MANAGEMENT AGREEMENT
Between
INTEGRAMED AMERICA, INC.
And
MPD MEDICAL ASSOCIATES, P.C.
THIS MANAGEMENT AGREEMENT is dated as of July 1, 1999, by and between
IntegraMed America, Inc., a Delaware corporation, with its principal place of
business at One Manhattanville Road, Purchase, New York 10577 ("Management
Company") and MPD Medical Associates, P.C., a New York professional services
corporation, with its principal place of business at 200 Old Country Road,
Mineola, New York 11501 ("PC").
RECITALS
PC is a medical practice specializing in gynecology and the treatment
of infertility, including the utilization of in vitro fertilization and assisted
reproductive technology services (all such medical services are collectively
referred to herein as "Infertility Services").
Management Company is in the business of owning certain assets and
providing billing and collection, and management and administrative services to
medical practices specializing in the provision of Infertility Services, and
furnishing such medical practices with the necessary facilities, equipment,
personnel, supplies and support staff (collectively, "Management Services") in
order to assist such medical practices in the business aspects of the practice
of their discipline.
PC and Management Company entered into a management agreement dated as
of June 2, 1997, as amended by agreement dated as of January 1, 1998
(collectively the "Former Agreements") pursuant to which Management Company,
agreed to provide, among other things, Management Services.
PC wishes to continue engaging Management Company to provide the
Management Services and Management Company desires to provide such Management
Services upon the terms and conditions herein set forth. PC and Management
Company have determined the fair market value for the full complement of
Management Services rendered by Management Company and have determined and
agreed to a management fee that will allow PC and Management Company to
establish a relationship permitting each party to this agreement to devote its
skills and expertise to the appropriate responsibilities and functions.
PC and Management Company desire to amend and restate the terms and
conditions of the Former Agreements.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, PC and Management
Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
1.1.1 "Assets" shall mean those fixed assets utilized in
connection with the operation of PC's medical practice.
1.1.2 "Adjustments" shall mean adjustments for refunds,
discounts, contractual adjustments, professional courtesies and other
activities that do not generate a collectible fee as reasonably
determined by Management Company and PC.
1.1.3 "Collections" shall mean the aggregate, over a six (6)
month period, of all Physician and Other Professional Collections.
1.1.4 "Cost of Services" shall mean all ordinary and necessary
expenses of PC and all direct ordinary and necessary operating expenses
of Management Company, without mark-up, incurred in connection with
billing, collection, management and administrative services provided by
Management Company in the management of PC's medical practice, as more
specifically defined in Section 2.1.
1.1.5 "Facilities" shall mean the medical office and clinical
space of PC, including the Mineola and Suffolk Facilities, as defined
in Section 3.2 and any satellite locations, related businesses and all
medical group business operations of PC, which are utilized by PC in
its medical practice.
1.1.6 "Fiscal Year" shall mean the 12 month period beginning
January 1 and ending December 31 of each year.
1.1.7 "Infertility Services" shall mean medical care in
gynecology and the treatment of human infertility, including but not
limited to, the provision of in vitro fertilization and other assisted
reproductive services provided by PC or any Physician Employee and
Other Professional Employee.
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1.1.8 "Management Fee" shall mean an annual fee paid by PC to
Management Company in an amount defined in 6.1.3 of this Agreement.
1.1.9 "Professional Employees" shall mean nurse anesthetists,
physician assistants, nurses, nurse practitioners, psychologists,
embryologists, tissue bank and laboratory personnel and other such
professional employees who may generate professional charges. Such
Professional Employees shall be the employees, or independent
contractors, as the case may be, of the PC.
1.1.10 "Physician Employees" shall mean those individuals who
are employees or members of PC or are otherwise under contract with PC
to provide professional services to PC patients and are duly licensed
as physicians in the State of New York.
1.1.11 "Physician and Professional Collections" shall mean all
fees and revenues actually collected each month by or on behalf of PC
as a result of professional medical services personally furnished to
patients by the PC and other fees or income collected by the PC in its
capacity as a group of professionals, whether rendered in an inpatient
or outpatient setting, including but not limited to, medical director
fees or technical fees from medical ancillary services, consulting fees
and speaking fees.
1.1.12 "Other Employees" shall mean any employee who is not a
Professional Employee or Physician Employee. Each Other Employee shall
be an Management Company employee, unless such employee cannot be
employed by Management Company, in which event such employee shall be
employed by PC.
ARTICLE 2
COST OF SERVICES AND MANAGEMENT FEE
2.1 "Cost of Services" (as defined in Section 1.1.4) includes without
limitation, the following costs and expenses, whether incurred by Management
Company or PC:
2.1.1 Salaries, fringe benefits and direct costs of all Other
Employees of Management Company working directly in the management, operation or
administration of the practice and all salaries, and fringe benefits of all PC
employees (including, without limitation, Professional Employees but excluding
Physician Employees) providing services at PC, along with payroll taxes or all
other taxes and charges now or hereafter applicable to such personnel;
2.1.2 Expenses incurred in the recruitment of additional
physicians for PC, including, but not limited to employment agency fees,
relocation and interviewing expenses and any actual out-of-pocket expenses of
Management Company personnel in connection with such recruitment effort;
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2.1.3 Direct marketing expenses of PC, such as direct costs of
printing marketing materials prepared by Management Company;
2.1.4 Any sales and use taxes assessed against PC related to
the operation of PC's medical practice;
2.1.5 Lease payments, depreciation expense (determined
according to GAAP), taxes and interest directly relating to the Facilities and
equipment, and other expenses of the Facilities described in Section 3.2 below;
2.1.6 Legal fees paid by Management Company or PC to outside
counsel in connection with matters specific to the operation of PC such as
regulatory approvals required as a result of the parties entering into this
Agreement; provided however, legal fees incurred by the parties hereto as a
result of a dispute between the parties shall not be considered a Cost of
Services.
2.1.7 Fringe benefits provided to Physician Employees;
2.1.8 All insurance necessary to operate PC including fire,
theft, general liability and malpractice insurance for Physician-Employees of
the PC;
2.1.9 Professional licensure fees and board certification fees
of Physician Employees and Professional Employees rendering Infertility Services
on behalf of PC;
2.1.10 Membership in professional associations and continuing
professional education for Physician Employees and Professional Employees;
2.1.11 The direct costs in maintaining a Quality Assurance
Program described in Section 3.7 herein;
2.1.12 Cost of filing fictitious name permits pursuant to this
Agreement;
2.1.13 The cost of medical supplies, including but not limited
to drugs, pharmaceuticals, products, substances, items, laboratory supplies,
office supplies, inventory and utilities; and
2.1.14 Such other costs and expenses directly incurred by
Management Company or PC necessary for the management or operation of PC.
