Document:

Exhibit 10.8.4

 

MANAGEMENT UNIT GRANT AGREEMENT

 

(Class C Units)

 

THIS MANAGEMENT UNIT GRANT AGREEMENT (this “Agreement”) by and between PG Holdco, LLC, a Delaware limited liability company (the “Company”), and the individual named on the Master Signature Page hereto (“Executive”) is made as of the date set forth on such Master Signature Page.

 

WHEREAS, on the terms and subject to the conditions hereof, Executive desires to acquire from the Company, and the Company desires to grant to Executive, the Company’s Class C Common Units (the “Units”) in the amount set forth on Schedule I included in the Master Signature Page, as hereinafter set forth; and

 

WHEREAS, this Agreement is one of several agreements being entered into by the Company on or after the date set forth on the Master Signature Page with certain persons who are or will be key employees of the Company or one or more Subsidiaries as part of a management equity incentive plan designed to comply with certain exemptions from registration under the Securities Act (as defined below).

 

NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

 

1.                                      Definitions.

 

1.1                               Activity Date. The term “Activity Date” shall have the meaning set forth in Section 6.2.

 

1.2                               Affiliate. The term “Affiliate” shall have the meaning set forth in the Securityholders Agreement.

 

1.3                               Agreement. The term “Agreement” shall have the meaning set forth in the preface.

 

1.4                               Applicable Federal Rate. The term “Applicable Federal Rate” shall have the meaning set forth in Section 1274 of the Code.

 

1.5                               Board. The term “Board” shall mean the Company’s Management Committee.

 

1.6                               Call Notice. The term “Call Notice” shall have the meaning set forth in Section 4.1(b).

 

1.7                               Call Period. The term “Call Period” shall have the meaning set forth in Section 4.1(a).

 

 

1.8                               Cause. The term “Cause” shall have the same meaning ascribed to such term in any employment, severance or similar agreement then in effect between Executive and the Company or one of its Subsidiaries or, if there is no such agreement or such term is not defined therein, “Cause” shall mean a termination of employment of Executive by the Company or any Subsidiary due to (i) the commission by Executive of an act of fraud or embezzlement, (ii) the indictment or conviction of Executive for (x) a felony or (y) a crime involving moral turpitude or a plea by Executive of guilty or nolo contendere involving such a crime, (iii) negligence or willful or intentional misconduct by Executive in the performance of Executive’s duties, including any willful or intentional misrepresentation or willful or intentional concealment by Executive on any report submitted to the Company (or any of its Subsidiaries) which the Board in its reasonable discretion determines is materially detrimental to the best interests of the Company and its Subsidiaries, (iv) the violation by Executive of a company policy regarding substance abuse, sexual harassment or discrimination or any other material policy of the Company or any of its Subsidiaries regarding employment that the Board in its reasonable discretion determines is materially detrimental to the best interests of the Company and its Subsidiaries, (v) the willful or intentional refusal or repeated failure of Executive, following notice from the Company, to render services to the Company or any of its Subsidiaries in accordance with Executive’s employment (other than as a result of incapacity due to physical or mental illness), (vi) the willful or intentional refusal or repeated failure of Executive, following notice from the Company, to comply with reasonable directives of the Board, the Board of Directors of any Subsidiary or the Chief Executive Officer of the Company or any Subsidiary consistent with Executive’s duties, (vii) any act or omission that constitutes a material breach by Executive of any of the provisions of any agreement between Executive, on the one hand, and the Company or an Affiliate of the Company, on the other hand or (viii) any other willful or intentional misconduct by Executive which is materially injurious to the financial condition or business reputation of, or is otherwise, materially injurious to the Company or any of its Subsidiaries or Affiliates. Any voluntary termination of employment by Executive in anticipation of an involuntary termination of Executive’s employment for Cause shall be deemed to be a termination for Cause.

 

1.9                               Closing Date. The term “Closing Date” shall have the meaning set forth in Section 2.1.

 

1.10                        Code. The term “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

1.11                        Company. The term “Company” shall have the meaning set forth in the preface.

 

1.12                        Competitive Activity. The term “Competitive Activity” shall have the meaning set forth in Section 6.1.

 

1.13                        Competitive Business. The term “Competitive Business” shall have the meaning set forth in Section 6.1.

 

1.14                        Cost. The term “Cost” shall mean the price per Unit, if any, paid by Executive as proportionately adjusted for all subsequent distributions of Units and other recapitalizations and

 

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less the amount of any tax distributions made with respect to the Units pursuant to Section 4.4(g) of the LLC Agreement.

 

1.15                        Disability. The term “Disability” used in connection with the termination of employment of Executive shall have the same meaning ascribed to such term in any employment, severance or similar agreement then in effect between Executive and the Company or one of its Subsidiaries or, if there is no such agreement or such term is not defined therein, “Disability” shall mean the inability of Executive to perform the essential functions of Executive’s job, with or without reasonable accommodation, by reason of a physical or mental infirmity, for a continuous period of six months. The period of six months shall be deemed continuous unless Executive returns to work for at least 30 consecutive business days during such period and performs during such period at the level and competence that existed prior to the beginning of the six-month period. The date of such Disability shall be on the first day of such six-month period.

 

1.16                        Employee and Employment. The term “employee” shall mean, without any inference as to negate Executive’s status as a member of the Company for all purposes hereunder (subject to the terms hereof) and for federal and other tax purposes, any employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Code) of the Company or any of its Subsidiaries, and the term “employment” shall include service as a part- or full-time employee to the Company or any of its Subsidiaries.

 

1.17                        Entities. The term “Entities” shall have the meaning set forth in Section 6.1.

 

1.18                        Executive. The term “Executive” shall have the meaning set forth in the preface.

 

1.19                        Executive Group. The term “Executive Group” shall mean Executive and Executive’s Permitted Transferees.

 

1.20                        Fair Market Value. The term “Fair Market Value” used in connection with the value of Units shall mean the fair value of a Unit determined in good faith by the Board using its reasonable business judgment (valuing the Company and its Subsidiaries as a going concern) disregarding any discount for minority interest or marketability of the Units, whether due to transfer restrictions or the lack of a public market for the Units. The Board shall conduct a valuation annually and, in connection with such valuation, agrees to consult with a nationally recognized valuation expert. For the avoidance of doubt, the determination of Fair Market Value of any Unit shall be based on the amounts that would be distributable in respect of such Unit under the terms of the LLC Agreement, including any adjustments necessary to reflect the portion of any tax distributions that were previously made in respect of such Unit but not charged against other distributions in respect of such Unit.

 

1.21                        Financing Default. The term “Financing Default” shall mean an event which would constitute (or with notice or lapse of time or both would constitute) an event of default under (i) any of the financing documents of the Company or its Subsidiaries from time to time (collectively, the “Financing Agreements”) and any extensions, renewals, refinancings or refundings thereof in whole or in part, (ii) any amendment of, supplement to or other modification of any of the instruments referred to in clause (i) above, and (iii) any of the

 

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securities issued pursuant to or whose terms are governed by the terms of any of the agreements set forth in clause (i) above and any extensions, renewals, refinancings or refundings thereof in whole or in part.

 

1.22                        Good Reason. The term “Good Reason” shall have the same meaning ascribed to such term in any employment, severance or similar agreement then in effect between Executive and the Company or one of its Subsidiaries or, if there is no such agreement or such term is not defined therein, “Good Reason” shall mean, without Executive’s consent, (i) a substantial change by the Company or any of its Subsidiaries in Executive’s duties and responsibilities which is materially inconsistent with Executive’s position in the Company or any Subsidiary, (ii) a material reduction in Executive’s annual base salary or annual bonus opportunity (excluding any reduction in Executive’s salary or bonus opportunity that is part of a plan to reduce compensation of comparably situated employees of the Company or its Subsidiaries generally), (iii) a material breach by the Company or any of its Subsidiaries of a material provision of the employment, severance or other similar agreement, if any, between Executive and the Company or one of its Subsidiaries, and (iv) the relocation of Executive’s principal place of work from its current location to a location that is beyond a 50-mile radius of such current location; provided that, notwithstanding anything to the contrary in the foregoing, Executive shall only have “Good Reason” to terminate employment following the Company’s or any Subsidiary’s failure to remedy the act or omission which is alleged to constitute “Good Reason” within thirty (30) days following the Company’s or Subsidiary’s receipt of written notice from Executive specifying such act or omission.

 

1.23                        Holdings Shares. The term “Holdings Shares” shall have the meaning set forth in Section 5.

 

1.24                        Junior Subordinated Note. The term “Junior Subordinated Note” shall have the meaning set forth in Section 5.

 

1.25                        LLC Agreement. The term “LLC Agreement” shall mean the Eighth Amended and Restated Limited Liability Company Agreement of the Company, dated as of              , 2013, as it may be amended or supplemented thereafter from time to time.

 

1.26                        MOI. The term “MOI” shall mean the cash consideration received by Vestar (other than (x) any fees paid to Vestar or (y) expenses reimbursed to Vestar or (z) tax distributions made to Vestar pursuant to Section 4.4(g) of the LLC Agreement in respect of amounts allotted to Vestar pursuant to Section 4.4(a)(v) of the LLC Agreement, in each case, from time to time) with respect to the amount of cash and the initial Gross Asset Value (as defined in the LLC Agreement) of any property (other than money) contributed from time to time to the Company by Vestar together with all cash distributions (other than (x) any fees paid to Vestar or (y) expenses reimbursed to Vestar or (z) tax distributions made to Vestar pursuant to Section 4.4(g) of the LLC Agreement in respect of amounts allotted to Vestar pursuant to Section 4.4(a)(v) of the LLC Agreement, in each case, from time to time) Vestar has received in respect of such investment resulting in a multiple of investment of Vestar’s aggregate invested equity capital.

