AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
AMONG
INTEGRAMED AMERICA, INC.
AND
MPD MEDICAL ASSOCIATES (MA), P.C.
AND
PATRICIA MCSHANE, M.D.
THIS AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT ("Amendment No. 1"),
is dated as of November 18, 1998 by and among IntegraMed America, Inc., a
Delaware corporation, with its principal place of business at One Manhattanville
Road, Purchase, New York 10577 ("Management Company"), MPD Medical Associates
(MA), P.C., a Massachusetts professional corporation, with its principal place
of business at Deaconess-Waltham Hospital, Hope Avenue, Waltham, Massachusetts
02254 ("PC") and Patricia McShane, MD, the sole shareholder of PC, residing at
124 Washington Street, Wellesley, Massachusetts 02181 (hereinafter referred to
as "McShane" or "Shareholder").
RECITALS:
Management Company and PC entered into a management agreement dated as
of October 1, 1997 (the "Management Agreement") pursuant to which Management
Company agreed to provide certain management and administrative services;
Management Company is willing to grant to each of McShane, Isaac Z.
Glatstein, MD and Samuel Pang, MD, physician-employees of PC, warrants to
acquire shares of Management Company's Common Stock, based on McShane causing PC
to agree to this amendment so as to extend the term from 10 years to 25 years;
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PC, based on McShane's approval, is willing to extend the Management
Agreement for fifteen (15) years so as to expire twenty-five (25) years from the
Effective Date; and
Management Company and PC desire to, in addition to extending the term
of the Management Agreement, amend other provisions thereof.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the parties hereto
agree as follows:
1. Section 6.3.3 of the Management Agreement is hereby deleted in its
entirety and the following hereby substituted therefor, effective July 1, 1998:
"6.3.3 Commencing July 1, 1998, the outstanding Advances owed by PC to
Management Company from 1996 in the amount of $106,372.00 (One Hundred and Six
Thousand Three-Hundred and Seventy-Two Dollars) (the "Debt") will be repaid from
PDE available to PC in excess of the current $595,000 (Five-Hundred Ninety-Five
Thousand Dollars) aggregate salary draw of McShane, Samuel Pang, MD ("Pang") and
Isaac Glatstein, MD ("Glatstein") (the aggregate draw of McShane, Pang and
Glatstein is referred to as "Threshold PDE" and McShane, Pang and Glatstein are
jointly referred to as "Physicians"). PDE in excess of PC's Threshold PDE will
be distributed 50% to PC as additional PDE for Physicians, as determined by PC,
and 50% to Management Company as payment of the Debt.
2. Section 7.2 of the Management Agreement is hereby deleted in its
entirety and the following hereby substituted therefor, effective July 1, 1998:
"7.2 PDE shall be allocated between Management Company and PC, as
follows:
7.2.1 PDE between $0.00 (zero dollars) and $2.5 million
shall be allocated forty percent (40%) to PC and
sixty percent (60%) to Management Company.
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7.2.1 PDE in excess of $2.5 million shall be allocated
seventy-five percent (75%) to PC and twenty-five
percent (25%) to Management Company.
3. Section 7.3 of the Management Agreement is hereby deleted in its
entirety and the following hereby substituted therefor, effective July 1, 1998:
"7.3 Management Company shall provide certain funding to PC, for the
purpose of Physician draws against PDE, as follows:
7.3.1 During the period July 1, 1998 to June 30, 2002,
Management Company shall make Advances, as necessary, pursuant to Section 6.3 of
this Agreement, to enable PC to fund bi-weekly draws against PDE for (i) McShane
based on an aggregate annualized salary of not less than $110, 000, (ii) Pang
based on an aggregate annualized salary of not less than $110,000 and (iii)
Glatstein based on an aggregate annualized salary of not less than $110,000, so
long as each such Physician shall be employed by PC.
7.3.2 Commencing July 1, 2002 Management Company will not
provide any Advances to PC for the purpose of Physician draws against PDE."
4. A new Section 7.4 is added to the Management Agreement as follows:
"7.4 Dan Tulchinsky, MD ("Tulchinsky") , though eligible for
draws against PDE, will not be eligible to share in any excess PDE. Tulchinsky,
effective July 1, 1998, will be entitled to a salary draw of $125,000.
Additionally, based on specific Revenue-based milestones, Dr. Tulchinsky will be
eligible for an additional $50,000 annually, payable in $10,000 increments, as
more fully set forth in Tulchinsky's employment agreement with PC."
5. A new Section 7.5 is added to the Management Agreement as follows:
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"7.5 PC INCENTIVES.
7.5.1 Physicians will be given five (5)-year
warrants (the "Warrants") to purchase shares of Management Company's Common
Stock in accordance with the terms and provisions of the Warrants.
7.5.2 McShane agrees that in the event PC retains
a full-time Medical Director who commences employment with PC on or before July
1, 1999 ("Medical Director Milestone") and PC achieves PDE of $2.5 million for
PC's 1998 fiscal year ("PDE Milestone") or as an alternative, PC achieves PDE of
either, at least (A) $625,000 for the 4th quarter of 1998, $637,500 for the 1st
quarter of 1999 and $650,000 for the 2nd quarter 1999 ("First Substitute PDE
Milestone") or (B) $1,912,500 in the aggregate for the aforementioned
three-quarter period ("Second Substitute PDE Milestone"), McShane will grant
equity positions in PC to (i) the Medical Director equivalent to 20%, (ii)
Glatstein equivalent to 10% and (iii) Pang equivalent to 10%. McShane will
become a 60% equity owner as a result of such grants. Thereafter, in the event
the Medical Director Milestone and either the PDE Milestone, First Substitute
PDE Milestone or Second Substitute PDE Milestone are achieved, on July 1, 2000,
July 1, 2001 and July 1, 2002, an additional 3.33% of McShane's equity interest
in PC shall be granted to each of the Medical Director, Glatstein and Pang.
Effective, July 1, 2002, McShane will own a 30% equity interest in PC, the
Medical Director will own a 30% equity interest in PC, Glatstein will own a 20%
equity interest in PC and Pang will own a 20% equity interest in PC provided
that PC continues to achieve annual total PDE of $ 2.5 million or above."
7.5.3 The Medical Director will be eligible for an
initial 20% equity interest in PC irrespective of Glatstein and Pang.
7.5.4 In the event that the PC achieves either the
PDE Milestone, First Substitute PDE Milestone or Second Substitute PDE
Milestone, yet a Medical Director mutually acceptable to the PC and the
Management Company has not been hired, if both the PC and the Management Company
have used their reasonable best efforts in the search for a Medical Director,
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the Medical Director Milestone requirement referred to in 7.5.2 and 7.5.3 may be
waived upon mutual agreement of both the PC and the Management Company.
6. The first sentence of Section 8.1 of the Management Agreement is
deleted in its entirety and the following substituted therefor:
"8.1 The term of this Agreement shall begin October 1, 1997 ("Effective
Date") and shall expire twenty-five (25) years after such date unless earlier
terminated pursuant to Article 9 below."
7. All other provisions of the Management Agreement not in conflict
with this Amendment No. 1 remain in full force and effect.
8. This Amendment No. 1 may be executed in any number of separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Amendment No. 1 as the
date first above written.
INTEGRAMED AMERICA, INC. SHAREHOLDER:
By:/s/Gerardo Canet /s/Patricia McShane
------------------------ ------------------------
Gerardo Canet, President Patricia McShane, MD
MPD MEDICAL ASSOCIATES (MA), P.C.
By: /s/Patricia
-----------------------------
Patricia McShane, MD, President
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