2.2 Notwithstanding anything to the contrary contained herein, Cost of
Services shall not include costs of the following:
2.2.1 Costs or expenses not included in the annual budget
prepared by Management Company pursuant to Section 3.4 herein, unless approved
by the Joint Practice Management Board;
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2.2.2 The Management Fee;
2.2.3 Any proportion of Management Company's costs
attributable to its operation of its corporate offices or payment of its
officers or employees who work out of its corporate offices;
2.2.4 Any federal or state income taxes of Management Company
other than as provided above.
2.3 The "Management Fee" shall cover and include all indirect costs of
Management Company including legal, accounting, financial, marketing, management
and administrative assistance provided by Management Company's corporate and
regional staff.
ARTICLE 3
DUTIES AND RESPONSIBILITIES OF MANAGEMENT COMPANY
3.1 MANAGEMENT SERVICES AND ADMINISTRATION.
3.1.1 PC hereby appoints Management Company as PC's sole and
exclusive manager and administrator of all of its day-to-day business functions
and grants Management Company all the necessary authority to carry out its
duties and responsibilities pursuant to the terms of this Agreement. PC and only
PC will perform the medical functions of its practice. Management Company will
have no authority, directly or indirectly, to perform, and will not perform, any
medical function. Management Company may, however, advise PC as to the
relationship between its performance of medical functions and the overall
administrative and business functioning of its practice.
3.1.2 Management Company shall, on behalf of PC, bill patients
and collect professional fees for Infertility Services rendered by PC at the
Facilities, outside the Facilities for PC's hospitalized patients, and for all
other Infertility Services rendered by any Physician Employee or Professional
Employee. PC hereby appoints Management Company for the term hereof to be its
true and lawful attorney-in-fact, for the following purposes: (i) to bill
patients in PC's name and on its behalf; (ii) to collect accounts receivable
resulting from such billing in PC's name and on its behalf; (iii) to receive
payments from insurance companies, prepayments received from health care plans,
and all other third- party payors; (iv) to take possession of and endorse in the
name of PC (and/or in the name of any Physician Employee or Other Professional
Employee rendering Infertility Services to patients of PC) any notes, checks,
money orders, and other instruments received in payment of accounts receivable;
and (v) with the consent of the PC, not to be unreasonably withheld, to initiate
the institution of legal proceedings in the name of PC to collect any accounts
and monies owed to PC, to enforce the rights of PC 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.
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3.1.3 Management Company shall supervise and maintain (on
behalf of PC) all files and records relating to the operations of the
Facilities, including but not limited to accounting and billing records, patient
medical records, and collection records. Patient medical records shall at all
times be and remain the property of PC and shall be located at the Facilities
and be readily accessible for patient care. Management Company's management 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 medical records of each patient 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. Management
Company shall have access to 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. PC
shall have unrestricted access to all of its records at all times.
3.1.4 Management Company shall supply to PC all reasonably
necessary clerical, accounting, bookkeeping and computer services, printing,
postage and duplication services, medical transcribing services, and any other
necessary or appropriate administrative services reasonably necessary for the
operation of PC's medical practice at the Facilities.
3.1.5 Should PC so direct, Management Company shall design and
implement a marketing and public relations program on behalf of PC, with
appropriate emphasis on public awareness of the availability of Infertility
Services from PC, designed to achieve objectives defined by PC. The public
relations program shall be conducted in compliance with applicable laws and
regulations governing advertising by the medical profession. PC shall approve
all advertising and marketing materials prior to use.
3.1.6 Management Company shall assist PC in recruiting
additional physicians, including such administrative functions as advertising
for and identifying potential candidates, checking credentials, and arranging
interviews; provided, however, PC shall interview and make the ultimate decision
as to the suitability of any physician to become associated with PC. All
physicians recruited by Management Company and accepted by PC shall be employees
of or independent contractors to PC.
3.1.7 Management Company shall negotiate, but shall not enter
into, and shall administer all managed care contracts on behalf of PC and shall
consult with PC on all administrative matters relating thereto. The
establishment, or continuation, of all managed contracts between the PC or any
of its Physician Employees and any managed care entity or organization, shall be
based on their financial terms and shall only be with the mutual consent of the
PC and Management Company.
3.1.8 Management Company shall, upon direction of PC, arrange
for legal and accounting services as may be reasonably required in the ordinary
course of the PC's operation, including the cost of enforcing any physician
contract containing restrictive covenants; provided, however, that Management
Company shall have no authority to arrange for any legal or accounting services
to the extent that the interests of Management Company and the PC in the matter
in question shall be adverse nor shall Management Company have any obligation to
make any Advance, as such term is used in Section 6.2, for such services.
Nothing contained herein is intended to authorize Management Company to settle
any claim made by or against PC.
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3.1.9 Management Company shall, upon the request of the PC,
negotiate for and cause premiums to be paid with respect to the insurance
provided for in Article 10.
3.1.10 Management Company shall, take such other reasonable
actions to collect fees and pay expenses of the Facilities in a timely manner as
are deemed reasonably necessary to facilitate the operation of PC's medical
practice at the Facilities.
3.1.11 Management Company shall, pay Cost of Services in the
ordinary course of PC's medical practice, it being understood that Management
Company shall make such payments in the first instance, from Physicians and
Other Collections, after deduction of Management Fees, and, if necessary, by
Advances as contemplated by Section 6.3 hereof.
3.1.12 If, at the end of any quarter, after the payment of all
Service Fees and draws of the Physician Shareholders, there shall be profits to
the PC, Management Company shall, at the direction of the PC, make any
distributions of such profits as requested by the PC, provided that such
distributions leave a reasonable reserve towards the next quarter's Service
Fees.
3.2 FACILITIES.
3.2.1 Facilities. Management Company shall provide the office
space and facilities necessary for the operation of PC's medical practice in
Mineola ["Mineola Facilities"] and Suffolk County [Suffolk Facilities'] [the
Mineola Facilities and Suffolk Facilities are collectively referred to herein as
the "Facilities"], as set forth in Exhibit 3.2 hereto, including but not limited
to, the use of the Facilities, all repairs, maintenance and improvements
thereto, utility (telephone, electric, gas, water) services, customary
janitorial services, refuse disposal and all other services reasonably necessary
in conducting the Facilities' physical operations. Management Company shall
provide for the cleanliness of the Facilities, and timely maintenance and
cleanliness of the equipment, furniture and furnishings located therein.
Management Company shall consult with PC regarding the condition, use and needs
for the Facilities, equipment, services and improvements thereto. The
"build-out" costs for the Suffolk Facilities of approximately One Hundred
Thousand Dollars ($100,000.00) shall be amortized over a ten (10) year period
from completion of the Suffolk Facilities for occupancy ("Construction
Investment").