 

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1.27                        New Preferred Units. The term “New Preferred Units” shall have the meaning set forth in Section 5.

 

1.28                        Permitted Transferee. The term “Permitted Transferee” shall mean any transferee of Units pursuant to clause (e) or (f) of the definition of “Exempt Employee Transfer” as defined in the Securityholders Agreement.

 

1.29                        Person. The term “Person” shall mean any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other entity of any nature whatsoever.

 

1.30                        PGA Holdings. The term “PGA Holdings” shall mean PGA Holdings, Inc., a Delaware corporation.

 

1.31                        Public Offering. The term “Public Offering” shall have the meaning set forth in the Securityholders Agreement.

 

1.32                        Purchase Price. The term “Purchase Price” shall have the meaning set forth in Section 2.1(a).

 

1.33                        Restricted Area. The term “Restricted Area” means (A) the general area of measurement and improvement solutions, (B) data analytics and decision support tools focused on healthcare quality, and (C) products or services related to improvement solutions, educational programs, or taking any actions on, or publishing or reporting results in connection with, the general area of quality and performance, in all cases described in the foregoing clauses (A), (B) and (C), to or about healthcare or related institutions or employees thereof, or medical or other professionals operating in the health care industry, anywhere in North America, Europe, South America or Asia or any other geographic location where the Company or any of its Subsidiaries operates. The term “Restricted Area” also includes (x) consulting services and solutions relating to quality and performance improvement, or (y) any other business that the Company or any of its Subsidiaries is taking or has taken specific actions in furtherance of engaging in (so long as Executive knew or reasonably should have known about such actions).

 

1.34                        Retirement. The term “Retirement” shall mean, with respect to Executive, Executive’s retirement as an employee of the Company or any of its Subsidiaries on or after reaching age 65 after at least three years of employment with the Company or any of its Subsidiaries after the Vesting Reference Date.

 

1.35                        Sale of the Company. The term “Sale of the Company” shall have the meaning set forth in the Securityholders Agreement.

 

1.36                        Securities Act. The term “Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

1.37                        Securityholders Agreement. The term “Securityholders Agreement” shall mean the Second Amended and Restated Securityholders Agreement dated as of November 9, 2012 by

 

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and among the Company and the other parties thereto, as it may be amended or supplemented thereafter from time to time.

 

1.38                        Subsidiary. The term “Subsidiary” shall have the meaning set forth in the Securityholders Agreement.

 

1.39                        Termination Date. The term “Termination Date” shall mean the date upon which Executive’s employment with the Company and its Subsidiaries terminates.

 

1.40                        Units. The term “Units” shall have the meaning set forth in the preface.

 

1.41                        Unvested Units. The term “Unvested Units shall mean such Units that are subject to any vesting, forfeiture or similar arrangement under this Agreement and have not become Vested Units.

 

1.42                        Vestar. The term “Vestar” shall mean Vestar Capital Partners V, L.P., a Cayman Islands exempted limited partnership.

 

1.43                        Vested Units. The term “Vested Units” shall mean such Units that are vested and nonforfeitable, as determined in accordance with Exhibit A hereto, and provide certain rights under the terms of this Agreement, the LLC Agreement and the Securityholders Agreement.

 

1.44                        Vesting Reference Date. The term “Vesting Reference Date” shall have the meaning set forth on the Master Signature Page.

 

2.                                      Subscription for and Grant of Units.

 

2.1                               Grant of Units. Pursuant to the terms and subject to the conditions set forth in this Agreement, the Company hereby agrees to grant to Executive and Executive agrees to accept the grant, on the date set forth on the Master Signature Page (the “Closing Date”), of the number of Units set forth in Schedule I included in the Master Signature Page.

 

2.2                               Section 83(b) Election. Within 10 days after the Closing Date, Executive shall provide the Company with a copy of a completed election under Section 83(b) of the Code and the regulations promulgated thereunder in the form of Exhibit A attached to the Master Signature Page. Executive shall timely file (within 30 days of the Closing Date via certified mail, return receipt requested) such election with the Internal Revenue Service, and shall thereafter certify to the Company Executive has made such timely filing.

 

2.3                               Closing Conditions. Notwithstanding anything in this Agreement to the contrary, the Company shall be under no obligation to issue to Executive any Units unless (i) Executive is an employee of, or consultant to, the Company or one of its Subsidiaries on the Closing Date, (ii) the representations of Executive contained in Section 3 hereof are true and correct in all material respects as of the Closing Date and (iii) Executive is not in breach of any agreement, obligation or covenant herein required to be performed or observed by Executive on or prior to the Closing Date.

 

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3.                                      Investment Representations and Covenants of Executive.

 

3.1                               Units Unregistered. Executive acknowledges and represents that Executive has been advised by the Company that:

 

(a)                                 the issuance of the Units has not been registered under the Securities Act;

 

(b)                                 the Units must be held indefinitely unless the offer and sale of such Units are subsequently registered under the Securities Act and all applicable state securities laws or an exemption from such registration is available;

 

(c)                                  there is no established market for the Units and it is not anticipated that there will be any public market for the Units in the foreseeable future;

 

(d)                                 a restrictive legend in the form set forth below and the legends set forth in Sections 9.2(a) and (b) of the Securityholders Agreement shall be placed on the certificates, if any, representing the Units:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A MANAGEMENT UNIT GRANT AGREEMENT BETWEEN THE ISSUER AND [NAME OF EXECUTIVE] DATED AS OF [CLOSING DATE], AS AMENDED AND MODIFIED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE”; and

 

(e)                                  a notation shall be made in the appropriate records of the Company indicating that the Units are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Units.

 

3.2                               Additional Investment Representations. Executive represents and warrants that:

 

(a)                                 Executive understands that there are substantial restrictions on the transferability of the Units and, on the Closing Date and for an indefinite period following the Closing Date, there will be no public market for the Units and, accordingly, it may not be possible for Executive to liquidate Executive’s Units in case of emergency, if at all;

 

(b)                                 the terms of this Agreement provide that if Executive engages in Competitive Activity or ceases to be an employee of the Company or its Subsidiaries, the Company and its Affiliates have the right to repurchase the Units at a price which may, under certain circumstances, be less than the Fair Market Value thereof;

 

(c)                                  Executive understands and has taken cognizance of all the risk factors related to the Units and, other than as set forth in this Agreement, no representations or

 

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warranties have been made to Executive or Executive’s representatives concerning the Units or the Company or their prospects or other matters;

 

(d)                                 Executive has been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the Company and its representatives concerning the Company and its Subsidiaries, the Securityholders Agreement, the Company’s organizational documents and the terms and conditions of the acquisition of the Units and to obtain any additional information which Executive deems necessary; and

 

(e)                                  Executive is or is not an “accredited investor” under the Securities Act, as indicated on the Master Signature Page.

 

4.                                      Certain Sales and Forfeitures Upon Termination of Employment.

 

4.1                               Call Option.

 

(a)                                 If, prior to a Sale of the Company, (x) Executive’s employment with the Company and its Subsidiaries terminates for any of the reasons set forth in clauses (i), (ii) or (iii) or (y) if Executive engages in Competitive Activity, the Company shall have the right and option, but not the obligation, to purchase for a period commencing on the Termination Date or the Activity Date, as applicable, and ending on the later of (I) 90 days following the Termination Date or the Activity Date, as applicable, and (II) 211 days following the Closing Date (such period, the “Call Period”), and each member of the Executive Group shall be required to sell to the Company, any or all of such Units then held by such member of the Executive Group (it being understood that if Units may be repurchased at different prices, the Company may elect to repurchase only the portion of Units subject to repurchase hereunder at a lower price), at a price per Unit equal to the applicable purchase price determined pursuant to Section 4.1(c):

 

(i)                                     if Executive’s employment with the Company and its Subsidiaries is terminated due to the Disability, death or Retirement of Executive;

 

(ii)                                  if Executive’s employment with the Company and its Subsidiaries is terminated by the Company and its Subsidiaries without Cause or by Executive for Good Reason;

 

(iii)                               if Executive’s employment with the Company and its Subsidiaries is terminated (A) by the Company or any of its Subsidiaries for Cause or (B) by Executive for any other reason not set forth in Section 4.1(a)(i) or Section 4.1(a)(ii).

 

(b)                                 If the Company desires to exercise its option to purchase Units pursuant to this Section 4.1 the Company shall, not later than 30 days prior to the end of the Call Period, send written notice to each member of the Executive Group of its intention to purchase all or a portion of the Units, specifying the number of Units to be purchased (the “Call Notice”). The closing of the purchase shall take place at the principal office of the Company or one of its Subsidiaries on a date specified by the Company no later than the 30th day after the giving of the Call Notice.

 

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(c)                                  In the event of a purchase by the Company pursuant to Section 4.1(a), the purchase price shall be:

 

(i)                                     with respect to a purchase of all or any portion of the Units (whether vested or unvested), in the case of a termination of employment described in Section 4.1(a)(iii)(A) or if Executive engages in Competitive Activity, a price per Unit equal to the lesser of (A) Fair Market Value (measured as of the date the Units are repurchased) and (B) Cost;

 

(ii)                                  with respect to a purchase of all or any portion of the Vested Units, in the case of a termination of employment described in Section 4.1(a)(iii)(B) prior to the third anniversary of the Vesting Reference Date, a price per Vested Unit equal to the lesser of (A) Fair Market Value (measured as of the date the Vested Units are repurchased) and (B) Cost; and

 

(iii)                               with respect to a purchase of all or any portion of the Vested Units, in the case of a termination of employment described in Section 4.1(a)(i) or Section 4.1(a)(ii) or a termination of employment described in Section 4.1(a)(iii)(B) on or after the third anniversary of the Vesting Reference Date, a price per Vested Unit equal to Fair Market Value (measured as of the date the Vested Units are repurchased).

