Exhibit 10.1


 


AMENDMENT TO MANAGEMENT SERVICES AGREEMENT


 


THIS AMENDMENT
TO MANAGEMENT SERVICES AGREEMENT (this “Amendment”), is made and entered
into as of October 1, 2007, by and between PROMED HEALTH CARE
ADMINISTRATORS, INC., a California corporation (“ProMed HCA”), and POMONA
VALLEY MEDICAL GROUP, INC., D.B.A. PROMED HEALTH NETWORK, a California
professional corporation (“IPA”).


 


RECITALS


 


A.                                   IPA
and ProMed HCA entered into that certain Management Services Agreement, dated
as of October 1, 1998 (the “Management Agreement”).


 


B.                                     The
parties desire to amend and restate Exhibit I to the Management Agreement,
to amend Exhibit II to the Management Agreement and to remove and delete Exhibit III
from the Management Agreement, each as set forth in this Amendment.


 


NOW THEREFORE, the parties to this Amendment hereby agree as follows:


 


AGREEMENT


 


1.                                       “Exhibit I –
Fees” to the Management Agreement is hereby amended to read, in its entirety,
as follows:


 


“EXHIBIT I - FEES


 


A.                                   Definitions


 


“Cost of Medical Services” means
with respect to IPA, the aggregate compensation of IPA’s employed physicians
and physician extenders (e.g., physician assistants and nurse practitioners);
charges incurred by IPA for independent contractor physicians; the cost of
services ordered by IPA through its physicians for managed care patients; and the
cost of IPA’s employee benefits, including, but not limited to, vacation pay, employer
and employee contributions to any 401(k) plan or other retirement plan for
the benefit of IPA employees, sick pay, health care expenses, IPA’s share of
employment and payroll taxes, IPA’s employees’ professional dues and all other
expenses and payments required to be made by IPA to or for physicians pursuant
to physician employment, and independent contractor agreements (including
expense reimbursements, discretionary bonuses, incentives based on
profitability or productivity, and payments paid and accrued or deferred).


 


“Gross Revenues” means all sums which are (i) attributed
to IPA (determined on an accrual basis) as compensation for the provision of
medical services by IPA employed and independent contractor physicians and
physician extenders, including, but not limited to, all capitated income, all
rights to receive IPA’s portion of hospital and other shared risk pool payments,
all copayments, coordination of benefits, third party recovery, insured
services, enrollment protection (or other such revenue as is available to
replenish capitated services) 


 

















 


and all rights
to receive fee-for-service income for medical, diagnostic and therapeutic
services provided to IPA patients; and/or (ii) derived by IPA or its
employees other than from the provision of medical services, including, but not
limited to, consulting services, insurance and legal recoveries, royalties and
licensing payments, franchise payments, rents and lease payments, and proceeds
from the sale of assets or the merger or other business combination of IPA.


 


“Net Pre-Tax Income” means Gross Revenues less
the Cost of Medical Services after provision of any physician incentive
payments but before provision for income taxes.


 


“Net Pre-Tax Loss” means any loss resulting
after the deduction from Gross Revenues of the Cost of Medical Services after
provision of any physician incentive payments but before provision for income
taxes.


 


“Net Pre-Tax Profit” means any profit
resulting after the deduction from Gross Revenues of the Cost of Medical
Services after provision of any physician incentive payments but before
provision for income taxes.


 


B.                                     Management
Fee


 


Base Management Fee.  For its services hereunder, which shall
include the provision of all necessary facilities and furniture, fixtures and
equipment and all non-physician employees of ProMed HCA who perform services
for IPA and all management services provided hereunder, ProMed HCA shall be
entitled to receive (i) fifteen percent (15%) of Gross Revenues (the “Management
Fee”) plus (ii) a fee for marketing and public relations services in
the amount of four thousand dollars ($4,000) per month.  Notwithstanding the foregoing, if IPA’s
working capital is insufficient to meet IPA’s liabilities or other obligations
to the extent necessary to meet such obligations, the Management Fee provided
for in item (i) above shall be deferred until IPA
is able to meet all such obligations.  The
Management Fee shall be reviewed on an annual basis by ProMed HCA’s Board of Directors
to ensure that it remains consistent with the fair market value for the
services rendered to IPA by ProMed HCA.


 


Performance Incentive Bonus Payment.  If, at the end of IPA’s fiscal year, it is
determined that IPA has a Net Pre-Tax Profit for the year, ProMed HCA shall be
entitled to a performance incentive bonus payment consistent with the fair
market value of the services provided by ProMed HCA to IPA (as determined on an
annual basis by the Board of Directors of ProMed HCA), but no more than fifty
percent (50%) of Net Pre-Tax Income in excess of eight percent (8%) of Net
Pre-Tax Profits.


 


Performance Incentive Penalty Payment.  If, at the end of IPA’s fiscal year, it is
determined that IPA has a Net Pre-Tax Loss for the year, ProMed HCA shall be
obligated to pay to IPA (in the form of a reduction in future management fees)
a penalty payment in the amount of fifty percent (50%) of one hundred percent
(100%) of such Net Pre-Tax Loss.”


 


2

















 


2.                                       Paragraph 9 of “Exhibit II
– Services” is hereby amended to read, in its entirety, as follows:


 


“9.                                 Marketing
and Public Relations Services. 
ProMed HCA will assist IPA in IPA’s marketing, public relations and
advertising of the health care services provided by IPA.  ProMed HCA, shall provide and be principally
responsible for marketing and advertising services for IPA and shall prepare
signs, brochures, letterhead, advertisements, and other marketing materials for
IPA.  ProMed HCA may, at its discretion,
contract with third parties to assist it in the provision of IPA marketing and
public relations services, should ProMed HCA deem such action advisable.  ProMed HCA shall produce and distribute such
written descriptive materials concerning IPA’s professional services, subject
to the prior approval of IPA, as may be necessary or appropriate to the conduct
of the Practice.  In providing such
marketing services, ProMed HCA is acting solely in its capacity as
administrator for the IPA.  At no time
shall ProMed HCA hold itself out as providing, or actually provide, medical
services on behalf of IPA.  All such
marketing services shall be conducted in accordance with the laws, rules,
regulations and guidelines of all applicable governmental and
quasi-governmental agencies, including but not limited to the Medical Board of
California.  ProMed HCA shall be the
owner and holder of all right, title and interest in and to any such marketing
and advertising materials.”


 


3.                                       “Exhibit III
– Compensation” is hereby removed and deleted, in its entirety, from the
Management Agreement.


 


IN WITNESS
WHEREOF, the parties hereto have executed this Amendment as of the day and year
first above written.


 


	
   

  	
  “PROMED HCA”

  
	
   

  	
  PROMED
  HEALTH CARE ADMINISTRATORS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    
  /s/ Samuel S. Lee

  
	
   

  	
  Name:  Samuel S. Lee

  
	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “IPA”

  
	
   

  	
  POMONA
  VALLEY MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    
  /s/ R. Stewart Kahn

  
	
   

  	
  Name:  R. Stewart Kahn

  
	
   

  	
  Title:  Vice President

  



 


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