricted
Stock, she may only vote those shares of Restricted Stock which
equal 18% of the then issued and outstanding shares of stock on
record at the time of the vote.
Notwithstanding
the foregoing agreement to grant the Executive the Restricted
Stock, it is expressly understood and agreed that the Company does
not now, nor hereafter shall have, any obligation to continue the
Executive in its employ whether or not on a full-time basis, after
the end of the Term. In the event that the Executive is terminated
“for Cause” as that term is defined below, Executive
agrees to i) execute a limited stock power transferring all rights
to vote the Restricted Stock to a person designated by Company in
its sole discretion and ii) execute a consent to the conversion of
the Restricted Stock from Class B Common Stock to Class C
Common Stock, if the Company requests such a consent.
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5.
Benefits . During the Term, the Executive shall:
(a) be
eligible to participate in Executive fringe benefits and pension
and/or profit sharing plans that may be provided by the Company for
its senior executive Executives in accordance with the provisions
of any such plan, as the same may be in effect from time to
time;
(b) be
eligible to participate in any medical and health plans or other
Executive welfare benefit plans that may be provided by the Company
for its senior executive Executives in accordance with the
provisions of any such plan, as the same may be in effect from time
to time;
(c) be
entitled to four (4) weeks of paid vacations taken at such
times in coordination with the needs of the Company as determined
by its Board of Directors during each twelve month period of the
Term;
(d) be
entitled to sick leave, sick pay and disability benefits in
accordance with the Company policy that may be applicable to senior
executive Executives from time to time; and
(e) be
entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Executive in the
performance of her duties hereunder in accordance with the
Company’s policies applicable thereto.
6.
Unauthorized Disclosure . The Executive hereby covenants,
agrees and acknowledge as follows:
(a) The
Executive has and will have access to and will participate in the
development of or be acquainted with confidential or proprietary
information and trade secrets related to the business of the
Company and its subsidiaries (collectively, the
“Companies”), including but not limited to
(i) business plans, operating plans, marketing plans,
financial reports, operating data, budgets, wage and salary rates,
pricing strategies and information, terms of agreements with
suppliers or customers and others, customer lists, patents,
devices, software programs, reports, correspondence, tangible
property and specifications owned by or used in the businesses of
one or more of the Companies, (ii) information pertaining to
future developments such as, but not limited to, research and
development, future marketing, distribution, delivery or
merchandising plans or ideas, and potential new business locations,
and (iii) other tangible and intangible property, which are
used in the business and operations of the Companies but not made
publicly available. The information and trade secrets relating to
the business of the Companies described hereinabove in this
paragraph (a) are hereinafter referred to collectively as the
“Confidential Information”; provided that the term
Confidential Information shall not include any information
(x) that is or becomes generally publicly available (other
than as a result of violation of this Agreement by the Executive)
or (y) that the Executive receives on a nonconfidential basis from
a source (other than the Company, its affiliates or
representatives) that is not known by her to be bound by an
obligation of secrecy or confidentiality to the Companies or any of
them.
(b) The
Executive hereby assigns to the Company, in consideration of her
employment, all Confidential Information developed by or otherwise
in the possession of the Executive at any time during the Term,
whether or not made or conceived during working hours, alone or
with others, which relates, directly or indirectly, to businesses
or proposed businesses of any of the Companies, and the Executive
agrees that all such Confidential Information shall be
the
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exclusive
property of the Companies. Upon request of the Board of Directors
of the Company, the Executive shall execute and deliver to the
Companies any specific assignments or other documents appropriate
to vest title in such Confidential Information in the Companies or
to obtain for the Companies legal protection for such Confidential
Information.
(c) The
Executive shall not disclose, use or make known for her or
another’s benefit any Confidential Information or use such
Confidential Information in any way except in the best interests of
the Companies in the performance of the Executive’s duties
under this Agreement. The Executive may disclose Confidential
Information when required by applicable law or judicial process,
but only after notice to the Company of the Executive’s
intention to do so and opportunity for the Company to challenge or
limit the scope of the disclosure.
(d) The
Executive acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this
Section 6 would be inadequate and, therefore, agrees that the
Companies shall be entitled to injunctive relief in addition to any
other available rights and remedies in case of any such breach or
threatened breach; provided , however , that nothing
contained herein shall be construed as prohibiting the Companies
from pursuing any other rights and remedies available for any such
breach or threatened breach.
(e) The
Executive agrees that upon termination of her employment by the
Company for any reason, the Executive shall forthwith return to the
Company all Confidential Information, documents, correspondence,
notebooks, reports, computer programs and all other materials and
copies thereof (including computer discs and other electronic
media) relating in any way to the business of the Companies in any
way developed or obtained by the Executive during the period of her
employment with the Company.
(f) Executive
agrees, while Executive is employed by the Company, to offer or
otherwise make known or available to it, as directed by the Board
of Directors of the Company and without additional compensation or
consideration, any business prospects, contracts or other business
opportunities that Executive may discover, find, develop or
otherwise have available to her in any field in which the Company
is engaged or proposes to be engaged, and further agrees that any
such prospects, contacts or other business opportunities shall be
the property of the Company.