 

4.2                               Obligation to Sell Several. If there is more than one member of the Executive Group, the failure of any one member thereof to perform its obligations hereunder shall not excuse or affect the obligations of any other member thereof, and the closing of the purchases from such other members by the Company shall not excuse, or constitute a waiver of its rights against, the defaulting member.

 

5.                                      Payment for Units. (a) Except as otherwise provided in this Section 5, if at any time the Company elects to purchase any Units pursuant to Section 4, the Company shall pay the purchase price for the Units it purchases (i) first, by the cancellation of any indebtedness, if any, owing from Executive to the Company or any of its Subsidiaries (which indebtedness shall be applied pro rata against the proceeds receivable by each member of the Executive Group receiving consideration in such repurchase) and (ii) then, either (x) by the Company’s delivery of a check or wire transfer of immediately available funds or (y) by the Company’s delivery of shares of capital stock of PGA Holdings (“Holdings Shares”) with a fair market value (as determined by the Board) equal to the remainder of the purchase price, if any, against delivery of the certificates or other instruments, if any, representing the Units so purchased, duly endorsed; provided, that if Holdings Shares are issued pursuant to this Section 5, the Company shall be obligated to cause PGA Holdings to immediately repurchase, and Executive shall be obligated to sell, such Holdings Shares for a price equal to the aforementioned fair market value of such Holdings Shares, to be paid by check or wire transfer of immediately available funds.

 

(b)                                 Notwithstanding anything herein to the contrary, (i) to the extent that the purchase of such Units or the payment to the Company or one of its Subsidiaries of a cash dividend or distribution by a Subsidiary of the Company to fund such purchase (together with any other purchases of Units pursuant to Section 4 or pursuant to similar provisions in agreements with other employees of the Company and its Subsidiaries of which the Company

 

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has at such time been given or has given notice and together with cash dividends and distributions to fund such other purchases) would result (A) in a violation of any law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any federal, state, local or foreign court or governmental authority applicable to the Company or any of its Subsidiaries or any of its or their property, (B) after giving effect thereto, in a Financing Default, (C) in a violation of the LLC Agreement, or (D) in adverse accounting treatment for the Company, or (ii) if immediately prior to such purchase there exists a Financing Default which prohibits such purchase, dividend or distribution, in each case which prohibits either of the cash payments referred to in clause (ii) of Section 5(a) (either directly or indirectly as a result of the prohibition of a related cash dividend or distribution), the portion of the applicable cash payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of a junior subordinated promissory note (which shall be subordinated and subject in right of payment to the prior payment of any debt outstanding under the Financing Agreements and any modifications, renewals, extensions, replacements and refunding of all such indebtedness) of the Company (a “Junior Subordinated Note”) in a principal amount equal to the balance of the purchase price, which note shall (x) (I) be payable, in the event of a termination of employment referenced in Sections 4.1(a)(i), 4.1(a)(ii) and 4.1(a)(iii)(B), as soon as the conditions set forth in this Section 5(b) no longer exist and (II) accrue interest, compounded annually, payable concurrently with the payment of principal, at the prevailing interest rate under the Company’s senior debt financing documents as in effect on the date of issuance, but in no event shall such interest rate exceed LIBOR plus four percent (4%) or (y) (I) be payable, in the event of a termination of employment referenced in Section 4.1(a)(iii)(A) or if Executive engages in Competitive Activity, on the fifth anniversary of the issuance thereof, and (II) accrue interest, compounded annually, payable concurrently with the payment of principal, at the applicable Applicable Federal Rate on the date of issuance. Notwithstanding the foregoing, if any of the conditions set forth in preceding sentence exists which prohibits such payment by delivery of a Junior Subordinated Note, the portion of the payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of a new class of preferred units of the Company that will be senior to all other classes of units in the Company (“New Preferred Units”) having an aggregate liquidation preference equal to the balance of the purchase price and accruing dividends annually at a yield equivalent to the interest rate that would have been payable on the aforementioned Junior Subordinated Note. Notwithstanding anything herein to the contrary, in the case of a purchase of Units pursuant to Section 4.1(a)(iii)(A) or if Executive engages in Competitive Activity, the Company shall deliver a Junior Subordinated Note in a principal amount equal to all or a portion of the cash purchase price (in lieu of paying such portion of the purchase price in cash), which Junior Subordinated Note shall mature on the fifth anniversary of its issuance and accrue interest, compounded annually, payable concurrently with the payment of principal, at the applicable Applicable Federal Rate on the date of issuance; provided that if any of the conditions set forth in the first sentence of this Section 5(b) exists which prohibits such payment by delivery of a Junior Subordinated Note, the portion of the payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of New Preferred Units having an aggregate liquidation preference equal to the balance of the purchase price and accruing dividends, compounded annually, at a yield equivalent to the interest rate that would have been payable on the aforementioned Junior Subordinated Note. The Company shall use its reasonable efforts (or shall cause PGA Holdings to use its reasonable efforts) to repurchase Units pursuant

 

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to Section 4.1(a)(i), Section 4.1(a)(ii) or Section 4.1(a)(iii)(B) with cash and/or to prepay any Junior Subordinated Notes or redeem any New Preferred Units issued in connection with such repurchase of Units. The Company shall have the right set forth in clause (i) of Section 5(a) whether or not the member of the Executive Group selling such Units is an obligor of the Company. Any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be prepaid (or redeemed) upon a Sale of the Company from net cash proceeds, if any, payable to the Company or its unitholders; to the extent that sufficient net cash proceeds are not so payable, the Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be cancelled in exchange for such other non-cash consideration received by unitholders in the Sale of the Company having a fair market value equal to the principal of and accrued interest on the note. Any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) also shall be prepaid (or redeemed) upon the consummation of an initial Public Offering from net cash proceeds, if any, payable to the Company or its unitholders; to the extent that sufficient net cash proceeds are not so payable, the Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be cancelled in exchange for such other non-cash consideration received by unitholders in the initial Public Offering having a fair market value equal to the principal of and accrued interest on the note. The principal of and accrued interest on any such note may be prepaid (and New Preferred Units issued in lieu thereof may be redeemed) in whole or in part at any time at the option of the Company. If interest (or a cash distribution) is required to be paid on any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) and any of the conditions set forth in the first sentence of this Section 5(b) exists or if any such cash payment would result in adverse accounting treatment for the Company which prohibits the payment of such interest (or distributions) in cash, such interest may be cumulated and accrued until and to the extent that such prohibition no longer exists.

 

6.                                      Non-Competition/Non-Solicitation.

 

6.1                               Competitive Activity. Executive shall be deemed to have engaged in “Competitive Activity” if, during the period commencing on the date hereof and ending on the date that is eighteen (18) months following the Termination Date, Executive, whether on Executive’s own behalf or on behalf of or in conjunction with any other person or entity, directly or indirectly (A) solicits, or assists in soliciting, the business of any client of the Company or any of its Subsidiaries (collectively, the “Entities”), or hires any employee of any of the Entities, or interferes with, or attempts to interfere with, the relationships between any of the Entities, on the one hand, and any of its customers, clients, suppliers, partners, members, employees or investors, on the other hand; or (B) becomes an employee, agent, representative, consultant, partner, shareholder or holder of any other financial interest with respect to any business, individual, partnership, joint venture, association, firm, corporation or other entity engaged, wholly or in part, in the Restricted Area or any other business that the Company is taking or has taken specific actions in furtherance of engaging in, which actions (taken together) would lead a reasonable person to conclude, as of the Termination Date, that it was more likely than not that the Company intended to pursue engaging in such business (so long as Executive knew or reasonably should have known about such actions prior to the Termination Date) (the “Competitive Business”). Notwithstanding the foregoing, if Executive is subject to a more restrictive non-competition or non-solicitation covenant in any employment or other agreement with the Company or any of its Affiliates, the most restrictive of such non-competition or non-solicitation covenants shall apply; it being understood that the activities which Executive is

 

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prohibited from engaging in contained herein or in such other non-competition or non-solicitation covenants all shall be deemed to be “Competitive Activity” for purposes of this Agreement.

 

6.2                               Activity Date. If Executive engages in Competitive Activity, the “Activity Date” shall be the first date on which Executive engages in such Competitive Activity.

 

6.4                               Repayment of Proceeds. If Executive engages in Competitive Activity, then Executive shall be required to pay to the Company, within ten business days following the Activity Date, an amount equal to the excess, if any, of (A) the aggregate proceeds Executive received upon the sale or other disposition of Executive’s Units, over (B) the aggregate Cost of such Units.

 

7.                                      Miscellaneous.

 

7.1                               Transfers to Permitted Transferees. Prior to the transfer of Units to a Permitted Transferee (other than a transfer subsequent to a Sale of the Company), Executive shall deliver to the Company a written agreement of the proposed transferee (a) evidencing such Person’s undertaking to be bound by the terms of this Agreement and (b) acknowledging that the Units transferred to such Person will continue to be Units for purposes of this Agreement in the hands of such Person. Any transfer or attempted transfer of Units in violation of any provision of this Agreement or the Securityholders Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Units as the owner of such Units for any purpose.

 

7.2                               Recapitalizations, Exchanges, Etc., Affecting Units. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to Units, to any and all securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Units, by reason of any dividend payable in units, issuance of units, combination, recapitalization, reclassification, merger, consolidation or otherwise.

 

7.3                               Executive’s Employment by the Company. Nothing contained in this Agreement shall be deemed to obligate the Company or any Subsidiary of the Company to employ Executive in any capacity whatsoever or to prohibit or restrict the Company (or any such Subsidiary) from terminating the employment of Executive at any time or for any reason whatsoever, with or without Cause.

