1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-26762
PEDIATRIX MEDICAL GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0271219
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1455 NORTH PARK DRIVE
FT. LAUDERDALE, FLORIDA 33326
(Address of principal executive offices)
(Zip Code)
(954) 384-0175
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
At August 1, 1997, the Registrant had 15,062,983 shares of $0.01 par value
common stock outstanding.
Page 1 of 13
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PEDIATRIX MEDICAL GROUP, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 1997 (Unaudited)
and December 31, 1996......................................................................................... 3
Condensed Consolidated Statements of Income for the Three and Six Months Ended
June 30, 1997 and 1996 (Unaudited)............................................................................ 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996 (Unaudited)............................................................................ 5
Notes to Condensed Consolidated Financial Statements............................................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................................................... 9
PART II - OTHER INFORMATION..................................................................................... 11
SIGNATURES...................................................................................................... 13
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
------------- ------------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 27,369 $ 18,435
Investments in marketable securities 27,755 57,218
Accounts receivable, net 29,728 23,396
Prepaid expenses 1,822 1,283
Other current assets 509 375
Income taxes receivable -- 202
--------- ---------
Total current assets 87,183 100,909
Property and equipment, net 9,347 8,676
Other assets, net 77,235 49,441
========= =========
Total assets $ 173,765 $ 159,026
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 12,549 $ 13,423
Income taxes payable 62 --
Current portion of note payable 200 200
Deferred income taxes 7,417 6,099
--------- ---------
Total current liabilities 20,228 19,722
Note payable 2,650 2,750
Deferred income taxes 1,314 233
--------- ---------
Total liabilities 24,192 22,705
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- --
Common stock 151 149
Additional paid-in capital 120,182 116,037
Retained earnings 29,241 20,165
Unrealized loss on investments (1) (30)
--------- ---------
Total stockholders' equity 149,573 136,321
--------- ---------
Total liabilities and stockholders' equity $ 173,765 $ 159,026
========= =========
The accompanying notes are an integral part of
these financial statements
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PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
(in thousands, except for per share data)
Net patient service revenue $ 30,599 $ 17,808 $ 57,612 $ 33,935
Operating expenses:
Salaries and benefits 19,774 11,541 37,383 22,337
Supplies & other operating expenses 2,358 1,269 4,460 2,482
Depreciation and amortization 1,008 335 1,791 568
-------- -------- -------- --------
Total operating expenses 23,140 13,145 43,634 25,387
-------- -------- -------- --------
Income from operations 7,459 4,663 13,978 8,548
Investment income 563 423 1,298 922
Interest expense (75) (27) (149) (62)
-------- -------- -------- --------
Income before income taxes 7,947 5,059 15,127 9,408
Income tax provision 3,179 2,024 6,051 3,761
-------- -------- -------- --------
Net income $ 4,768 $ 3,035 $ 9,076 $ 5,647
======== ======== ======== ========
Per share data:
Net income per common and
common equivalent share:
Primary $ .30 $ .22 $ .58 $ .41
======== ======== ======== ========
Fully diluted $ .30 $ .22 $ .58 $ .41
======== ======== ======== ========
Weighted average shares used
in computing net income per
common and common equivalent
share:
Primary 15,678 13,873 15,611 13,785
======== ======== ======== ========
Fully diluted 15,837 13,873 15,691 13,799
======== ======== ======== ========
The accompanying notes are an integral part of
these financial statements
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PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-----------------------
1997 1996
-------- --------
(in thousands)
Cash flows provided (used) by operating activities:
Net income $ 9,076 $ 5,647
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,791 568
Deferred income taxes 2,399 2,329
Changes in assets and liabilities:
Accounts receivable (6,332) (4,821)
Prepaid expenses and other current assets (680) (1,194)
Income taxes receivable/payable 2,146 950
Other assets (84) (1,766)
Accounts payable and accrued expenses 439 2,247
-------- --------
Net cash provided by operating activities 8,755 3,960
-------- --------
Cash flows provided (used) by investing activities:
Physician group acquisition payments (30,365) (30,220)
Purchase of investments (7,074) (6,421)
Proceeds from sale of investments 36,567 26,818
Purchase of property and equipment (1,114) (2,629)
-------- --------
Net cash used in investing activities (1,986) (12,452)
-------- --------
Cash flows provided (used) by financing activities:
Payments on note payable (100) (32)
Proceeds from issuance of common stock 2,265 147
Payments made to retire common stock -- (45)
-------- --------
Net cash provided by financing activities 2,165 70
-------- --------
Net increase (decrease) in cash and cash equivalents 8,934 (8,422)
Cash and cash equivalents at beginning of period 18,435 18,499
-------- --------
Cash and cash equivalents at end of period $ 27,369 $ 10,077
======== ========
The accompanying notes are an integral part of
these financial statements
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PEDIATRIX MEDICAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements
of Pediatrix Medical Group, Inc. (the "Company" or "Pediatrix")
presented herein do not include all disclosures required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the results of interim periods.
The results of operations for the three and six months ended June 30,
1997 are not necessarily indicative of the results of operations to be
expected for the year ended December 31, 1997. The interim condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1997.
2. BUSINESS ACQUISITIONS:
During the first six months of 1997, the Company completed the
acquisition of six physician group practices in Dallas, Texas;
Albuquerque, New Mexico; Tacoma, Washington; South Bend, Indiana;
Pasadena, California and Columbia, South Carolina. Additionally, 3
neonatal intensive care units (NICUs) were added through the Company's
internal marketing activities. Total cash paid for these units
approximated $27 million, adding a total of 14 NICUs.
The Company has accounted for the acquisitions using the purchase
method of accounting and the excess of cost over fair value of net
assets acquired is being amortized on a straight-line basis over 25
years. The results of operations of the acquired practices have been
included in the consolidated financial statements from the dates of
acquisition.
