<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2000
COMMISSION FILE NUMBER: 0-26625
NOVAMED EYECARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-4116193
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
980 North Michigan Avenue, Suite 1620, Chicago, Illinois 60611
(Address of principal executive offices)
Registrant's telephone, including area code: (312) 664-4100
___________________
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 and Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports)
Yes [X] No [_] and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
As of May 9, 2000, there were outstanding 24,418,531 shares of the
registrant's common stock, par value $.01 per share.
===============================================================================
<PAGE>
NOVAMED EYECARE, INC.
FORM 10-Q FOR QUARTERLY PERIOD ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PART OR ITEM PAGE
<S> <C> <C>
Part I. FINANCIAL STATEMENTS 3
Item 1. Interim Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets - March 31, 2000 and
December 31, 1999 3
Condensed Consolidated Statements of Operations - Three months ended
March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 2000 and 1999 5
Notes to the Interim 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
Item 2. Change in Securities and Use of Proceeds 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
2
<PAGE>
Part I
- ------
Item 1.
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,193 $ 1,828
Accounts receivable, net 17,268 14,501
Due from affiliated providers, net 1,806 1,931
Notes receivable from affiliated providers 655 342
Inventory 2,896 3,427
Other current assets 2,578 2,113
------- -------
Total current assets 26,396 24,142
Property and equipment, net 17,478 16,065
Intangible assets, net 53,516 47,852
Other assets, net 194 193
------- -------
Total assets $97,584 $88,252
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,399 $ 3,608
Accrued expenses 5,860 4,662
Income taxes payable - 275
Current maturities of long-term debt 9,213 3,617
------- -------
Total current liabilities 18,472 12,162
------- -------
Long-term debt, net of current maturities 182 196
------- -------
Deferred income tax liability 1,113 1,113
------- -------
Commitments and contingencies
Stockholders' equity:
Series E junior participating preferred stock ($.01 par
value, 1,912,000 shares authorized, none outstanding at
March 31, 2000 and December 31, 1999, respectively) - -
Common stock ($.01 par value, 81,761,465 shares authorized,
24,398,584 and 24,159,199 shares outstanding, respectively) 244 242
Additional paid-in capital 76,184 74,628
Retained earnings (deficit) 1,389 (89)
------- -------
Total stockholders' equity 77,817 74,781
------- -------
Total liabilities and stockholders' equity $97,584 $88,252
======= =======
</TABLE>
The notes to the interim condensed consolidated financial statements
are an integral part of these statements.
3
<PAGE>
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
<S> <C> <C>
2000 1999
------- -------
Net revenue:
Management services $16,747 $11,852
Surgery and laser centers 9,894 5,886
Product sales and other 4,975 3,288
------- -------
Total net 31,616 21,026
------- -------
Operating expenses:
Salaries, wages and benefits 11,778 8,231
Cost of sales and medical supplies 8,200 5,738
Selling, general and administrative 7,203 4,929
Depreciation and amortization 1,699 1,096
Compensation expense related to stock options -- 57
------- -------
Total operating expenses 28,880 20,051
------- -------
Income from operations 2,736 975
Other expense, net 175 508
------- -------
Income before income taxes 2,561 467
Provision for income taxes 1,083 209
------- -------
Net income 1,478 258
Accretion of Series C and Series D convertible
preferred stock -- (569)
------- -------
Income (loss) available to Series A and Series B
convertible preferred and common stockholders $ 1,478 $ (311)
======= =======
Basic earnings (loss) per common share $ 0.06 $ (0.02)
======= =======
Diluted earnings (loss) per common share $ 0.06 $ (0.02)
======= =======
Basic weighted average common shares outstanding 24,234 2,521
======= =======
Diluted weighted average common shares outstanding 26,339 15,969
======= =======
</TABLE>
The notes to the interim condensed consolidated financial statements
are an integral part of these statements.
4
<PAGE>
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
2000 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,478 $ 258
Adjustments to reconcile net income to net cash provided
by operating activities, net of effects of purchase
transactions--
Depreciation and amortization 1,699 1,096
Noncash employee stock option expense - 57
Changes in noncash working capital items--
Accounts receivable and due from affiliated
providers, net (2,405) 394
Inventory 576 (195)
Other current assets (465) 15
Other noncurrent assets (1) 111
Accounts payable, accrued expenses and income taxes
payable 857 (1,399)
------- -------
Net cash provided by operating activities 1,739 337
------- -------
Cash flows from investing activities:
Purchases of property and equipment (1,742) (1,342)
Acquisitions of and affiliations with entities, net (6,354) (6,337)
Issuance of notes receivable to affiliated providers (313) (28)
------- -------
Net cash used in investing activities (8,409) (7,707)
------- -------
Cash flows from financing activities:
Borrowings under revolving line of credit 12,450 12,500
Payments under revolving line of credit (6,850) (4,850)
Payments of subordinated debt - (850)
Proceeds from the exercise of stock options 453 -
Payments of other debt and capital lease obligations (18) (207)
------- -------
Net cash provided by financing activities 6,035 6,593
------- -------
Net decrease in cash and cash equivalents (635) (777)
Cash and cash equivalents, beginning of period 1,828 1,875
------- -------
Cash and cash equivalents, end of period $ 1,193 $ 1,098
======= =======
</TABLE>
The notes to the interim condensed consolidated financial statements
are an integral part of these statements.
5
<PAGE>
NOVAMED EYECARE, INC. AND SUBSIDIARIES
NOTES TO THE INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Dollars in thousands, except per share data)
(Unaudited)
1. BASIS OF PRESENTATION
The information contained in the interim consolidated financial statements
and footnotes is condensed from that which would appear in the annual
consolidated financial statements. Accordingly, the interim condensed
consolidated financial statements included herein should be read in conjunction
with the consolidated financial statements as of and for the year ended December
31, 1999 filed by NovaMed Eyecare, Inc. (the "Company") with the Securities and
Exchange Commission on Form 10-K. The unaudited interim condensed consolidated
financial statements as of March 31, 2000 and 1999, include all normal recurring
adjustments which management considers necessary for a fair presentation. The
results of operations for the interim periods are not necessarily indicative of
the results that may be expected for the entire fiscal year. The net income
(loss) per share was computed using the weighted average number of common shares
outstanding during each period.