 

7.4                               Cooperation. Executive agrees to cooperate with the Company in taking action reasonably necessary to consummate the transactions contemplated by this Agreement.

 

7.5                               Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that no transferee shall derive any rights under this Agreement unless and until such transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement; and provided further that Vestar is a third party beneficiary of this Agreement and shall have the right to enforce the provisions hereof.

 

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7.6                               Amendment; Waiver. This Agreement may be amended only by a written instrument signed by the parties hereto. No waiver by any party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving.

 

7.7                               Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein.

 

7.8                               Jurisdiction. Any suit, action or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Company and the members of the Executive Group hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. Each of the members of the Executive Group and the Company hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and (c) any right to a jury trial.

 

7.9                               Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when personally delivered, telecopied (with confirmation of receipt), one day after deposit with a reputable overnight delivery service (charges prepaid) and three days after deposit in the U.S. Mail (postage prepaid and return receipt requested) to the address set forth below or such other address as the recipient party has previously delivered notice to the sending party.

 

(a)                                 If to the Company:

 

PG Holdco, LLC

c/o Vestar Capital Partners V, L.P.

245 Park Avenue, 41st Floor

New York, NY 10167

Attn:                    Norman W. Alpert

Managing Director

Telecopy: (212) 351-1630

 

with a copy (which shall not constitute notice) to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017-3954

Attn: Caroline B. Gottschalk

Telecopy: (212) 455-2502

 

(b)                                 If to Executive, to the address as shown on the unit register of the Company.

 

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7.10                        Integration. This Agreement and the documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to the subject matter hereof and thereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

7.11                        Counterparts. This Agreement may be executed in separate counterparts, and by different parties on separate counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

7.12                        Injunctive Relief. Executive and Executive’s Permitted Transferees each acknowledges and agrees that a violation of any of the terms of this Agreement will cause the Company irreparable injury for which adequate remedy at law is not available. Accordingly, it is agreed that the Company shall be entitled to an injunction, restraining order or other equitable relief to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which it may be entitled at law or equity.

 

7.13                        Rights Cumulative; Waiver. The rights and remedies of Executive and the Company under this Agreement shall be cumulative and not exclusive of any rights or remedies which either would otherwise have hereunder or at law or in equity or by statute, and no failure or delay by either party in exercising any right or remedy shall impair any such right or remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any power or right preclude such party’s other or further exercise or the exercise of any other power or right. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

 

* * * * *

 

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* * * * *

 

This Management Unit Grant Agreement between the Company and the Executive named

on the Master Signature Page hereto is dated and executed as of the Closing Date set forth

on such Master Signature Page.

 

* * * * *Exhibit 10.10.1

 

EMPLOYMENT AGREEMENT

(Patrick T. Ryan)

 

EMPLOYMENT AGREEMENT (the “Agreement”) dated February 24, 2012, among PGA HOLDINGS, INC., a Delaware corporation (the “Company”), PRESS GANEY ASSOCIATES, INC., an Indiana corporation (“PGA”), and PATRICK T. RYAN (the “Employee”).

 

WHEREAS, the Company and PGA desire to employ the Employee and to enter into an agreement embodying the terms of such employment; and

 

WHEREAS, the Employee desires to accept such employment and enter into such an agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                      Term. (a) The term of the Employee’s employment with the Company and PGA under this Agreement shall commence on February 24, 2012 (the “Effective Date”) and shall continue until December 31, 2016 (the “Expiration Date”) (such period, the “Initial Term”); provided, however, that commencing on the Expiration Date and on each anniversary of the Expiration Date thereafter, unless either party hereto gives the other party at least 60 days’ prior written notice of its or his election not to extend the period of the Employee’s employment with the Company and PGA hereunder, the term shall automatically be extended for an additional one-year period on the same terms and conditions set forth herein, unless otherwise agreed upon by the parties hereto (each such extension, a “Renewal Term”); provided further, however, that the Employee’s employment with the Company and PGA under this Agreement may be terminated pursuant to the provisions of Section 4 at any time prior to the expiration of the Initial Term or any then current Renewal Term. The period commencing on the Effective Date and ending on the date of termination of the Employee’s employment with the Company and PGA under this Agreement is referred to herein as the “Term”.

 

(b)            The Employee agrees and acknowledges that the Company and PGA have no obligation to provide for any Renewal Term or to continue the Employee’s employment after expiration of the Initial Term or any then current Renewal Term, and the Employee expressly acknowledges that no promises or understandings to the contrary have been made or reached. The Employee also agrees and acknowledges that, should the Employee, the Company and PGA choose to continue the Employee’s employment for any period of time following the expiration of the Term (including any extensions thereof) without a written employment agreement, the Employee’s employment with the Company and PGA shall continue to be “at will”, such that, during any time following the expiration of the Term if a written employment agreement is not in effect, the Company or PGA may terminate the Employee’s employment at any time, with or without reason and with or without notice, and the Employee may resign at any time, with or without reason and with or without notice.

 

 

2.              Duties and Responsibilities. (a) During the Term, the Employee agrees to perform the Employee’s exclusive services for the Company and PGA upon the terms and conditions of this Agreement. The Employee shall serve as PGA’s and the Company’s Chief Executive Officer, reporting to the Board of Directors of PGA (the “PGA Board”) and the Board of Directors of the Company (the “Company Board”), respectively. The Employee shall have the duties, responsibilities and authority as are determined from time to time by the Company Board or the PGA Board, as applicable, and he will perform the services requested from time to time by the Company Board or the PGA Board, as applicable, commensurate with his status and consistent with his position as in effect from time to time hereunder.

 

(b)         During the Term, the Employee acknowledges that the Employee’s duties and responsibilities shall require the Employee to travel on business to the extent necessary to fully perform the Employee’s duties hereunder. The Company and PGA hereby acknowledge and agree that, in connection with his duties hereunder, the Employee will not be required to relocate from his current residence in Beverly Farms, Massachusetts without his consent.

 

(c)          During the Term, the Employee shall devote all of the Employee’s business time, energy and skill to the business of the Company and its subsidiaries and affiliates, as applicable, and the performance of the Employee’s duties hereunder, and shall use the Employee’s best efforts to faithfully and diligently serve the Company and its subsidiaries and affiliates, as applicable. During the Term, the Employee shall not, without the prior written consent of the Company or PGA, engage in any other business, profession or occupation, whether or not pursued for gain, profit or other pecuniary advantage, and shall not accept employment with, or provide services as a consultant or in any other capacity for, any person or entity other than the Company and its subsidiaries; provided, however, that nothing herein shall preclude the Employee from continuing to serve on the boards or committees as described on Exhibit A hereto so long as such activities described in the forgoing clause (i) do not, singularly or in the aggregate, conflict or interfere with the Employee’s duties hereunder and are not in conflict with the interests of the Company and its subsidiaries or violate Sections 6 or 7.

 

(d)         During the Term, if requested by the Company or PGA, the Employee shall cooperate and assist the Company or PGA in acquiring and maintaining key-man life insurance covering the Employee, including, if applicable, submitting to such medical examination(s) as may be required by the insurer from time to time.

 

(e)          During the Term, the Employee will serve as a member of the Management Committee of PG Holdco, LLC (the “Holdco Board”) and, if so requested by the Holdco Board, shall also serve as a member of the board of directors of any other affiliate or subsidiary of the Company, in each case, without additional compensation.

 

3.         Compensation and Related Matters. (a) Base Salary. During the Term, for all services rendered under this Agreement, PGA shall pay the Employee a base salary (“Base Salary”), payable in accordance with PGA’s applicable payroll practices, at an annual rate of $600,000. References in this Agreement to “Base Salary” shall be deemed to refer to the most recently effective annual base salary rate.

 

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(b)          Incentive Compensation. With respect to the 2012 calendar year and each full calendar year during the Term (each, a “Bonus Year”) commencing with the 2013 calendar year, the Employee shall be eligible to earn an annual bonus award (the “Annual Bonus”) with an initial target Annual Bonus (“Target Bonus”) in an amount equal to seventy-five percent (75%) of Base Salary, based upon and subject to the achievement of budgeted financial objectives and Management by Objectives (MBOs), established in good faith by the Company Board or the PGA Board, as applicable, after consultation with the Employee, within the first three months of each Bonus Year during the Term. The Annual Bonus, if any, shall be paid to the Employee during the calendar year immediately following the relevant Bonus Year following the Company’s and PGA’s receipt of the final audited financial statements from the Company’s and PGA’s accounting firm in respect of the relevant Bonus Year; provided that the Employee is employed by the Company and PGA on December 31 of the applicable Bonus Year. None of the bonuses provided for under this Section 3(b) are guaranteed bonuses or any other form of guaranteed compensation.

 

(c)           Benefits and Perquisites. During the Term, the Employee shall be provided, in accordance with the terms of PGA’s employee benefit plans as in effect from time to time, with employee benefits and perquisites on the same basis as those benefits are generally made available to other senior executives of the Company and PGA. In addition to the foregoing, the Employee will be entitled to the use of private air transportation for the purpose of traveling on Company or PGA business. The Employee agrees to manage his travel expenses, exercising good judgment with the goal of spending not more than $750,000 per year on private air transportation, which may be funded directly by the Company or PGA. The Employee agrees to discuss his private air transportation expenses on a quarterly basis during the Term with the Chairman of the Compensation Committee of the Holdco Board, to ensure spending is consistent with the parameters set forth herein.

 

(d)          Expense Reimbursements. During the Term, PGA shall reimburse the Employee for the Employee’s reasonable and necessary business expenses in accordance with its then prevailing policy for senior executives (which shall include appropriate itemization and substantiation of expenses incurred).

