Document:

Employment Agreement

 Exhibit 10.26 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the
“Agreement”), is entered into as of October 19, 2011 and is effective as of November 1, 2011 (the “Effective Date”), by and between IPC THE HOSPITALIST COMPANY, INC., a Delaware
corporation (the “Company”), and RICHARD H. KLINE, III (“Employee”). 
 BACKGROUND
INFORMATION 
 A. The Company desires to enter into this Agreement to secure for its benefit the skills of individuals who
provide unique value to its operations; 
 B. The Company recognizes that Employee possesses certain skills and expertise which
give Employee peculiar value to the Company; and 
 C. The Company desires to retain these skills for the benefit of the Company
and to provide Employee with compensation commensurate with such skills. 
 NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 

ARTICLE I 

BASIC EMPLOYMENT 
 1.1 Employment. The Company agrees to employ Employee, and Employee hereby agrees to be employed by the Company, to perform the duties more fully described below for the compensation and
duration specified in this Agreement, as it may be amended from time to time, subject to and upon all the terms and conditions set forth herein. 
 1.2 Term. The term of employment under this Agreement shall commence as of the Effective Date, and continue in full force and effect after the Effective Date for a period of one
(1) year (the “Term”); provided, however, that the Term shall automatically be extended for successive one (1) year periods unless either party provides the other with at least ninety (90) days advance written
notice of its intention not to extend the Term. Each twelve (12) month period during the Term or any extension shall be referred to herein as a “Contract Year.” Notwithstanding anything to the contrary contained herein, the
Term will terminate upon termination of Employee’s employment by the Company or by Employee pursuant to Article III below. 

1.3 Duties and Powers. 
 1.3.1 Service with the Company. During the Term, Employee shall (i) serve as the Company’s Chief Financial Officer and shall report directly to the Chief Executive Officer
of the Company (the “CEO”) and (ii) have such responsibilities, duties and authorities, and render such other services for the Company, that are consistent with Employee’s position as Chief Financial Officer, as the
CEO may from time to time reasonably direct. 
 1.3.2 Service with Subsidiaries and other Affiliates. During the
Term Employee shall, at the reasonable request of the CEO, serve as the Chief Financial Officer and/or director of each subsidiary or other affiliate of the Company; provided that Employee shall not be entitled to any additional
compensation for serving as an officer or director of the Company’s subsidiaries and other affiliates. 
 1.3.3
Performance of Duties. Employee will devote his best efforts, energies and abilities and his full business time, skill and attention (except for permitted vacation periods and reasonable periods of illness) to the business and affairs
of the Company, its subsidiaries and other affiliates and shall perform the duties and carry out the responsibilities assigned to him, to the best of his ability and in a diligent, trustworthy, businesslike and efficient manner. Employee
acknowledges that his duties and responsibilities will require his full-time business efforts and agrees that during the Term he will not engage in any other business activity or have any business pursuits or interests, except activities or
interests which do not conflict with the business of the Company, its subsidiaries and other affiliates and do not interfere with the performance of Employee’s duties hereunder; provided that Employee shall be permitted to
(i) continue to serve on civic and charitable boards and committees (provided that in January of each 

 
year hereunder, Employee furnishes the board of directors of the Company (the “Board”) with a list of the civic and charitable boards and committees on which Employee is then
serving), and (ii) manage his personal investments and affairs, in each case so long as the activities referred to in clauses (i) and (ii) above otherwise comply with the terms and conditions of this Agreement, including the
provisions of this Section 1.3.3; provided further that, other than the positions and entities listed in clause (i) above, Employee shall not, without the prior written consent of the Board, be permitted to serve on
any for profit entity’s board of directors or committee or hold any similar position with respect to any such entity. 

1.4 Compensation. During the Term, the Company agrees to pay to Employee an initial base salary at the gross rate of
$350,000 per annum, commencing on the effective date hereof (the “Base Salary”). The Base Salary shall be payable in arrears in substantially equal payments at such frequency as is the custom and practice of the Company and on at
least a monthly basis. During the Term, the Base Salary shall be subject to annual review by the compensation committee (the “Committee”) of the Board. 
 1.5 Bonus Compensation. During the Term, in addition to the Base Salary, Employee shall be eligible to receive an annual performance-based cash bonus (“Annual Bonus”) during
each Contract Year with respect to each fiscal year of the Company (subject to Section 4.2). The Annual Bonus shall be based upon quantitative and qualitative performance targets as established by the Committee in it sole discretion in
accordance with the Company’s annual bonus plan; provided, that Employee’s Annual Bonus payable for achievement of the target level of performance designated by the Committee shall be not less than fifty percent (50%) of Base
Salary in effect at the time the Committee establishes the Annual Bonus. The Committee may, in its discretion, specify amounts of Annual Bonus payable above or below the designated target amount for achievement of performance at specified levels
above or below the designated target level of performance. The Annual Bonus shall be payable to Employee at the same time bonuses are paid to other executive officers in accordance with the Company’s annual bonus plan, but in no event later
than March 15 of the calendar year following the calendar year in which the Annual Bonus is no longer subject to a substantial risk of forfeiture within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”). 
 1.6 Working Conditions/ Benefits. 

1.6.1 Vacation. Employee shall be entitled to twenty (20) business days of paid vacation per calendar year. Any unused
vacation days shall accrue from year to year up to a maximum of thirty-five (35) days accrued at any one time. Employee shall accrue ten (10) paid sick days per calendar year. The maximum accumulation of vacation and sick days shall be in
accordance with the Company’s policies and practices. 
 1.6.2 Insurance and Other Benefits. During the Term,
Employee shall be eligible to participate in and, if eligible, to receive employee and dependent group medical, dental, disability, life insurance, 401(k) and such other benefits made available by the Company in accordance with the Company’s
policies and procedures established from time to time, or, if there is no policy or procedure in place at any applicable time, on the same basis as other senior management of the Company. 

1.6.3 Expenses. During the Term, Employee shall be entitled to reimbursement for all approved reasonable travel and other
business expenses incurred by Employee in connection with his services to the Company pursuant to the terms of this Agreement. All business expenses for which Employee seeks reimbursement from the Company shall be adequately documented by Employee
in accordance with the Company’s procedures covering expense reimbursement and in compliance with the regulations of the Internal Revenue Service. 
 1.6.4 Facilities. During the Term, Company shall provide Employee with office space at its headquarters in North Hollywood, California, and secretarial and other support services and
facilities commensurate with Employee’s position. 
 1.6.5 Equity Compensation Grants. During the Term,
Employee shall be eligible to receive, at the discretion of the Committee, grants of stock options and/or other equity-based compensation under, and subject to the terms of, the Company’s 2007 Incentive Compensation Plan or any such other
incentive compensation plan that may be maintained by the Company from time to time. 
 ARTICLE II 

PROPRIETARY AND CONFIDENTIAL INFORMATION 
 2.1 The Company’s Proprietary, Confidential and Trade Secret Information. Employee may have access to or otherwise obtain knowledge of confidential information of the Company and/or its
affiliates (whether such affiliation is through a management agreement between the Company and/or another entity or otherwise) (“Affiliates”), including, without limitation, the Company’s and Affiliates’ selling and
servicing methods and business techniques, software programs, policies and procedures, business records, training, service and business manuals, promotional materials, training courses and other training and instructional materials, vendor and
product information, customer and prospective customer lists, other customer and prospective customer 

