Exhibit 10.35
FIRST AMENDMENT TO MEMBERSHIP PURCHASE AGREEMENT &
COLOMBO EMPLOYMENT AGREEMENT & NOTE C
Dated APRIL 30, 2004
The parties to this First Amendment to Membership Purchase Agreement and
Colombo Employment Agreement and Note C (the "Agreement") are PHC, Inc., a
Massachusetts corporation ("PHC" or "Buyer"), Pivotal Research Centers, L.L.C.,
an Arizona limited liability company ("Pivotal"), Louis C. Kirby ("Kirby"),
Anthony A. Bonacci ("Bonacci") and Carol A. Colombo ("Columbo") (Kirby, Bonacci
and Colombo may be collectively referred to herein as the "Sellers") and Michael
J. Colombo ("MColumbo"). This Amendment shall amend that certain Membership
Purchase Agreement between Buyer, Pivotal and Sellers dated April 30, 2004 (the
"Agreement"), the Colombo Employment Agreement (as that term defined in the
Agreement) and Note C (as that term is defined in the Agreement).
All capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Membership Purchase Agreement or the Notes, as
applicable. For purposes of this Amendment, "CEO" means the Chief Executive
officer of Pivotal and the CEO of PHC divisions, subsidiaries and/or affiliates
conducting Clinical Research Services. MColumbo is the CEO under the terms of
the Colombo Employment Agreement.
Except as specifically amended hereby, all of the terms of the Agreement
and the Colombo Employment Agreement shall remain in full force and effect. The
Agreement
is hereby amended as follows:
1. Financial Control Over Clinical Research Services. Except to the extent
prohibited by all applicable laws, Buyer hereby agrees that all routine
accounting and financial functions relating to Clinical Research Services,
including but not limited to maintaining all books and records relating to
Clinical Research Services, maintaining depository bank accounts, payroll
input, receipt and deposit of payment for accounts receivable, and writing
checks for immediate needs associated with providing Clinical Research
Services, will be performed in Arizona under the authority of the CEO, and
reported to Buyer's corporate office on a schedule established by Buyer's.
All accounting and financial functions for Clinical Research Services shall
be performed in accordance with industry appropriate processes and
procedures shall comply with applicable Law, as approved by Bruce Shear on
behalf of Buyer. The CEO will oversee all of the above referenced
accounting and financial controls related to Clinical Research Services and
such oversight is hereby added to and included within the definition of
MColombo's material duties under the Colombo Employment Agreement.
Notwithstanding the above, Buyer shall retain the right to issue from its
corporate office checks for payables related to Clinical Research Services.
With respect to the Clinical Research Services payables, Buyer's corporate
office will take all reasonable and necessary measures to ensure that
payables are paid when due. To ensure prompt payment of payables, Buyer
hereby agrees to the following procedures: (i) if the CEO authorizes an
expenditure related to Clinical Research Services, it will be paid by
Buyer's corporate office without delay; (ii) payroll for employees
performing Clinical Research Services will be paid as scheduled bi-weekly
in the amount specified by the CEO, (iii) Buyer will not adjust the amount
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of or delay the issuance of bonus checks to Clinical Research Services
employees; (v) cash advances for travel will be approved by the CEO and
processed by Buyer's corporate office in an expeditious manner; (vi) cash
reimbursements for travel will be paid within two weeks of receipt by
Buyer's corporate office of an expense report, provided such travel
reimbursements have been reviewed and approved by the CEO, and (vii) Louis
Kirby, Shannon Bird, Mike Colombo, shall each be issued a corporate credit
card, which they shall be responsible to use in a commercially reasonable
manner and only for company business, provided, however that any failure to
use the cards in a commercially reasonable manner may result in the
termination such privilege for the offending party. Airline travel shall be
booked through PHC's corporate office.
2. Full Operational Control over Clinical Research Services. Buyer agrees that
all operational control related to Clinical Research Services shall be
maintained by CEO, which shall specifically include, but not be limited to,
full authority and control over: (i) all employees performing Clinical
Research Services, (ii) the employee compensation structure put in place
annually by the CEO for Clinical Research Services employees, which
compensation structure shall be within industry market ranges unless
otherwise approved by Buyer, provided Buyer shall have the right to review
and approve compensation structure for any executive level employees
proposed to be hired by the CEO related to Clinical Research Services, and
(iii) hiring and firing personnel performing Clinical Research Services,
with all such activities being added to and included within the definition
of MColombo's material duties under the Colombo Employment Contract.
3. Financial Reporting. Buyer shall provide to Sellers, through the CEO, a
monthly financial statement relating to all Clinical Research Services and
Buyer shall provide Sellers, upon receipt of written request, with access
to the information used in or underlying such financial reports (this
request, if made, will be made to PHC's CEO, who will fulfill such
request).
4. Note C. With respect to Note C, the definition of Adjusted EBITDA is hereby
modified to exclude any of Buyer's intra-company or related company debt,
including but not limited to debt attributed to PPR. Adjusted EBITDA also
shall not include any corporate overhead charges on the Non-Pivotal
Business in excess of $50,000 per annum, and no direct third party costs
incurred and paid by Buyer's corporate office on behalf of Non-Pivotal
Business shall exceed the market rate at which such services could be
obtained from unrelated third parties. If the Non-Pivotal Business pays any
inter-company or related company debt, or any corporate overhead charges in
excess of $50,000 per annum, or incurs any direct costs at prices in excess
of prevailing market rates, then all such amounts shall be added back into
the Adjusted EBITDA.
5. Insurance. The undersigned parties agree that the Landmark Professional
Liability Insurance Policy (the "Landmark Policy") will be prorated as of
Closing with Sellers responsible only for costs related to the period of
coverage from 2/15/04 to 2/28/04, and (ii) no portion of the Landmark
Policy, including retroactive coverage, will be charged to Sellers or
offset against amounts owed to Sellers.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed
on the date and year first above written.
PHC, INC., A MASSACHUSETTS
CORPORATION
By: /s/ Bruce A. Shear, President
PIVOTAL RESEARCH CENTERS, L.L.C.
/s/ Louis C. Kirby
MICHAEL J COLOMBO
/s/ Michael J. Colombo
SELLERS:
/s/ Louis C. Kirby
5633 North Royal Circle
Paradise Valley, AZ 85253
/s/ Carol A. Colombo
2525 E. Camelback Road, Suite 840
Phoenix, AZ 85016
/s/ Anthony A. Bonacci
2525 E. Camelback Road, Suite 840
Phoenix, AZ 85016
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