Exhibit 10.3
Execution Copy
IPC The Hospitalist
Company
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (the
“ Agreement ”), dated as of August 5, 2009
and effective as of January 11, 2008 (the “ Effective
Date ”), by and between IPC The Hospitalist Company,
Inc. , a Delaware corporation (the “ Company
”), and DEVRA G. SHAPIRO (“ Employee
”) amends, restates and supersedes that certain Amended and
Restated Employment Agreement dated as of June 12, 2008 and
effective as of January 11, 2008 (the “ Prior
Agreement ”), which amended and restated that certain
Employment Agreement dated October 1, 2002, between In-Patient
Consultants Management, Inc, which is the former name of the
Company, and the Employee.
BACKGROUND
INFORMATION
A. The Company desires to encourage
the continuity of its management and secure for its benefit the
skills of individuals who provide unique value to its
operations;
B. The Company recognizes that
Employee possesses certain skills and expertise which give Employee
peculiar value to the Company, the loss of which cannot be
reasonably or adequately replaced;
C. The Company desires to retain
these skills for the benefit of the Company and to provide Employee
with compensation commensurate with such skills; and
D. Employee and the Company desire
to enter amend, restate and supersede the Prior Agreement on the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
BASIC EMPLOYMENT
1.1 Employment . The
Company agrees to employ Employee, and Employee hereby agrees to be
employed by the Company, to perform the duties more fully described
below for the compensation and duration specified in this
Agreement, as it may be amended from time to time, subject to and
upon all the terms and conditions set forth herein.
1.2 Term . The term of
employment under this Agreement shall commence as of the Effective
Date, and continue in full force and effect after the Effective
Date for a period of one (1) year (the “
Term ”); provided, however, that the Term shall
automatically be extended for successive one (1) year periods
unless either party provides the other with at least ninety
(90) days advance written notice of its intention not to
extend the Term. Each twelve (12) month
period during the Term or any extension shall be
referred to herein as a “ Contract Year .”
Notwithstanding anything to the contrary contained herein, the Term
will terminate upon termination of Employee’s employment by
the Company or by Employee pursuant to Article III below. Upon the
Effective Date, all previously existing employment agreements or
arrangements, including the Prior Agreement, between Employee and
the Company (other than this Agreement) shall terminate
automatically and be of no further force or effect.
1.3 Duties and Powers
.
1.3.1 Service with the
Company . During the Term, Employee shall (i) serve as
the Company’s Chief Financial Officer and shall report
directly to the Chief Executive Officer of the Company (the “
CEO ”), (ii) have such responsibilities, duties
and authorities, and render such services for the Company, that
Employee has or renders for the Company as of the Effective Date,
and (iii) have such other responsibilities, duties and
authorities, and render such other services for the Company, that
are consistent with Employee’s position as Chief Financial
Officer as the CEO may from time to time reasonably
direct.
1.3.2 Service with
Subsidiaries and other Affiliates. During the Term Employee
shall (i) have such responsibilities, duties and authorities,
and render such services for the Company’s subsidiaries and
other affiliates that (a) Employee renders for such
subsidiaries and other affiliates as of the Effective Date and
(b) that are consistent with Employee’s position as
Chief Financial Officer of the Company, as the CEO may from time to
time reasonably direct; and (ii) at the reasonable request of
the CEO, serve as the Chief Financial Officer, Treasurer and/or
director of each subsidiary or other affiliate of the Company;
provided that Employee shall not be entitled to any
additional compensation for serving as an officer or director of
the Company’s subsidiaries and other affiliates.
1.3.3 Performance of
Duties. Employee will devote her best efforts, energies and
abilities and her full business time, skill and attention (except
for permitted vacation periods and reasonable periods of illness)
to the business and affairs of the Company, its subsidiaries and
other affiliates and shall perform the duties and carry out the
responsibilities assigned to her, to the best of her ability and in
a diligent, trustworthy, businesslike and efficient manner.
