SERVICE AGREEMENT
Among
INTEGRAMED PHARMACEUTICAL SERVICES, INC.,
IVPCARE, INC.,
And
INTEGRAMED AMERICA, INC.
THIS SERVICE AGREEMENT ("Agreement"), dated January 16, 2002, is made
and entered into by and among IntegraMed Pharmaceutical Services, Inc., a Texas
corporation with a place of business at Xxx Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 ("IPSI"), ivpcare, Inc., a Texas corporation with its principal place
of business at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000 Xxxxxx, Xxxxx 00000 ("IVP"), and
IntegraMed America, Inc., a Delaware corporation with its principal place of
business at Xxx Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("IntegraMed").
Each of IPSI, IVP and IntegraMed is individually referred to herein as a "Party"
and collectively referred to as "Parties."
RECITALS
0.1 WHEREAS, IVP is a licenced pharmacy specializing in dispensing
ingestable, injectable, and infusion drugs, pharmaceuticals, and products
related to the treatment of human infertility, pursuant to the prescription of a
duly licensed and authorized physician ("Pharmaceutical Products"), to end-user
patients ("Customers");
0.2 WHEREAS, IntegraMed has developed, and may develop in the future,
relationships, affiliations and associations with certain infertility medical
practices, as set forth on Exhibit 0.2 attached hereto, as may be amended from
time to time (such existing and any future medical practice and associated
infertility medical practices shall hereinafter be referred to collectively as
the "Medical Practices");
0.3 WHEREAS, IPSI, a wholly-owned subsidiary of IntegraMed, arranges
for the retail distribution of Pharmaceutical Products and educational materials
to Customers of the Medical Practices ("Pharmaceutical Services");
0.4 WHEREAS, IPSI, IVP and IntegraMed are parties to a management
agreement dated effective as of April 21, 1999 (the "Prior Agreement");
0.5 WHEREAS, the Parties desire to amend and restate the Prior
Agreement effective as of the Effective Date provided for herein;
0.6 WHEREAS, IntegraMed will, through a variety of marketing
communications, management, and patient education efforts, introduce Customers
of the Medical Practices to the availability and benefits of the Pharmaceutical
Services and educational programs offered by IPSI (the "Marketing Services"), in
recognition that on-going communciations with the Medical Practices will
facilitate greater penetration and utilization of the Pharmaceutical Services by
the Customers of the Medical Practices; it being specifically understood that
IntegraMed's efforts shall not be the sole marketing efforts to the Medical
Practices, but shall be in addition to certain sales efforts made by IVP
pursuant to Section 3.1.7.
0.7 WHEREAS, IntegraMed desires to cause IPSI to engage IVP to provide
administrative, business, and pharmacy services as are necessary and appropriate
for IPSI to provide Pharmaceutical Services to Customers of the Medical
Practices (the "Services"); and
0.8 WHEREAS, IVP agrees to provide the Services under the terms and
conditions set forth herein;
0.9 NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants and obligations set forth herein, and for such other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
1.1.1 "Cost of Operations" shall mean a monthly fee paid by
IPSI to IVP on the first day of each month for the items described in
Section 2.1 below. Cost of Operations shall equal that percentage of
the Net Revenues of IPSI realized or accrued during the immediately
preceding month as set forth on Exhibit 1.1.1 attached hereto, as may
be amended from time to time.
1.1.2 "Cost of Pharmaceutical Products" shall mean the cost of
Pharmaceutical Products sold on behalf of IPSI to Customers of Medical
Practices and shall equal IVP's wholesale cost for such Pharmaceutical
Products, as set forth on Exhibit 1.1.2 attached hereto, as may be
amended from time to time.
1.1.3 "Collections" shall mean all payments actually received
by IVP from the distribution of Pharmaceutical Products to Customers of
the Medical Practices and the provision of Pharmaceutical Services
hereunder.
1.1.4 "Cycle Kit" shall mean the packaging format and patient
education materials that IVP supplies to Customers under the trade name
"Cycle Kit(TM)."
1.1.5 "Direct Costs" shall mean the cost of outside
accountants and attorneys who provide services directly to IPSI.
1.1.6 "Employees" shall mean such accounting, nursing,
pharmacy, secretarial, receptionist, and billing and collections
personnel necessary for IVP to provide Pharmaceutical Services on
behalf of IPSI. Such Employees may be employees exclusively of IVP, or
may be independent contractors or leased employees.
1.1.7 "Fiscal Year" shall mean the 12-month period beginning
January 1 and ending December 31 of each year.
1.1.8 "GAAP" shall mean generally accepted accounting
principles applied to public companies in the United States.
1.1.9 "JOB" shall mean the Joint Operating Board described in
Section 5.1 below.
1.1.10 "Month" shall mean a calendar month.
