EXECUTED IN MULTIPLE ORIGINALS
MANAGEMENT AGREEMENT
Between
INTEGRAMED AMERICA, INC.
And
REPRODUCTIVE SCIENCES MEDICAL CENTER, INC.
THIS MANAGEMENT AGREEMENT, dated June 6, 1997, by and between IntegraMed
America, Inc., a Delaware corporation, with its principal place of business at
Xxx Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("INMD") and Reproductive
Sciences Medical Center, Inc., a California professional corporation, with its
principal place of business at 0000 Xxxxxxx Xxx, Xxxxx 000, Xx Xxxxx, Xxxxxxxxxx
00000 ("PC").
RECITALS:
PC specializes in the provision of gynecological and infertility services,
including the treatment of human infertility encompassing the provision of in
vitro fertilization and other assisted reproductive services ("Infertility
Services"). All PC interests in PC are owned by Xxxxxx X. Xxxx, M.D., Ph.D.
(referred to herein as "Physician" or "Shareholder").
INMD is in the business of owning certain assets and providing 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.
PC desires to obtain the services of INMD in performing such management and
administrative functions to permit PC to devote its efforts on a concentrated
and continuous basis to the rendering of Infertility Services to its patients.
In addition, PC desires access to capital to fund its growth and
development and INMD desires to provide such capital or access to capital as
provided herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, PC hereby agrees to
purchase from INMD the management and administrative services herein described
and INMD agrees to provide such services on the terms and conditions provided
herein.
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 INMD and PC.
1.1.3 "Base Management Fee" shall mean an annual fee paid by PC to
INMD in an amount equal to a percentage of PC's annual Physician and Other
Professional Revenues as more specifically described in Section 2.3.
1.1.4 "Cost of Services" shall mean all ordinary and necessary
expenses of PC and all direct ordinary and necessary operating expenses of
INMD, without xxxx-up, incurred in connection with the management of PC's
medical practice, as more specifically described in Section 2.1.
1.1.5 "Facilities" shall mean the medical office and clinical space of
PC, including 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 the provision of gynecological
services, treatment of human infertility encompassing the provision of in
vitro fertilization and other assisted reproductive services, including but
not limited to those which during the term of this Agreement are provided
by PC or any Physician Employee and Other Professional Employee.
1.1.8 "Other Professional Employees" shall mean the provision of
gynecological services, including the nurse anesthetists, physician
assistants, nurse practitioners, psychologists, and other such professional
employees who generate professional charges, but shall not include
Technical Employees.
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1.1.9 "Physician Employees" shall mean those individuals who are
employees or shareholders 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 California.
1.1.10 "Physician and Other Professional Revenues" shall mean all
fees, whether received or accrued, and actually recorded each month (net of
Adjustments) by or on behalf of PC as a result of professional medical
services personally furnished to patients by Physician Employees and Other
Professional Employees and other fees or income earned in their capacity as
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. "Physician
and Other Professional Revenues" shall not include income derived from
testimony for litigation-related proceedings, lectures, passive
investments, fundraising or writing where Physician does not render
professional medical services.
1.1.11 "Predistribution Earnings" ("PDE") shall mean (i) Physician and
Other Professional Revenues, less (ii) Cost of Services and the Base
Management Fee.
1.1.12 "Receivables"shall mean and include all rights to payment for
services rendered or goods sold, accounts, receivables, contract rights,
chattel paper, documents, instruments and other evidence of patient
indebtedness to PC, policies and certificates of insurance relating to any
of the foregoing, and all rights to payment, reimbursement or settlement or
insurance or other medical benefit payments assigned to PC by patients or
pursuant to any preferred provider, HMO, capitated payment agreements or
other agreements between PC and a payer, recorded each month (net of
Adjustments).
1.1.13 "Revenues" shall mean the sum of all Physician and Other
Professional Revenues.
1.1.14 "Shareholder" shall mean Physician and/or other physicians who
are owners/shareholders of PC.
1.1.15 "Technical Employees" shall mean technicians such as
embryologists and other laboratory personnel, ultrasonographers and
phlebotomists who provide services to the PC. All Technical Employees shall
be INMD Employees or independent contractors.
ARTICLE 2
COST OF SERVICES AND BASE 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 INMD or PC:
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2.1.1 Salaries and fringe benefits of all employees of INMD working
directly in the management, operation or administration (including, without
limitation, Other Professional Employees and Technical Employees) providing
services at PC, along with payroll taxes or all other taxes and charges now
or hereafter applicable to such personnel, and services of independent
contractors;
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 INMD
personnel in connection with such recruitment effort;
2.1.3 Direct marketing expenses of PC, such as direct costs of
printing marketing materials prepared by INMD;
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 INMD 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 Other Professional Employees rendering Infertility
Services on behalf of PC;
2.1.10 Membership in professional associations and continuing
professional education for Physician Employees and Other Professional
Employees;
2.1.11 Quality Assurance Program described in Section 3.8 herein;
2.1.12 Cost of filing fictitious name permits pursuant to this
Agreement;
2.1.13 Cost of supplies, medical and administrative, and all direct
general and administrative expenses relative to the PC;
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2.1.14 Such other costs and expenses directly incurred by INMD or PC
necessary for the management or operation of PC; and
2.2 Notwithstanding anything to the contrary contained herein, Cost of
Services shall not include costs of the following:
2.2.1 PDE of the PC paid to Shareholders;
2.2.2 Costs or expenses not included in the annual budget prepared by
INMD pursuant to Section 3.4 herein, unless approved by the parties prior
to costs or expenses being incurred unless subsequently ratified by PC;
2.2.3 Any INMD overhead charges;
2.2.4 Any federal or state income taxes of INMD other than as provided
above; and
2.2.5 The Base Management Fee and the Additional Management Fee.
2.3 The "Base Management Fee" and the "Additional Management Fee" described
in Article 6 of this Agreement shall constitute INMD's sole compensation for all
indirect costs including all legal, accounting, financial, marketing, management
and administrative assistance provided by INMD corporate and regional staff
which are not provided for in Section 2.1.