 

4.                   Termination of Services; Obligations Upon Termination. (a) Generally. The Employee’s employment may be terminated by any party at any time and for any reason, and without any advance notice; provided, however, that the Employee shall be required to give the Company and PGA at least 60 days’ advance written notice of any voluntary termination of the Employee’s employment. Following any termination of the Employee’s employment with the Company and PGA hereunder, notwithstanding any provision to the contrary in this Agreement, the obligations of the Company and PGA to pay or provide the Employee with compensation and benefits under Section 3 shall cease, and except as otherwise expressly provided in this Section 4, the Company and PGA shall have no further obligations to the Employee hereunder except (i) payment (within thirty (30) days following the date of the termination of the Employee’s employment hereunder) of any Base Salary accrued through the date of termination, to the extent unpaid, (ii) except in the case of termination of the Employee’s employment by the Company or PGA for Cause (as defined in Section 4(b)(ii)), payment of any Annual Bonus earned for the Bonus Year prior to the year in which the date of termination of employment occurs, to the extent unpaid, such payment to be made in accordance with Section 3(b), (iii) reimbursement of

 

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any unreimbursed business expenses properly incurred by the Employee prior to the date of termination of employment in accordance with Company or PGA policy and (iv) as set forth in any benefit plans, programs or arrangements in which the Employee participates (the amounts described in clauses (i) through (iv), as applicable, of this Section 4(a) being referred to herein as the “Accrued Rights”).

 

(b)         Termination by the Company or PGA Without Cause (Other Than Due to Disability or Death) or by the Employee for Good Reason. (i) If the Employee’s employment with the Company and PGA hereunder is terminated by (A) the Company or PGA for any reason other than (1) Cause, (2) Disability or (3) the Employee’s death or (B) the Employee for Good Reason, then, in addition to the Accrued Rights, subject to the Employee’s continued compliance with Sections 6 and 7 and the Employee’s execution and delivery of a general release of claims against the Company (excluding equity-based claims), PGA and their respective affiliates in a form acceptable to the Company (the “Release”), on or prior to the sixtieth (60th) day following the date of the Employee’s termination of employment and his non-revocation of such Release within the time period provided therein, PGA or the Company, as applicable, shall pay the Employee (x) an amount equal to any Annual Bonus earned for the Bonus Year in which the date of termination of employment occurs which bonus would otherwise be payable to the Employee if his employment had not terminated (as determined following the end of such Bonus Year based on the actual full-year performance of the Company and PGA, as applicable, in such Bonus Year), multiplied by a fraction, the numerator of which is the number of days the Employee was employed hereunder in such year and the denominator of which is 365 (the “Pro-Rata Bonus”), which amount is payable in accordance with Section 3(b), (y) an amount equal to one and a half (1.5) times the sum of (I) the Employee’s Base Salary at the rate in effect on the date of termination and (II) the amount of the Employee’s Annual Bonus, if any, paid or earned, but not yet paid, in respect of the year immediately preceding the year of termination, which amount is payable in equal installments in accordance with PGA’s usual payment practices over an eighteen (18) month period commencing on the day immediately following the termination date (such period, the “Severance Period”), and (z) an amount equal to one and a half (1.5) times the Company’s or PGA’s cost of providing, for 18 months, coverage for the Employee and his dependents under the Company’s or PGA’s group health plan(s) at the applicable premium rate in effect at the time of the Employee’s termination of employment, which amount is payable in equal installments in accordance with PGA’s usual payment practices over the Severance Period. Notwithstanding the foregoing, the Company and PGA shall have the right to cease making such payments and the Employee shall be obligated to repay any such amounts to the Company or PGA already paid if the Employee fails to execute and deliver the Release within the time period provided for above or, after timely delivery, the Employee revokes it within the time period specified in such Release.

 

(ii)               For purposes of this Agreement, “Cause” means:

 

(A)       the Employee’s willful and continued failure to perform the Employee’s material, reasonable and lawful duties (other than as a result of incapacity due to physical or mental illness), provided the Employee does not cure such failure within 15 days after receipt from the Company or PGA of written notice of such failure;

 

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(B)       the Employee’s negligence or willful misconduct in the course of the Employee’s employment with the Company and PGA that the Company Board or the PGA Board in good faith in its reasonable discretion determines has had a material, demonstrable and adverse effect on the Company or any of its subsidiaries;

 

(C)       the Employee’s indictment of, conviction of, or plea of nolo contendere to a (x) misdemeanor involving moral turpitude or (y) felony (or the equivalent of a misdemeanor or felony in a jurisdiction other than the United States);

 

(D)       the Employee’s material breach of this Agreement, including, without limitation, the provisions of Sections 6, 7 and 8, provided the Employee does not cure such failure within 15 days after receipt from the Company or PGA of written notice of such failure;

 

(E)        the Employee’s violation of lawful company policies that the Company Board or PGA Board in good faith in its reasonable discretion determines has had a material, demonstrable and adverse effect on the Company and any of its subsidiaries;

 

(F)         the Employee’s misappropriation, embezzlement or material misuse of funds or property belonging to the Company or any of its subsidiaries; or

 

(G)       the Employee’s use of alcohol or drugs that either interferes with the performance of the Employee’s duties hereunder or materially, demonstrably and adversely affects the integrity or reputation of the Company, its subsidiaries or affiliates, their employees or their products or services, as determined by the Company Board or PGA Board in good faith in its reasonable discretion.

 

(iii)        For purposes of this Agreement, “Good Reason” means, without the Employee’s written consent:

 

(A)       a change by the Company or PGA in the Employee’s duties or responsibilities which is materially inconsistent with the Employee’s position in the Company or PGA;

 

(B)       a reduction in the Employee’s Base Salary or annual bonus opportunity;

 

(C)       a material breach by the Company or PGA of this Agreement;

 

provided that, notwithstanding anything to the contrary in the foregoing, the Employee shall only have “Good Reason” to terminate employment pursuant to subsection (A), (B) or (C) following the Company’s or PGA’s failure to remedy the act or omission which is alleged to constitute “Good Reason” within fifteen (15) days following the Company’s or PGA’s receipt of written notice from the Employee specifying such act or omission.

 

(v)                                  For purposes of this Agreement, the Employee shall be deemed to have a “Disability” if the Employee would be entitled to long-term disability benefits under the Company’s or PGA’s long-term disability plan as in effect from time to time, without regard to any waiting or elimination period under such plan and assuming for such purpose that the Employee is actually participating in such plan at such time. If the Company or PGA does not

 

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maintain a long-term disability plan at the time of the Employee’s termination of employment, “Disability” shall mean the Employee’s inability to perform the Employee’s duties and responsibilities hereunder due to physical or mental illness that is expected to last for at least 6 months. Any question as to the existence of the Disability of the Employee as to which the Company, PGA and the Employee shall not agree shall be determined in writing by a qualified independent physician mutually acceptable to the Employee, PGA and the Company (and if the Employee, PGA and the Company cannot agree as to a qualified independent physician, PGA and the Company together and the Employee shall each appoint a physician and those two physicians shall select a third physician who shall make such determination in writing, which shall be final and conclusive for all purposes of this Agreement). In connection therewith, the Employee agrees to submit to any medical examination(s) as may be requested by the Company or PGA for such purpose.

 

(c)          Termination on Account of Disability or Death. If the Employee’s employment with the Company and PGA hereunder is terminated on account of a Disability or as a result of the Employee’s death, then in addition to the Accrued Rights, the Employee (or the Employee’s estate, as the case may be) shall be entitled to receive from PGA the Pro-Rata Bonus, if any, for the year in which termination of employment occurs, which amount is payable in accordance with Section 3(b). Any termination by the Company or PGA for Disability shall be communicated by written notice in accordance with Section 20.

 

(d)         Termination by the Company or PGA for Cause; Voluntary Resignation. For the avoidance of doubt, if the Employee’s employment with the Company or PGA hereunder is terminated by the Company or PGA for Cause, or by the Employee (other than for Good Reason or as a result of Disability or death), the Employee shall not be entitled to any compensation or benefits other than the Accrued Rights. Any voluntary termination of employment by the Employee in anticipation of an involuntary termination of employment by the Company or PGA for Cause shall be deemed to be a termination of the Employee’s employment by the Company or PGA for Cause. Any termination by the Company or PGA for Cause, or voluntary resignation by the Employee, shall be communicated by written notice in accordance with Section 20 (and, in the case of the Employee’s voluntary resignation, in accordance with Section 4(a)).

 

(e)          Additional Payment Provisions. The payment of any amounts accrued under any benefit plan, program or arrangement in which the Employee participates shall be subject to the terms of the applicable plan, program or arrangement, and any elections the Employee has made thereunder.

 

(f)           Transition. Upon request of the Company or PGA, the Employee shall actively work with the Company and PGA during the 60-day period following notification to the Company and PGA of the Employee’s intent to terminate employment hereunder to recruit the Employee’s successor and shall perform such other duties as may reasonably be required by the Company or PGA to assist in the transition process.

 

(g)          Board Resignation. Upon termination of the Employee’s employment for any reason, the Employee agrees to resign (or that he may be removed), as of the date of such termination and, to the extent applicable, from the Holdco Board and any committees thereof and

 

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any boards or similar governing bodies of any subsidiaries or affiliates of PGA and the Company.

 

5.           Acknowledgments. (a) The Employee acknowledges that the Company and its subsidiaries has expended and shall continue to expend substantial amounts of time, money and effort to develop business strategies, customer relationships, employee relationships and goodwill and build an effective organization. The Employee acknowledges that during the Term, the Employee shall become familiar with the Company’s and its subsidiaries’ Confidential Information (as defined in Section 6(a)) and that during the Term the Employee shall have access to such Confidential Information.

