PERSONAL RESPONSIBILITY AGREEMENT
XXXXX X. XXXXXX, M.D.
THIS PERSONAL RESPONSIBILITY AGREEMENT ("Agreement"), dated as
of July 1, 1999, is made and entered into by and among IntegraMed America, Inc.,
a Delaware corporation, with its principal place of business at Xxx
Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("IntegraMed"), Xxxxx X. Xxxxxx,
M.D., P.C. a Missouri professional services corporation, about to have a place
of business at Xxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx 00000 ("PC")
and Xxxxx X. Xxxxxx, M.D., residing at 00000 Xxxx 00xx Xxxxxxx ("Xxxxxx").
RECITALS:
This Agreement is made with reference to a Management Agreement dated
as of July 1, 1999 ("Management Agreement") between IntegraMed and PC.
Xxxxxx is the sole shareholders of PC, the entity through Xxxxxx
intends exclusively to conduct his practice of medicine.
Pursuant to the Management Agreement, IntegraMed has paid or will pay
Xxxxxx directly or on his behalf, in the aggregate, $250,000 in cash.
The services Xxxxxx intends to offer through PC are unique in terms of
how these services are rendered and the relative unavailability of similar
services from other physicians, and in terms of Xxxxxx'x reputation, and involve
medical, professional and technical services. Through IntegraMed's resources,
the parties intend to maintain and enhance the technology which Xxxxxx offers
through PC.
Xxxxxx intends that PC be the entity through which Xxxxxx henceforth
conduct his practice of medicine, and has entered into a Physician-Stockholder
Employment Agreement with PC as of July1, 1999 (the "Employment Agreement").
This Agreement is also made with reference to the Employment Agreement, which
defines Xxxxxx'x rights and responsibilities with respect to PC and his medical
practices, including but not limited to compensation terms and a covenant not to
compete.
Xxxxxx recognizes that the success of PC and of IntegraMed's investment
in administrative and technologic resources depends on his commitment to
continue to practice medicine exclusively through PC. IntegraMed has made
substantial payments to Xxxxxx or on his behalf for the exclusive right to
manage PC in accordance with the Management Agreement ("Exclusive Management
Right") , and in reliance on Xxxxxx'x commitment of his availability and
dedication to PC. Moreover, IntegraMed has made and plans to make a substantial
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investment in equipment and other resources for PC in reliance on the ability to
amortize such investments based on such assurances from Xxxxxx.
The purpose of this Agreement is to assure IntegraMed that its payment
for the Exclusive Management Right, and other payments and commitment of
resources, is supported by the commitment of Xxxxxx to exert his best efforts to
support the operation of PC under its Management Agreement with IntegraMed.
Therefore, IntegraMed, PC, and Xxxxxx agree as follow:
1. Term and Termination. This Agreement shall commence on the date that
Management Company makes the first payment pursuant to Section 8.1 of the
Management Agreement and expire three (3) years thereafter (the "Term").
2. PC as Representative of Xxxxxx'x Interests. Xxxxxx acknowledges that
IntegraMed has acquired the Exclusive Management Right, and as such has valued
the Exclusive Management Right based upon Xxxxxx'x stipulation that PC
represents his entire medical practice and that Xxxxxx will devote substantially
all of his professional time, effort and ability to PC.
3. Payment to IntegraMed.
3.1 Pursuant to the Management Agreement, IntegraMed has paid,
or will pay Xxxxxx or on his behalf aggregate consideration of $250,000 (the
"Aggregate Consideration"). If, during the Term of this Agreement, Xxxxxx should
cease to practice medicine through PC, except as a result of death or "permanent
disability", as defined in the Employment Agreement, Xxxxxx shall be obligated
to forthwith pay to IntegraMed a prorata portion of the Aggregate Consideration
determined by deducting the Vested Amount (as hereinafter described) from the
Aggregate Consideration. The Vested Amount shall be determined by multiplying
the number of quarters this Agreement has been in effect, rounded to the nearest
quarter based on the number of days in the quarter, times $20,833.33 (the
product of which is the "Vested Amount"). Payments to IntegraMed under this
paragraph shall not entitle Xxxxxx to any interest in the assets of PC or
IntegraMed. The parties agree that this provision requires a repayment of
consideration as a penalty for breach of the representation that Xxxxxx would
remain employed by PC for a specified time, which induced IntegraMed to enter
into the Management Agreement.
3.2 The parties acknowledge that through an effective
transition plan, PC may add another physician to its practice so that Xxxxxx'x
retirement or other reduction in his availability to PC does not adversely
affect IntegraMed revenues under the Management Agreement, but that there are no
assurances of such a transition's success. Xxxxxx may request IntegraMed to
waive or reduce his repayment obligation by submitting a written transition plan
to IntegraMed for its consideration. Xxxxxx shall submit such a transition plan
as soon as possible if he plans to reduce his availability to PC, but in no
event less than six months before the reduction in his availability. It is
expected that such a plan shall be modified as the result of discussions among
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Xxxxxx, PC, and IntegraMed, that
IntegraMed's acceptance of the plan shall be in accordance with the Management
Agreement, and that its agreement to waive or reduce Xxxxxx'x repayment
obligation shall be mostly, if not wholly, contingent upon the economic results
of the implementation of the plan and shall be secured by sums owed Xxxxxx by
PC. Approval of the request shall be discretionary for IntegraMed, but shall not
be unreasonably withheld.