ARTICLE 3
DUTIES AND RESPONSIBILITIES OF INMD
3.1 MANAGEMENT SERVICES AND ADMINISTRATION.
3.1.1 PC hereby appoints INMD as PC's sole and exclusive manager and
administrator of all of its day-to-day business functions and grants INMD
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. INMD will have no authority, directly or
indirectly, to perform, and will not perform, any medical function. INMD
may, however, advise PC as to the relationship between its performance of
medical functions and the overall administrative and business functioning
of its practice. To the extent that they assist PC in performing medical
functions, all Technical Employees provided by INMD shall be subject to the
professional supervision of PC. The parties agree that the "Decision-Making
Authority for Integrated Entities Criteria" developed by the California
Medical Association which provides a framework for compliance with the
California corporate practice proscriptions shall be utilized by the
parties as a guide with respect to the management and administration
services to be provided under this Agreement.
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3.1.2 INMD shall, on behalf of PC, xxxx 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 Other
Professional Employee. PC hereby appoints INMD for the term hereof to be
its true and lawful attorney-in-fact, for the following purposes: (i) to
xxxx 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) 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.
3.1.3 INMD 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. INMD'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. INMD 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 INMD 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 efficient operation of PC's medical practice at the Facilities.
3.1.5 Subject to PC's prior approval, INMD shall design and implement
an appropriate marketing and public relations program on behalf of PC, with
appropriate emphasis on public awareness of the availability of Infertility
Services from 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.
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3.1.6 INMD 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 INMD and accepted by PC shall be employees of or
independent contractors to PC.
3.1.7 INMD shall assist in negotiating, 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.
3.1.8 INMD shall 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. Nothing contained herein is intended to authorize INMD to settle
any claim made by or against PC.
3.1.9 INMD shall negotiate for and cause premiums to be paid with
respect to the insurance provided for in Article 10.
3.1.10 INMD 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.
3.2 FACILITIES.
(a) INMD shall provide the office space and facilities necessary for
the operation of PC's medical practice, as set forth in Exhibit 3.2 hereto (the
"Facilities"), including but not limited to, the use of the Facilities, and
shall be responsible for 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. INMD shall provide for the
cleanliness of the Facilities, and timely maintenance and cleanliness of the
equipment, furniture and furnishings located therein. INMD shall consult with PC
regarding the condition, use and needs for the Facilities, equipment, services
and improvements thereto. PC shall have the right to review all proposed leases
for office space and INMD shall consult with PC with respect to the terms of
such leases and use its best efforts to ensure that the leases provide for
reasonable assignment.
(b) Inclusive in the Facilities to be provided shall be a
state-of-the-art clinical and IVF laboratory (the "Lab") which shall meet
minimum national standards and be consistent with other laboratories provided by
INMD to other medical practices it manages. The Lab build-out, which shall
consist of all required construction necessary for P.C. to seek licensure (the
"Lab Build-Out"), shall be accomplished within seven (7) months of execution of
the lease for the new Facilities. INMD shall bear the risk of all construction
aspects being completed within the seven (7)-
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month period in order for the Lab to be in operational and capable of generating
Revenues, but shall have no liability or responsibility for the failure of the
appropriate license issuing agencies to timely issue licenses; all other risks,
including the failure of the Lab to be timely licensed, shall be borne by P.C.
INMD and P.C. agree to use their best efforts to accomplish the Lab build-out
and licensure thereof and will cooperate with each other as to all reasonable
requests of the other.
(c) INMD agrees that in the event the Lab Build-Out isn't completed as
provided for in Section 3.2 (b), P.C. shall, effective with the commencement of
the 8th month following execution of the lease, suspend payment of any further
Management Fee provided for in Section 6.1.3, unless and until such time as the
Lab Build-Out is completed.
3.3 EXECUTIVE DIRECTOR AND OTHER PERSONNEL.
3.3.1 EXECUTIVE DIRECTOR. Subject to the approval of PC, which shall
not be unreasonably withheld, INMD shall hire and appoint an Executive
Director to manage and administer all the day-to-day business functions of
the Facilities and determine the salary and fringe benefits paid to the
Executive Director. At the direction, supervision and control of INMD, the
Executive Director, subject to the terms of this Agreement, shall implement
the policies agreed upon by INMD and PC and shall generally perform the
administrative duties assigned to the Executive Director by INMD. PC
acknowledges that the removal of an Executive Director is likely to involve
financial and other commitments on the part of INMD that were undertaken
after that individual's approval by PC. Therefore, the decision to remove
an Executive Director shall rest with INMD. However, upon request by PC,
INMD shall review any disputes between PC and an Executive Director, or
disapproval of Executive by PC and endeavor to resolve the problem with
consideration to be given to the removal of the Executive Director, among
other outcomes.
3.3.2 PERSONNEL. INMD shall provide support personnel and
administrative personnel, clerical, secretarial, bookkeeping and collection
personnel reasonably necessary for the efficient operation of PC at the
Facilities. Such personnel shall be under the direction, supervision and
control of INMD, with Technical Employees and Other Professional Employees
subject to the professional supervision of PC. If PC is dissatisfied with
the services of any person delivering non-professional services, PC shall
consult with INMD. INMD shall in good faith determine whether the
employment of that employee warrants termination. INMD's obligations to
utilize non-professional personnel shall be governed by the overriding
principle and goal of facilitating PC's provision of high quality medical
care and laboratory services. INMD shall make every effort to honor the
specific requests of PC with regard to the assignment of INMD's employees,
including the Executive Director.
