Net Income Guarantee Contract Example (Page 3 of 11) in pdf

$20,000.00 per month and if Net Income during a monthly period were $40,000.00, then Excess Income in the

amount of $20,000.00 would be included in Physician's Net Income for the following month. In that following

month, if Physician achieves Gross Collections of $35,000.00 and incurs Reasonable Operating Expenses of

$10,000.00, Physicians Net Income will be $45,000.00 (Gross Collections [$35,000.00] plus Excess Income

[$20,000.00] minus Reasonable Operating Expenses [$10,000.00]). Accordingly, Excess Income of $5,000.00 (Net

Income [$45,000.00] minus $40,000.00) will be carried forward to the next month.

For example only, a

demonstration of the mechanics of the Income Guarantee Loan is set forth on Exhibit A attached hereto.

Notwithstanding any other provision in this Agreement, the total outlays from Medical Center to Physician pursuant

to the Income Guarantee Loan shall not exceed XXX and No/100 Dollars ($XXX,000.00) during the Distribution

Period.

Final Settlement of Start-Up and Income Guarantee Loans.

The parties agree that a Final

Settlement shall be determined within thirty (30) days of the end of the Distribution Period. Such Final Settlement

shall determine the outstanding balance owed to Medical Center by Physician, which balance shall include the total

value of the loan advances by the Medical Center pursuant to both the Start-Up Loan and the Income Guarantee

Loan which have not been paid back during the Distribution Period (the "Aggregate Loan Balance”).

"In Kind" Repayment of Aggregate Loan Balance. So long as Physician maintains the Practice in

the Service Area after the Distribution Period, Physician may repay "in kind" the Aggregate Loan Balance. This "in

kind" repayment period may also begin at any time during the Distribution Period. Medical Center, in its sole

discretion, may choose to allow Physician to perform uncompensated services during the Distribution Period that

will be credited to the total repayment of the Aggregate Loan Balance. For example only, if Physician has

performed a total of 50 hours of uncompensated services considered as “repayment in kind” during the Distribution

Period, and if the services were billed at an hourly rate of $300.00 per hour, then Physician will have accumulated a

credit of $15,000.00 to offset the Aggregate Loan Balance after the Distribution Period. As used in this Agreement,

“repayment in kind” means Physician’s provision of uncompensated services that have been agreed upon by

Medical Center and Physician prior to the time Physician renders the services in repayment under this Agreement.

Physician understands and acknowledges that Medical Center is under no obligation to agree to the provision of any

such services. Such services may include, but shall not be limited to, consulting with Medical Center personnel

regarding the establishment of satellite clinics for the Medical Center, providing medical services at the clinics,

participating with Medical Center in community activities such as health fairs and screenings, and preparing and

presenting educational programs for the community and in-service education for Medical Center employees.

Services for which Physician receives revenue shall not count as credit toward “repayment in kind”. Such services

shall not include administrative duties, such as attending medical staff meetings, performing peer review activities,

or any other activity required of all active medical staff members. The parties shall also agree on the value of each

type of service prior to the time Physician renders such service; provided, however, that the value shall not exceed

$XXX.00 per hour. At least quarterly, Physician shall submit to Medical Center a statement of the agreed upon

authorized services he performed during the period of time covered by the statement. Medical Center shall not pay

Physician for such services but shall decrease Physician’s Aggregate Loan Balance by the value of the services

agreed upon by the parties and performed by Physician. Total “repayment in kind” must be completed within three

(3) years after the end of the Distribution Period.

Repayment of Aggregate Loan Balance. At the end of the Distribution Period, and in no event

more than thirty (30) days after the Final Settlement, Physician shall execute a promissory note evidencing the

Aggregate Loan Balance in the form attached hereto as Exhibit B. Said promissory note will have a fixed interest

rate at the then current prime rate and shall provide for repayment of the Medical Center in thirty-six (36) equal

monthly installments beginning the earlier of (i) thirty (30) days after the third (3

) anniversary following the end of

the Distribution Period, (ii) thirty (30) days after Physician ceases to maintain membership on the Medical Center’s

active medical staff or to maintain the Practice within the Service Area, or (iii) thirty (30) days after termination of

this Agreement by Medical Center pursuant to Sections 12(b) through 12(h). Interest on the promissory note shall

not begin to accrue until the due date of Physician's first payment.

Net Income Guarantee Contract Example Page 3

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