SERVICE AGREEMENT
between
INTEGRAMED AMERICA, INC.
and
MPD MEDICAL ASSOCIATES (MA), P.C.
THIS SERVICE AGREEMENT ("Agreement"), dated May 25, 2001 by and
between IntegraMed America, Inc., a Delaware corporation, with its principal
place of business at Xxx Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000
("IntegraMed") and MPD Medical Associates (MA), P.C., a Massachusetts
professional corporation, with its principal place of business located at
Deaconess-Waltham Hospital, Hope Avenue, Waltham, Massachusetts 02254 ("PC").
RECITALS:
PC specializes in gynecological services, treatment of human
infertility encompassing the provision of in vitro fertilization and other
assisted reproductive services ("Infertility Services"). PC provides Infertility
Services through Xxxxx Xxxxxxxxx, M.D., Xxxxxxxx XxXxxxx, M.D. and Xxxxxx Xxxx,
M.D. (collectively referred to as "Physicians") as well as other physician
employees. Physicians have entered into employment agreements with PC.
IntegraMed is in the business of making available to medical providers
certain assets (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".
PC believes the Services will benefit its medical practice and desires
IntegraMed's assistance with various aspects of PC's medical practice through
the utilization of the Services as more particularly set forth herein. PC
acknowledges and agrees that the Services being made available to PC require
PC's cooperation and collaboration, and that IntegraMed, in making the Services
available, makes no warranty or representation that the Services will achieve
PC's desired goals and objectives.
In addition, PC desires access to capital for funding its growth and
development, and IntegraMed desires to provide such capital or access to capital
as provided herein.
IntegraMed and PC entered into a management agreement dated as of
October 1, 1997, as amended, (the "Former Agreement") and desire to amend and
restate the terms and conditions of the Former Agreement.
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, PC 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 "Additional Service Fee" shall mean a monthly fee paid
by PC to IntegraMed in an amount equal to a percentage of PC's monthly
PDE.
1.1.2 "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 PC.
1.1.3 "Assets" shall mean those fixed assets utilized in
connection with the operation of PC'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 PC
to IntegraMed in an amount equal to a percentage of PC's monthly
Physician and Other Professional Revenues.
1.1.5 "Facilities" shall mean the medical offices and
clinical spaces of PC, including any satellite locations, related
businesses and all medical group business operations of PC, which are
utilized by PC 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 PC 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 a Physician-Stockholder, who is an employee of PC or is
otherwise under contract with PC to provide professional services to
PC patients and is duly licensed as a physician in the Commonwealth of
Massachusetts.
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 PC as a result of
professional medical services personally furnished to patients by
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
Physician-Stockholders. 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-Stockholder 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-Stockholder 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 "Physician-Stockholder" shall mean any physician, duly
licensed to practice medicine in a jurisdiction where PC provides
Infertility Services, who is or becomes a stockholder of PC.
1.1.12 "Predistribution Earnings" ("PDE") shall mean (i)
Physician and Other Professional Revenues, less (ii) Cost of Services
and the Base Service Fee.
1.1.13 "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
PC, 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 PC by patients
or pursuant to any Preferred Provider, HMO, capitated payment
agreements or other agreements between PC and a payer, recorded each
month (net of Adjustments).
1.1.14 "Services" shall mean IntegraMed making available
certain assets (including, without limitation, all facilities and
equipment necessary to operate the PC'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.
1.1.15 "Technical Employees" shall mean embryologists and
other laboratory personnel, ultrasonographers, phlebotomists and
technicians who provide services to PC.
ARTICLE 2
COST OF SERVICES AND BASE SERVICE FEE
2.1 "Cost of Services" shall mean all ordinary and necessary expenses
of PC 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 PC, including, without limitation, the following
costs and expenses, whether incurred by IntegraMed or PC:
2.1.1 Salaries and fringe benefits of all IntegraMed
employees employed at PC 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 PC, 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 PC, such as direct costs
of printing marketing materials prepared by IntegraMed;
2.1.4 Any sales and use taxes assessed against PC related to
the operation of PC'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 PC to outside counsel
in connection with matters specific to the operation or internal
affairs of PC such as regulatory approvals required as a result of the
parties entering into this Agreement or developing a shareholder
agreement, revisions to Articles of Incorporation, etc., in an amount
not to exceed $20,000 annually; 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 Physician-Stockholders shall not
be considered Cost of Services.
