Senior Management Agreement

Exhibit 10.11


SENIOR MANAGEMENT AGREEMENT


THIS AGREEMENT is made as of September 5, 1996, between American Medserve Corporation, a Delaware corporation (the "Company"), and J. Jeffrey Gephart ("Executive").


The Company and Executive desire to enter into an agreement pursuant to which Executive will purchase, and the Company will sell the number of shares of the Company's Class B Common Stock, par value $.01 per share (the "Class B Common") set forth in Section 1(a) below. All of such shares of Class B Common and all shares of Class B Common hereafter acquired by Executive pursuant to this Agreement are referred to herein as "Executive Stock." Certain definitions are set forth in Section 15 of this Agreement.


The execution and delivery of this Agreement by the Company and Executive is a condition to the Executive's purchase of shares of the Class B Common. Certain provisions of this Agreement are intended for the benefit of, and will be enforceable by, Golder, Thoma, Cressey, Rauner Fund IV, L.P. (the "Investor"), and the Investor is an intended third party beneficiary of this Agreement.


The parties also desire to enter into an agreement pursuant to which Executive shall be employed by the Company as the Company's Vice President- Sales.


The parties hereto agree as follows:


PROVISIONS RELATING TO EXECUTIVE STOCK


1. PURCHASE AND SALE OF EXECUTIVE STOCK.


(a) Executive hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Executive, 750.7229 shares of Class B Common. The purchase price per share of Class B Common (the "Purchase Price") shall equal $98.46.


(b) The closing of the purchase and sale of the Class B Common (the "Closing") shall take place at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601 at 10:00 a.m. on September 5, 1996, or at such other place or on such other date as may be mutually agreeable to the Company and the Executive. At the Closing, the Company shall deliver to the Executive stock certificates evidencing the Class B Common to be purchased by the Executive, registered in the Executive's name, upon payment of the purchase price thereof by a cashier's or certified check, or by wire transfer of immediately available funds to such account as designated by the Company in an amount not less than $7,392.00 and by delivery of a promissory note substantially in the form attached hereto as EXHIBIT A (the "Executive Note") in the amount of the balance of the Purchase Price owed in respect of the Class B Common purchased hereunder. Executive's obligations under the Executive Note will be secured by a pledge of all of the shares of Executive Stock to the Company and in connection therewith Executive shall enter into a pledge agreement in the form of EXHIBIT B attached hereto.


(c) Within 30 days after the purchase of Executive Stock by Executive from the Company, Executive shall make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder substantially in the form of EXHIBIT C attached hereto and will promptly notify the Company of such election.


(d) Executive represents and warrants to the Company that:


(i) The Executive Stock to be acquired by Executive pursuant
to this Agreement will be acquired for Executive's own account and not
with a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.


(ii) Executive is sophisticated in financial matters and is
able to evaluate the risks and benefits of the investment in the
Executive Stock.


(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.


(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Executive Stock and has had access to such other information
concerning the Company as he has requested.


(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.


(e) As an inducement to the Company to issue the Executive Stock to Executive, and as a condition thereto, Executive acknowledges and agrees that:


(i) Neither the issuance of any of the Executive Stock to
Executive nor any provision hereof shall entitle Executive to remain
in the employment of the Company and its Subsidiaries or affect the
right of the Company to terminate Executive's employment at any time
for any reason.


(ii) The Company shall have no duty or obligation to disclose
to Executive, and Executive shall have no right to be advised of, any
material information regarding the Company or any Subsidiary at any
time prior to, upon


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or in connection with the repurchase of the Executive Stock upon the
termination of Executive's employment with the Company or any
Subsidiary or as otherwise provided hereunder.


(f) As an inducement to the Company to issue the Executive Stock to Executive, and as a condition thereto, Executive covenants and agrees to enter into an Amended and Restated Stockholders Agreement in the form of EXHIBIT D attached hereto.


2. VESTING OF EXECUTIVE STOCK.


(a) FULLY VESTED SHARES. 30% of the shares of Executive Stock purchased hereunder (the "Fully Vested Shares") are vested on the date hereof.


(b) PERFORMANCE VESTING SHARES.