1.1.11 "Net Revenues" shall mean gross revenues that are
earned and recorded in accordance with GAAP less contractual sales
discounts.
1.1.12 "Receivables" shall mean and include all rights to
payment for Pharmaceutical Products sold, including without limitation,
accounts, receivables, contract rights, chattel paper, documents,
instruments and other evidence of Customer indebtedness to IVP,
policies and certificates of insurance relating to any of the
foregoing, and all rights to payment, reimbursement or settlement of
insurance or other medical benefit payments assigned to IVP by patients
pursuant to any Preferred Provider, HMO, capitated payment agreements
or other agreements between IVP and a payer, recorded each month (net
of adjustments).
ARTICLE 2
COST OF OPERATIONS
2.1 OPERATIONS. Operations shall include, and the fee defined as Costs
of Operations in Section 1.1.1 hereof shall reimburse, cover, and fully
compensate IVP for the following costs and expenses:
2.1.1 Salaries, fringe benefits, payroll taxes, and other
costs of employing or retaining Employees to provide the Services, as
defined in Section 0.7 hereof;
2.1.2 Any sales and use taxes assessed against IVP related to
provision of the Services ;
2.1.3 Professional and regulatory licensure fees;
2.1.4 Insurance premiums that are paid with respect to the
insurance delineated in Article 11 below.
2.1.5 Such other costs and expenses actually incurred by IVP
reasonably necessary for the provision of the Services.
2.2 Notwithstanding anything to the contrary contained herein, Cost of
Operations shall not include the following:
2.2.1 Direct Costs;
2.2.2 The Service Fee;
2.2.3 Any federal or state income or franchise taxes of IPSI
or IVP; or
2.2.4 Cost of Pharmaceutical Products.
ARTICLE 3
DUTIES AND RESPONSIBILITIES OF IVP
3.1 SERVICES AND ADMINISTRATION. IVP agrees to provide the Services
delineated in this Section 3.1, all of which shall be fully compensated by and
included in the Cost of Operations, applicable Sales Force Intervention Fee and
the Service Fee, if any.
3.1.1 IPSI hereby appoints IVP as IPSI'S sole and exclusive
agent and administrator to distribute Pharmaceutical Products to
Customers of the Medical Practices and grants IVP all the necessary
authority to carry out its duties and responsibilities pursuant to the
terms of this Agreement.
3.1.2 IVP shall xxxx patients and collect fees for
Pharmaceutical Products supplied to Customers of the Medical Practices.
Pursuant to Section 7.1, IPSI will purchase the Receivables arising
from Pharmaceutical Products supplied to Customers of the Medical
Practices and IPSI hereby appoints IVP during the Term of this
Agreement to be its true and lawful attorney-in-fact, for the following
purposes: (a) to collect the Receivables; (b) to receive payments from
insurance companies, prepayments received from health care plans, and
all other third-party payors; (c) to open in the name of IPSI such
savings, checking, and other accounts at such financial institutions as
IVP deems appropriate; (d) to take possession of and endorse in the
name of IPSI any notes, checks, money orders, and other instruments
received in payment of the Receivables (e) to deposit, in such
account(s) as IPSI shall designate, all such payments received; and (f)
with the consent of IPSI, not to be unreasonably withheld, to initiate
the institution of legal proceedings in the name of IPSI, to collect
any accounts and monies owed to IPSI, to enforce the rights of IPSI as
creditor under any contract or in connection with the rendering of any
service, and to contest adjustments and denials by governmental
agencies (or its fiscal intermediaries) as third-party payors.
3.1.3 IVP shall supervise and maintain (on behalf of IPSI) all
files and records relating to accounting and billing records, and
collection records. Prescription records shall at all times be and
remain the property of IVP and be readily accessible to IPSI. IVP's
maintenance 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 records
relating to patients 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. IVP may utilize 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. IPSI shall
have unrestricted access to all of such records at all times and such
right shall survive any termination of this Agreement.
3.1.4 IVP shall maintain all reasonably necessary management,
administrative, supervisory, nursing, pharmacy, clerical, accounting
and bookkeeping employees necessary to provide, and IVP shall provide,
quality and competent pharmacy services to Customers of the Medical
Practices on behalf of IPSI. IVP shall provide such computer services,
printing, postage and duplication services, and any other necessary or
appropriate administrative services reasonably necessary for the
provision of Pharmaceutical Services to Customers of the Medical
Practices. IVP shall have the responsibility for hiring, supervising,
promoting, reprimanding, suspending, and/or reinstating and terminating
its employees consistent with IVP's policies and procedures.
