EXHIBIT 4.3(D)
PERSONAL RESPONSIBILITY AGREEMENT
THIS PERSONAL RESPONSIBILITY AGREEMENT ("Agreement"), dated January 7,
1997, is made and entered into by and between IntegraMed America, Inc., a
Delaware corporation, with its principal place of business at One Manhattanville
Road, Purchase, New York 10577 ("INMD"), Bay Area Fertility And Gynecology
Medical Group, Inc., a California professional corporation ("P.C."), whose
principal place of business is 5601 Norris Canyon Road, Suite 300, San Ramon,
California 94583, and Arnold Jacobson, M.D., whose mailing address is 2476 Alamo
Glen Drive, Danville, California 94526 ("Jacobson").
I. This Agreement is made with reference to a Management Agreement of even date
herewith (the "Management Agreement") between INMD and P.C., and with reference
to an Asset Purchase Agreement of even date herewith (the "Asset Purchase
Agreement") between INMD and Bay Area Fertility Medical Group, a California
professional partnership ("Partnership").
A. Jacobson and Donald I. Galen, M.D. and Louis N. Weckstein, M.D.
(collectively, "Physicians") are the sole shareholders of P.C., which owns all
of the good will of the Partnership, the entity through which Physicians
exclusively conducted their practice of medicine prior to the formation of P.C.
B. Pursuant to the Management Agreement and the Asset Purchase
Agreement, INMD has transferred to the Physicians or entities representing the
Physicians cash in excess of $1,500,000 and stock in INMD valued at $500,000.
C. The services Physicians have offered through the Partnership and
intend to offer through P.C. are unique in terms of how these services are
rendered and the relative unavailability of similar services from other
physicians, and in terms of Physicians' reputation, and involve both medical
professional and technical services. Through INMD's resources, the parties
intend to maintain and enhance the technology which Physicians offer through
P.C.
D. Physicians intend that P.C. be the entity through which they
henceforth conduct their practice of medicine, and have entered into an
Agreement Among Shareholders (the "Stock Purchase Agreement") and a Shareholders
Employment Agreement effective on or about January 7, 1997, between and among
Physicians and P.C. This Agreement is also made with reference to those
agreements, which define Jacobson's and the other Physicians' respective rights
and responsibilities with respect to P.C. and their medical practices, including
but not limited to governance and compensation terms, a stock buy-sell agreement
and a covenant not to compete.
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E. While it is the objective of the parties to this Agreement and the
above-referencedagreements that the P.C. expand its presence, hire additional
and replacement physicians, and otherwise seek to maintain and establish good
will apart from the continued full-time commitment of each of Jacobson and each
of the other Physicians, the parties also acknowledge that at present the
identity of P.C. is not institutional, but rather is co-extensive with the
individual practices of its current owners.
F. Jacobson recognizes that the success of P.C. and of INMD's
investment in administrative and technologic resources depends on his commitment
and the commitment of each of the other Physicians to continue to practice
medicine exclusively through P.C. INMD has made substantial payments to Jacobson
and the other Physicians to assure their availability and dedication to P.C. and
has made and plans to make a substantial investment in equipment and other
resources for P.C. in reliance on the ability to amortize such investments based
on such assurances from Jacobson and each of the other Physicians.
G. The purpose of this Agreement is to assure INMD that its payments
and commitment of resources is supported by the commitment of Jacobson to
exerting his best efforts to support the operation of P.C. under its Management
Agreement with INMD. Jacobson acknowledges that each of the Physicians has
executed a similar agreement with INMD.
Therefore, INMD, P.C., and Jacobson agree as follow:
1. Term and Termination. This Agreement shall have the same term as the
Management Agreement.
