Exhibit 10.32


 


AMENDMENT TO MANAGEMENT SERVICES AGREEMENT


 


This Amendment (“Amendment”)
to Management Services Agreement, effective as of November 1, 2002 (this
“Amendment”) to that certain Management Services Agreement made and entered
into as of January 1, 2001 (the “Agreement”) is entered into by and
between Prospect Medical Systems, Inc. (“Manager”) and Prospect Health Source
Medical Group, Inc. (“Group”) (collectively as the “Parties”).


 


RECITALS


 


A.                                   Pursuant to the
Agreement, Manager commenced management of Group’s IPA and Robertson Practice.


 


B.                                     In 2001 Group
sold the Robertson Practice and management of the Robertson Practice by Manager
terminated.


 


C.                                     Manager
continues to manage the IPA pursuant to the terms of the Agreement.


 


D.                                    The Parties now
desire to amend the Agreement in order to increase the management fee to
Manager.


 


Capitalized
terms used herein but not defined shall have the meanings ascribed to such
terms in the Agreement.


 


NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:


 


AMENDMENT


 


1.                                      Exhibit
C to Management Agreement. 
Exhibit C to the Management Agreement shall be replaced in its entirety
with the following:


 


EXHIBIT C


 


MANAGEMENT FEE


 


A.                                   Definitions


 


“Cost of Medical
Services” means with respect to the GROUP, the aggregate compensation of
GROUP’s employed physicians and physician extenders (e.g. physician assistants
and nurse practitioners), charges incurred by the GROUP for independent
contractor physicians, the cost of services ordered by GROUP through its
physicians for managed care patients, the cost of GROUP’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


 


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of GROUP employees, sick
pay, health care expenses, GROUP’s share of employment and payroll taxes,
GROUP’s employees’ professional dues and all other expenses and payments
required to be made by GROUP 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
the sum of (i) all capitated income attributed to GROUP (determined on an
accrual basis) as compensation for the provision of medical services during the
Term by GROUP employed and independent contractor physicians and physician
extenders; (ii) all other sums attributed to GROUP (determined on a cash basis)
as compensation for the provision of medical services during the Term by GROUP
employed and independent contractor physicians and physician extenders, including
but not limited to, all rights to receive GROUP’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 GROUP patients; and (iii) sums derived  by GROUP or its employees from consulting services provided
during the Term or as interest income accrued during the Term.


 


B.                                     Management Fee


 


For its services
hereunder, which shall include the provision of all facilities at the Premises
and all non-physician employees of Manager who perform services at or for the
Practice and all management services provided hereunder, but shall exclude
marketing and public relations services, Manager shall retain that portion of
the Gross Revenues which is equal to twelve and one-half percent (12.50%) of
Gross Revenues, less eight thousand dollars ($8,000) per month.  Manager shall also receive a fee for
marketing and public relations services of eight thousand dollars ($8,000) per
month.


 


Furthermore, Manager shall receive a year-end
bonus fee for meeting the following performance objectives: each year Manager
provides services to GROUP and GROUP achieves profitability (i.e., GROUP’s
gross revenues exceed GROUP’s expenses), Manager shall receive a bonus fee that
is five percent (5%) of Gross Revenues. 
This bonus fee shall be reduced (or, if applicable, not paid) to the
extent it shall cause GROUP to (i) receive less than sixty percent (60%) of
GROUP’s net profits for the year (after the fees in the preceding paragraph of
this Section B are paid), or (ii) no longer meet provider solvency requirements
specified by the California Department of Managed Health Care.  The manner in which GROUP’s 60% share of its
net profits, if any, shall be distributed shall be based solely on the
discretion of the Class A directors.


 


2.                                      Further
Assurances.  Each Party hereto
agrees to execute such other documents and take such other actions as may be
reasonably necessary or desirable to confirm or effectuate the agreements
contemplated in this Amendment.


 


3.                                      Continuing
Agreement.  Except as modified
by this Amendment, the Agreement shall continue in full force and effect.  In the event of any conflict between any


 


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provision of this Amendment and any provision of the Agreement, the
provision of this Amendment shall control.


 


IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Management Services Agreement as of the date first written above.


 


 


	
  “Group”

  	
  “Manager”

  
	
   

  	
   

  
	
  PROSPECT HEALTH SOURCE MEDICAL

  GROUP, INC.

  a California professional medical corporation

  	
  PROSPECT MEDICAL SYSTEMS, INC.

  a Delaware corporation  

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  



 


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