UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act 1934
Date of Report: June 20, 1996
INTEGRAMED AMERICA, INC.
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(Exact name of registrant as specified in charter)
Delaware
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(State of other jurisdiction of incorporation)
0-20260 and 1-11440 06-1150326
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(Commission File Numbers) (IRS Employer Identification No.)
One Manhattanville Road, Purchase, NY 10577
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (914) 253-8000
Registrant's former name: IVF America, Inc.
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Item 2. Acquisition or Disposition of Assets
On June 7, 1996, the Registrant entered into an Agreement and Plan of
Merger (the "Agreement") pursuant to which INMD Acquisition Corp. ("IAC"), a
Florida corporation and wholly-owned subsidiary of the Registrant, acquired all
of the outstanding stock of the following three related Florida corporations:
The Climacteric Clinic, Inc. ("CCI"), Midlife Centers of America, Inc. ("MCA"),
and Women's Research Centers, Inc. ("WRC"), America (collectively "the Merger
Companies"), and 51% of the outstanding stock of the National Menopause
Foundation, Inc. ("NMF"), also a related Florida corporation (the Merger
Companies and NMF are hereinafter sometimes referred to as the "Companies").
Pursuant to the Agreement, the Merger Companies were merged with and into IAC,
the surviving corporation in the Merger, which will continue its corporate
existence under the laws of the State of Florida under the name Women's Medical
& Diagnostic Center, Inc. ("WMDC"). Founded by Morris Notelovitz, M.D., Ph.D.
("the "Physician"), a world-renowned clinician, researcher, and lecturer on
topics related to women's midlife health issues, the Companies will form the
basis for IntegraMed America's new Women's Medical & Diagnostic Center Division
(the "Division"). Under the Agreement, the Physician became a member of the
Registrant's Board of Directors, and, under a long term employment agreement,
the Physician will serve as Vice President for Medical Affairs and Medical
Director of the Division. IAC simultaneously entered into an Employment
Agreement with the Physician pursuant to which the Physician will provide
medical services, as defined.
CCI is a full service clinical ambulatory care facility that offers
comprehensive diagnostic and treatment alternatives for healthcare issues common
to peri and post-menopausal women. WRC is a company dedicated to contracting
with pharmaceutical companies for clinical research related to the treatment of
health issues common to peri and post-menopausal women. NMF is dedicated to the
development and sale of educational programs and products to peri and
post-menopausal women. MCA is a management and consulting company. The
Gainesville based companies all shared central resources and management talent
through MCA.
The purchase price for the Companies consisted of 666,666 shares of the
Registrant's Common Stock, $400,000 in cash, and a secured promissory note in
the amount of $600,000 payable in sixteen quarterly installments of $37,500
beginning September 1, 1996 with simple interest payable at a rate of 4.16%.
Under the Agreement, the Registrant will provide funding to and for the
development of NMF on an as-needed basis during the four-year period commencing
June 6, 1996, in amounts not to exceed $500,000 in the aggregate.
Financial statements of the Companies will be filed within the time
period required by this report.
On May 15, 1996, the Registrant entered into an asset purchase and a long
term management agreement with W. F. Howard, M.D., P.A. (the "P.A."), a provider
of conventional infertility and assisted reproductive technology ("ART")
services. The aggregate purchase price was approximately $702,500 of which
approximately $244,000 was paid at closing and the Registrant issued a
promissory note for the $458,000 balance which is payable as follows: $100,000
on the last business day of May 1997 and 1998, and $36,786 on the last business
day of May in each of the seven years thereafter, thru May 2005. The assets
acquired, primarily medical equipment, furniture and fixtures, will continue to
be used by the P.A. in the provision of infertility and ART services.