3.2.2 Upon the mutual agreement of the parties, Management
Company and the PC shall establish such other sites for the operation of the
practice of the PC and, in the absence of a formal written agreement governing
the establishment thereof, all costs shall be added to the Management Company
Construction Investment and Management Company and the PC shall assume all of
the obligations, as to such sites as each has with respect to the Facilities.
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3.3 EXECUTIVE DIRECTOR AND OTHER PERSONNEL.
3.3.1 EXECUTIVE DIRECTOR. Management Company will hire an
Executive Director, subject to the approval of the Joint Practice Management
Board, to manage and administer all of the day-to-day business functions of the
Facilities. The Executive Director, subject to the terms of this Agreement,
shall implement the policies agreed upon by the Joint Practice Management Board
and will perform the administrative duties assigned by Management Company.
3.3.2 PERSONNEL. Management Company shall provide all Other
Employees, who shall include non-professional support personnel and
administrative personnel, clerical, secretarial, bookkeeping, billing and
collection personnel reasonably necessary for the operation of PC at the
Facilities. Such personnel shall be under the direction, supervision and control
of Management Company. If PC is dissatisfied with the services of any Other
Employee, PC shall consult with Management Company, and Management Company shall
in good faith determine whether the employment of that employee warrants
termination. Management Company's obligations to utilize nonprofessional
personnel shall be governed by the overriding principle and goal of facilitating
the PC's provision of high quality medical care and laboratory services.
Management Company shall make every effort, consistent with sound business
practices, to honor the specific requests of PC with regard to the assignment of
Management Company's employees, including the Executive Director.
3.4 FINANCIAL PLANNING AND GOALS. Management Company shall prepare, for
the approval of PC, annual capital and operating budgets reflecting the
anticipated revenues and expenses, sources and uses of capital for growth of
PC's practice and for the provision of Infertility Services at the Facilities.
Management Company shall present the budgets to PC for its approval at least
thirty (30) days prior to the commencement of the Fiscal Year. PC shall specify
the targeted profit margin for PC's practice at the Facilities which shall be
reflected in the overall budget, and Management Company shall manage the PC and
use all reasonable efforts to attempt to reach such target. If the parties do
not agree on the budget for any Fiscal Year, the budget for the preceding Fiscal
Year shall serve as the budget until such time as the Budget is the subject of
agreement. Management Company's ability to disapprove an item in the Budget
shall be limited to its refusal to advance monies to the PC pursuant to Section
6.3 of this Agreement , and payments to Management Company of Service Fees,
pursuant to Section 6.1 of this Agreement, shall have priority to the payment of
any items to which Management Company makes objection.
3.5 FINANCIAL STATEMENTS. Management Company shall prepare annual
financial statements for operations of PC at the Facilities within ninety (90)
days of the close of the Fiscal Year. Management Company shall prepare monthly
financial statements containing a balance sheet and statement of operations,
which shall be delivered to PC within thirty (30) days after the close of each
calendar month.
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3.6 INVENTORY AND SUPPLIES. Management Company shall order and purchase
inventory and supplies, and such other materials which are requested by PC to
enable PC to deliver Infertility Services in a cost-effective manner.
3.7 LICENSES AND PERMITS Management Company shall, on behalf of and in
the name of the PC, coordinate and assist the PC in its application for and
efforts to obtain and maintain all federal state and local licenses,
certifications and regulatory permits required for or in connection with the
operation of the PC and equipment located at the Facilities, other than those
relating to the practice of medicine or the administration of drugs by Physician
Employees.
3.8 QUALITY IMPROVEMENT. Management Company shall assist PC in
fulfilling its obligations to maintain a Quality Improvement Program and in
meeting the goals and standards of such program.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF PC
4.1 PROFESSIONAL SERVICES. PC shall provide to its patients medical
treatment, including but not limited to, Infertility Services which can be
covered by the Management Company insureds insurance program.
4.2 MEDICAL PRACTICE. PC shall use and occupy the Facilities
exclusively for the purpose of providing medical services. The medical practice
conducted at the Facilities shall be conducted solely by physicians or
Professional Employees employed by or serving as independent contractors to PC.
4.3 DIRECTION OF PRACTICE
4.3.1 PC, as a continuing condition of Management Company's
obligations under this Management Agreement, shall at all time during
the Term be and remain
legally organized and operated to provide Infertility Services in a
manner consistent with state and federal laws.
4.3.2 PC covenants that should a physician become a
shareholder of the PC, that a condition precedent to the issuance of
the shares shall be the ratification of this Management Agreement.
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4.3.3 PC covenants to use diligent efforts to cooperate with
Management Company in order to obtain necessary licenses. Management
Company shall be primarily responsible for the administrative
responsibility of pursuing, in behalf of, and in the name of, the PC,
any and all necessary licenses to operate the laboratory and tissue
bank services existing on the date hereof at the Mineola Facility, and
any licenses required at the Suffolk Facility or any other Facility in
accordance with all applicable laws and regulations. PC agrees that the
Medical Director(s) or Tissue Bank Director(s) shall be Physician
Employees or Professional Employees of the PC and that should there be
a vacancy in any such position, the PC will cause another Physician
Employee or Professional Employee to fill such vacancy.
4.3.4 PC acknowledges that it bears all medical obligations to
patients treated at the facilities and covenants that it is responsible
for all tissue, specimens, embryos or biological material ["Biological
Materials"] kept at the Facilities on behalf of the patients (or former
patients) of the PC. In the event of a termination or dissolution of
the PC, or the termination of this Management Agreement for any reason,
the PC and its members shall have the obligation to account to patients
and to arrange for the storage or disposal of such Biological Materials
["Relocation Program"]. Management Company, in such event, shall, at
the request of the PC, assist in the administrative details of such a
Relocation Program for so long as the PC shall request and the
Management Fee shall be paid during that time. These obligations shall
survive the termination of this Agreement.
4.3.5 PC covenants not to liquidate or dissolve as a
Professional Corporation except on six months prior written notice to
Management Company. In the event that any liquidation or dissolution of
the PC occurs, for a reason other than the death or disability of all
of the shareholders, Management Company's obligations under this
Agreement shall cease.
4.4 COLLECTION EFFORTS. PC covenants agrees that during the term of
this Agreement it will use its diligent efforts to cause its Physician Employees
and Professional Employees to execute such documents and take such steps
reasonably necessary to assist billing and collecting for patient services
rendered by PC and its Physician Employees and Professional Employees.
Article 5
Joint Duties and Responsibilities
5.1 FORMATION AND OPERATION OF JOINT PRACTICE MANAGEMENT BOARD.
Management Company and PC will establish a joint practice management board
("Joint Practice Management Board") which will be responsible for developing
management and administrative policies for the effectuation of this Agreement.
