EXHIBIT 10.59
AMENDMENT OF MANAGEMENT AGREEMENT
THIS AMENDMENT TO MANAGEMENT AGREEMENT ("Amendment"), is made effective
August 1, 2001 by and between United American Healthcare Corporation, a Michigan
corporation ("UNITED AMERICAN") and OmniCare Health Plan, a Michigan nonprofit
corporation, f/k/a Michigan Health Maintenance Organization Plans, Inc. ("HMO"),
through the Deputy Rehabilitator for OmniCare ("Rehabilitator"), appointed by
the Rehabilitator of HMO pursuant to Court Order of the Xxxxxx County Circuit
Court of the State of Michigan.
WHEREAS, UNITED AMERICAN and HMO entered into a Management Agreement dated March
15, 1985, as amended (the "Management Agreement"), which sets forth the terms
and conditions which UNITED AMERICAN provides management services to HMO;
WHEREAS, the Commissioner of the Office of Financial & Insurance Services filed
a Verified Petition for Order of Rehabilitation of OmniCare Health Plan pursuant
to MCL 500.8112, and an Order of Rehabilitation and Injunctive Relief has been
issued issued by the Xxxxxx County Circuit Court appointing the Commissioner as
the Rehabilitator; and
WHEREAS, the parties desire to amend certain terms and conditions of the
Management Agreement, as amended by this Amendment.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows.
1. Section Three-Management Fees. Paragraphs 3.1, 3.2 and 3.3 of the
Management Agreement are deleted in their entirety and the Management Agreement
is amended to state new Paragraphs 3.1 and 3.2 as follows:
3.1 Amount. For the services performed by UNITED AMERICAN each
month of the term hereof, a Management Fee shall be payable to UNITED
AMERICAN of the direct fixed and variable costs UNITED AMERICAN
actually incurs for the management of HMO ("HMO Costs") plus four (4%)
percent. The Management Fee is established by: (a) the total costs of
UAHC ("UAHC Costs"), (b) the HMO Costs, and (c) the costs related to
UAHC, its subsidiaries and affiliates ("UAHC Specific Costs"), such
that,
UAHC Costs = HMO Costs + UAHC Specific Costs.
Monthly payments by HMO will be based upon estimates of the UAHC Costs
as stated in the UAHC monthly financial statements less the monthly
pro-rata allocation of the estimated UAHC Specific Costs identified on
Exhibit 3.1. The estimates of the UAHC Specific Costs are identified
in Exhibit 3.1, as amended from time to time, which is attached hereto
and incorporated by reference. The estimated UAHC Specific Costs may be
revised prospectively from time to time
by mutual agreement of the parties. UNITED AMERICAN shall not make any
expenditure of HMO Costs outside the ordinary course of a financially
distressed business unless approved in advance by HMO in writing.
HMO shall reconcile the estimated HMO Costs paid and the actual HMO
Costs experienced by UNITED AMERICAN on a quarterly basis within thirty
(30) days of each quarter of the term, or as soon as reasonably
possible thereafter. With respect to any overpayments by HMO, at HMO's
option, UNITED AMERICAN shall immediately return the overpaid amount in
cash to HMO or HMO shall setoff the next month's Management Fee by the
amount overpaid. UNITED AMERICAN shall provide HMO with access to any
and all financial records and supporting documentation requested by
HMO, and HMO may audit the UAHC Costs.
UNITED AMERICAN shall pay as due, the HMO Costs incurred hereunder.
3.2 When Due. The Management Fee shall be payable to UNITED AMERICAN
by the fifteenth (15th day of each month during each month that
services are rendered and any payments shall be prorated on a daily
basis for any partial month.
2. Section Four-Miscellaneous. Paragraph 4.3 of the Management Agreement
is deleted in its entirety and the Management Agreement is amended to state new
Paragraph 4.3 as follows:
4.3 Termination Without Cause. Either party may terminate this
Management Agreement upon ninety (90) days prior written notice to the
other party.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
referenced above.
UNITED AMERICAN HEALTHCARE CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Its: 12/14/01
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President & CEO
OMNICARE HEALTH PLAN
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Its: Deputy Rehabilitator
EXHIBIT 3.1 (ESTIMATED SPECIFIC UAHC COSTS)
EFFECTIVE AUGUST 2001
COMPENSATION
Xxxx Xxxxx $312,000
Xxxxxxx Xxxxxxx 85,120
Xxxx Xxxx 71,042
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TOTAL COMPENSATION 468,162
BENEFITS 140,449
ADMINISTRATIVE & GENERAL 300,000
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ESTIMATED UAHC SPECIFIC COSTS $908,611
INITIALS
For: OmniCare Health Plan /s/ Xxxxx Xxxxx 12/10/2001
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Xxxxx Xxxxx Date
For: UAHC /s/ Xxxxxxx Xxxxx 12/14/2001
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Xxxxxxx Xxxxx Date
EXHIBIT 3.1 (ESTIMATED SPECIFIC UAHC COSTS)
EFFECTIVE DECEMBER 2001
COMPENSATION & BENEFITS
Xxxx Xxxxx $ 312,000
Xxxxxxx Xxxxxxx 88,099
Xxxxx Xxxxxxxxx* 31,156
Xxxxxxxxx Xxxxxxx* 20,259
Xxxxxxx Xxxxxxx* 26,055
Xxxxxxx Xxxxxx* 16,123
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493,692
Benefits (estimated @ 22%) 108,612
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TOTAL COMPENSATION & BENEFITS 602,304
ADMINISTRATIVE & GENERAL
Occupancy/depreciation (incl. OAO) 125,000
Postage, express, telephone 10,000
Printing and supplies 10,000
Legal** 300,000
Auditing & consulting** 300,000
Travel and entertainment 20,000
Board fees** 325,000
Insurance 300,000
Single business taxes 240,000
OAO lease & dev. Costs 400,000
Interest expense on debt 173,000
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2,203,000
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Estimated UAHC Specific Costs $2,805,304
*At 50%
**Subject to seasonality. Will be adjusted out on an actual basis for purpose of
monthly payment.
Note: All OAO development costs, including AS400 partition lease and contracted
programmers, are UAHC specific costs and should not be included in HMO expenses.
INITIALS
For: OmniCare Health Plan /s/ Xxxxx Xxxxx 12/10/2001
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Xxxxx Xxxxx Date
For: UAHC /s/ Xxxxxxx Xxxxx 12/14/2001
----------------- -----------
Xxxxxxx Xxxxx Date