3.1.5 IVP shall arrange for such legal and accounting services
as may be reasonably required in the ordinary course of providing the
Pharmaceutical Services; provided, however, that IVP shall have no
authority to arrange for any legal or accounting services to the extent
that the interests of IVP and IPSI in the matter in question shall be
adverse. IVP will maintain all bookkeeping services necessary to
support the Pharmaceutical Services made available to Customers of the
Medical Practices, including, without limitation, maintenance, custody,
and supervision of all business records, papers, documents, ledgers,
journals and reports, and the preparation, distribution, and
recordation of all bills and statements for services rendered by IPSI,
including the billing and completion of reports and forms required by
insurance companies, governmental agencies, or other third-party
payors.
3.1.6 IVP shall open appropriate bank accounts in the name of
IPSI and shall deposit the proceeds of all Capitalization Loans and all
Purchased Receivables Collections in such bank accounts and pay Costs
of Operations, Costs of Pharmaceutical Products, Direct Costs, the
Service Fee, if any, taxes, the repayment of Capitalization Loans, and
the distribution of Net Profits from such bank accounts.
3.1.7 In connection with any Pharmaceutical Products sold to
Customers of the Medical Practices, IVP shall provide CycleTriage,
CycleTrack, CycleKits and any patient educational materials in the same
manner as it provides such to Customers purchasing Pharmaceutical
Products directly from IVP. Monthly sales call report documentation
shall be provided to IPSI and IntegraMed.
3.1.8 IVP (a) shall purchase and maintain in its inventory,
sufficient Pharmaceutical Products as may be necessary from time to
time to provide Pharmaceutical Services to Customers of the Medical
Practices in a timely fashion; provided, however, a minimal inventory,
not to exceed the dollar amount set forth on Exhibit 3.1.8 shall be
maintained by IVP at all time during the Term of this Agreement; (b)
shall invoice IPSI, at the Cost of Pharmaceutical Products, for such
Pharmaceutical Products as are necessary to fill the orders of
Customers of the Medical Practices; and (c) shall distribute such
Pharmaceutical Products to Customers of the Medical Practices in
accordance with all applicable laws and regulations and as prescribed
by physicians associated with the Medical Practices. Cost of
Pharmaceutical Products shall be paid by IPSI to IVP under the
following schedule: Pharmaceutical Products shipped to Customers of
Medical Practices during the first 15 days of a month shall be paid for
on the 25th day of such month; Pharmaceutical Products shipped to
Customers of the Medical Practice during the 16th day through the end
of the month shall be paid on the 10th day of the immediately
succeeding month.
3.2 FINANCIAL PLANNING AND GOALS. IVP shall prepare an annual capital
and operating budget for IPSI reflecting the anticipated revenues and expenses.
IVP shall present the budget to the JOB for its approval at least 30 days prior
to the commencement of the Fiscal Year. If the JOB does not agree on the budget
or any aspect thereof for any Fiscal Year, the budget for the preceding Fiscal
Year shall serve as the budget until such time as a budget is approved.
3.3 FINANCIAL STATEMENTS.
--------------------
3.3.1 IVP shall arrange for the preparation of, and within 30
days following the end of each Fiscal Year shall present to IPSI, (a) a
balance sheet, dated as of the last day of such Fiscal Year; (b) a cash
flow statement showing the cash flows for the month and for the entire
Fiscal Year then concluded; and (c) a statement showing the income and
expenses of IPSI for the month and for the entire Fiscal Year then
concluded. At the election of IntegraMed, expressed in writing to IVP
at least 90 days prior to the end of a Fiscal Year, the financial
statements referred to in this Section 3.4 shall be audited by
PriceWaterhouseCoopers or other independent certified public account
approved by the JOB. IVP's failure to present annual financial
statements to IPSI in accordance with this Section 3.4.1 within 45 days
following the end of the Fiscal Year shall be deemed a material breach
subject to Section 9.1.2 below.
3.3.2 IVP shall prepare, and within six days following the end
of each month shall present to IPSI, (a) an unaudited balance sheet,
dated as of the last day of such month; (b) a cash flow statement
showing the cash flow for the month and for the Fiscal Year to date;
and (c) a statement showing the income and expenses of IPSI for such
month and for the Fiscal Year to date.
3.4 INVENTORY AND SUPPLIES. IVP shall order and purchase inventory and
supplies, other than Pharmaceutical Products governed by Section 3.1.8 of this
Agreement, and such other materials that are reasonably requested by IPSI to
enable IPSI'S Pharmaceutical Services to be conducted in a cost-effective
manner.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF INTEGRAMED AND IPSI
4.1 PARTICIPATION IN MANAGEMENT. IPSI, while delegating to IVP the
fulfillment of Pharmaceutical Services to Customers of the Medical Practices
through this Agreement, shall nonetheless actively participate in the management
of IVP's fulfillment of Pharmaceutical Services to Customers of the Medical
Practices through its participation in the JOB. IntegraMed, as the sole
shareholder of IPSI, shall participate in the supervision of IPSI through (a)
its election of its representative to the JOB; and (b) its review, supervision,
and/or audit of the Services provided under this Agreement. IntegraMed hereby
agrees that all compensation, expenses, and travel costs for its officers,
directors, employees, and consultants, shall be paid by IntegraMed.