The following unaudited pro forma information combines the consolidated
results of operations of the Company and the physician group practices
acquired during 1996 and 1997 as if the acquisitions had occurred on
January 1, 1996:
SIX MONTHS ENDED
JUNE 30,
-----------------------------------
1997 1996
--------------- --------------
(in thousands, except per share data)
Net patient service revenue $59,760 $50,057
Net income 9,170 6,624
Net income per share:
Primary .59 .48
Fully diluted .58 .48
The pro forma results do not necessarily represent results which would
have occurred if the acquisitions had taken place at the beginning of
the period, nor are they indicative of the results of future combined
operations.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consists of the following:
JUNE 30, DECEMBER 31,
1997 1996
------- ------------
(in thousands)
Accounts payable ............................ $ 2,656 $ 2,489
Accrued salaries and bonuses ................ 3,694 3,508
Accrued payroll taxes and benefits .......... 2,102 2,009
Accrued professional liability coverage ..... 2,870 2,413
Other accrued expenses ...................... 1,227 3,004
------- -------
$12,549 $13,423
======= =======
4. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Primary and fully diluted net income per share is calculated by
dividing net income by the weighted average number of common and common
equivalent shares outstanding during the period. Common equivalent
shares consist of the dilutive effect of outstanding options calculated
using the treasury stock method.
5. CONTINGENCIES:
During the ordinary course of business, the Company has become a party
to pending and threatened legal actions and proceedings, most of which
involve claims of medical malpractice and are generally covered by
insurance. The Company believes that the outcome of such legal actions
and proceedings will not have a material adverse effect on the
Company's financial condition, results of operations or liquidity,
notwithstanding any possible insurance recovery.
The Company is currently under examination by the Internal Revenue
Service for the tax years ended December 31, 1992, 1993, and 1994. The
IRS has challenged certain deductions that, if disallowed, would result
in additional taxes of approximately $4.5 million, plus interest. The
Company has reviewed the IRS matters under consideration and believes
that the tax returns are substantially correct as filed. The Company
intends to vigorously contest the proposed adjustments and believes it
has adequately provided for any liability that may result from this
examination. The Company and its tax advisors believe that the ultimate
resolution of the examination will not have a material effect on the
Company's consolidated financial position, results of operations or
cash flows.
The Company has been notified by a hospital customer of a dispute
regarding the interpretation of the customer's contract with the
Company. The customer believes that the Company should refund
approximately $7.5 million of payments made to the Company over the
last five years. The Company disagrees with the customer's
interpretation of the contract and believes that the matter will be
resolved amicably. In the unlikely event that the Company cannot
resolve this matter amicably, the Company intends to vigorously
litigate the matter and assert all its legal defenses. The Company
believes that the ultimate resolution of the matter will not have a
material effect on the Company's consolidated financial position,
results of operations or cash flows.
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8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
6. CHANGES TO ACCOUNTING PRONOUNCEMENTS:
In February, 1997 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share". This statement is designed to improve the earnings per
share ("EPS") information provided in financial statements by
simplifying the existing computational guidelines, revising the
disclosure requirements, and increasing the comparability of EPS data
on an international basis. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997. Under the
provisions of SFAS 128, basic EPS would have been $.32 and $.23 for the
three months ended June 30, 1997 and 1996, respectively, and $.61 and
$.43 for the six months ended June 30, 1997 and 1996, respectively.
Diluted EPS would have been the same as the reported amounts.
7. SUBSEQUENT EVENTS:
Subsequent to June 30, 1997, the Company completed the acquisition of
two physician group practices. Total cash paid for these acquisitions
approximated $20 million. The acquisitions will be accounted for using
the purchase method of accounting.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AS COMPARED TO THREE MONTHS ENDED JUNE
30, 1996
The Company reported net patient service revenue of $30.6 million for
the three months ended June 30, 1997, as compared with $17.8 million for the
same period in 1996, a growth rate of 71.8%. Of this $12.8 million increase,
$12.4 million, or 96.9% was attributable to new units, including units at which
the Company provides services as a result of acquisitions. Same unit patient
service revenue, exclusive of administrative fees, increased $574,000, or 4.3%,
for the three months ended June 30, 1997. Same units are those units at which
the Company provided services for the entire period for which the percentage is
calculated and the entire comparable period. The same unit growth resulted from
volume increases as there were no general price increases.
Salaries and benefits increased $8.2 million, or 71.3% to $19.8 million
for the three months ended June 30, 1997, as compared with $11.6 million for the
same period in 1996. Of this $8.2 million increase, $6.2 million, or 75.3%, was
attributable to hiring new physicians, primarily to support new unit growth, and
the remaining $2.0 million was primarily attributable to increased support staff
and resources added in the areas of nursing, executive management and billing
and reimbursement. Supplies and other operating expenses increased $1.1 million,
or 85.8% to $2.4 million for the three months ended June 30, 1997, as compared
with $1.3 million for the same period in 1996, primarily as a result of new
units. Depreciation and amortization expense increased by $673,000, or 200.9% to
$1.0 million for the three months ended June 30, 1997, as compared with $335,000
for the same period in 1996, primarily as a result of amortization of goodwill
in connection with acquisitions.
Income from operations increased approximately $2.8 million, or 60.0%,
to $7.5 million for the three months ended June 30, 1997, as compared with $4.7
million for the same period in 1996. The increase in income from operations was
primarily due to increased volume, principally from acquisitions.
The Company earned investment income of approximately $563,000 for the
three months ended June 30, 1997, as compared with $423,000 for the same period
in 1996. The increase in investment income resulted primarily from additional
funds available for investment due to proceeds from the secondary public
offering completed in the third quarter of 1996 as well as cash flow from
operations.
The effective income tax rate was approximately 40% for the three month
periods ended June 30, 1997 and 1996.
Net income increased 57.1% to $4.8 million for the three months ended
June 30, 1997, as compared with $3.0 million for the same period in 1996. Net
income as a percentage of net patient service revenue decreased to 15.6% for the
three months ended June 30, 1997, compared to 17.0% for the same period in 1996,
primarily as a result of amortization of goodwill in connection with
acquisitions.
SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO SIX MONTHS ENDED JUNE 30,
1996
The Company reported net patient service revenue of $57.6 million for
the six months ended June 30, 1997, as compared with $33.9 million for the same
period in 1996, a growth rate of 69.8%. This $23.7 million increase was
primarily attributable to new units. Same unit patient service revenue,
exclusive of administrative fees, increased $262,000, or 1.1%, for the six
months ended June 30, 1997. Same units are those units at which the Company
provided services for the entire period for which the percentage is calculated
and the entire comparable period.
