EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the Effective Date (as hereinafter defined) by and between PHYAMERICA
PHYSICIAN GROUP, INC. (the "Employer"), a Delaware corporation with its
principal place of business in Durham, North Carolina, and Xxxx X. Xxxxxx
("Employee"), a resident of Oakland, New Jersey.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Employee was previously employed as a Regional Vice President
by SHG/PhyAmerica Physician Group, Inc., a subsidiary of Employer pursuant to an
Employment Agreement dated September 1, 1999 (the "Previous Agreement"), and
WHEREAS, Employee has been serving as Executive Vice President and
Interim Chief Financial Officer of Employer since June 21, 2000; and
WHEREAS, subject to the terms and conditions hereinafter provided,
Employer desires to employ Employee, and Employee desires to accept such
employment, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, and the agreements and covenants set forth herein,
Employee and Employer hereby agree as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby accepts
such employment, subject to the terms and conditions stated herein. Upon
the commencement of the term of this Agreement on the Effective Date, the
Previous Agreement shall terminate and be of no further force and effect
(except that the provisions of Sections 8, 9, 10 and 11, dealing with
confidentiality, non-compete and non-solicitation shall survive and are
continued by the provisions of this Agreement).
2. Term. This Agreement shall be effective as of January 1, 2001 (the
"Effective Date") and shall continue until December 31, 2001 (the "Initial
Term") unless either Employer or Employee terminates this Agreement
pursuant to Section 12 herein. Subsequent to the Initial Term, unless
Employer or Employee terminates this Agreement pursuant to Section 12
herein, this Agreement shall automatically renew itself for successive one
year periods (the Initial Term plus all such renewal periods, if any,
collectively, the "Term").
3. Duties. During the Term the Employee shall perform the following duties
pursuant to this Agreement:
(a.) Employee shall serve as Chief Financial Officer and an Executive Vice
President of Employer. Employee shall perform such services
principally at Employer's headquarters in Durham, North Carolina,
where Employer will provide office space and administrative support
for Employee.
(b.) Employee shall at all times abide and observe Employer's written
policies and procedures as are in effect from time to time. Employee
acknowledges that Employer is an equal opportunity employer and that
Employer's established policy is not to discriminate on the basis of
age, marital status, race, color, sex, religion or national origin, or
to violate any federal or state anti-discrimination law. Employee
shall be responsible for carrying out and implementing the foregoing
policy throughout the operations and activities of Employer.
(c.) Employee may be elected to the Board of Directors of Employer, or of
one or more of the Employer's subsidiaries or affiliates. If so
elected, Employee may be removed at any time from any board position
by action of the shareholders of such company or otherwise as provided
in the bylaws or laws applicable to such company, and such removal
shall not be considered to be a breach by the Employer or Employee of
this Agreement.
4. Compensation. For the services provided by Employee as an employee of
Employer, Employer shall pay Employee the annual base salary (the "Base
Salary") and other compensation identified on Exhibit A.
5. Additional Benefits. During the term of this Agreement, Employee shall be
entitled to and Employer shall provide to Employee, at no cost to Employee,
all employment benefits which are generally provided to senior executive
officers of Employer and its affiliates, including without limitation the
following:
(a.) Vacation and Sick Leave. Employee shall be entitled to paid vacation
in accordance with that provided to other senior executive officers of
Employer, plus all legal holidays observed by Employer and in
accordance with the Company's policy. The dates of Employee's vacation
shall be reasonably selected by Employee to reasonably minimize the
inconvenience to Employer and with due regard to his responsibilities
and duties hereunder, including, without limitation, making reasonable
provision for coverage of Employees responsibilities and duties.
Employee shall be entitled to paid sick leave in accordance with the
Company's policy. Unused sick days for any calendar year may be
carried over and shall accrue for use upon Employee's subsequent
illness; provided, however, that upon Employee's termination of
employment hereunder for any reason, Employee shall not be entitled to
any payment or other compensation for any current or accrued sick
days.
