Exhibit 10.33
Amendment Number One to
Outsourcing Agreement
This Amendment Number One to
Outsourcing Agreement (“Amendment”) is entered into as
of this 12 th day of December 2003 by and between
Creditek MediFinancial, Inc., a Delaware corporation
(“OUTSOURCER”), and dj Orthopedics, LLC, a Delaware
limited liability company (“CLIENT”).
Whereas, the parties have previously entered into that
certain Outsourcing Agreement dated as of December 30, 2002 (the
“Original Agreement”) relating to the provision of
outsourcing services by OUTSOURCER to CLIENT;
Whereas, the parties desire to set forth in this
Amendment certain changes and modifications to the Original
Agreement;
Now, therefore,
the parties hereby agree to amend
the Original Agreement in the following manner. Capitalized
terms used herein and not defined in this Amendment shall have the
meanings ascribed to them in the Original Agreement.
1.
Section
1.2
Section 1.2 of the Original
Agreement is hereby amended to provide in the list of Exhibits
after Exhibit D the following: “Exhibit E
[Intentionally
omitted]”.
2.
Section
2.1
The first sentence of Section 2.1 is
hereby amended in its entirety to read as follows: “The
term of this Agreement (the “Term”) shall be from the
Agreement Date through December 31, 2006 (hereinafter, the
“Expiration Date”), unless terminated pursuant to
Article XVII”.
The following sentence shall be
added as a new third sentence to Section 2.1: “At the
request of CLIENT made on or before November 30, 2004, OUTSOURCER
agrees to engage in good faith renegotiation of such of the terms
of the Agreement as are indicated in the request of
CLIENT.”
3
Section
2.2
The third sentence of Section 2.2 is
hereby amended in its entirety to read as follows:
“Thereafter, commencing effective as of October 1, 2003,
OUTSOURCER shall bill CLIENT on the 5 th day of each
month for the Services rendered the prior month under the
Agreement, as set forth in Article XII.”
4.
Section
3.4b
Paragraph (b) of Section 3.4 is
hereby amended in its entirety as follows: “(b)
Effective on November 17, 2003, OUTSOURCER shall transfer to the
employment of CLIENT, and CLIENT shall thereafter employ, the
CLIENT Service Location staff
performing OfficeCare services. OUTSOURCER shall
maintain operations at the CLIENT Service Location until the
transfer of employees is completed.”
5.
Section
3.12
Section 3.12 shall be amended by
adding the following new paragraph at the end thereof:
“Each month, OUTSOURCER shall
1)
Provide CLIENT with a project profit
and loss statement for the preceding month and cumulative for the
calendar year,
2)
The monthly profit and loss
statement shall include detailed headcount and cost breakdown
information for the preceding month.
3)
The monthly profit and loss
statement shall be provided to CLIENT by the 30 th day
of the following month
4)
OUTSOURCER shall also provide CLIENT
quarterly with a forecast of anticipated revenues and expenses
covering the immediate next three-month period
5)
The above shall be presented to
CLIENT no later than the 15 th day of the month
immediately preceding the respective quarter.
6)
OUTSOURCER shall further provide
CLIENT every six months a profit and loss statement, balance sheet,
and cash flow statement reflecting OUTSOURCER’s entire
operations. The first such set of statements will be provided
for the month ended December 31, 2003 and include the previous 12
months. OUTSOURCER shall further supply CLIENT with audited
financial statements once per year .
6.
Section
4.3
Section 4.3 is hereby amended by
adding a new paragraph (d) as follows:
“(d) Rehired Employees
.
(i) Effective as
of October 10, 2003 (the Insurance Transfer Date), all OUTSOURCER
employees assigned to the Insurance/Custom Brace group at the
CLIENT’s Vista Service Location will become CLIENT employees.
Effective on November 17, 2003 (the OfficeCare Transfer Date), all
OUTSOURCER staff assigned to the OfficeCare group at the
CLIENT’s Vista Service Location will become CLIENT employees
(collectively the “Rehired Employees”).
(ii) CLIENT shall
offer employment on the above dates to the Rehired Employees.