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Salaries and benefits increased $15.1 million, or 67.4% to $37.4
million for the six months ended June 30, 1997, as compared with $22.3 million
for the same period in 1996. Of this $15.1 million increase, $11.3 million, or
74.8%, was attributable to hiring new physicians, primarily to support new unit
growth, and the remaining $3.8 million was primarily attributable to increased
support staff and resources added in the areas of nursing, executive management
and billing and reimbursement. Supplies and other operating expenses increased
$2.0 million, or 79.7% to $4.5 million for the six months ended June 30, 1997,
as compared with $2.5 million for the same period in 1996, primarily as a result
of new units. Depreciation and amortization expense increased by $1.2 million,
or 215.3% to $1.8 million for the six months ended June 30, 1997, as compared
with $568,000 for the same period in 1996, primarily as a result of amortization
of goodwill in connection with acquisitions.
Income from operations increased approximately $5.5 million, or 63.5%,
to $14.0 million for the six months ended June 30, 1997, as compared with $8.5
million for the same period in 1996. The increase in income from operations was
primarily due to increased volume, principally from acquisitions.
The Company earned investment income of approximately $1.3 million for
the six months ended June 30, 1997, as compared with $922,000 for the same
period in 1996. The increase in investment income resulted primarily from
additional funds available for investment due to proceeds from the secondary
public offering completed in the third quarter of 1996 as well as cash flow
from operations.
The effective income tax rate was approximately 40% for the six month
periods ended June 30, 1997 and 1996.
Net income increased 60.7% to $9.1 million for the six months ended
June 30, 1997, as compared with $5.6 million for the same period in 1996. Net
income as a percentage of net patient service revenue decreased to 15.8% for the
six months ended June 30, 1997, compared to 16.6% for the same period in 1996,
primarily as a result of amortization of goodwill in connection with
acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had working capital of approximately
$67.0 million, a decrease of $14.2 million from the working capital of $81.2
million available at December 31, 1996. The decrease is principally a result of
funds utilized for acquisitions during the first six months of 1997, offset by
cash generated from operations.
During the six months ended June 30, 1997, capital expenditures
amounted to approximately $1.1 million principally for computer hardware and
software and furniture and fixtures. For the remainder of 1997, the Company
anticipates capital expenditures of approximately $1.0 million, principally for
computer hardware and software.
The Company anticipates that funds generated from operations together
with cash and marketable securities on hand and funds available under its credit
facility, will be sufficient to meet its working capital requirements and
finance any required capital expenditures for at least the next twelve months.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the ordinary course of business, the Company has become
a party to pending and threatened legal actions and proceedings, most
of which involve claims of medical malpractice and are generally
covered by insurance. The Company believes that the outcome of such
legal actions and proceedings will not have a material adverse effect
on the Company's financial condition, results of operations or
liquidity, notwithstanding any possible insurance recovery.
The Company is currently under examination by the Internal
Revenue Service for the tax years ended December 31, 1992, 1993, and
1994. The IRS has challenged certain deductions that, if disallowed,
would result in additional taxes of approximately $4.5 million, plus
interest. The Company has reviewed the IRS matters under consideration
and believes that the tax returns are substantially correct as filed.
The Company intends to vigorously contest the proposed adjustments and
believes it has adequately provided for any liability that may result
from this examination. The Company and its tax advisors believe that
the ultimate resolution of the examination will not have a material
effect on the Company's consolidated financial position, results of
operations or cash flows.
The Company has been notified by a hospital customer of a
dispute regarding the interpretation of the customer's contract with
the Company. The customer believes that the Company should refund
approximately $7.5 million of payments made to the Company over the
last five years. The Company disagrees with the customer's
interpretation of the contract and believes that the matter will be
resolved amicably. In the unlikely event that the Company cannot
resolve this matter amicably, the Company intends to vigorously
litigate the matter and assert all its legal defenses. The Company
believes that the ultimate resolution of the matter will not have a
material effect on the Company's consolidated financial position,
results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Company's Annual Meeting of Shareholders was held
on May 8, 1997.
(b) Not required.
(c) The matters voted on at the Annual Meeting of
Shareholders and the tabulation of votes on such
matters are as follows:
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1. Election of Directors.
AGAINST OR BROKER
NAME FOR WITHHELD ABSTAINED NON-VOTE
---- --- ---------- --------- --------
Roger J. Medel, M.D. 11,556,689 44,343 0 0
E. Roe Stamps, IV 11,591,089 9,943 0 0
Bruce R. Evans 11,591,089 9,943 0 0
Michael B. Fernandez 11,556,689 44,343 0 0
Albert H. Nahmad 11,591,089 9,943 0 0
M. Douglas Cunningham, M.D. 11,556,339 44,693 0 0
Cesar L. Alvarez 11,322,292 278,740 0 0
2. Proposal to approve the amendment of the Company's Amended and
Restated Stock Option Plan.
FOR AGAINST OR WITHHELD ABSTAINED BROKER NON-VOTE
--- ------------------- --------- ---------------
9,303,148 1,338,196 7,594 952,094
3. Proposal to approve the adoption of the incentive plans for
the President and Chief Executive Officer and Vice President
of Business Development.
FOR AGAINST OR WITHHELD ABSTAINED BROKER NON-VOTE
--- ------------------- --------- ---------------
10,507,554 72,041 69,343 952,094
(d) Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 Pediatrix's Amended and Restated Stock Option Plan
10.34 Amendment No. 2 to the Employment Agreement between
Pediatrix and Roger J. Medel, M.D.
10.35 Amendment No. 1 to the Employment Agreement between
Pediatrix and Kristen Bratberg
11.1 Statement Re: Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PEDIATRIX MEDICAL GROUP, INC.
Date: August 12, 1997 By: /s/ ROGER J. MEDEL
--------------------------------------
Roger J. Medel, President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1997 By: /s/ LAWRENCE M. MULLEN
--------------------------------------
Lawrence M. Mullen, Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
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Exhibit 10.1
---------------------------------------
PEDIATRIX MEDICAL GROUP, INC.
AMENDED AND RESTATED
STOCK OPTION PLAN
---------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
Pediatrix Medical Group, Inc., a Florida corporation (the "Company"), providing
an additional incentive to attract and retain qualified and competent persons
who are key to the Company (as hereinafter defined), including key employees,
Officers and Directors, and upon whose efforts and judgment the success of the
Company is largely dependent, through the encouragement of stock ownership in
the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the stock option committee appointed by
the Board pursuant to Section 13 hereof or, if not appointed, the Board.
(d) "Common Stock" shall mean the Company's Common Stock, par value
$0.01 per share.