3.3 Xxxxxx may assign all or a portion of his payment
obligations under this Section to a new or an existing shareholder of PC who has
executed the agreements with PC and IntegraMed contemplated by this Agreement,
subject to IntegraMed's written consent, which shall not be unreasonably
withheld. Such assignment shall be reflected in the Personal Responsibility
Agreement signed by the new shareholder of PC and in an amendment to this
Agreement.
4. PC's Compliance with the Management Agreement. Xxxxxx agrees to
exert his best efforts to cause PC to fulfill each of its obligations under the
Management Agreement.
5. Physician-Shareholder Employment Agreement.
5.1 PC agrees to exert its best efforts to: (i) comply with
the terms of the Employment Agreement which, if PC does not comply, would excuse
Xxxxxx from complying with his covenant not to compete with PC, his assignment
of all Professional Revenues to PC and other terms confirming that Xxxxxx'x
commitment to practicing medicine solely through PC for a period of not less
than five (5) years (the "Exclusive Practice Covenants") and thereafter not to
terminate his employment without cause on less than 180 days written notice and
(ii) enforce the Exclusive Practice Covenants, and Xxxxxx agrees to exert his
best efforts to cause PC to comply with each of the aforementioned obligations.
5.2 PC and Xxxxxx further agree that IntegraMed is a
third-party beneficiary of the Exclusive Practice Covenants with respect to
Xxxxxx and that the Exclusive Practice Covenants set forth in the Employment
Agreement, in the form that is then most recently approved by IntegraMed, are
hereby incorporated in this Agreement by reference and may be enforced by
IntegraMed or PC. PC and Xxxxxx further agree that the Exclusive Practice
Covenants and any other terms of the Employment Agreement may not be amended or
modified in a way which may adversely affect the interests of IntegraMed,
including without limitation, rights under the Management Agreement, without
thirty (30) days prior written notice to IntegraMed and the written consent of
IntegraMed, which consent shall not be unreasonably withheld. Moreover, Xxxxxx
acknowledges that PC and/or IntegraMed are entitled to damages in the event
Xxxxxx breaches the Exclusive Practice Covenants.
6. Scope of Covenant Not to Compete. Xxxxxx and PC agree that the scope
and term of Xxxxxx'x covenant not to compete, insofar as it is for the benefit
of IntegraMed, shall be as follows:
6.1 The term of the covenant not to compete (the
"Non-Competition Period") shall be for a period of one (1) year after the
termination of Physician's employment in the event such termination occurs
during the initial term of the Employment Agreement. The Non-Competition
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Period shall not apply to any termination that occurs after the first 3 years of
employment.
6.2 The geographic scope of the covenant not to compete is
twenty-five (25) miles from any offices ("Non-Compete Area") maintained by PC
for the rendition of professional or other medical services to patients during
the last 12 months of Xxxxxx'x employment by PC.
6.3 During the Non-Competition Period, Xxxxxx agrees that he
shall not advertise or market Infertility Services, engage in the practice of
medicine in which he provides Infertility Services, be an agent of, act as a
consultant for, allow his name to be used by, or have a proprietary interest in,
any Medical Practice providing Infertility Services within the Non-Compete Area.
6.4 For purposes of this Section, the following definitions
shall apply:
6.4.1 The term "Medical Practice" shall include any
form of organization in which Infertility Services are provided to
patients of the Medical Practice or of other physicians, including but
not limited to a sole proprietorship, a partnership, an association, a
professional corporation, a business corporation, or a limited
liability partnership or corporation, a laboratory, an outpatient
clinic, a practice management company or medical services organization
(or MSO). However, ownership of less than 5% of the outstanding
securities of any class of a medical management or managed care
organization traded on a national securities exchange or the NASDAQ
National Market System will not be deemed to be engaging, solely by
reason thereof, in the same business.
6.4.2 The term "Infertility Services" shall have the
same meaning as setforth in the Management Agreement, except that
Xxxxxx shall not be prohibited from providing obstetrics and general
gynecological services.
6.5 Separability. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section is
invalid or unenforceable, each Party agrees that the court making the
determination of invalidity or unenforceability will have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
will be enforceable as so modified after the expiration of time within which the
judgment may be appealed.
6.6 Clarification of Scope of Non-Competition Covenant. This
Agreement is not intended to prohibit the personal performance of medical care
by Xxxxxx on behalf of PC, provided those services are for patients of PC, nor
prohibit Xxxxxx from fulfilling his contract with PC, nor prohibit Xxxxxx from
holding any position on the medical staff of any acute care hospital or the
teaching staff of any university.