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Item 5. Other
On June 6, 1996, the Registrant made a new conversion offer (the "Offer")
to the holders ("Preferred Stockholders") of the 773,878 outstanding shares of
the Registrant's Series A Cumulative Convertible Preferred Stock ("Preferred
Stock"). Under the Offer, Preferred Stockholders would receive four shares of
the Registrant's Common Stock upon conversion of a share of Preferred Stock
subject to the terms and conditions set forth in the Offer. The Offering is
conditioned upon a minimum of 400,000 shares of Preferred Stock being tendered;
provided that the Registrant reserves the right to accept fewer shares. The
Offer will expire on Wednesday, July 10, 1996, at 5 p.m. E.D.T.
The Offer is being made pursuant to an Offering Circular dated June 5, 1996
and an exemption from registration under the Securities Act of 1933. This notice
shall not constitute an offer to sell or the solicitation of an offer to buy any
securities of the Registrant.
On June 20, 1996, the Registrant announced that the Court of Chancery of
the State of Delaware has denied a claim by a Preferred Stockholder, in
Bernstein v. IVF America, et.al. that the anti-dilution rights of existing
Preferred Stockholders were required to be expanded as a result of a previous
Conversion Offer made by the Company in November 1994.
The lawsuit was originally filed in the Court on December 13, 1994. By its
June 11, 1996 decision, the Court has directed that the Complaint be dismissed
and judgement entered accordingly. The plaintiff has a right of appeal but has
not indicated what, if any, further action he intends to take.
Exhibits
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10.52 - Agreement and Plan of Merger By and Among IVF America, Inc., INMD
Acquisition Corp., The Climacteric Clinic, Inc., Midlife Centers of America,
Inc., Women's Research Centers, Inc., America, National Menopause Foundation,
Inc. and Morris Notelovitz.
10.53 - Employment Agreement between Morris Notelovitz, M.D., Ph.D. and IVF
America, Inc., d/b/a IntegraMed America.
10.54 - Physician Employment Agreement between Morris Notelovitz, M.D., Ph.D.
and INMD Acquisition Corp ("IAC"), a Florida corporation and wholly owned
subsidiary of IVF America, Inc. ("INMD").
10.55 - Management Agreement between IVF America, Inc., d/b/a IntegraMed
America, and W. F. Howard, M.D., P.A.
10.56 - Asset Purchase Agreement between IVF America, Inc., d/b/a IntegraMed
America, and W.F. Howard, M.D., P.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRAMED AMERICA, INC.
(Registrant)
Date: June 20, 1996 By: /s/ Dwight P. Ryan
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Dwight P. Ryan
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IVF AMERICA, INC.
INMD ACQUISITION CORP.
THE CLIMACTERIC CLINIC, INC.
MIDLIFE CENTERS OF AMERICA, INC.
WOMEN'S RESEARCH CENTERS, INC., AMERICA
NATIONAL MENOPAUSE FOUNDATION, INC.
AND
MORRIS NOTELOVITZ, M.D.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 7, 1996 (the "Agreement"),
by and among (i) IVF America, Inc., a Delaware corporation, doing business as
IntegraMed America ("Parent"), (ii) INMD Acquisition Corp., a Florida
corporation and wholly-owned subsidiary of Parent, ("Sub"), (iii) The
Climacteric Clinic, Inc., a Florida corporation ("CCI"), (iv) Midlife Centers of
America, Inc., a Florida corporation ("MCA"), (v) Women's Research Centers,
Inc., America, a Florida corporation ("WRC"), (vi) National Menopause
Foundation, Inc., a Florida corporation ("NMF"), and (viii) Morris Notelovitz,
M.D., an individual having a principal place of business at Office Park West,
222 S.W. 36th Terrace, Gainesville, Florida 32607 ("Seller"). (CCI, MCA and WRC
are hereinafter sometimes referred to collectively as the "Merger Companies," or
singularly as a " Merger Company;" the Merger Companies and NMF are hereinafter
sometimes referred to collectively as the "Companies," or singularly as a
"Company.")
