SERVICE AGREEMENT
between
INTEGRAMED AMERICA, INC.
and
REPRODUCTIVE ENDOCRINE ASSOCIATES OF CHARLOTTE, P.C.
THIS SERVICE AGREEMENT ("Agreement") is dated September 1, 2003 by and
between IntegraMed America, Inc., a Delaware corporation, with its principal
place of business at Two Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000
("IntegraMed") and Reproductive Endocrine Associates of Charlotte, P.C., a North
Carolina professional corporation, with its principal place of business located
at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("REACh").
IntegraMed and REACh are individually referred to herein as a "Party" and
jointly, as "Parties."
RECITALS:
REACh specializes in gynecological services, treatment of human
infertility encompassing the provision of in vitro fertilization and other
assisted reproductive services ("Infertility Services"). REACh provides
Infertility Services through Xxxx X. Xxxxx, M.D., Xxxxxx X. Xxxxxxxxxx, M.D.,
Xxxxx X. Xxxxx, M.D. and Xxxxxxx X. Xxxx, M.D., the shareholders of REACh. Drs.
"Wing, Crain, Whitesides and Xxxxx are collectively referred to as "Physicians."
REACh also contemplates providing Infertility Services through other physician
employees. Physicians have entered or will enter into employment agreements with
REACh on or about the date of execution of this Agreement.
IntegraMed is in the business of making available to medical providers
such as REACh certain assets (principally, facilities and equipment) and support
services, primarily consisting of (i) financial management; (ii) administrative
systems; (iii) clinical and laboratory organization and function; (iv) marketing
and (v) operations management. Such support services and the provision of
certain fixed assets are collectively referred to as "Services."
REACh believes the Services will benefit its medical practice and
desires IntegraMed's assistance with various aspects of REACh's medical practice
through the utilization of the Services as more particularly set forth herein.
REACh acknowledges and agrees that the Services being made available to REACh
require REACh's cooperation and collaboration, and that IntegraMed, in making
the Services available, makes no warranty or representation that the Services
will achieve REACh's desired goals and objectives.
In addition, REACh desires access to capital for funding its growth and
development, and IntegraMed desires to provide such capital or access to capital
as provided herein.
NOW THEREFORE, in consideration of the above recitals which the parties
incorporate into this Agreement, the mutual covenants and agreements herein
contained and other good and valuable consideration , REACh hereby agrees to
purchase from IntegraMed the services ("Services") herein described and
IntegraMed agrees to provide the Services on the terms and conditions provided
herein.
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
1.1.1 "Adjustments" shall mean adjustments for refunds,
discounts, contractual adjustments, professional courtesies and other
activities that do not generate a collectible fee as reasonably
determined by IntegraMed and REACh.
1.1.2 "Additional Service Fee" shall mean a monthly fee paid
by REACh to IntegraMed in an amount equal to a percentage of REACh's
monthly PDE."
1.1.3 "Assets" shall mean those fixed assets utilized in
connection with the operation of REACh's medical practice, including,
but not limited to, fixed assets and leasehold improvements.
1.1.4 "Base Service Fee" shall mean a monthly fee paid by
REACh to IntegraMed in an amount equal to a percentage of REACh's
monthly Physician and Other Professional Revenues.
1.1.5 "Facilities" shall mean the medical offices and clinical
spaces of REACh, including any satellite locations, related businesses
and all medical group business operations of REACh, which are utilized
by REACh in its medical practice.
1.1.6 "Fiscal Year" shall mean the 12-month period beginning
January 1 and ending December 31 of each year.
1.1.7 "Infertility Services" shall mean gynecological
services, treatment of human infertility encompassing the provision of
in vitro fertilization and other assisted reproductive services
provided by REACh or any Physician Employee and Other Professional
Employee.
1.1.8 "Other Professional Employee" shall mean a non-physician
individual who provides services, including nurse anesthetists,
physician assistants, nurse practitioners, psychologists, and other
such professional employees who generate professional charges, but
shall not include Technical Employees.
1.1.9 "Physician-Employee" shall mean an individual including
Physicians and any other physician who is an employee of REACh or is
otherwise under contract with REACh to provide professional services to
REACh patients and is duly licensed as a physician in the State of
North Carolina.
1.1.10 "Physician and Other Professional Revenues" shall mean
all fees, whether received or accrued, and actually recorded each month
(net of Adjustments) by or on behalf of REACh as a result of
professional medical and laboratory services furnished to patients by
Physicians and Physician-Employees and Other Professional Employees
and, except as described in the next succeeding sentence, other fees or
income earned in their capacity as professionals, whether rendered in
an inpatient or outpatient setting, including but not limited to,
medical director fees or technical fees from medical ancillary
services, consulting fees and ultrasound fees from businesses owned or
operated by Physicians. Physician and Other Professional Revenues shall
not include (i) board attendance fees and other compensation in
connection with board memberships; provided, the compensation for board
related activities does not exceed $5,000 in the aggregate, annually,
per Physician and (ii) other services where Physician does not provide
professional medical services such as testimony and consultation for
litigation-related proceedings, lectures, passive investments,
fundraising, or writing ("Permitted Services"); the compensation from
Permitted Services may be retained by a Physician or Physician-Employee
without limit, subject to Section 4.7.5 hereof. Physician and Other
Professional Revenues are sometimes referred to herein as "Revenues."
1.1.11 "Pre-distribution Earnings" ("PDE") shall mean (i)
Physician and Other Professional Revenues, less (ii) Cost of Services
and the Base Service Fee.
1.1.12 "Receivables" shall mean and include all rights to
payment for services rendered or goods sold, including, without
limitation, accounts receivables, contract rights, chattel paper,
documents, instruments and other evidence of patient indebtedness to
REACh, policies and certificates of insurance relating to any of the
foregoing, and all rights to payment, reimbursement or settlement or
insurance or other medical benefit payments assigned to REACh by
patients or pursuant to any Preferred Provider, HMO, capitated payment
agreements or other agreements between REACh and a payer, recorded each
month (net of Adjustments).
1.1.13 "Services" shall mean IntegraMed making available
certain assets (including, without limitation, all facilities and
equipment necessary to operate REACh's medical practice of the
provision of Infertility Services) and support services, primarily
consisting of (i) financial management; (ii) administrative systems;
(iii) clinical and laboratory organization and function; (iv) marketing
and (v) operations management, all as more fully set forth in Section
3.1.
1.1.14 "Technical Employees" shall mean embryologists and
other laboratory personnel, ultrasonographers, phlebotomists and
technicians who provide services to REACh.
ARTICLE 2
COST OF SERVICES AND BASE SERVICE FEE
2.1 "Cost of Services" shall mean all ordinary and necessary expenses
of REACh and all direct ordinary and necessary operating expenses of IntegraMed,
exclusive of IntegraMed overhead costs, without xxxx-up, incurred in connection
with the Services provided to REACh, including, without limitation, the
following costs and expenses, whether incurred by IntegraMed or REACh:
2.1.1 Salaries and fringe benefits of all IntegraMed and other
employees employed at REACh Facilities, along with payroll taxes or all
other taxes and charges now or hereafter applicable to such personnel,
and services of independent contractors;
2.1.2 Expenses incurred in the recruitment of additional
physicians for REACh, including, but not limited to employment agency
fees, relocation and interviewing expenses and any actual out-of-pocket
expenses of IntegraMed personnel in connection with such recruitment
effort;
2.1.3 Direct marketing expenses of REACh, such as direct costs
of printing marketing materials prepared by IntegraMed;
2.1.4 Any sales and use taxes assessed against REACh related
to the operation of REACh's medical practice;
2.1.5 Lease payments, depreciation expense (determined
according to GAAP), taxes and interest directly relating to the
Facilities and equipment, and other expenses of the Facilities
described in Section 3.2 below;
2.1.6 Legal fees paid by IntegraMed or REACh to outside
counsel in connection with matters specific to the operation or
internal affairs of REACh such as regulatory approvals required as a
result of the parties entering into this Agreement; provided, however,
legal fees incurred by the parties relative to the execution or
performance of this Agreement or as a result of a dispute between the
parties under this Agreement shall not be considered a Cost of
Services; and provided, further any disputes between or among
Physicians shall not be considered Cost of Services.