The Joint Practice Management Board will consist of designated management
representatives from Management Company, one or more PC owners, as determined by
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PC, such other PC physicians, as appropriate and determined by PC, and the
Executive Director. Management Company's role on the Joint Practice Management
Board will be advisory, except in circumstances where matters for consideration
involve Cost of Services items to be paid by Management Company or Advances by
Management Company, in which event, Management Company shall be entitled to vote
on such matters. For such matters requiring a formal vote, PC shall have one (1)
vote and Management Company shall have one (1) vote. A tie vote will be the same
as a vote against any matter or issue. The Management Company's negative vote
shall mean only that the Management Company shall not advance money for such
matters, by way of either payment of Costs of Services for such matters or
through the making of Advances, and such negative vote shall not, in any manner,
prevent PC from adopting or pursuing such matter.
5.2 DUTIES AND RESPONSIBILITIES OF THE JOINT PRACTICE MANAGEMENT Board.
The Joint Practice Management Board shall have, among others, the following
duties and responsibilities:
5.2.1 ANNUAL BUDGETS AND PROFITABILITY. All annual capital and
operation budgets prepared by Management Company shall be subject to
the review, amendment, approval and disapproval of the Joint Practice
Management Board. PC covenants and agrees to use its best efforts to
assist the Joint Management Board in achieving the projected budgets,
in place from time to time. PC and Management Company agree that,
recognizing changes in circumstances, annual budgets and forecast are
subject to revisions and, accordingly, they will cause the Joint
Practice Management Board to modify the annual budgets, as needed,
including without limitation, staff reductions, to ensure that PC
operates in a profitable mode which means that PDE is positive on a
monthly basis. Further, PC agrees that in the event PC incurs
operational losses at any point during the term of this Agreement,
nothing herein shall obligate Management Company to incur losses under
this Agreement in order to sustain PC's operations.
5.2.2 CAPITAL IMPROVEMENTS AND EXPANSION. Except as otherwise
provided herein, any renovation and expansion plans, and capital
equipment expenditures with respect to PC shall be reviewed and
approved by the Joint Practice Management Board and shall be based upon
the best interests of PC, and shall take into account capital
priorities, economic feasibility, physician support, productivity and
then current market and regulatory conditions.
5.2.3 ADVERTISING BUDGET. All annual advertising and other
marketing budgets prepared by Management Company shall be subject to
the review, amendment, approval and disapproval of the Joint Practice
Management Board.
5.2.4 EXECUTIVE DIRECTOR AND KEY PERSONNEL.
(a) The selection and retention of the Executive Director
pursuant to Section 3.3.1 by Management Company shall be subject to the
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approval of the Joint Practice Management Board. If PC is dissatisfied
with the services provided by the Executive Director, PC shall consult
with Management Company who shall, in good faith, determine whether the
performance of the Executive Director could be brought to acceptable
levels through counsel and assistance, or whether the Executive
Director should be terminated.
(b) Management Company shall follow the recommendations of the
Joint Practice Management Board with respect to the hiring, terminating
or relocating of key personnel at PC Facilities, provided such
recommendations do not cause Management Company to violate any federal,
state or local laws or regulations.
ARTICLE 6
FINANCIAL ARRANGEMENTS
6.1 SERVICE FEES. The compensation set forth in this Article 6 shall be
paid to Management Company in consideration of the substantial commitment made
and services to be rendered by Management Company hereunder and shall not be
interpreted or applied as permitting Management Company to share in the fees of
the PC. Prior to entering into this Agreement, the parties have computed the
Cost of Services of the P.C. for the past full fiscal year and have projected
the Costs of Services for the full calendar year of this agreement. The bases of
the negotiated, fixed Management Fee, which the parties agree to represent the
fair market value of services, supplies and facilities, include, but are not
limited to, a combined figure of (1) reasonable market value of the equipment,
contract analysis and support, support services, purchasing, personnel,
Facilities, management, administration, other services and capital provided by
Management Company; (2) value to be received monthly by PC as the result of
Management Company's purchase of accounts receivable pursuant to 6.2 hereof; (3)
The value of Management Company's Construction Investment; (4) the value of
insurance coverages made available to PC through group rates available to
Management Company; (5) the increased value to PC as the result of Management
Company's access to better rates for supplies through bulk purchase; and (6) the
ability of Management Company to manage the practice with greater profitability
to PC. The negotiated compensation is intended to account for the nature,
quantity and quality of services required, and financial risks assumed by
Management Company under this Management Agreement. Management Company shall be
paid the following amounts (collectively "Service Fees"):
6.1.1 An amount reflecting all Cost of Services (whether
incurred by Management Company or PC) paid or recorded by Management
Company from Management Company's own funds, pursuant to the terms of
this Agreement; and
6.1.2 Repayment of any Advances or Discretionary Advances; and
6.1.3 Management Fee of $45,000 (Forty-Five Thousand Dollars)
per month ("Monthly Management Fee").
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6.2 COLLECTIONS AND MANAGEMENT COMPANY PURCHASE OF ACCOUNTS RECEIVABLE.
On or before the 20th business day of each month, Management Company shall
reconcile the accounts receivable of the PC arising during the previous calendar
month. Accounts receivable shall be defined as all receivable recorded each
month (net of Adjustments) on the books of the PC ["Accounts Receivable"]. The
adjustments made shall only reflect actual collection history of the PC and
Management Company shall pay dollar-for-dollar on such Adjusted Accounts
Receivable. Management Company shall transfer or pay such amount of funds to PC
equal to the Accounts Receivable less Cost of Services and Basic Management Fee,
the latter payment subject to Sections 3.1.12 and 3.1.13. Management Company
shall, in addition, transfer such portion of the Service Fees necessary to pay
such portion of the Cost of Services which are costs and expenses of the PC, as
described in Section 2.1 hereof. PC shall cooperate with Management Company and
execute all necessary document necessary to effect an assignment of such
Accounts Receivable to Management Company or, at Management Company's option, to
its lenders. All collections in respect of such Accounts Receivable shall be the
property of Management Company and deposited in a bank account at a bank
designated by Management Company. To the extent that the PC comes into
possession of any payments which are in satisfaction or all, or any part, of
such Accounts Receivable, the PC shall direct such payments to Management
Company for deposit in bank accounts designated by Management Company.
6.3 ADVANCES. Management Company agrees to advance funds to PC to meet
Cost of Services, or provide working capital ["Advances"], although the purchase
of Accounts Receivable and the Management Company Construction Investment shall
not be constitute Advances. Management Company may, in its sole discretion, at
the request of the PC, advance funds to fund mergers with other physicians or
physician groups into PC ["Discretionary Advance(s)"]. All Advances and
Discretionary Advances shall be made only with the mutual agreement of PC and
Management Company.