Employee acknowledges that her duties and responsibilities will
require her full-time business efforts and agrees that during the
Term she will not engage in any other business activity or have any
business pursuits or interests, except activities or interests
which do not conflict with the business of the Company, its
subsidiaries and other affiliates and do not interfere with the
performance of Employee’s duties hereunder; provided
that Employee shall be permitted to (i) continue to serve on
civic and charitable boards and committees (provided that in
January of each year hereunder, Employee furnishes the Board with a
list of the civic and charitable boards and committees on which
Employee is then serving), and (ii) manage her personal
investments and affairs, in each case so long as the activities
referred to in clauses (i) and (ii) above otherwise
comply with the terms and conditions of this Agreement, including
the provisions of this Section 1.3.3 ; provided
further that, other than the positions and entities listed in
clause (i) above, Employee shall not, without the prior
written consent of the Board, be permitted to serve on any for
profit entity’s board of directors or committee or hold any
similar position with respect to any such entity.
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1.4 Compensation .
During the Term, the Company agrees to pay to Employee an initial
base salary at the rate of $328,000 per annum, commencing on the
date hereof (the “ Base Salary ”). The Base
Salary shall be payable in arrears in substantially equal payments
at such frequency as is the custom and practice of the Company and
on at least a monthly basis. During the Term, the Base Salary shall
be subject to annual review by the compensation committee (the
“ Committee ”) of the board of directors of the
Company (the “ Board ”), and the Base Salary may
be increased by the Committee in its sole discretion, but the Base
Salary (including any previously approved increase) may not be
decreased as long as Employee remains a full-time employee of the
Company.
1.5 Bonus Compensation
. During the Term, in addition to the Base Salary, Employee
shall be eligible to receive an annual performance-based cash bonus
(“ Annual Bonus ”) during each Contract Year
with respect to each fiscal year of the Company (subject to
Section 4.1 ). The Annual Bonus shall be based upon
quantitative and qualitative performance targets as established by
the Committee in it sole discretion in accordance with the
Company’s annual bonus plan; provided , that
Employee’s Annual Bonus payable for achievement of the target
level of performance designated by the Committee shall be not less
than fifty percent (50%) of Base Salary in effect at the time
the Committee establishes the Annual Bonus. The Committee may, in
its discretion, specify amounts of Annual Bonus payable above or
below the designated target amount for achievement of performance
at specified levels above or below the designated target level of
performance. The Annual Bonus shall be payable to Employee at the
same time bonuses are paid to other executive officers in
accordance with the Company’s annual bonus plan, but in no
event later than March 15 of the calendar year following the
calendar year in which the Annual Bonus is not subject to a
substantial risk of forfeiture within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(“ Section 409A ”).
1.6 Working Conditions/
Benefits .
1.6.1 Vacation .
Employee shall be entitled to twenty (20) business days of
paid vacation per calendar year. Any unused vacation days shall
accrue from year to year up to a maximum of thirty-five
(35) days accrued at any one time. Employee shall accrue ten
(10) paid sick days per calendar year. The maximum
accumulation of vacation and sick days shall be in accordance with
the Company’s policies and practices.
1.6.2 Insurance and Other
Benefits . During the Term, Employee shall be eligible to
participate in and, if eligible, to receive employee and dependent
group medical, dental, disability, life insurance, 401(k) and such
other benefits made available by the Company in accordance with the
Company’s policies and procedures established from time to
time, or, if there is no policy or procedure in place at any
applicable time, then on the same basis as other senior management
of the Company.
1.6.3 Expenses .
During the Term, Employee shall be entitled to reimbursement for
all approved reasonable travel and other business expenses incurred
by Employee in connection with her services to the Company pursuant
to the terms of this Agreement. All business expenses for which
Employee seeks reimbursement from the Company shall be adequately
documented by Employee in accordance with the Company’s
procedures covering expense reimbursement and in compliance with
the regulations of the Internal Revenue Service.
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1.6.4 Facilities .
During the Term, Company shall provide Employee with office space
at its headquarters in North Hollywood, California, and secretarial
and other support services and facilities commensurate with
Employee’s position.