  
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information, information concerning the Company’s and Affiliates’ current or any future or proposed work, services, or products, the facts that any such work, services, or products are
planned, under consideration, or in production, as well as any descriptions thereof, and other business information (“Confidential Information”). Confidential Information shall not include information that Employee can demonstrate:
(i) was publicly available at the time of disclosure, or later became publicly available through no act or omission of the Employee; (ii) was rightfully in Employee’s possession prior to Employee’s date of employment by the
Company; or (iii) was rightfully received by Employee from a third party without any obligation of confidentiality. 
 Employee
acknowledges that (a) all such Confidential Information, whether reduced to writing, maintained on any form of electronic media, or maintained in the mind or memory of Employee and whether compiled by the Company, its Affiliates and/or
Employee, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use; (b) reasonable efforts have been made by the Company and its
Affiliates to maintain the secrecy of such information; (c) all Confidential Information and materials have and will be made available to Employee only for the limited purpose of the performance of Employee’s duties as an employee;
(d) all Confidential Information of the Company and its Affiliates has been developed or compiled by the Company and its Affiliates through substantial expenditures of time, effort and money and constitutes valuable and unique property of the
Company and its Affiliates; and (e) all Confidential Information and materials are the sole property of the Company or its Affiliates. Any retention and use of such information by Employee during Employee’s employment with the Company
(except in the course of performing Employee’s duties and obligations hereunder) or after the termination of Employee’s employment shall constitute a misappropriation of the Company’s and its Affiliates’ trade secrets and
Confidential Information and unfair competition. 
 The Company’s and its Affiliates’ business is the development and implementation
of programs for the management of comprehensive hospital-based care for patients within structural in-patient programs, the provision of hospitalist and associated services throughout the United States and the development and utilization of
automated and electronic work tools and processes for hospital-based healthcare providers. Employee acknowledges and agrees that the development of relationships between the Company or its Affiliates and their respective customers and clients
entails great expense and difficulty and requires frequent personal contact with such customers and clients, that the development of the Company’s and its Affiliates’ staff and employees entails great difficulty and expense and extensive
training and supervision of such staff and employees, and that but for Employee’s employment by the Company, Employee would have no contact with or knowledge of the identities, addresses and other contact information pertaining to the
Company’s or its Affiliates’ customers, clients, staff, or other employees, all of which constitute part of the Company’s and its Affiliates’ Confidential Information. 
 Accordingly, and without diminishing in any way the rights and remedies of the Company under any applicable law and regulation, Employee will keep in strict confidence, and will not, directly or
indirectly, at any time during or after Employee’s employment with the Company, disclose, furnish, disseminate, make available or, except in the course of performing Employee’s duties of employment, use any Confidential Information or
other trade secrets or confidential business and technical information of the Company or its Affiliates. 
 Employee expressly authorizes the
Company to notify any person, firm, entity, hospital, medical group, medical provider or corporation employing Employee in the future, or evidencing an intent to employ Employee in the future, of the existence and provisions of this Agreement.

 Employee acknowledges that Employee’s use of Confidential Information regarding the Company’s or any of its Affiliates’
accounts, clients, customers, staff and/or employees by Employee during or after the Term of Employee’s exclusive and non-exclusive employment by the Company or consultation with the Company, except as is necessary in the course and scope of
performing Employee’s job duties for the Company, will materially and adversely affect the Company, and all of its shareholders, economically and otherwise, and constitutes unfair competition. Accordingly, as an additional inducement to the
Company to enter into the Agreement with the Employee, Employee agrees that: 
 2.1.1 Use of Trade Secrets and
Confidential Information. During and after the Term of Employee’s exclusive or non-exclusive employment by the Company or consultation with the Company, except as is necessary in the course and scope of performing Employee’s job
duties for the Company, Employee will not use the Company’s or any of its Affiliates’ trade secrets or Confidential Information, directly or indirectly, alone or in concert with any person or entity, for Employee’s own account or for,
or on behalf of, any other person or entity, to solicit any business from accounts, clients or customers of the Company or its Affiliates who have dealt with the Company or its Affiliates at any time during the Term. 

2.1.2 Non-Solicit. During the Term and for a period of two (2) years following expiration or termination of the Term,
regardless of the reason for the termination, Employee will not directly or indirectly solicit or induce or attempt to solicit or induce any officer, director, employee, sales representative, agent or consultant of the Company or its Affiliates to
terminate or adversely alter their employment, representation or other association with the Company or its Affiliates. In addition, at no time after 

  
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Employee leaves employment with the Company will Employee seek to obtain or misappropriate any of the Company’s or its Affiliates’ trade secrets or Confidential Information from any
current or former employee or consultant of the Company or any of its Affiliates. 
 2.1.3 Disclosure. In the
event that Employee is requested or required in any proceeding to disclose any Confidential Information, Employee shall: (i) provide the Company with prompt written notice of such request(s) and the documents or information requested so that
the Company or its Affiliates may seek an appropriate protective order and/or waive Employee’s compliance with the provisions of this Article II; and (ii) consult with the Company or its Affiliates as to the advisability of taking
legally available steps to resist or narrow such request. It is further agreed that, if in the absence of a protective order or the receipt of a written waiver from the Company or its Affiliates, the Employee is nonetheless, in the opinion of his
legal counsel, compelled to disclose any of the Confidential Information or else stand liable for contempt or suffer other censure or penalty, Employee agrees to disclose to such tribunal only such Confidential Information as is legally required,
which disclosure shall be without liability hereunder; provided, however, that Employee shall give the Company written notice of the Confidential Information to be so disclosed as far in advance of its disclosure as is practicable and
Employee shall request, from the parties to whom the Confidential Information is disclosed, assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Company or its
Affiliates designates. 
 2.2 Return Of Property. Employee agrees that upon termination of Employee’s
employment with the Company, for any reason, Employee shall promptly return to the Company, in good condition, all property of the Company or its Affiliates, including, without limitation, the originals and all copies of any materials which contain,
reflect, summarize, describe, analyze or refer or relate to any Confidential Information. In the event that such items are not so returned, the Company or its Affiliates will have the right to charge Employee for all reasonable damages, costs,
attorneys’ fees and other expenses incurred in taking, removing and/or recovering such property. 
 2.3 Assignment Of
Inventions. Employee hereby assigns and agrees to assign to the Company, its Affiliates, successors, assigns or nominees, all of Employee’s right, title and interest in and to any and all “Inventions,” which include any
and all discoveries, developments, designs, inventions, improvements, processes, techniques, business records, software programs, training, service and business manuals, promotional materials, training courses and other results and proceeds of
Employee’s services, regardless of whether subject to patent, registration, trade mark or copyright protection or protection under similar statutes, made, conceived, suggested, either solely or jointly with others, by Employee while in the
Company’s employ, whether in the course of employment with the use of the Company’s time, material or facilities or that is in any way within or related to the existing or contemplated scope of the Company’s or its Affiliates’
business or result from the use of property owned, leased or contracted for by the Company or any of its Affiliates. Inventions shall also include anything that derives actual or potential economic value from not being generally known to the public
or to other persons who can obtain economic value from its disclosure or use. Any Inventions directly derivative of the Company’s or its Affiliates’ planned or existing products or services, developed or under development during
Employee’s employment and made, conceived or suggested by Employee, either solely or jointly with others, within one (1) year following termination of Employee’s employment under the Agreement, or any successor agreement shall be
irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials and/or facilities. All work papers, reports, documentation, drawing, photographs, negatives, tapes
and masters therefor, prototypes, other tangible items and materials, and all other results and proceeds of Employee’s services hereunder, made, conceived, or suggested, either solely or jointly with others, by Employee while in the
Company’s employ, whether in the course of employment with the use of the Company’s time, material or facilities or in any way within or related to the existing or contemplated scope of the Company’s or its Affiliates’ business,
including, without limitation, and such results and proceeds directly derivative of the Company’s or its Affiliates’ planned or existing products or services, developed or under development during Employee’s employment and made,
conceived or suggested by Employee, either solely or jointly with others, within one (1) year following termination of Employee’s employment under the Agreement or any successor agreements, and including, without limitation, any and all
such items generated and maintained on any form of electronic media, constitute specially commissioned works made for hire as defined in the United States Copyright Act, which works and the copyrights therein and thereto shall be the property of the
Company or its Affiliates as the author thereof. To the extent that California law applies to this Agreement, this paragraph does not apply to any invention that qualifies fully under the provisions of Section 2870 of the California Labor Code,
the text of which is reproduced in Section 2.6, and Employee agrees and acknowledges that Employee will bear the full burden of proving to the Company that an Invention qualifies fully under Section 2870. 