2. P.C. as Representative of Jacobson's Interests. Jacobson
acknowledges that INMD is entering into the Management Agreement with P.C. upon
Jacobson's stipulation that P.C. represents his entire medical practice. It is
agreed, therefore, that for purposes of assuring continuity of the commitments
under the Management Agreement, that P.C. is deemed the alter ego of Jacobson,
with specific rights and responsibilities existing between Jacobson and INMD, as
set forth herein. However, this Agreement shall not serve as evidence to justify
a claim by INMD that Jacobson is liable on an alter ego theory for sums owed by
P.C. under Section 9.1 of the Management Agreement
3. Repayment of Rateable Portion of Right to Manage Fee.
a. Pursuant to Article 7 of the Management Agreement, INMD has
paid P.C., for the benefit of Physicians, a Right to Manage Fee in the sum of
$1,000,000 cash and $500,000 in INMD stock and pursuant to the Asset Purchase
Agreement has paid to Partnership, also for the benefit of Physicians, the sum
of $500,000 for the name "Bay Area Fertility," said $2,000,000 being referred to
herein as the "Payment at Closing.". If, during the first five (5) years of this
Agreement, Jacobson should cease to practice medicine through P.C., except as a
result of death or disability, Jacobson shall be obligated to forthwith pay to
INMD one-third of the portion of the Payment at Closing, calculated in
accordance with Section 9.1.3 of the Management Agreement that would be payable
by P.C. if the Management Agreement terminated as of the date Jacobson ceased to
practice medicine at P.C.'s offices. Said repayment shall also be due in the
event of a reduction in Jacobson's availability to provide the services that he
currently provides, e.g., if Jacobson reduced his medical office hours from
four-and-two- thirds days per week to three-and-two-thirds days per week the
additional multiplier would be twenty-one and four-tenths percent (21.4%), and
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if he increases his vacation from nine weeks per year to ten weeks per year, the
additional multiplier would be eleven percent (11%), in each case multiplied by
the amount that would be paid had Jacobson totally ceased work for P.C. at that
time. Jacobson may pay up to 25% of the sums due INMD under this paragraph in
the form of INMD stock, at its then fair market value. Payments to INMD under
this paragraph shall not entitle Jacobson to any interest in the assets of P.C.
or INMD.
b. The parties acknowledge that through an effective
transition plan, P.C. may add another physician to its practice so that
Jacobson's retirement or other reduction in his availability to P.C. does not
adversely affect INMD revenues under the Management Agreement, but that there
are no assurances of such a transition's success. Jacobson may request INMD to
waive or reduce his repayment obligation by submitting a written transition plan
to INMD for its consideration. Jacobson shall submit such a transition plan as
soon as possible if he plans to reduce his availability to P.C., 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 Jacobson,
P.C., and INMD, that INMD's acceptance of the plan shall be in accordance with
the Management Agreement, and that its agreement to waive or reduce Jacobson's
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 Jacobson by P.C. and P.C.'s shareholders. Approval of the request shall be
discretionary for INMD, but shall not be unreasonably withheld.
c. Jacobson may assign all or a portion of his payment
obligations under this Section to a new or an existing shareholder of P.C. who
has executed the agreements with P.C. and INMD contemplated by this Agreement,
subject to INMD'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 P.C. and in an amendment to this Agreement.
4. P.C.'s Compliance with the Management Agreement. Jacobson agrees to
exert his best efforts to cause P.C. to fulfill each of its obligations under
the Management Agreement.
5. Stock Purchase Agreement and Shareholders Employment Agreement.
a. P.C. agrees to exert its best efforts to: (I) comply with
the terms of the Stock Purchase Agreement and Shareholders Employment Agreement
which, if P.C. does not comply, would excuse Jacobson or any of the other
Physicians or other physician employees or shareholders of P.C. from complying
with his covenant not to compete with P.C., his assignment of all Professional
Revenues to P.C. and other terms confirming that physician's commitment to
practicing medicine solely through P.C. for a period of not less than five (5)
years and thereafter not to terminate his employment without cause on less than
180 days written notice (the "Exclusive Practice Covenants") and (ii) enforce
with respect to each of the Physicians and other physician employees and
shareholders of P.C. the Exclusive Practice Covenants and Jacobson agrees to
exert his best efforts to cause P.C. to comply with each of the aforementioned
obligations.