(b.) Medical, Dental and Other Insurance. Employee may elect to be covered
by medical, dental, life, long term disability and other insurance
programs provided by Employer, or Employee may elect to opt out of
such coverage. The compensation payable hereunder shall not be
adjusted based upon any election to participate or not participate in
any such programs.
(c.) Continuing Professional Education. Employee shall be entitled to a
maximum of 5 5 paid days per year to be used for continuing
professional education. Employer will pay the cost of continuing
professional education required to maintain the professional
license(s) of Employee up to the amount of $2,500 per year, and
provide reimbursement of usual and customary dues and license fees
consistent with Employer's policies.
(d.) Short-term Disability. Upon Employee's physical disability to perform
his duties hereunder, after utilization of all of Employee's current
and accrued sick days, Employee's Base Salary shall continue to be
paid for the first 14 days following utilization of all of Employee's
current and accrued sick days during which Employee continues to be
incapable of performing his duties hereunder. During the Term,
Employee shall be eligible for participation in, and shall receive all
benefits under, Employer's short-term disability insurance plan, in
accordance with such plan's terms as in effect from time to time.
(e.) Paging Service. Employer shall provide and pay the cost of a paging
service for use by Employee.
(f.) Business-related Expenses. Employer shall reimburse Employee for all
reasonable actual out of pocket expenses incurred by him in the
performance of his duties hereunder and which are incurred at the
direction of Employer and accounted for in accordance with Employer's
written expense guidelines and reimbursement procedures and practices
as in effect from time to time, including, but not limited to, travel,
postage, shipping, copying, fax, long distance telephone and
cellular phone. Employee's automobile expenses shall be reimbursed
based on the then applicable per mile amount allowed as a deduction
for federal income tax purposes.
(g.) Travel Expenses for Durham Office. In addition to the benefits
generally provided to senior executive officers of Employer, until
such time as Employee relocates to Durham, North Carolina, Employer
will pay reasonable travel/lodging/automobile expenses incurred by
Employee in order to perform services in Durham, North Carolina in an
amount not to exceed $3,300 per month.
6. Devotion of Time. During the Term, Employee's full time and attention shall
be devoted to the business of Employer and its affiliates in a manner and
to an extent commensurate with the commitment of other executive officers
of Employer, to fulfill the duties and responsibilities under the Agreement
and to advance the business interests and good reputation of Employer and
the direct and indirect subsidiaries of Employer.
7. Confidentiality and Non-Disclosure. Employee acknowledges that during the
Term he will gain access to, or possession or knowledge of, numerous trade
secrets, confidential information, other valuable properties not generally
available to the public and proprietary information, including but not
limited to, hospital and healthcare facility client lists, client files and
records, lists of potential clients, prospects or targets, and/or other
market and marketing data and plans, price books, promotional devices and
methods, business methods, manuals and plans, business and sales
techniques, strategic plans, computer programs, hospital and physician
contracts, and research and development (hereinafter referred to
collectively as "Confidential Information"). Employee acknowledges that
such Confidential Information is owned by Employer or by subsidiaries or
affiliates of Employer (for purposes of this Agreement, Employer and its
subsidiaries and affiliates are collectively referred to as the "Company"),
is unique and a valuable asset of the Company and is to be used only for
the Company's benefit. Employee shall not, during or after the term of this
Agreement, disclose, divulge, reveal, transfer, reproduce, sell, capitalize
upon or take advantage of such Confidential Information and, in addition,
Employee shall exercise all reasonable efforts and precautions to protect
such Confidential Information from misappropriation, misuse, disclosure,
breach of confidentiality, or other conduct or action inconsistent with the
Company's rights; provided, however, that Confidential Information may be
disclosed to the extent required by law or court order and Confidential
Information shall not include information (i) generally available to the
public other than by unauthorized disclosure, (ii) developed by Employee
independently of his employment hereunder as shown by his written business
records regularly kept; (iii) rightfully obtained by the Employee from a
third party without restriction and without breach of any nondisclosure
obligation; or (iv) released by the disclosing party without restriction on
further disclosure by any individual or entity. Upon termination of this
Agreement, Employee shall return immediately to Employer all of the
Company's property (including, without limitation, Confidential
Information) in Employee's possession or control. Any materials, manuals,
documents or records developed, written, edited or designed by Employee
while employed by Employer are the exclusive property of Employer.