4.2 COOPERATION WITH IVP. IPSI and IntegraMed agree that during the
Term of this Agreement, they will use their best efforts to cause their officers
and employees to execute such documents, agreements, notifications, and consents
and take such steps reasonably necessary to assist IVP in providing its Services
under this Agreement and in billing and collecting for Pharmaceutical Products
sold.
4.3 SALES AND MARKETING. IntegraMed shall provide marketing services on
behalf of IPSI in the form of Customer education concerning the availability of
the Pharmacuetical Products and training Medical Practice personnel on the
availabilty of the Pharmaceutical Products. IntegraMed shall prepare an annual
sales and marketing plan for IPSI detailing its anticipated activities in such
regard. IntegraMed shall present the plan to the JOB for its approval at least
45 days prior to the commencement of the Fiscal Year. If the JOB does not agree
on the plan or any aspect thereof for any Fiscal Year, the plan, or portion of
the plan in disagreement, for the preceding Fiscal Year shall serve as the plan
until such time as a plan is the subject of agreement. Monthly marketing
activity documentation will be provided to IVP by IPSI and IntegraMed.
4.4 ADDITIONAL COVENANTS OF IPSI AND INTEGRAMED. IPSI hereby covenants
that, during the Term of this Agreement, it will not do any of the following:
(a) except with the consent of the JOB, enter into any line of business other
than the sale of Pharmaceutical Products and Pharmaceutical Services pursuant to
this Agreement; (b) incur any indebtedness except as contemplated in this
Agreement; or (c) merge, consolidate, liquidate, or sell all or substantially
all of its assets. IntegraMed hereby covenants that, during the Term of this
Agreement, it will not sell, assign, convey, or transfer its stock in IPSI.
Either of IPSI'S or IntegraMed's breach of this Section 4.4 shall be deemed a
material breach subject to Section 9.1.2 below.
ARTICLE 5
JOINT DUTIES AND RESPONSIBILITIES
5.1 FORMATION AND OPERATION OF JOINT OPERATIONS BOARD. IVP and
IntegraMed shall establish a Joint Operations Board ("JOB"), which shall be
responsible for developing management and administrative policies for the
overall provision of the Services by IVP and IntegraMed hereunder. IntegraMed
and IVP shall each be entitled to elect two members to the JOB, provided,
however, that each party shall be allowed only one vote on each matter submitted
to the JOB for its vote. The representatives of IntegraMed and IVP on the JOB
shall be either directors or executive officers of their respective parties.
5.2 DUTIES AND RESPONSIBILITIES OF THE JOB. The JOB shall have the
following duties and responsibilities:
5.2.1 ANNUAL BUDGETS AND MARKETING PLANS. All annual capital
and operation budgets prepared by IVP, and all sales, marketing,
advertising, and promotions plans prepared by IntegraMed, shall be
subject to the review, amendment, approval, and/or disapproval of the
JOB. Approval shall not be unreasonably withheld.
5.2.2 CAPITALIZATION LOANS. The JOB shall have the sole power
to authorize and direct Capitalization Loans.
5.2.3 STRATEGIC PLANNING. The JOB shall develop long-term
strategic plans, from time to time.
5.2.4 RETAIL PRICING POLICIES. The JOB shall establish retail
pricing policies.
5.2.5 PROVIDER CONTRACT. The JOB shall have veto authority
over all managed care, PPO, HMO, Medicare risk and other provider
contracts.
ARTICLE 6
FEES
6.1 IVP's FEES. IVP shall be paid the following for Services rendered
pursuant to this Agreement:
6.1.1 The monthly fee which represents Cost of Operations, as
defined in Section 1.1 and Exhibit 1.1.1;
6.1.2 A Service Fee, accrued and paid monthly, but reconciled
to IPSI'S annual results of operations, equal to 50% of the net income
before tax (determined in accordance with GAAP and without reference to
the Service Fee), provided, however, that at any time during which
Capitalization Loans are outstanding, payment (but not accrual) of the
Service Fee shall be limited to Net Available Cash of IPSI. "Net
Available Cash" of IPSI shall mean the amount resulting from (a) all
Collections and other income actually received during the preceding
month; less the sum of (b) all Costs of Pharmaceutical Products; (c)
all Cost of Operations for such month; (d) Direct Costs for such month;
(e) the payment of interest and the repayment, if any, of the current
principal portion of all Capitalization Loans during such month; and
(f) a reserve, in an amount determined by the JOB, for anticipated
expenses, capital needs, or contingencies of IPSI and for the payment
of all applicable income, franchise, property, and payroll taxes of
IPSI for such month (calculated after deduction of expenses of the
Service Fee); and
6.1.3 A Sales Force Intervention Fee equal to 3% or 1%, as
applicable, of Revenues.