W I T N E S S E T H
WHEREAS, the respective boards of directors of Parent, Sub and the Merger
Companies have approved or adopted this Agreement, which provides for the merger
of the Merger Companies with and into Sub (the "Merger") on the terms and
conditions set forth herein and in accordance with the provisions of the Florida
Business Corporation Act (the "BCA");
WHEREAS, the boards of directors of Sub and the Merger Companies have
recommended this Agreement to the respective shareholders of Sub and the Merger
Companies, and such shareholders have approved this Agreement and the
consummation of the transactions contemplated hereby;
WHEREAS, Parent, Sub, the Merger Companies and Seller desire to make
certain representations and warranties and other agreements in connection with
the Merger;
WHEREAS, Seller is the holder of 100 shares of common stock, having a par
value of $1.00 per share, of NMF (the "NMF Stock"), constituting all of the
issued and outstanding capital stock of NMF.
WHEREAS, Seller desires to sell to Parent, and Parent desires to purchase
from Seller, fifty one-percent (51%) of the NMF Stock held by Seller.
NOW, THEREFORE, Parent, Sub, the Companies and the Seller hereby agree as
follows:
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ARTICLE I
THE MERGER
1.1 The Merger. In accordance with the provisions of this Agreement
and the BCA, at the Effective Time (as defined in Section 1.2), the Merger
Companies shall be merged with and into Sub, the separate existence of each of
the Merger Companies shall thereupon cease, and Sub shall be the surviving
corporation in the Merger (sometimes hereinafter called the ("Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Florida under the name Women's Medical & Diagnostic Center, Inc.
1.2 Effective Time of the Merger. The Merger shall be effected by
filing articles of merger, substantially in the form of Exhibit 1.2 attached
hereto (the "Articles of Merger"), with the Department of State of the State of
Florida in accordance with section 607.1105 of the BCA. The effective date of
the Merger (the "Effective Date") shall be the date upon which the Articles of
Merger shall have been filed with the Department of State of the State of
Florida and the effective time of the Merger (the "Effective Time") shall be the
time of the filing of the Articles of Merger with the Department of State of the
State of Florida.
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Richard M.
Knellinger, P.A., Barnett Bank Building, Suite 305, 2815 NW 13th Street,
Gainesville, Florida 32609 at 11:00 a.m., local time, on the date first above
written.
1.4 Articles of Incorporation. The Articles of Incorporation of Sub in
effect at the Effective Time shall continue to be the Articles of Incorporation
of the Surviving Corporation until amended in accordance with applicable law.
1.5 By-Laws. The By-Laws of Sub as in effect at the Effective Time
shall continue to be the By-Laws of the Surviving Corporation until amended in
accordance with applicable law.
1.6 Directors and Officers of Surviving Corporation.
(a) The directors of Sub at the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Articles of Incorporation or By-Laws
of the Surviving Corporation or as otherwise provided by law.
(b) The officers of Sub at the Effective Time shall be the
initial officers of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Articles of Incorporation or By-Laws
of the Surviving Corporation, or as otherwise provided by law.
1.7 Conversion of the Merger Companies' Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof, the outstanding shares of the Common Stock (the "Merger Company
Shares") of the Merger Companies (the "Merger Company Stock") shall be treated
as follows:
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(a) All Merger Company Shares issued and outstanding on the
Closing Date shall be converted into shares of the voting Common Stock of
Parent, par value $0.01 per share ("Parent Stock"), and cash, (collectively, the
"Merger Consideration"), as provided in Section 1.8 below. From and after the
Closing Date, each certificate therefore evidencing one or more Merger Company
Shares shall no longer evidence Merger Company Shares but shall evidence only
the Merger Consideration in the manner provided below in Section 1.8 of this
Agreement.
(b) All capital stock of the Merger Companies held in the
treasury of the Merger Companies immediately prior to the Closing Date shall be
canceled and no Parent Stock, cash or other consideration of any kind shall be
delivered in exchange therefor under this Agreement.