(g) The
obligations of the Executive under this Section 6 shall
survive the termination of the Term and the termination of this
Agreement and shall terminate two (2) years after the
termination of the Term.
(h) Without
limiting the generality of Section 11 hereof, the Executive
hereby expressly agrees that the foregoing provisions of this
Section 6 shall be binding upon the Executive’s heirs,
successors and legal representatives.
7.
Termination . (a) The Executive’s employment
hereunder may be terminated without any breach of this Agreement
under the following circumstances:
(i)
Death . The death of the Executive;
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(ii)
Disability . The Disability (as defined below) of the
Executive, as determined by the Board of Directors;
For purposes of
this Agreement, the term “Disability” shall mean that
if, as a result of the Executive’s incapacity due to physical
or mental illness, the Executive shall have been absent from her
duties with the Company on a full-time basis for three
(3) consecutive months or an aggregate of 120 days in any
twenty-four month period, and within thirty (30) days after
written notice of termination is given, the Executive shall not
have returned to the full-time performance of the Executive’s
duties.
(iii)
Termination For Cause . Termination of the Executive’s
employment hereunder by the Company at any time “for
cause” (as defined below), such termination to take effect
immediately upon written notice from the Company to the
Executive;
The following
actions, failures and events by or affecting the Executive shall,
in the reasonable opinion of the Board of Directors, constitute
“cause” for termination within the meaning of clause
(iii) above: (1) material breach by Executive of any
material provision of this Agreement which has not been cured by
Executive within thirty (30) days after receipt by Executive
of written notice from the Company of such breach; (2) gross
negligence or willful misconduct of Executive in connection with
the performance of her duties under this Agreement, or
Executive’s willful refusal to perform any of her material
duties or responsibilities required pursuant to this Employment
Agreement which has not been cured by Executive within thirty
(30) days after receipt by Executive of written notice from
the Company of such conduct and/or refusal;
(3) Executive’s misappropriation for personal use of
assets or business opportunities of the Company;
(4) Executive’s embezzlement of the Company’s
funds or property, or fraud on the part of Executive’s;
(5) Executive’s conviction of, or plea of no contest to,
a felony or any other crime which in the Board of Directors’
sole opinion renders the Executive unfit to serve the Company as
contemplated herein; or (6) a knowing misrepresentation of a
material fact made by the Executive to the Company’s Board of
Directors, with the intention of misleading the Board.
(iv)
Termination Without Cause . Termination of the
Executive’s employment hereunder by the Company at any time,
other than (x) termination by reason of Disability as
contemplated by clause (ii) above or (y) termination by
the Company “for cause” as contemplated by clause (iii)
above; and
(v)
Termination by Executive . At any time during the Term,
Executive may terminate her employment hereunder for Good Reason
(as defined below). For purposes of this Agreement, “Good
Reason” shall mean that Executive has complied with the
“Good Reason Process” (hereinafter defined) following
the occurrence of any of the following events: (A) a
substantial diminution or other substantive adverse change, not
consented to by Executive, in the nature or scope of
Executive’s responsibilities, authorities, powers, functions
or duties; (B) any removal, during the Term, from Executive of
her title of Chief Executive Officer; (C) an involuntary
reduction in Executive’s Base Salary except for
across-the-board reductions similarly affecting all or
substantially all of the Company’s employees; (D) a
breach by the Company of any of its other material obligations
under this Agreement and the failure of the Company to cure such
breach within thirty (30) days after written notice thereof by
Executive; or (E) the involuntary relocation of the
Company’s offices at which Executive is principally employed
or the
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involuntary
relocation of the offices of Executive’s primary workgroup to
a location more than fifty (50) miles from such offices, or
the requirement by the Company that Executive be based anywhere
other than the Company’s offices at such location on an
extended basis, except for required travel on the Company’s
business to an extent substantially consistent with
Executive’s business travel obligations. “Good Reason
Process” shall mean that (i) Executive reasonably
determines in good faith that a “Good Reason” event has
occurred; (ii) Executive notifies the Company in writing of
the occurrence of the Good Reason event; (iii) Executive
cooperates in good faith with the Company’s efforts, for a
period not less than ninety (90) days following such notice,
to modify Executive’s employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding
such efforts, one or more of the Good Reason events continues to
exist and has not been modified in a manner reasonably acceptable
to Executive. If the Company cures the Good Reason event in a
manner reasonably acceptable to Executive during the ninety
(90) day period, Good Reason shall be deemed not to have
occurred.
(b) In
the event that the Executive’s employment is terminated
pursuant to clause (i), (ii), (iv) or (v) of Section 7(a)
above, the Company shall pay to the Executive (or her personal
representative, as the case may be), as severance pay or liquidated
damages or both, the amount of Base Salary that the Executive would
have otherwise been entitled to receive had the Executive’s
employment not been so terminated, for a period of twelve months
immediately following such termination (the
“Severance”). The Company shall pay the Severance in
accordance with its payroll practices from time to time in effect.
In addition, in the event that the Executive’s employment is
terminated pursuant to clause (i), (ii), (iv) or (v) of
Section 7(a) above, each stock-based grant and award, including the
Restricted Stock, held by Executive shall continue to vest, as if
Executive’s e
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