8. Covenant Not To Compete. Employee has, as a result of employment under the
Previous Agreement, and will, as a result of this employment under this
Agreement, be responsible for the executive management and direction of
substantial business resources and assets of the Company and will develop
additional contacts and relationships with numerous individuals,
executives, hospitals and healthcare companies. Such individuals and
organizations will have business and contractual relationships with the
Company that will be a valuable asset thereof. Employee therefore agrees,
as follows:
(a.) For a period of 66 months after the end of the Term, Employee will
not, in the states in which the Employee is providing services at the
end of the Term, become employed by, own, operate, manage, or provide
other such similar services to any business that provides hospital
emergency practice management or staffing services such as are
provided by the Company.
(b.) For a period of 12 months after the end of the Term, Employee will not
solicit any hospital, clinic, healthcare facility or other client
having a contractual or business relationship with the Company,
or any prospect or potential client to which a marketing proposal or
presentation was made within 6 months of termination, and of which
Employee was aware, involving the provision of hospital emergency
department management services, which solicitation would be for the
purpose of providing healthcare or healthcare related services.
(c.) For a period of 12 months following the end of the Term, Employee will
refrain from any activity of any nature intended or reasonably
calculated to result in the termination or cancellation of any
contractual or business arrangement between the Company, and any
insurer, client, facility or other business or entity.
(d.) Employee shall notify any entity or organization of which he is a
director, significant shareholder (or other equity owner), manager,
general partner, executive officer or as to which he is otherwise a
controlling party or over whom he exerts significant influence (an
"Affiliate") of the provisions of Sections 7, 8 and 9 of this
Agreement in the event that such Affiliate encourages Employee to
engage in any activity that would be prohibited for Employee
personally under this Agreement.
(e.) Notwithstanding anything to the contrary in this Agreement, after the
end of the Term Employee shall have the right, during any of the
restrictive time periods set forth in Sections 8, 9 or 10, or
otherwise, to be employed by any hospital as a hospital administrator
or a similar position and such employment shall not constitute a
violation of this Agreement. In addition, nothing in this Agreement
shall prevent Employee from making passive investments in third
parties so long as such investments do not require Employee to perform
any services prohibited by any of the provisions of this Section in
connection with any such investments in such third parties.
9. Solicitation of Other Employees. Employee agrees, for a period of 12 months
after the end of the Term, not to solicit or seek to influence, either
directly or indirectly, any employee or any physician or healthcare
provider under contract with the Employer or any of its affiliates at any
time during Employee's employment by Employer, to enter into any employment
agreement, independent contractor arrangement, or any other contractual
arrangement whereby such individual would perform services for
compensation, either directly or indirectly, for any person, firm,
corporation or other entity or business that provides products or services
in competition with the Company.
10. Breach and Remedies.
(a.) Employee acknowledges that the breach or threatened breach of any of
the covenants set forth in Sections 8, 9 or 10 may result in immediate
and irreparable injury to the Company. Accordingly, Employee agrees
that the provisions of Sections 8, 9 and 10 shall inure to the benefit
of and may be enforced by the Company. In addition to any rights or
remedies available to the Company for a breach by Employee of Sections
8, 9 or 10, the Company shall be entitled to injunctive relief to
enforce the obligations of Employee contained in such Sections.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other legal or equitable remedies that may be available
to it for any such breach or threatened breach, including the recovery
of damages from Employee.
(b.) The periods of time provided for in Sections 8, 9 or 10, respectively,
shall be extended by a period of time equal to the duration of any
breach of any such section.
