AMENDMENT No. 2 to
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment No. 2 (the "Amendment"), dated and effective as of
August 15, 1998 (the "Commencement Date"), by and among Sheridan Healthcare,
Inc. (formerly SAMA Holdings, Inc.), a Delaware corporation ("Holdings"),
Sheridan Healthcorp, Inc. (formerly Southeastern Anesthesia Management
Associates, Inc.), a Florida corporation (the "Company"), and Jay A. Martus (the
"Executive"), amends the Executive Employment Agreement, dated as of January 1,
1995 and entered into by and among Holdings, the Company and the Executive (the
"Employment Agreement").
PRELIMINARY STATEMENTS
1. The Executive is and has been an employee of the Company and the
parties entered into the Employment Agreement to assure the ongoing services of
the Executive.
2. The parties entered into an amendment to the Agreement, dated as of
August 1, 1995 (the "First Amendment"). The Agreement, the First Amendment and
this Second Amendment shall be collectively, the "Agreement". All capitalized
terms not defined in this Second Amendment shall have the meanings given them in
the Agreement.
3. The parties desire to assure the ongoing services of the Executive
and to further amend the Employment Agreement as described in this Second
Amendment.
4. The Employment Agreement provides in Section 16 that it may be
amended by an agreement in writing signed by each of the parties.
In consideration of the mutual promises and covenants contained in this
Second Amendment, the parties agree as follows:
AGREEMENT
1. The first two sentences of Section 3 of the Agreement, entitled Term of
Employment, is deleted in its entirety and is replaced by the following
sentence:
Subject to the provisions of this Agreement, the term of the
Executive's employment pursuant to this agreement shall remain
effective until July 31, 2003 (the "Expiration Date").
2. At the end of Section 4 of the Agreement, entitled Duties, add the following
sentence:
Notwithstanding anything in the Agreement, the Executive's principal
place of employment shall be within Broward County and no further than
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fifteen miles from 4651 Sheridan Street, Hollywood, Florida and, the
Executive shall not be required to travel area to fulfill his duties
under the Agreement except for ordinary course business travel.
3. The first sentence of Section 5 of the Agreement, entitled Compensation, is
deleted in its entirety and is replaced by the following:
During the Term of Employment, beginning on the Commencement Date, the
Company shall pay the Executive as compensation for the performance of
his duties under this Agreement, a salary at an annual rate of Two
Hundred Twenty Thousand Dollars ($220,000.00) per annum (the "Base
Salary").
Each calendar year during the term of the Executive's
Employment Agreement, the Company's Board of Directors shall establish
an earnings per share target for the Company (the "Target"). The Target
should be a reasonable growth amount in earnings per share when
compared with the Company's preceding years' actual earnings per share.
A bonus pool (the "Pool") shall be established for each calendar year
for at least thirty percent (30%) of the amount of the Company's
earnings, if any, in excess of the Target (the "Excess Amount"). During
the term of their respective employment agreements with the Company and
during any time period which that person is eligible to receive
severance payments, the persons who shall be eligible to participate in
the Pool shall be Mitchell Eisenberg, Lewis Gold, Jay Martus and
Michael Schundler. Additionally, from time to time, any or all of the
following persons or their replacements or substitutes may be
designated, during the term of their employment with the Company, by
Mitchell Eisenberg, in his discretion as it may be exercised from time
to time, to also participate in the Pool: Robert Coward, Gilbert
Drozdow and/or Mary Kittle. Eisenberg, Gold and Schundler shall each be
entitled to a maximum portion of the Pool up to an amount equal to
thirty percent (30%) of their then current base salaries (the "Maximum
Portion" and Martus shall each be entitled to a maximum portion of the
Pool up to fifteen percent (15%) of his then current base salary (also,
the "Maximum Portion"). Coward, Drozdow and Kittle, if included in the
Pool by Eisenberg, shall each be entitled to a maximum portion of the
Pool up to an amount equal to fifteen percent (15%) of their then
current base salaries (also, the "Maximum Portion"). Provided they each
remain eligible to participate in the Pool, the "Pool Participants"
shall be: Eisenberg, Gold, Martus and Schundler and to the extent
selected by Eisenberg in any calendar year: Coward, Drozdow and Kittle.
A Pool Participant's portion of the Pool in a given calendar year shall
be determined as follows: (i) multiply the Pool Participant's then
current base salary times their Maximum Portion (the product of that
calculation is the, "Maximum Target Bonus"); then (ii) divide the
Executive's Maximum Target Bonus by the sum of all of that calendar
year's Pool Participants' (including the Executive) then current
Maximum Target Bonuses. The Company shall pay to each Pool Participant
their portion of the Pool on or before the March 1 in the immediately
succeeding calendar year from the calendar year the bonus was based
upon.
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4. The second sentence of Section 5 of the Agreement, entitled Compensation, is
deleted in its entirety and is replaced by the following sentences:
The Base Salary shall be reviewed, at least annually, for merit
increases and may, by action and in the discretion of the Board, be
increased at any time or from time to time, but in no event shall the
Base Salary be reduced below the sum of Two Hundred Twenty Thousand
Dollars ($220,000.00), plus the sum of all Cost of Living Adjustments
(as defined below). In addition, on each anniversary of the
Commencement Date of this Agreement, the Base Salary shall be
increased, but shall not be decreased, by that percentage by which the
Consumer Price Index, for the Miami-Fort Lauderdale, Florida area
published by the United States government (the "Index") for the
immediately preceding calendar year exceeds such index for the next
preceding calendar year (the sum of these increases are collectively,
the "Cost of Living Adjustments"). If publication of the Index is
discontinued, the parties hereto shall accept comparable statistics on
the cost of living for the Miami-Fort Lauderdale, Florida area as
computed and published by an agency of the United States government, or
if no such agency computes and publishes such statistics, by any
regularly published national financial periodical that does compute and
publish such statistics.
