**Exhibit 10.3**

 

October 1, 2003

 

EdwardDinan

President& CEO

LawrenceHospital Center

55Palmer Avenue

Bronxville,NY

10708

 

Re:  Reimbursement of Interest Expense

 

DearMr. Dinan,

 

In connectionwith First Consulting Group, Inc.’s (“FCG”) implementation of the Meditechsoftware system at Lawrence Hospital Center (the “Hospital”), FCG will agree toreimburse the Hospital for actual interest amounts owed if the Hospital drawsworking capital from a third party commercial line of credit or other loanagreement due to an increase in the number of days that its patient accountsreceivable are outstanding (the “A/R Days Outstanding”).  FCG’s offer to reimburse such interestamounts is subject to the terms and conditions contained in this letteragreement.

 

FCG willmeasure the A/R Days Outstanding for the Hospital during the four (4) monthperiod immediately preceding the 1st day of the month in which thefirst services under the IT Outsourcing Agreement (the “Agreement”) between FCGand Healthstar Network, Inc. (dba Stellaris Health Network) (“Stellaris”)occur.  During such four month period,the maximum monthly A/R Days Outstanding for the Hospital will be the “BaselineDO Threshold.”  During the InterestPayment Period (defined below), the Hospital will continue to operate inaccordance with its bad debt reserve and “write off” policies for thecalculation of A/R Days Outstanding in accordance with its past customs andpractices, but in any event the Hospital’s A/R Days Outstanding will becalculated “net” of its bad debt reserves and its contractual allowances.

 

FCG will onlyreimburse the Hospital’s actual interest charges (not to exceed the prime rate,as reported in the Western Edition of the Wall Street Journal on the Hospital’sborrowing date, plus 2.0%) incurred on incremental borrowings under its creditfacility up to the Maximum Principal Amount (defined below) for a period of 120days after the Commencement Date (defined below) (the “Interest PaymentPeriod”).  The Hospital shall designateits Commencement Date, and such date must be within 90 days after the “go live”date of the “Billing Accounts Receivables” software systems in connection withthe Meditech software implementation by FCG (the “Commencement Date”).  FCG will only reimburse the Hospital’s interestcharges on principal amounts of indebtedness that have actually been drawn bythe Hospital during the Interest Payment Period, and then only based on aprincipal amount determined by the difference between the A/R Days Outstandingfor the previous month-end less the Baseline DO Threshold (and only if suchdifference is a positive number), multiplied by the Hospital’s average revenueper day (as computed in the calculation of A/R Days Outstanding) during the 120day period prior to the Commencement Date.

 

Thecalculation in the preceding paragraph shall be conducted on the CommencementDate and every 30 days thereafter during the Interest Payment Period.  The principal amount against which FCG willreimburse interest expenses will be adjusted as a result of the monthlycalculation; however, FCG will not reimburse any interest expense on principalamounts that exceed the lesser of (i) $2,838,000 or (ii) the Hospital’s averagerevenue per day (as computed in the calculation of A/R Days Outstanding) duringthe 120 day period prior to the Commencement Date, multiplied by 10.  Such maximum amount is the “MaximumPrincipal Amount.”  For example,(assuming the Hospital makes a draw on its credit facility, the Hospital doesnot repay any such amounts and its average revenue per day is $250,000) if theHospital’s Baseline DO is 72 days, its A/R Days Outstanding on the CommencementDate is 74 days, its A/R Days Outstanding on the 30th day after theCommencement Date is 75 days, then the maximum principal amount for which FCGwould be obligated to pay the Hospital’s actual interest charges for the first30 days after the Commencement Date is $500,000 and the maximum principalamount FCG for which FCG would be obligated to pay the Hospital’s actualinterest charges for the 30th-60th days after theCommencement Date is $750,000.

 

Further, ifthe Hospital has repaid any draws under its credit facility during the InterestPayment Period, then the principal amount against which FCG is obligated toreimburse interest charges will be reduced by the amount that the Hospitalrepaid to its lender. The Hospital will also be required to submit evidence toFCG that it has drawn on its credit facility (including the principal amountand applicable interest rate) and present FCG with an invoice for the interestexpense reimbursable under the terms of this letter agreement.  Such invoices will be paid with fivebusiness days of receipt.  The Hospitalalso agrees to promptly inform FCG of any repayments to its lender during theInterest Payment Period.

 

Except forFCG’s obligations that have accrued prior to the termination date of thisletter agreement, FCG’s obligations under this letter agreement shallimmediately cease upon the earlier to occur of the following: (i) thetermination of the Agreement by Stellaris or FCG for any reason, (ii) the 121stday following the Commencement Date, (iii) Stellaris’ failure to timely pay allundisputed fees associated with the Agreement that results in a material breachof the Agreement, (iv) the dissolution or termination of Stellaris or theHospital as an operating business, (v) the insolvency of Stellaris or theHospital (determined if the entity is unable to pay its debts before theybecome due or if the entity’s total liabilities exceed its total assets), (vi)the appointment of a receiver for Stellaris or the Hospital’s business orproperty or any assignment for the benefit of creditors, (vii) any type ofcreditor workout, or the commencement of any proceeding under any bankruptcy orinsolvency laws by or against Stellaris or a Hospital, (viii) the commencementof foreclosure or forfeiture proceedings by any creditor of Stellaris or theHospital, or by any governmental agency against any collateral securing anyloan or credit facility, (ix) Stellaris’ divestiture or sale of the Hospital.

 

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If Stellaris and the Hospitaldo not receive a Certificate of Need (if required) for the Meditech softwareimplementation by September 30, 2004, or Stellaris terminates the Letterof Engagement with FCG to implement the Meditech software system, then FCG’sobligations under this letter agreement will immediately terminate and thisletter agreement will be of no further force or effect.

 

FCG alsoagrees to provide resources, to the extent mutually agreed, to help reduce theHospital’s A/R Days Outstanding prior to the Commencement Date and during theInterest Payment Period.  Such FCGassistance will provide value to the Hospital as they are skilled professionalsthat generally provide consulting and operational services for other FCGclients in the area of revenue cycle.

 

Ifthis letter agreement is acceptable to the Hospital, please acknowledge andagree to these terms by countersigning below.

 
| Best  regards,           | Accept  and Agree:       |
|--------------------------|--------------------------|
|                     |                     |
|                     |                     |
|                     |                     |   |   |
| Luther  Nussbaum         | Name:                    |
| Chief  Executive Officer | Chief  Executive Officer |
|                          |                          |  |  |

 

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