3.4 FINANCIAL PLANNING AND GOALS. INMD 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. INMD shall present the
budgets to PC for its approval at least thirty (30) days prior to the
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commencement of the Fiscal Year. INMD shall specify the targeted profit margin
for PC's practice at the Facilities which shall be reflected in the overall
budget. If the parties cannot 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 dispute can be resolved.
3.5 FINANCIAL STATEMENTS. INMD shall prepare annual financial statements
for operations of PC at the Facilities within sixty (60) days of the close of
the Fiscal Year. INMD 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.
3.6 TAX PLANNING AND TAX RETURNS. INMD will not be responsible for any tax
planning or tax return preparation for PC, but will provide support
documentation in connection with the same. Such support documentation shall not
be destroyed without PC's consent.
3.7 INVENTORY AND SUPPLIES. INMD 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.
3.8 QUALITY IMPROVEMENT. INMD shall assist PC in fulfilling its obligations
to maintain a Quality Improvement Program and in meeting the goals and standards
of such program.
3.9 RISK MANAGEMENT. INMD shall assist PC in the development of a Risk
Management Program and in meeting the standards of such program.
3.10 PERSONAL POLICIES AND PROCEDURES. INMD shall develop personnel
policies, procedures and guidelines, to govern office behavior, protocol and
procedure, designed to insure that the work site(s) of PC observe all laws and
guidelines related to employment and human resources.
3.11 LICENSES AND PERMITS INMD shall, on behalf of in the name of PC,
coordinate and assist 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 PC and equipment
located at the Facilities, other than those relating to the practice of medicine
or the administration of drugs by Physician Employees.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF PC
4.1 PROFESSIONAL SERVICES. PC shall provide Infertility Services to
patients in compliance at all times with ethical standards, laws and regulations
applying to the practice of medicine in the State of California. PC shall ensure
that each Physician Employee, Other Professional Employee and any other
professional provider associated with PC is duly licensed to
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provide the services being rendered within the scope of such provider's
practice. In addition, PC shall require each new shareholder and
Physician-Employee to maintain a DEA number and appropriate medical staff
privileges as determined by PC during the term of this Agreement and to obtain
board certification in Reproductive Endocrinology within five (5) years of a
shareholder's or Physician-Employee's completion of an accredited training
program. In the event that any disciplinary actions or medical malpractice
actions are initiated against any Physician-Shareholder, Physician-Employee or
other professional provider, PC shall immediately inform the Executive Director
and provide a written indication of the underlying facts and circumstances of
such action.
4.2 MEDICAL PRACTICE. PC shall use and occupy the Facilities exclusively
for the purpose of providing Infertility Services and shall comply with all
applicable laws and regulations and all applicable standards of medical care,
including, but not limited to, those established by the American Society of
Reproductive Medicine and the American College of Obstetricians and
Gynecologists. The medical practice conducted at the Facilities shall be
conducted solely by physicians employed by or serving as independent contractors
to PC, and other Professional Employees as defined herein, unless approval is
obtained from INMD. No other physician or medical practitioner shall be
permitted to use or occupy the Facilities without the prior written consent of
INMD, except in the case of a medical emergency, in which event, notification
shall be provided to INMD as soon after such use or occupancy as possible.
4.3 EMPLOYMENT OF PHYSICIAN AND OTHER PROFESSIONAL EMPLOYEES. In the event
PC shall determine that additional physicians are necessary, 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. PC
shall cause each Physician-Employee to enter into an employment agreement with
PC in the form attached hereto as Exhibit 4.3(A) if the Physician-Employee is a
shareholder or in the form of Exhibit 4.3(B) if the Physician-Employee is not a
shareholder, or such other form as is mutually acceptable to PC and INMD.
Physician shall also sign, and shall require each shareholder to sign an
Acknowledgment of Personal Financial Responsibility in the form attached hereto
as Exhibit 4.3(C). PC covenants that it will not employ any physician or make
any physician a shareholder of PC unless the physician shall sign the
appropriate employment agreement before employment or ownership interest in PC,
and provided further, INMD consents to such physician utilizing the Facilities,
which consent shall not be unreasonably withheld. PC shall have complete control
of and responsibility for the hiring, compensation, supervision, evaluation and
termination of its Physician-Employees and Other Professional Employees,
although at the request of PC, INMD shall consult with PC respecting such
matters.
4.4 CONTINUING MEDICAL EDUCATION . PC shall require its Physician-Employees
and Other Professional Employees to participate in such continuing medical
education as PC deems to be reasonably necessary for such physicians or Other
Professional Employees to remain current in the provision of Infertility
Services.
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4.5 PROFESSIONAL AND OTHER INSURANCE ELIGIBILITY.
(a) 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 ongoing risk
management program, under INMD's direction.
(b) PC and INMD shall cooperate in the obtaining and retaining Key Man
Insurance and/or Business Interruption coverage with respect to Physician and
PC.
4.6 DIRECTION OF PRACTICE
4.6.1 PC, as a continuing condition of INMD'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.
4.6.2 PC shall operate and maintain at the facilities a full time
practice of medicine specializing in the provision of Infertility Services
and shall maintain and enforce Physician Employment Agreements in the forms
attached hereto as Exhibits 4.3(B) and 4.3(C) ("Physician Employment
Agreement(s)") or in such other form as is mutually agreed to by the PC and
INMD in writing. PC covenants that it shall not employ any physician, or
have any physician as a shareholder, unless said physician shall sign such
Employment Agreement prior to assuming the status as employee and/or
shareholder. 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.