1.6.5 Equity Compensation
Grants . During the Term, Employee shall be eligible to
receive, at the discretion of the Committee, grants of stock
options and/or other equity under, and subject to the terms of, the
Company’s 2007 Incentive Compensation Plan or any such other
incentive compensation plan that may be maintained by the Company
from time to time.
ARTICLE II
PROPRIETARY AND CONFIDENTIAL
INFORMATION
2.1 The Company’s
Proprietary, Confidential and Trade Secret Information .
Employee may have access to or otherwise obtain knowledge of
confidential information of the Company and/or its affiliates
(whether such affiliation is through a management agreement between
the Company and/or another entity or otherwise) (“
Affiliates ”), including, without limitation, the
Company’s and Affiliates’ selling and servicing methods
and business techniques, software programs, policies and
procedures, business records, training, service and business
manuals, promotional materials, training courses and other training
and instructional materials, vendor and product information,
customer and prospective customer lists, other customer and
prospective customer information, information concerning the
Company’s and Affiliates’ current or any future or
proposed work, services, or products, the facts that any such work,
services, or products are planned, under consideration, or in
production, as well as any descriptions thereof, and other business
information (“ Confidential Information ”).
Confidential Information shall not include information that
Employee can demonstrate: (i) was publicly available at the
time of disclosure, or later became publicly available through no
act or omission of the Employee; (ii) was rightfully in
Employee’s possession prior to Employee’s date of
employment by the Company; or (iii) was rightfully received by
Employee from a third party without any obligation of
confidentiality.
Employee acknowledges that
(a) all such Confidential Information, whether reduced to
writing, maintained on any form of electronic media, or maintained
in the mind or memory of Employee and whether compiled by the
Company, its Affiliates and/or Employee, derives independent
economic value from not being readily known to or ascertainable by
proper means by others who can obtain economic value from its
disclosure or use; (b) reasonable efforts have been made by
the Company and its Affiliates to maintain the secrecy of such
information; (c) all Confidential Information and materials
have and will be made available to Employee only for the limited
purpose of the performance of Employee’s duties as an
employee; (d) all Confidential Information of the Company and
its Affiliates has been developed or compiled by the Company and
its Affiliates through substantial expenditures of time, effort and
money and constitutes valuable and unique property of the Company
and its Affiliates; and (e) all Confidential Information and
materials are the sole property of the Company or its Affiliates.
Any retention and use of such information by Employee during
Employee’s employment with the Company (except in the course
of performing Employee’s duties and obligations hereunder) or
after the termination of Employee’s employment shall
constitute a misappropriation of the Company’s trade secrets
and Confidential Information and unfair competition.
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The Company’s and its Affiliates’
business is the development and implementation of programs for the
management of comprehensive hospital-based care for patients within
structural in-patient programs, the provision of hospitalist and
associated services throughout the United States and the
development and utilization of automated and electronic work tools
and processes for hospital-based healthcare providers. Employee
acknowledges and agrees that the development of relationships
between the Company or its Affiliates and its customers and clients
entails great expense and difficulty and requires frequent personal
contact with such customers and clients, that the development of
the Company’s and its Affiliates’ staff and employees
entails great difficulty and expense and extensive training and
supervision of such staff and employees, and that but for
Employee’s employment by the Company, Employee would have no
contact with or knowledge of the identities, addresses and other
contact information pertaining to the Company’s or its
Affiliates’ customers, clients, staff, or other employees,
all of which constitute part of the Company’s and its
Affiliates’ Confidential Information.
Accordingly, and without diminishing
in any way the rights and remedies of the Company under any
applicable law and regulation, Employee will keep in strict
confidence, and will not, directly or indirectly, at any time
during or after Employee’s employment with the Company,
disclose, furnish, disseminate, make available or, except in the
course of performing Employee’s duties of employment, use any
Confidential Information or other trade secrets or confidential
business and technical information of the Company or its
Affiliates.
Employee expressly authorizes the
Company to notify any person, firm, entity, hospital, medical
group, medical provider or corporation employing Employee in the
future, or evidencing an intent to employ Employee in the future,
of the existence and provisions of this Agreement.