2.1.7 Health benefits provided to Physician-Employees,
including health and life insurance, and long-term disability;
2.1.8 All insurance necessary to operate PC including fire,
theft, general liability professional liability and malpractice
insurance for Physician-Employees of the PC;
2.1.9 Professional licensure fees and board certification
fees of Physician- Employees, and Other Professional Employees
rendering Infertility Services on behalf of PC;
2.1.10 Membership in professional associations and continuing
professional education for 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 PC; and
2.1.14 Such other costs and expenses directly incurred by
IntegraMed related to PC'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 PC or IntegraMed
other than as provided above;
2.2.3 The Base Service Fee and the Additional Service Fee; or
2.2.4 Any amount paid to or on behalf of any
Physician-Employee, including salary, draw or pension contributions
(all of which come out of PC's share of PDE).
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 PC hereby engages IntegraMed for the Services.
IntegraMed agrees to provide the Services only in the states of
Massachusetts, Maine, Vermont and New Hampshire (the "Territory"), and
PC agrees to limit its use of the Services to the Territory, without
prior written consent from IntegraMed. Upon request of PC, IntegraMed
will consider providing the Services to PC in Connecticut and/or Rhode
Island; provided, however, any determination to provide the Services
shall not be unreasonably withheld.. None of the Services made
available to PC 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 PC's interest. The following Services, as more
particularly described in this Agreement, shall be made available to
PC:
3.1.1.1 Financial Services, including access to
facilities and equipment, fully integrated accounting
and finance programs, and budgeting and reporting.
3.1.1.2 Information and Administrative Services,
including the ARTWorks(R)suite of fertility specific
information systems.
3.1.1.3 Clinical Support Services, including
assistance with Standards Review, Continuous Quality
Improvement, Risk Management systems and
accreditation and access to the Council of Physicians
and Scientists.
3.1.1.4 Clinical Laboratory Services, including
assistance with standards review and access to the
Council of Physicians and Scientists.
3.1.1.5 Marketing Services, including assistance with
marketing development, physician referral development
and managed care contracting.
3.1.1.6 Such other services as IntegraMed will time
to time make available to its network of infertility
practitioners. IntegraMed reserves the right to
alter, modify or cease any Service; provided,
however, IntegraMed will use its best effort to avoid
materially altering PC'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 PC and as directed by PC,
xxxx patients timely and collect professional fees for Infertility
Services rendered by PC at the Facilities, outside the Facilities for
PC's hospitalized patients, and for all other Infertility Services
rendered by any Physician- Employee or Other Professional Employee. PC
hereby appoints IntegraMed for the term hereof to be its true and
lawful attorney-in-fact, for the following purposes: (i) xxxx patients
in PC's name and on its behalf; (ii) collect Receivables resulting
from such xxxxxxxx in PC'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 PC (and/or in the name of any Physician Employee or
Other Professional Employee rendering Infertility Services to patients
of PC) any notes, checks, money orders, and other instruments received
in payment of Receivables; and (v) at PC's request, initiate the
institution of legal proceedings in the name of PC, with PC's
cooperation, to collect any accounts and monies owed to PC, to enforce
the rights of PC as creditor under any contract or in connection with
the rendering of any service by PC, 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 PC) 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 PC 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. PC shall have unrestricted access to all of its records at
all times.
3.1.4 IntegraMed will provide, as requested by PC, 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 PC's medical practice at the Facilities.
3.1.5 With PC's cooperation and participation, IntegraMed
will design and assist with implementing an appropriate marketing
program for PC. PC'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 PC, will assist PC in
recruiting additional physicians, including IntegraMed providing such
administrative functions as advertising for and identifying potential
candidates, checking credentials, and arranging interviews; provided,
however, PC shall interview and make the ultimate decision as to the
suitability of any physician to become associated with PC. All
physicians recruited by IntegraMed and accepted by PC shall be
employees of or independent contractors to PC.
3.1.7 IntegraMed will assist PC in negotiating any managed
care contracts to which PC desires to become a party. IntegraMed will
provide administrative assistance to PC in fulfilling its obligations
under any such contract.
3.1.8 IntegraMed will arrange, in consultation with PC, for
legal and accounting services as may be reasonably required in the
ordinary course of PC's operation.