 

(b)              The Employee acknowledges that the Company and its subsidiaries have a legitimate business interest and right in protecting the Confidential Information, goodwill, employee and customer relationships, and that the Company and its subsidiaries would be seriously damaged by the disclosure of Confidential Information and the loss or deterioration of its customer and employee relationships. The Employee further acknowledges that the Company and PGA are entitled to protect and preserve the going concern value of the Company and its subsidiaries to the extent permitted by law.

 

(c)               The Employee agrees that the covenants contained in this Agreement are reasonable and appropriate in light of the cash and non-cash consideration paid and to be paid, and the equity investment opportunities made and to be made available, by the Company and its affiliates, and to be received by the Employee, under this Agreement and other agreements entered into and to be entered into with the Company and its affiliates. The Employee further acknowledges that, notwithstanding the Employee’s compliance with the covenants contained in this Agreement and other agreements entered into and to be entered into with the Company and its affiliates, the Employee has other opportunities to earn a livelihood and adequate means of support for the Employee and his dependents.

 

6.                   Confidentiality. (a) The Employee agrees that all Confidential Information is a valuable, special and unique asset of PG Holdco, LLC (“Holdco”), the Company and their respective subsidiaries and affiliates and the Employee agrees that he will not at any time, including following the Term, directly or indirectly, except with the prior written consent of the Company or PGA, use, divulge or disclose or communicate, or cause any other person or entity to use, divulge, disclose or communicate, to any person, firm, corporation or entity, in any manner whatsoever, any Confidential Information, other than as necessary for the Employee to perform his duties and responsibilities to the Company and PGA as authorized by the Company and PGA; provided, however, that the foregoing shall not apply to Confidential Information that is required to be disclosed by a court or regulatory authority of competent jurisdiction. The foregoing covenants shall apply to each item of information for so long as it remains Confidential Information. For purposes of this Agreement, “Confidential Information” means all trade secrets, proprietary information and other confidential information of Holdco, the Company and their respective subsidiaries and affiliates, including, without limitation, their methods, techniques, and processes, development, costs and pricing of products and services, business and marketing strategies and plans, the identity and needs of clients and potential clients, survey analyses and reports prepared for clients, and any and all satisfaction measurement survey data and other non-public and patient information furnished to Holdco, the

 

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Company and their respective subsidiaries and affiliates pursuant to contracts with clients, financial data, personnel data, and all the other know-how, materials and things pertaining in any respect to Holdco, the Company and their respective subsidiaries and affiliates or clients that are a “trade secret” pursuant to applicable law; provided, however, that “Confidential Information” shall not include information that is generally known in the industry or the public or is or becomes publicly available, in each case, other than as a result of the Employee’s breach of this Agreement. For the avoidance of doubt, Confidential Information also includes Patient Information. For purposes of this Agreement, “Patient Information” means information that (x) relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present or future payment for the provision of health care to an individual; and (y) either identifies the individual or reasonably could be used to identify the individual (including, without limitation, the individual’s name and address; diagnosis and treatment information, including the identity of the facility at which such treatment was rendered; and the individual’s medical history, records or charts). The Employee acknowledges that the Company and its subsidiaries have a duty under law and by contract to keep Patient Information strictly confidential and that unauthorized use or disclosure of Patient Information may subject the Company and its subsidiaries to substantial fines, penalties and damages. The Employee shall comply with such policies and procedures relating to the protection of Patient Information and other Confidential Information as the Company and its subsidiaries may implement from time to time, and shall use reasonable care to avoid the inadvertent disclosure or dissemination of any Patient Information or other Confidential Information.

 

(b)         The Employee agrees that upon termination of the Employee’s employment with the Company and PGA for any reason, the Employee will return to the Company or PGA, as applicable, immediately any and all notes, memoranda, specifications, devices, formulas, records, files, lists, drawings, books, plans, documents, information, letters, data, models, equipment, property, computer, software or intellectual property relating to Holdco’s, the Company’s and their respective subsidiaries’ and affiliates’ business in whatever form (including electronic), and all copies thereof, in any way relating to the business of Holdco, the Company or any of their respective subsidiaries and affiliates. The Employee further agrees that any property situated on the Company’s or PGA’s premises and owned by Holdco, the Company or any of their respective subsidiaries or affiliates, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company or PGA personnel at any time with or without notice. The Employee further agrees that he will not retain or use for his account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of Holdco, the Company or any of their respective subsidiaries or affiliates.

 

(c)          The Employee represents and warrants that he has not disclosed any of the terms of this Agreement to any person not a party to, or an attorney for or other representative of a party to, this Agreement. The Employee further agrees that he shall not disclose the terms of this Agreement, except to the Employee’s immediate family and the Employee’s financial and legal advisors, or as may be required by law or ordered by a court or regulatory authority of competent jurisdiction, or as otherwise required herein, provided, however, that the Employee may disclose to any prospective employer the provisions of Sections 5, 6, 7, 9 and 10 hereof.

 

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7.            Non-Competition; Equitable Relief; Forfeiture of Severance Benefits. (a) As an inducement to the Company and PGA to enter into this Agreement, and to reduce the cost to the Company and PGA of monitoring and enforcing compliance with confidentiality obligations contained in Section 6, the Employee agrees that he will not, directly or indirectly:

 

(i)        own (except passive ownership of less than 1% of a publicly traded company), manage, operate, control, participate in, enter into employment with, or render services or assistance of any kind to any business or organization (other than the Company or any of its subsidiaries) which is, in whole or in part, involved in a Restricted Area (as defined below) or undertakes activities in the Restricted Area during the Restricted Period (as defined below). For purposes of this Agreement, “Restricted Area” means (A) the general area of measurement and improvement solutions, (B) data analytics and decision support tools focused on healthcare quality, and (C) products or services related to improvement solutions, educational programs, or taking any actions on, or publishing or reporting results in connection with, the general area of quality and performance, in all cases described in the foregoing clauses (A), (B) and (C), to or about (i) healthcare, (ii) healthcare or related institutions or employees thereof, or (iii) medical or other professionals operating in the health care industry, anywhere in the United States or any other geographic location where the Company or any of its subsidiaries operates. The term “Restricted Area” also includes (x) consulting services and solutions relating to quality and performance improvement, or (y) any other business that the Company or any of its subsidiaries is taking or has taken specific actions in furtherance of engaging in (so long as the Employee knew or reasonably should have known about such actions); notwithstanding the foregoing, nothing in this Agreement shall prohibit the Employee from, directly or indirectly, (a) owning, managing, operating, controlling, participating in, entering into employment with, or rendering services or assistance of any kind to a business or organization that as its primary source of business provides total cost management solutions, manages hospitals, sells medical devices, provides direct patient care (including homecare, dialysis, outpatient imaging, outpatient surgery), provides physician practice management, manages a health insurance plan, engages in disease management, provides supply distribution, or engages in direct to consumer healthcare product sales, or (b) owning, managing, operating, controlling, participating in, entering into employment with, or rendering services or assistance of any kind to a private equity fund; or (c) owning, managing, operating, controlling, participating in, entering into employment with, or rendering services or assistance to revenue cycle service companies; so long as the Employee, in each case, recuses himself from and does not participate in any activity of these companies (including any board or management or similar discussions, including any strategic discussions) if the activity is competitive with or involves discussions regarding any activity that is competitive with the Restricted Area or the Company’s or any of its subsidiaries’ current business or is competitive with a business in which the Company or any of its subsidiaries is taking or has taken specific actions in furtherance of engaging in (so long as the Employee knew or reasonably should have known about such actions);

 

(ii)          solicit, divert or accept, or assist in soliciting, diverting or accepting the business of any customer of the Company or any of its subsidiaries, or any person or entity in respect of which the Employee is reasonably aware that the Company or any of its subsidiaries has approached or has made significant plans to approach as a prospective customer, during the Term, whether on the Employee’s own behalf or on behalf of or in conjunction with any other person, firm, corporation or entity during the Restricted Period;

 

9

 

(iii)                               (A) encourage, induce, hire or solicit or seek to induce, hire or solicit any person engaged with the Company or any of its subsidiaries as an employee, agent, independent contractor or otherwise (or any such person that was so engaged during the one-year period immediately preceding such initial inducement or solicitation during the Term)(each, a “Company Employee”) to end his or her engagement or employment with the Company or any of its subsidiaries or otherwise to participate in any Restricted Area or (B) recommend to any person or entity that such person or entity employ or engage such current or former Company Employee, except in response to a good faith request by a person or entity that is not involved in a Restricted Area for a recommendation regarding the employment qualifications of any such current or former Company Employee during the Restricted Period;

 

(iv)          whether on the Employee’s own behalf or on behalf of or in conjunction with any other person, firm, corporation or entity, (A) solicit (whether by mail, telephone, personal meeting or otherwise), encourage or induce any customer, supplier or client of the Company or any of its subsidiaries to transact business with any business or organization (other than the Company or PGA) involved in a Restricted Area or reduce or refrain from doing any business with the Company or any of its subsidiaries, (B) interfere with or damage (or attempt to interfere with or damage) any relationship between the Company or any of its subsidiaries and any of their respective customers, suppliers or clients (or any person or entity in respect of which the Employee is reasonably aware that the Company or any of its subsidiaries has approached or has made significant plans to approach as a prospective customer, supplier or client), or (C) aid other persons or entities involved in any such acts, in each case, during the Restricted Period; or

 

(v)             whether in written or oral form, (x) do any act or make any statement whatsoever that may or shall criticize, denigrate, disparage (including, but not limited to, by relative comparison), impair, impugn or negatively reflect upon the name, reputation or business interests of any of the Beneficiaries (as defined below) (including, but not limited to, the methodologies, products, services, activities or results of any of the Beneficiaries, as applicable) with respect to the business of the Company and PGA or (y) otherwise publish statements that tend to portray any of the Beneficiaries (including, but not limited to, the methodologies, products, services, activities or results of any of the Beneficiaries, as applicable) in an unfavorable light with respect to the business of the Company and PGA, in each case, at any time, including after the expiration of the Term.