Such offers of employment shall provide for compensation and
benefits consistent with the compensation and benefits in effect
for such employees immediately preceding the Insurance and
OfficeCare Transfer Dates, giving effect to the level of seniority
with OUTSOURCER of such Rehired Employees immediately preceding
their respective Transfer Dates.
(iii) Nothing
contained herein shall be deemed to create an employment contract
between CLIENT and any Rehired Employee or to cause any Rehired
Employee to be treated as other than an at will employee of CLIENT
after the Transfer Date. CLIENT shall not be obligated or
deemed to employ any Rehired Employee who does not execute
CLIENT’s standard offer letter for similarly situated
employees.
(iv) OUTSOURCER
shall be responsible, and CLIENT shall have no liability, for any
accrued wages, severance pay, sick leave or any other benefits, or
benefits under any of OUTSOURCER’s benefits plans, or any
other liability or claim of any type or nature arising from or on
account of OUTSOURCER’s employment of, or termination of
employment of, the Rehired Employees on or prior to the Transfer
Dates. CLIENT shall not assume or be responsible for
liabilities for unpaid, accrued (and unused) vacation and bonuses
of Rehired Employees as of the Transfer Dates.”
7.
Section
6.1
Section 6.1 is amended by adding the
following sentence to the end thereof: “The parties
agree that Ms. Lise Goldstein shall be the OUTSOURCER Contract
Executive through at least December 31, 2004 and that Mr. Chris
Chinni shall be the backup OUTSOURCER Contract Executive during the
Term.”
8.
Section 6.2
(b)
Section 6.2(b) is hereby deleted in
its entirety and replaced by the following section:
“(b) Dedicated Staff.
OUTSOURCER will provide CLIENT the services of the following
individuals (or their functional equivalents in the event any of
them leaves Creditek’s employment) whose dedication to the
project shall be:
•
Isabel Burghardt 2004=100%,
2005=50%
•
Roger Lin 2004=100%,
2005=50%
•
Steve Fulton 2004=75%,
2005=50%
•
The combined efforts of Scott
DeMarzio, Grace Lu, Ed Dwyer and Lisa Graham (or their functional
equivalents) shall be equal to that of one full time equivalent
person working 100% on the Services during 2004.
OUTSOURCER shall provide to CLIENT detailed
timesheets for the above individuals (or their functional
equivalents) at the time of the monthly invoice and charge to
CLIENT the actual hours incurred.
CLIENT and OUTSOURCER shall, from time to time,
evaluate the need to maintain or to change the level of dedication
of the above staff
OUTSOURCER will continue to provide the services
of Brian McCann as On-Site Manager at CLIENT Service Location
through December 4, 2003 or earlier if requested by
CLIENT.”
9.
Section
6.5
Section 6.5 is hereby amended by
adding a new paragraph (c) as follows:
“(c) Effective as of October
1, 2003, OUTSOURCER shall, from that date forward and for the
balance of the Term of the Agreement, cease paying CLIENT the Lease
Rate described above and previously set forth on former Exhibit
E.”
10.
Section
12.1
Section 12.1 is hereby amended in
its entirety to read as follows: “Effective as of
October 1, 2003 and continuing throughout the Term of the
Agreement, OUTSOURCER shall issue an invoice to CLIENT on the 5
th day of each month for the Fees due for the prior
month. The Fees shall be due and payable to OUTSOURCER by check,
wire funds transfer or other electronic means acceptable to
OUTSOURCER to an account specified by OUTSOURCER within 30
days.”
11.
Section
17.1
Section 17.1,
paragraph (a)(i), is hereby amended by replacing the phrase
“90 days” with the phrase “120
days”.
Section 17.1,
paragraph (a)(ii), is hereby amended by replacing the phrase
“180 days” with the phrase “270
days”.
12.
Section
17.2
Section 17.2 is
hereby amended in its entirety to read as follows:
“(a) If
this Agreement is terminated for convenience by CLIENT as set forth
in 17.1(a)(i) on or prior to February 28, 2006, then CLIENT shall
pay to OUTSOURCER in immediately available funds the unamortized
fixed costs based on the monthly amortization schedule set forth on
Exhibit I.