(e) "Company" shall refer to Pediatrix Medical Group, Inc., a
Florida corporation, its wholly-owned subsidiary, Pediatrix Medical Group of
Florida, Inc., and the companies related to the Company through long-term
management contracts which provide the medical component of the services
required in respect of any arrangement where Pediatrix Medical Group, Inc.
provides the non-medical component of the services required in respect of such
arrangement in various states and Puerto Rico, and any future majority owned
subsidiary of the Company or any business entity, partnership or other business
entity related to the Company through a long-term management contract with
respect to the services described herein.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall mean September 20, 1995.
(h) "Employee Director" shall mean a member of the Board who is also
an employee of the Company or a Subsidiary.
(i) "Fair Market Value" of a Share on any date of reference shall be
the "Closing Price" (as defined below) of the Common Stock on such business day,
unless the Committee in its sole discretion shall determine otherwise in a fair
and uniform manner. For the purpose of determining Fair Market Value, the
"Closing Price" of the Common Stock on any
2
business day shall be (i) if the Common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the last reported sale price of
Common Stock on NASDAQ or such system, or (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the National Quotation Bureau, Incorporated if at
least two securities dealers have inserted both bid and asked quotations for
Common Stock on at least five of the ten preceding days. If neither (i), (ii) or
(iii) above is applicable, then Fair Market Value shall be determined in good
faith by the Committee or the Board in a fair and uniform manner.
(j) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
(k) "Non-Employee Director" shall mean a member of the Board who is
not an employee of the Company or a Subsidiary.
(l) "Non-Statutory Stock Option" shall mean an Option which is not
an Incentive Stock Option.
(m) "Officer" shall mean the Company's president, principal
financial officer, principal accounting officer (or, if there is no such
accounting officer, the controller), any vice-president of the Company in charge
of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of Subsidiaries shall be deemed Officers of the Company if
they perform such policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include policy-making
functions that are not significant. Unless specified otherwise in a resolution
by the Board, an "executive officer" pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. ss. 229.401(b)) shall be only such person designated as an "Officer"
pursuant to the foregoing provisions of this paragraph.
(n) "Option" (when capitalized) shall mean any option granted under
this Plan.
(o) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(p) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Code Section 162(m) and the regulations
thereunder and as a "Non-Employee Director" under Rule 16b-3 promulgated under
the Securities Exchange Act.
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(q) "Plan" shall mean this Stock Option Plan for the Company.
(r) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(s) "Share(s)" shall mean a share or shares of the Common Stock.
(t) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. The Committee or the Board may grant to
Optionees from time to time Options to purchase an aggregate of up to 3,250,000
Shares from authorized and unissued Shares. If any Option granted under the Plan
shall terminate, expire, or be canceled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
4. INCENTIVE AND NON-QUALIFIED OPTIONS. An Option granted hereunder
shall be either an Incentive Stock Option or a Non-Qualified Stock Option as
determined by the Committee or the Board at the time of grant of such Option and
shall clearly state whether it is an Incentive Stock Option or a Non-Qualified
Stock Option. All Incentive Stock Options shall be granted within 10 years from
the effective date of this Plan. Incentive Stock Options may not be granted to
any person who is not an employee of the Company or any Subsidiary.
5. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate Fair Market Value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Code Section 422(b) are exercisable for the first time by any individual
during any calendar year (under all plans of the Company and any Subsidiary as
defined in Code Section 424), exceeds $100,000.
6. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee or the Board,
provided such terms are not inconsistent with this Plan or any applicable law.
The Optionees shall be (i) those persons selected by the Committee or the Board
from the class of all regular employees of the Company or its Subsidiaries,
including Employee Directors and Officers who are regular employees of the
Company and (ii) Non-Employee Directors. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible to
receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee or the Board shall take into
consideration the contribution the person has made to the success of the Company
or its Subsidiaries and such other factors as the Committee or the Board shall
determine. The
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Committee or the Board shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee or the Board may from
time to time in granting Options under the Plan prescribe such other terms and
conditions concerning such Options as it deems appropriate, including, without
limitation, (i) prescribing the date or dates on which the Option becomes
exercisable, (ii) providing that the Option rights accrue or become exercisable
in installments over a period of years, or upon the attainment of stated goals
or both, or (iii) relating an Option to the continued employment of the Optionee
for a specified period of time, provided that such terms and conditions are not
more favorable to an Optionee than those expressly permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither the Plan nor
any Option granted under the Plan shall confer upon any person any right to
employment or continuance of employment by the Company or its Subsidiaries.
(d) Notwithstanding any other provision of this Plan, an Incentive
Stock Option shall not be granted to any person owning directly or indirectly
(through attribution under Section 424(d) of the Code) at the date of grant,
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (or of its parent or subsidiary corporation [as defined
in Section 424 of the Code] at the date of grant) unless the option price of
such Option is at least 110% of the Fair Market Value of the Shares subject to
such Option on the date the Option is granted, and such Option by its terms is
not exercisable after the expiration of five years from the date such Option is
granted.
(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Director, Officer or employee may not exceed 40% of the total
number of Options available for grant under the Plan.
7. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee or the Board but shall not be less than the
par value per Share; provided, however, that in no event shall the option price
per Share of any Incentive Stock Option or any Option granted pursuant to
paragraph (a) of Section 15 of this Plan be less than the Fair Market Value of
the Shares underlying such Option on the date such Option is granted.
8. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or the Board in its sole discretion have
been made for the Optionee's payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements. Unless
further limited by the Committee or the Board in any Option and subject to such
guidelines as the Committee or the Board may
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establish, the option price of any Shares purchased shall be paid in cash, by
certified or official bank check, by money order, with Shares by the withholding
of Shares issuable upon exercise of the Option or by any other form of cashless
exercise procedure approved by the Committee or the Board, or in such other
consideration as the Committee or the Board deems appropriate, or by a
combination of the above. The Committee or the Board in its sole discretion may
accept a personal check in full or partial payment of any Shares. If the
exercise price is paid in whole or in part with Shares, or through the
withholding of Shares issuable upon exercise of the Option, the value of the
Shares surrendered shall be their Fair Market Value on the date the Option is
exercised. The Company in its sole discretion may, on an individual basis or
pursuant to a general program established in connection with this Plan, lend
money to an Optionee, guarantee a loan to an Optionee, or otherwise assist an
Optionee to obtain the cash necessary to exercise all or a portion of an Option
granted hereunder or to pay any tax liability of the Optionee attributable to
such exercise. If the exercise price is paid in whole or part with Optionee's
promissory note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the Optionee purchases
upon exercise of such Option, (iii) bear interest at the prime rate of the
Company's principal lender, and (iv) contain such other terms as the Board in
its sole discretion shall reasonably require. No Optionee shall be deemed to be
a holder of any Shares subject to an Option unless and until a stock certificate
or certificates for such Shares are issued to such person(s) under the terms of
this Plan. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as expressly provided in Section 10 hereof.
9. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee or the
Board shall provide in such Option, except as otherwise provided in this Section
9.
(a) The expiration date of an Option shall be determined by the
Committee or the Board at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable in the event of a "Change in Control"
or in the event that the Committee or the Board exercises its discretion to
provide a cancellation notice with respect to the Option pursuant to Section
10(b) hereof. For this purpose, the term "Change in Control" shall mean the
approval by the shareholders of the Company of 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 a liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned).
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(c) The Committee or the Board may in its sole discretion accelerate
the date on which any Option may be exercised and may accelerate the vesting of
any Shares subject to any Option.
10. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option, other than an Option
granted pursuant to Section 15 hereof, shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
(i) three months after the date on which the Optionee's
employment is terminated for any reason other than by reason of (A) Cause,
which, solely for purposes of this Plan, shall mean the termination of the
Optionee's employment by reason of the Optionee's willful misconduct or gross
negligence, (B) a mental or physical disability (within the meaning of Code
Section 22(e)) as determined by a medical doctor satisfactory to the Committee
or the Board, or (C) death;
(ii) immediately upon the termination of the Optionee's
employment for Cause;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Code Section 22(e)) as determined by a medical doctor
satisfactory to the Committee or the Board; or
(iv) (A) twelve months after the date of termination of the
Optionee's employment by reason of death of the Optionee, or (B) three months
after the date on which the Optionee shall die if such death shall occur during
the one year period specified in Subsection 10(a)(iii) hereof.
All references herein to the termination of the Optionee's employment shall, in
the case of an Optionee who is not an employee of the Company or a Subsidiary,
refer to the termination of the Optionee's service with the Company.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Section 9(b) hereof or of
any reorganization, merger, consolidation or other form of corporate transaction
in which the Company does not survive, any Option that remains unexercised on
such date. Such cancellation notice shall be given a reasonable period of time
prior to the proposed date of such cancellation and may be given either before
or after approval of such corporate transaction.
11. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding
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Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares available for grant under the Plan, or available for grant to
any person under the Plan, so that the same percentage of the Company's issued
and outstanding Shares shall continue to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee or
the Board may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's or the Board's sole discretion, such adjustments
become appropriate so as to preserve but not increase benefits under the Plan.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to the number of or exercise price of Shares
then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
12. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) No Incentive Stock Option, and unless the prior written consent
of the Committee or the Board is obtained and the transaction does not violate
the requirements of Rule 16b-3 promulgated under the Securities Exchange Act no
Non-Qualified Stock Option, shall be subject to alienation, assignment, pledge,
charge or other transfer other than by the Optionee by will or the laws of
descent and distribution, and any attempt to make any such prohibited transfer
shall be void. Each Option shall be exercisable during the Optionee's lifetime
only by the
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Optionee, or in the case of a Non-Qualified Stock Option that has been assigned
or transferred with the prior written consent of the Committee or the Board,
only by the permitted assignee.
(b) Unless the prior written consent of the Committee or the Board
is obtained and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act, no Shares acquired by an Officer
or Director pursuant to the exercise of an Option may be sold, assigned, pledged
or otherwise transferred prior to the expiration of the six-month period
following the date on which the Option was granted.
13. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the Company
shall not be obligated to issue any Shares unless it is advised by counsel of
its selection that it may do so without violation of the applicable Federal and
State laws pertaining to the issuance of securities, and may require any stock
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps, as in its judgment are reasonably required to prevent any
such violation.
(b) As a condition of any sale or issuance of Shares upon exercise
of any Option, the Committee or the Board may require such agreements or
undertakings, if any, as the Committee or the Board may deem necessary or
advisable to facilitate compliance with any such law or regulation including,
but not limited to, the following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be
bound by any legends endorsed upon the certificate(s) for such Shares that are,
in the opinion of the Committee or the Board, necessary or appropriate to
facilitate compliance with the provisions of any securities law deemed by the
Committee or the Board to be applicable to the issuance and transfer of such
Shares.
14. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a committee appointed by the
Board (the "Committee") which shall be composed of two or more Directors all of
whom shall be Outside Directors. The membership of the Committee shall be
constituted so as to comply at all times with the applicable requirements of
Rule 16b-3 promulgated under the Securities Exchange Act and Section 162(m) of
the Internal Revenue Code. The Committee shall serve at the pleasure of the
Board and shall have the powers designated herein and such other powers as the
Board may from time to time confer upon it.
(b) The Board may grant Options pursuant to any persons to whom
Options may be granted under Section 5(a) hereof.
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(c) The Committee or the Board, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan. The
determinations by the Committee or the Board and the interpretation and
construction of any provision of the Plan or any Option by the Committee or the
Board, shall be final and conclusive.
(d) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
15. GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) Each Non-Employee Director that is not affiliated with any
beneficial owner of more than 10% of the Company's Common Stock will receive on
the date of his or her appointment as a Director, an Option to purchase 5,000
shares of Common Stock, which Option will become fully exercisable on the first
anniversary of its grant. The per share exercise price of all Options granted to
Non-Employee Directors pursuant to this Section 15(a) will be equal to the Fair
Market Value of the Shares underlying such Option on the date such Option is
granted. The unexercised portion of any Option granted pursuant to this Section
15(a) shall become null and void three months after the date on which such
Non-Employee Director ceases to be a Director for any reason.
(b) In addition to Options granted to Non-Employee Directors
pursuant to Section 15(a), the Board may grant Options to Non-Employee Directors
pursuant to Section 6, subject to the provisions of the Plan generally
applicable to Options granted pursuant to Section 6.
16. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
17. INTERPRETATION.
(a) As it is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under the Securities Exchange Act ("Rule
16b-3"), any ambiguities or inconsistencies in construction of the Plan shall be
interpreted to give effect to such intention, and if any provision of the Plan
is found not to be in compliance with Rule 16b-3, such provision shall be deemed
null and void to the extent required to permit the Plan to comply with Rule
16b-3. The Committee or the Board may from time to time adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
(b) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under section 422 of the
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Internal Revenue Code. If any provision of the Plan should be held invalid for
the granting of Incentive Stock Options or illegal for any reason, such
determination shall not affect the remaining provisions hereof, but instead the
Plan shall be construed and enforced as if such provision had never been
included in the Plan.