2.1.7 Health benefits provided to Physicians and
Physician-Employees, including health and life insurance, and long-term
disability;
2.1.8 All insurance necessary to operate REACh including fire,
theft, general liability professional liability and malpractice
insurance for Physicians and Physician-Employees of REACh, and Other
Professional and Technical Employees provided by IntegraMed;
2.1.9 Professional licensure fees and board certification fees
of Physician- Employees, and Other Professional Employees rendering
Infertility Services on behalf of REACh;
2.1.10 Membership in professional associations and continuing
professional education for Physicians and Physician-Employees and Other
Professional Employees;
2.1.11 Quality Improvement Program described in Section 3.8
herein;
2.1.12 Cost of filing fictitious name permits pursuant to this
Agreement;
2.1.13 Cost of supplies, medical and administrative, and all
direct general and administrative expenses, including but not limited
to travel and entertainment expenses, car allowances (including car
leases), dues and subscriptions, car and other business related
expenses, such as cellular telephone, relative to REACh; and
2.1.14 Such other costs and expenses directly incurred by
IntegraMed related to REACh's operations.
2.2 Notwithstanding anything to the contrary contained herein, Cost of
Services shall not include costs of the following:
2.2.1 Any federal or state income taxes of REACh or IntegraMed
other than as provided above;
2.2.3 The Base Service Fee;
2.2.4 Any amount paid to or on behalf of any Physician or
Physician-Employee including salary, draw or pension contributions (all
of which come out of REACh's share of PDE);or
2.2.5 Any proportion of IntegraMed's costs attributable to its
operation of its corporate offices or payment of its officers or
employees who work out of its corporate offices.
ARTICLE 3
DUTIES AND RESPONSIBILITIES OF INTEGRAMED
3.1 SERVICES AND ADMINISTRATION.
3.1.1 REACh hereby engages IntegraMed for the Services.
IntegraMed agrees to provide the Services only in the State of North
Carolina , Counties of Alexander, Anson, Burke, Cabarrus, Catawba,
Cleveland, Davidson, Davie, Forsyth, Gaston, Guilford, Iredell,
Lincoln, McDowell, Mecklenburg, Montgomery, Randolph, Richmond,
Rockingham, Rowan, Rutherford, Stanly and Union, and South Carolina,
Counties of Cherokee and York (the "Territory"), and REACh agrees to
limit its use of the Services to the Territory, without prior written
consent from IntegraMed. None of the Services made available to REACh
include any physician medical functions. IntegraMed acknowledges that
its timely performance of its duties and responsibilities as delineated
in this Article 3 are material to this Agreement and to REACh's
interest. The Services, as more particularly described in this
Agreement and the "INTEGRAMED 2003 RESOURCES, PRODUCTS AND SERVICES TO
PARTNER Practices", attached hereto as Exhibit 3.1.1, shall be made
available to REACh. Additionally, such other services as IntegraMed
from time to time make available to its network of infertility
practitioners shall be provided to REACh. IntegraMed reserves the right
to alter,modify or cease any Service; provided, however, IntegraMed
will use its best efforts to avoid materially alterning REACh's ability
to continue its business based on any decision to alter, modify or
cease any Service.
3.1.2 IntegraMed will, on behalf of REACh and as directed by
REACh, xxxx patients timely and collect professional fees for
Infertility Services rendered by REACh at the Facilities, outside the
Facilities for REACh's hospitalized patients, and for all other
Infertility Services rendered by any Physician- Employee or Other
Professional Employee. REACh hereby appoints IntegraMed for the term
hereof to be its true and lawful attorney-in-fact, for the following
purposes: (i) xxxx patients in REACh's name and on its behalf; (ii)
collect Receivables resulting from such xxxxxxxx in REACh's name and on
its behalf; (iii) receive payments from insurance companies,
prepayments from health care plans, and all other third-party payors;
(iv) take possession of and endorse in the name of REACh (and/or in the
name of any Physician Employee or Other Professional Employee rendering
Infertility Services to patients of REACh) any notes, checks, money
orders, and other instruments received in payment of Receivables; and
(v) at REACh's request, initiate the institution of legal proceedings
in the name of REACh, with REACh's cooperation, to collect any accounts
and monies owed to REACh, to enforce the rights of REACh as creditor
under any contract or in connection with the rendering of any service
by REACh, and to contest adjustments and denials by governmental
agencies (or its fiscal intermediaries) as third-party payors.
3.1.3 IntegraMed will provide the administrative services
function of supervising and maintaining (on behalf of REACh) all files
and records relating to the operations of the Facilities, including but
not limited to accounting and billing records, including for billing
purposes, patient medical records, and collection records. Patient
medical records shall at all times be and remain the property of REACh
and shall be located at the Facilities and be readily accessible for
patient care. IntegraMed's management of all files and records shall
comply with all applicable state and federal laws and regulations,
including without limitation, those pertaining to confidentiality of
patient records. The medical records of each patient shall be expressly
deemed confidential and shall not be made available to any third party
except in compliance with all applicable laws, rules and regulations.
IntegraMed shall have access to such records in order to provide the
Services hereunder, to perform billing functions, and to prepare for
the defense of any lawsuit in which those records may be relevant. The
obligation to maintain the confidentiality of such records shall
survive termination of this Agreement. REACh shall have unrestricted
access to all of its records at all times.
3.1.4 IntegraMed will provide, as requested by REACh, all
reasonably necessary clerical, accounting, bookkeeping and computer
services, printing, postage and duplication services, medical
transcribing services, and any other necessary or appropriate
administrative services reasonably necessary for the efficient
operation of REACh's medical practice at the Facilities.
3.1.5 With REACh's cooperation and participation, IntegraMed
will design and assist with implementing an appropriate marketing
program for REACh. REACh's participation is essential in developing
such marketing program and accordingly, will designate one or more
physicians and staff to work with IntegraMed in designing and
implementing such marketing program.
3.1.6 IntegraMed, upon request of REACh, will assist REACh in
recruiting additional physicians, including IntegraMed providing such
administrative functions as advertising for and identifying potential
candidates, checking credentials, and arranging interviews; provided,
however, REACh shall interview and make the ultimate decision as to the
suitability of any physician to become associated with REACh. All
physicians recruited by IntegraMed and accepted by REACh shall be
employees of or independent contractors to REACh.
3.1.7 IntegraMed will assist REACh in negotiating any managed
care contracts to which REACh desires to become a party. IntegraMed
will provide administrative assistance to REACh in fulfilling its
obligations under any such contract.
3.1.8 IntegraMed will arrange, in consultation with REACh, for
legal and accounting services as may be reasonably required in the
ordinary course of REACh's operation.
3.2 FACILITIES. After the Joint Practice Management Board, as defined
in Section 5.1, determines the nature and extent of the facilities needed for
REACh's medical practice, IntegraMed will assist REACh in obtaining such
Facilities, including providing administrative support, effort and resources in
obtaining the Facilities, including all furniture, equipment and furnishings
necessary for the Facilities, all repairs, maintenance and improvements thereto,
utility (telephone, electric, gas, water) services, customary janitorial
services, refuse disposal and all other services reasonably necessary in
conducting REACh's medical practice at the Facilities. IntegraMed will arrange
for the cleaning of the Facilities, and timely maintenance and cleanliness of
the equipment, furniture and furnishings located therein. IntegraMed will
advise, counsel and collaborate with REACh regarding the condition, use and
needs for the Facilities, the improvements thereto, equipment and services.
3.3 EXECUTIVE DIRECTOR AND OTHER PERSONNEL.
3.3.1 EXECUTIVE DIRECTOR. IntegraMed will employ an Executive
Director, selected by the Joint Practice Management Board, as defined
in Section 5.1,to manage and administer all of the day-to-day business
functions of the Facilities. The Joint Practice Management Board will
direct the day-to-day functions of the Executive Director in
implementing the policies agreed upon by the Joint Practice Management
Board. Salary and fringe benefits paid to the Executive Director shall
be determined by the Joint Practice Management Board.
3.3.2 PERSONNEL. IntegraMed will provide, as requested by
REACh, Other Professional Employees, Technical Employees, support and
administrative personnel, clerical, secretarial, bookkeeping and
collection personnel reasonably necessary for the efficient operation
of REACh at the Facilities. Such personnel will be under the direction
and supervision of the Executive Director, with Technical Employees and
Other Professional Employees subject to the professional supervision of
REACh.