3.2 FACILITIES. After the Joint Practice Management Board determines
the nature and extent of the facilities needed for PC's medical practice,
IntegraMed will assist PC 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 the PC's medical practice at
the Facilities. IntegraMed will arrange for the cleanliness of the Facilities,
and timely maintenance and cleanliness of the equipment, furniture and
furnishings located therein. IntegraMed will advise, counsel and collaborate
with PC 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, 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 PC,
Other Professional Employees, Technical Employees, support and
administrative personnel, clerical, secretarial, bookkeeping and
collection personnel reasonably necessary for the efficient operation
of PC 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 PC.
3.4 FINANCIAL PLANNING AND GOALS. IntegraMed, in collaboration with
PC, 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 PC'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
cannot agree on PC'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 PC 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 PC'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 PC, but will provide support
documentation in connection with the same. Such support documentation will not
be destroyed without PC's consent.
3.7 INVENTORY AND SUPPLIES. IntegraMed shall order and purchase
inventory and supplies, and such other materials which are equested by PC to
enable PC to deliver Infertility Services in a cost-effective quality manner.
3.8 QUALITY IMPROVEMENT. IntegraMed shall assist PC 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 PC 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 PC'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 PC 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 PC and equipment located at the Facilities,
other than those relating to the practice of medicine or the administration of
drugs by Physician-Employees.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF PC
4.1 PC, in engaging IntegraMed to provide the Services described in
this Agreement, acknowledges that PC'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. PC shall use its best efforts to cause its
Physician-Employees to provide Infertility Services to PC'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-Employee provides Infertility Services on behalf of PC. PC shall
ensure that each Physician-Employee, any Other Professional Employee employed by
PC, and any other professional provider associated with PC is duly licensed to
provide the Infertility Services being rendered within the scope of such
provider's practice. In addition, PC shall require each Physician-Employee to
maintain a DEA number and appropriate medical staff privileges as determined by
PC during the term of this Agreement. In the event that any disciplinary actions
or medical malpractice actions are initiated against any Physician-Stockholder,
Physician-Employee or other professional provider, PC 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. PC 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 Physician-Employees employed by or serving as independent
contractors to PC, and Other Professional Employees employed by PC. 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 PC shall determine that additional physicians are necessary, PC shall
undertake and use its best efforts to select physicians who, in PC's judgment,
possess the credentials and expertise necessary to enable such physician
candidates to become affiliated with PC for the purpose of providing Infertility
Services. PC shall cause each Physician-Employee to enter into an employment
agreement with PC ("Physician Employment Agreement") in such form as is mutually
acceptable to PC and IntegraMed. Except as otherwise provided in Sections 4.7.4
and 5.2.5 of this Agreement, PC shall have complete control of and
responsibility for the hiring, compensation, supervision, evaluation and
termination of its Physician-Employees, although at the request of PC,
IntegraMed shall consult with and advise PC respecting such matters.
4.5 CONTINUING MEDICAL EDUCATION . PC shall require its
Physician-Employees to participate in such continuing medical education as PC
deems to be reasonably necessary for such physicians to remain current in the
provision of Infertility Services.
4.6 PROFESSIONAL INSURANCE . PC 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 PC desires to be made an additional
insured under IntegraMed's professional liability coverage as provided for in
Section 11.2, PC shall cooperate in the obtaining and retaining of professional
liability insurance by assuring that its 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 PC and its Physician-Shareholders, 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. PC,
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 PC as determined by the Joint Practice Management Board. In
furtherance of which:
4.7.1 PC 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 the PC and IntegraMed in writing. PC 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. PC covenants that
should a physician become a shareholder of the PC, that a condition
precedent to the issuance of the shares shall be the ratification of
this Service Agreement.
4.7.2 PC shall not terminate the Physician Employment
Agreement(s) of any Physician or Shareholder, 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 the PC 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. PC covenants to enforce
the terms of each Physician Employment Agreement, including but not
limited to any covenants not to compete and other terms confirming a
Physician-Employee's commitment to practice medicine solely through
the PC for a specified number of years. In addition, in the exercise
of IntegraMed's sole discretion, if the PC 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 PC 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 the PC's covenant to maintain and enforce the
Physician Employment Agreements with any physician now employed or
physicians who may hereafter become employees of the PC, 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 the PC from a physician whose employment is terminated,
shall be paid to IntegraMed in proportion to IntegraMed's loss or
damages.