(c) This Plan shall be governed by the laws of the State of Florida.
(d) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
18. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee or the
Board may from time to time amend, suspend or terminate the Plan or any Option;
provided, however, that, any amendment to the Plan shall be subject to the
approval of the Company's shareholders if such shareholder approval is required
by any federal or state law or regulation (including, without limitation, Rule
16b-3 or to comply with Section 162(m) of the Internal Revenue Code) or the
rules of any Stock exchange or automated quotation system on which the Common
Stock may then be listed or granted. Except to the extent provided in Sections 9
and 10 hereof, no amendment suspension or termination of the Plan or any Option
issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.
19. EFFECTIVE DATE AND TERMINATION DATE. The Plan shall be effective
upon the Effective Date and shall terminate on the 10th anniversary of the
Effective Date.
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Exhibit 10.34
AMENDMENT NO. 2 TO
------------------
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT entered into this 15th day of March, 1997, by and
between Pediatrix Medical Group, Inc., a Florida corporation (the "Company"),
and Roger J. Medel, M.D. M.B.A.(the "Executive"), amends the Employment
Agreement (the "Agreement") entered into on the 1st day of February, 1995, as
amended, by and between the Company and the Executive.
W I T N E S S E T H:
--------------------
WHEREAS, the Company and the Executive desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions set forth in the Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive hereby agree as follows:
1. Section 2.3 of the Agreement in its present form shall be deleted in
its entirety and a new Section 2.3 shall be substituted therefor as follows:
2.3 INCENTIVE BONUS. Executive shall be entitled to receive an
incentive bonus as set forth in that certain Incentive Plan in the form attached
hereto as Exhibit A.
2. Except as expressly amended hereby, the Agreement remains in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to
Employment Agreement the day and year first above written.
PEDIATRIX MEDICAL GROUP, INC.
By: /s/ Lawrence M. Mullen
------------------------------
Name: Lawrence M. Mullen
Title: Chief Financial Officer
EXECUTIVE
/s/ Roger J. Medel
----------------------------------
Roger J. Medel, M.D., M.B.A.
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EXHIBIT A
INCENTIVE PLAN
FOR ROGER J. MEDEL, M.D., M.B.A.
SECTION 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company by
providing to the Executive bonus incentives that qualify as performance-based
compensation within the meaning of Section 162(m) of the Code.
SECTION 2. DEFINITIONS AND TERMS
2.1. ACCOUNTING Terms. Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and reflected
in the consolidated financial statements of the Company, prepared in the
ordinary course of business.
2.2. SPECIFIC TERMS. The following words and phrases as used herein
shall have the following meanings unless a different meaning is plainly required
by the context:
"BONUS" means the incentive bonus as determined under Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the Compensation Committee which has been
established to administer the Plan in accordance with Section 3.1 and
Section 162(m) of the Code.
"COMPANY" means Pediatrix Medical Group, Inc. and any successor
whether by merger, ownership of all or substantially all of its assets
or otherwise.
"EMPLOYMENT AGREEMENT" means that certain Employment Agreements
dated January 1, 1995, between the Company and the Executive, or any
amendment to or renewal of such Employment Agreement or any new
employment agreement entered into with the Executive.
"EMPLOYMENT PERIOD" means the same as the period defined in the
Employment Agreement.
"EXECUTIVE" means Roger J. Medel, M.D., M.B.A.
"PLAN" means this Incentive Plan for Roger J. Medel, M.D., M.B.A. as
amended from time to time.
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"PRE-TAX CONSOLIDATED NET INCOME" means the Company's annual
consolidated net income before the cumulative effect of any change in an
accounting principle, extraordinary items and income taxes as reflected
in the Company's audited financial statements for the relevant fiscal
period. For purposes of this Plan, the Company's Pre-Tax Consolidated
Net Income for any complete fiscal year shall not be less than zero. The
Pre-Tax Consolidated Net Income of the Company hereunder shall be as
determined by the Company's independent auditors in accordance with
generally accepted accounting principles and auditing standards, both
applied on a consistent basis with prior periods, except that the amount
of Pre-Tax Consolidated Net Income for any fiscal year of the Company
consisting of less than twelve (12) full and consecutive calendar months
shall be annualized on the basis of a twelve (12) month year.
"SECTION 162(M)" means Section 162(m) of the Code, and the
regulations promulgated THEREUNDER, all as amended from time to time.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1. THE COMMITTEE. The Plan shall be administered by a Committee
consisting of at least two members of the Board of Directors of the Company,
duly authorized by the Board of Directors of the Company to administer the Plan,
who (i) are not eligible to participate in the Plan and (ii) are "outside
directors" within the meaning of Section 162(m).
3.2. POWERS OF THE COMMITTEE. The Committee shall have the authority to
construe and interpret the Plan (except as otherwise provided herein), may adopt
rules and regulations governing the administration of the Plan, and shall
exercise all other duties and powers conferred on it by the Plan, or which are
incidental or ancillary thereto.
3.3. REQUISITE ACTION. A majority (but not fewer than two) of the
members of the Committee shall constitute a quorum. The vote of a majority of
those present at a meeting at which a quorum is present or the unanimous written
consent of the Committee shall constitute action by the Committee.
SECTION 4. BONUS PROVISIONS.
4.1. PROVISION FOR BONUS. The Executive shall be entitled to an
incentive bonus for each of the Company's fiscal years during the Employment
Period. The Bonus shall be equal to five (5%) of the remainder of (x) the
Company's Pre-Tax Consolidated Net Income for the relevant year, minus (y) the
highest Pre-Tax Consolidated Net Income since 1995.
4.2. COMMITTEE CERTIFICATION. The Executive shall not receive any
payment under the Plan unless the Committee has certified, by resolution or
other appropriate action in writing, that the amount thereof has been accurately
determined in accordance with the terms and conditions of the Plan.
4.3. TIME OF PAYMENT. Any Bonuses granted by the Committee under the
Plan shall be paid as soon as practicable following the Committee's
determinations under this Section 4 and the certification of the Committee's
findings under Section 4.2, but in no event later than the 91st day after the
last day of the Company's fiscal year for which the Bonus is due to the
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Executive. Any such payment shall be in cash or cash equivalent, subject to
applicable withholding requirements.