(c.) Employee hereby acknowledges that the covenants set forth in Sections
8, 9 and 10 are reasonable in all respects and are necessary to
protect the legitimate business interests of the Company. It is the
intention of the parties to restrict the activities of Employee only
to the extent necessary to protect the legitimate business interests
of the Company, and not to deprive Employee of the right or ability to
earn a livelihood. Employee acknowledges that the provisions of
Sections 8, 9 and 10
are substantially identical to the provisions of Sections 8, 9 and 10
of the Previous Agreement. The provisions of Sections 8, 9 and 10 of
this Agreement shall be a continuation of the provisions of the
Previous Agreement. Employee acknowledges that he received valuable
consideration in the form of increased compensation and a fixed term
in the Previous Agreement, and he has received additional valuable
consideration in the form of increased compensation, a fixed term,
severance benefits and a promotion in this Agreement to support the
non-compete and non-solicitation provisions of this Agreement.
(d.) In the event of a bankruptcy of the Employer and a rejection of this
Agreement pursuant thereto, Sections 8, 9 and 10 hereof shall cease to
be effective immediately upon such rejection.
11. Vacation and Sick Leave. All earned, accrued and unused vacation and any
unused sick pay, upon termination, will be governed by Employer's then
current policies.
12. Termination. This Agreement may be terminated as follows:
(a.) Employer may terminate this Agreement without cause effective at any
time after the end of the Initial Term upon 30 days' prior written
notice to Employee. The effective date of such termination shall be
the date set forth in such written notice ("Termination Date");
provided, however, that the Termination Date shall be at least 30 days
after the date of such notice (such 30 day or longer period, the
"Notice Period"). In the event of such termination, Employee, if
requested by Employer, shall continue to perform the obligations and
duties specified under this Agreement and assist with the transition
of duties to a new employee during the Notice Period. Employer, at its
option, may notify Employee at any time during the Notice Period that
no further services are to be performed; provided, however, that
Employee shall receive his Base Salary during the Notice Period.
Employee may terminate his continued employment pursuant to this
Agreement without cause at any time during the Term upon 30 days'
prior written notice to Employer. Whereupon Employee shall be paid his
Base Salary only through the date his employment term initiates. In
the event that this Agreement is terminated without cause by either
party, the covenants set forth in Sections 8, 9 and 10 shall continue
in effect, and the applicable start date for the periods of time in
Sections 8, 9 or 10 shall be the later of the date that notice of
termination is given or the last date upon which services are
performed by Employee.
(b.) If this Agreement is terminated without cause by Employer at any time
during the Term, Employer shall pay Employee a severance benefit equal
to 6 months of Employee's Base Salary then in effect (see Exhibit A),
all to be paid to Employee in equal monthly installments over the
period following the Termination Date in accordance with Employer's
regular monthly payroll, beginning with the first payroll payment date
following termination (the "Severance Benefits"). If the Agreement is
terminated without cause by Employer or Employee, any PhyAmerica ETA
Group Incentive Bonus and any Incentive Bonus described in Sections 2
and 3 of Exhibit A that has been earned as of the date of termination
shall be payable to Employee as provided in Exhibit A.
(c.) This Agreement may be terminated by Employer at any time for cause
upon written notice to Employee, which notice shall specify the reason
for termination. For purposes of this Section 12(c), cause shall
include, but shall not be limited to, the following: fraud;
dishonesty; substantial and continuous nonperformance of assigned
duties; failure to comply with a material written policy of Employer;
unlawful activities for which Employee is indicted or convicted of a
felony in a jurisdiction of the United States; and material breach of
this Agreement; provided that in the event Employer intends to
terminate this Agreement pursuant to this Section 12(c) for any cause
other than fraud, dishonesty or indictment or conviction of a felony,
then it shall first give written
notice of same to Employee with the specific reasons for termination
and afford Employee 30 days to cure such deficiency or default.