 

For purposes of this Agreement:

 

(A)                               the term “Beneficiaries” shall mean, collectively, Vestar Capital Partners V. L.P. (together with any predecessor or successor funds (e.g., Vestar Capital Partners I, L.P. and Vestar Capital Partners VI, L.P.), the “Vestar Funds”) and Holdco, together with their respective Controlled Affiliates (including any entity in which any of the Vestar Funds has an equity investment, collectively, the “Vestar Entities”), subsidiaries and successors, and their respective employees, officers and directors;

 

(B)                               the term “Restricted Period” means the period commencing at the Effective Date and ending on the expiration of the 18- month period following the expiration of the Term; and

 

10

 

(C)                               the terms “Controlled” and “Affiliates” shall each have the meaning set forth in the Amended and Restated Securityholders Agreement dated as of March 9, 2010 by and among Holdco and the other parties thereto, as it may be amended or supplemented thereafter from time. to time.

 

Solely for purposes of ensuring the Employee’s compliance with his obligations under clause (v) above, the Employee shall be permitted to request, at reasonable intervals following the termination date, and the Company and PGA shall use commercially reasonable efforts to deliver as promptly as practicable to the Employee, a list of all Vestar Entities. Any such list provided to the Employee shall be deemed to be Confidential Information and the Employee agrees to keep such list confidential in accordance with Section 6 above.

 

(b)        The Employee acknowledges and agrees that any violation of the provisions of Sections 6 or 7(a) would constitute a material breach by the Employee of this Agreement and cause the Beneficiaries irreparable damage and that if the Employee breaches or a court of competent jurisdiction determines that there is a substantial likelihood of success on the merits of a threatened breach of such provisions, (i) as of such time the Company and PGA shall have no further obligation to make any payments or provide any benefits under this Agreement (including, without limitation, those described in Section 4(a)(ii), 4(b) or 4(c)), provided that if a court of competent jurisdiction renders a final and nonappealable determination that the Employee has breached the provisions of Section 6 or 7(a), and the Company or PGA has already paid the Employee all or a portion of such payments and benefits in respect of any period following the date of such breach, the Employee shall be obligated to repay such amounts to the Company or PGA, as applicable, without prejudice to any other remedies available to the Company and its subsidiaries under this Agreement (and, specifically, without prejudice with respect to any other rights and remedies the Company and its subsidiaries may have at law or in equity, to obtain specific performance of such covenants through injunction or other equitable relief from a court of competent jurisdiction, without proof of actual damages or inadequacy of available remedies at law and without being required to post bond or other security) and (ii) the Beneficiaries shall be entitled, in addition to any other rights and remedies the Company and its subsidiaries may have at law or in equity, to obtain specific performance of such covenants through injunction or other equitable relief from a court of competent jurisdiction, without proof of actual damages or inadequacy of available remedies at law and without being required to post bond or other security. Notwithstanding anything contained in this Section 7(b) above, the parties expressly do not intend that the remedies authorized herein in the event of the Employee’s breach or threatened breach of Section 6 or 7(a) of this Agreement are the exclusive remedies for such threatened or actual breach(es), and the parties hereto expressly intend that all equitable remedies, including, without limitation, the remedy of injunctive relief, shall remain fully available to the Company and the Beneficiaries.

 

(c)          The Restricted Period shall be tolled during (and shall be deemed automatically extended by) any period in respect of which a court of competent jurisdiction renders a final and nonappealable determination that the Employee is or was in violation of any of the provisions hereof limited by reference to the Restricted Period.

 

(d)         The Employee hereby agrees that, during the Restricted Period, prior to accepting any position with any other person or entity, the Employee shall provide such person

 

11

 

or entity with written notice of the covenants contained in Sections 5, 6, 7, 9 and 10 hereof, with a copy of such notice delivered simultaneously to the Company and PGA.

 

8.              Representations and Covenants of the Employee. (a) The Employee represents, warrants and covenants that (i) the Employee has the full right and authority to enter into this Agreement and perform his obligations hereunder, (ii) the Employee is not bound by any agreement that conflicts with or prevents or restricts the full performance of his duties and obligations to the Company or PGA hereunder during or after the Term, and (iii) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which the Employee is subject.

 

(b)     Prior to execution of this Agreement, the Employee was advised by the Company and PGA of his right to seek independent advice from an attorney of the Employee’s own selection regarding this Agreement. The Employee acknowledges that he has entered into this Agreement knowingly and voluntarily and with full knowledge and understanding of the provisions of this Agreement after being given the opportunity to consult with counsel. The Employee further represents that in entering into this Agreement, the Employee is not relying on any statements or representations made by any of the Beneficiaries which are not expressly set forth herein, and that the Employee is relying only upon his own judgment and any advice provided by his attorney.

 

9.         Intellectual Property Rights. (a) The Employee agrees that the results and proceeds of the Employee’s services for the Company and its subsidiaries (including any trade secrets, products, services, processes, know-how, designs, developments, techniques, formulas, methods, mask works, developmental or experimental work, improvements, discoveries, inventions, ideas, source and object codes, programs, matters of a literary, musical, dramatic or otherwise creative nature, writings and other works of authorship) resulting from services performed while an employee of or consultant to the Company and its subsidiaries and any works in progress, whether or not patentable or registrable under copyright or similar statutes, that were made or conceived or reduced to practice or learned by the Employee, either alone or jointly with others resulting from services performed while an employee of or consultant to the Company and its subsidiaries (collectively, “Inventions”), shall be works-made-for-hire and the Company (or, if applicable or as directed by the Company, any of the Company’s subsidiaries or affiliates) shall be deemed the sole owner throughout the universe of any and all trade secret, patent, copyright, mask work and other intellectual property rights (collectively, “Proprietary Rights”) of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Company determines in its sole discretion, without any further payment to the Employee whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-made-for-hire and/or there are any Proprietary Rights which do not accrue to the Company (or, as the case may be, any of the Company’s subsidiaries or affiliates) under the immediately preceding sentence, then the Employee hereby irrevocably assigns and agrees to assign any and all of the Employee’s right, title and interest thereto, including any and all Proprietary Rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, to the Company (or, if applicable or as directed by the Company, any of the Company’s subsidiaries or affiliates), and the Company or such subsidiaries or affiliates shall have the right to use the same in perpetuity throughout the universe in any manner

 

12

 

determined by the Company or such subsidiaries or affiliates without any further payment to the Employee whatsoever. As to any Invention that the Employee is required to assign, the Employee shall promptly and fully disclose to the Company all information known to the Employee concerning such Invention.

 

(b)         The Employee has set forth on Exhibit B hereto a complete list of all Inventions that the Employee has, alone or jointly with others, made prior to the commencement of the Employee’s employment or consultancy with the Company and its subsidiaries that the Employee considers to be the Employee’s property or the property of third parties and that the Employee wishes to have excluded from the scope of this Agreement (collectively referred to as “Prior Inventions”). If no such disclosure is attached, the Employee represents and warrants that there are no Prior Inventions. If, while an employee of or consultant to the Company and its subsidiaries, the Employee incorporates a Prior Invention into a Company product or process, the Company or PGA, as applicable, is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the foregoing, the Employee agrees that the Employee shall not incorporate, or permit to be incorporated, Prior Inventions in any such Company product or process without the advance written consent of a duly authorized officer of the Company or PGA.

 

(c)          The Employee agrees that, from time to time, as may be requested by the Company or PGA and at the Company’s or PGA’s sole cost and expense, the Employee shall do any and all things that the Company or PGA may reasonably deem useful or desirable to establish or document the Company’s exclusive ownership throughout the United States of America or any other country of any and all Proprietary Rights in any such Inventions, including the execution of appropriate copyright and/or patent applications or assignments. To the extent the Employee has any Proprietary Rights in the Inventions that cannot be assigned in the manner described above, the Employee unconditionally and irrevocably waives the enforcement of such Proprietary Rights. This Section 9(c) is subject to and shall not be deemed to limit, restrict or constitute any waiver by the Company or PGA of any Proprietary Rights of ownership to which the Company may be entitled by operation of law by virtue of the Company’s or one of its subsidiaries’ being the Employee’s employer. The Employee shall assist the Company and PGA in every proper and lawful way to obtain and from time to time enforce Proprietary Rights relating to Inventions in any and all countries. To this end, the Employee shall execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company or PGA may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining, and enforcing such Proprietary Rights and the assignment thereof. In addition, the Employee shall execute, verify, and deliver assignments of such Proprietary rights to the Company or its designee. The Employee’s obligation to assist the Company or PGA with respect to Proprietary Rights relating to such Inventions in any and all countries shall continue beyond the termination of the Employee’s employment or consultancy with the Company and PGA, provided that the Company or PGA shall compensate the Employee at a reasonable rate after such termination for the time actually spent by the Employee at the Company’s or PGA’s request on such assistance.

 

(d)         In the event the Company or PGA is unable for any reason, after reasonable effort, to secure the Employee’s signature on any document required in connection with the

 

13

 

actions specified in Section 9(c), the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Employee’s agent and attorney in fact, to act for and in the Employee’s behalf to execute, verify and deliver any such documents and to do all other lawfully permitted acts to further the purposes of Section 9(c) with the same legal force and effect as if executed by the Employee. The Employee hereby waives and quitclaims to the Company and PGA any and all claims, of any nature whatsoever, that the Employee now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company.