2. EARNINGS (LOSS) PER COMMON SHARE
Prior to the Company's initial public offering on August 18, 1999 ("IPO"),
the Company had multiple classes of convertible preferred stock outstanding.
Upon the completion of the IPO, all outstanding classes of preferred stock
converted into common stock of the Company. In addition, $9.7 million of
subordinated exchangeable promissory notes were exchanged into 1,516,000 shares
of common stock. For the computation of earnings per share, the Series A and
Series B convertible preferred stock were assumed to be outstanding through the
IPO.
Because the Series A and Series B convertible preferred stock participated
along with the common stock in the Company's earnings, the Company used the two
class method for the calculation of earnings per share ("EPS") for 1999. Under
the two class method, earnings or loss is allocated to the Series A and Series B
convertible preferred stock as one class, and to common stock as a second class.
For each class of stock, basic EPS is calculated by dividing allocated earnings
(loss) allocable to the class by the weighted average number of shares
outstanding of that class during the period. Diluted EPS is calculated by
dividing net income (loss) by the weighted average number of common shares,
including the dilutive effect of potential common shares outstanding during the
period. Potential common shares consist of outstanding options, convertible debt
and preferred stock. The dilutive effect of options are calculated using the
treasury stock method. The dilutive effect of the Series A and Series B
convertible preferred shares are calculated using the if-converted method.
6
<PAGE>
Earnings (loss) per common share is calculated as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------
(in thousands, except per share) 2000 1999
- ------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
Income (loss) available to Series A and B convertible preferred and
common stockholders $ 1,478 $ (311)
Income (loss) allocated to preferred stockholders - (257)
------------- -------------
Income (loss) available to common stockholders-basic $ 1,478 $ (54)
------------- -------------
Income (loss) available to common stockholders-diluted $ 1,478 $ (311)
============= =============
Basic weighted average number of common shares outstanding 24,234 2,521
Weighted average number of common shares issuable upon the conversion
of dilutive preferred shares - 11,873
Effect of dilutive securities--stock options 2,105 1,575
------------- -------------
Diluted weighted average number of shares outstanding 26,339 15,969
============= =============
Earnings (loss) per common share:
Basic $ 0.06 $ (0.02)
============= =============
Diluted $ 0.06 $ (0.02)
============= =============
</TABLE>
The effect of the subordinated exchangeable notes was anti-dilutive in 1999
and accordingly, is excluded from diluted EPS. Additionally, the effect of the
conversion of the Series C and Series D convertible preferred stock was anti-
dilutive for 1999 and as such, has been excluded from diluted EPS.
3. UNAUDITED PRO FORMA INFORMATION
In connection with the Company's initial public offering on August 18,
1999, certain noncash, nonrecurring charges were recorded in the 1999
consolidated financial statements. The following unaudited pro forma summary
presents the results of operations as if the events described more fully in the
notes below had occurred on January 1, 1999:
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
(in thousands, except per share) 2000 1999
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Income (loss) available to Series A and Series B convertible preferred and
common stockholders $ 1,478 $ (311)
Eliminate compensation expense related to stock options (a) - 57
Eliminate preferred stock accretion upon conversion to common stock (b) - 569
Eliminate interest expense upon debt conversion to common
stock (c) - 200
Related income tax effect - (115)
------- -------
Pro forma net income $ 1,478 $ 400
======= =======
Pro forma earnings per diluted common share $ 0.06 $ 0.02
======= =======
Pro forma weighted average diluted shares outstanding 26,399 21,306
======= =======
</TABLE>
7
<PAGE>
Notes:
(a) Represents the pro forma elimination of the compensation expense associated
with the IPO-related vesting of certain stock options granted in 1999.
(b) Represents the pro forma elimination of the accretion of the Series C and
Series D convertible preferred stock through the date of the IPO to its
estimated fair market value. Upon the completion of the IPO, the Series C
and Series D convertible preferred stock converted into common stock.
(c) Represents the pro forma elimination of the interest expense from the
subordinated exchangeable promissory notes, which were exchanged into
common stock at the time of the IPO.
4. OPERATING SEGMENTS
The table below presents information about operating data and segment
assets, adjusted to exclude the effects of the 1999 noncash, nonrecurring items
discussed in Note 3, used by the chief operating decision maker of the Company
as of and for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Product
Management Surgery and Sales and
Services Laser centers Other Corporate Eliminations Total
-------- ------------- ----- --------- ------------ -----
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 2000
- ---------------------------------
Net revenue $19,867 $ 9,894 $4,975 $ - $(3,120) $31,616
Earnings before tax 2,090 3,878 450 (3,857) - 2,561
Depreciation and amortization 342 363 46 948 - 1,699
Interest (income) (5) - (1) (21) - (27)
Interest expense - - - 227 - 227
Identifiable assets 17,661 10,471 4,017 65,435 - 97,584
======= ======= ====== ======= ======= ========
Three months ended March 31, 1999
- ---------------------------------
Net revenue $14,411 $ 5,886 $3,288 $ - $(2,559) $21,026
Earnings before tax 1,375 2,138 391 (3,437) - 467
Depreciation and amortization 256 185 38 617 - 1,096
Interest (income) (5) - (12) (20) - (37)
Interest expense 1 1 1 543 - 546
Identifiable assets 12,227 7,187 3,656 45,897 - 68,967
======= ======= ====== ======= ======= =======
</TABLE>
8
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Except for historical information, statements relating to NovaMed's plans,
objectives and future performance are forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations. Because of various risks and
uncertainties, actual strategies and results in future periods may differ
materially from those currently expected.
The discussion set forth below analyzes certain factors and trends related to
the financial results for each of the three months ended March 31, 2000 and
1999. This discussion should be read in conjunction with the condensed
consolidated financial statements and notes to the condensed consolidated
financial statements.