Upon request by the Company with respect to any such Inventions, Employee agrees to execute and deliver to the Company, at any time during or after
Employee’s employment, such further documents as the Company may require in connection with the rights, privileges and property granted to the Company or its Affiliates in the preceding paragraph (the “Rights”), when so
requested, at the expense of the Company, but without further or additional consideration. In the event the Company is unable, after reasonable effort, to secure Employee’s signature on any document(s) required in accordance with the provisions
of this Article II, Employee irrevocably designates the Company or its Affiliates, or their nominee, as Employee’s agent or attorney-in-fact to act on Employee’s 

  
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behalf, with the right, but not the obligation, to execute and deliver all such further documents for the purposes aforesaid. Employee also irrevocably designates the Company or its Affiliates,
or their nominee, as Employee’s agent or attorney-in-fact, with the right but not the obligation, for the sole benefit of the Company or its Affiliates, and at the Company’s or its Affiliates’ expense, to bring, prosecute, defend and
appear in suits, actions, and proceedings of any nature under or concerning all such Rights; and to take such action as the Company or its Affiliates may deem advisable to enforce, protect, and/or defend any of the Rights; and to litigate, collect
and receive all damages arising from any infringement of any such Rights. Any such action may be taken by the Company or its Affiliates in the name of Employee or otherwise, and the Company or its Affiliates may join Employee as a plaintiff or
defendant in any such suit, action or proceeding. 
 Employee further acknowledges that the foregoing assignment of rights is made in
consideration of, and is adequately supported by good, valuable and sufficient consideration including but not limited to the agreement of the Company to employ Employee. 
 2.4 Remedies. Employee acknowledges and agrees that the provisions of this Article II are reasonable and necessary to protect the legitimate professional and business interests of the
Company and its Affiliates and that any breach or violation hereof would result in irreparable damage and injury to the Company or its Affiliates with the extent and the amount of the damages and injury being difficult, if not impossible, to
ascertain. Employee acknowledges and agrees that such damages and injury cannot be adequately compensated with monetary damages, and Employee further agrees that the Company or its Affiliates may seek and obtain injunctive relief against the breach
or threatened breach of any of the provisions of this Article II and/or specific enforcement of such provisions in addition to any other legal or equitable remedies which may be available and that are not inconsistent with the Dispute
Resolution Procedure in Section 5.1, Employee agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. Should litigation be instituted to enforce any provision of this Article II,
the prevailing party will be entitled to recover all costs incurred in connection with such action, including without limitation reasonable legal fees, cost of investigation and cost of settlement; provided, however, that in the case
of recovery by the Employee, such recovery shall only be allowed for amounts incurred during the life time of the Employee and shall be subject to the provisions of Section 5.4 governing reimbursement for expenses.  

2.5 Reasonableness of Obligations. Employee acknowledges and agrees that Employee’s obligations under this Article
II are reasonable in the context of the nature of the Company’s and its Affiliates’ business and the competitive injuries likely to be sustained by the Company or its Affiliates if Employee were to violate such obligations. Employee
further acknowledges that the Agreement is made in consideration of, among other things, this Article II and is adequately supported by good, valuable and sufficient consideration, including but not limited to the agreement of the Company to
employ Employee. Employee specifically agrees that the provisions of this Article II shall survive the termination or expiration of the Agreement. 
 2.6 California Labor Code Section 2870. 
 2.6.1 Any provision in
an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time
without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: 
 (a) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer. 

(b) Result from any work performed by the employee for the employer. 

2.6.2 To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under Section 2.6.1, the provision is against the public policy of California and is unenforceable. 
 ARTICLE III 
 TERMINATION 

3.1 Termination. The Term and Employee’s employment (a) shall automatically terminate immediately upon
Employee’s death, (b) may be terminated at any time by the Board as set forth herein for Cause (as defined in Section 3.2.2) or without Cause, or by reason of Employee’s Permanent Disability (as defined in
Section 3.3.2), upon written notice to Employee, (c) may be terminated at any time by Employee for Good Reason (as defined in Section 3.5.5) upon written notice to the Company, as set forth below, or (d) may be
terminated at any time by Employee without Good Reason in accordance with Section 3.4. In the event the Employee’s employment with the Company terminates after the expiration of the initial Term due to a notice of non-renewal in
accordance with Section 1.2, the Employee shall only be entitled to (i) in the case of non-renewal by the Employee, the Accrued Obligations payable as described in Section 3.2.1 and (ii) in the case of non-renewal
by the Company, the Accrued Obligations payable as described in Section 3.2.1 and the Annual Bonus payable as described in Section 4.2. 

  
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 3.2 Termination for Cause. The Company shall have the right to terminate
Employee’s employment at any time for Cause by giving Employee written notice of the effective date of termination. The determination of whether Cause exists shall be made in the sole discretion of the CEO. 

3.2.1 Obligations Upon Termination for Cause. If the Company terminates Employee’s employment for Cause (as defined in
Section 3.2.2), the Company shall have no further obligation hereunder from and after the effective date of such termination, except for (x) payment, within thirty (30) days of such termination, of Employee’s earned and
unpaid Base Salary through the date of termination, (y) payment of amounts or benefits accrued and vested as of the date of termination under any retirement plan, profit sharing plan, employee benefit plan, incentive compensation plan, deferred
compensation plan or life insurance policy maintained by the Company in accordance with the terms of such plans, and (z) any Annual Bonus earned and payable for the immediately preceding fiscal year to the extent unpaid on the date of such
termination, payable at the same time as such annual bonuses are paid to other executives of the Company, but in no event later than March 15 of the calendar year following the year in which such Annual Bonus was no longer subject to a
substantial risk of forfeiture (collectively, the “Accrued Obligations”), and the Company shall have all other rights and remedies available under this Agreement, at law or in equity. 

3.2.2 Cause Definition. “Cause” shall solely be defined as: 

(a) fraud, misappropriation, embezzlement or other act of material misconduct against the Company; 

(b) substantial, continuing and willful failure to render services in accordance with the terms of this Agreement;

 (c) knowing violation of any laws, rules or regulations of any governmental or regulatory body material to the
business of the Company; or 
 (d) conviction of or a plea of nolo contendere to a felony or a crime
involving moral turpitude, or a charge or indictment of a felony or of any crime involving moral turpitude the defense of which renders Employee substantially unable to perform his services hereunder. 