4.6.3 PC shall not (except for medical cause) terminate the Employment
Agreement(s) of any Physician or Shareholder, nor amend or modify the
Employment Agreements in any material manner, nor waive any material rights
of the PC thereunder without the prior written approval of INMD. PC
covenants to enforce the terms of each Physician Employment Agreement,
including but not limited to any covenants not to compete and other terms
confirming a Physician-Employee's commitment to practice medicine solely
through the PC for a specified number of years. In addition, in the
exercise of INMD's sole discretion, if the PC fails to pursue the
enforcement of its rights against a Physician-Employee, INMD shall have the
right, but not the obligation, to direct, initiate or join in a lawsuit to
enforce the provisions of any Employment Agreement and PC shall assign its
rights and remedies against such Physician-Employee upon the request of
INMD.
4.6.4 Recognizing that INMD would not have entered into this
Management Agreement but for the PC's covenant to maintain and enforce
Employment Agreements with Physicians now employed or Physicians who may
hereafter become
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employees of the PC, and in reliance upon such physicians' observance and
performance of all of the obligations under the Employment Agreements, any
damages, liquidated damages, compensation, payment or settlement received
by the PC from a Physician whose employment is terminated, shall be paid to
INMD in proportion to INMD's loss or damages.
4.6.5 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 only with the prior approval of
INMD, which approval shall not be unreasonably withheld. Each Physician
Employee shall hold and maintain a valid and unrestricted license to
practice medicine in California, and shall be competent in the practice of
gynecology, including the subspecialty of infertility and assisted
reproductive medicine. PC shall be responsible for paying the compensation
and benefits, as applicable, for all Physician Employees, and for
withholding, as required by law, any sums for income tax, unemployment
insurance, social security, or any other withholding required by applicable
law. INMD may, on behalf of the PC, establish and administer the
compensation with respect to such Physician Employees in accordance with
the written agreement between the PC and each Physician Employee. INMD
shall neither control nor direct any Physician in the performance of
Infertility Services for patients.
4.6.6 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 PC's office at
the address set forth in Schedule A, and/or such other location as shall be
mutually agreed to by PC and INMD. 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.
4.6.7 PC covenants to obtain necessary licenses and operate clinical
laboratory and tissue bank services 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.
4.6.8 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 in
accordance with
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patient consent and the ethical guidelines of the American Society of
Reproductive Medicine ("Relocation Program"). INMD, 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.
4.6.9 Except for circumstances due to operation of law, PC covenants
not to terminate or dissolve as a Professional Corporation except on six
months prior written notice to INMD. PC covenants that such a restriction
will be contained either in the by-laws or shareholder agreement by PC's
shareholders. In the event that such termination or dissolution occurs, for
a reason other than the death or disability of all of the shareholders, the
PC, and its individual shareholders, shall indemnify INMD for: (a) the
actual costs of maintaining the facilities and any reasonably necessary
Professional Employees during a Relocation Program (Section 4.6.8); (b)
legal costs for relicensing; (c) recruitment of other physicians to assume
the Practice; and (d) any damages, costs, liabilities, including reasonable
attorneys fees, arising out of the result of claims, suits, causes of
action or proceedings, brought by a patient of the PC having an interest in
any Biological Materials kept at the Facilities. These obligations shall
survive the termination of this Management Agreement.
4.7 PRACTICE DEVELOPMENT, COLLECTION EFFORTS AND NETWORK INVOLVEMENT. PC
agrees that during the term of this Agreement PC covenants for itself and will
use its best efforts to cause its Physician Employees and Professional Employees
to:
4.7.1 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;
4.7.2 Promote PC's medical practice and participate in marketing
efforts developed by INMD; and
4.7.3 Participate in reasonable INMD network activities and programs.
4.8 PERSONNEL POLICIES PC covenants for itself and will cause its Physician
Employees and Professional Employees to comply with personnel policies and
guidelines developed for the practice of the PC by INMD, which shall include
administrative protocols and policies designed to insure that the work sites
complies with all applicable laws and regulations, federal and state.
ARTICLE 5
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LICENSE OF INMD NAME
5.1 GRANT OF LICENSE. INMD hereby grants to PC a revocable and
non-assignable license for the term of this Agreement to use the name
Reproductive Science Center(R) and any other service names, trademark names and
logos of INMD (the "Trade Names") in conjunction with the provision of
Infertility Services by PC at the Facilities. Notwithstanding the License
granted to PC hereunder, INMD retains the absolute right to use and license the
Trade Names to others, except that INMD agrees that:
5.1.1 During the term of this Agreement, it will not enter into any
management agreement with any other physician or medical practice providing
Infertility Services within 25 miles of PC's office(s) ( the "Radius") without
PC's consent.
5.1.2 During the first eighteen months following the signing of this
Agreement, it shall not enter into a management agreement with any other
physician or medical practice providing Infertility Services which physician or
medical practice is located outside the Radius in San Diego county or, Imperial,
Riverside or Orange Counties, California (the "Territory"), without first
offering the opportunity for PC to establish an office in such counties to be
managed by INMD on essentially the same terms as in the proposed management
arrangement. PC shall within 20 days of receipt of written notice, including all
terms and copies of contracts, from INMD of INMD's intent to manage a practice
in the Territory indicate to INMD in writing, its willingness to establish, at
its costs and expense, an office in the Territory to be managed by PC. Failure
to provide the written notice within the 20-day period shall be a waiver of PC's
right of first refusal provided for in this Section 5.1.2.