5. At the end of Section 5 of the Agreement, entitled Compensation, add this new
subsection (d):
(d) Certain Additional Payments by the Company.
(i) notwithstanding anything in this Agreement, in the event
it shall be determined that any payment, distribution or other
action by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, (a
"Payment") would be subject to an excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") or any other provision of applicable federal,
state or local law that is in addition to income taxes
generally applicable to the Payment, or any interest or
penalties are incurred by the Executive with respect to any
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred
to as the "Excise Tax"), the Company shall make an additional
payment to the Executive (a "Gross-Up Payment") in an amount
such that the net amount retained by the Executive after
deduction from the Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Payment and any federal, state and
local income tax and Excise Tax imposed upon the Gross-Up
Payment shall be equal to the original amount of the Payment,
prior to deduction of any Excise Tax imposed with respect to
the Payment.
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(ii) The Executive shall appoint a nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
"Accounting Firm". Subject to the provisions of paragraph
(iii) of this Section 5 (d), all determinations required to be
made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such
determination, shall be made by the Accounting Firm which
shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company.
All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report
the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence
or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the
calculations required to be made under this Agreement. In the
event that the Company exhausts its remedies pursuant to this
Section and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such
Underpayment shall be paid by the Company to or for the
benefit of the Executive within five days of Executive written
request.
(iii) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
reasonably practicable after the Executive is informed in
writing of such claim and shall apprize the Company of the
nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(a) give the Company any information reasonably
requested by the Company relating to such claim,
(b) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
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(c) cooperate with the Company in good faith in order
effectively to contest such claim, and
(d) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of
this Section, the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(iv). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this Section, the
Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company's
complying with the requirements of this Section)) promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this Section, a
determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does
not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and
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shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
6. The first sentence of Section 6 (a) of the Agreement, entitled Benefits, is
deleted in its entirety and is replaced by the following sentence:
During the Term of Employment and as otherwise provided in this
Agreement, the Executive shall be entitled to participate in any and
all pension, profit sharing, medical, dental and/or life insurance
plans (collectively, the "Benefits") as may be in effect for senior
employees of the Company.
7. The first sentence of Section 7 (d) of the Agreement, entitled Termination of
the Employment of the Executive, is deleted in its entirety and is replaced by
the following sentence:
At any time by the Executive upon thirty (30) days prior written notice
to the Company.
8. The second sentence of Section 7 (e) of the Agreement, entitled Termination
of the Employment of the Executive, is deleted in its entirety and is replaced
by the following sentence:
In the event of termination of the Executive by the Company pursuant to
this Section 7 (e), by the Executive under Section 7 (f) or 7 (h), or
if the Company fails to offer to renew this Agreement upon the
expiration of its Term on the same or better terms and conditions , the
Company shall (i) pay the Executive the Executive's salary according to
the terms of Section 5 (a) of this Agreement from the effective date of
termination through the date that is one year from the effective date
of termination, (ii) continue the Executive's benefits as provided in
Section 6 of this Agreement from the effective date of termination
through the date that is one year from the effective date of
termination; and (iii) each and every option to acquire Company
securities granted to the Executive during the Term, notwithstanding
the terms of any agreement or plan documents whatsoever, shall
automatically, without any action required whatsoever, become
immediately and fully vested and exercisable without any restrictions
whatsoever.
9. Add a new subsection (h) to Section 7 of the Agreement, entitled Termination
of the Employment of the Executive, as follows:
(h) This Agreement shall be terminated, at any time within ninety
days of the effective date of a Change In Control, upon the
delivery of a written notice from the Executive to the Company
terminating his employment with the Company.
10. At the end of Section 8 (c) of the Agreement, entitled Non-Competition, add
the following sentence:
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Notwithstanding anything in this Agreement, in the event of a Change in
Control (as defined in Section 18 of the Agreement) the term
Competitive Enterprise shall be limited to entities or individuals who
engage in the provision of goods or services to entities or individuals
which were doing business with the Company immediately prior to the
Change of Control.
11. In Section 8 (d) of the Agreement, entitled Non-Competition, delete the
following words:
"and the Non-Competition Period"
12. Add a new Section 18 as follows:
18. Change In Control.
For purposes of this Agreement, the term "Change in Control"
shall mean:
(i) Approval by the shareholders of the Company of (x) a
reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case,
with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding
voting securities, or (y) a liquidation or dissolution of the
Company or (z) the sale of all or substantially all of the
assets of the Company; or
(ii) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
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majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Securities
Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iii) The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act,
(excluding, for this purpose, the Company or its Subsidiaries,
or any employee benefit plan of the Company or its
Subsidiaries which acquires beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of 20% or more of either the then outstanding
shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors.
13. Except as set forth in paragraph 1 - 11 of this Second Amendment, the
Employment Agreement shall remain in full force and effect.
14. This Second Amendment shall be governed by and construed under the laws and
solely in the courts of the State of Florida, without regard to the conflicts of
law provisions thereof. This Second Amendment may be executed in two or more
counterparts, each of which shall constitute an original.
The parties have executed this Second Amendment as of September 15,
1998.
COMPANY:
SHERIDAN HEALTHCORP, INC.
By:
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Mitchell Eisenberg, President
HOLDINGS:
SHERIDAN HEALTHCARE, INC.
By:
------------------------------------
Mitchell Eisenberg, President
EXECUTIVE:
---------------------------------------
Jay A. Martus, Esq.
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