4.7.4 PC shall retain that number of Physician-Employees as
are reasonably necessary and appropriate for the provision of
Infertility Services. However, PC 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 PC, 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. PC 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 may, on
behalf of the PC, establish and administer the compensation with
respect to such Physician-Employees in accordance with the written
agreement between the PC 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
PC and its Physician-Employees.
4.7.5 PC shall insure that Physician-Employees provide
patient care and clinical backup as required to insure the proper
provision of Infertility Services to patients of the PC at PC's
Facilities. PC shall insure that its full-time Physician-Employees
devote substantially all of their professional time, effort and
ability to PC'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 PC's
Facilities.
4.7.6 PC covenants to obtain necessary licenses and operate
clinical laboratory and tissue bank services in accordance with all
applicable laws and regulations. PC agrees that the Medical Director
or Tissue Bank Director, if applicable, shall be Physician-Employees
or Other Professional Employees, if applicable, of the PC who meet the
qualifications required by applicable State law or regulation, and
that should there be a vacancy in any such position, PC will cause
another Physician-Employee or Other Professional Employee, if
applicable, to fill such vacancy in accordance with applicable State
law.
4.7.7 PC 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 PC. In the event of a termination or
dissolution of PC, or the termination of this Agreement for any
reason, PC and its Physician-Stockholders 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 the PC, assist in the administrative details of such a
Relocation Program for so long as the PC 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 PC or
Physician-Stockholders, PC covenants not to terminate or dissolve as a
professional services corporation except on six months prior written
notice to IntegraMed. PC covenants that such a restriction will be
contained either in PC's by-laws or shareholder agreement among PC'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 PC substantially in
the form contemplated by this Agreement, PC 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 the PC having an interest in any Biological Materials kept at the
Facilities. These obligations shall survive the termination of this
Agreement.
4.7.9 PC 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 PC's
participation and cooperation, PC 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.
PC agrees that during the term of this Agreement, PC 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 PC and its Physician-Employees;
4.8.2 Promote PC's medical practice and participate in
marketing efforts developed by IntegraMed; and
4.8.3 Participate in IntegraMed network activities and
programs, including managed care agreements and IPA arrangements.
4.9 PERSONNEL POLICIES PC 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 PC 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.
4.10 CANCELLATION OF WARRANTS. Contemporaneous with the execution of
this Agreement, each Physician will deliver to IntegraMed, for cancellation, the
Warrants dated November 17, 1998 to acquire IntegraMed Common Stock that were
issued to Physicians in consideration of PC extending the term of the Former
Agreement.
ARTICLE 5
JOINT DUTIES AND RESPONSIBILITIES
5.1 FORMATION AND OPERATION OF JOINT PRACTICE MANAGEMENT BOARD.
IntegraMed and PC 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 PC. The Joint Practice
Management Board will consist of designated representatives from IntegraMed, one
or more PC owners, as determined by PC, such other PC physicians, as appropriate
and determined by PC, and the Executive Director. It is the intent and objective
of IntegraMed and PC that they agree on the overall provision of the Services to
PC. In the case of any matter requiring a formal vote, PC shall have one (1)
vote and IntegraMed shall have one (1) vote. The desire is that IntegraMed and
PC 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. PC 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 PC
operates in a profitable mode which means that PDE is positive on a
monthly basis. Further, PC agrees that in the event PC 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 PC'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 PC shall be reviewed and
approved by the Joint Practice Management Board and shall be based
upon the best interests of PC, and shall take into account capital
priorities, economic feasibility, physician support, productivity and
then current market and regulatory conditions.
5.2.3 MARKETING BUDGET.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 PC, determine, the number and type of
physicians required for the efficient operation of PC. In addition to
any other approvals required under this Agreement or the
Physician-Stockholder Agreements, the approval of the Joint Practice
Management Board shall be required for any modifications to the
restrictive covenants contained in any physician employment agreement.
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 PC a revocable,
non-exclusive and non-assignable license for the term of this Agreement to use
the name REPRODUCTIVE SCIENCE CENTER(R) 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 PC at the Facilities within the Territory.
6.2 FICTITIOUS NAME PERMIT. If necessary, PC 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 PC 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 PC in obtaining any such original,
amended or renewal fictitious name permit.