(d.) This Agreement shall terminate upon the death or total and permanent
disability of Employee. In the event that this Agreement terminates
due to Employee's death or total and permanent disability, Employer
shall pay upon such termination to Employee, or the Employee's estate
or personal representative, as the case may be, Employee's Base Salary
accrued through the date of Employee's death or the date Employee
becomes totally and permanently disabled, as the case may be. Any
PhyAmerica ETA Group Incentive Bonus and any Incentive Bonus described
in Sections 2 and 3 of Exhibit A that has been earned as of the date
of termination as a result of death or disability shall be payable to
Employee, or his estate or personal representative, as the case may
be, as provided in Exhibit A. Permanent disability for purposes of
this Agreement shall mean the inability to perform the functions of
Employee's position for a continuous period of 6 months as determined
by a physician selected by both Employee and Employer or, in the event
they do not agree, a physician that is mutually selected by Employee's
physician and a physician designated by Employer to make such
selection.
(e.) This Agreement may be terminated by Employee upon a material breach of
the terms of this Agreement by Employer upon written notice to
Employer which shall specify the reason for termination, and if this
Agreement is terminated at any time during the term hereof by Employee
under this section 12(e), then Employer shall pay Employee the
Severance Benefits. Any PhyAmerica ETA Group Incentive Bonus and any
Incentive Bonus described in Sections 2 and 3 of Exhibit A that has
been earned as of the date of termination shall be payable to Employee
as provided in Exhibit A.
(f.) Except as expressly set forth herein, all of Employer's obligations
for compensation or other benefits shall terminate upon the effective
date of the termination of this Agreement.
(g.) Upon termination of Employee's employment for any reason, Employee
agrees to resign any position as a director of Employer or any of its
subsidiaries then held by Employee. In that regard, Employee agrees
that if, during the term of this Agreement, Employee is elected or
appointed to be a director, upon request of Employer, Employee shall
execute and deliver to an independent escrow agent designated by
Employer, an undated resignation letter with respect to such director
position, which escrow agent is authorized to date and deliver to
Employer upon receipt of notice from Employer that Employee's
employment has terminated.
13. Compliance With Securities Laws. Employee agrees to comply with all
applicable federal and state securities laws and with all applicable
policies of Employer concerning the buying and selling of stock of Employer
by employees to the extent such policies do not restrict Employee's express
rights under this Agreement.
14. Entire Agreement. This Agreement contains the entire understanding between
the parties and supersedes and cancels any prior oral and written
understanding and/or agreements between them respecting the subject matter
of this Agreement. This Agreement may be amended or modified only in a
writing signed by both parties.
15. Severability. If any provision, term, condition, or clause of this
Agreement or the application thereof shall be found to be invalid or
unenforceable to any extent, then the offending portion shall be construed
as valid and enforceable only to the extent permitted by law and the
remainder of this Agreement shall not be affected thereby and shall remain
in full force and effect.
16. Governing Law. This Agreement is made and entered into in the State of New
York and is to be construed in accordance with and take effect under the
laws of the State of New York without regard to principles of conflicts of
laws.
17. Dispute Resolution. The parties shall attempt in good faith to settle any
dispute or controversy arising under, out of, or in connection with or in
relation to this Agreement, or any amendment hereof, or the breach hereof,
by negotiation and mutual agreement; provided that if the parties are not
able to agree within a reasonable period of time, then any such dispute or
disagreement shall be resolved by submitting such dispute first to
mediation and second to arbitration in Durham County, North Carolina.
Either party may make written demand for mediation, in which case the
parties shall mediate the dispute or disagreement with the mediator
appointed by the Judicial Arbitration & Mediation Services, Inc. ("JAMS").