6.2 PRIORITY OF PAYMENTS. IVP, IntegraMed, and IPSI hereby covenant
that all payments from accounts of IPSI shall be paid by IPSI to IVP and
IntegraMed in the following order of priority: (a) the payment of Costs of
Pharmaceutical Products; (b) the payment of Costs of Operations; (c) the payment
of Direct Costs; (d) the payment or reserve for payment of interest accrued on
Capitalization Loans to IVP and IntegraMed (or other lender), pari passu; (e)
the payment or reserve for payment of the current portion of the Capitalization
Loans to IVP and IntegraMed (or other lender), pari passu; and (f) the payment
of the Service Fee to IVP and the payment of dividends to IntegraMed (not to
exceed the amount of the Service Fee) pari passu.
ARTICLE 7
NET REVENUES AND ACCOUNTS RECEIVABLE
7.1 The parties agree that IVP in providing the Services hereunder
shall have no risk for Collections resulting from Net Revenues hereunder. In
that connection, on or before the 20th business day of each month, IVP shall
reconcile the Receivables arising from the sale of Pharmaceutical Products to
Customers of the Medical Practices during the previous calendar month. Subject
to the terms and conditions of this Agreement, IVP hereby sells and assigns to
IPSI as absolute owner, and IPSI hereby purchases from IVP the Receivables, at
their face amount, hereafter owned by or arising in favor of IVP on or before
the 20th business day of each month. All Receivables are sold on a without
recourse basis. IVP shall transfer or pay such amount of funds to IPSI equal to
the Receivables less Compensation due IVP pursuant to Section 6.1. IVP shall
cooperate with IPSI and execute all necessary documents in connection with the
purchase and assignment of such Receivables to IPSI or at IPSI's option, to its
lender.
7.2 As part of the Services rendered hereunder, IVP shall collect the
Receivables on behalf of IPSI in accordance with policies and procedures
established from time to time by IPSI. All collections in respect of such
Receivables shall be deposited in a bank account at a bank designated by IPSI.
To the extent IVP comes into possession of any payments in respect of such
Receivables, IVP shall direct such payments to IPSI for deposit in bank accounts
designated by IPSI.
7.3 No Medicare or Medicaid Receivables due to IVP shall be purchased
by IPSI hereunder.
ARTICLE 8
EXCLUSIVE SERVICE RIGHT, TERM AND RENEWAL
8.1 IPSI grants IVP the exclusive right to provide the Pharmaceutical
Services on behalf of IPSI during the Term of this Agreement.
8.2 The term of this Agreement shall begin on January 1, 2002 (the
"Effective Date") and shall expire on April 21, 2009 (unless this Agreement is
renewed from time to time as provided in this Section 8.2) or on any earlier
date if this Agreement is terminated pursuant to Article 9 below (the Effective
Date through the date of final expiration or termination shall be referred to as
the "Term of this Agreement"). This Agreement may be renewed by either party, if
within the period of 180 days prior to the date of expiration, one party gives
notice to the other of its intention to continue this Agreement under the same
terms and conditions as set forth herein or under such different terms and
conditions as particularly set forth in the written notice and further providing
that the other party has 30 days from the date of notice to accept, reject, or
modify the offer. If within 30 days the other party does not respond or by
written notice accepts, this Agreement shall continue for an additional 10 years
under the terms and conditions as provided in the notice. In the event the offer
is not accepted, the parties agree to negotiate, in good faith, a renewal of
this Agreement.
ARTICLE 9
TERMINATION OF THE AGREEMENT
9.1 TERMINATION. This Agreement may be terminated by any party to this
Agreement in the event of the following, provided, however, that no party having
the right to terminate this Agreement shall be obligated to exercise such right:
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 if 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 any party shall materially breach
its obligations hereunder, then either of the other parties may
terminate this Agreement by providing 30 days prior written notice to
the breaching party detailing the nature of the breach, provided that
the breaching party shall not have cured the breach within such 30-day
period, or, with respect to breaches that are not curable within such
30-day period, shall not have commenced to cure such breach within such
30-day period and thereafter shall not have cured the breach with the
exercise of due diligence. It shall be a material breach for IVP to
provide the Services in a manner inconsistent with the generally
prevailing standard of care in the delivery of pharmacy services to
Customers, or to provide the Services in a commercially unreasonable
manner or in a manner that wastes or destroys the assets or reputation
of IPSI. IntegraMed and/or IPSI shall have the burden of proving that
IVP has failed to provide the Services in a commercially reasonable
manner or has destroyed the assets or reputation of IPSI in an
arbitration proceeding or court of competent jurisdiction.