Results of Operations
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999
Net Revenue. Net revenue for the first quarter 2000 increased 50.4% to
$31.6 million from $21.0 million in the prior year period. Management services
revenue increased 41.3% from $11.9 million to $16.7 million. The increase in
management services revenue was primarily a result of overall increases in laser
vision correction, cataract and other ophthalmic surgery procedures performed by
our affiliated eye care professionals as well as new affiliations with eye care
professionals. Surgery and laser center revenue increased 68.1% from $5.9
million to $9.9 million, primarily as a result of a 118.9% increase in laser
vision correction procedures, compared to the same three months of 1999. The
increase in laser vision correction procedures resulted from an overall increase
in demand. We also experienced a 24.5% increase in the number of cataract
procedures, compared to the three months ended March 31, 1999. Product sales
revenue increased 51.3% from $3.3 million to $5.0 million, reflecting strong
product demand.
Salaries, Wages and Benefits. Salaries, wages and benefits expense
increased 43.1% from $8.2 million to $11.8 million. As a percentage of revenue,
salaries, wages and benefits expense decreased from 39.1% to 37.3%. The absolute
increase in salaries, wages and benefits expense primarily reflects costs
associated with organic procedure volume growth, along with increased costs as a
result of new acquisitions and affiliations. The decrease in salaries, wages and
benefits expense as a percentage of revenue was mainly attributable to better
utilization of staff due primarily to the increased volume of laser vision
correction and cataract procedures.
Cost of Sales and Medical Supplies. Cost of sales and medical supplies
expense increased 42.9% from $5.7 million to $8.2 million. As a percentage of
revenue, cost of sales and medical supplies expense decreased to 25.9% from
27.3%. The absolute increase in cost of sales and medical supplies expense is
primarily attributable to higher volumes at our Optical Product Sales business,
along with costs incurred at new acquisitions and affiliations. Supply costs
associated with the increase in laser vision correction and cataract procedures
also contributed to the absolute increase during the period. The decrease in
cost of sales and medical supplies expense as a percentage of revenue was
primarily due to strong refractive revenue growth which has increased
proportionately more than has cost of sales and medical supplies expense.
Selling, General and Administrative. Selling, general and administrative
("SG&A") expense increased 46.1% from $4.9 million to $7.2 million. As a
percentage of revenue, SG&A expense decreased from 23.4% to 22.8%. The absolute
increase in SG&A expense related primarily to the expansion of sales and
marketing efforts in connection with our laser vision correction business (which
includes the continued investment in developing regional brands), and
acquisitions. In addition, we increased our information technology expenditures
related to our enterprise-wide information systems, other programs supporting
our laser vision correction business and our application service provider
platform.
Depreciation and Amortization. Depreciation and amortization expense
increased 55.0% from $1.1 million to $1.7 million. Acquisitions, affiliations
and increased capital expenditures have increased overall depreciation and
amortization expense.
9
<PAGE>
Other Expense. Other expense decreased 65.6% from $508 thousand to $175
thousand. The decrease in other expense was primarily related to the reduction
of interest expense as a result of lower average outstanding indebtedness during
the first quarter of 2000 as compared to the 1999 period.
Provision for Income Taxes. Our effective tax rate reflects the impact of
nondeductible amortization expense. Our effective tax rate decreased to 42.3%
from 44.8%, due to a higher level of pre-tax earnings for the three months ended
March 31, 2000, which absorbed a higher percentage of non-deductible expenses as
compared to the prior year period.
Accretion of Series C and Series D Convertible Preferred Stock. In
connection with our August 18, 1999 initial public offering ("IPO"),
approximately 16.3 million shares of Series A, Series B, Series C and Series D
convertible preferred stock, which represented all of the issued and outstanding
shares of preferred stock, converted into our common stock. Prior to the initial
public offering, however, the holders of the Series C and Series D convertible
preferred stock had the right to tender their stock for redemption in 2004 and
2005 at the greater of the amount originally paid for the preferred stock or its
fair market value. Because the redemption right was outside of our control,
generally accepted accounting principles required that until the redemption
date, we increase the value of the preferred stock to its ultimate redemption
value, a principle known as accretion. The accretion was deducted from net
income in the 1999 consolidated financial statements to arrive at the income
available for common stockholders. Upon the conversion of the Series C and
Series D convertible preferred stock into common stock, the redemption rights
terminated, thus eliminating the need for further accretion. We recorded
accretion of $569 thousand for the three months ended March 31, 1999.
Liquidity and Capital Resources
Net cash provided by operating activities for the three months ended March
31, 2000 increased $1.4 million over the comparable 1999 period to $1.7 million,
mainly as a result of improved earnings. The Company used $8.4 million of cash
for investing activities during first quarter 2000, which included two
acquisitions and/or affiliations and the purchase of property and equipment.
During the first three months of 2000, the Company's net borrowings under its
revolving credit line increased $5.6 million primarily as a result of borrowings
used to fund acquisitions. Additionally, the Company received $453 thousand
during first quarter 2000 from the issuance of common stock associated with the
exercise of stock options. At March 31, 2000, the Company had cash and cash
equivalents of $1.2 million and working capital of $7.9 million.
The Company's credit agreement, which provides for a $35 million revolving
credit facility, expires in July 2000. Accordingly, the Company's current
maturities of long-term debt at March 31, 2000 and December 31, 1999 include
outstanding credit line borrowings of $8.8 million and $3.2 million,
respectively. Interest is payable at an annual rate equal to our lender's
published base rate minus .50% or LIBOR plus a range from 1.5% to 2.0%, varying
upon our ability to meet financial covenants. The weighted average interest rate
on credit line borrowings was approximately 8% (annualized) for the three months
ended March 31, 2000. The credit agreement contains covenants that include
limitations on indebtedness, liens, capital expenditures, ratios that define
borrowing availability and restrictions on the payment of dividends. As of March
31, 2000, we were in compliance with all our credit agreement covenants. We had
$26.2 million available on our line of credit as of March 31, 2000. We are
currently in the process of renegotiating our revolving credit facility to
expand our borrowing capacity and to extend the facility beyond July 2000. We
expect to complete this refinancing in the second quarter of 2000.