Employee acknowledges that
Employee’s use of Confidential Information regarding the
Company’s accounts, clients, customers, staff and/or
employees by Employee during or after the Term of Employee’s
exclusive and non-exclusive employment by the Company or
consultation with the Company, except as is necessary in the course
and scope of performing Employee’s job duties for the
Company, will materially and adversely affect the Company, and all
of its shareholders, economically and otherwise, and constitutes
unfair competition. Accordingly, as an additional inducement to the
Company to enter into the Agreement with the Employee, Employee
agrees that:
2.1.1 Use of Trade Secrets and
Confidential Information . During and after the Term of
Employee’s exclusive or non-exclusive employment by the
Company or consultation with the Company, except as is necessary in
the course and scope of performing Employee’s job duties for
the Company, Employee will not use the Company’s trade
secrets or Confidential Information, directly or indirectly, alone
or in concert with any person or entity, for Employee’s own
account or for, or on behalf of, any other person or entity, to
solicit any business from accounts, clients or customers of the
Company or its Affiliates who have dealt with the Company or its
Affiliates at any time during the Term.
2.1.2 Non-Solicit .
During the Term and for a period of two (2) years following
expiration or termination of the Term, regardless of the reason for
the termination, Employee will not directly or indirectly solicit
or induce or attempt to solicit or induce any officer,
director,
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employee, sales representative, agent or
consultant of the Company or its Affiliates to terminate or
adversely alter their employment, representation or other
association with the Company or its Affiliates. In addition, at no
time after Employee leaves employment with the Company will
Employee seek to obtain or misappropriate any of the
Company’s trade secrets or Confidential Information from any
current or former Company employee or consultant.
2.1.3 Disclosure . In
the event that Employee is requested or required in any proceeding
to disclose any Confidential Information, Employee shall:
(i) provide the Company with prompt written notice of such
request(s) and the documents or information requested so that the
Company or its Affiliates may seek an appropriate protective order
and/or waive Employee’s compliance with the provisions of
this Article II ; and (ii) consult with the Company or
its Affiliates as to the advisability of taking legally available
steps to resist or narrow such request. It is further agreed that,
if in the absence of a protective order or the receipt of a written
waiver from the Company or its Affiliates, the Employee is
nonetheless, in the opinion of her legal counsel, compelled to
disclose any of the Confidential Information or else stand liable
for contempt or suffer other censure or penalty, Employee agrees to
disclose to such tribunal only such Confidential Information as is
legally required, which disclosure shall be without liability
hereunder; provided, however, that Employee shall give the Company
written notice of the Confidential Information to be so disclosed
as far in advance of its disclosure as is practicable and Employee
shall request, from the parties to whom the Confidential
Information is disclosed, assurance that confidential treatment
will be accorded to such portion of the Confidential Information
required to be disclosed as the Company or its Affiliates
designates.
2.2 Return Of Property
. Employee agrees that upon termination of Employee’s
employment with the Company, for any reason, Employee shall
promptly return to the Company, in good condition, all property of
the Company or its Affiliates, including, without limitation, the
originals and all copies of any materials which contain, reflect,
summarize, describe, analyze or refer or relate to any Confidential
Information. In the event that such items are not so returned, the
Company or its Affiliates will have the right to charge Employee
for all reasonable damages, costs, attorneys’ fees and other
expenses incurred in taking, removing and/or recovering such
property.
2.3 Assignment Of
Inventions . Employee hereby assigns and agrees to assign
to the Company, its Affiliates, successors, assigns or nominees,
all of Employee’s right, title and interest in and to any and
all “ Inventions ,” which include any and all
discoveries, developments, designs, inventions, improvements,
processes, techniques, business records, software programs,
training, service and business manuals, promotional materials,
training courses and other results and proceeds of Employee’s
services, regardless of whether subject to patent, registration,
trade mark or copyright protection or protection under similar
statutes, made, conceived, suggested, either solely or jointly with
others, by Employee while in the Company’s employ, whether in
the course of employment with the use of the Company’s time,
material or facilities or that is in any way within or related to
the existing or contemplated scope of the Company’s or its
Affiliates’ business or result from the use of property
owned, leased or contracted for by the Company. Inventions shall
also include anything that derives actual or potential economic
value from not being generally known to the public or to other
persons who can obtain economic value from its disclosure or use.