5.2 FICTITIOUS NAME PERMIT. If necessary, PC shall file or cause to be
filed an original, amended or renewal application with an appropriate regulatory
agency to obtain a fictitious name permit which allows PC to practice at the
Facilities under the Trade Names and shall take any other actions reasonably
necessary to procure protection of or protect INMD's rights to the Trade Names.
INMD shall cooperate and assist PC in obtaining any such original, amended or
renewal fictitious name permit.
5.3 RIGHTS OF INMD. PC acknowledges INMD's exclusive right, ownership,
title and interest in and to the Trade Names and will not at any time do or
cause to be done any act or thing contesting or in any way impairing or tending
to impair any part of such right, title and interest. In connection with the use
of the Trade Names, PC shall not in any manner represent that it has any
ownership interest in the Trade Names, and PC's use shall not create in PC's
favor any right, title, or interest in or to the Trade Names other than the
right of use granted hereunder, and all such uses by PC shall inure to the
benefit of INMD. PC shall notify INMD immediately upon becoming aware of any
claim, suit or other action brought against it for use of the Trade Names or the
unauthorized use of the Trade Names by a third party. PC shall not take any
other action to protect the Trade Names without the prior written consent of
INMD. INMD, if it so desires, may commence or prosecute any claim or suit in its
own name or in the name of PC or join PC as a party thereto. PC
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shall not have any rights against INMD for damages or other remedy by reason of
any determination of INMD not to act or by reason of any settlement to which
INMD may agree with respect to any alleged infringements, imitations or
unauthorized use by others of the Trade Names, nor shall any such determination
of INMD or such settlement by INMD affect the validity or enforceability of this
Agreement.
5.4 RIGHTS UPON TERMINATION.
5.4.1 Upon termination of this Agreement, PC shall: (i) within 60 days
of the termination, cease using the Trade Names in all respects and refrain
from making any reference on its letterhead or other publicly-disseminated
information or material to its former relationship with INMD; and (ii) take
any and all actions required to make the Trade Names available for use by
any other person or entity designated by INMD.
5.4.2 PC's failure (except as otherwise provided herein) to cease
using the Trade Names at the termination or expiration of this Agreement
will result in immediate and irreparable damage to INMD and to the rights
of any licensee of INMD. There is no adequate remedy at law for such
failure. In the event of such failure, INMD shall be entitled to equitable
relief by way of injunctive relief and such other relief as any court with
jurisdiction may deem just and proper. Additionally, pending such a hearing
and the decision on the application for such permanent injunction, INMD
shall be entitled to a temporary restraining order, without prejudice to
any other remedy available to INMD. All such remedies hereunder shall be at
the expense of PC and shall not be a Cost of Services.
ARTICLE 6
FINANCIAL ARRANGEMENTS
6.1 SERVICE FEES. The compensation set forth in this Article 6 is being
paid to INMD in consideration of the substantial commitment made and services to
be rendered by INMD hereunder and is fair and reasonable. INMD shall be paid
monthly the following amounts (collectively "Service Fees") prior to any PC
distributions (defined herein as PDE):
6.1.1 an amount reflecting all Cost of Services (whether incurred by
INMD or PC) paid or recorded by INMD pursuant to the terms of this
Agreement;
6.1.2. during each year of this Agreement, a Base Management Fee in an
amount equal to six percent (6%) of the Revenues. Said Base Management Fee
includes the right to use the name purchased by INMD pursuant to an Asset
Purchase Agreement of even date;
6.1.3 an additional management fee ("Additional Management Fee") in an
amount equal to fifteen (15%) of the Revenues, but not to exceed 25% of
PDE. INMD agrees to
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forego the Additional Management Fee for any month during the first nine
months of this Agreement in which PC fails to achieve positive PDE.
6.2 ACCOUNTS RECEIVABLE.
6.2.1 On or before the 15th business day of each month, INMD shall
reconcile the Receivables of PC arising during the previous calendar month.
Subject to the terms and conditions of this Agreement, PC hereby sells and
assigns to INMD as absolute owner, and INMD hereby purchases from PC all
Receivables hereafter owned by or arising in favor of PC on or before the 15th
business day of each month. All Receivables are sold on a full recourse basis.
INMD shall transfer or pay such amount of funds to PC equal to the Receivable
less Service Fees. INMD shall, in addition, transfer such portion of the
Services Fees necessary to pay such portion of the Cost of Services which are
costs and expenses of PC, as described in Section 2.1 above. PC shall cooperate
with INMD and execute all necessary documents in connection with the purchase
and assignment of such Receivables to INMD or at INMD's option, to its lenders.
All collections in respect of such Receivables shall be deposited in a bank
account at a bank designated by INMD. To the extent PC comes into possession of
any payments in respect of such Receivables, PC shall direct such payments to
INMD for deposit in bank accounts designated by INMD.
6.2.2 Any Medicare or Medicaid Receivables due to PC shall be excluded
from the operation of Section 6.2.1 hereof. Any such Receivables shall be
subject to agreement of PC and INMD with respect to the collection thereof.
6.3 ADVANCES. In addition to the purchase of the Receivables set forth in
6.2 above, INMD agrees to advance funds to PC, to provide new services, utilize
new technologies, meet Cost of Services, provide working capital or fund mergers
with other physicians or physician groups into PC ("Advance"). Such Advances
shall be made only with the consent of PC.
6.3.1 Any amounts advanced hereunder shall be a debt owed to INMD by
PC and shall have payment priority over PDE distribution to Shareholders.