We expect that our funds from operations and access to bank credit lines
will be sufficient to fund our operations and capital expenditures for at least
12 months. Our future capital requirements and the adequacy of available funds
will depend on many factors, including the timing of our acquisition activities,
new affiliations with eye care professionals, capital requirements associated
with our laser vision correction services and facilities, expansions and the
future cost of surgical equipment.
Most of our current FDA-approved lasers are subject to a supply agreement
with Summit Technology, Inc. Under this agreement, we utilize Summit-
manufactured lasers for periods ranging from 36 to 42 months. During these
periods, we pay Summit monthly based on the number of procedures performed with
each laser. We are required to pay for a minimum number of procedures on each
laser during the commitment period, whether or not
10
<PAGE>
these procedures are actually performed. As of March 31, 2000, we have a minimum
remaining commitment to Summit of approximately $5.7 million.
In connection with the exchange of $9.7 million of our subordinated
exchangeable promissory notes resulting from our IPO, we agreed to lend each of
these noteholders an amount equal to the Federal and state income taxes payable
by the holder as a result of the exchange of the notes, but only for those
shares of our common stock received in the exchange which they still owned as of
April 1, 2000. In accordance with these agreements, the Company loaned $2.7
million to the holders, the majority of which was advanced in April 2000. The
tax loans are noninterest bearing, nonrecourse to the debtor and secured by a
number of shares of our common stock held by the debtor having a value, based on
the offering price, equal to two times the loan amount. Upon the sale by a
debtor after April 1, 2000 of any shares of our common stock issued in exchange
for a note, the debtor will be required to repay a fraction of the debtor's
initial tax loan amount equal to the number of shares sold divided by the total
number of shares of our common stock previously issued in exchange for a note
and owned by the debtor as of April 1, 2000. The tax loans are payable by the
debtors upon our demand for payment. Currently, we intend to allow the debtors
to repay these loans as they dispose of their shares of our common stock. We
also have agreed to reimburse these debtors on a grossed-up basis, for any
Federal or state taxes that they recognize as a result of imputed interest on
the tax loans.
PART II. OTHER INFORMATION
Item 2. Change in Securities and Use of Proceeds
Sales of Unregistered Securities from January 1, 2000 through March 31, 2000
On January 21, 2000, the Company issued 7,995 shares of common stock to an
affiliated professional entity as partial consideration to consummate its
affiliation with such entity.
No underwriters were engaged in connection with the foregoing sale of
securities. The sale of securities listed above was made in reliance upon the
exemptions from registration in Section 4(2) of the Securities Act of 1933 for
transactions not involving a public offering.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 10.17 - Third Amendment to Amended and Restated Credit
Agreement
Exhibit 10.18 - Third Amendment to Amended and Restated Summit
Technology, Inc. Agreement
Exhibit 10.19 - Amendment to Amended and Restated Employment
Agreement with Stephen J. Winjum
Exhibit 10.20 - Amendment to Amended and Restated Employment
Agreement with Ronald G. Eidell
Exhibit 10.21 - Amendment to Amended and Restated Employment
Agreement with E. Michele Vickery
Exhibit 27 - Financial Data Schedule
B. Reports on Form 8-K
The Company did not file any reports on Form 8-K during the first quarter
of 2000.
11
<PAGE>
SIGNATURE
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.
NOVAMED EYECARE, INC.
/s/ Ronald G. Eidell May 12, 2000
- -------------------- ------------
Ronald G. Eidell Date
Executive Vice President, Chief
Financial Officer and Secretary
(on behalf of Registrant and as
principal financial officer)
/s/ Martin A. Koehler May 12, 2000
- --------------------- ------------
Martin A. Koehler Date
Vice President Finance
(principal accounting officer)
12
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Name
- ------ ------------
10.17 Third Amendment to Amended and Restated Credit Agreement
10.18* Third Amendment to Amended and Restated Summit Technology, Inc.
Agreement
10.19 Amendment to Amended and Restated Employment Agreement with
Stephen J. Winjum
10.20 Amendment to Amended and Restated Employment Agreement with Ronald
G. Eidell
10.21 Amendment to Amended and Restated Employment Agreement with E.
Michele Vickery
27 Financial Data Schedule
- --------
* Portions of this Exhibit have been omitted based upon a request for
confidential treatment of this document; omitted portions have been separately
filed with the Commission.
13
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------------------
This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of February 17, 2000 is entered into by and among NOVAMED
EYECARE, INC., a Delaware corporation ("Borrower"), THE NORTHERN TRUST COMPANY
and PNC BANK, NATIONAL ASSOCIATION each as Agent and each for itself as a Lender
(as defined below), and each as Agent for the Lenders, and the financial
institutions signatory hereto ("Lenders"). Unless otherwise specified herein,
capitalized terms used in this Amendment shall have the meanings ascribed to
them by the Credit Agreement (as hereinafter defined).
RECITALS
--------
WHEREAS, the Borrower, the Agent and the Lenders have entered into
that certain Amended and Restated Credit Agreement, dated as of May 20, 1997 and
as amended and restated as of July 8, 1998 (as amended by that certain Letter
Agreement dated as of November 1, 1998, by that certain First Amendment dated as
of December 23, 1998 and by that certain Second Amendment and Consent dated as
of May 21, 1999, and as the same may be further amended, supplemented, restated
or otherwise modified from time to time, the "Credit Agreement"); and
WHEREAS, the Borrower, the Agent and the Lenders wish to acknowledge
and consent to certain actions, all as more fully set forth herein;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
SECTION 1. Amendment to the Credit Agreement. The definition of
"Agent" in Section 1.1 of the Credit Agreement is hereby amended in its entirety
by inserting in lieu thereof the following new definition:
"Agent" means for The Northern Trust Company and includes each other
Person as shall have subsequently been appointed as the successor Agent
pursuant to Section 9.4.
