STATE OF NORTH CAROLINA FIRST AMENDMENT
TO
COUNTY OF DURHAM EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made and
entered into effective the 1st day of January, 1999 by and between COASTAL
PHYSICIAN GROUP, INC. ("the "Employer" or "Coastal"), a Delaware corporation
with its principal place of business in Durham, North Carolina, and XXXXXX X.
XXXXXXXX, XX. ("Employee"), a resident of Durham, North Carolina.
W I T N E S S E T H
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WHEREAS, Employer and Employee have previously entered into an employment
agreement dated July 1, 1997 (the "Agreement") under which Employee is currently
employed by Employer; and
WHEREAS, Employer and Employee also desire to substantially and materially
modify the existing terms of employment of Employee to, among other matters,
increase his Base Salary, modify the Incentive Bonus structure, and provide for
payment of earned divestiture bonuses;
NOW, THEREFORE, in consideration of the terms and conditions set forth in
this Amendment, the parties hereby agree that the Agreement is hereby modified
as follows:
1. Replacement of Exhibit A. Exhibit A, Compensation, attached to the
Agreement is hereby replaced by the Exhibit A dated January 1, 1999 and attached
to this Amendment.
2. This Amendment shall be an amendment and modification to the Agreement
and shall become part of the Agreement and employment arrangement between
Employee and Employer from and after the date of this Amendment. All capitalized
terms not defined herein shall have the same meaning as set forth in the
Agreement. Any conflict between terms of this Amendment and the Agreement will
be resolved in favor of this Amendment. Except as amended herein, all terms of
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
COASTAL PHYSICIAN GROUP, INC.
By:______________________________
Its:_____________________________
____________________________(SEAL)
Xxxxxx X. Xxxxxxxx
EXHIBIT A
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COMPENSATION
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January 1, 1999
1. Base Salary. For services provided as an employee of Employer, Employee shall
receive, beginning July 1, 1998, a base salary of $193,500 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 as of each January
1, commencing January 1, 2000 (or such other times as may be determined by
Employer), but if renewed by agreement of Employer and Employee, the Base Salary
shall increase by seven and one-half percent (7.5%) or by such other amount as
the parties may agree on to bring Employee's Base Salary in line with other
senior executives (this provision shall not create any right or obligation of
Employer or Employee to extend the term of this Agreement or to prevent Employer
and Employee from extending upon such terms and conditions as they determine by
mutual agreement). Employee has been paid from July 1, 1998 through December 31,
1998 on the basis of an annual salary of $180,000 and so was underpaid $6,750,
which amount shall be paid to Employee at the rate of $1,350 per month for five
months beginning January, 1999 and continuing through May, 1999. These amounts
shall be added to and paid with the payouts of deferred earned divestiture
bonuses described Section 2 below.
2. Earned Divestiture Bonuses. Under Section 3 of the Exhibit A which this
Exhibit A replaces, Employee was entitled to earn certain divestiture bonuses.
Employer acknowledges that Employee earned divestiture bonuses in the aggregate
amount of $56,387 which have not been paid, calculated as follows:
Transaction Applicable
Asset Consideration Percentage Bonus
----- ------------- ---------- -----
South Florida Clinics, Valley, Mebane $ 438,654 1.0% $ 4,387
Cumberland Pediatrics 150,000 1.0% 1,500
IPN, PSI 10,100,000 0.5% 50,500
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$56,387
Employer has paid Employee $27,000 of the divestiture bonus from funds received
from a settlement of a legal matter. The balance of $29,387 shall be paid in
five equal monthly installments of $5,877.40 beginning January, 1999 and
continuing through May, 1999. This amount shall be combined with the payment of
installments of deferred base compensation under Section 1 (for a total monthly
payment of $7,227.40 per month during the five month period).
3. Incentive Bonus. Employee acknowledges that no incentive bonuses were earned
under Section 2 of the prior Exhibit A. For 1999, Employee shall be entitled to
an incentive or performance bonus (the "Incentive Bonus") of up to forty percent
(40%) of annual Base Salary, based on the following:
(a) Employee must be employed by Employer at the time the event described
below occurs and at December 31, 1999 unless employment is terminated (i) by
Employer without
cause under Section 12(a), (ii) by death or disability of Employee under Section
12(d) where such death or disability occurs within the last four months of the
calendar year, or (iii) by Employee because of a material breach by Employer as
provided in section 12(e).
(b) Employee's Incentive Bonus shall be based on the following criteria,
subject to a cap of 40% of annual Base Salary as previously indicated:
(i) 10% of Base Salary shall be earned upon the closing of a
transaction providing a complete or partial replacement of the Company's
existing securitization financing program with a new bank loan, credit
facility, securitization or financing program, an equity infusion or
recapitalization of the Company and its subsidiaries, or an additional
capital or financing for the Company in addition to the existing facility.
(ii) 0.5% of the "Transaction Consideration" paid shall be earned upon
the closing of a transaction involving any significant merger, acquisition
or divestiture of or by the Company or any of its subsidiaries
("significant" shall be understood to include any transaction, or series of
transactions that are related, involving purchase consideration or
valuation greater than $10,000,000 or a target company with gross
annualized revenues in excess of $25,000,000). The "Transaction
Consideration" shall be understood to mean the consideration paid or
calculated for purposes of compensating the Company's investment bankers on
a percentage basis as such term, or its equivalent, is used in the
agreement between the Company and its investment bankers retained for such
transaction.
(iii) 2.5% of Base Salary for each calendar quarter in which Employer
and its consolidated subsidiaries achieve a net profit (after all financing
expenses) as reflected on the regularly prepared financial statements of
Employer.
(iv) One percent (1%) of any amounts recovered after January 1, 1999
by Employer or any of its subsidiaries for any disputed claims, unpaid
amounts owed, recoveries from bankruptcies, reorganizations, creditor
arrangements or similar insolvency proceedings, recoveries from litigation
or claim settlements; provided, however, this provision shall not apply to
any matter in which Employee shall become a material witness.
(v) up to 15% of Base Salary as determined solely in the discretion of
Employer's Chief Executive Officer.
4. Stock Options or Awards. Employee shall be eligible for stock options and
awards available to other senior management of Employer and its affiliates from
time to time. This subsection shall not be a guarantee of any awards or options,
and Employee recognizes that the awarding of such compensation is governed by
plans adopted by the Board of Directors of Employer from time to time.
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