AMENDMENT NO. 5 TO MANAGEMENT AGREEMENT
BETWEEN
INTEGRAMED AMERICA, INC.
AND
BAY AREA FERTILITY AND GYNECOLOGY MEDICAL GROUP, INC.
THIS AMENDMENT NO. 5 TO MANAGEMENT AGREEMENT ("Amendment No. 5"), dated
September 19, 2001 by and between IntegraMed America, Inc., a Delaware
corporation, with its principal place of business at One Manhattanville Road,
Purchase, New York 10577 ("IntegraMed") and Bay Area Fertility and Gynecology
Medical Group, Inc., a California medical corporation, with its principal place
of business at 3160 Crow Canyon Road, Suite 150, San Ramon, California 94583
("Bay Area Fertility").
RECITALS:
WHEREAS, IntegraMed and Bay Area Fertility are parties to a Management
Agreement dated January 7, 1997, as amended (the "Agreement");and
WHEREAS, IntegraMed and Bay Area Fertility 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, IntegraMed and Bay Area
Fertility 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
Alameda and Contra Costa, California (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. To the extent
they assist PC in performing medical functions, all Technical Employees
provided by IntegraMed shall be subject to the professional supervision
of PC. The parties agree that the `Decision-Making Authority for
Integrated Entities Criteria' developed by the California Medical
Association which provides a framework for compliance with the
California corporate practice proscriptions shall be utilized by the
parties as a guide with respect to the business services provided under
this Agreement."
3. The Agreement is hereby amended to add the following new Section 4.6:
"4.6 NETWORK ACTIVITIES. PC agrees to 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 6.1.2 is hereby deleted in its entirety and the following
substituted therefor:
"6.1.2 through December 31, 2002, a Base Service Fee, paid
monthly, which includes a licensing fee for use of the names
Reproductive Science Center and Bay Area Fertility, 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, which includes a
licensing fee for use of the names Reproductive Science Center
and Bay Area Fertility, 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. Sections 6.1.3 and 6.1.4 are hereby deleted in their entirety and the
following substituted therefor:
"6.1.3 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 6.1.3 to the contrary,
beginning January 1, 2006, the minimum annual Additional Service Fee paid to
IntegraMed under this Agreement shall not be less than $322,000.00 per year but
in no event shall exceed 20% of PDE, and the maximum annual Additional Service
Fee paid to IntegraMed shall not exceed $644,000.00."
6. The Agreement is hereby amended to add the following new Section 6.4 to
Article 6:
"6.4 INTEREST ON RECEIVABLES. 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 3 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 6.5 to
Article 6:
"6.5 FIXED ASSET INTEREST. PC agrees to pay IntegraMed
interest equal to the prime rate plus 2% of IntegraMed's
primary bank on IntegraMed net fixed assets at the Facilities
in excess of $1,187,146."
8. The Agreement will be captioned "Business Service Agreement between
IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group,
Inc..," and all references to "management services" shall mean "business
services." .
9. All other provisions of the Agreement, as amended, not in conflict with
this Amendment No. 5 remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed this Amendment No. 5 as the
date first written above.
INTEGRAMED AMERICA, INC.
By: /s/Gerardo Canet
--------------------------------
Gerardo Canet, President
BAY AREA FERTILTY AND GYNECOLOGY MEDICAL GROUP, INC.
By: /s/Aronold Jacobson, M.D.
--------------------------------
Arnold Jacobson, M.D., President