3.3 Termination on Account of Death or Permanent Disability. 

3.3.1 Separation Benefits. If Employee dies or is terminated due to Permanent Disability, then following his death or such
termination due to Permanent Disability, the Company shall pay or provide to Employee (or, in the case of death, to such person or persons as Employee shall have designated for that purpose in a notice filed with the Company, or, if no such person
shall have been so designated, to his estate (the “Employee’s Beneficiary”)) the Accrued Obligations payable as described in Section 3.2.1. In addition, in the case of death or termination due to Permanent
Disability, the Company shall pay or provide to Employee or (y) in the case of death, the Company shall pay or provide to the Employee’s Beneficiary, the following: (a) periodic payments equal to seventy-five percent (75%) of
Employee’s Base Salary in effect as of the date of his death or termination due to Permanent Disability (reduced to the extent that any disability benefit provided by the Company exceeds 25% of Employee’s Base Salary or increased, but to
not more than 100% of Employee’s Base Salary, to the extent that any disability benefit provided by the Company is less than 25% of Employee’s Base Salary), which shall be payable in monthly installments and in accordance with the
Company’s standard payroll practices, subject to Section 5.4, for a period of twelve (12) months following the Employee’s death or termination due to Permanent Disability; (b) the Welfare Benefits Payment, as defined
in Section 3.5.4; (c) medical and dental benefits to Employee (in the case of termination due to Permanent Disability) and/or his covered dependents (in the case of death or termination due to Permanent Disability and in either case
to the extent applicable) upon the same terms and conditions as if Employee continued to remain an active employee of the Company for a period of twelve (12) months following the date of such termination due to death or Permanent Disability,
subject to Employee (or his dependents, in the case of Employee’s death) timely electing coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA Coverage”); and (d) the payment
of the Annual Bonus as specified in Section 4.2. Employee shall be entitled to receive his standard employment compensation and benefits described in Section 1 (reduced by the amount of any disability benefits paid to the
Employee under any disability plan maintained by the Company) from the time the Employee has suffered a physical or mental impairment until such time the Employee has been terminated due to death or a Permanent Disability. 

3.3.2 Permanent Disability Definition. “Permanent Disability” shall mean any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. Termination due to Permanent Disability shall mean a termination of Employee’s
employment by the Company, based upon the Company’s determination in good faith that Employee has incurred a Permanent Disability. 

  
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 3.4 Voluntary Termination by Employee. Employee may terminate his employment
by Company at any time without Good Reason upon sixty (60) days’ advance written notice to the Company; provided, however, in the event of such termination of employment under this Section 3.4, (i) Employee
(or his heirs, executors or administrators) shall continue to be bound by any provisions of this Agreement that expressly survive termination of this Agreement, (ii) the Company shall have no further obligation hereunder from and after the
effective date of such termination, except for payment of the Accrued Obligations as described in Section 3.2.1, and (iii) the Company shall have all other rights and remedies available under this Agreement, at law or in equity.

 3.5 Termination by Employee for Good Reason or by Company without Cause. 

3.5.1 Termination by Employee for Good Reason. Employee may terminate his employment with the Company for Good Reason upon
written notice to the Company, provided, however, that in order for Employee to have a termination of employment for Good Reason, the Company must have failed to remedy the event or condition constituting Good Reason within thirty
(30) days following receipt of notice pursuant to Section 3.5.5 (or, in the case of any event or condition (or events or conditions) which is capable of cure, but not reasonably within such thirty (30) day period, then the
Company must have failed to commence efforts to cure within such thirty (30) day period and, thereafter, must have failed to continue diligently in good faith its efforts to cure until such cure is effected). 

3.5.2 Termination without Cause. The Company may terminate Employee’s employment without Cause upon sixty
(60) days’ advance written notice to Employee. 
 3.5.3 Separation Benefits. In the event that
Employee’s employment with the Company is terminated by Employee for Good Reason or by the Company without Cause, the Company shall pay or provide to Employee the Accrued Obligations payable as described in Section 3.2.1 and
the payments described in Section 4.2. In addition, the Company shall pay or provide to Employee the following: (a) the Severance Payment, as set forth in Section 3.5.4; (b) the Welfare Benefits Payment, as set
forth in Section 3.5.4; (c) medical and dental benefits to Employee and/or his covered dependents (to the extent applicable) upon the same terms and conditions as if Employee continued to remain an active employee of the Company for
the severance period; and (d) the payment of the prorated Annual Bonus specified in Section 4.2 (in all events below determined without regard for any diminution of such coverage constituting Good Reason for his resignation
hereunder). Further, Employee shall be entitled to continued participation in certain welfare plans as described in Section 4.3. In addition, Employee and the Company shall continue to be bound by any provisions of this Agreement that
expressly survive termination of this Agreement. 
 3.5.4 Severance and Welfare Benefits Payment. For purposes of
this Agreement, “Severance Benefits” shall represent a payment in amount equal to the Base Salary (as in effect immediately before such termination, without taking into account any diminution in Base Salary constituting Good Reason
for his resignation hereunder) and “Welfare Benefits Payment” shall represent a lump sum cash payment, payable sixty (60) days following the Employee’s termination of employment, equal to the present value of the cost to
the Company for providing life and disability insurance benefits to Employee, based upon the cost immediately preceding such termination, for a period of twelve (12) months. The Severance Payment shall be divided into substantially equal
monthly cash payments, which shall be payable in monthly installments and in accordance with the Company’s standard payroll practices, subject to Section 5.4, for a period of twelve (12) months following the date of such
termination. The Company will pay all applicable payroll taxes related to such payments and shall withhold the Employee’s payroll taxes. 
 3.5.5 Good Reason Definition. “Good Reason” shall mean the occurrence, without Employee’s express written consent, of any of the following events, provided that
Employee shall have given the Company written notice that circumstances that Employee believes potentially constitute one of the following Good Reason events exist no later than ninety (90) days after the date that such circumstances come into
existence, with specific explanation of the circumstances and the provision of this definition under which Good Reason has arisen: 
 (a) a substantial reduction in Employee’s status, title, position or authority at the Company such that Employee is no longer the Chief Financial Officer of the Company; 

(b) a reduction in the Base Salary or the target amount of any Annual Bonus which represents or will represent, in any
12-month period following such reduction, a reduction of $20,000 in either Base Salary, target Annual Bonus, or the aggregate of Base Salary and target Annual Bonus; 

  
 7 

 (c) the requirement that Employee render services outside of Los Angeles
County, California or the relocation of the Company’s headquarters outside of Los Angeles County, California; provided, however, that the foregoing shall not apply as to reasonable business travel commensurate with Employee’s
position; or 
 (d) any material breach by the Company of any provision of this Agreement. 