SECTION 5. GENERAL PROVISIONS
5.1. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the establishment of the
Plan nor the provision for or payment of any amounts hereunder nor any action of
the Company (including, for purposes of this Section 5.1, any predecessor or
subsidiary), the Board of Directors of the Company or the Committee in respect
of the Plan, shall be held or construed to confer upon the Executive any legal
right to be continued in the employ of the Company.
5.2. COMPENSATION UPON TERMINATION. If the Executive's employment with
the Company is terminated for any reason, other than Cause (as defined in
Section 4.1(b) of the Employment Agreement), the Executive shall be paid the
Bonus that would have been payable to the Executive for the fiscal year if the
Executive's employment had not been terminated, multiplied by the number of days
in the fiscal year prior to and including the date of termination and divided by
365. The prorated Bonus shall be paid to the Executive at such time as the
Executive would have received the Bonus if no termination of employment had
occurred.
5.3. DISCRETION OF COMPANY, BOARD OF DIRECTORS AND COMMITTEE. Any
decision made or action taken by the Company or by the Board of Directors of the
Company or by the Committee arising out of or in connection with the creation,
amendment, construction, administration, interpretation and effect of the Plan
shall be within the absolute discretion of such entity and shall be conclusive
and binding upon all persons. No member of the Committee shall have any
liability for actions taken or omitted under the Plan by the member or any other
person.
5.4. ABSENCE OF LIABILITY. A member of the Board of Directors of the
Company or a member of the Committee of the Company or any officer of the
Company shall not be liable for any act or inaction hereunder, whether of
commission or omission.
5.5. NO FUNDING OF PLAN. The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an "unfunded" plan of
the Company. The Company shall not, by any provisions of the Plan, be deemed to
be a trustee of any property, and any obligations of the Company to the
Executive under the Plan shall be those of a debtor and any rights of the
Executive shall be limited to those of a general unsecured creditor.
5.6. NON-TRANSFERABILITY OF BENEFITS AND INTERESTS. Except as expressly
provided by the Committee, no benefit payable under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of the Executive. This Section 5.6 shall not
apply to an assignment of a contingency or payment due after the death of the
Executive to the deceased Executive's legal representative or beneficiary.
5.7. LAW TO GOVERN. All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Florida.
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5.8. NON-EXCLUSIVITY. The Plan does not limit the authority of the
Company, the Board or the Committee, or any subsidiary of the Company, to grant
awards or authorize any other compensation under any other plan.
SECTION 6. AMENDMENT OF PLAN; TERM
No amendment may be effective without Board of Directors and/or
shareholder approval if such approval is necessary to comply with the applicable
rules under Section 162(m) of the Code. The term of this Plan shall be for a
period of ten years. The Executive shall be entitled to participate in the Plan
as long as the Employment Agreement is in effect.
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Exhibit 10.35
AMENDMENT NO. 1 TO
------------------
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT entered into this 15th day of March, 1997, by and
between Pediatrix Medical Group, Inc., a Florida corporation (the "Company"),
and Kristen Bratberg (the "Executive"), amends the Employment Agreement (the
"Agreement") entered into on the 6th day of November, 1995 by and between the
Company and the Executive.
W I T N E S S E T H:
--------------------
WHEREAS, the Company and the Executive desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions set forth in the Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive hereby agree as follows:
1. Section 2.3 of the Agreement in its present form shall be deleted in
its entirety and a new Section 2.3 shall be substituted therefor as follows:
2.3 INCENTIVE BONUS. Executive shall be entitled to receive an
incentive bonus as set forth in that certain Incentive Plan in the form attached
hereto as Exhibit A.
2. Except as expressly amended hereby, the Agreement remains in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Employment Agreement the day and year first above written.
PEDIATRIX MEDICAL GROUP, INC.
By: /s/ Lawrence M. Mullen
------------------------------
Name: Lawrence M. Mullen
Title: Chief Financial Officer
EXECUTIVE
/s/ Kristen Bratberg
----------------------------------
Kristen Bratberg
2
EXHIBIT A
INCENTIVE PLAN
FOR KRISTEN BRATBERG
SECTION 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company by
providing to the Executive bonus incentives that qualify as performance-based
compensation within the meaning of Section 162(m) of the Code.
SECTION 2. DEFINITIONS AND TERMS
2.1. ACCOUNTING TERMS. Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and reflected
in the consolidated financial statements of the Company, prepared in the
ordinary course of business.
2.2. SPECIFIC TERMS. The following words and phrases as used herein
shall have the following meanings unless a different meaning is plainly required
by the context:
"BONUS" means the incentive bonus as determined under Section
4.1.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITTEE" means the Compensation Committee which has been
established to administer the Plan in accordance with Section 3.1 and
Section 162(m) of the Code.
"COMPANY" means Pediatrix Medical Group, Inc. and any successor
whether by merger, ownership of all or substantially all of its assets
or otherwise.
"EMPLOYMENT AGREEMENT" means the Employment Agreement, dated
November 6, 1995, between the Company and the Executive, or any
amendment to or renewal of such Employment Agreement or any new
employment agreement entered into with the Executive.
"EXECUTIVE" means Kristen Bratberg.
"GROSS PROFIT" means net patient service revenue less direct
costs of the merged/acquired business in which revenue and costs are
determined following the customary procedures of the Company.
"MERGER/ACQUISITIONS" means all business transactions wherein
the Company or any of its affiliates acquires a medical practice
through a merger or a stock or asset purchase or other similar
transaction and excludes internal growth of the Company through hospital
contracts without the acquisition/merger of a corresponding physician
practice.
"PLAN" means this Incentive Plan for Kristen Bratberg, as
amended from time to time.
A-1
3
"SECTION 162(M)" means Section 162(m) of the Code, and the
regulations promulgated thereunder, all as amended from time to time.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1. THE COMMITTEE. The Plan shall be administered by a Committee
consisting of at least two members of the Board of Directors of the Company,
duly authorized by the Board of Directors of the Company to administer the Plan,
who (i) are not eligible to participate in the Plan and (ii) are "outside
directors" within the meaning of Section 162(m).
3.2. POWERS OF THE COMMITTEE. The Committee shall have the authority
to construe and interpret the Plan (except as otherwise provided herein), may
adopt rules and regulations governing the administration of the Plan, and shall
exercise all other duties and powers conferred on it by the Plan, or which are
incidental or ancillary thereto.