3.4 FINANCIAL PLANNING AND GOALS. IntegraMed, in collaboration with
REACh, will prepare, for the approval of the Joint Practice Management Board (as
defined in Section 5.1), an annual capital and operating budget (the "Budget")
reflecting the anticipated Revenues and Cost of Services, sources and uses of
capital for growth of REACh's practice and for the provision of Infertility
Services at the Facilities. IntegraMed will present the Budget to the Joint
Practice Management Board for its approval at least thirty (30) days prior to
the commencement of the Fiscal Year. If the Joint Practice Management Board can
not agree on REACh's Budget for any Fiscal Year during the term of this
Agreement, the Budget for the preceding Fiscal Year will serve as the Budget
until such time as a new Budget is approved.
3.5 FINANCIAL STATEMENTS. IntegraMed will deliver to REACh monthly
financial statements ("Financial Statements") within thirty (30) days after the
end of each calendar month. Such Financial Statements will comprise, on a
monthly and year-to-date basis, a statement of REACh's Revenues and Cost of
Services, and PDE, as hereinafter defined.
3.6 TAX PLANNING AND TAX RETURNS. IntegraMed will not be responsible
for any tax planning or tax return preparation for REACh, but will provide
support documentation in connection with the same. Such support documentation
will not be destroyed without REACh's consent.
3.7 INVENTORY AND SUPPLIES. IntegraMed shall order and purchase
inventory and supplies, and such other materials which are requested by REACh to
enable REACh to deliver Infertility Services in a cost-effective quality manner.
3.8 QUALITY IMPROVEMENT. IntegraMed shall assist REACh in fulfilling
its obligations to maintain a Quality Improvement Program and in meeting the
goals and standards of such program.
3.9 RISK MANAGEMENT. IntegraMed shall assist REACh in the development
of a Risk Management Program and in meeting the standards of such Program.
3.10 PERSONAL POLICIES AND PROCEDURES. IntegraMed shall develop
personnel policies, procedures and guidelines, governing office behavior,
protocol and procedures, which, with REACh's cooperation, will aid in compliance
with applicable laws and guidelines related to employment and human resources
management.
3.11 LICENSES AND PERMITS. IntegraMed will coordinate and assist REACh
in its application for and efforts to obtain and maintain all federal, state and
local licenses, certifications and regulatory permits required for or in
connection with the operations of REACh and equipment located at the Facilities,
other than those relating to the practice of medicine or the administration of
drugs by Physicians and Physician-Employees.
3.12 ACCESS TO PROTECTED HEALTH INFORMATION.. In connection with the
Services provided by IntegraMed pursuant to this Agreement, IntegraMed and its
employees, representatives and agents will have access to protected health
information ("PHI") maintained by REACh. In connection with such PHI, IntegraMed
contemporaneous with entering into this Agreement will enter into a Business
Associate Agreement with REACh in accordance with the regulations promulgated
under the Health Insurance Portability & Accountability Act of 1996.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF REACH
4.1 TIMELY PERFORMANCE. REACh, in engaging IntegraMed to provide the
Services described in this Agreement, acknowledges that REACh's timely
performance of its duties and responsibilities as delineated in this Article 4
are material to this Agreement and to IntegraMed's interest.
4.2 PROFESSIONAL SERVICES. REACh shall use its best efforts to cause
its Physicians and Physician-Employees to provide Infertility Services to
REACh's patients in compliance at all times with ethical standards, laws and
regulations applying to the practice of medicine in the applicable jurisdiction
which such Physician or Physician-Employee provides Infertility Services on
behalf of REACh. REACh shall ensure that each Physician, Physician-Employee, any
Other Professional Employee employed by REACh, and any other professional
provider associated with REACh is duly licensed to provide the Infertility
Services being rendered within the scope of such provider's practice. In
addition, REACh shall require each Physician and Physician-Employee to maintain
a DEA number and appropriate medical staff privileges as determined by REACh
during the term of this Agreement. In the event that any disciplinary actions or
medical malpractice actions are initiated against any Physician,
Physician-Employee or other professional provider, REACh shall promptly inform
the Executive Director and provide the underlying facts and circumstances of
such action, and the proposed course of action to resolve the matter. Periodic
updates, but not less than monthly, shall be provided to IntegraMed.
4.3 MEDICAL PRACTICE. REACh shall use and occupy the Facilities
exclusively for the purpose of providing Gynecology, Infertility Services, and
related services and activities and shall use its best efforts to comply with
all applicable laws and regulations and all applicable standards of medical
care, including, but not limited to, those established by the American Society
of Reproductive Medicine. The medical practice conducted at the Facilities shall
be conducted solely by Physicians employed by partners of REACh and
Physician-Employees employed by or serving as independent contractors to REACh,
and Other Professional Employees employed by REACh. No other physician or
medical practitioner shall be permitted to use or occupy the Facilities without
the prior written consent of IntegraMed, except in the case of a medical
emergency, in which event, notification shall be provided to IntegraMed as soon
after such use or occupancy as possible.
4.4 EMPLOYMENT OF PHYSICIAN AND OTHER PROFESSIONAL EMPLOYEES. In the
event REACh shall determine that additional physicians are necessary, REACh
shall undertake and use its best efforts to select physicians who, in REACh's
judgment, possess the credentials and expertise necessary to enable such
physician candidates to become affiliated with REACh for the purpose of
providing Infertility Services. REACh shall cause each Physician-Employee to
enter into an employment or service agreement with REACh or their respective
professional association which is a partner of REACh ("Physician Employment
Agreement") in such form as is mutually acceptable to REACh and IntegraMed.
Except as otherwise provided in Sections 4.7.4 and 5.2.5 of this Agreement,
REACh shall have complete control of and responsibility for the hiring,
compensation, supervision, evaluation and termination of its
Physician-Employees, although at the request of REACh, IntegraMed shall consult
with and advise REACh respecting such matters.
4.5 CONTINUING MEDICAL EDUCATION . REACh shall require its
Physician-Employees to participate in such continuing medical education as REACh
deems to be reasonably necessary for such physicians to remain current in the
provision of Infertility Services.
4.6 PROFESSIONAL INSURANCE . REACh shall maintain professional
liability coverage at all times in limits of not less than $1 million per
occurrence, $3 million in the aggregate. In the event REACh desires to be made
an additional insured under IntegraMed's professional liability coverage as
provided for in Section 11.2, REACh shall cooperate in the obtaining and
retaining of professional liability insurance by assuring that its Physicians
and Physician-Employees and Other Professional Employees, if applicable, are
insurable and participating in an on-going Risk Management Program in
cooperation with IntegraMed.
4.7 DIRECTION OF PRACTICE REACh and its Physicians, as a continuing
condition of IntegraMed's obligations under this Agreement, shall at all time
during the Term be and remain legally organized and operated to provide
Infertility Services in a manner consistent with state and federal laws. REACh,
through its physicians, is expected to provide leadership in its market area and
fully cooperate with IntegraMed in IntegraMed's efforts to make the Services
available to REACh as determined by the Joint Practice Management Board. In
furtherance of which:
4.7.1 REACh shall operate and maintain at the Facilities a
full-time practice of medicine specializing in the provision of
Infertility Services and shall maintain and enforce the Physician
Employment Agreements or in such other form as is mutually agreed to by
REACh and IntegraMed in writing. REACh covenants that it shall not
employ any physician, or have any physician as a shareholder, unless
said physician shall sign the Physician Employment Agreement prior to
assuming the status as employee and/or shareholder. REACh covenants
that should a physician become a shareholder of REACh, that a condition
precedent to the issuance of the shares shall be the ratification of
this Service Agreement.
4.7.2 REACh shall not terminate the Physician Employment
Agreement(s) of any Physician, except in accordance with the Physician
Employment Agreement(s), or amend or modify the Physician Employment
Agreements in any material manner, nor waive any material rights of
REACh thereunder without the prior written approval of IntegraMed,
which approval will not be unreasonably withheld, and it shall be
deemed unreasonable for IntegraMed to withhold consent of an amendment
or modification mandated by the necessity of compliance with applicable
law. REACh covenants to enforce the terms of each Physician Employment
Agreement, including but not limited to any terms confirming a
Physician-Employee's commitment to practice medicine solely through
REACh for a specified number of years. In addition, in the exercise of
IntegraMed's sole discretion, if REACh fails to pursue the enforcement
of its rights against a Physician-Employee, IntegraMed shall have the
right, but not the obligation, to direct, initiate or join in a lawsuit
to enforce the provisions of any Physician Employment Agreement and
REACh shall assign its rights and remedies against such
Physician-Employee upon the request of IntegraMed.