After receipt of Employee’s notice under this Section 3.5.5, Employee’s continued employment shall not, subject to the requirements
under this Section 3.5.5, constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason. Any termination of Employee’s employment for Good Reason as a result of such event or condition
must occur no later than the second anniversary of the date that such condition initially arose. At any time after such notice has been given and Good Reason exists (and has not been cured), the Company may not terminate Employee’s employment
due to Permanent Disability under Section 3.3. 
 3.5.6 Release. Notwithstanding anything in this
Agreement to the contrary, Employee’s right to receive any separation benefits under Section 3.3.1 following a termination due to Permanent Disability or under Section 3.5.3 following a Termination by Employee for Good
Reason or by the Company without Cause excluding, in each case, any Accrued Obligations, shall be contingent upon (i) Employee having executed and delivered to the Company a release in such form as provided by the Company not later than the
date set forth in the release (but in no event more than 45 days after the date of termination) (the “Consideration Period”), (ii) Employee not revoking such release in accordance with the terms of the release and (ii) the
Employee not violating any of the Employee’s on-going obligations under this Agreement; provided, however, that the Company has the discretion to pay to the Employee the separation benefits under Section 3.3.1 and
Section 3.5.3, as applicable, prior to the Company’s receipt of the release and/or the expiration of the release revocation period; provided further that if the Employee does not execute and deliver a release to the
Company prior to the expiration of the Consideration Period or if the Employee revokes the release in accordance with its terms, the Employee shall pay to the Company within 10 days following the expiration of the Consideration Period or the date
such release was revoked, a lump sum payment of all separation benefits received by Employee to date (excluding any Accrued Obligations). 
 OTHER PAYMENTS AND BENEFITS 
 ARTICLE IV 

4.1 Annual Bonus Payable Following Certain Terminations. In the event of a termination of Employee’s employment due to
death, Permanent Disability, or in circumstances triggering Severance Payments under Section 3.5, Employee (or his beneficiaries following his death) shall be entitled to receive a pro rata portion of his Annual Bonus for the fiscal year
in progress at the date of termination of employment, based on the actual performance achieved for the full fiscal year determined in good faith by the Committee and consistent with its determinations for senior executives who remain in service to
the Company at the time of such determination. The pro rata portion shall be equal to the number of calendar days in the fiscal year through the applicable termination date divided by 365 (or 366 in a leap year). Payment of any Annual Bonus so
earned shall be made by March 15 of the year following the year of Employee’s termination. For any Contract Year which ends with the non-renewal of this Agreement by the Company, the Annual Bonus for the fiscal year in progress at the end
of such Contract Year shall be payable in the same way, treating such non-renewal as a qualifying termination for purposes of this Section 4.2. 
 4.2 Commitment Regarding Continued Participation in Welfare Plans. In the event of a termination of Employee’s employment following age 55 and five years of employment with the Company
due to death, Permanent Disability, or in circumstances triggering Severance Payments under Section 3.5, the Company will in good faith use its best efforts to permit Employee (or his dependents, in the case of Employee’s death) to
continue to participate in the Company’s employee and dependent group medical and dental benefit programs, upon the same terms and conditions as if Employee continued to remain an active employee of the Company, for a period until both Employee
and his spouse at the time of termination become eligible for Medicare coverage. 
 ARTICLE V 

MISCELLANEOUS 
 5.1 Dispute Resolution Procedure. 
 5.1.1
Arbitration. The parties agree that any dispute arising out of or related to the employment relationship between them, including the termination of that relationship, shall be resolved by binding arbitration, except where the law
specifically forbids the use of arbitration as a final and binding remedy. 

  
 8 

 5.1.2 Statement of Grievance. The party claiming to be aggrieved shall furnish
to the other party a written statement of the grievance identifying any witnesses or documents then reasonably known to that party that support the grievance and the relief requested or proposed. 

5.1.3 Mediation. If within thirty (30) days after the written statement of grievance the other party does not agree to
furnish the relief requested or proposed, or otherwise does not satisfy the demand of the party claiming to be aggrieved, the other party shall provide a statement of reasons, identifying witnesses or documents then reasonably known to that party in
support of its position. Either party may then submit the dispute to nonbinding mediation before a mediator to be jointly selected by the parties within fourteen (14) business days thereafter. The Company will pay the cost of the mediation.
Such mediation shall be completed within sixty (60) days of the submission of the dispute to a mediator. 
 5.1.4
Arbitration Proceeding. If the mediation does not produce a resolution of the dispute, or if the parties fail to cooperate with such mediation, the Company and Employee agree that final and binding arbitration will be the exclusive
remedy for any employment related dispute between them which is based on a legally protected right, including without limitation, any common law claims such as breach of contract or commission of a tort, and any claims arising under the federal,
state or local civil rights laws, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the
Worker Adjustment or Retraining Notification Act, the California Fair Employment & Housing Act, the California Family Rights Act, California’s Pregnancy Disability Leave law, and all other federal, state or local employment related
statutes, ordinances and common law. Employee acknowledges that Employee waives the right to litigate the foregoing employment related legal claims in a judicial forum before a judge or jury. 

This arbitration provision does not apply to any Employee claim for workers’ compensation benefits (with the exception of claims
pursuant to California Labor Code section 132a), claims under the National Labor Relations Act, unemployment compensation benefits or denial of benefits pursuant to the Employee Retirement Income Security Act of 1974, as amended, or to the filing of
Employee charges with government agencies. 
 5.1.5 Claim Initiation/Time Limits. A party must notify the other
party in writing at the addresses indicated below of a request to arbitrate a dispute within the same statute of limitations applicable to the legal claim asserted. The written request for arbitration must specify: (i) the factual basis on
which the claim is made; (ii) the statutory provision or legal theory under which the claim is made; and (iii) the nature and extent of any relief or remedy sought. 
 5.1.6 Procedures. Arbitration will be before a single arbitrator in Los Angeles, California, unless the parties mutually agree to hold the arbitration in a different location. The
arbitration will be administered in accordance with the Employment Dispute Rules of the American Arbitration Association (“AAA”), a copy of which is available upon request to the Company. If the parties cannot agree on an
arbitrator, then the AAA rules will govern selection. The Company will pay the fees of the AAA and the arbitrator. However, in the event Employee requests an arbitration, Employee will be required to contribute an amount equal to the fee required to
file a complaint of the same type in the state court which is geographically closest to the site of the arbitration. Employee and the Company may be represented by counsel of their choosing at their own expense. However, the arbitrator may award
attorneys’ fees and costs to a prevailing party if authorized by the statute or common law under which the claim is made. 

5.1.7 Responsibilities of Arbitrator. The arbitrator will act as the impartial decision maker of any claims that come
within the scope of this arbitration provision. The arbitrator will have the powers and authorities provided by the Employment Dispute Resolution Rules of the AAA and the statute or common law under which the claim is made. For example, the
arbitrator will have the power and authority to include all remedies in the award available under the statute or common law under which the claim is made including, without limitation, the issuance of an injunction. The arbitrator will apply the
elements and burdens of proof, mitigation duty, interim earnings offsets and other legal rules or requirements under the statutory provision or common law under which such claim is made. The arbitrator will permit reasonable pre-hearing discovery.
The arbitrator will have the power to issue subpoenas. The arbitrator will have the authority to issue a summary disposition if there are no material factual issues in dispute requiring a hearing and the Company or Employee is entitled to an award
in its or his favor. The arbitrator will issue a signed written opinion and award that will include findings of fact and conclusions of law. If any monetary award is made, the arbitrator will specify the elements and factual basis for calculating
the amount. The arbitrator’s award will be enforceable, and a judgment may be entered thereon, in a federal or state court of competent jurisdiction. The decision of the arbitrator will be final and binding; provided, however,
limited judicial review may be obtained in a court of competent jurisdiction: (i) on any ground referred to in the Federal Arbitration Act, 9 U.S.C. § 1 et seq.; (ii) where the findings of fact are not supported by substantial
evidence; or (iii) where the arbitrator’s conclusions of law are erroneous. 
 5.2 Notices. Whenever
notice is to be served hereunder, service shall be made personally, by facsimile transmission, by overnight courier or by registered or certified mail, return receipt requested. All postage and other delivery charges shall be prepaid by the party
sending the notice. Notice shall be effective only upon receipt by the party being served, except notice shall be deemed 