SECTION 2. Representations and Warranties. The Borrower represents
and warrants that:
(a) each of the representations and warranties contained in the
Credit Agreement is true and correct in all material respects on and
as of the date hereof as if made on the date hereof, except to the
extent that such representations and warranties expressly relate to an
earlier date;
(b) neither the execution, delivery and performance of this
Amendment nor the consummation of the transactions contemplated hereby
does
<PAGE>
or shall contravene, result in a breach of, or violate (i) any
provision of the Borrower's certificate or articles of incorporation
or bylaws, (ii) any law or regulation, or any order or decree of any
court or government instrumentality or (iii) indenture, mortgage, deed
of trust, lease, agreement or other instrument to which the Borrower
or any of its Subsidiaries is a party or by which the Borrower or any
of its Subsidiaries or any of their property is bound, except in any
such case to the extent such conflict or breach, with respect to any
such indenture, mortgage, deed of trust, lease, agreement or other
instrument, would not reasonably be expected to have a Material
Adverse Effect or has been waived by a written waiver, a copy of which
has been delivered to the Agent on or before the date hereof; and
(c) no Default or Event of Default will exist or result before
and after giving effect to this Amendment.
SECTION 3. Reference to and Effect Upon the Credit Agreement.
(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy
of the Agent or any Bank under the Credit Agreement or any Loan
Document, nor constitute a waiver of any provision of the Credit
Agreement or any Loan Document, except as specifically set forth
herein. Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of similar import shall mean and be a reference to
the Credit Agreement as amended hereby.
SECTION 4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
SECTION 5. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts (including by facsimile), each of which when so executed
shall be deemed an original but all such counterparts shall constitute one and
the same instrument.
SECTION 7. Effectiveness. This Amendment shall become effective upon
receipt by the Agent of a fully executed copy of this Amendment.
[signature page follows]
- 2 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first above written.
NOVAMED EYECARE, INC.
By: /s/ Ronald G. Eidell
------------------------------------
Title: Executive Vice President and Chief
Financial Officer
----------------------------------
THE NORTHERN TRUST COMPANY,
Individually and as Agent
By: /s/ Christopher J. Collins
-------------------------------------
Title: Vice President
----------------------------------
PNC BANK, NATIONAL ASSOCIATION,
Individually and as Agent
By: /s/ Peter S. Tsudis
-------------------------------------
Title: Vice President
----------------------------------
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Amy K. King
-------------------------------------
Title: Commercial Banking Officer
----------------------------------
- 3 -
<PAGE>
EXHIBIT 10.18
CONFIDENTIAL TREATMENT
----------------------
THIRD AMENDMENT TO
NOVAMED/SUMMIT AGREEMENT
THIS THIRD AMENDMENT TO THE NOVAMED-SUMMIT AGREEMENT (the "Third
Amendment") is made and entered into effective as of the 23rd day of February,
2000, by and between NovaMed Eyecare Services, LLC ("NovaMed") and Summit
Technology, Inc. ("STI") and Autonomous Technologies Corporation, a wholly owned
subsidiary of STI ("ATC," together with STI, "Summit").
RECITALS
A. STI and NovaMed entered into a NovaMed-Summit Agreement entitled "An
Opportunity for Rapid Expansion into the Business of Laser Vision Correction"
dated as of October 2, 1998, as amended by (i) a First Amendment ("First
Amendment") dated April 2, 1999, (ii) a Second Amendment ("Second Amendment")
dated May 21, 1999, (iii) an Amended and Restated NovaMed/Summit Agreement dated
as of July 7, 1999 ("Amended and Restated Agreement"), (iv) a First Amendment to
the Amended and Restated NovaMed/Summit Agreement dated as of October 1, 1999,
and (v) a Second Amendment to the Amended and Restated NovaMed/Summit Agreement
dated as of November 1, 1999 (collectively, the "Agreement").
B. On February 23, 2000, Summit announced that it was reducing its per
Procedure pricing on its Apex Plus/Infinity ("Apex Plus Systems") and
LADARVision/(R)/ Systems.
C. Summit and NovaMed desire to amend the Agreement to implement a new
pricing schedule, to be effective as of February 23, 2000, so that NovaMed will
realize the benefits of the aforesaid price reduction.
NOW, THEREFORE, for good and valuable consideration, the parties hereby
agree as follows:
TERMS
1. Defined Terms. Capitalized words and terms used herein and not defined
shall have the respective meanings ascribed to them in the Agreement.
2. Third Party Financed Apex Plus Systems. Effective on and after
February 23, 2000, all existing NovaMed Apex Plus Systems that have been
financed by Health Capital Financial Group, LLC (excluding * )("Health
Capital") will carry * . These Systems are listed on Exhibit A,
annexed (collectively, the "Health Capital Systems"). The existing *
applicable to the Health Capital Systems shall remain in effect.
3. * Apex Plus Systems. Exhibit B, annexed, lists the NovaMed
Apex Plus Systems currently utilized in * .
The * will continue to carry a *
__________________________
*Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
, and the existing * applicable to the * will remain in
effect. The * are exclusively the Systems listed on Exhibit B, and
NovaMed may not add any new * or redesignate any other existing Systems
as * .
4. Other Existing Apex Plus Systems. Effective on and after February 23,
2000, all other existing Apex Plus Systems which have been procured or priced
under the Agreement (collectively, and including any new Apex Plus system
placements described in Section 5, below, "Rental Systems") will carry a new
* , and the * schedules applicable to those Apex Plus
Systems will remain in effect.
5. New Apex Plus Placements. In addition to the other lasers that have
been or may be procured under the Agreement, NovaMed may elect, at its option,
to procure up to an unlimited number of additional Apex Plus Systems as follows
(the systems described in this paragraph will be hereinafter referred to as the
"Tier 4 Systems"):
(a) Pricing. Summit will place an Apex Plus System in a location
designated by NovaMed in exchange for a * and a * .