Any Inventions directly derivative of the Company’s or its
Affiliates’ planned or existing products or services,
developed or under development during Employee’s
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employment and made, conceived or suggested by
Employee, either solely or jointly with others, within one
(1) year following termination of Employee’s employment
under the Agreement, or any successor agreement shall be
irrebuttably presumed to have been so made, conceived or suggested
in the course of such employment with the use of the
Company’s time, materials and/or facilities. All work papers,
reports, documentation, drawing, photographs, negatives, tapes and
masters therefor, prototypes, other tangible items and materials,
and all other results and proceeds of Employee’s services
hereunder, made, conceived, or suggested, either solely or jointly
with others, by Employee while in the Company’s employ,
whether in the course of employment with the use of the
Company’s time, material or facilities or in any way within
or related to the existing or contemplated scope of the
Company’s or its Affiliates’ business, including,
without limitation, and such results and proceeds directly
derivative of the Company’s or its Affiliates’ planned
or existing products or services, developed or under development
during Employee’s employment and made, conceived or suggested
by Employee, either solely or jointly with others, within one
(1) year following termination of Employee’s employment
under the Agreement or any successor agreements, and including,
without limitation, any and all such items generated and maintained
on any form of electronic media, constitute specially commissioned
works made for hire as defined in the United States Copyright Act,
which works and the copyrights therein and thereto shall be the
property of the Company or its Affiliates as the author thereof. To
the extent that California law applies to this Agreement, this
paragraph does not apply to any invention that qualifies fully
under the provisions of Section 2870 of the California Labor
Code, the text of which is reproduced in Section 2.6 ,
and Employee agrees and acknowledges that Employee will bear the
full burden of proving to the Company that an Invention qualifies
fully under Section 2870.
Upon request by the Company with
respect to any such Inventions, Employee agrees to execute and
deliver to the Company, at any time during or after
Employee’s employment, such further documents as the Company
may require in connection with the rights, privileges and property
granted to the Company or its Affiliates in the preceding paragraph
(the “ Rights ”), when so requested, at the
expense of the Company, but without further or additional
consideration. In the event the Company is unable, after reasonable
effort, to secure Employee’s signature on any document(s)
required in accordance with the provisions of this Article
II , Employee irrevocably designates the Company or its
Affiliates, or their nominee, as Employee’s agent or
attorney-in-fact to act on Employee’s behalf, with the right,
but not the obligation, to execute and deliver all such further
documents for the purposes aforesaid. Employee also irrevocably
designates the Company or its Affiliates, or their nominee, as
Employee’s agent or attorney-in-fact, with the right but not
the obligation, for the sole benefit of the Company or its
Affiliates, and at the Company’s or its Affiliates’
expense, to bring, prosecute, defend and appear in suits, actions,
and proceedings of any nature under or concerning all such Rights;
and to take such action as the Company or its Affiliates may deem
advisable to enforce, protect, and/or defend any of the Rights; and
to litigate, collect and receive all damages arising from any
infringement of any such Rights. Any such action may be taken by
the Company or its Affiliates in the name of Employee or otherwise,
and the Company or its Affiliates may join Employee as a plaintiff
or defendant in any such suit, action or proceeding.
Employee further acknowledges that
the foregoing assignment of rights is made in consideration of, and
is adequately supported by good, valuable and sufficient
consideration including but not limited to the agreement of the
Company to employ Employee.
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2.4 Remedies .