4.7.3 Recognizing that IntegraMed would not have entered into
this Agreement but for REACh's covenant to maintain and enforce the
Physician Employment Agreements with any physician now employed or
physicians who may hereafter become employees of REACh, and in reliance
upon such Physician-Employee's observance and performance of all of the
obligations under the Physician Employment Agreements, any damages,
liquidated damages, compensation, payment or settlement received by
REACh from a physician whose employment is terminated, shall be paid to
IntegraMed in proportion to IntegraMed's loss or damages.
4.7.4 REACh shall retain that number of Physician-Employees as
are reasonably necessary and appropriate for the provision of
Infertility Services. However, REACh agrees that it will not hire more
physicians than consented to by the Joint Practice Management Board
which shall not be unreasonable in giving its consent. Each
Physician-Employee shall hold and maintain a valid and unrestricted
license to practice medicine in the applicable jurisdiction where such
Physician-Employee provides Infertility Services on behalf of REACh,
and all full-time Physician-Employees shall be board eligible in the
practice of gynecology, with training in the subspecialty of
infertility and assisted reproductive medicine. REACh shall be
responsible for paying the compensation and benefits, as applicable,
for all Physician-Employees, and for withholding, as required by law,
any sums for income tax, unemployment insurance, social security, or
any other withholding required by applicable law. IntegraMed at the
request of REACh, will establish and administer the compensation with
respect to such Physician-Employees in accordance with the written
agreement between REACh and each Physician Employee. IntegraMed shall
neither control nor direct any Physician in the performance of
Infertility Services for patients, and IntegraMed will not unreasonably
interfere with the employer-employee relationship between REACh and its
Physician-Employees.
4.7.5 REACh shall insure that Physician-Employees provide
patient care and clinical backup as required to insure the proper
provision of Infertility Services to patients of REACh at REACh's
Facilities. REACh shall insure that its full-time Physician-Employees
devote substantially all of their professional time, effort and ability
to REACh's practice, including the provision of Infertility Services
and the development of such practice, and that Permitted Services, of
any Physician-Employee do not interfere with such Physician-Employees
full time practice of Infertility Services at REACh's Facilities.
4.7.6 REACh covenants to obtain necessary licenses and operate
clinical laboratory and tissue bank services in accordance with all
applicable laws and regulations. REACh agrees that the Medical Director
or Tissue Bank Director, if applicable, shall be Physician-Employees or
Other Professional Employees, if applicable, of REACh who meet the
qualifications required by applicable State law or regulation, and that
should there be a vacancy in any such position, REACh will cause
another Physician-Employee or Other Professional Employee, if
applicable, to fill such vacancy in accordance with applicable State
law.
4.7.7 REACh acknowledges that it bears all medical obligations
to patients treated at the Facilities and covenants that it is
responsible for all tissue, specimens, embryos or biological material
("Biological Materials") kept at the Facilities on behalf of the
patients (or former patients) of REACh. In the event of a termination
or dissolution of REACh, or the termination of this Agreement for any
reason, REACh and the Physicians will have the obligation to account to
patients and to arrange for the storage or disposal of such Biological
Materials in accordance with patient consent and the ethical guidelines
of the American Society of Reproductive Medicine ("Relocation
Program"). IntegraMed, in such event, will, at the request of REACh,
assist in the administrative details of such a Relocation Program for
so long as REACh shall request and an appropriate fee shall be paid
during that time. These obligations shall survive the termination of
this Agreement.
4.7.8 Except for circumstances outside the control of REACh or
the Physicians, REACh covenants not to terminate or dissolve as a
professional services corporation except on six months prior written
notice to IntegraMed. REACh covenants that such a restriction will be
contained either in REACh's by-laws or shareholder agreement among
REACh's shareholders. In the event that such termination or dissolution
occurs without the requisite prior written notice, for a reason other
than the death or disability of all of the shareholders, or any
successor entity fails to continue the medical practice of REACh
substantially in the form contemplated by this Agreement, REACh and its
individual shareholders, shall indemnify IntegraMed for: (i) the actual
costs of maintaining the Facilities and any reasonably necessary Other
Professional Employees during and relating to a Relocation Program
(Section 4.7.7); (ii) legal costs for re-licensing; (iii) recruitment
of other physicians to assume the Practice; and (iv) any damages,
costs, liabilities, including reasonable attorneys fees, arising from
claims, suits, causes of action or proceedings, brought by a patient of
REACh having an interest in any Biological Materials kept at the
Facilities. These obligations shall survive the termination of this
Agreement.
4.7.9 REACh will designate certain physicians to (i) work with
IntegraMed in designing and implementing marketing plans, (ii)
participate in marketing strategy sessions, and (iii) identify targeted
referral sources and managed care opportunities. Recognizing that
successfully collecting Receivables is dependent on REACh's
participation and cooperation, REACh will cooperate fully with respect
to IntegraMed's collection efforts, and policies and procedures
established by the Joint Practice Management Board governing the
collection of Receivables.
4.8 PRACTICE DEVELOPMENT, COLLECTION EFFORTS AND NETWORK INVOLVEMENT.
REACh agrees that during the term of this Agreement, REACh covenants for itself
and will use its best efforts to cause its Physician-Employees to:
4.8.1 Execute such documents and take such steps reasonably
necessary to assist billing and collecting for patient services
rendered by REACh and its Physician-Employees;
4.8.2 Promote REACh's medical practice and participate in
marketing efforts developed by IntegraMed; and
4.8.3 Participate in IntegraMed network activities and
programs, including, but not limited to, using best efforts in offering
IntegraMed Pharmaceutical Services and the IntegraMed Shared Risk
Refund Program to patients and participating in other product and
service offerings IntegraMed has in effect from time to time.
4.9 PERSONNEL POLICIES REACh covenants for itself and will use its best
efforts to cause its Physician-Employees and any other employees to comply with
reasonable personnel policies and guidelines developed for the REACh by
IntegraMed and/or the Joint Practice Management Board, which shall include
administrative protocols and policies designed to insure that the Facilities
comply with all applicable laws and regulations, federal, state and local.
ARTICLE 5
JOINT DUTIES AND RESPONSIBILITIES
5.1 FORMATION AND OPERATION OF JOINT PRACTICE MANAGEMENT BOARD.
IntegraMed and REACh will establish a joint practice management board ("Joint
Practice Management Board"), which will be responsible for developing management
and administrative policies for the overall operation of REACh. The Joint
Practice Management Board will consist of designated representatives from
IntegraMed, one or more REACh owners, as determined by REACh, such other REACh
physicians, as appropriate and determined by REACh, and the Executive Director.
It is the intent and objective of IntegraMed and REACh that they agree on the
overall provision of the Services to REACh. In the case of any matter requiring
a formal vote, REACh shall have one (1) vote and IntegraMed shall have one (1)
vote. The desire is that IntegraMed and REACh agree on matters of operations and
that, if they disagree, they will have to work cooperatively to resolve any
disagreement.
5.2 DUTIES AND RESPONSIBILITIES OF THE JOINT PRACTICE MANAGEMENT Board.
The Joint Practice Management Board shall have, among others, the following
duties and responsibilities:
5.2.1 ANNUAL BUDGETS AND PROFITABILITY. All annual capital and
operation budgets prepared by IntegraMed shall be subject to the
review, amendment, approval and disapproval of the Joint Practice
Management Board. The parties covenant and agree to use their
respective best efforts to assist the Joint Management Board in
achieving the projected budgets. REACh and IntegraMed agree that,
recognizing changes in circumstances, annual budgets and forecast are
subject to revisions and, accordingly, they will cause the Joint
Practice Management Board to modify the annual budgets, as needed,
including without limitation, staff reductions, to ensure that REACh
operates in a profitable mode which means that PDE is positive on a
monthly basis. Further, REACh agrees that in the event REACh incurs
operational losses at any point during the term of this Agreement,
nothing herein shall obligate IntegraMed to incur losses under this
Agreement in order to sustain REACh's operations. For example,
IntegraMed may take appropriate steps to reduce its Cost of Services in
order to avoid negative PDE at any point.
5.2.2 CAPITAL IMPROVEMENTS AND EXPANSION.Except as otherwise
provided herein, any renovation and expansion plans, and capital
equipment expenditures with respect to REACh shall be reviewed and
approved by the Joint Practice Management Board and shall be based upon
the best interests of REACh, and shall take into account capital
priorities, economic feasibility, physician support, productivity and
then current market and regulatory conditions.
5.2.3 MARKETING BUDGET.REACh shall assist in the development
of an annual marketing budget and plan. All annual advertising and
other marketing budgets prepared by IntegraMed shall be subject to the
review, amendment, approval and disapproval of the Joint Practice
Management Board.