  
 9 

 
received seventy-two (72) hours after posting by the United States Post Office, by method described above. Confirmation of receipt of any facsimile sent must be received in order to presume
that the transmission was received. All notices shall be sent to the addresses described below unless changed by written notice pursuant to the terms of this Section 5.2: 

To the Company: 

IPC The Hospitalist Company 
 4605 Lankershim Boulevard, Suite 617 
 North Hollywood, CA 91602 

Attention: President 
 Facsimile: (818) 766-3999 
 To Employee: 

RICHARD H. KLINE, III 
 215 Via Colusa 
 Palos Verdes Estates, CA 92074 

5.3 Determinations by the Board or the Committee. Except as specifically provided herein to the contrary, with respect to
any determinations to be made by the Board or the Committee in connection with Employee’s employment (or termination of employment) hereunder, Employee shall not have the right to participate in the deliberations of such determination and shall
abstain from any vote of the Board or the Committee with respect thereto. 
 5.4 Section 409A. 

5.4.1 General. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be
interpreted and construed consistently with such intent. The payments to Employee pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption
pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for purposes of the separation pay exemption, each installment paid to Employee under this Agreement shall
be considered a separate payment. In the event the terms of this Agreement would subject Employee to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Employee shall cooperate diligently to
amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement.
To the extent any amounts under this Agreement are payable by reference to Employee’s “termination of employment” such term and similar terms shall be deemed to refer to Employee’s “separation from service,” within the
meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, if Employee is a “specified employee,” as defined in Section 409A of the Code, as of the date of Employee’s separation from service,
then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon Employee’s separation from service
and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of Employee’s separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the
separation from service or (b) the date of Employee’s death. Any reimbursement payable to Employee pursuant to this Agreement shall be conditioned on the submission by Employee of all expense reports reasonably required by the Company
under any applicable expense reimbursement policy, and shall be paid to Employee in accordance with the Company’s procedures covering expense reimbursements, but in no event later than the last day of the calendar year following the calendar
year in which Employee incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit
to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit. 

5.4.2 Other Provisions. 
 (a) No Influence on Year of Payment. In the case of any payment under the Agreement payable during a specified period of time following a termination of employment or other event, if such
permitted payment period begins in one calendar year and ends in a subsequent calendar year, Employee shall have no right to elect in which year the payment will be made, and the Company’s determination of when to make the payment shall not be
influenced in any way by Employee. 
 (b) Good Reason. The definition of “Good Reason” in
Section 3.5.5 is intended to meet requirements so that a termination for Good Reason will constitute an “involuntary separation” within the meaning of Treasury Regulation § 1.409A-1(n)(2)(i), and shall be so
construed and interpreted. 

  
 10 

 (c) Non-transferability. No right to any payment or benefit under this
Agreement shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by Employee’s creditors or of any of Employee’s beneficiaries. 

(d) No Acceleration. The timing of payments and benefits under the Agreement may not be accelerated to occur before the
time specified for payment hereunder, except to the extent permitted under Treasury Regulation § 1.409A-3(j)(4) or as otherwise permitted under Code Section 409A without Employee incurring a tax penalty. 

5.5 No Mitigation; No Set-Off. The Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action (provided Employee enters into and does not rescind the general release provided in
Section 3.6 and subject to the proviso in the succeeding sentence) which the Company may have against Employee or others, other than any action the Company may need to take pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.
In no event shall Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Employee under any of the provisions of this Agreement and such amounts shall not be reduced whether or not
Employee obtains other employment; provided that the Company’s obligation under Sections 3.3.1, 3.5.3 and 4.3 with respect to medical and dental benefits shall be limited to the extent that Employee obtains any such
medical or dental benefits from another employer during the benefit continuation period provided thereunder, in which case the Company may reduce the coverage of any medical and dental benefits it is required to provide Employee under Sections
3.3.1, 3.5.3 and 4.3 as long as the aggregate coverages of the combined benefits provided by the Company and such other employer are comparable to the benefits to be provided to Employee by the Company under Sections 3.3.1,
3.5.3 and 4.3. The provisions of this Section 5.5 shall survive the expiration or earlier termination of this Agreement for any reason. 
 5.6 Assignability. The Company may assign its interest in this Agreement to any subsidiary or affiliate of the Company or in connection with a merger or sale of all or substantially all of
the assets of the Company and the provisions of this Agreement shall inure to the benefit of the successors and assigns of the Company. Employee may not assign or transfer this Agreement, it being deemed personal to Employee only; provided,
however, upon Employee’s death, Employee’s heirs, executors and/or administrators may seek collection of any sums that may have been due Employee as of Employee’s death. Subject to the above, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 
 5.7 Deductions. The Company shall deduct from any payment to Employee hereunder such social security insurance, federal, state and other taxes, state disability insurance and other
withholdings as may be required by law. 
 5.8 Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be found to be invalid, void or unenforceable, the remaining provisions of this Agreement and any application thereof shall, nevertheless, continue in full force and effect
without being impaired or invalidated in any way. 
 5.9 Waiver. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition
of this Agreement. 
 5.10 Headings. The headings herein used are for convenience purposes only and shall not be
used to construe the meaning of this Agreement in any respect. 
 5.11 Entire Agreement. This Agreement, together
with the Exhibits and any extensions or renewals hereof, constitutes the parties’ entire Agreement with respect to the subject matter hereof and supersedes all prior statements or agreements, both written and oral except for award agreements
related to grants of equity-based compensation to Employee. This Agreement may be amended only by a writing signed by the parties. 
 5.12 Governing Law. The validity, interpretation and construction of this Agreement, and all other matters related to the Agreement, shall be interpreted and governed by the laws of the
State of California. 
 5.13 Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original instrument and all of which together shall constitute the same instrument. 

  
 11 

 5.14 Acknowledgements. Employee and the Company each acknowledge and represent
to the other that each of them (a) has carefully read and understands this Agreement, (b) has had the opportunity to consult with legal counsel prior to executing this Agreement, (c) understands the legal effect and binding nature of
this general Agreement, and (d) is acting voluntarily (and not as a result of any threats or coercion) and with full knowledge of their actions in executing this Agreement, with the intent of being bound by this Agreement. 

5.15 Future Cooperation. Following the end of the Term, as the Company in its sole discretion deems necessary to effectuate
a smooth transition, or in connection with any and all claims, disputes, negotiations, investigation, lawsuits or administrative proceedings involving the Company, Employee agrees to make himself available, upon reasonable notice from the Company,
and without the necessity of subpoena, to provide information or documents, provide declarations or statements to the Company, meet with attorneys or other representatives of the Company, prepare for and give depositions or testimony, render
consulting services and/or otherwise cooperate in the investigation, defense or prosecution of any or all such matters. Separate from any compensation provided pursuant to any other provision of this Agreement, the Company agrees that if the
provision of such services is more than 5% of the average level of services performed by Employee for the Company and its affiliated “service recipients” (within the meaning of Treasury regulation §1.409A-1(h)(3)) over the
immediately preceding 36-month period, the Company shall promptly compensate Employee at the rate of $500 per hour, and will reimburse Employee for reasonable out of pocket expenses. Any additional fees or reimbursement payable pursuant to this
Section 5.15 shall be paid as soon as administratively feasible, but in all cases, no later than March 15 of the year following the year in which such fees are earned or such expense is incurred. This Section 5.15 shall
survive the termination of this Agreement. Notwithstanding any other provision in this Agreement, in no event shall the level of services to be provided by the Employee pursuant to this Section 5.15 exceed more than 20% of the average
level of services performed by the Employee for the Company and its affiliated “service recipients” over the immediately preceding 36-month period. 

