Exhibit
10.49


 


AMENDMENT
TO MANAGEMENT SERVICES AGREEMENT


 


THIS
AMENDMENT TO MANAGEMENT SERVICES AGREEMENT (“Agreement”) is made and entered
into as of October 1, 1998, by and between SIERRA MEDICAL MANAGEMENT, INC., a
Delaware corporation (“Manager”), SIERRA PRIMARY CARE MEDICAL GROUPS, INC., a
California professional corporation, and Antelope Valley Medical Associates,
Inc. (“GROUPS”).


 


RECITALS


 


A.            GROUPS and Sierra
Medical Management (Manager’s predecessor in interest) entered into that
certain Management Services Agreement dated as of June 4, 1996 (“Management
Agreement”).


 


B.            The parties desire
to amend and restate Exhibit D to the Management Agreement as follows:


 


EXHIBIT D -
MANAGEMENT FEE


 


A.            Definitions


 


Cost of Medical Services means with respect to the GROUPS, the
aggregate compensation of GROUPS’ employed physicians and physician extenders
(e.g. physician assistants and nurse practitioners), charges incurred by the
GROUPS for independent contractor physicians, the cost of services ordered by
GROUPS through its physicians for managed care patients, the cost of GROUPS’
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 GROUPS employees, sick pay, health care expenses, GROUPS’ share of
employment and payroll taxes, GROUPS’ employees’ professional dues and all
other expenses and payments required to be made by GROUPS 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).


 


Manager’s Costs means all operating and non-operating third
party vendor and consultant expenses and costs, as well as expenses and costs
directly related to Manager’s employees working at GROUPS’ facility, incurred
by Manager on behalf of GROUPS in conjunction with the operation of the
Practice.  These expenses and costs
include, but are not limited to, direct labor costs (for all employees of
Manager or its affiliates working at GROUPS’ facility, and for any independent
contractors or consultants to Manager or other third parties whose services are
specifically retained primarily for the benefit of GROUPS), indirect labor
costs for services primarily for the benefit of GROUPS, supplies, all amounts
paid by Manager or GROUPS to satisfy any obligations of GROUPS to
non-professional employees and third parties (other than for the Cost of Medical
Services), obligations under any lease or purchase


 

















 


agreement
or arrangement for which Manager has direct or indirect financial liability,
and direct and indirect corporate overhead of GROUPS.


 


Gross Revenues means all sums which are (i) attributed to
GROUPS (determined on an accrual basis) as compensation for the provision of
medical services by GROUPS employed and independent contractor physicians and
physician extenders, including but not limited to all capitated income, all
rights to receive GROUPS’ 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 GROUPS
patients; and (ii) derived by GROUPS 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 GROUPS.


 


Net Pre-Tax  Income
means Gross Revenues less the sum of Manager’s Costs and 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 Manager’s
Costs and 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 Manager’s
Costs and 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 facilities and furniture, fixtures and equipment
at the Premises and all non-physician employees of Manager who perform services
at or for the Practice and all management services provided hereunder, Manager
shall (i) retain that portion of the Gross Revenues which is equal to Manager’s
Costs plus (ii) fifteen percent (15%) of Gross Revenues the (“Management Fee”)
plus (iii) a fee for marketing and public relations services in the amount of
four thousand dollars ($4,000) per month. 
Notwithstanding the foregoing, if, after the payment of Manager’s Costs
as set forth in item (i) above, GROUPS’ working capital is insufficient to meet
GROUPS’ liabilities or other obligations to the extent necessary to meet such
obligations, the Management Fee provided for in item (ii) above shall be
deferred until GROUPS is able to meet all such obligations.  The Management Fee shall be reviewed on an
annual basis by Manager’s Board of Directors to ensure that it remains
consistent with the fair market value for the services rendered to GROUPS by Manager.


 


Performance Incentive Bonus Payment: if, at the end of GROUPS’ fiscal year, it is
determined that GROUPS has a Net Pre-Tax Profit for the year, Manager shall be
entitled to


 


2

















 


a
performance incentive bonus payment consistent with the fair market value of
the services provided by Manager to GROUPS (as determined on an annual basis by
the Board of Directors of Manager), 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 GROUPS’ fiscal year, it is
determined that GROUPS has a Net Pre-Tax Loss for the year, Manager shall be
obligated to pay to GROUPS (in the form 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.


 


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


 


	
  MANAGER

  	
  GROUPS

  
	
   

  	
   

  
	
  SIERRA
  MEDICAL MANAGEMENT, INC.

  	
  SIERRA
  PRIMARY CARE

  
	
   

  	
  MEDICAL
  GROUPS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  R. Stewart Kahn

  	
   

  	
  By:

  	
  /s/
  Jacob Y. Terner

  	
   

  
	
   

  	
  R.
  Stewart Kahn,

  	
   

  	
   

  	
  Jacob
  Y. Terner, M.D.,

  	
   

  
	
   

  	
  Executive
  Vice President

  	
   

  	
   

  	
  Vice
  President

  	
   

  



 


3