9.1.3 ILLEGALITY. Any party may terminate this Agreement
immediately upon receipt of notification by any local, state, or
federal agency or court of competent jurisdiction that the conduct
contemplated by this Agreement is forbidden by law; except that this
Agreement shall not terminate during such period of time as to any
party that contests such notification in good faith and the conduct
contemplated by this Agreement is allowed to continue during such
contest. If any governing regulatory agency asserts that the services
provided by any party under this Agreement are unlawful and such
assertion is not contested by such party (or if contested, 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 terminate with the same
force as if such termination date was the date originally specified in
this Agreement as the date of final expiration of the terms of this
Agreement. Notwithstanding this paragraph, the parties acknowledge that
this Agreement serves the interests of all of the parties. For these
reasons, the parties agree to make such amendments to this Agreement as
are necessary to conform to the opinions, reviews, and/or orders of
regulatory and/or administrative agencies of any jurisdiction, such as
to preserve the legality of this Agreement, provided that such are not
to the material financial detriment of any party.
9.1.4 TERMINATION UPON LOSS OF LICENSE. IPSI may terminate
this Agreement upon 10 days prior written notice to IVP should IVP's
license to practice pharmacy, in any jurisdiction where Pharmaceutical
Services are provided to Customers of Medical Practices, is suspended,
revoked, or not renewed. Any loss, revocation, or failure to renew
licenses of IVP shall be deemed a material breach of this Agreement by
the party or parties whose negligence, fault, or failure to provide
necessary information is the primary cause of such loss, revocation, or
non-renewal.
9.1.5 TERMINATION UPON UNPROFITABILITY. In the event that, at
any time following the date nine months from the Effective Date of this
Agreement, IPSI does not have net income determined in accordance with
GAAP for any period of six consecutive months, then any party may
terminate this Agreement upon 30 days prior written notice to the other
parties.
9.1.6 Terminations pursuant to Sections 9.1.1 through 9.1.5
shall be deemed termination for cause ("Termination for Cause"), and
shall be made by delivering a termination notice, detailing the reasons
therefor, to the non-terminating party, and providing the opportunity
to cure under the provisions of Section 9.1.2 above. for any other
reason shall be deemed termination without cause ("Termination without
Cause").
ARTICLE 10
RIGHTS UPON TERMINATION
10.1 If this Agreement is Terminated for Cause by IPSI or IntegraMed,
then:
10.1.1 The provisions of Articles 11 and 12.1 shall be of no
force and effect.
10.1.2 The license granted by Article 13 shall cease, and IPSI
shall cease to use any such Tradename and cease to utilize any written
materials, for delivery to Customers of Pharmaceutical Products,
supplied by IVP.
10.2 If this Agreement is Terminated for Cause by IVP, then:
10.2.1 The provisions of Articles 11 and 12.2 shall be of no
force and effect.
10.2.2 The license granted by Article 13 shall cease, and IPSI
shall cease to use any such Tradename and cease to utilize any written
materials, for delivery to Customers of Pharmaceutical Products,
supplied by IVP.
10.3 If this Agreement is Terminated without Cause by any party, then:
10.3.1 If IVP is the non-terminating party, then (a) the
provisions of Section 12.1 shall continue to apply for the periods
specified therein; and (b) the license granted by Article 13 shall
cease, and IPSI shall cease to use any such Tradename and cease to
utilize any written materials, for delivery to Customers of
Pharmaceutical Products, supplied by IVP.
10.3.2 If IPSI and IntegraMed are the non-terminating parties,
then (a) the provisions of Section 12.2 shall continue to apply for the
periods specified therein; and (b) the license granted by Article 13
shall cease, and IPSI shall cease to use any such Tradename and cease
to utilize any written materials, for delivery to Customers of
Pharmaceutical Products, supplied by IVP.
10.3.3 The terminating party shall bear any (a) accounting and
bookkeeping; and (b) severance/vacation costs associated with any
employees which directly result from the termination.
10.4 In the event that this Agreement is terminated for any reason,
then IVP shall cease dispensing Pharmaceutical Products to Customers of IPSI as
of the date of notice of termination, and IVP and IPSI covenant to utilize their
best efforts, for a period 90 days prior to the termination date and 30 days
thereafter, or, if the required notice of termination be only 30 days, then for
the notice period and 90 days post-termination, to fully cooperate so as to
effect a transition of the Services to IPSI, IntegraMed or their designee, the
collection of all Receivable earned as of the termination date and the payment
of all trade and accounts payable as of the termination date (the "Transition
Period"). For any services provided by IVP during a Transition Period that
extend beyond the termination date, IVP shall be paid a reasonable fee to be
agreed upon between the IVP and IPSI, but in no event shall such amount be less
than the Cost of Operations and Service Fee, if any, that would have been earned
by IVP during the Transition Period had the Agreement not so terminated.