“(b) If
this Agreement is terminated for convenience by OUTSOURCER as set
forth in 17.1(a)(ii) prior to December 31, 2006, OUTSOURCER
shall pay to CLIENT in immediately available funds the amount
equal to the greater of Four Hundred Thousand Dollars ($400,000.00)
or two hundred percent (200%) of the average monthly Fees paid to
OUTSOURCER hereunder during the period that is the shorter of (i)
the 12 months immediately preceding the date of OUTSOURCER’s
notice of termination (the “Notice Date”) or (ii) the
period between the Effective Date and the Notice
Date.”
13.
Exhibit A, Section
A
Section A of Exhibit A to the
Agreement is hereby amended as follows:
The first sentence following the
title of Section A is hereby amended to read in its entirety as
follows: “The following are Required Services to be
performed after the Effective Date:”
14.
Exhibit A, Section B, Part
III
Item 1 and all subparts thereof are
hereby deleted.
Items 2-5 are hereby amended to read
in their entirety as follows:
“2)
Order Entry:
a)
The following are CLIENT’s
responsibilities regarding entry of Orders on Outsourcer’s
Systems:
i)
Reviewing the PPA prior to entering
the data and, to the extent possible, identifying missing,
incomplete or incorrect information.
ii)
Implementing a process to
communicate with Physician Practices and/or CLIENT’s Agents
to obtain missing and/or correct the information necessary to bill
for the services provided to Patients.
iii)
Entering the content of the PPA
forms into the Systems.
iv)
Organizing and passing PPA forms to
CLIENT’s imaging department for timely imaging.
3)
Verification of insurance
coverage:
a)
As required by the Third Party Payer
and based on the type of and charge for the supply provided to
Patients, CLIENT shall contact the Third Party Payer to ascertain
whether the Patient is covered for the OfficeCare and Insurance
Business DME products they have or shall receive, as well as the
Patient’s and Third Party Payer’s financial
responsibilities.
b)
Required verification of insurance
coverage shall occur within 48 hours after an Order is entered on
the System.
4)
Pre-Authorization of insurance
coverage:
a)
As required by its managed care
agreements, CLIENT will obtain insurance Pre-Authorization for
OfficeCare products that have already been dispensed to Patients by
Physician Offices. In those instances where the Pre-Authorization
is denied by the Third Party Payer, OUTSOURCER will seek payment
from Patient.
b)
For all Insurance Business products,
CLIENT shall get prior approval from the Patient’s Third
Party Payer prior to the supply being delivered to the Patient. If
the service is denied, CLIENT intends to deliver Insurance Business
supplies only after payment for the service is received from
Patient.
5)
Billing:
a)
For the Insurance Business only,
CLIENT shall be responsible for submitting the initial hard copy
(paper) bill to Third Party Payers that do not accept electronic
billing. OUTSOURCER shall be responsible for submitting all
electronic bills for Insurance and OfficeCare business.
OUTSOURCER shall be responsible for rebilling all Third Part
Payers and/or Patients, for all Accounts, whether these happen
electronically or on paper. OUTSOURCER shall submit all OfficeCare
invoices to carriers that do not accept electronic
billing.
b)
Except as stated on Exhibit A,
Section B, Part III, Item 5a, OUTSOURCER shall invoice the
appropriate Third Party Payers and/or Patients on CLIENT’s
behalf in accordance with payer specific requirements, including
any additional required documentation.”
Item 18 of Part III of Section B of
Exhibit A is hereby deleted in its entirety and the items
thereafter are renumbered accordingly.
Item 20 of Part III of Section B of
Exhibit A is hereby deleted in its entirety and the items
thereafter are renumbered accordingly.
Item 21 of Part III of Section B of
Exhibit A is hereby amended to add the following
paragraphs:
“b). Certify/Register Program
. CLIENT shall pay directly to supplier all cost associated
with the certifying and registering of paper claims mailed to
insurance companies by OUTSOURCER.
c). Patient Product Agreements
(PPA’s) . CLIENT will pay directly to supplier all
costs to print, store and distribute PPA’s to
customers.
d). Bank Charges . Effective as of
October 1, 2003, CLIENT shall pay directly to supplier all costs
related to PNC Bank (or its replacement).”
15.
Exhibit B, Section
A
Section A of Exhibit B is hereby
amen