5.2.4 STRATEGIC PLANNING. The Joint Practice Management Board
shall develop long-term strategic plans, from time to time.
5.2.5 PHYSICIAN HIRING.The Joint Practice Management Board
shall, in conjunction with REACh, determine, the number and type of
physicians required for the efficient operation of REACh.
5.2.6 EXECUTIVE DIRECTOR. The Joint Practice Management Board
will direct the day-to-day functions of the Executive Director employed
by IntegraMed pursuant to Section 3.3.1.
ARTICLE 6
LICENSE OF INTEGRAMED NAME
6.1 GRANT OF LICENSE. IntegraMed hereby grants to REACh a revocable,
non-exclusive and non-assignable license for the term of this Agreement to use
the name REPRODUCTIVE SCIENCE CENTER and a revocable, non-exclusive and
non-assignable license with respect to any other service names, trademark names
and logos of IntegraMed (the "Trade Names") in conjunction with the provision of
Infertility Services by REACh at the Facilities within the Territory.
6.2 FICTITIOUS NAME PERMIT. If necessary, REACh shall file or cause to
be filed an original, amended or renewal application with an appropriate
regulatory agency to obtain a fictitious name permit which allows REACh to
practice at the Facilities under the Trade Names and shall take any other
actions reasonably necessary to procure protection of or protect IntegraMed's
rights to the Trade Names. IntegraMed shall cooperate and assist REACh in
obtaining any such original, amended or renewal fictitious name permit.
6.3 RIGHTS OF INTEGRAMED. REACh acknowledges IntegraMed's exclusive
right, ownership, title and interest in and to the Trade Names and will not at
any time do or cause to be done any act or thing contesting or in any way
impairing or tending to impair any part of such right, title and interest. In
connection with the use of the Trade Names, REACh shall not in any manner
represent that it has any ownership interest in the Trade Names, and REACh's use
shall not create in REACh's favor any right, title, or interest in or to the
Trade Names other than the right of use granted hereunder, and all such uses by
REACh shall inure to the benefit of IntegraMed. REACh shall notify IntegraMed
immediately upon becoming aware of any claim, suit or other action brought
against it for use of the Trade Names or the unauthorized use of the Trade Names
by a third party. REACh shall not take any other action to protect the Trade
Names without the prior written consent of IntegraMed. IntegraMed, if it so
desires, may commence or prosecute any claim or suit in its own name or in the
name of REACh or join REACh as a party thereto. REACh shall not have any rights
against IntegraMed for damages or other remedy by reason of any determination of
IntegraMed not to act or by reason of any settlement to which IntegraMed may
agree with respect to any alleged infringements, imitations or unauthorized use
by others of the Trade Names, nor shall any such determination of IntegraMed or
such settlement by IntegraMed affect the validity or enforceability of this
Agreement.
6.3.1 IntegraMed will defend, indemnify, and hold REACh harmless from
any claim, suit, action or expense (including reasonable attorney's
fees) alleging that REACh's use of the trade name "Reproductive Science
Center" or any of the other Trade Names infringe or violate any rights
of third parties.
6.4 RIGHTS UPON TERMINATION.
6.4.1 Upon termination of this Agreement, REACh shall within
30 days of the termination (i) cease using the Trade Names in all
respects and refrain from making any reference on its letterhead,
consents or other information or material to its former relationship
with IntegraMed and (ii) return to IntegraMed all Proprietary Materials
as defined herein including, but not limited to, consents, policy and
procedure manuals, Risk Management and Clinical Standards Review
Manuals. Additionally REACh will take any and all actions required to
make the Trade Names available for use by any other person or entity
designated by IntegraMed.
6.4.2 REACh's failure (except as otherwise provided herein) to
cease using the Trade Names at the termination or expiration of this
Agreement will result in immediate and irreparable damage to IntegraMed
and to the rights of any licensee of IntegraMed. There is no adequate
remedy at law for such failure. In the event of such failure,
IntegraMed shall be entitled to equitable relief by way of injunctive
relief and such other relief as any court with jurisdiction may deem
just and proper. Additionally, pending such a hearing and the decision
on the application for such permanent injunction, IntegraMed shall be
entitled to a temporary restraining order relating to REACh's failure
to cease using the Trade Names, without prejudice to any other remedy
available to IntegraMed. All such remedies hereunder shall be at the
expense of REACh and shall not be a Cost of Services.
ARTICLE 7
FINANCIAL ARRANGEMENTS
7.1 COMPENSATION. The compensation set forth in this Article 7 is being
paid to IntegraMed in consideration of the substantial commitment made, capital
provided and services to be rendered by IntegraMed hereunder and is fair and
reasonable. IntegraMed shall be paid the following amounts (collectively
"Compensation"):
7.1.1 an amount reflecting all Cost of Services (whether
incurred by IntegraMed or REACh) paid or accrued by IntegraMed pursuant
to the terms of this Agreement;
7.1.2 during each year of this Agreement commencing with the
Effective Date , a Base Service Fee, paid monthly but reconciled to
annual Revenues, of an amount equal to six percent (6%) of the first
$8.0 million of REACh's Revenues; five percent (5%) of REACh.'s
Revenues over $8.0 million, but less than $12 million; four percent
(4%) of REACh.'s Revenues of $12 million or more, but less than $16.
million; and three (3%) of. REACh's Revenues of $16 million or more.
7.1.3 during each year of this Agreement, commencing with the
Effective Date, an additional service fee ("Additional Service Fee")
paid monthly but reconciled to annual operating results of REACh, equal
to ten (10%) of PDE.
7.1.4 In the event that either Section 7.1.2 or 7.1.3 of this
Agreement is found to be illegal, unenforceable, against public policy,
or forbidden by law, by any local, state or federal agency or
department, or any court of competent jurisdiction ("Findings"), then
Section 7.1.2 and/or 71.3 and/or the Base and Additional Service Fees
shall be replaced, effective immediately and retroactive to the date of
this Agreement, by a fixed annual Service Fee, payable in equal monthly
installments ("Alternate Service Fee") on or before the 15th business
day of each month. Said Alternate Service Fee shall be in an amount
mutually agreed upon, within thirty days time from the Findings,
between IntegraMed and REACh, but in no event shall be less than
$700,000 per annum. In the event of a Finding which causes the
Alternate Service Fee to become operative, the parties shall, within
sixty days of the Finding, account for all payments made prior to the
date of the Finding, and recalculate such amounts pursuant to the
formula provided in the Alternate Service Fee. Any overpayment to
IntegraMed resulting from the prior application of Section 7.1.2 and/or
7.1.3 shall be applied so as to satisfy 50% of each future monthly
Alternate Service Fee until the aggregate of such overpayment is fully
paid by IntegraMed. Any underpayment to IntegraMed resulting from the
prior application of Section 7.1.2 and/or 7.1.3 shall be paid to
IntegraMed commencing on the first day of the next full month following
the date of the Finding, in eighteen (18) equally monthly installments.
7.1.5 The right of termination provided for in Section 9.1.3
of this Agreement, if based on the fact that either Section 7.1.2 or
7.1.3 of this Agreement has been found to be illegal, unenforceable,
void, against public policy or forbidden by law, shall only be
exercisable in the event that both (i) Sections 7.1.2 and 7.1.3 and
(ii) the Alternate Service Fee have been so found by a local, state or
federal agency or department, or any court of competent jurisdiction.
7.2 ACCOUNTS RECEIVABLE.
7.2.1 On or before the 20th business day of each month,
commencing with the first month following the Effective Date,
IntegraMed shall reconcile the Receivables of REACh arising during the
previous calendar month. Subject to the terms and conditions of this
Agreement, REACh hereby sells and assigns to IntegraMed as absolute
owner, and IntegraMed hereby purchases from REACh all Receivables
hereafter owned by or arising in favor of REACh on or before the 20th
business day of each month. IntegraMed shall transfer or pay such
amount of funds to REACh equal to the Receivables less Compensation due
IntegraMed pursuant to Section 7.1. REACh shall cooperate with
IntegraMed and execute all necessary documents in connection with the
purchase and assignment of such Receivables to IntegraMed or at
IntegraMed's option, to its lenders. All collections in respect of such
Receivables shall be deposited in a bank account at a bank designated
by IntegraMed. To the extent REACh comes into possession of any
payments in respect of such Receivables, REACh shall direct such
payments to IntegraMed for deposit in bank accounts designated by
IntegraMed.