ARTICLE 11
INSURANCE
11.1 IVP, at its own cost, shall secure and carry insurance, covering
itself and its employees providing services under this Agreement in the minimum
amount of $1 million per incident, $3 million in the aggregate, for professional
negligence and general liability. Such insurance shall name IPSI and IntegraMed
as additional named insureds. IVP shall also carry a policy of public liability
and property damage insurance with respect to the Facilities under which the
insurer agrees to indemnify IPSI and IntegraMed, subject to ordinary
deductibles, 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 IVP. The minimum
limits of liability of such insurance shall be $1 million combined single limit
covering bodily injury and property damage. IPSI and IntegraMed shall be
additional named insureds under the terms of such insurance coverages. A
certificate of insurance evidencing such policies shall be presented to IPSI
within 30 days after the execution of this Agreement. Failure to provide such
certificate(s) with such period shall constitute a material breach by IVP
hereunder subject to the procedures of Section 9.1.2 above.
11.2 IVP shall provide IPSI with written notice, at least 10 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
NON-SOLICITATION AND NON-COMPETITION
12.1 During the Term of this Agreement, and for a period of two years
after the termination thereof (except as provided in Section 10 above), neither
IntegraMed nor IPSI shall, either individually or through an affiliate, (a)
enter into any agreement with another independent person or entity, other than
IVP, to provide services substantially similar to the Services required under
this Agreement; (b) market or sell any pharmaceuticals to any end-user patients
except through IPSI during the Term of this Agreement; or (c) employ or solicit
for employment any employee of IVP, or contact any employee of IVP for the
purpose of encouraging such employee to leave the employment of IVP.
12.2 During the Term of this Agreement, and for a period of two years
after the termination thereof (except as provided in Section 10 above), IVP
shall not, either individually or through an affiliate, (a) market or sell any
Pharmaceutical Products to any patients or Customers of the Medical Practices
except through IPSI (and subject to the terms of this Agreement), provided,
however, that this prohibition shall not apply to the Medical Practices
identified on Exhibit 12.2 attached hereto who had Customers that had purchased
Pharmaceutical Products from IVP prior to the Effective Date of this Agreement;
or (b) employ or solicit for employment any Employee of IPSI (other than
Employees who are employees of or shared employees with IVP or independent
contractors), IntegraMed, or their affiliates ("IPSI Employees"), or contact any
IPSI Employees for the purpose of encouraging such employees to leave their
employment.
ARTICLE 13
Licenses and Confidential Information
13.1 GRANT OF LICENSE. During the Term of this Agreement, IVP hereby
grants to IPSI a nonexclusive, personal, nonassignable, nontransferable,
royalty-free license to use the "Cycle Kit" tradename ("Tradename") in IPSI'S
business. IPSI hereby acknowledges IVP's exclusive ownership of the Tradename.
13.2 TRADE SECRETS, PROPRIETARY AND CONFIDENTIAL INFORMATION. IPSI
hereby acknowledges that it shall have access to and become familiar with
certain management information systems, trade secrets, and proprietary and
confidential information of IVP, as described and scheduled on Exhibit 13.2
("Confidential Information"). IPSI hereby acknowledges IVP's exclusive ownership
of Confidential Information and agrees not to use or disclose such Confidential
Information without the prior written consent of IVP, which consent may be
withheld by IVP in its sole and absolute discretion. IPSI shall not 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 IVP and shall be returned to the proprietor
immediately upon any termination of this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 FURTHER ASSURANCES. Each party hereto agrees to perform any
further acts and to execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.
14.2 PRIOR AGREEMENTS; AMENDMENTS. This Agreement and the accompanying
exhibits represent the entire agreement and understanding of the parties hereto
and supersedes the Prior Agreement, any other prior agreements and
understandings between the parties as to the subject matter covered hereunder,
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.
14.3 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. Subject to such limitations on assignment, 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.
14.4 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.
14.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Any and all claims,
disputes, or controversies arising under, out of, or in connection with this
Agreement or any breach thereof, shall be determined by binding arbitration in
Washington, D.C. (hereinafter "Arbitration"). The party seeking determination
shall subject any such dispute, claim or controversy to the American Arbitration
Association, Washington, D.C., and the rules of commercial arbitration of the
selected entity shall govern. The Arbitration shall be conducted and decided by
three 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 Section shall be brought only in the Courts of the States of New York or
Texas or the United States District Courts for the Southern District of New York
or the Northern District of Texas, to whose jurisdiction for such purposes IPSI,
IntegraMed, and IVP hereby irrevocably consent and submit.