Any Advance shall be repaid, and accordingly deducted, from Physicians' PDE
either as a lump sum payment, within 60 days after the advance or
installments as agreed to by INMD.
6.3.2 Interest expense will be charged for funds advanced and will be
computed at the Prime Rate used by INMD's primary bank in effect at the
time of the Advance. Advances shall be evidenced by a security agreement in
the form of Exhibit 6.3.2, giving INMD a collateral interest in all
Receivables of PC and PDE to Shareholders.
6.3.3 INMD shall also be entitled, and PC specifically authorizes
INMD, to offset any Right to Manage Fee when payable to PC against any
unpaid Advances.
ARTICLE 7
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EXCLUSIVE MANAGEMENT RIGHT AND TERM
7.1 INMD Agrees to pay PC the sum of $800,000 ("Right to Manage Fee") for
the exclusive right to manage PC during the term of this Agreement (the
"Exclusive Management Right"), as follows:
7.1.1 The equivalent of Two-Hundred Thousand Dollars ($200,000) of
unregistered INMD Common Stock (the "Shares") upon the signing of this
Agreement;
7.1.2 $12,500 in cash within 30 days after the Lab provided for in
Section 3.2(b) is operational; provided INMD shall be entitled to offset
the payment against any Advances outstanding pursuant to Section 6.3.
7.1.3 $187,500 in cash the earlier of (i) 30 days after a 3-month
period, after the Lab provided for in Section 3.2(b) is operational, for
which PC's annualized Revenues are $1.5 million or (ii) 12 months from the
date of this Agreement; provided INMD shall be entitled to offset the
payment against any Advances outstanding pursuant to Section 6.3.
7.1.4 $300,000 in cash or a combination of cash and Stock, at PC's
option, within 30 days of a second Physician-Shareholder whose equity
interest is not less than 20% joining the PC and completing three (3)
months of practice at the PC; provided the Physician-Shareholder becomes a
Shareholder of PC within eighteen months from the date of this Agreement.
7.1.5 $100,000 in cash or a combination of cash and Stock, at PC's
option, within 30 days of a third Physician-Shareholder whose equity
interest is not less than 20% joining PC and completing three (3) months of
practice at the PC; provided the Physician-Shareholder becomes a
Shareholder of PC within three (3) years from the date of this Agreement.
7.1.6 Not more than 50% of the payments provided for in Sections 7.1.2
and 7.1.3, with respect to PC's option to receive part INMD Common Stock
and part cash, will be in cash. The value of any INMD Common Stock issued,
as part consideration, for the payments provided for in Sections 7.1.2 and
7.1.3 will be based on the closing price of INMD's Common Stock on the 3rd
business day prior to the issuance of the stock to PC.
7.1.7 The Stock will be unregistered and issued in relation to the
provisions of Rule 144 under the Securities Act of 1933. For a period of
two (2) years from issuance of the INMD Common Stock, PC and its assignees
shall give Xxxxxxx Xxxxx, President and CEO of INMD, or his designee, a
voting proxy as to the INMD Common Stock with respect to (i) election of
Directors or any amendments to INMD's Certificate of Incorporation
affecting Directors and (ii) any change in stock options for management and
Directors. If at any time within two years after the date of this
Agreement, INMD shall determine to file a registration
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statement under the Securities Act of 1933 (the "Act") on Form S-l or its
equivalent covering an underwritten public offering of INMD's common stock
by INMD (other than an exchange offer by INMD to stockholders of another
corporation or an offer to INMD's employees) or by any of its stockholders,
INMD shall so notify PC at least 30 days prior to the filing. Upon written
request made by PC within 15 days after the notice is given, INMD shall
include in the registration statement such number of the shares of the
Stock acquired by PC pursuant to this Agreement as PC shall designate in
its request, except that INMD shall not be obligated to include any of the
Stock in the registration statement if:
(i) in the case of a proposed registration statement covering
shares to be offered by INMD, INMD or any proposed underwriter of the
shares covered by the registration statement advises PC that it reasonably
believes that inclusion of the Stock would interfere with the offering of
the other shares being registered;
(ii) PC shall have failed to agree in writing within 10 days
after INMD's request to do so: (A) not to sell any of the Stock for such a
period of time as INMD may designate (not to exceed 120 days after the
effective date of the registration statement), or (B) to distribute the
shares for which registration was requested (or such lesser number of
shares, in proportion to the total number of shares to be offered pursuant
to the registration statement as the underwriter may specify) pursuant to a
firm (as distinguished from a best efforts) underwriting through an
underwriter designated by INMD;
(iii) INMD withdraws the registration statement with respect to
all the shares for which registration was contemplated before the
registration statement becomes effective; or
(iv) PC shall have failed to furnish to INMD such information and
other material as INMD or its counsel may have reasonably requested with
respect to the public offering of its shares or shall have failed to take
any other action or execute any documents which INMD or its counsel
considers necessary or desirable in connection with the registra tion
statement.
7.1.8 INMD currently has an S-1 Registration Statement for a public
offering pending under the Act. PC specifically waives any rights to have
the Shares included in such Registration Statement under Section 7.1.7
7.2 The term of this Agreement shall begin on June 6, 1997 (the "Closing
Date"), and shall expire twenty (20) 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 expiration date 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
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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.
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 period and thereafter
shall not have cured the breach with the exercise of due diligence.
8.1.3 ILLEGALITY.
(a) Any 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 the services
provided by INMD under this Agreement are unlawful or that the practice of
medicine by PC as contemplated by this Agreement 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.
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(b) Any illegality may also be cured and the termination of this
Agreement avoided by implementing Section 11.9 entitled "Separability."
