AMENDMENT NO. 6 TO MANAGEMENT AGREEMENT
BETWEEN
INTEGRAMED AMERICA, INC.
AND
SHADY GROVE REPRODUCTIVE SCIENCE CENTER, P.C.
THIS AMENDMENT NO. 6 TO MANAGEMENT AGREEMENT ("Amendment No. 6"), dated
September 18, 2001 by and between IntegraMed America, Inc., a Delaware
corporation, with its principal place of business at Xxx Xxxxxxxxxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000 ("INMD") and Shady Grove Reproductive Science Center,
P.C., a Maryland professional corporation, with its principal place of business
at 00000 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("PC").
RECITALS:
WHEREAS, INMD and PC are parties to a Management Agreement dated March
12, 1998, as amended (the "Agreement");and
WHEREAS, INMD and PC wish to amend further the Agreement, in pertinent
part to clarify certain financial and other terms and conditions;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, and as contained in the Agreement, as amended, INMD and PC
agree as follows:
1. Section 2.1.2 is hereby deleted and the following is substituted
therefor:
"2.1.2 Expenses incurred in the recruitment of additional
physicians for PC including, but not limited to employment agency fees,
travel and relocation expenses; and, (i) through December 31, 2001 up
to $175,000 for the first 12 months of each new physician's employment
to cover base salary, and (ii) commencing January 1, 2002, up to
$250,000 annually for a period of three (3) years for each new
physician's employment to cover base salary; provided, however, any
such hire must be approved by the Joint Practice Management Board on a
case-by-case basis; and provided, further, "additional physician" shall
mean a new physician whose hiring is not to replace a physician who has
left PC within 12 months prior to the employment of the new physician,
but whose hiring increases PC's full-time equivalent ("FTE") physicians
to a number greater than PC's FTE physicians for the previous 12
months."
2. Section 3.1.1 is hereby deleted in its entirety and the following
substituted therefor:
"3.1.1 PC hereby engages IntegraMed for the Services.
IntegraMed agrees to provide the Services only in the Counties of
Xxxxxxx, St. Mary's, Xxxxxxx, Prince Xxxxxx'x, Xxxx Arundel, Xxxxxx,
Xxxxxxxxx and Xxxxxxxxxx in the State of Maryland, the District of
Columbia, and the Counties of Loudoun, Fauquier, Fairfax, Prince
Xxxxxxx, Xxxxxxxx and Frederick in the Commonwealth of Virginia
(collectively, the "Territory"), and PC agrees to limit its use of the
Services to the Territory, without prior written consent of IntegraMed.
None of the Services made available to PC include any physician medical
functions."
3. Section 4.7.3 is hereby deleted in its entirety and the following
substituted therefor:
"4.7.3 Participate in IntegraMed network activities and
programs including, but not limited to, using best efforts in offering
IntegraMed Pharmaceutical Services to patients and participating in
other product and service offerings IntegraMed has in effect from time
to time."
4. Section 7.1.3 is hereby deleted in its entirety and the following
substituted therefor:
"7.1.3 through December 31, 2002, a Base Service Fee, paid
monthly, of an amount equal to six percent (6%) of the first
$8.0 million of PC's Revenues; five percent (5%) of PC's
Revenues over $8.0, but less than $12.0 million; and four
percent (4%) of PC's Revenues of $12.0 million and above; and
commencing January 1, 2003, a Base Service Fee, paid monthly,
of an amount equal to six percent (6%) of the first $8.0
million of PC's Revenues; five percent (5%) of PC's Revenues
over $8.0 million, but less than $12.0 million; four percent
(4%) of PC's Revenues of $12.0 million or more, but less than
$16.0 million; and three percent (3%) of PC's Revenues of
$16.0 million or more."
5. Section 7.1.4 is hereby deleted in its entirety and the following
substituted therefor:
"7.1.4 during each year of this Agreement, an Additional
Service Fee, paid monthly but reconciled quarterly, in
accordance with the following table:
Applicable Year Additional Service Fee
--------------- ----------------------
2001 20% of PDE
2002 18% of PDE
2003 16% of PDE
2004 14% of PDE
2005 12% of PDE
2006 and thereafter 10% of PDE
Notwithstanding anything in this Section 7.1.4 to the
contrary, beginning January 1, 2006, the minimum annual Additional Service Fee
paid to IntegraMed under this Agreement shall not be less than $540,000 per year
but in no event shall exceed 20% of PDE, and the maximum annual Additional
Service Fee paid to IntegraMed shall not exceed $1,080,000."
6. The Agreement is hereby amended to add the following new Section 7.2.4
to Article 7:
"7.2.4 PC will be charged monthly interest at an annualized
rate of prime plus two percent (2%) on Receivables with an
average days sales outstanding ("DSO") greater than 60 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 the average of PC's Receivables
resulting from the sum of the Receivables on the last day of
the month and the last day of each of the preceding two months
divided by three are $1.0 million, then PC's DSO equal 65
($1.0 million divided by $15,389), resulting in interest being
charged for the month on $76,945 of PC's Receivables ($15,389
times 5 days) at the rate of .67% (6% prime plus 2% divided by
12), or a $515.53 interest charge."
7. The Agreement is hereby amended to add the following new Section 7.5 to
Article 7:
"7.5 FIXED ASSET INTEREST. PC will incur no interest on
IntegraMed net fixed assets at the Facilities totaling $1.1 million and
below. PC agrees to pay IntegraMed interest equal to the prime rate of
IntegraMed's primary bank on IntegraMed net fixed assets at the
Facilities between $1.1 million and $1.5 million, and prime plus 2% on
IntegraMed net fixed assets at the Facilities in excess of $1.5
million."
8. The Agreement will be captioned "Business Service Agreement between
IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C.," and
all references to "management services" shall mean "business services," and all
references to "Management Company" shall refer to "IntegraMed." .
9. All other provisions of the Agreement, as amended, not in conflict with
this Amendment No. 6 remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed this Amendment No.6 as the
date first written above.
INTEGRAMED AMERICA, INC.
By: /s/Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx, President
SHADY GROVE REPRODUCTIVE SCIENCE CENTER, P.C.
By: /s/Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx, M.D., President