3.3. REQUISITE ACTION. A majority (but not fewer than two) of the
members of the Committee shall constitute a quorum. The vote of a majority of
those present at a meeting at which a quorum is present or the unanimous written
consent of the Committee shall constitute action by the Committee.
SECTION 4. BONUS PROVISIONS.
4.1. PROVISION FOR BONUS. Executive shall receive as an incentive
bonus an amount equal to five percent (5%) of the initial fiscal year "Gross
Profit" of any and all "mergers/acquisitions" consummated during the term of
this Agreement. Payment of said incentive shall be implemented as follows:
Executive shall receive 2 1/2% (two and one-half percent) of the projected Gross
Profit for the initial fiscal year from each consummated merger and/or
acquisition in the month immediately succeeding the closing of the merger and/or
acquisition (the "Initial Payment"). Additionally, at the end of the initial
fiscal year of the merger and/or acquisition upon closure of the accounting
period, Executive shall receive an additional 2 1/2% (two and one-half percent)
of the actual Gross Profit for the initial fiscal year from each consummated
merger and/or acquisition (the "Additional Payment"). It is understood and
agreed by Employer and Executive this incentive bonus may be adjusted upward or
downward based upon the actual Gross Profit obtained as compared to the
projected Gross Profit for the initial fiscal year.
4.2. COMMITTEE CERTIFICATION. The Executive shall not receive any
payment, other than the Initial Payment, under the Plan unless the Committee has
certified, by resolution or other appropriate action in writing, that the amount
thereof has been accurately determined in accordance with the terms and
conditions of the Plan.
4.3. TIME OF PAYMENT. Each Additional Payment under Section 4.1
shall be paid as soon as practicable following the Committee's determinations
under this Section 4 and the certification of the Committee's findings under
Section 4.2. Any payments of Bonuses under this Plan shall be in cash or cash
equivalent, subject to applicable withholding requirements.
SECTION 5. GENERAL PROVISIONS
5.1. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the establishment of
the Plan nor the provision for or payment of any amounts hereunder nor any
action of the Company (including, for purposes of this Section 5.1, any
predecessor or subsidiary), the Board of Directors of the Company or
A-2
4
the Committee in respect of the Plan, shall be held or construed to confer upon
the Executive any legal right to be continued in the employ of the Company.
5.2. COMPENSATION UPON TERMINATION. If Executive is terminated for
any reason other than Cause (as defined in Section 4.1(a) of the Employment
Agreement), the Executive shall also be paid, for services rendered prior to
termination, an amount equal to the amount due Executive under Section 4.1 for
all mergers/acquisitions consummated prior to Executive's termination and unpaid
at the time of termination. It is understood and agreed that the amounts will be
paid to Executive without proration. Any Bonus payable to the Executive after
termination of his employment shall be paid to the Executive at such time as the
Executive would have received the Bonus if no termination of employment had
occurred.
5.3. DISCRETION OF COMPANY, BOARD OF DIRECTORS AND COMMITTEE. Any
decision made or action taken by the Company or by the Board of Directors of the
Company or by the Committee arising out of or in connection with the creation,
amendment, construction, administration, interpretation and effect of the Plan
shall be within the absolute discretion of such entity and shall be conclusive
and binding upon all persons. No member of the Committee shall have any
liability for actions taken or omitted under the Plan by the member or any other
person.
5.4. ABSENCE OF LIABILITY. A member of the Board of Directors of the
Company or a member of the Committee of the Company or any officer of the
Company shall not be liable for any act or inaction hereunder, whether of
commission or omission.
5.5. NO FUNDING OF PLAN. The Company shall not be required to fund
or otherwise segregate any cash or any other assets which may at any time be
paid to Participants under the Plan. The Plan shall constitute an "unfunded"
plan of the Company. The Company shall not, by any provisions of the Plan, be
deemed to be a trustee of any property, and any obligations of the Company to
the Executive under the Plan shall be those of a debtor and any rights of the
Executive shall be limited to those of a general unsecured creditor.
5.6. NON-TRANSFERABILITY OF BENEFITS AND INTERESTS. Except as
expressly provided by the Committee, no benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted action shall be void and
no such benefit shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of the Executive. This Section 5.6
shall not apply to an assignment of a contingency or payment due after the death
of the Executive to the deceased Executive's legal representative or
beneficiary.
5.7. LAW TO GOVERN. All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Florida.
5.8. NON-EXCLUSIVITY. The Plan does not limit the authority of the
Company, the Board or the Committee, or any subsidiary of the Company, to grant
awards or authorize any other compensation under any other plan.
SECTION 6. AMENDMENT OF PLAN; TERM
No amendment may be effective without Board of Directors and/or
shareholder approval if such approval is necessary to comply with the applicable
rules under Section 162(m) of the Code. The term of the Plan shall be for a
period of ten years. The Executive shall be entitled to participate in the Plan
as long as the Employment Agreement is in effect.
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Exhibit 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Income applicable to common stock $ 4,768 $ 3,035 $ 9,076 $ 5,647
Weighted average number of common and common
share equivalents outstanding:
Primary:
Weighted average number of common shares
outstanding 15,001 13,072 14,944 13,065
Weighted average number of dilutive
common share equivalents 677 801 667 720
------- ------- ------- -------
Weighted average number of common and
common share equivalents outstanding for
primary earnings per share
15,678 13,873 15,611 13,785
======= ======= ======= =======
Fully diluted:
Weighted average number of common shares
outstanding 15,001 13,072 14,944 13,065
Weighted average number of dilutive
common stock equivalents 836 801 747 734
------- ------- ------- -------
Weighted average number of common and
common equivalent shares outstanding
for fully diluted earnings per share
15,837 13,873 15,691 13,799
======= ======= ======= =======
Income per share:
Primary $ .30 $ .22 $ .58 $ .41
======= ======= ======= =======
Fully diluted $ .30 $ .22 $ .58 $ .41
======= ======= ======= =======
5
1,000
6-MOS
DEC-31-1997
JAN-01-1997
JUN-30-1997
27,369
27,755
29,728
0
0
87,183
9,347
0
173,765
20,228
2,650
0
0
151
149,422
173,765
0
57,612
0
43,634
(1,298)
0
149
15,127
6,051
9,076
0
0
0
9,076
.58
.58
AMOUNTS FOR RECEIVABLES AND PROPERTY, PLANT AND EQUIPMENT ARE NET OF ANY
ALLOWANCES AND ACCUMULATED DEPRECIATION.