Fees and costs of the mediation shall be borne equally by the parties and
each party shall pay its own professional fees and costs. If the dispute or
disagreement is not settled by mediation within a reasonable period of
time, then either party may demand arbitration, in which case the dispute
or disagreement shall be arbitrated in accordance with rules and procedures
established by JAMS. The arbitrator shall be allowed, in his or her
discretion, to require the losing party to pay the reasonable attorney's
fees and costs of the prevailing party. Any award rendered by the
arbitrator shall be final and binding upon each of the parties and judgment
thereof may be entered in any court having jurisdiction thereof. The costs
of the arbitrator shall be borne equally by both parties. The provisions of
Article 45A of the North Carolina General Statutes (the Uniform Arbitration
Act) shall apply to any arbitration under this Agreement.
18. Assignment. No party shall have any right to assign, mortgage, pledge,
hypothecate or encumber this Agreement in whole or in part, or any benefit
or any right accruing hereunder, without in any such case first obtaining
the prior written consent of the other party hereto, except that Employer
may assign this Agreement to one of its affiliates or wholly-owned
subsidiaries with written notice to Employee, provided that in the event of
such an assignment, Employer shall remain primarily responsible for its
obligations hereunder. All rights hereunder are personal to the Employee
and shall cease upon the termination of this Agreement unless otherwise
stated herein; provided, however, that the provisions hereof shall inure to
the benefit of the personal representatives, heirs and legatees of
Employee.
19. Notice. Any notice, or other written communication to be given pursuant to
this Agreement for whatever reason shall be deemed duly given and received
(a) if delivered personally, on the date of delivery, or (b) by certified
mail, postage pre-paid, return receipt requested, 3 days after the date of
mailing, addressed: in the case of Employer, to its principal office and
marked "Attention: President," and in the case of Employee, to the last
known permanent address according to the books and records of Employer.
20. Miscellaneous. Any protection, benefits, rights or other provisions given
to Employer in this Agreement shall also be deemed to apply to, protect and
inure to the benefit of Employer's affiliates and subsidiaries. All rights
of Employer expressed in this Agreement are in addition to any rights
available under the common law or other legal principles. Section or
paragraph titles or captions contained in this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any
provision hereof. All pronouns and any variation thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the
identity of person or persons, firm or firms, corporation or corporations,
and as context may require. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
shall constitute one agreement. References herein to the "Agreement" shall
include all exhibits and the exhibits and recitals to this Agreement shall
be incorporated herein by reference. All references in this Agreement to a
number of days shall mean calendar days unless expressly provided otherwise
and, in the event the day on which any period of time specified in this
Agreement is to end shall fall on a Saturday, Sunday or other legal holiday
recognized in the State of North Carolina, the immediately subsequent
business day shall be the date upon which such period of time shall end.
(signature page to follow)
IN WITNESS WHEREOF, the parties sign and seal below, effective the date
first written in this Agreement.
EMPLOYEE:
XXXX X. XXXXXX
_______________________________________(SEAL)
Date: _________________________________
EMPLOYER:
PHYAMERICA PHYSICIAN GROUP, INC.
By:_____________________________________
Title: _________________________________
Date: __________________________________
EXHIBIT A
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Compensation
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1. Base Salary. For services provided as an employee of Employer, Employee
shall receive, beginning on the Effective Date, a base salary of $200,000
per annum (the "Base Salary") payable in accordance with Employer's current
payroll practices. The Base Salary shall be subject to annual review and
adjustment during the term of this Agreement.
2. PhyAmerica ETA Group Incentive Bonus. SHG/PhyAmerica Physician Services,
Inc. provides management services to 5 professional corporations, including
Emergency Treatment Associates, Xxxx X. Xxxxx, M.D. and Xxxxxx X. Xxxxxxx,
M.D., P.C. which has a contractual relationship with St. Xxxxxxx Hospital
located in Poughkeepsie, New York; Beacon Emergency Services, P.C. which
provides services with respect to a Walk In Center in Beacon, New York
owned by St. Xxxxxxx; Rhinebeck Emergency Physicians, P.C., which has a
contractual relationship with Northern Dutchess Hospital in Rhinebeck, New
York; Ulster Emergency Physicians, P.C., which has a contractual
relationship with The Benedictine Hospital in Kingston, New York; and
Passaic Emergency Physicians, P.C. which has a contractual relationship
with St. Mary's Hospital in Passaic, New Jersey. Collectively, the Employer
management company and the aforementioned professional corporations are
referred to as the "PhyAmerica ETA Group."