14.6 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 take as a whole.
14.7 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.
14.8 NOTICES. Any notice hereunder shall have been deemed to have been
given only if in writing and either delivered in hand or sent by registered or
certified mail, return receipt requested, postage prepaid, or by United States
Express Mail or other commercial expedited delivery service, with all postage
and delivery charges prepaid, to the addresses set forth below:
14.8.1 If for IPSI:
Xxxxxxx Xxxxx, President & CEO
IntegraMed Pharmaceutical Services, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
14.8.2 If for IVP:
Von L. Best, President & CEO
ivpcare, inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
14.8.3 If for IntegraMed:
Xxxxxxx Xxxxx, President & CEO
IntegraMed America Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Either party hereto, by like notice to the other parties, may designate
such other address or addresses to which notice must be sent.
14.9 INDEMNIFICATION.
---------------
14.9.1 IVP agrees to indemnify and hold harmless IPSI and
IntegraMed, their shareholders, directors, officers, employees and
servants from any suits, claims, actions, losses, liabilities or
expenses (including reasonable attorney's fees and costs) arising out
of or in connection with any act or failure to act by IVP related to
the performance of its duties and responsibilities under this
Agreement. The obligations contained in this Section 14.9.1 shall
survive termination of this Agreement.
14.9.2 IPSI and IntegraMed each agree to indemnify and hold
harmless IVP, its shareholders, directors, officers, employees and
servants from any suits, claims, actions, losses, liabilities or
expenses (including reasonable attorney's fees and costs) arising out
of or in connection with any act or failure to act by IPSI or
IntegraMed related to the performance of its duties and
responsibilities under this Agreement. The obligations contained in
this Section 14.9.2 shall survive termination of this Agreement.
14.9.3 In the event of any claims or suits in which IVP,
IntegraMed, and/or IPSI and/or their directors, officers, employees and
servants are named, each of IVP, IntegraMed, and IPSI 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.
14.9.3 Promptly after the receipt by IPSI or IntegraMed of
notice of any claim or commencement of any action or proceeding subject
to indemnification delineated in Section 14.9.1 ("asserted liability"),
IPSI or IntegraMed, as the case may be, will demand such
indemnification from IVP and proffer the defense to IVP. IVP may
thereafter, at its option, assume such defense at its own expense and
by its own counsel. IVP shall provide written notice to IPSI or
IntegraMed, as the case may be, within 20 days, of its assumption or
declination of such defense. If IVP shall undertake to compromise any
asserted liability, it shall promptly notify IPSI or IntegraMed, as the
case may be, of its intention to do so and IPSI or IntegraMed, as the
case may be, agrees to cooperate fully and promptly with IVP and its
counsel in the compromise and defense of any asserted liability. IVP
shall not enter into any non-monetary settlement hereunder without the
prior written consent of IPSI or IntegraMed, as the case may be.
Notwithstanding the foregoing, IPSI or IntegraMed, as the case may be,
shall have the right to participate in the compromise or defense of any
asserted liability with its own counsel and at its own expense.
14.9.4 Promptly after the receipt by IVP of notice of any
claim or commencement of any action or proceeding subject to
indemnification delineated in Section 14.9.2 ("asserted liability"),
IVP will demand such indemnification from IPSI or IntegraMed, as the
case may be, and proffer the defense to such party. Such party may
thereafter, at its option, assume such defense at its own expense and
by its own counsel. Such party shall provide written notice to IVP,
within 20 days, of its assumption or declination of such defense. If
IPSI or IntegraMed, as the case may be, shall undertake to compromise
any asserted liability, it shall promptly notify the IVP of its
intention to do so and IVP agrees to cooperate fully and promptly with
IVP and its counsel in the compromise and defense of any asserted
liability. Neither IPSI nor IntegraMed shall enter into any
non-monetary settlement hereunder without the prior written consent of
IVP. Notwithstanding the foregoing, IVP shall have the right to
participate in the compromise or defense of any asserted liability with
its own counsel and at its own expense.
14.10 CONSTRUCTION. Each party and its counsel have participated fully
in the review and revision of this Agreement. In construing this Agreement, it
shall be deemed to have been drafted jointly.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
IVPCARE, INC.
By:/s/ Von L. Best
------------------------------------------------------------
Von L. Best, President and CEO
INTEGRAMED PHARMACEUTICAL SERVICES, INC.
By:/s/ Xxxxxxx Xxxxx
---------------------------------------------------
Xxxxxxx Xxxxx, President and CEO
INTEGRAMED AMERICA, INC.
By:/s/ Xxxxxxx Xxxxx
---------------------------------------------------
Xxxxxxx Xxxxx, President and CEO