Employee acknowledges and agrees that the provisions of this
Article II are reasonable and necessary to protect the
legitimate professional and business interests of the Company and
its Affiliates and that any breach or violation hereof would result
in irreparable damage and injury to the Company or its Affiliates
with the extent and the amount of the damages and injury being
difficult, if not impossible, to ascertain. Employee acknowledges
and agrees that such damages and injury cannot be adequately
compensated with monetary damages, and Employee further agrees that
the Company or its Affiliates may seek and obtain injunctive relief
against the breach or threatened breach of any of the provisions of
this Article II and/or specific enforcement of such
provisions in addition to any other legal or equitable remedies
which may be available and that are not inconsistent with the
Dispute Resolution Procedure in Section 5.1 , Employee
agrees to waive any requirement for the securing or posting of any
bond in connection with such remedy. Should litigation be
instituted to enforce any provision of this Article II , the
prevailing party will be entitled to recover all costs incurred in
connection with such action, including without limitation
reasonable legal fees, cost of investigation and cost of
settlement; provided , however , that in the case of
recovery by the Employee, such recovery shall only be allowed for
amounts incurred during the life time of the Employee, the amount
of such recovery provided during one taxable year shall not affect
the amount of recovery during any other taxable year, such recovery
may not be liquidated, exchanged or substituted for other forms of
compensation to Employee, and any amounts paid with respect to such
recovery will be paid no later than the last day of the
Employee’s taxable year following the taxable year in which
she incurred the expense giving rise to such
recovery.
2.5 Reasonableness of
Obligations . Employee acknowledges and agrees that
Employee’s obligations under this Article II are
reasonable in the context of the nature of the Company’s and
its Affiliates’ business and the competitive injuries likely
to be sustained by the Company or its Affiliates if Employee were
to violate such obligations. Employee further acknowledges that the
Agreement is made in consideration of, among other things, this
Article II and is adequately supported by good, valuable and
sufficient consideration, including but not limited to the
agreement of the Company to employ Employee. Employee specifically
agrees that the provisions of this Article II shall survive
the termination or expiration of the Agreement.
2.6 California Labor Code
Section 2870 .
2.6.1 Any provision in an employment
agreement which provides that an employee shall assign, or offer to
assign, any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee
developed entirely on his or her own time without using the
employer’s equipment, supplies, facilities, or trade secret
information except for those inventions that either:
(a) Relate at the time of conception
or reduction to practice of the invention to the employer’s
business, or actual or demonstrably anticipated research or
development of the employer.
(b) Result from any work performed
by the employee for the employer.
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2.6.2 To the extent a provision in
an employment agreement purports to require an employee to assign
an invention otherwise excluded from being required to be assigned
under Section 2.6.1 , the provision is against the
public policy of California and is unenforceable.
ARTICLE III
TERMINATION
3.1 Termination . The
Term and Employee’s employment (a) shall automatically
terminate immediately upon Employee’s death, (b) may be
terminated at any time by the Board as set forth herein for Cause
(as defined in Section 3.2.2 ) or without Cause, or by
reason of Employee’s Permanent Disability (as defined in
Section 3.3.2 ), upon written notice to Employee,
(c) may be terminated at any time by Employee for Good Reason
(as defined in Section 3.5.5 ) upon written notice to
the Company, as set forth below, or (d) may be terminated at
any time by Employee without Good Reason in accordance with
Section 3.4 . In the event the Employee’s
employment with the Company terminates after the expiration of the
Term due to a notice of non-renewal by Employee in accordance with
Section 1.2 , the Employee shall only be entitled to
the Accrued Obligations payable as described in
Section 3.2.1 below.
3.2 Termination for Cause
. The Company shall have the right to terminate
Employee’s employment at any time for Cause by giving
Employee written notice of the effective date of termination. The
determination of whether Cause exists shall be made in the sole
discretion of the CEO.
3.2.1 Obligations Upon
Termination for Cause . If the Company terminates
Employee’s employment for any of the reasons set forth in
Section 3.2.2 , the Company shall have no further
obligation hereunder from and after the effective date of such
termination, except for (x) payment, within thirty
(30) days of such termination, of Executive’s Base
Salary through the date of termination, (y) payment of amounts
or benefits accrued and vested as of the date of termination under
any ret