6.3 RIGHTS OF INTEGRAMED. PC 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, PC shall not in any manner represent
that it has any ownership interest in the Trade Names, and PC's use shall not
create in PC'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 PC shall
inure to the benefit of IntegraMed. PC 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. PC
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 PC or join PC as a
party thereto. PC 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 PC harmless
from any claim, suit, action or expense (including reasonable
attorney's fees) alleging that PC'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, PC 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 PC 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 PC'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 PC'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 PC 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 PC) paid or accrued by IntegraMed pursuant
to the terms of this Agreement;
7.1.3. during each year of this Agreement, a Base Service Fee
("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
PC's Revenues; five percent (5%) of P.C.'s Revenues over $8.0 million,
but less than $12 million; and four percent (4%) of P.C.'s Revenues of
$12 million and above.
7.1.4 For the period January 1, 2001 through December 31,
2001, an Additional Service Fee ("Additional Service Fee"), paid
monthly but reconciled to annual operating results of PC, equal to 33
1/3 % of PDE.
7.1.5 Commencing with January 1, 2002 and continuing until
termination of this Agreement, an Additional Service Fee, paid monthly
but reconciled to annual operating results of PC, equal to 20 % of
PDE.
7.1.6 In the event that Section 7.1.3, Section 7.1.4 and/or
Section 7.1.5 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 Sections 7.1.3, 7.1.4 and 7.1.5 and the Base
Service Fee and Additional Service Fee 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
between IntegraMed and PC, within thirty (30) days from the date of
notice of the Findings, but in no event shall be less than One Million
Two Hundred Fifty Thousand Dollars ($1,250,000.00) 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 Sections 7.1.3, 7.1.4 and/or 7.1.5 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 Sections 7.1.3, 7.1.4 and/or 7.1.5 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.
7.1.7 The right of termination provided for in Section 9.1.3
of this Agreement, if based on the fact that Section 7.1.3, Section
7.1.4 and Section 7.1.5 of this Agreement have 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
7.1.3 and 7.1.4 (or, 7.1.5) 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,
IntegraMed shall reconcile the Receivables of PC arising during the
previous calendar month. Subject to the terms and conditions of this
Agreement, PC hereby sells and assigns to IntegraMed as absolute
owner, and IntegraMed hereby purchases from PC all Receivables
hereafter owned by or arising in favor of PC on or before the 20th
business day of each month. All Receivables are sold on a full
recourse basis. IntegraMed shall transfer or pay such amount of funds
to PC equal to the Receivables less Compensation due IntegraMed
pursuant to Section 7.1. PC 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 PC comes into possession of any payments in
respect of such Receivables, PC shall direct such payments to
IntegraMed for deposit in bank accounts designated by IntegraMed.
7.2.2 Any Medicare or Medicaid Receivables due to PC shall be
excluded from the operation of Section 7.2.1 hereof. Any such
Receivables shall be subject to agreement of PC and IntegraMed with
respect to the collection thereof.
7.2.3 PC will be charged monthly interest at an annualized
rate of prime plus 2% on Receivables with an average days sales
outstanding ("DSO") greater than 85 days for a trailing three-month
period.. For example, if prime is 6% and PC'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 PC's Receivables are $1.5 million,
then PC's DSO equal 97 days ($1.5 million divided by $15,389),
resulting in interest being charged for the month on $184,668 of PC's
Receivables ($15,389 times 12 days) at a rate of 0.67% ( 6% prime plus
2% divided by 12), or a $1,237 interest charge..
7.3 ADVANCES. IntegraMed agrees to advance necessary funds for
PC to meet Cost of Services and, subject to the reserve under Section
7.4, to meet Physician-Employee salaries; provided, however, nothing
herein shall obligate IntegraMed to incur Cost of Services and
Physician-Employee salary Advances in excess of Revenues under this
Agreement in order to sustain PC's operations. 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 PC, to IntegraMed in the event PC's Cost of Services exceed PC'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 draws, salaries or pension
contributions.
7.3.1 Any Advance hereunder shall be a debt owed to IntegraMed
by PC and shall be repaid within 60 days after the Advance. Upon
request of PC, IntegraMed will consider repayment in installments. To
the extent PDE is available for distribution to Physician-Stockholders
for a particular month, IntegraMed is authorized to deduct any
outstanding Advance from the PDE prior to distribution to the
Physician-Stockholders.
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.
Advances shall be evidenced by a security agreement in the form of
Exhibit 7.3.2, giving IntegraMed a collateral interest in all
Receivables of PC and PDE payable to PC Shareholders.