b. P.C. and Jacobson further agree that INMD is a third party
beneficiary of the Exclusive Practice Covenants with respect to Jacobson and the
other Physicians and that the Exclusive Practice Covenants, in the form that is
then most recently approved by INMD, are hereby incorporated in this Agreement
by reference and may be enforced by INMD as well as by P.C. P.C. and Jacobson
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further agree that the Exclusive Practice Covenants and any other terms of the
Stock Purchase Agreement and Shareholders Employment Agreement may not be
amended or modified in a way which may adversely affect the interests of INMD,
including without limitations its rights under the Management Agreement, without
thirty (30) days prior written notice to INMD and the written consent of INMD,
which consent shall not be unreasonably withheld.
6. Scope of Covenant Not to Compete. Jacobson and P.C. agree that the
scope and term of Jacobson's covenant not to compete, insofar as it is for the
benefit of INMD, shall be as follows:
a. The term of the covenant not to compete (the
Non-Competition Period") shall be not less than the greater of five (5) years of
employment of Jacobson by P.C. or three (3) years after the termination of the
Shareholders Employment Agreement, whichever is greater, but in no event shall
extend beyond the first ten (10) years of employment of Jacobson by P.C., that
employment being deemed to have begun, for purposes of this Agreement, on the
initial effective date of this Agreement.
b. The geographic scope of the covenant not to compete (the
"Service Area") is twenty-five (25) miles from any offices maintained by P.C.
for the rendition of professional or other medical services to patients during
the last year of Jacobson's employment by P.C. or replacements of said offices
(the "Current Medical Offices") or offices which it planned to establish or
acquire during that year and in fact did establish or acquire within one year
after the termination of Jacobson's employment (a "Planned Medical Office"). An
office shall be deemed to have been a Planned Medical Office if P.C. had
substantial plans to open such office in that city or area prior to such date,
which plans were discussed at meetings of the Board of Directors or committees
of P.C. which were attended by Jacobson or minutes of which, whether in draft or
approved form, were provided to Jacobson, whether or not P.C. entered into
leases, ordered equipment, or secured regulatory approval prior to the
termination date.
c. During the Non-Competition Period, Jacobson agrees that he
shall not advertize or market Infertility Services, engage in the practice of
medicine, or directly or indirectly, own, operate, be employed by, 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 which is competitive with P.C., or would be
competitive with P.C. if P.C. continued to operate, including but not limited to
a Medical Practice which owns, operates, contracts with or manages Medical
Offices within twenty-five (25) miles of a Current Medical Office or Proposed
Medical Office of P.C..
d. For purposes of this Section, the following definitions
shall apply:
(1) The term "Medical Practice" shall include any
form of organization in which Infertility Services, gynecological
services, or other medical diagnostic, care or treatment 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 1% 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.
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(2) The term "Medical Office" includes any location
at which the professional or technical component of Infertility
Services are provided and any other location which a Medical Practice
maintains for patient visits.
e. 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.
f. Clarification of Scope of Non-Competition Covenant. This
Agreement is not intended to prohibit the personal performance of medical care
by Physician on behalf of P.C., provided those services are for patients of
P.C., nor prohibit Physician from fulfilling his contract with P.C., nor
prohibit the Physician from holding any position on the medical staff of any
acute care hospital or the teaching staff of any university.
g. Acknowledgments. P.C., INMD and Jacobson each acknowledges
that: (I) the terms set forth in this Section are necessary for the reasonable
and proper protection of the interests of P.C. and INMD; (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 Jacobson or other disputes under this Agreement or the
Stock Purchase Agreement or the Shareholders Employment Agreement; and (iv) the
P.C. and INMD have been induced to enter into this Agreement and their other
respective agreements with Jacobson, in part, due to the representation by
Jacobson that he will abide by and be bound by the aforesaid covenants and
restraints.