Upon completion of * , NovaMed has the option to continue using the
laser at the cost of * , renegotiating the Agreement or
terminating the Agreement, all as set forth in the relevant OmniCard Plus
Agreement. Unless NovaMed is in default under the relevant OmniCard Plus
Agreement, Summit may not terminate, or elect not to renew, such Agreement.
(b) * . There will be a * for each Tier
4 System. The schedule for such * will be as follows:
Months * *
Months * *
Months * *
Months * *
Months * *
Any procedures in a given month that are * will be credited
towards * (i.e., NovaMed is satisfying the * so long as it is
achieving * ).
(c) Infinity LS Upgrades. NovaMed may elect an Infinity LS Upgrade
for any Apex Plus System, whether for an existing laser or upon ordering a new
laser, for a * to Summit equal to * . Upon NovaMed's request,
Summit agrees to provide NovaMed with * .
2
__________________________
*Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
6. * . Commencing April 1, 2000, the new aggregate *
will be revised as follows:
When the * on all Apex Plus Systems procured or priced
under the Agreement reaches * , NovaMed will receive a
* . When the * on all Apex Plus Systems procured or
priced under the Agreement reaches * , NovaMed will
receive an aggregate * .
For any calendar quarter in which NovaMed achieves any * ,
NovaMed may * , provided that the * ,
if any, will only be * in the subject quarter (that is,
the * , but will not themselves be * ; the
* would have been eligible for * . For
purposes of measuring the * , such measurements will be based on the
* by NovaMed in a calendar quarter. The Parties hereto
acknowledge that the * applies only to the ApexPlus Systems and will
not apply to the LADARVision Systems. The parties hereto also acknowledge
that the * in place prior to giving effect to this Third Amendment
will apply to the calendar quarter ended March 31, 2000 and will be measured
on the * in such quarter.
Consistent with the methodology described in this Section 6, NovaMed
will also * attained in the quarter ended March 31, 2000.
7. LADARVision Systems. Except with respect to the * LADARVision
Systems (as defined below), each new LADARVision System placement will bear a
* and will carry an * , broken down as
follows:
Year One *
Year Two *
Year Three * .
For each individual LADARVision System during each year of its use,
the * will be reduced for * in
accordance with the following schedule:
Procedures *
Procedures *
Procedures * .
The parties acknowledge that the above schedule is to be applied on a
per LADARVision System per year basis and that there will be no * .
The term for each System will commence upon installation in good working order.
Summit will bill NovaMed monthly for the applicable monthly * and
will bill quarterly in arrears for * .
3
__________________________
*Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
Upon completion of * , NovaMed has the option to continue
using the laser at the pricing schedule set forth above * ,
renegotiating the Agreement or terminating the Agreement, all as set forth in
the relevant OmniCard Plus Agreement. Unless NovaMed is in default under the
relevant OmniCard Plus Agreement, Summit may not terminate, or elect not to
renew, such Agreement.
Any Procedures in a given month that are * (i.e.,
NovaMed is satisfying the * so long as it is achieving * ).
Except as expressly set forth in this Third Amendment, the use,
operation and maintenance of the LADARVision System (including without
limitation hardware/software upgrades, retreatment and courtesy policies) will
be governed by the same terms and conditions as those relating to the Apex Plus
Systems which were in place prior to this Amendment.
The parties acknowledge that * and procedures are not
included in the Agreement and will be an additional charge if, as and when
approved by FDA.
8. * LADARVision System. NovaMed may designate two LADARVision
Systems as * Systems (the " * LADARVision Systems"). The
pricing for the * LADARVision Systems will be * and be subject to
the other terms as described in Section 7 above, except that there will be
* applicable to the * LADARVision Systems for the first six months
after installation. Thereafter, it will be assigned the same *
schedule as all other NovaMed LADARVision Systems, and the *
schedule will be deemed to have commenced at expiry of the initial six-month
period.
9. Exchanges. NovaMed may elect to exchange any Rental System for a
LADARVision System if either (i) such Rental System has achieved *
or (ii) NovaMed agrees to the * set forth in Section 7
above for the LADARVision System. In the event NovaMed makes such an election,
NovaMed will be absolved of any further * commitment
applicable to the * (provided it is returned to Summit in good
condition, reasonable wear and tear excepted). The LADARVision System taken in
replacement may be assigned by NovaMed to any site (not just to former location
of the * ), and will be subject to the term, pricing and
* provisions described in Section 7, above.
10. * Trade-In Program. If at any time through December 31, 2000
NovaMed elects to remove any * system and replace it with an Apex Plus
or a LADARVision System, * , provided such system is in
good working order (reasonable wear and tear excepted).
11. * . * .
12. Retreatments. Each calendar quarter during the term hereof, NovaMed
will * .
4
__________________________
*Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
13. Other Terms.
(a) Summit agrees to continue to provide NovaMed, * ,
marketing seminars and staff training with the * .
(b) * .
14. Effect of Amendment. Except as specifically provided in this Third
Amendment, the Agreement shall remain in full force and effect in accordance
with its existing terms. In the event of conflict between the terms of the
Agreement and the terms of this Third Amendment, the terms of this Third
Amendment will control.
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment as
of the date first written above.
SUMMIT TECHNOLOGY, INC.
By: /s/Edward P. Devnew, Jr.
-----------------------
Edward P. Devnew, Jr., Director of Sales
AUTONOMOUS TECHNOLOGIES CORPORATION
By: /s/ Robert Kelly
----------------
Robert Kelly, its Treasurer
NOVAMED EYECARE SERVICES, LLC
By: NovaMed Eyecare, Inc., its Manager
By:/s/ Stephen J. Winjum
---------------------
Stephen J. Winjum, its President
5
__________________________
*Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
Exhibit A
* .
________________
Confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
Exhibit B
* .
_________________
Confidential treatment requested.
<PAGE>
Exhibit 10.19
AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into effective as of March 9, 2000, by and
between NovaMed Eyecare Services, LLC, a Delaware limited liability company (the
"Company"), and Stephen J. Winjum ("Employee").