7.4 PDE DUE PC. During the term of this Agreement, IntegraMed shall be
authorized to hold, in reserve solely for repaying Advances or remittance to PC,
PDE belonging to PC in an amount equal to the greater of (i) $120,000 or (ii)
the aggregate of the highest monthly draw, on a trailing 12-month basis, of all
physicians employed by PC. All PDE belonging to PC in excess of (i) or (ii), as
applicable, shall be distributed by IntegraMed to PC and/or to
Physician-Stockholders in accordance with written instructions from PC's
president. Additionally, at the written request of PC's president, IntegraMed
will distribute to PC and/or to Physician-Stockholders all PDE belonging to PC
being held by IntegraMed. In such later event, IntegraMed will immediately cease
issuing salary checks for Physician-Employees and remit to PC its share of
monthly PDE on or about the 20th business day following the month in which PDE
is earned.
7.5 MARKETING DIRECTOR. In the event a Marketing Director is hired for
the benefit of PC and commences employment in 2001, IntegraMed agrees to bear
the cost of such individual's base salary, from the date of hire to December 31,
2001, which will not be treated as a Cost of Services through that date.
ARTICLE 8
TERM AND END OF TERM OPTION
8.1 TERM. The term of this Agreement shall begin as of January 1, 2001
(the "Effective Date") and shall expire August 31, 2007 (the "Term") unless
earlier terminated pursuant to Article 9, below. On or before 180 days prior to
the expiration of the Term, PC shall provide a written election notice (the
"Election Notice") to IntegraMed. Such Election Notice shall state P.C's
election to either (i) extend, for an additional five (5) years (the "Extended
Term"), this Agreement under the terms and conditions of this Agreement existing
at the time of the Election Notice, (ii) exercise the option described in
Section 8.2 below (the "Purchase Election"), or (iii) allow this Agreement to
expire at the end of the Term. In the event that PC fails to provide timely such
Election Notice, or makes an election described in either clause (ii) or (iii)
above, this Agreement shall expire at the end of the Term.
8.1.2 IntegraMed shall honor PC's timely Election Notice,
provided, however, in the event PC elects to extend the Agreement
pursuant to clause 8.1(i), IntegraMed shall have ten (10) business
days from the date of receipt of the Election Notice to provide
written notice to PC that IntegraMed elects not to extend this
Agreement ("Non-Extension Notice"), in which event this Agreement
shall expire at the end of the Term.
8.1.3 On or before 180 days prior to the expiration of the
Term, IntegraMed shall have the right to provide a Non-Extension
Notice to PC, in which event, this Agreement shall expire at the end
of the Term, provided, however, any prior Purchase Election made by PC
shall not be affected by such Non-Extension Notice, and provided
further that PC shall have 30 days from the receipt of any
Non-Extension Notice (whether pursuant to this Section or Section
8.1.2) to provide a written Purchase Election to IntegraMed.
8.2 END OF TERM OPTION. In the event, pursuant to Section 8.1, PC
makes a timely Purchase Election, PC shall have the right at the end of the Term
(the "Acquisition"), to (i) acquire IntegraMed's fixed assets at the Facilities
at their appraised value, (ii) at PC's option, repurchase the Receivables, at
net book value, purchased by IntegraMed from PC (iii) employ such of
IntegraMed's employees at the Facilities as desired, and (iv) pay IntegraMed a
non-extension fee equal to 4.5 times the average annual aggregate of the Base
and Additional Service Fees paid by P.C. to IntegraMed for the last two (2)
years of this Agreement. (the "Non-Extension Fee"). The closing (the "Closing")
of the Acquisition shall take place on or about the last day of the Term. P.C.
shall deliver at the Closing, the dollar amount for the Fixed Assets, 50% of the
Non-Extension Fee and a two-year promissory note ("Promissory Note") for the
balance of the Non-Extension Fee, payable in two equal installments on the first
and second anniversary dates of the Closing, together with interest at an annual
rate of prime, plus two (2%) percent. The Promissory Note shall be guaranteed by
the then Physician-Shareholders.
8.3 CLOSING. In the event at the end of the Term the parties do not
enter into the Extended Term, IntegraMed shall reconcile and make available to
PC and IntegraMed, all amounts due and owing to IntegraMed and PC pursuant to
this Agreement.
8.4 MUTUAL RELEASES. In the event at the end of the Term the parties
do not enter into the Extended Term, upon completion of the reconciliation
provided for in Section 8.3, the parties shall enter into acceptable releases
pursuant to which, among other things, each party (i) releases the other from
any further obligations hereunder and (ii) is subject to no subsequent business
or operational restrictions by the other.