  
 12 

 IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement,
effective as of the date first above written, by their duly authorized representatives. 
  

							
	COMPANY	 		 	 IPC THE HOSPITALIST COMPANY, INC.,
 a Delaware corporation

				
		 		 	By:	 	 /s/Adam D. Singer, M.D.

		 		 	Name:	 	 Adam D. Singer, M.D.

		 		 	Title:	 	 Chief Executive Officer

			
	EMPLOYEE	 		 	 /s/ Richard H. Kline, III

		 		 	RICHARD H. KLINE, III

  
 13 

 EXHIBIT A 
 GENERAL RELEASE 
 For a valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of IPC The Hospitalist Company, and each of its subsidiaries, associates, affiliates, successors, heirs, assigns,
agents, managers, directors, officers, employees, representatives, lawyers, insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action,
in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent to the extent
permissible under applicable law (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of
time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the
Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasee’s right to terminate the employment of the undersigned; and any alleged violation
of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With Disabilities Act, and the California Fair Employment and
Housing Act. 
 THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL
CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” 
 THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. 

IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS: 

(A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE; 
 (B) HE HAS FORTY FIVE (45) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND 
 (C) HE HAS
SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION PERIOD. 
 The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever
by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned. 
 IN
WITNESS WHEREOF, the undersigned has executed this Release this      day of             ,     . 

  
 14Letter Agreement

 Exhibit 10.13 
 PERFUMANIA 
 HOLDINGS INC. 

December 23, 2011 
 Parlux Fragrances, Inc. 
 5900 N. Andrews Avenue 

Suite 500 
 Fort Lauderdale, FL 33309 

Artistic Brands Development, LLC 
 1850 N.W.
84th Avenue, Suite 100 

Miami, Florida 33126 
 Rene Garcia 

1850 N.W. 84th Avenue, Suite 100 
 Miami, Florida 33126 
  

	 	RE:	Agreement and Plan of Merger (the “Merger Agreement”), dated the date hereof, by and among Perfumania Holdings, Inc. (“Parent”), PFI
Merger Corp., a wholly-owned subsidiary of Parent (“Merger Sub”) and Parlux Fragrances, Inc. (the “Company”) 

 Ladies and Gentlemen: 
 Reference is made to the Merger Agreement. Capitalized
terms used herein without definition shall have the meaning given to them in the Merger Agreement. 
 As of the Effective Time,
the Company will merge with and into Merger Sub and each of the Company Shareholders shall receive the Merger Consideration set forth in the Merger Agreement. In connection with the Merger, it is hereby acknowledged that, concurrently with the
execution of the Merger Agreement (i) the Company, Rene Garcia and Artistic Brands Development, LLC (f/k/a Iconic Fragrances, LLC) (“Licensor”) are executing an amendment (the “Letter Amendment”) to the Letter
Agreement dated April 3, 2009 (as amended, the “Letter Agreement”) by and between the Company, Rene Garcia and Licensor to provide among other matters that the Merger and the Second Merger shall not be deemed a
“Fundamental Transaction” as defined in and for purposes of the Letter Agreement and (ii) the Company and the holders of outstanding Licensor Warrants exercisable for a majority of the shares Company Common Stock issuable under such
Licensor Warrants are executing an amendment to all of the outstanding Licensor Warrants (the “Licensor Warrant Amendment”) to govern treatment of the Licensor Warrants in connection with the Merger and the Transactions. 

Licensor and Parent have agreed, pursuant to a letter agreement dated as of December 23, 2011 among Licensor, Parent and S. Carter
Enterprises, LLC, to enter into a Sublicense dated as of the Effective Time, in the forms attached hereto as Exhibit B and Exhibit C, respectively, and Licensor and S. Carter Enterprises, LLC have agreed pursuant to such letter
agreement to enter into a License Agreement as of the Effective Time, in the form attached hereto as Exhibit D (the “Carter License and Sublicense”). 

 It is acknowledged and agreed that this agreement shall terminate and be null and void
ab initio if (a) the Merger is not consummated in accordance with the terms of the Merger Agreement (x) as in effect on the date hereof or (y) as amended following the date hereof; provided that such amendments shall not
(i) adversely affect any of the principal rights and benefits of Licensor or Rene Garcia intended hereby, (ii) affect the Merger Consideration or the Exchange Ratio (each as defined in the Merger Agreement), (iii) affect any holder of
a Licensor Warrant (as defined in the Merger Agreement) adversely and disproportionately to any other holder of a Licensor Warrant without the former holder’s written consent, or (iv) adversely affect any of the other rights and benefits
afforded Licensor or Rene Garcia hereunder other than in an immaterial and de minimis respect, or (b) the transactions contemplated by the Letter Amendment and the Licensor Warrant Amendment are not consummated. 

Parent, the Company, Licensor and Rene Garcia hereby agree as follows: 

1. Except as set forth in paragraph 2 below, Licensor and Rene Garcia shall, and each shall cause each of their Affiliates to, use
commercially reasonable efforts to cause each of their Representatives to (a) not solicit or take other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to an Artistic
Brands Proposal, as defined below, (b) not participate in any way in any discussions or negotiations relating thereto or in furtherance thereof or accept any Artistic Brands Proposal, except to notify such person as to the existence of the
provisions of this agreement, and (c) not enter into any letter of intent, agreement or agreement in principle with respect to an Artistic Brands Proposal. 
 2. The Company may receive one or more Acquisition Proposals in the manner and at the times specified in Section 5.3 of the Merger Agreement. If, in accordance with the requirements of
Section 5.3 of the Merger Agreement, the Company and the Independent Committee determine to engage in discussions or negotiations with the third Person that submits the Acquisition Proposal (the “Third Person”), then the
Company shall promptly notify Parent (in accordance with the requirement of the Merger Agreement), Licensor and Rene Garcia in writing of such determination (a “Notice”), and following receipt thereof by Licensor and Rene Garcia,
Licensor and Rene Garcia shall be permitted to (a) enter into, participate in and/or engage in discussions or negotiations as to the proposed treatment of the Licensor Warrants and the Letter Agreement and a license and/or sublicense as to the
same subject matter as the Carter License and Sublicense in connection with such Acquisition Proposal with the Third Person upon such terms and conditions that such parties may agree (any such proposed treatment being referred to as an
“Artistic Brands Proposal”), and (b) upon or following the execution by the Company of an Alternative Acquisition Agreement as to a Superior Proposal in accordance with the Merger Agreement, enter into agreements with respect
to a related Artistic Brands Proposal. The Company shall promptly notify Licensor and Rene Garcia if it terminates or ceases negotiations or discussions with respect to an Acquisition Proposal, and Licensor and Rene Garcia shall promptly thereafter
terminate discussions or negotiations as to the related Artistic Brands Proposal; provided, however, if a subsequent Acquisition Proposal is received by the Company, the foregoing provisions of this Section 2 shall once again apply.