Employee shall be entitled to receive an incentive bonus (the "PhyAmerica
ETA Group Incentive Bonus") equal to 15% of the "Net Cash Flow" from the
operations of the PhyAmerica ETA Group. For purposes of the Incentive Bonus
calculation, "Net Cash Flow" shall be defined to mean an amount equal to
(i) net cash receipts of the PhyAmerica ETA Group (cash receipts from all
medical professional services, consulting services, subsidy payments and
all other sources, after patient refunds and other similar adjustments),
less (ii) all direct expenses (physician and all other similar adjustments)
less all direct expenses (physician and all other provider compensation,
professional liability expenses, billing and collection expense, any
amounts paid for continuing professional education, dues, licenses and
other similar physician and provider expenses) and less all management
company operating expenses (employee salaries and benefits, rent and
occupancy expense and all other office and operating costs and any other
expenses directly related to the operations of the management company). It
is the intention of the parties to provide an incentive based on the cash
flow profitability of the PhyAmerica ETA Group of contracts managed by
SHG/PhyAmerica Physician Services, Inc. and Employee, and to exclude any
allocation of corporate overhead from Employer and its other operating
subsidiaries; provided, however, to the extent that Employer or any of its
subsidiaries provide certain items that would otherwise be provided
directly by management company, such as, for example, professional
liability insurance, other insurance, telecommunications or long distance
service, etc., such costs would be deducted in the above calculation of Net
Cash Flow.
The Net Cash Flow and any PhyAmerica ETA Group Incentive Bonus shall be
calculated for each calendar quarter, beginning with the calendar quarter
commencing January 1, 2001, and shall be paid as soon as reasonably
practical after such determination is made, but not more than 30 days
following the end of the calendar quarter. Employee's right to receive the
Incentive Bonus shall continue (i) until August 31, 2004 if the Term ends
prior to such date or (ii) if the Term continues past August 31, 2004,
until the date on which the last hospital contract for the provision of
emergency services by any of the aforementioned entities which contracts
were in effect on the Effective Date shall terminate.
3. Incentive Bonus. In addition to Base Salary and the PhyAmerica ETA Group
Incentive Bonus, Employee shall be eligible for additional incentive
bonuses under this Paragraph 3 in a maximum amount not to exceed 20% of
Base Salary, as follows:
(a.) An annual bonus of 5% of Base Salary for successfully organizing and
conducting a Medical Director Leadership Development Seminar for
Employer.
(b.) An annual bonus of 5% of Base Salary for successful implementation of
a management reporting system for reports to the Board of Directors,
senior management, regional vice presidents and contract managers.
(c.) Quarterly bonuses of 2.5% of Base Salary if PhyAmerica Physician
Services, Inc. achieves a 5% or greater operating profit before debt
and financing expenses (including the costs of the current receivables
sale and subservicing program providing funding for the Company and
its subsidiaries by National Century Financial Enterprises, Inc. and
its affiliates (NCFE) for the quarter, to be paid within 15 days of
completion of the financial statements for the Company and its
subsidiaries on a consolidated basis for the quarter.
(d.) An annual discretionary bonus of up to 10% of Base Salary to be
awarded in the discretion of the Company's Chief Executive Officer.
In no event shall the total of incentive bonuses paid under this
Paragraph 3 exceed 20% of Base Salary for any calendar year. To be
eligible for the bonuses Employee must be employed on the day the
bonus is due to be paid.
In the event the term of this Agreement is extended past the initial term,
Employer and Employee will review the Base Salary and bonuses each year and
establish appropriate, mutually agreed upon Base Salary and bonuses for each
year of the term of this Agreement.