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 PC 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.
PC 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 PC if a Physician's authorization
to practice medicine is suspended, revoked or not renewed and PC has failed to
suspend such physician; provided, however, such action may not be taken until PC
has been given 30 days to resolve such physician's authorization to practice
medicine. PC 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 PC (Section 9.1.1), for a material breach by
PC (Section 9.1.2), or PC 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, PC agrees, within 90 days of the date of termination
of this Agreement, at IntegraMed's option, to purchase from IntegraMed the
IntegraMed's assets utilized directly by PC in the operation of PC business (the
"Assets") as set forth in Sections 10.1.1 and 10.1.3 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 In addition to purchasing the Assets, PC shall pay
IntegraMed any and all outstanding unpaid Advances.
10.1.3 If a purchase is completed under Section 10.1, closing
shall occur within 90 days of the date the option is exercised. PC
shall assume all leases for offices and equipment used directly for
the management and operation of PC's business and may hire such
employees from IntegraMed as it determines are necessary to operate
the medical practice and business. In such event, PC 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 PC In the event this Agreement is terminated by PC
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 PC's option, to sell to PC 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, PC
shall have the option of assuming leases for offices and equipment
used directly for the operation of PC'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 PC 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 PC does not exercise the option
within 90 days of termination, PC 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 PC and
return to PC all security deposits. PC 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 PC 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, PC 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 PC to be made an
additional insured under IntegraMed's professional liability coverage; provided,
however, conditions for being made an additional insured shall be (i) PC
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) PC 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 PC 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 PC within thirty (30) days after such coverage is
effected.
11.3 PC 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 PC are independent
contracting parties. In this regard, the parties agree that:
12.1.1 The relationship between IntegraMed and PC 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 PC;
12.1.2 Notwithstanding the authority granted to IntegraMed
herein, IntegraMed and PC agree that PC 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 PC not specifically vested in IntegraMed
by the terms of this Agreement shall remain with PC;
12.1.4 PC shall, at all times, be the sole employer of the
Physician-Employees, the Other Professional Employees required by law
to be employees of PC and all other professional personnel engaged by
PC 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 PC;
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 PC, 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 PC, and other employees of PC, disposition of PC 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 PC and
licensing, shall remain the sole responsibility of PC and the
individual Physician-Stockholder(s), except with respect to the number
of physicians the PC 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 PC 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 PC, 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 Commonwealth of Massachusetts 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 Commonwealth of Massachusetts, City of Boston (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 Commonwealth of Massachusetts or
the United States District Court for the District of Massachusetts, to whose
jurisdiction for such purposes PC 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.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
With a copy to:
Xxxxxx X. Xxxxx, General Counsel
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
12.10.2 If for PC:
Xxxxxxxx XxXxxxx, M.D., President
MPD Medical Associates (MA), P.C.
d/b/a Reproductive Science Center of Boston
Deaconess-Waltham Hospital
Hope Avenue
Waltham, Massachusetts 02254
With a copy to:
Xxxxxxx Xxxxxxxx, Esq.
Holland & Knight, LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 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 PC will designate at each others request the specific
information which IntegraMed or PC considers to be Confidential
Information.
12.14 INDEMNIFICATION.
12.14.1 IntegraMed agrees to indemnify and hold harmless PC,
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.
12.14.2 PC 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 PC 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.
12.14.3 In the event of any claims or suits in which
IntegraMed and/or PC and/or their directors, officers, employees and
servants are named, each of IntegraMed and PC 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
12.15 Physician-Stockholders. Within 60 days after execution of this
Agreement, PC shall provide IntegraMed with evidence that the
Physician-Stockholders are Xxxxxxxx XxXxxxx, M.D., Xxxxx Xxxxxxxxx, M.D. and
Xxxxxx Xxxx, M.D. and that they are parties to a shareholder 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/Xxxxxx X. Xxxx
--------------------------------------
Xxxxxx X. Xxxx, Xx. Vice President &
Chief Operating Officer
MPD MEDICAL ASSOCIATES (MA), P.C.
D/B/A RESPRODUCTIVE SCIENCE CENTER OF BOSTON
BY:/s/Xxxxxxxx XxXxxxx
---------------------------------
Xxxxxxxx XxXxxxx, M.D., President
EXHIBIT 7.3.2
SECURITY AGREEMENT
[See attached]
