"ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY PROSPECT MEDICAL HOLDINGS, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT."
AMENDMENT TO
IPA MEDICARE SHARED RISK SERVICES AGREEMENT
The undersigned parties to the PacifiCare IPA Medicare Shared Risk Services
Agreement ("Agreement") between PacifiCare of California ("PacifiCare") and
Santa Xxx Xxxxxx Physicians Group, Inc. ("IPA") do hereby amend the
Agreement as set forth herein. Except as otherwise specifically provided,
terms utilized herein shall have the meanings set forth in the Agreement.
Except as specifically amended herein, the Agreement shall remain unchanged
and in full effect.
1. Paragraph 6.01, TERM, is amended in full to read as follows:
6.01 TERM - The term of this Agreement shall be for thirty-six (36)
months and shall begin on January 1, 1996 (the "Commencement Date") and
end on December 31, 1998 ("Initial Term"). A "Year" under this Agreement
shall begin on January 1 and end on December 31. After the expiration of
the Initial Term, the Agreement shall be automatically extended for one
(1) year terms upon the expiration of the prior term unless either party
provides the other with written notice of such party's intention not to
extend the term no less than three hundred and sixty-five (365) days prior
to the end of the initial term or one hundred and eighty (180) days prior
to the end of each subsequent term thereafter or until this Agreement is
appropriately terminated by either party as provided in Section 7 herein.
Notwithstanding the above, should IPA breach the covenant not to compete
as stated in Paragraph 9.02, this Agreement shall be automatically
extended for one (1) year terms on each successive January 1 upon the
expiration of the calendar year during which the breach occurs. In
addition, Pacificare may terminate this Agreement by providing IPA at least
sixty (60) days prior written notice within ninety (90) days of receiving
notification of IPA's breach of the covenant not to compete as stated in
Paragraph 9.02. At least for the first year of the Initial Term, IPA may
continue to use Tustin Hospital, Xxxxxxx General Hospital and Western
Medical Centers as well as St. Joseph's Hospital.
2. Section 9, EXCLUSIVITY, is amended in full to read as follows:
9.01 UTILIZATION OF IPA BY PACIFICARE - Nothing in this Agreement
shall be construed to require PacifiCare to assign any minimum or maximum
number of Subscribers to IPA, nor to require PacifiCare to utilize the
Medical Services of IPA for any or all Subscribers in the IPA Service
Area.
9.02 IPA COVENANTS NOT TO COMPETE - In recognition of PacifiCare's
desire to enhance the quality of care provided to its Subscribers by
ensuring continuity of care, better control
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and standardization in procedures and full-time availability of services,
IPA agrees that it shall not enter into any agreements, other than those
currently in effect, to provide or arrange Health Care Services to
Medicare beneficiaries who are Subscribers or enrollees of a health
maintenance organization, competitive medical plan or other similar
entity that contracts with HCFA on a risk basis. IPA recognized that the
consideration for this covenant not to compete is PacifiCare's financial
commitment to the development of its Secure Horizons Medical and Hospital
Plan and this Agreement, and PacifiCare's commitment to arrange for
cost-effective Health Care Services to its Subscribers while maintaining
continuity and quality of care.
9.02.01 MATERIALITY OF COVENANT NOT TO COMPETE - IPA agrees that its
obligations under this Section 9.02 are material terms for purposes of
the termination provision of this Agreement.
9.02.02 VALUE OF COVENANT NOT TO COMPETE - In recognition of IPA's
covenant not to compete, PacifiCare agrees to increase the monthly
capitation payment as noted in Attachment C.
3. Paragraph 12.07, ASSIGNMENT, is amended in full to read as follows:
12.07 ASSIGNMENT - This Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged, or
hypothecated in any way by IPA or PacifiCare and shall not be subject to
execution, attachment or similar process, nor shall the duties imposed
herein be subcontracted or delegated without the written consent of the
other party. Notwithstanding, PacifiCare may assign, transfer, pledge or
hypothecate this Agreement and its rights, interests and benefits
hereunder to any entity of which PacifiCare has at least majority control.
4. Attachment C, COMPENSATION, Section B, MONTHLY HCFA PAYMENT is amended in
part as follows:
B. MONTHLY HCFA PAYMENT
PacifiCare shall pay IPA [ ** ] of the Monthly HCFA Payment, LESS the
applicable ISL Premium identified in Attachment A3 as payment for
Individual Stop Loss coverage. The percent of monthly HCFA Payment stated
above includes [ ** ] which is the value of IPA's covenant not to
compete as outlined in Section 9 of this Agreement. Should IPA breach the
covenant not to compete, PacifiCare shall reduce the percent of monthly
HCFA Payment by this [ ** ] commencing the month in
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which the breach occurs and the term of this Agreement shall be amended
as stated in Paragraph 6.01 and the term of the IPA Commercial Services
Agreement shall be amended as stated in Paragraph 6.01 of that Agreement.
It is understood that any existing Medicare Risk arrangements that the IPA
currently has in effect does not constitute a breach for this purpose.
The payment per Subscriber per month by PacifiCare to IPA shall be
increased or decreased to reflect increases or decreases made by HCFA in
the Monthly HCFA Payment. PacifiCare shall make monthly retroactive
adjustments to reflect adjustments made by HCFA, if any.
THE EFFECTIVE DATE OF THIS AMENDMENT IS JANUARY 1, 1996
By signing below, both parties hereto have executed and agreed to this
Amendment.
PACIFICARE, INC IPA
By: /s/ Xxxxx Xxxx By: /s/ Xxxxxx X. Xxxxx
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Xxxxx Xxxx, Vice President
Vice President/General Manager
Date: Date: 12/5/95
-------------------------------- -----------------------------
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