RECITALS
A. The Company and Employee have previously entered into an Amended and
Restated Employment Agreement dated as of February 17, 1999 (the "Original
Agreement").
B. In consideration for the grant of stock options by the Company to
Employee pursuant to the terms and conditions of a Stock Option Agreement of
even date herewith, and the continued employment of Employee by the Company, the
Company and Employee desire to amend the terms and conditions of the Original
Agreement, as hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
TERMS
1. Section 3.3(b) and (c) of the Original Agreement will be deleted and
replaced with the following language comprising a new Section 3.3(b):
(b) If the Employment Period is terminated by the Company
without Cause (including a termination resulting from the Company's
election not to renew this Agreement under Section 1.1 hereof), the
Employee shall be entitled to receive, as severance, the following
(collectively, the "Severance Pay"): (i) Employee's Base Salary hereunder
for a period of eighteen (18) months (such time period to be hereinafter
referred to as the "Severance Period"), payable in regular installments in
accordance with the Company's general payroll practices for salaried
employees; (ii) the bonus, if any, that Employee would have received under
Section 2.2 hereof at the end of the year during which termination without
Cause occurs had such termination not occurred, which bonus will be (A)
prorated based on the amount of time that Employee was employed by the
Company during the year (not including the Severance Period) for which such
bonus is being calculated and (B) determined and paid to Employee
contemporaneously with the determination and payment of bonuses for
comparable employees of the Company; and (iii) continuation of the Benefits
for the Severance Period. Receipt of Severance Pay is contingent upon
Employee executing and adhering to a release of all employment claims in a
form acceptable to the Company. The Company shall have no further
obligations hereunder or otherwise with respect to Employee's employment
from and after the termination date, and the Company shall continue to have
all other
<PAGE>
rights available hereunder (including without limitation, all rights under
Article IV hereof) at law or in equity.
2. The following sentence will be added at the end of Section 4.3 of the
Original Agreement:
In addition, at all times from and after the Termination Date,
Employee shall not contact or communicate in any manner with any of
Employer's suppliers or vendors, or any other third party providing
services to Employer, regarding Employer or any Employer-related matter
(which suppliers, vendors or third party service providers will include,
without limitation, any third party with whom Employer was, during the term
of Employee's employment with Employer, contemplating engaging, or
negotiating with, for the future provision of products or services).
3. The following provision will be added at the end of Article IV of the
Original Agreement as Section 4.9:
Section 4.9 Covenant Not to Disparage. During the Restrictive
Period and thereafter, Employee shall not disparage, denigrate or derogate
in any way, directly or indirectly, any of the Company, its agents,
officers, directors, employees, parent, subsidiaries, affiliates,
affiliated practices, affiliated doctors, representatives, attorneys,
executors, administrators, successors and assigns (collectively, the
"Protected Parties"), nor shall Employee disparage, denigrate or derogate
in any way, directly or indirectly, his experience with any Protected
Party, or any actions or decisions made by any Protected Party.
4. Except as expressly provided in this Amendment, the Original Agreement
will remain in full force and effect in accordance with its existing terms.
* * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
NOVAMED EYECARE SERVICES, LLC
By: NovaMed Eyecare, Inc., its Manager
By: /s/ Ronald G. Eidell
-------------------------------------
Ronald G. Eidell, Executive Vice
President and Chief Financial Officer
/s/ Stephen J. Winjum
----------------------------------------
Stephen J. Winjum
<PAGE>
Exhibit 10.20
AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into effective as of March 9, 2000, by and
between NovaMed Eyecare Services, LLC, a Delaware limited liability company (the
"Company"), and Ronald G. Eidell ("Employee").
RECITALS
A. The Company and Employee have previously entered into an Amended and
Restated Employment Agreement dated as of February 17, 1999 (the "Original
Agreement").
B. In consideration for the grant of stock options by the Company to
Employee pursuant to the terms and conditions of a Stock Option Agreement of
even date herewith, and the continued employment of Employee by the Company, the
Company and Employee desire to amend the terms and conditions of the Original
Agreement, as hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
TERMS
1. Section 3.3(b) and (c) of the Original Agreement will be deleted and
replaced with the following language comprising a new Section 3.3(b):
(b) If the Employment Period is terminated by the Company
without Cause (including a termination resulting from the Company's
election not to renew this Agreement under Section 1.1 hereof), the
Employee shall be entitled to receive, as severance, the following
(collectively, the "Severance Pay"): (i) Employee's Base Salary hereunder
for a period of nine (9) months (such time period to be hereinafter
referred to as the "Severance Period"), payable in regular installments in
accordance with the Company's general payroll practices for salaried
employees; (ii) the bonus, if any, that Employee would have received under
Section 2.2 hereof at the end of the year during which termination without
Cause occurs had such termination not occurred, which bonus will be (A)
prorated based on the amount of time that Employee was employed by the
Company during the year (not including the Severance Period) for which such
bonus is being calculated and (B) determined and paid to Employee
contemporaneously with the determination and payment of bonuses for
comparable employees of the Company; and (iii) continuation of the Benefits
for the Severance Period. Receipt of Severance Pay is contingent upon
Employee executing and adhering to a release of all employment claims in a
form acceptable to the Company. The Company shall have no further
obligations hereunder or otherwise with respect to Employee's employment
from and after the termination date, and the Company shall continue to have
all other
<PAGE>
rights available hereunder (including without limitation, all rights under
Article IV hereof) at law or in equity.
2. The following sentence will be added at the end of Section 4.3 of the
Original Agreement:
In addition, at all times from and after the Termination Date,
Employee shall not contact or communicate in any manner with any of
Employer's suppliers or vendors, or any other third party providing
services to Employer, regarding Employer or any Employer-related matter
(which suppliers, vendors or third party service providers will include,
without limitation, any third party with whom Employer was, during the term
of Employee's employment with Employer, contemplating engaging, or
negotiating with, for the future provision of products or services).