(i) Except as otherwise provided in Sections 2(b)(ii) and
2(b)(iii) below, 25% of the shares of Executive Stock purchased
hereunder (the "Performance Vesting Shares") shall vest on the seventh
anniversary of the Start Date, if as of such date Executive is still
employed by the Company or any Subsidiary, provided that if at the end
of any of the first five fiscal years of the Company following the
date hereof, both the Company's EBITDA and EBITDA Percentage equal or
exceed 90% of the Company's Projected EBITDA and Projected EBITDA
Percentage, as determined in good faith by the Board, respectively,
for such fiscal years, then 20% of the Performance Vesting Shares
shall vest as of the end of each fiscal year in which such requirement
is satisfied. In the event the Company does not satisfy the
requirement for 20% of the Performance Vesting Shares to vest as of
the end of any fiscal year, IF (i) the sum of the Company's EBITDA for
the fiscal year in which such requirement is not met and the
immediately succeeding fiscal year equals or exceeds 90% of the sum of
the Company's Projected EBITDA for such two fiscal years, and (ii) the
average of the Company's EBITDA Percentages for such two years equals
or exceeds 90% of the average of the Company's Projected EBITDA
Percentages for such two fiscal years, THEN 40% of the Performance
Vesting Shares shall vest as of the end of the second of such two
fiscal years.


(ii) Except as set forth in Section 2(b)(iii) below, in the
event Executive ceases to be employed by the Company for any reason,
then any Performance Vesting Shares which have not become vested on or
prior to such date shall not vest after such date. Upon the
occurrence of a Sale of the Company while the Executive is still
employed by the Company or its Subsidiaries, all Performance Vesting
Shares which have not yet become vested shall become vested at the
time of such event.


(iii) In the event the Company terminates Executive (other than
for Cause) or in the event of Executive's death or disability (as
reasonably determined by the Board or CEO) prior to the fifth
anniversary of the date of the Closing and


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the Additional Benefits Requirements (as defined below) are satisfied
as determined in good faith by the Board, the Performance Vesting
Shares shall continue to vest after Executive's termination, death or
disability as applicable in accordance with the provisions of
Section 2(b)(i) as if Executive were still employed by the Company.


The "Additional Benefits Requirements" are defined as:


(x) the Company's EBITDA for the 12 months ending as of the
month end immediately preceding the date of Executive's
termination equals or exceeds 85% of the Projected EBITDA for
such 12 month period, provided that if such 12 month period is
not one complete fiscal year of the Company, then the Projected
EBITDA for such period shall be deemed to be a proportionate
blend of the Projected EBITDA for the then current fiscal year
and the immediately preceding fiscal year taking into account the
relative number of months elapsed in each such fiscal year which
are part of such 12 month period; and


(y) the Company's EBITDA Percentage as of the end of such
12 month period equals or exceeds 85% of the Projected EBITDA
Percentage as of the end of such 12 month period, provided that
if such 12 month period is not one complete fiscal year of the
Company, then the Company's Projected EBITDA Percentage for such
period shall be deemed to be a proportionate blend of the
Projected EBITDA Percentages for the then current fiscal year and
the immediately preceding fiscal year, taking into account the
relative number of months elapsed in each such fiscal year which
are part of such 12 month period.


See attached Appendix 1 for an example of such calculation.


(c) TIME VESTING SHARES.


(i) Except as otherwise provided in Section 2(c)(ii) below,
45% of the shares of Executive Stock purchased hereunder (the "Time
Vesting Shares") will become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the
Company or any Subsidiary:


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Cumulative Percentage of
------------------------
Time Vesting Shares
-------------------
Date Vested
---- ------


At the Start Date 20%
1st Anniversary of the Start Date 36%
2nd Anniversary of the Start Date 52%
3rd Anniversary of the Start Date 68%
4th Anniversary of the Start Date 84%
5th Anniversary of the Start Date 100%


(ii) If Executive ceases to be employed by the Company or its
Subsidiaries on any date prior to an anniversary date listed above,
the cumulative percentage of Time Vesting Shares to become vested will
be determined on a pro rata basis according to the number of days
elapsed since the prior anniversary date. Upon the occurrence of a
Sale of the Company while Executive is still employed by the Company
or its Subsidiaries, all Time Vesting Shares which have not yet become
vested shall become vested at the time of such event. In the event
the Company terminates Executive (other than for Cause) or in the
event of Executive's death or disability (as reasonably determined by
the Board or CEO) prior to the fifth anniversary of the Start Date and
the Additional Benefits Requirements are satisfied as of the date of
Executive's termination, death or disability as applicable, all Time
Vesting Shares which have not become vested prior to the date of such
termination shall become vested on such date. Subject to the
preceding sentence, any Time Vesting Shares which have not become
vested as of the date that Executive ceases to be employed by the
Company or its Subsidiaries shall not vest after such date.


(d) Shares of Executive Stock which have become vested (including the Fully Vested Shares) are referred to herein as "Vested Shares," and all other shares of Executive Stock are referred to herein as "Unvested Shares."