6.3.1 Any Advances or Discretionary Advances made pursuant to
this Management Agreement shall be a debt owed to Management Company by
PC and shall have payment priority over any distribution to PC's
Physician-Shareholder(s). Any Advance shall be repaid from any
distribution to Physician-Shareholder(s) of PC either as a lump sum
payment, within 60 days after the advance, or in installments as agreed
to by Management Company.
6.3.2 Interest expense will be charged for Advances and
Discretionary Advances and will be computed at the Prime Rate used by
Management Company's primary bank, from time to time (the "Prime
Rate"). Advances shall be evidenced by a security agreement, in the
form of Exhibit 6.3.2, giving Management Company a collateral interest
in all accounts receivable and distributions to PC's Shareholder(s).
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6.4 The Monthly Management Fee provided for in Section 6.1.3 shall be
adjusted on the dates indicated below, and as adjusted, shall become the Monthly
Management Fee for the applicable period:
6.4.1 For the Fiscal Year commencing January 1, 2000 the
Monthly Management Fee shall be the greater of (i) $45,000 multipied by
a fraction, the numerator of which shall be the Consumer Price Index[
(the "CPI" as hereinafter defined) for "All Items" shown on the "New
York Metropolitan Area" (unadjusted for seasonal variation) as
promulgated by the Bureau of Labor Statistics of the United States
Department of Labor ("Department of Labor") for the month of September
1999 and the denominator of which shall be the CPI for the month of
September 1998. In the event that a substantial change is made by the
Department of Labor in the method by which the CPI is established
during the term of this Agreement, then the CPI shall be adjusted to
the figure that would have resulted had no change occured in the manner
of computing the CPI. If the CPI as defined herein is no longer
published by the Department of Labor, a reliable governmental or
nonpartisan publication evaluating the information theretofore used in
detemining the CPI shall be used in lieu thereof], or (ii) $47,500.00
per month.
6.4.2 For the Fiscal Year commencing January 1, 2001, the
Monthly Management Fee shall be the greater of (i) $45,000 multipied by
a fraction, the numerator of which shall be the Consumer Price Index[
(the "CPI" as hereinafter defined) for "All Items" shown on the "New
York Metropolitan Area" (unadjusted for seasonal variation) as
promulgated by the Bureau of Labor Statistics of the United States
Department of Labor ("Department of Labor") for the month of September
2000 and the denominator of which shall be the CPI for the month of
September 1998 or (ii) $50,000 per month.
6.4.3 For the Fiscal Year commencing January 1, 2002, the
Monthly Management Fee shall be the greater of (i) $45,000 multipied by
a fraction, the numerator of which shall be the Consumer Price Index[
(the "CPI" as hereinafter defined) for "All Items" shown on the "New
York Metropolitan Area" (unadjusted for seasonal variation) as
promulgated by the Bureau of Labor Statistics of the United States
Department of Labor ("Department of Labor") for the month of September
2001 and the denominator of which shall be the CPI for the month of
September 1998 or (ii) $52,000 per month.
6.4.4 For the Fiscal Year commencing January 1, 2003, the
Monthly Management Fee shall be the greater of (i) $45,000 multipied by
a fraction, the numerator of which shall be the Consumer Price Index[
(the "CPI" as hereinafter defined) for "All Items" shown on the "New
York Metropolitan Area" (unadjusted for seasonal variation) as
promulgated by the Bureau of Labor Statistics of the United States
14
Department of Labor ("Department of Labor") for the month of September
2002 and the denominator of which shall be the CPI for the month of
September 1998 or (ii) $55,000 per month.
6.4.5 For the Fiscal Year commencing January 1, 2004, the
Monthly Management Fee shall be the greater of (i) $45,000 multipied by
a fraction, the numerator of which shall be the Consumer Price Index[
(the "CPI" as hereinafter defined) for "All Items" shown on the "New
York Metropolitan Area" (unadjusted for seasonal variation) as
promulgated by the Bureau of Labor Statistics of the United States
Department of Labor ("Department of Labor") for the month of September
2003 and the denominator of which shall be the CPI for the month of
September 1998 or (ii) $57,500 per month.
6.4.6 For the Fiscal Year commencing January 1, 2005, the
Monthly Management Fee shall be an amount that Management Company and
PC shall have negotiated in advance of January 1, 2005. In the event
Management Company and PC shall not have prior to January 1, 2005
agreed upon a Monthly Management Fee for the Fiscal Year commencing
January 1, 2005, then the 2004 Monthly Management Fee in effect prior
to January 1, 2005 shall continue in effect until such time as
Management Company and PC shall agree upon a Monthly Management Fee for
the Fiscal Year commencing January 1, 2005. For each Fiscal Year
subsequent to January 1, 2005, Management Company and PC shall likewise
negotiate a Monthly Management Fee. In the event Management Company and
PC are unable to negotiate successfully a Monthly Management Fee for
such subsequent Fiscal Years, then the Monthly Management Fee in effect
prior to the commencement of any such Fiscal Year shall pertain until
such time as Management Company and PC are able to negotiate
successfully a Monthly Management Fee for the applicable Fiscal Year,
which agreed upon Monthly Management Fee shall be retroactive to the
commencement of such Fiscal Year.
ARTICLE 7
EXCLUSIVE MANAGEMENT RIGHT, TERM AND RENEWAL
7.1 PC grants to Management Company the exclusive right to manage PC
during the term of this Agreement (the "Exclusive Management Right"). In
consideration of the Exclusive Management Right, Management Company agrees as
follows:
7.1.1 Management Company shall pay Dr. San Roman $100,000.00
(One Hundred Thousand Dollars) in cash within 30 days after Dr. San
Roman and PC cause another physician to become a senior equity owner of
PC on or before December 31, 1999 and completes three (3) months of
practice at the PC ("Second Shareholder"). For purposes of this
Agreement "senior equity owner" shall mean a physician owning not less
than a twenty-six per cent (26%) interest in PC.
15
7.1.2 Management Company shall pay Dr. San Roman $100,000.00
(One Hundred Thousand Dollars) in cash within 30 days after PC, Dr. San
Roman and the Second Shareholder cause a third Physician-Shareholder to
become a equity owner of PC with not less than a ten percent (10%)
equity interest which 10% interest shall become not less than twenty
(20%) within 36 months thereafter. In the event such
Physician-Shareholder does not become at least a twenty percent (20%)
equity owner within the 36 months, Dr. San Roman shall remit to
Management Company, the amount paid pursuant to this Section, within 30
days after demand by Management Company.
7.2 The term of this Agreement shall begin on July 1, 1999 and shall
expire ten (10) years after such date unless earlier terminated pursuant to
Article 8 below. 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 8
TERMINATION OF THE AGREEMENT
8.1 TERMINATION. This Agreement may be terminated by either party in
the event of the following:
8.1.1 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 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.