 3. Licensor and Rene Garcia shall have the same obligations with respect to an Artistic
Brands Proposal as the Company has with respect to a Superior Proposal pursuant to Section 5.3(e)(W) through (Y) of the Merger Agreement, and Parent and Merger Sub shall have the same rights with respect to such Artistic Brands Proposal as
they have with respect to a Superior Proposal pursuant to Section 5.3(e)(W) through (Y) of the Merger Agreement, including without limitation obligations and rights relating to notice and information with respect to the Superior Proposal
and negotiations relating to it and Parent’s right to revise the Merger Agreement, the Financing Letter, the Related Person Investment Commitment, the Letter Amendment and the Licensor Warrant Amendment with respect to a Superior Proposal.

 4. Within five (5) business days of the Effective Time, Licensor, or its designees, shall be issued 300,000 shares of
Parent Common Stock, which shares shall be afforded the same registration rights as contemplated under that certain Amendment to Warrant Certificates of even date herewith by and among the Company and certain holders of Warrants as if such
provisions were set forth herein, conditioned upon receipt by Parent of a representation letter in the form attached hereto as Exhibit A duly executed by Licensor, or its designees, as the case may be, or an authorized signatory of Licensor
or its designees. The parties acknowledge and agree that the issuance of such 300,000 shares shall be in consideration for the transactions contemplated by this letter and not with respect to the amendment or modification of the Licensor Warrants.
If, after the date of this agreement and at or prior to the issuance of such 300,000 shares, the outstanding shares of Parent Common Stock are changed into a different number of shares or type of securities by reason of any reclassification,
recapitalization, split-up, stock split, subdivision, combination or exchange of shares, or any dividend payable in stock or other securities is declared thereon or rights issued in respect thereof with a record date within such period, or any
similar event occurs (any such action, an “Adjustment Event”), the 300,000 shares to be issued hereunder shall be adjusted accordingly to provide to Licensor, or its designee, the same economic effect as contemplated by this
agreement prior to such Adjustment Event. Each of Parent and the Company covenants and agrees not to treat the issuance of the shares of Parent Common Stock to be issued hereunder to Licensor or its designees in any manner that would preclude
Licensor or its designees from treating the receipt of such shares as generating capital gain for federal or state tax purposes, and both Parent and Company further covenant and agree not to claim any deduction in connection with the issuance of
such shares that would be inconsistent with the treatment of the receipt of such shares as generating capital gain to the Licensor or its designees. 
 5. The Company acknowledges and agrees that the Carter License and Sublicense will be entered into as of the Effective Time. 
 6. This agreement shall be construed in accordance with and governed by the internal laws (without regard to the conflict of laws provisions) of the State of New York. 

7. The parties agree that irreparable damage would occur in the event that any of the provisions of this agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this agreement and to enforce specifically the terms and
provisions of this agreement in the United States District Court for the Eastern District of New 

 
York or in New York Supreme Court sitting in Suffolk County, New York, without bond or other security being required, this being in addition to any other remedy to which they are entitled at law
or in equity. 
 8. This agreement may be executed in one or more counterparts, all of which shall be considered one and the
same agreement and each of which shall be deemed an original. 
 [Remainder of Page Intentionally Left Blank.] 

 The Company, Rene Garcia and Licensor agree to the foregoing by signing a counterpart of this agreement
where indicated below. 
  

			
	Sincerely,
	
	Perfumania Holdings, Inc.
		
	By:	 	 /s/ Michael W. Katz

	Name:	 	Michael W. Katz
	Title:	 	President and Chief Executive Officer
	
	AGREED AND ACCEPTED:
	
	Parlux Fragrances, Inc.
		
	By:	 	 /s/ Frederick E. Purches

	Name:	 	Frederick E. Purches
	Title:	 	Chairman and CEO
	
	Artistic Brands Development, LLC
		
	By:	 	 /s/ Rene Garcia

	Name:	 	Rene Garcia
	Title:	 	Manager
	
	 /s/ Rene Garcia

	Rene Garcia, individually

 EXHIBIT A 

FORM OF REPRESENTATION LETTER 
 Date:                      
 Perfumania Holdings, Inc. 
 35 Sawgrass Drive, Suite 2 

Bellport, NY 11713 
 Attn: Donna Dellomo

 Edwards Wildman Palmer LLP 
 111
Huntington Avenue 
 Boston, MA 02199 

Attn: Matthew C. Dallett 
 The
undersigned (the “Holder”) is entitled to receive shares of the common stock, $0.01 par value, of Perfumania Holdings, Inc. (the “Licensor Shares”) pursuant to the Letter Agreement, dated December     , 2011,
by and among Perfumania Holdings, Inc., Parlux Fragrances, Inc., Artistic Brands Development, LLC and Rene Garcia (the “Letter Agreement”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such
terms in the Letter Agreement. 
 In connection with this request, the Holder hereby represents and warrants to Parent and its
counsel and transfer agent as follows: 
 1. Holder is acquiring the Licensor Shares as principal for his, her or its own
account and not with a view to or any present intention of distributing such Licensor Shares or any part thereof in violation of the Securities Act and has no direct or indirect arrangement or understandings with any other persons regarding the
distribution of such Licensor Shares in violation of the Securities Act. 
 2. Holder is an accredited investor, as defined in
Rule 501(a) under the Securities Act, because Holder meets the element of the definition of “accredited investor” that Holder has indicated in the attached Schedule I. 

3. Holder agrees that its Licensor Shares may only be disposed of in compliance with state and federal securities laws and the terms of
the following legend, which shall be imprinted on the certificate(s) representing the Licensor Shares: 
 THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE 

 
COMPANY THAT SUCH REGISTRATION STATEMENT IS NOT REQUIRED UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNDER APPLICABLE STATE SECURITIES LAWS. 

 

	
	Very truly yours,
	
	  

	(Signature of Holder)
	Please print or type name and address of Holder:
	  

	  

	  

  

	
	Acknowledged and Accepted
	
	PERFUMANIA HOLDINGS, INC.
	
	  

	Name:
	Title:

 SCHEDULE I 
 CONFIRMATION OF STATUS AS ACCREDITED INVESTOR 
 The Holder hereby represents that
he, she or it is: 
  

	 ̈	An organization described in section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for
the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; 

  

	 ̈	A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase (exclusive of the equity in his or her
primary residence) exceeds $1,000,000; 

  

	 ̈	A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year; 

  

	 ̈	A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act; or 

  

	 ̈	An entity in which all of the equity owners are “accredited investors.” 

 EXHIBIT B 

Letter Agreement 
 (Filed
separately as Exhibit 10.14 to the Registration Statement on Form S-4 (File No. 333-179124) filed by Perfumania Holdings, Inc. on February 23, 2012.) 

 EXHIBIT C 

Sublicense 
 (Filed
separately as Exhibit B to Exhibit 10.14 to the Registration Statement on Form S-4 (File No. 333-179124) filed by Perfumania Holdings, Inc. on February 23, 2012.) 

 EXHIBIT D 

License Agreement 

(Filed separately as Exhibit A to Exhibit 10.14 to the Registration Statement on Form S-4 (File No. 333-179124) filed by Perfumania Holdings, Inc.
on February 23, 2012.)

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