3. The following provision will be added at the end of Article IV of the
Original Agreement as Section 4.9:
Section 4.9 Covenant Not to Disparage. During the Restrictive Period
and thereafter, Employee shall not disparage, denigrate or derogate in any
way, directly or indirectly, any of the Company, its agents, officers,
directors, employees, parent, subsidiaries, affiliates, affiliated
practices, affiliated doctors, representatives, attorneys, executors,
administrators, successors and assigns (collectively, the "Protected
Parties"), nor shall Employee disparage, denigrate or derogate in any way,
directly or indirectly, his experience with any Protected Party, or any
actions or decisions made by any Protected Party.
4. Except as expressly provided in this Amendment, the Original Agreement
will remain in full force and effect in accordance with its existing terms.
* * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
NOVAMED EYECARE SERVICES, LLC
By: NovaMed Eyecare, Inc., its Manager
By: /s/ Stephen J. Winjum
-----------------------------------------
Stephen J. Winjum, Chairman of the Board,
President and Chief Executive Officer
/s/ Ronald G. Eidell
--------------------------------------------
Ronald G. Eidell
<PAGE>
Exhibit 10.21
AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into effective as of March 9, 2000, by and
between NovaMed Eyecare Services, LLC, a Delaware limited liability company (the
"Company"), and E. Michele Vickery ("Employee").
RECITALS
A. The Company and Employee have previously entered into an Amended and
Restated Employment Agreement dated as of February 17, 1999 (the "Original
Agreement").
B. In consideration for the grant of stock options by the Company to
Employee pursuant to the terms and conditions of a Stock Option Agreement of
even date herewith, and the continued employment of Employee by the Company, the
Company and Employee desire to amend the terms and conditions of the Original
Agreement, as hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
TERMS
1. Section 3.3(b) and (c) of the Original Agreement will be deleted and
replaced with the following language comprising a new Section 3.3(b):
(b) If the Employment Period is terminated by the Company without
Cause (including a termination resulting from the Company's election not to
renew this Agreement under Section 1.1 hereof), the Employee shall be
entitled to receive, as severance, the following (collectively, the
"Severance Pay"): (i) Employee's Base Salary hereunder for a period of nine
(9) months (such time period to be hereinafter referred to as the
"Severance Period"), payable in regular installments in accordance with the
Company's general payroll practices for salaried employees; (ii) the bonus,
if any, that Employee would have received under Section 2.2 hereof at the
end of the year during which termination without Cause occurs had such
termination not occurred, which bonus will be (A) prorated based on the
amount of time that Employee was employed by the Company during the year
(not including the Severance Period) for which such bonus is being
calculated and (B) determined and paid to Employee contemporaneously with
the determination and payment of bonuses for comparable employees of the
Company; and (iii) continuation of the Benefits for the Severance Period.
Receipt of Severance Pay is contingent upon Employee executing and adhering
to a release of all employment claims in a form acceptable to the Company.
The Company shall have no further obligations hereunder or otherwise with
respect to Employee's employment from and after the termination date, and
the Company shall continue to have all other
<PAGE>
rights available hereunder (including without limitation, all rights under
Article IV hereof) at law or in equity.
2. The following sentence will be added at the end of Section 4.3 of the
Original Agreement:
In addition, at all times from and after the Termination Date,
Employee shall not contact or communicate in any manner with any of
Employer's suppliers or vendors, or any other third party providing
services to Employer, regarding Employer or any Employer-related matter
(which suppliers, vendors or third party service providers will include,
without limitation, any third party with whom Employer was, during the term
of Employee's employment with Employer, contemplating engaging, or
negotiating with, for the future provision of products or services).
3. The following provision will be added at the end of Article IV of the
Original Agreement as Section 4.9:
Section 4.9 Covenant Not to Disparage. During the Restrictive Period
and thereafter, Employee shall not disparage, denigrate or derogate in any
way, directly or indirectly, any of the Company, its agents, officers,
directors, employees, parent, subsidiaries, affiliates, affiliated
practices, affiliated doctors, representatives, attorneys, executors,
administrators, successors and assigns (collectively, the "Protected
Parties"), nor shall Employee disparage, denigrate or derogate in any way,
directly or indirectly, his experience with any Protected Party, or any
actions or decisions made by any Protected Party.
4. Except as expressly provided in this Amendment, the Original Agreement
will remain in full force and effect in accordance with its existing terms.
* * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
NOVAMED EYECARE SERVICES, LLC
By: NovaMed Eyecare, Inc., its Manager
By: /s/ Stephen J. Winjum
-----------------------------------------
Stephen J. Winjum, Chairman of the Board,
President and Chief Executive Officer
/s/ E. Michele Vickery
---------------------------------------------
E. Michele Vickery
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-2000
<PERIOD-START> JAN-01-1999 JAN-01-2000
<PERIOD-END> DEC-31-1999 MAR-31-2000
<CASH> 1,828 1,193
<SECURITIES> 0 0
<RECEIVABLES> 29,488 33,192
<ALLOWANCES> 12,714 13,462
<INVENTORY> 3,427 2,896
<CURRENT-ASSETS> 24,142 26,396
<PP&E> 22,693 25,239
<DEPRECIATION> 6,628 7,761
<TOTAL-ASSETS> 88,252 97,584
<CURRENT-LIABILITIES> 12,162 18,472
<BONDS> 0 0
0 0
0 0
<COMMON> 242 244
<OTHER-SE> 74,539 77,573
<TOTAL-LIABILITY-AND-EQUITY> 88,252 97,584
<SALES> 26,895 8,961
<TOTAL-REVENUES> 102,588 31,616
<CGS> 17,718 5,368
<TOTAL-COSTS> 96,221 28,880
<OTHER-EXPENSES> 3,685 175
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,299 201
<INCOME-PRETAX> 2,682 2,561
<INCOME-TAX> 1,808 1,083
<INCOME-CONTINUING> 874 1,478
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 874 1,478
<EPS-BASIC> .19 .06
<EPS-DILUTED> (.06) .06
</TABLE>