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6.7 Acknowledgments. PC, IntegraMed and Xxxxxx each
acknowledges that: (i) the terms set forth in this Section are necessary for the
reasonable and proper protection of the interests of PC and IntegraMed; (ii)
each and every covenant and restriction is reasonable with respect to such
matter, length of time and geographical area; (iii) this Agreement, and this
Section in particular, shall be enforceable notwithstanding any dispute as to
the sums and timing of payments to Xxxxxx or other disputes under this Agreement
or the Employment Agreement; and (iv) the PC and IntegraMed have been induced to
enter into this Agreement and their other respective agreements with Xxxxxx, in
part, due to the representation by Xxxxxx that he will abide by and be bound by
the aforesaid covenants and restraints.
7. Commitment to Pay Management Fees. Xxxxxx has agreed in the
Employment Agreement not to compete with PC during the initial term of his
employment by PC and for at least one (1) year thereafter should employment
terminate at or before the fifth anniversary of employment, and recognizes that
in the event that he should compete with PC, IntegraMed would suffer damages in
addition to the loss of Xxxxxx'x unique services. Xxxxxx therefore agrees that
during the initial term of his Employment Agreement with PC, and during the
Non-Competition Period thereafter, he shall be obligated, with respect to each
month in which he renders services which earn Physician and Other Professional
Revenues, as defined in the Management Agreement, that are not assigned to and
collected by PC, or offers services or assists other persons in offering
services in the Service Area which are similar to any of those offered by PC
while he was still a director, officer or shareholder of PC or active in
providing services on behalf of PC, he shall owe IntegraMed management fees
equal to one-twelfth of:
7.1 the Cost of Services as defined in the Management
Agreement, which are incurred in the twelve months preceding the first
month in which IntegraMed, in the reasonable exercise of its
discretion, concludes that Xxxxxx was engaging in such competitive acts
so as to materially adversely affect PC's operations (the
"Pre-Competition Period").
7.2 the Base Management Fee which IntegraMed earned during the
Pre- Competition Period.
7.3 any other fees earned by IntegraMed under the Management
Agreement during the Pre-Competition Period.
7.4 any Advances or other payments owed by PC to IntegraMed at
the end of the Pre-Competition Period.
These fees shall be payable notwithstanding the dissolution,
insolvency, receivership or bankruptcy of PC and any breach of PC's contracts
with Xxxxxx occasioned by such dissolution, insolvency, receivership or
bankruptcy.
8. Force Majeure. No party shall be liable to the other party 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
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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.
9. Equitable Relief. Without limiting other possible remedies available
to a non- breaching party for the breach of the covenants contained herein,
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.
10. Confidential Information. Xxxxxx acknowledges and agrees to
maintain the confidentiality of IntegraMed and PC Confidential Information as
defined in the Management Agreement and in any agreements he may have with PC,
and that any notice to IntegraMed that documents or other information, however
maintained, is Confidential Information, shall be deemed, for purposes of this
Agreement, to be notice to him that it is Confidential Information.
11. Prior Agreements; Amendments. This Agreement, together with the
Management Agreement and the other agreements referenced herein, supersedes all
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 the
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. Assignment; Binding Effect. This Agreement and the rights and
obligations hereunder may not be assigned without the prior written consent 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
subsidiary or affiliate of IntegraMed without the consent of Xxxxxx. 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.
13. 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. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York to the fullest extent
permitted by law, without regard to the application of conflict of law rules.
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 the State of New York, Westchester County (hereinafter
"Arbitration"). The party seeking determination shall subject any such dispute,
claim or controversy to either (I) JAMS/Endispute or (ii) the American
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Arbitration Association, and the rules of commercial arbitration of the selected
entity shall govern, except with regard to actions for injunctive relief. 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 without limitation,
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 either in the Courts of the State of Maryland or the
United States District Court for the District of New York, to whose jurisdiction
for such purposes the parties hereby irrevocably consent and submit.
15. Severability. 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.
16. Headings; Capitalized Terms. 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. The term
"Infertility Services" and any other capitalized term which is not defined in
this Agreement shall have the same definition it has in the Management
Agreement.
17. 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:
If for IntegraMed at:
Xxxxxxx Xxxxx, President
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
With a copy to:
Xxxxxx X. Xxxxx, General Counsel
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 000000-0000
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If for Xxxxxx at:
Xxxxx X. Xxxxxx, MD
00000 Xxxx 00xx Xxxxxxx
Xxxxxxx, Xxxxxx 00000
If for PC at:
President
Xxxxx X. Xxxxxx, M.D., P.C.
Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Any party hereto, by like notice to the other party, may designate such
other address or addresses to which notice must be sent.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
XXXXX X. XXXXXX, M.D.
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, M.D.
INTEGRAMED AMERICA, INC.
By: /s/Xxxxxx X. Xxxx, Ph.D.
---------------------------------------------
Xxxxxx X. Xxxx, Ph.D., Sr. Vice President and
Chief Operating Officer
XXXXX X. XXXXXX, M.D., P.C.
By: /s/Xxxxx X. Xxxxxx, M.D.
-----------------------------------------------
Xxxxx X. Xxxxxx, M.D., President
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