 

(e)     While an employee of or consultant to the Company or any of its subsidiaries, the Employee shall promptly disclose to the Company and PGA fully and in writing and shall hold in trust for the sole right and benefit of the Company any and all Inventions. In addition, the Employee shall disclose to the Company and PGA all patent applications filed by the Employee during the two (2) year period after termination of the Employee’s employment with the Company and PGA.

 

10.       Cooperation. The Employee shall provide reasonable cooperation in connection with any suit, action or proceeding (or any appeal from any suit, action or proceeding) which relates to events occurring during the Employee’s employment with the Company, its subsidiaries and affiliates, and their predecessors, provided that PGA shall reimburse the Employee for expenses reasonably incurred in connection with such cooperation.

 

11.       No Mitigation; Offset: No Other Severance Benefits. (a) The Employee shall have no duty to attempt to mitigate any amounts payable to the Employee under this Agreement following the termination of the Employee’s employment with the Company and PGA by seeking alternative employment or consulting work.

 

(b)         The Company or PGA, as applicable, may offset any amounts the Employee owes to the Company or PGA as of the date of the termination of the Employee’s employment with the Company and PGA (excluding, for the avoidance of doubt, any obligations related to that certain Promissory Note, between PGA and the Employee, dated as of February 27, 2012) from any amounts that are payable to the Employee under this Agreement following the termination of Employee’s employment with the Company and PGA under this Agreement.

 

(c)          The Employee hereby agrees that in consideration of the payments to be received under this Agreement, the Employee waives any and all rights to any payments or benefits under any severance (but not pension) plans, programs or arrangements of the Company or any of its subsidiaries.

 

12.       Withholding. The Company and PGA may withhold from any amounts payable under this Agreement such Federal, state, local, foreign or other taxes as are required to be withheld pursuant to any applicable law or regulation.

 

13.       Assignment. (a) This Agreement is personal to the Employee and without the prior written consent of the Company and PGA shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution, and any assignment in violation of this Agreement shall be void.

 

14

 

(b)       This Agreement shall be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal representatives, successors and permitted assigns (including, without limitation, in the event of the Employee’s death, the Employee’s estate and heirs in the case of any payments due to the Employee hereunder).

 

(c)        The Company or PGA may assign this Agreement and its rights and obligations hereunder to any entity which, by way of merger, consolidation, purchase or otherwise, becomes, directly or indirectly, a successor to all or substantially all of the business and/or assets of the Company or PGA, as applicable. The Employee acknowledges and agrees that all of the Employee’s covenants and obligations to the Company and PGA, as well as the rights of the Company and PGA hereunder, shall run in favor of and shall be enforceable by the Company and PGA or one or more of their respective affiliates, direct or indirect successors and permitted assigns.

 

14.     Consent to Jurisdiction: Waiver of Jury Trial. (a) Except as otherwise specifically provided herein, the Employee, the Company and PGA each hereby irrevocably submits to the exclusive jurisdiction of federal and state courts in the District of Delaware with respect to any disputes or controversies arising out of or relating to this Agreement. The parties undertake not to commence any suit, action or proceeding arising out of or relating to this Agreement in a forum other than a forum described in this Section 14(a); provided, however, that nothing herein shall preclude the Company or PGA from bringing any suit, action or proceeding in any other court for the purposes of enforcing the provisions of Section 14 or enforcing any judgment obtained by the Company or PGA and, in such event, the Employee hereby irrevocably submits to the jurisdiction of such other court.

 

(b)       The agreement of the parties to the forum described in Section 14(a) is independent of the law that may be applied in any suit, action, or proceeding and the parties agree to such forum even if such forum may under applicable law choose to apply non-forum law. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in an applicable court described in Section 14(a), and each party agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. The parties agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any suit, action or proceeding brought in any applicable court described in Section 14(a) shall be conclusive and binding upon the parties and may be enforced in any other jurisdiction.

 

(c)        Each party hereto irrevocably consents to the service of any and all process in any suit, action or proceeding arising out of or relating to this Agreement by the mailing of copies of such process to such party at such party’s address specified in Section 20.

 

(d)       Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of or relating to this Agreement. Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (ii)

 

15

 

acknowledges that it and the other party hereto has been induced to enter into this Agreement by, among other things, the mutual waiver and certifications in this Section 14(d).

 

15.     Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Delaware without regard to its principles of conflicts of law.

 

16.     Amendment; No Waiver. No provisions of this Agreement may be amended, modified, waived or discharged except by a written document signed by the Employee and a duly authorized officer of each of the Company and PGA. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

17.     Severability. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect to the fullest extent permitted by law. The Employee agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement (whether in whole or in part) is void or constitutes an unreasonable restriction against the Employee, such provision shall not be rendered void but shall be deemed to be modified to the minimum extent necessary to make such provision enforceable for the longest duration and the greatest scope as such court may determine constitutes a reasonable restriction under the circumstances.

 

18.     Entire Agreement. This Agreement sets forth the entire understanding between the parties with respect to the subject matter hereof. All oral or written agreements or representations, express or implied, with respect to the subject matter of this Agreement are set forth in this Agreement. All prior agreements, understandings and obligations (whether written, oral, express or implied) between the parties with respect to the subject matter hereof are terminated as of the date hereof and are superseded by this Agreement.

 

19.     Survival of Rights and Obligations. The rights and obligations of the Employee, PGA and the Company under the provisions of this Agreement shall survive, and remain binding and enforceable, notwithstanding the expiration of the Term, the termination of this Agreement, the termination of the Employee’s employment with the Company and its subsidiaries, as applicable, hereunder or any settlement of the financial rights and obligations arising from the Employee’s employment with the Company and PGA hereunder, to the extent necessary to preserve the intended benefits of such provisions.

 

20.     Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when personally delivered, telecopied (with confirmation of receipt), one day after deposit with a reputable overnight delivery service (charges prepaid) and three days after deposit in the U.S. Mail (postage prepaid and return receipt requested) to the address set forth below or such other address as the recipient party has previously delivered notice to the sending party.

 

	
If to the Company or PGA:
    	
Press Ganey Associates, Inc.
    

 

16

 

	
 
    	
404 Columbia Place
   South Bend. Indiana 46601
    
	
 
    	
Attn: Chairman of the Board
    
	
 
    	
Fax No.:(574) 232-3485
    
	
 
    	
 
    
	
With a copy (which shall not constitute notice) to:
    	
Vestar Capital Partners
    
	
 
    	
245 Park Avenue, 41st Floor
    
	
 
    	
New York, NY 10167
    
	
 
    	
Attn: General Counsel
    
	
 
    	
Fax No.: (212) 351-1630
    
	
 
    	
 
    
	
 
    	
 
    
	
If to the Employee: 
    	
Patrick T. Ryan
    
	
 
    	
c/o his last known address and facsimile
    
	
 
    	
number in the personnel records of the
    
	
 
    	
Company or PGA
    

 

21.       No Third-Party Beneficiaries. Except as expressly provided herein, this Agreement shall not confer on any person other than the parties hereto any rights or remedies hereunder.

 

22.       Headings and References. The headings of this Agreement are inserted for convenience only and neither constitutes a part of this Agreement nor affect in any way the meaning or interpretation of this Agreement. When a reference in this Agreement is made to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.

 

23.       Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile), each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

 

24.       Compliance with IRC Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and will be interpreted accordingly. References under this Agreement to the Employee’s termination of employment shall be deemed to refer to the date upon which the Employee has experienced a “separation from service” within the meaning of Section 409A of the Code. Notwithstanding anything herein to the contrary, (i) if at the time of the Employee’s separation from service with the Company or any of its affiliates the Employee is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder or payable under any other compensatory arrangement between the Employee and the Company or any of its affiliates as a result of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company or PGA, as applicable, will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Employee) until the date that is six months following the Employee’s separation from service (or the earliest date as is permitted under Section 409A of the Code), at which point all payments

 

17

 

deferred pursuant to this Section 24 shall be paid to the Employee in a lump sum and (ii) if any other payments of money or other benefits due to the Employee hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner that does not cause such an accelerated or additional tax. To the extent any reimbursements or in-kind benefits due to the Employee under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to the Employee in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv). Without limiting the generality of the foregoing, the Employee shall notify the Company or PGA if he believes that any provision of this Agreement (or of any award of compensation, including equity compensation, or benefits) would cause the Employee to incur any additional tax under Code Section 409A and, if the Company and PGA concur with such belief after good faith review or the Company or PGA independently make such determination, then the Company and PGA shall use reasonable efforts to reform such provision to comply with Code Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code Section 409A. For purposes of Section 409A of the Code, each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.

 

[The remainder of this page is intentionally left blank.]

 

18

 

IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first written above.

 

	
 
    	
PGA HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
by: 
    	
/s/ Paul D. Worland
    
	
 
    	
 
    	
Name:  Paul Worland
    
	
 
    	
 
    	
Title:  Vice   President & Secretary
    
	
 
    	
 
    
	
 
    	
PRESS GANEY ASSOCIATES, INC.
    
	
 
    	
 
    
	
 
    	
by: 
    	
/s/ Paul D. Worland
    
	
 
    	
 
    	
Name:  Paul Worland
    
	
 
    	
 
    	
Title:  Vice   President & Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
/s/ Patrick T. Ryan
    
	
 
    	
 
    	
PATRICK T. RYAN
    

 

 

EXHIBIT A

 

Current Boards and Committees

 

·                  Board of Affiliated Managers Group (Audit Committee and Chair of Compensation Committee)

·                  Board of Atrius (Compensation Committee)

·                  Board of Avon Old Farms School

·                  Advisor to Ferrer, Freeman & Company

·                  Lahey Clinic

 

20

 

EXHIBIT B

 

PRIOR INVENTIONS

 

NONE

 

21

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