8.1.2 MATERIAL BREACH. If either 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
16
period and thereafter shall not have cured the breach with the exercise
of due diligence.
8.1.3 ILLEGALITY. Either 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 which 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 (i) the services provided by Management
Company under this Agreement are unlawful, (ii) the practice of
medicine by PC as contemplated by this Agreement is unlawful, or (ii)
the services provided by Management Company requires a certificate of
need; and any such assertion is not contested (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 both PC and
Management Company and, specifically, affords PC the opportunity for
growth, and self-direction, and provides access to essential capital
and cash flow. For these reasons, PC agrees 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 the State
of New York, such as to preserve the legality of this Agreement
provided that such are not to the financial detriment of the PC.
8.1.4 TERMINATION UPON TWELVE MONTHS WRITTEN NOTICE. Either
party may terminate this Agreement upon twelve (12) months prior
written notice.
8.2 TERMINATION BY MANAGEMENT COMPANY FOR PROFESSIONAL DISCIPLINARY
ACTIONS. Management Company may terminate this Agreement upon 10 days prior
written notice to PC if any PC shareholder's, having an equity ownership of 25%
or more ("25% Shareholder"), authorization to practice medicine is suspended,
revoked or not renewed, or if any other formal disciplinary action is taken
against any 25% Shareholder which could reasonably lead to a suspension,
revocation or non-renewal of a 25% Shareholder's license.
8.3 TERMINATION BY MANAGEMENT COMPANY FOR FAILURE OF PC TO ADD
ADDITIONAL PHYSICIANS. Management Company may terminate this Agreement upon 30
days prior written notice to PC if PC fails to increase the number of
shareholders, pursuant to Section 7.1.2 by July 1, 2002.
17
ARTICLE 9
RIGHTS UPON TERMINATION
9.1 If this Agreement is terminated for any reason, other than
illegality, or the insolvency or material breach by Management Company, then
Management Company and the PC agree as follows:
9.1.1 PC shall purchase, and Management Company shall sell,
any Assets at the net book value determined in accordance with
generally accepted accounting principles consistently applied as to the
date of termination. Should this Agreement terminate prior to October
1, 2002, then the PC shall pay to Management Company not only the
unamortized portion of Management Company's Construction Investment,
but interest on such amount, to be computed at the Prime Rate and
retroactive to the date or dates of such Construction Investment.
9.1.2 PC shall assume all leases for offices and equipment
used directly for the management and operation of the PC's business,
both at the Mineola and Suffolk sites and any other sites existing as
of the date of termination, or if assumption is not permitted, make all
payments called for by such leases, to Management Company.
9.1.3 PC shall notify, within 30 days of the date of
termination, all patients with Biological Materials in storage at the
Facility, that Management Company will no longer provide management
services and that the care and custody of such Biological Materials
rests solely with the PC. The form of such notification shall be with
the consent of Management Company (such consent not to be unreasonably
withheld).
9.1.4 PC shall repay any indebtedness, owned to Management
Company as the result of Advances, Discretionary Advances or Service
Fees. In addition, any unamortized portions of the payments made to Dr.
San Roman pursuant to Sections 7.1.1 and 7.1.2 shall be repaid by Dr.
San Roman within 30 days of the date of termination. For purposes of an
amortization of the payments pursuant to Sections 7.1.1 and 7.1.2,
Management Company will amortize such payments over a three-year
period.
9.1.5 The sale and purchase, assumptions and/or assignments
contemplated by sections 9.1.1 and 9.1.2 shall be accomplished at a
closing to be held within 60 days of the effective date of termination
(or sooner shall the parties mutually agree) and any and all payments
18
to IntegraMed shall be made, in equal monthly installments, over
thirty-six months, payment to commence on the first day of the first
full month following the termination date.
9.2 If this Agreement terminates as the result of illegality, or the
insolvency or material breach by Management Company, then PC and Management
Company agree as follows:
9.2.1 PC shall have the option, but not the obligation, to
purchase, and Management Company shall, upon the exercise of such
option sell, any Assets at the net book value determined in accordance
with generally accepted accounting principles consistently applied as
to the date of termination.
9.2.2 PC shall have the option, but not the obligation, to
assume all leases for offices and equipment used directly for the
management and operation of the PC's business, both at the Mineola and
Suffolk sites and any other sites existing as of the date of
termination, or if assumption is not permitted, make all payments
called for by such leases, to Management Company. Management Company
agrees to assign its rights to such facilities should the PC exercise
its option, or accept payments in lieu of assumption.
9.2.3 Management Company will notify, within 30 days of the
date of termination, all patients with Biological Materials in storage
at the Facility, that Management Company will no longer provide
management services and that the care and custody of such Biological
Materials rests solely with the PC. The form of such notification shall
be with the consent of Management Company (such consent not to be
unreasonably withheld).
9.2.4 The PC shall repay any indebtedness, owed to Management
Company as the result of Advances, Discretionary Advances or Service
Fees.
9.2.5 PC shall exercise its the options provided in 9.2.1 and
9.2.2, by written notice to Management Company within thirty (30) days
of the effective date of termination. The sale and purchase,
assumptions and/or assignments contemplated by sections 9.1.1 and 9.1.2
shall be accomplished at a closing to be held within 75 days of the
effective date of termination (or sooner shall the parties mutually
agree) and any and all payments to IntegraMed shall be made, in equal
monthly installments, over twenty-four months, payment to commence on
the first day of the first full month following the termination date.
9.3 In the event of termination for any reason, the continuing
obligations delineated in Article 11, and Sections 12.14, and 12.15 (and any
subparts thereof) shall continue pursuant to their terms.
19
ARTICLE 10
INSURANCE
10.1 Management Company shall use its best efforts to cause PC to be
made an additional insured under Management Company's professional liability
coverage; provided, however, conditions for being made an additional insured
shall be (i) PC utilizing patient informed consent forms supplied by Management
Company, provided such forms are consistent with law and any guidelines issued
by the American Society of Reproductive Medicine and (ii) PC complying with
requirements of Management Company's insurance company. Management Company shall
also carry a policy of public liability and property damage insurance with
respect to the Facilities under which the insurer agrees to indemnify Management
Company and PC 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
Management Company. The minimum limits of liability of such insurance shall be
$1 million combined single limit covering bodily injury and property damage.
Certificates of Insurance evidencing such policies and additional insured status
shall be presented to PC within thirty (30) days after such coverage is
effected. In the event Management Company is unable to cause PC to be made an
additional insured under Management Company's professional liability coverage,
PC shall carry professional liability insurance covering itself and its
employees providing Infertility Services under this Agreement. Such coverage
shall be in the minimum amount of $1 million per incident, $3 million in the
aggregate.