7.2.2 Any Medicare or Medicaid Receivables due to REACh shall
be excluded from the operation of Section 7.2.1 hereof. Any such
Receivables shall be subject to agreement of REACh and IntegraMed with
respect to the collection thereof.
7.2.3 REACh will be charged monthly interest at an annualized
rate of prime plus 2% on Receivables with an average days sales
outstanding ("DSO") greater than 75 days for a trailing three-month
period. For example, if prime is 6% and REACh's Revenues are $1,385,000
for a three-month period, the average Revenues per day (assuming 90
days in such three-month period) equals $15,389. If on the last day of
that same three-month period REACh's Receivables are $1.5 million, then
REACh's DSO equal 97 days ($1.5 million divided by $15,389), resulting
in interest being charged for the month on $338,558.00 of REACh's
Receivables ($15,389 times 22 days) at a rate of 0.67% ( 6% prime plus
2% divided by 12), or a $2,268.34 interest charge..
7.2.4 On or before the 20th business day of each month,
commencing with the month following the Effective Date, IntegraMed
shall remit to REACh the PDE generated for the previous calendar month.
7.3 ADVANCES. IntegraMed agrees to advance necessary funds for
REACh to meet Cost of Services and, to meet Physician distributions (through
their respective professional associations), and Physician-Employee salaries;
provided, however, nothing herein shall obligate IntegraMed to incur Cost of
Services and Physician salary Advances in excess of Revenues under this
Agreement in order to sustain REACh's operations. As security for such Advances,
REACh shall deliver to IntegraMed with the execution of this Agreement a
Security Agreement in the form of Exhibit 7.3 hereto giving IntegraMed a
collateral interest in all Receivables of REACh and PDE payable to REACh
Shareholders. IntegraMed shall, in its sole discretion, be entitled to take any
and all necessary action to prevent financial losses, in the form of Cost of
Services on behalf of REACh, to IntegraMed in the event REACh's Cost of Services
exceed REACh's Revenues at any point during the Term of this Agreement.
Notwithstanding anything herein to the contrary, no Advances will be made by
IntegraMed to satisfy physician-employee draws, salaries or pension
contributions.
7.3.1 Any Advance hereunder shall be a debt owed to IntegraMed
by REACh and shall be repaid within 60 days after the Advance. Upon
request of REACh, IntegraMed will consider repayment in installments.
To the extent PDE is available for distribution to Physicians for a
particular month, IntegraMed is authorized to deduct any outstanding
Advance from the PDE prior to distribution to the Physicians.
7.3.2 Interest expense will be charged on an Advance and will
be computed at the Prime Rate used by IntegraMed's primary bank.
7.3.3 REACh acknowledges and understands that IntegraMed's
bank has a security interest in REACh's accounts receivable purchased
by IntegraMed. In that connection, IntegraMed's bank requires that the
various medical practices with which IntegraMed enters into a Service
Agreement, executes and delivers to such bank a Continuing General
Limited Security Agreement in the form of Exhibit 7.3.3 attached
hereto, which REACh hasl executed and delivered to IntegraMed.
7.4 BUILD OUT AND CAPITAL COMMITMENT.
IntegraMed agrees to invest sufficient capital to build, equip and
supply appropriate office and laboratory space for REACh to conduct its medical
practice at the Facilities. As an expression of IntegraMed's commitment to the
growth of REACh's practice, IntegraMed agrees to maintain, during the term of
this Agreement, an on-going investment in the Facilities and equipment, without
an interest charge to REACh, of an amount up to $2.0 million ("Capital
Commitment"). Any amounts invested by IntegraMed in REACh's medical practice in
excess of the Capital Commitment provided for this Section will be charged to
REACh as a capital cost at an interest rate of prime plus two (2%) percent.
ARTICLE 8
TERM, SERVICE RIGHT, PAYMENTS, AND OTHER COMMITMENTS
8.1 The term of this Agreement shall begin on the date first above
written ("Effective Date") and shall expire fifteen (15) years after such date
(the "Term") unless earlier terminated pursuant to Article 9, below.
8.2 In consideration of the considerable investment of time and
resources in REACh expected by IntegraMed and the payment of Two Million
One-Hundred Seventy Thousand Dollars ($2,170,000.00) ("Right to Service Fee") in
the aggregate by IntegraMed to the Physicians or for their benefit as an
inducement to enter into the Employment Agreements with REACh and for causing
REACh, in their capacities as shareholders of REACh, to enter into this
Agreement, REACh grants to IntegraMed the exclusive right to provide the
Services to REACh during the Term.. Each of Physicians, pursuant to a Personal
Responsibility Agreement will agree to remit to IntegraMed unamortized Right to
Service Fees if this Agreement or such Physician's employment by REACh
terminates within five (5) years from the Effective Date.
8.3 In addition to the payment provided for in Section 8.2, IntegraMed
agrees to purchase the fixed assets of REACh at net book value as of August 31,
2003, and the accounts receivable, net of adjustments for refunds, discounts,
contractual allowances, patient deposits, professional courtesies and other
activities that did not generate a collectible fee as reasonably determined by
IntegraMed and REACh.
8.4 IntegraMed agrees to reimburse REACh for legal and accounting
expenses incurred in connection with this Agreement, not to exceed $15,000.00 in
the aggregate.
8.5 With respect to those REACh employees hired by IntegraMed,
IntegraMed agrees to recognize and give credit to all such employees for their
years of service to REACh for purposes of vacation and sick leave and other
benefits provided by IntegraMed.
ARTICLE 9
TERMINATION OF THE AGREEMENT
9.1 TERMINATION
This Agreement may be terminated by either party in the event
of the following:
9.1.1 INSOLVENCY. If a receiver, liquidator or trustee of any
party shall be appointed by court order, or a petition to reorganize shall be
filed against any party under any bankruptcy, reorganization or insolvency law,
and shall not be dismissed within 90 days, or any party shall file a voluntary
petition in bankruptcy or make assignment for the benefit of creditors, then
either of the other parties may terminate this Agreement upon 10 days prior
written notice to the other parties.
9.1.2 MATERIAL BREACH. If either party shall materially breach
its obligations hereunder, then the other party may terminate this Agreement by
providing 30 days prior written notice to the breaching party detailing the
nature of the breach and providing the breaching party with the opportunity to
cure the breach. If the breach is not cured within such 30-day period, this
Agreement shall terminate, provided however, that if the breach is not curable
within such 30-day period and the breaching party is making diligent efforts to
cure the breach during such 30-day period ("Good Faith Cure Efforts"), this
Agreement shall not terminate. If after the exercise of such Good Faith Cure
Efforts, the breaching party shall be unable to cure the breach within 60 days
from the notice of breach from the non-breaching party, the non-breaching party
in its sole discretion may extend the time in which to cure the breach, upon
request of the breaching party. In the event the non-breaching party does not
extend the time in which to cue the breach, this Agreement will terminate at the
expiration of 60 days from the original notice of breach from the non-breaching
party.
9.1.3 ILLEGALITY. Any party may terminate this Agreement
immediately upon receipt of notification of a final order issued by any local,
state or federal agency or court of competent jurisdiction that the conduct
contemplated by this Agreement is forbidden by law; provided, however, that if
such finding is based upon the nature or method of compensation to IntegraMed,
it specifically finds the Alternative Service Fee is forbidden by law.
Notwithstanding the foregoing, this Agreement shall not terminate during such
period of time as either party contests such order or finding in good faith
("Challenge") and during any such Challenge, this Agreement shall remain in full
force and effect. If any governing regulatory agency asserts that the services
provided by IntegraMed under this Agreement are unlawful or that the practice of
medicine by REACh as contemplated by this Agreement requires a certificate of
need, and any such assertion is not the subject of a Challenge, or if the
subject of Challenge, the agency's assertion is found to be correct by a court
of competent jurisdiction and no appeal is taken, or if any appeals are taken
and the same are unsuccessful), this Agreement shall thereupon be deemed
terminated and the provisions of Section 10.1 shall apply.
9.2 TERMINATION BY INTEGRAMED FOR PROFESSIONAL DISCIPLINARY ACTIONS.
REACh shall be obligated to suspend a physician whose authorization to practice
medicine is suspended, revoked or not renewed. IntegraMed may terminate this
Agreement upon 10 days prior written notice to REACh if a Physician's
authorization to practice medicine is suspended, revoked or not renewed and
REACh has failed to suspend such physician; provided, however, such action may
not be taken until REACh has been given 30 days to resolve such physician's
authorization to practice medicine. REACh shall notify IntegraMed within five
(5) days of a notice that a physician's authorization to practice medicine is
suspended, revoked or not renewed or that formal disciplinary action has been
taken against a physician which could reasonably lead to a suspension,
revocation or non-renewal of a physician's license.