8.2 TERMINATION BY INMD FOR PROFESSIONAL DISCIPLINARY ACTIONS. PC shall be
obligated to suspend a physician whose authorization to practice medicine is
suspended, revoked or not renewed. INMD may terminate this Agreement upon 10
days prior written notice to PC if a Physician's authorization to practice
medicine is suspended, revoked or not renewed and PC has failed to suspend such
physician; provided, however, such action may not be taken until PC has been
given 30 days to resolve such physician's authorization to practice medicine. PC
shall notify INMD within five (5) days of a notice that a physician's
authorization to practice medicine is suspended, revoked or not renewed or that
formal disciplinary action has been taken against a physician which could
reasonably lead to s suspension, revocation or non-renewal of a physician's
license.
ARTICLE 9
PURCHASE OF ASSETS - OBLIGATIONS AND OPTIONS
9.1 TERMINATION BY INMD If INMD terminates this Agreement due to the
insolvency of PC (Section 8.1.1) for reasons other than circumstances directly
attributable to INMD, for a material breach by PC (Section 8.1.2), or for
disciplinary action against a Physician Employee (Section 8.2), PC agrees,
within 90 days of the date of termination, at INMD's option;
9.1.1 To purchase from INMD the PC Assets and leasehold improvements
at their net book value determined in accordance with GAAP, consistently
applied, as of the date of termination.
9.1.2 To pay INMD 85% of the preceding 12 months' Revenues over $1.5
million.
9.1.3 In addition, during the first five years of this Agreement PC
shall repay INMD such portion of the payment received by PC from INMD for
the Exclusive Management Right, determined by multiplying the number of
years the Management Agreement has been in effect rounded off to the
nearest quarter of the year by $180,000 ("Earned Amount"). The Earned
Amount is then deducted from the amount PC actually received from INMD for
the Exclusive Management Right; the excess, if any, equals the amount to be
repaid by PC to INMD. Further, PC shall pay all Base Management Fees due as
of the termination together with any other Service Fees, including unpaid
Advances.
9.1.4 If a purchase is completed under this Section 9.1, PC shall
assume all leases for offices and equipment used directly for the
management and operation of PC's business and may hire such employees as it
determines are necessary to operate the medical practice and business.
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9.2 TERMINATION BY PC In the event this Agreement is terminated by PC as a
result of the insolvency of INMD (8.1.1) or material breach by INMD (8.1.2),
INMD agrees, within 90 days of the date of termination, at PC option, to sell to
PC the PC Assets and leasehold improvements as set forth in Sections 9.1.1.
9.2.1 If a termination occurs under this Section 9.2, PC shall assume
all leases for offices and equipment used directly for the management and
operation of PC's business and may hire such employees as it determines are
necessary to operate the medical practice and business.
9.2.2 In the event PC exercises the option set forth in this Section
9.2, closing shall occur within 90 days of the date the option is
exercised. In the event PC does not exercise the option within 90 days of
termination, PC shall have relinquished its right and interest to the PC
Assets and INMD shall be free to use or dispose of the PC Assets as it
determines with neither party having any further obligations to the other.
9.3 TRANSFER OF OWNERSHIP
Upon receipt of payment of the purchase price and other payments due, INMD
shall transfer ownership and possession of the PC Assets, and assign all right,
title and interest in and to and obligations under the Lease(s) to PC and return
to PC all security deposits. PC shall have the option of receiving full credit
on the purchase price for all liens, encumbrances or security interest, or of
having INMD transfer ownership of the PC Assets free and clear of all liens,
encumbrances or security interests thereon.
9.4 BIOLOGICAL MATERIALS. Upon termination of this Agreement, within 30
days of the date of termination, PC will notify all patients with Biological
Materials in storage at the Facility, that INMD will no longer provide
management services and that the care and custody of such Biological Materials
rests solely with PC. The form of such notification shall be with the consent of
INMD (such consent not to be unreasonably withheld).
ARTICLE 10
INSURANCE
10.1 INMD shall carry professional liability insurance, covering itself and
its employees providing services under this Agreement in the minimum amount of
$1 million per incident, $3 million in the aggregate, at its own expense. INMD
shall also carry a policy of public liability and property damage insurance with
respect to the Facilities under which the insurer agrees to indemnify INMD
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 INMD. The minimum limits of
liability of such insurance shall be $1 million combined single limit covering
bodily injury and property damage. If possible under the terms of
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the insurance coverage, PC shall be named as additional insureds on the INMD's
public liability and property damage insurance policies; provided however,
conditions for being made an additional insured should be (i) PC utilizing
patient informed consent forms supplied by INMD and (ii) PC complying with
requirements of INMD's insurance company. A certificate of insurance evidencing
such policies shall be presented to PC within thirty (30) days after the
execution of this Agreement. Failure to provide such certificate(s) with such
period shall constitute a material breach by INMD hereunder.
10.2 INMD shall use its best efforts to cause PC, Physicians and
physician-employees to be made named insureds under INMD's professional
liability coverage. If PC is not made an insured, PC shall carry professional
liability insurance covering PC and PC's employees in the amount of $2 million
per incident, $5 million in the aggregate. INMD shall be made an additional
insured under such coverage and Certificates of Insurance evidencing such
policies and additional insured status shall be presented to INMD within ninety
(90) days after the execution of this Agreement.
10.3 PC and INMD shall provide written notice to the other at least ten
(10) days in advance of the effective date of any reduction, cancellation or
termination of the insurance required to be carried by each hereunder.