10.2 PC and Management Company shall provide written notice to the
other at least thirty (30) days in advance of the effective date of any
reduction, cancellation or termination of the insurance required to be carried
by each hereunder.
10.3 As part of PC's participation, in any manner, in an Management
Company insurance program, and in an effort to assist Management Company in the
maintenance of its owns insurance, PC agrees to the following obligations, which
represent an effort to reduce risk and maintain a cost effective insurance
program:
10.3.1 PC shall provide medical treatment, including
Infertility Services in compliance at all times with ethical standards,
laws and regulations applying to the practice of medicine in the State
of New York. PC shall ensure that each Physician Employee, Other
Professional Employee and any other professional provider associated
with PC is duly licensed to provide the services being rendered within
the scope of such provider's practice. In addition, PC shall require
each Physician Employee during the term of this Agreement (1) to
maintain a DEA number; (2) to maintain appropriate medical staff
privileges as determined by PC and (3) to obtain board certification in
Reproductive Endocrinology within five (5) years of a Physician
Employee's completion of an accredited training program or, to have the
equivalent training and experience at a foreign university and/or
20
medical center. In the event that any disciplinary actions or medical
malpractice actions are initiated against any such physician or other
professional provider, PC shall immediately inform the Executive
Director and provide the underlying facts and circumstances of such
action.
10.3.2 PC shall retain that number of Physician Employees as
are reasonably necessary and appropriate for the provision of
Infertility Services. However, PC shall hire Physicians ["Incoming
Physician"] only (1) with the consent, not to be unreasonably withheld,
of Management Company, and upon notice and investigation of the
insurer.
10.3.3 Each Physician Employee shall hold and maintain a valid
and unrestricted license to practice medicine in New York, and shall be
competent in the practice of obstetrics and gynecology, including the
subspecialty of infertility and assisted reproductive medicine.
10.3.4 PC shall insure that Physician Employees and
Professional Employees provide patient care and clinical backup as
required to insure the proper provision of services to patients of the
PC at the Mineola and Suffolk Facilities, and/or such other locations
as shall be mutually agreed to by PC and Management Company. PC shall
insure that its Physician Employees and Professional Employees devote
substantially all of their professional time, effort and ability to
PC's practice, including the provision of Infertility Services and the
development of such practice.
10.3.5 In the Event of any Relocation Program, as described in
section 4.3.4, such shall be conducted by the PC in accordance with
patient consent and the ethical guidelines of the American Society of
Reproductive Medicine.
10.3.6 PC shall undertake and use its best efforts to locate
physicians who, in PC's judgment, possess the credentials and expertise
necessary to enable such physician candidates to become affiliated with
PC for the purpose of providing Infertility Services.
10.3.7 PC covenants for itself and will use diligent efforts
to cause its Physician Employees and Professional Employees to comply
with reasonable personnel policies and guidelines developed for the
practice of the PC by Management Company, which shall include
administrative protocols and policies designed to insure that the work
sites complies with all applicable laws and regulations, federal and
state.
21
10.3.8 PC shall require its Physician Employees and
Professional Employees to participate in such continuing medical
education as PC deems to be reasonably necessary for such physicians or
Professional Employees to remain current in the provision of
Infertility Services.
10.3.9 PC shall cooperate in the obtaining and retaining of
professional liability insurance by assuring that its Physician
Employees and Other Professional Employees are insurable and
participating in an on-going risk management program. PC shall cause
its Physician Employees and Professional Employees to cooperate in any
risk management program created and/or operated by Management Company.
ARTICLE 11
NON-SOLICITATION AND NON-COMPETITION
11.1 The PC recognizes and acknowledges that Management Company will
incur substantial costs in providing the equipment, support services, personnel,
management, administration and other services that are the subject of this
Agreement. The parties also recognize that the services to be provided by
Management Company will be feasible only if the PC operates an active practice
to which the Employee-Physicians devote their full professional time and
attention. PC agrees that the non-competition and non-solicitation covenants
described hereunder are necessary for the protection of Management Company, and
that Management Company would not enter this Agreement without the following
covenants:
11.1.1 During the term of this Agreement, PC shall not
establish, operate or provide Infertility Services at a medical office,
clinic or other health care facility other than as provided for in this
Agreement.
11.1.2 During the Term of this Agreement, and for a period of
two years from the date it is terminated, PC shall not directly or
indirectly own, manage, operate, control, contract with, be associated
with or lend its or its shareholders' names to, or maintain any
interest whatsoever in any enterprise (i) which provides, distributes,
promotes or advertises any type of management or administrative
services in competition with Management Company; or (ii) which offers
any type of service or product to third parties substantially similar
to those offered by Management Company.
11.1.3 During the term of this Agreement, and for two years
from the date of termination, PC shall not hire, attempt to hire,
contract or solicit for hiring or consultancy, any employee of
Management Company, or form a corporation, partnership or joint venture
or other entity with any such employee, who is currently employed by
Management Company or had been employed by Management Company within
one (1) year prior to the termination of this Agreement.
22
Notwithstanding anything to the contrary contained herein, the PC may
(1) continue the employment of any Professional Employees employed by
the PC as of the date of notice of termination of this Agreement, or
effective date of termination of this Agreement (whichever is earlier);
and (ii) hire, attempt to hire, contract or solicit for hiring or
consultancy Sue McGreevy.
ARTICLE 12
MISCELLANEOUS
12.1 INDEPENDENT CONTRACTOR. Management Company and PC are independent
contracting parties. In this regard, the parties agree that:
12.1.1 The relationship between Management Company and PC is
that of an independent supplier of non-medical services and a medical
practice, respectively, and, unless otherwise provided herein, nothing
in this Agreement shall be construed to create a principal-agent,
employer-employee, or master-servant relationship between Management
Company and PC;
12.1.2 Neither PC nor Management Company (on behalf of PC)
shall seek or accept payment from Medicare or Medicaid for services
provided by PC;
12.1.3 Notwithstanding the authority granted to Management
Company herein, Management Company and PC agree that PC shall retain
the full authority to direct all of the medical, professional, and
ethical aspects of its medical practices;
12.1.4 Any powers of PC not specifically vested in Management
Company by the terms of this Agreement shall remain with PC;
12.1.5 PC shall, at all times, be the sole employer of the
Physician Employees, the Other Professional Employees and all other
professional personnel engaged by PC in connection with the operation
of its medical practice at the Facilities, and shall be solely
responsible for the payment of all applicable federal, state or local
withholding or similar taxes and provision of workers' compensation and
disability insurance for such professional personnel;
12.1.6 No party shall have the right to participate in any
benefits, employment programs or plans sponsored by the other parties
on behalf of the other parties' employees, including, but not limited
to, workers' compensation, unemployment insurance, tax withholding,
health insurance, life insurance, pension plans or any profit sharing
arrangement;
23
12.1.7 In no event shall any party be liable for the debts or
obligations of any other party except as otherwise specifically
provided in this Agreement; and
12.1.8 Matters involving the internal agreements and finances
of PC, including but not limited to the distribution of professional
fee income among Physician Employees and Other Professional Employees
who are providing professional services to patients of PC, and other
employees of PC, disposition of PC property and stock, accounting, tax
preparation, tax planning, and pension and investment planning (and
expenses relating solely to these internal business matters), hiring
and firing of physicians, decisions and contents of reports to
regulatory authorities governing PC and licensing, shall remain the
sole responsibility of PC.