7. Commitment to Pay Management Fees. Jacobson has agreed in the Stock
Purchase Agreement and Shareholder Employment Agreement not to compete with P.C.
during the term of his employment by P.C. and for at least three (3) years
thereafter, and recognizes that in the event that he should compete with P.C.,
INMD would suffer damages in addition to the loss of Jacobson's unique services.
Jacobson therefore agrees that during the term of his Shareholders Employment
Agreement with P.C., 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 P.C., or offers services or
assists other persons in offering services in the Service Area which are similar
to any of those offered by P.C. or planned to be offered by P.C. while he was
still a director, officer or shareholder of P.C. or active in providing services
on behalf of P.C., he shall owe INMD management fees equal to one-twelfth of:
a. One-third of the Cost of Services as defined in the
Management Agreement, which are incurred in the twelve months preceding the
first month in which INMD, in the reasonable exercise of its discretion,
concludes that Jacobson was engaging in such competitive acts so as to
materially adversely affect P.C.'s operations (the "Pre-Competition Period").
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b. One-third of the Base Management Fee which INMD earned
during the Pre- Competition Period.
c. One-third of any other fees earned by INMD under the
Management Agreement during the Pre-Competition Period.
d. One-third of any advances or other payments owed by P.C. to
INMD at the end of the Pre-Competition Period.
These fees shall be payable notwithstanding the dissolution, insolvency,
receivership or bankruptcy of P.C. and any breach of P.C.'s contracts with
Jacobson occasioned by such dissolution, insolvency, receivership or bankruptcy.
8. New Shareholders. P.C. and Jacobson shall require each new
Shareholder of P.C. to enter into an agreement with INMD on substantially the
same terms as this Agreement. Any reallocation of responsibility for repayment
under Section 1 of this Agreement and the parallel provision in the Asset
Purchase Agreement shall be set forth in the new shareholder's Personal
Responsibility Agreement and in an amendment to this Agreement.
9. 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 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.
10. 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.
11. Confidential Information. Jacobson acknowledges and agrees to
maintain the confidentiality of INMD and P.C. Confidential Information as
defined in the Management Agreement and in any agreements he may have with P.C.,
and that any notice to INMD 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.
12. 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.
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13. 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 INMD may assign this Agreement to any
subsidiary or affiliate of INMD without the consent of Jacobson. 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. 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.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California 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 California, County of Contra Costa or
Alameda (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, 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 California or the United States District Court for the Northern
District of California, to whose jurisdiction for such purposes the parties
hereby irrevocably consent and submit.
16. 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.
17. 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.
18. 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:
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If for INMD at:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, NY 10577-2100
Attention: Judith Connell, Vice President
With a copy to:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, NY 105277-2100
Attention: Claude White, General Counsel
If for Jacobson at:
Arnold Jacobson, M.D.
2476 Alamo Glen Drive
Danville, California 94526.
If for P.C. at:
Bay Area Fertility And Gynecology Medical Group
5601 Norris Canyon Road, Suite 300
San Ramon, California 94583
Attention: President
With a copy to:
Frank Gamma, Esq.
Charles Bond & Associates
821 Bancroft Way
Berkeley, California 94710-0226
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.
INTEGRAMED AMERICA, INC.,
A DELAWARE CORPORATION
BY: /s/ Dwight Ryan
--------------------------
DWIGHT P. RYAN
ITS Vice President and CFO
ARNOLD JACOBSON, M.D.
/s/ Arnold Jacobson
--------------------------
ARNOLD JACOBSON, M.D.
BAY AREA FERTILITY AND GYNECOLOGY MEDICAL GROUP, INC.,
A CALIFORNIA PROFESSIONAL CORPORATION
BY: /s/ Arnold Jacobson
-------------------------
ARNOLD JACOBSON
ITS: President
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