ARTICLE 10
PURCHASE OF ASSETS - OBLIGATIONS AND OPTIONS
10.1 TERMINATION BY INTEGRAMED. If IntegraMed terminates this Agreement
due to the insolvency of REACh (Section 9.1.1), for a material breach by REACh
(Section 9.1.2), or REACh fails to suspend a physician whose license is
suspended, revoked or not renewed (Section 9.2), or this Agreement terminates
pursuant to Section 9.1.3, REACh agrees, within 90 days of the date of
termination of this Agreement, at IntegraMed's option, to purchase from
IntegraMed the assets utilized directly by REACh in the operation of REACh
business (the "Assets") as set forth in Sections 10.1.1 and 10.1.2 below:
10.1.1 The purchase price of the Assets will be the net book
value determined in accordance with GAAP, consistently applied, as at
the date of the termination.
10.1.2 If a purchase is completed under Section 10.1, closing
shall occur within 90 days of the date the option is exercised. REACh
shall assume all leases for offices and equipment used directly for the
management and operation of REACh's business and may hire such
employees from IntegraMed as it determines are necessary to operate the
medical practice and business. In such event, REACh shall be obligated
to indemnify IntegraMed for any and all severance or termination
obligations to IntegraMed employees utilized directly in providing the
Services.
10.2 TERMINATION BY REACH In the event this Agreement is terminated by
REACh as a result of the insolvency of IntegraMed (9.1.1) or material breach by
IntegraMed (9.1.2), IntegraMed agrees, within 90 days of the date of
termination, at REACh's option, to sell to REACh the Assets as set forth in
Sections 10.1.1 together with leasehold improvements.
10.2.1 If a termination occurs under this Section 10.2, REACh
shall have the option of assuming leases for offices and equipment used
directly for the operation of REACh's business and may hire such
employees from IntegraMed as it determines are necessary to operate the
medical practice and business.
10.2.2 In the event REACh exercise the option set forth in
this Section 10.2, closing shall occur within 90 days of the date the
option is exercised. In the event REACh does not exercise the option
within 90 days of termination, REACh shall have relinquished its right
and interest to the Assets and IntegraMed shall be free to use or
dispose of the Assets as it determines with neither party having any
further obligations to the other.
10.3 TRANSFER OF OWNERSHIP
Upon receipt of payment of the purchase price and other payments due,
IntegraMed shall transfer ownership and possession of the Assets, and assign all
right, title and interest in and to and obligations under the Lease(s) to REACh
and return to REACh all security deposits. REACh shall have the option of
receiving full credit on the purchase price for all liens, encumbrances or
security interest, or of having IntegraMed transfer ownership of the Assets free
and clear of all liens, encumbrances or security interests thereon.
ARTICLE 11
INSURANCE
11.1 REACh shall carry professional liability insurance, covering
itself and its employees providing Infertility Services under this Agreement in
the minimum amount of $1 million per incident, $3 million in the aggregate, at
its own expense. If possible under the terms of the insurance coverage, REACh
shall use its best efforts to cause IntegraMed to be named an additional insured
on such policies. Evidence of such policies shall be presented to IntegraMed
upon execution of this Agreement.
11.2 IntegraMed shall use its best efforts to cause REACh to be made an
additional insured under IntegraMed's professional liability coverage; provided,
however, conditions for being made an additional insured shall be (i) REACh
utilizing patient informed consent forms supplied by IntegraMed, provided such
forms are consistent with law and any guidelines issued by the American Society
of Reproductive Medicine and (ii) REACh complying with requirements of
IntegraMed's insurance company. IntegraMed shall also carry a policy of public
liability and property damage insurance with respect to the Facilities under
which the insurer agrees to indemnify IntegraMed and REACh against all cost,
expense and/or liability arising out of or based upon any and all claims,
accidents, injuries and damages customarily included within the coverage of such
policies of insurance available for IntegraMed. The minimum limits of liability
of such insurance shall be $1 million combined single limit covering bodily
injury and property damage. Certificates of Insurance evidencing such policies
and additional insured status shall be presented to REACh within thirty (30)
days after such coverage is in effect.
11.3 REACh and IntegraMed shall provide written notice to the other at
least thirty (30) days in advance of the effective date of any reduction,
cancellation or termination of the insurance required to be carried by each
hereunder.
ARTICLE 12
MISCELLANEOUS
12.1 INDEPENDENT CONTRACTOR. IntegraMed and REACh are independent
contracting parties. In this regard, the parties agree that:
12.1.1 The relationship between IntegraMed and REACh is that
of an independent supplier of non-medical services and a medical
practice, respectively, and, unless otherwise provided herein, nothing
in this Agreement shall be construed to create a principal-agent,
employer-employee, or master-servant relationship between IntegraMed
and REACh;
12.1.2 Notwithstanding the authority granted to IntegraMed
herein, IntegraMed and REACh agree that REACh shall retain the full
authority to direct all of the medical, professional, and ethical
aspects of its medical practices;
12.1.3 Any powers of REACh not specifically vested in
IntegraMed by the terms of this Agreement shall remain with REACh;
12.1.4 REACh shall, at all times, be the sole employer of the
Physician-Employees, other than the Physicians, the Other Professional
Employees required by law to be employees of REACh and all other
professional personnel engaged by REACh in connection with the
operation of its medical practice at the Facilities, and shall be
solely responsible for the payment of all applicable federal, state or
local withholding or similar taxes and provision of workers'
compensation and disability insurance for such professional personnel
that are employees of REACh;
12.1.5 No party shall have the right to participate in any
benefits, employment programs or plans sponsored by the other party on
behalf of the other party's employees, including, but not limited to,
workers' compensation, unemployment insurance, tax withholding, health
insurance, life insurance, pension plans or any profit sharing
arrangement;
12.1.6 In no event shall any party be liable for the debts or
obligations of any other party except as otherwise specifically
provided in this Agreement; and
12.1.7 Matters involving the internal agreements and finances
of REACh, including but not limited to the distribution of professional
fee income among Physician Employees and, if applicable, Other
Professional Employees who are providing professional services to
patients of REACh, and other employees of REACh, disposition of REACh
property and stock, accounting, tax preparation, tax planning, and
pension and investment planning, hiring and firing of physicians,
decisions and contents of reports to regulatory authorities governing
REACh and licensing, shall remain the sole responsibility of REACh and
the individual Physicians, except with respect to the number of
physicians REACh hires which will be based upon recommendations of the
Joint Practice Management Board.
12.2 FORCE MAJEURE. No party shall be liable to the other parties for
failure to perform any of the services required under this Agreement in the
event of a strike, lockout, calamity, act of God, unavailability of supplies, or
other event over which such party has no control, for so long as such event
continues and for a reasonable period of time thereafter, and in no event shall
such party be liable for consequential, indirect, incidental or like damages
caused thereby.
12.3 EQUITABLE RELIEF. Without limiting other possible remedies
available to a non-breaching party for the breach of the covenants contained
herein, including the right of IntegraMed to cause REACh to enforce any and all
provisions of the Physician Employment Agreements described in Section 4.3
hereof, injunctive or other equitable relief shall be available to enforce those
covenants, such relief to be without the necessity of posting bond, cash or
otherwise. If any restriction contained in said covenants is held by any court
to be unenforceable or unreasonable, a lesser restriction shall be enforced in
its place and remaining restrictions therein shall be enforced independently of
each other.
12.4 PRIOR AGREEMENTS; AMENDMENTS. This Agreement supersedes all prior
agreements and understandings between the parties as to the subject matter
covered hereunder including the Former Agreement, and this Agreement may not be
amended, altered, changed or terminated orally. No amendment, alteration, change
or attempted waiver of any of the provisions hereof shall be binding without the
written consent of all parties, and such amendment, alteration, change,
termination or waiver shall in no way affect the other terms and conditions of
this Agreement, which in all other respects shall remain in full force.