ARTICLE 11
NON-SOLICITATION AND NON-COMPETITION
11.1 The PC recognizes and acknowledges that INMD 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 INMD 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 INMD, and that INMD would not enter this Agreement without
the following covenants:
(a) 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.
(b) 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 INMD; or (ii) which offers any
type of service or product to third parties substantially similar to those
offered by INMD.
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(c) 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 INMD, or form a corporation, partnership or
joint venture or other entity with any such employee, who is currently employed
by INMD or had been employed by INMD within one (1) year prior to the
termination of this Agreement; except that this restriction shall not apply with
respect to any employee of PC who was an employee of PC immediately prior to the
execution of this Agreement and becomes an employee of INMD subsequent to the
execution of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 INDEPENDENT CONTRACTOR. INMD and PC are independent contracting
parties. In this regard, the parties agree that:
12.1.1 The relationship between INMD 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 INMD and PC;
12.1.2 Notwithstanding the authority granted to INMD herein, INMD and
PC agree that PC shall retain the full authority to direct all of the
medical, professional, and ethical aspects of its medical practices;
12.1.3 Any powers of PC not specifically vested in INMD by the terms
of this Agreement shall remain with PC;
12.1.4 PC shall, at all times, be the sole professional PC of the
Physician and, except with INMD's specific consent, the sole employer of
the Physician Employees, the Other Professional Employees required by law
to be employees of PC 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 that
are employees of PC;
12.1.5 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;
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12.1.6 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
12.1.7 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 PC interests (except all Physicians
shall be required to accept and be bound by the Agreement), 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 and the individual Physician Stockholder(s).
12.2 FORCE MAJEURE. No party shall be liable to the other parties 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. This provision shall not apply to INMD's obligation to provide
for a backup generator for the Lab provided as part of the Facilities.
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 INMD and PC shall not be used in any manner or on behalf of INMD in any
advertising or promotional materials or otherwise without PC's prior written
consent. However, INMD may use PC's name or address in advertising to the public
solely for the purpose of providing directions to the office 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.
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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 INMD may assign this Agreement to
any subsidiary or affiliate of INMD 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. In particular, the obligation to pay Service Fees shall be
owed by any of the Physicians or any other Shareholder who establishes, during
the term of this Agreement, whether alone or with one or more Physicians, or
joins a medical practice in the PC Service Area which offers, whether through
that Shareholder or with his assistance, Infertility Services.
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 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 San Diego (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. 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
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 Southern
District of California, to whose jurisdiction for such purposes PC and INMD
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 taken 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.
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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:
12.11.1 If for INMD at:
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxx, President
With a copy to:
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 000000-0000
Attention: Xxxxxx Xxxxx, General Counsel
12.11.2 If for PC at:
Reproductive Sciences Medical Center, Inc.
0000 Xxxxxxx Xxxx Xxx, Xxxxx 000
Xx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, M.D., Ph.D.
With a copy to:
Xxxxx Gamma, Esq.
Xxxxxxx Xxxx & Associates
000 Xxxxxxxx Xxx
Xxxxxxxx, XX 00000-0000
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 and the
Asset Purchase Agreement 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.
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12.13 NO MEDICAL PRACTICE BY INMD. INMD will not engage in any activity
that constitutes the practice of medicine, and nothing contained in this
Agreement is intended to authorize INMD to engage in the practice of medicine or
any other licensed profession.
12.14 CONFIDENTIAL INFORMATION.
(a) 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.
(b) 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.
(c) In order to minimize any misunderstanding regarding what information is
considered to be Confidential Information, INMD or PC will designate at each
others request the specific information which INMD or PC considers to be
Confidential Information.
12.15 INDEMNIFICATION.
12.15.1 INMD 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) arising out
of or in connection with any act or failure to act by INMD 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.
12.15.2 PC agrees to indemnify and hold harmless INMD, its
shareholders, directors, officers, employees and servants from any suits,
claims, actions, losses, liabilities or expenses (including reasonable
attorney's fees) arising out of or in connection with any act or failure to
act by PC related to the performance of its duties and responsibilities
under
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this Agreement. The obligations contained in this Section 12.15.2 shall
survive termination of this Agreement.
12.16 OWNERSHIP OF INTELLECTUAL PROPERTY. Any intellectual property
developed by INMD shall be owned by INMD. Any intellectual property developed by
PC shall be owned by PC. Jointly developed intellectual property shall be
covered by written agreement between the parties. Absent such agreement, the
party who principally funded the development shall be the owner, notwithstanding
the participation of the other party in the development.
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/ Xxxxxx X. Xxxx
--------------------------------------------------------
XXXXXX X. XXXX, VICE PRESIDENT & CHIEF FINANCIAL OFFICER
REPRODUCTIVE SCIENCES MEDICAL CENTER, INC.
BY: /s/ Xxxxxx X. Xxxx, M.D.
--------------------------------------------------------
XXXXXX X. XXXX M.D., PH.D., PRESIDENT
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EXHIBIT 3.2
DESCRIPTION OF OFFICE AND FACILITIES
TO BE PROVIDED BY INMD TO PC
0000 Xxxxxxx Xxxx Xxx, Xxxxx 000, Xx Xxxxx, Xxxxxxxxxx 00000
00000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxxxxx 00000
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EXHIBIT 4.3(A)
SHAREHOLDER-PHYSICIAN EMPLOYMENT AGREEMENT
(See Attached)
EXHIBIT 4.3(B)
EMPLOYEE-PHYSICIAN EMPLOYMENT AGREEMENT
(See Attached)
EXHIBIT 4.3(C)
PERSONAL RESPONSIBILITY AGREEMENT
(See attached)
EXHIBIT 6.3.2
SECURITY AGREEMENT
[See attached]