3. REPURCHASE OPTION.


(a) Subject to 3(f) below, in the event Executive ceases to be employed by the Company or its Subsidiaries for any reason (the "Termination"), the Executive Stock (whether held by Executive or one or more of Executive's transferees) will be subject to repurchase by the Company and the Investor pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option").


(b) The purchase price for each Unvested Share will be the lesser of Executive's Original Cost or the Fair Market Value for such share, and the purchase price for each Vested Share will be the Fair Market Value for such share.


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(c) The Board may elect to purchase all or any portion of the Unvested Shares and the Vested Shares by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Stock within 100 days after the Termination. The Repurchase Notice will set forth the number of Unvested Shares and Vested Shares to be acquired from each holder, the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of shares to be repurchased by the Company shall first be satisfied to the extent possible from the shares of Executive Stock held by Executive at the time of delivery of the Repurchase Notice. If the number of shares of Executive Stock then held by Executive is less than the total number of shares of Executive Stock which the Company has elected to purchase, the Company shall purchase the remaining shares elected to be purchased from the other holder(s) of Executive Stock under this Agreement, pro rata according to the number of shares of Executive Stock held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares and Vested Shares to be repurchased hereunder will be allocated among Executive and the other holders of Executive Stock (if any) pro rata according to the number of shares of Executive Stock to be purchased from such person.


(d) If for any reason the Company does not elect to purchase all of the Executive Stock pursuant to the Repurchase Option, the Investor shall be entitled to exercise the Repurchase Option for the shares of Executive Stock the Company has not elected to purchase (the "Available Shares"). As soon as practicable after the Company has determined that there will be Available Shares, but in any event within 60 days after the Termination, the Company shall give written notice (the "Option Notice") to the Investor setting forth the number of Available Shares and the purchase price for the Available Shares. The Investor may elect to purchase any or all of the Available Shares by giving written notice to the Company within thirty days after the Option Notice has been given by the Company. As soon as practicable, and in any event within ten days after the expiration of the thirty day period set forth above, the Company shall notify each holder of Executive Stock as to the number of shares being purchased from such holder by the Investor (the "Supplemental Repurchase Notice"). At the time the Company delivers the Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company shall also deliver written notice to the Investor setting forth the number of shares the Investor is entitled to purchase, the aggregate purchase price and the time and place of the closing of the transaction. The number of Unvested Shares and Vested Shares to be repurchased hereunder shall be allocated among the Company and the Investor pro rata according to the number of shares of Executive Stock to be purchased by each of them.


(e) The closing of the purchase of the Executive Stock pursuant to the Repurchase Option shall take place on the date designated by the Company in the Repurchase Notice or Supplemental Repurchase Notice, which date shall not be more than thirty days nor less than five days after the delivery of the later of either such notice to be delivered. The Company and/or the Investor will pay for the Executive Stock to be purchased pursuant to the Repurchase Option by delivery of a check, a wire transfer of funds and/or a note (payable in three equal annual installments commencing on the first anniversary of such closing and bearing interest at the corporate base rate as determined by the First National Bank of Chicago at the time the note is issued) in form and substance determined by the Board in good faith in the aggregate


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amount of the purchase price for such shares. In addition, the Company may pay the purchase price for such shares by offsetting amounts outstanding under the Executive Note issued to the Company hereunder and any other debts owed by Executive to the Company. The Company and the Investor will be entitled to receive customary representations and warranties from the sellers regarding such sale and to require all sellers' signatures be guaranteed.


(f) Notwithstanding anything to the contrary set forth above, in the event the Company terminates Executive (other than for Cause) prior to the fifth anniversary of the date of Closing and the Additional Benefits Requirements are satisfied, then (i) Executive will be entitled to retain all Performance Vesting Shares which are Unvested Shares until it is finally determined whether they will vest under the EBITDA and EBITDA Percentage tests described in Section 2(b) above (at which time, as such determinations are made, the Company and the Investor will be entitled to exercise the Repurchase Option in respect of such Shares of Executive Stock) and (ii) subject to Section 3(h) below, Executive shall be entitled to require the Company to purchase all Vested Shares as soon as practicable after such termination by delivery of written notice to the Company within 30 days following such termination and all Performance Vesting Shares which had not vested as of the date of such termination as soon as practicable after the date on which all such Performance Vesting Shares become Vested Shares by delivery of written notice to the Company within 30 days following such vesting. The Company will pay for the Executive Stock to be purchased pursuant to this Section 3(f) by delivery of a check, a wire transfer of funds and/or a note (payable in three equal annual installments commencing on the first anniversary of the date of purchase by the Company and bearing interest at the corporate base rate as determined by the First National Bank of Chicago at the time the note is issued) in form and substance determined by the Board in good faith. In addition, the Company, at its election, may pay ...