12.5 ASSIGNMENT; BINDING EFFECT. This Agreement and the rights and
obligations hereunder may not be assigned without the prior written consent of
all of the parties, and any attempted assignment without such consent shall be
void and of no force and effect, except that IntegraMed may assign this
Agreement to any affiliate, which for purposes of this Agreement, shall include
any parent or subsidiary of IntegraMed, without the consent of REACh, provided
IntegraMed shall remain liable for its obligations hereunder. The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties' respective heirs, legal representatives, successors and permitted
assigns.
12.6 WAIVER OF BREACH. The failure to insist upon strict compliance
with any of the terms, covenants or conditions herein shall not be deemed a
waiver of such terms, covenants or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.
12.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina irrespective of the
principal place of business of the parties hereto. Any and all claims, disputes,
or controversies arising under, out of, or in connection with this Agreement or
any breach thereof, except for equitable relief sought pursuant to Section 6.4
or Section 12.3 hereof, shall be determined by binding arbitration in the State
of North Carolina, City of Charlotte (hereinafter "Arbitration"). The party
seeking determination shall subject any such dispute, claim or controversy to
either (i) JAMS/Endispute or (ii) the American Arbitration Association, and the
rules of commercial arbitration of the selected entity shall govern. The
Arbitration shall be conducted and decided by three (3) arbitrators, unless the
parties mutually agree, in writing at the time of the Arbitration, to fewer
arbitrators. In reaching a decision, the arbitrators shall have no authority to
change or modify any provision of this Agreement, including any liquidated
damages provision. Each party shall bear its own expenses and one-half the
expenses and costs of the arbitrators. Any application to compel Arbitration,
confirm or vacate an arbitral award or otherwise enforce this Paragraph shall be
brought in the Courts of the State of North Carolina or the United States
District Court for the District of North Carolina, to whose jurisdiction for
such purposes REACh and IntegraMed hereby irrevocably consent and submit.
12.8 SEPARABILITY. If any portion of the provisions hereof shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such portion or provisions in circumstances other than those in
which it is held invalid or unenforceable, shall not be affected thereby, and
each portion or provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law, but only to the extent the same continues to
reflect fairly the intent and understanding of the parties expressed by this
Agreement taken as a whole.
12.9 HEADINGS. Section and paragraph headings are not part of this
Agreement and are included solely for convenience and are not intended to be
full or accurate descriptions of the contents thereof.
12.10 NOTICES. Any notice or other communication required by or which
may be given pursuant to this Agreement shall be in writing and mailed,
certified or registered mail, postage prepaid, return receipt requested, or
overnight delivery service, such as Fedex or Airborne Express, prepaid, and
shall be deemed given when received. Any such notice or communication shall be
sent to the address set forth below:
12.10.1 If for IntegraMed:
Xxxxxxx Xxxxx, President
IntegraMed America, Inc.
Two Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
With a copy to:
Xxxxxx X. Xxxxx, General Counsel
IntegraMed America, Inc.
Two Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 0000
12.10.2 If for REACh:
Xxxxxxx Xxxx, MD, President
Reproductive Endocrine Associates of Charlotte, P.C.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx Xxxxxxx, LLP
Morehead Corporate Plaza, Suite 3000
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Any party hereto, by like notice to the other parties, may designate
such other address or addresses to which notice must be sent.
12.11 ENTIRE AGREEMENT. This Agreement and all attachments hereto
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and thereof, and cancel and supersede all prior agreements
and understandings among the parties hereto, whether oral or written, with
respect to such subject matter.
12.12 NO MEDICAL PRACTICE BY INTEGRAMED. IntegraMed will not engage in
any activity that constitutes the practice of medicine, and nothing contained in
this Agreement is intended to authorize IntegraMed to engage in the practice of
medicine or any other licensed profession.
12.13 CONFIDENTIAL INFORMATION.
12.13.1 During the initial term and any renewal term(s) of
this Agreement, the parties may have access to or become acquainted
with each other's trade secrets and other confidential or proprietary
knowledge or information concerning the conduct and details of each
party's business ("Confidential Information"). At all times during and
after the termination of this Agreement, no party shall directly or
indirectly, communicate, disclose, divulge, publish or otherwise
express to any individual or governmental or non-governmental entity or
authority (individually and collectively referred to as "Person") or
use for its own benefit, except in connection with the performance or
enforcement of this Agreement, or the benefit of any Person any
Confidential Information, no matter how or when acquired, of another
party. Each party shall cause each of its employees to be advised of
the confidential nature of such Confidential Information and to agree
to abide by the confidentiality terms of this Agreement. No party shall
photocopy or otherwise duplicate any Confidential Information of
another party without the prior express written consent of the such
other party except as is required to perform services under this
Agreement. All such Confidential Information shall remain the exclusive
property of the proprietor and shall be returned to the proprietor
immediately upon any termination of this Agreement.
12.13.2 Confidential Information shall not include information
which (i) is or becomes known through no fault of a party hereto; (ii)
is learned by a party from a third-party legally entitled to disclose
such information; or (iii) was already known to a party at the time of
disclosure by the disclosing party.
12.13.3 In order to minimize any misunderstanding regarding
what information is considered to be Confidential Information,
IntegraMed or REACh will designate at each others request the specific
information which IntegraMed or REACh considers to be Confidential
Information.
12.14 INDEMNIFICATION.
12.14.1 IntegraMed agrees to indemnify and hold harmless
REACh, its directors, officers, employees and servants from any suits,
claims, actions, losses, liabilities or expenses (including reasonable
attorney's fees) arising out of or in connection with any act or
failure to act by IntegraMed related to the performance of its duties
and responsibilities under this Agreement. The obligations contained in
this Section 12.14.1 shall survive termination of this Agreement. This
indemnification provision shall apply to both third-party claims and
second-party claims, including, but not limited to, claims, actions,
damages, losses, expenses, or costs (including, but not limited to,
reasonable attorneys' fees and court costs) incurred by one party to
this Agreement as a result of an act, or omission to act, on the part
of the other party, its agents, or employees pursuant to this Agreement
12.14.2 REACh agrees to indemnify and hold harmless
IntegraMed, its shareholders, directors, officers, employees and
servants from any suits, claims, actions, losses, liabilities or
expenses (including reasonable attorney's fees) arising out of or in
connection with any act or failure to act by REACh related to the
performance of its duties and responsibilities under this Agreement.
The obligations contained in this Section 12.14.2 shall survive
termination of this Agreement. This indemnification provision shall
apply to both third-party claims and second-party claims, including,
but not limited to, claims, actions, damages, losses, expenses, or
costs (including, but not limited to, reasonable attorneys' fees and
court costs) incurred by one party to this Agreement as a result of an
act, or omission to act, on the part of the other party, its agents, or
employees pursuant to this Agreement
12.14.3 In the event of any claims or suits in which
IntegraMed and/or REACh and/or their directors, officers, employees and
servants are named, each of IntegraMed and REACh for their respective
directors, officers, employees agree to cooperate in the defense of
such suit or claim; such cooperation shall include, by way of example
but not limitation, meeting with defense counsel (to be selected by the
respective party hereto), the production of any documents in his/her
possession for review, response to subpoenas and the coordination of
any individual defense with counsel for the respective parties hereto.
The respective party shall, as soon as practicable, deliver to the
other copies of any summonses, complaints, suit letters, subpoenas or
legal papers of any kind, served upon such party, for which such party
seeks indemnification hereunder. This obligation to cooperate in the
defense of any such claims or suits shall survive the termination, for
whatever reason, of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
INTEGRAMED AMERICA, INC.
By:/s/Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx, President & CEO
REPRODUCTIVE ENDOCRINE ASSOCIATES OF CHARLOTTE, P.C.
By:/s/Xxxxxxx X. Xxxx, M.D.
-----------------------------------
Xxxxxxx X. Xxxx, M.D., President
The undersigned, as Shareholders of REACh, join in this Agreement with respect
to Section 8.2 hereof.
/s/Xxxx X. Xxxxx, M.D.
------------------------------------
Xxxx X. Xxxxx, M.D.
/s/Xxxxx X. Xxxxx, M.D.
------------------------------------
Xxxxx X. Xxxxx, M.D.
/s/Xxxxxx X. Xxxxxxxxxx, M.D.
------------------------------------
Xxxxxx X. Xxxxxxxxxx, M.D.
/s/Xxxxxxx X. Xxxx, M.D.
------------------------------------
Xxxxxxx X. Xxxx, M.D.
Exhibit 3.1.1
2003 Resources, Products and Services to Partner Practices
[Attached]
Exhibit 7.3
Security Agreement
[Attached]
Exhibit 7.3.3
Continuing General Limited Security Agreement
[Attached]