12.2 FORCE MAJEURE. No party shall be liable to the other 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 not 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.
12.3 USE OF NAME OF PC. The name or any statement that may implicitly
refer directly or indirectly to PC or impute any affiliation directly or
indirectly between Management Company and PC shall not be used in any manner or
on behalf of Management Company in any advertising or promotional materials or
otherwise without PC's prior written consent. However, Management Company may
use P.C's name or address in advertising to the public solely for the purpose of
providing directions to the office(s) of PC.
12.4 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.
12.5 PRIOR AGREEMENTS; AMENDMENTS. This Agreement 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 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.
24
12.6 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, except that Management Company may assign this
Agreement to any subsidiary or affiliate of Management Company without the
consent of the other parties. 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.
12.7 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.
12.8 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, except for equitable relief sought pursuant to
Section 11.4 hereof, shall be determined by binding arbitration in the State of
New York, County of New York (hereinafter "Arbitration"). The party seeking
determination shall subject any such dispute, claim or controversy to the
American Arbitration Association, New York County, and the rules of commercial
arbitration of the selected entity shall govern. 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 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 in the Courts
of the State of New York or the United States District Court for the Southern
District of New York, to whose jurisdiction for such purposes PC and Management
Company hereby irrevocably consent and submit.
12.9 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.
12.10 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.
25
12.11 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:
If to Management Company:
Gerardo Canet, President
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
With a copy to:
Claude E. White, Esq.
General Counsel
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
If to PC:
Gabriel San Roman, MD, President
MPD Medical Associates, P.C.
200 Old Country Road
Mineola, New York 11501
With a copy to:
Charles A. Bilich, Esq.
Meltzer, Lippe, Goldstein & Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Any party hereto, by like notice to the other parties, may designate such other
address or addresses to which notice must be sent.
12.12 ENTIRE AGREEMENT. This Agreement and all attachments hereto
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and thereof, and cancel and supersede all prior agreements
and understandings among the parties hereto, whether oral or written, with
respect to such subject matter.
26
12.13 NO MEDICAL PRACTICE BY MANAGEMENT COMPANY. Management Company
will not engage in any activity that constitutes the practice of medicine, and
nothing contained in this Agreement is intended to authorize Management Company
to engage in the practice of medicine or any other licensed profession.
12.14 CONFIDENTIAL INFORMATION.
12.14.1 During the initial term and any renewal term(s) of
this Agreement, the parties may have access to or become acquainted
with each others' trade secrets and other confidential or proprietary
knowledge or information concerning the conduct and details of each
party's business ("Confidential Information"). At all times during and
after the termination of this Agreement, no party shall directly or
indirectly, communicate, disclose, divulge, publish or otherwise
express to any individual or governmental or non-governmental entity or
authority (individually and collectively referred to as "Person") or
use for its own benefit or the benefit of any Person any Confidential
Information, no matter how or when acquired, of another party. Each
party shall cause each of its employees to be advised of the
Confidential nature of such Confidential Information and to agree to
abide by the confidentiality terms of this Agreement. No party shall
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 the proprietor and shall be returned to the proprietor
immediately upon any termination of this Agreement.
12.14.2 Confidential Information shall not include information
which (i) is or becomes known through no fault of a party hereto; (ii)
is learned by a party from a third-party legally entitled to disclose
such information; or (iii) was already known to a party at the time of
disclosure by the disclosing party.
12.14.3 In order to minimize any misunderstanding regarding
what information is considered to be Confidential Information,
Management Company or PC will designate at each others request the
specific information which Management Company or PC considers to be
Confidential Information.
12.15 INDEMNIFICATION.
12.15.1 Management Company agrees to indemnify and hold
harmless PC, its 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 Management Company related to the
performance of its duties and responsibilities under this Agreement.
The obligations contained in this Section 12.15.1 shall survive
termination of this Agreement.
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12.15.2 PC agrees to indemnify and hold harmless Management
Company, 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 PC's related to the
performance of its duties and responsibilities under this Agreement.
The obligations contained in this Section 12.15.2 shall survive
termination of this Agreement.
12.15.3 In the event of any claims or suits in which
Management Company and/or PC and/or their directors, officers,
employees and servants are named, each of Management Company and PC 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.
12.15.4 Management Company will defend, indemnify and hold
harmless the PC against and in respect of (i) any and all debts,
liabilities and obligations of the PC accruing prior to the Effective
Financial Date ["Prior PC Liabilities"] and (ii) any and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs and
expenses (including fees and expenses of counsel) arising out of such
Prior PC Liabilities.
12.15.5 Promptly after the receipt by the PC of notice of any
claim or commencement of any action or proceeding subject to
indemnification delineated in Section 12.15.4 ("asserted liability"),
the PC will, demand such indemnification from Management Company and
proffer the defense to Management Company. Management Company may
thereafter, at its option, assume such defense at its own expense and
by its own counsel. Management Company shall provide written notice to
the PC, within twenty days, of its assumption or declination of such
defense. If Management Company shall undertake to compromise any
asserted liability, it shall promptly notify the PC of its intention to
do so and the PC agrees to cooperate fully and promptly with Management
Company and its counsel in the compromise and defense of any asserted
liability. Management Company shall not enter into any non-monetary
settlement hereunder without the prior written consent of the PC.
Notwithstanding the foregoing, PC shall have the right to participate
in the compromise or defense of any asserted liability with its own
counsel and at its own expense.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
INTEGRAMED AMERICA, INC.
By:/s/Gerardo Canet
------------------------------
Gerardo Canet, President & CEO
MPD MEDICAL ASSOCIATES, P.C.
By:/s/Gabriel San Roman
------------------------------------
Gabriel San Roman, M.D., Shareholder
By:/s/Kristen Cain
-----------------------------
Kristen Cain, MD, Shareholder
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EXHIBIT 3.2
OFFICE AND FACILITIES
TO BE PROVIDED BY MANAGEMENT COMPANY TO PC
200 Old Country Road, Mineola, New York 11501
2500 Nesconset Highway, Building #19, Stony Brook, New York 11790
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EXHIBIT 6.3.2
SECURITY AGREEMENT
[See Attached]
31