1.8 Exchange of Certificates: Merger Consideration
(a) As of the Closing Date, the stock transfer books of the
Merger Companies shall be closed and no transfer of certificates formerly
representing Company Shares outstanding at the Closing Date shall thereafter be
made. Parent shall act as the exchange agent for the surrender and exchange of
Merger Company Shares for the Merger Consideration. At the Closing, the Seller
shall deliver to Parent in exchange for the Merger Consideration, the stock
certificate(s) for such Merger Company Stock, duly endorsed for transfer or
accompanied by stock transfer powers executed in blank. Parent shall have no
responsibility or liability for surrendered stock certificates until its actual
receipt of same.
Upon Seller's surrender of certificate(s) representing the
outstanding shares of Merger Company Stock held by Seller duly endorsed for
transfer, together with duly executed and completed stock transfer powers
endorsed in blank, and subject to the provisions of the preceding paragraph,
Seller shall receive upon such surrender in exchange for the shares of Merger
Company Stock held by Seller, the following Merger Consideration:
(i) In exchange for Seller's Merger Company Shares, (A) cash
in an aggregate amount equal to Three-Hundred Fifty Thousand Dollars ($350,000),
as more specifically described in Section 1.8(b); and (B) a number of shares of
Parent Stock ("Parent Shares") equal to the quotient derived by dividing Two
Million Dollars ($2,000,000) by the "Parent Share Value" as defined in clause
"(iii)" below.
(ii) Notwithstanding any provisions of this Agreement, no
fractional Parent Shares will be issued. Parent shall aggregate the Parent
Shares issuable to Seller, and, if following such aggregation, Seller would be
entitled to receive a fractional Parent Share but for this Section, Seller will,
in lieu of such fractional share and upon surrender of certificate or
certificates of Merger Company Stock, receive an amount in cash equal to the
Parent Share Value multiplied by the fraction of the Parent Share to which
Seller would otherwise be entitled.
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(iii) For purposes of this Agreement, the "Parent Shares
Value" shall equal the average bid price of a Parent Share, as reported in The
Wall Street Journal, NASDAQ National Market System Transactions, for the ten
consecutive trading days prior to the earlier of (A) the Closing Date or (B) the
date the Merger is publicly announced, subject to a ceiling of Three Dollars
($3.00) per share and a floor or Two Dollars ($2.00) per share.
(b) The Three-Hundred Fifty Thousand Dollars ($350,000) cash
portion of the Merger Consideration to be paid to Seller pursuant to Section
1.8(a)(i) shall be paid at the Closing.
(c) Allocation of Merger Consideration
The Merger Consideration shall be allocated $2,350,000 to the
Merger Company Stock and $650,000 to the NMF Shares.
1.9 Stock Free of Liens. The Merger Companies and Seller warrant that
the Company Stock shall be transferred in the Merger free and clear of all
liens, claims, security interests, restrictions, prior assignments, charges or
encumbrances of any kind or nature whatsoever, including, without limitation,
any tax liens (collectively, "Liens").
ARTICLE II
PURCHASE AND SALE OF NMF STOCK
2.1 Sale and Purchase of NMF Shares. Simultaneously with the execution
and delivery of this Agreement, Seller shall sell to Parent and Parent shall
purchase from Seller, free and clear of all Liens, fifty-one (51) shares of NMF
Stock (the "NMF Shares"), such NMF Shares to constitute fifty-one percent (51%)
of the total number of issued and outstanding shares of NMF's capital stock.
2.2 Purchase Price. Parent is purchasing the NMF Shares from Seller
for an aggregate purchase price of Six-Hundred Fifty Thousand Dollars ($650,000)
(the "Purchase Price"), payable as follows:
(a) At Closing, Parent shall pay to Seller the sum of
Fifty-Thousand Dollars ($50,000);
<PAGE>
(b) The balance of Six-Hundred Thousand Dollars ($600,000) shall
be paid in sixteen (16) quarterly installments of Thirty-Seven Thousand Five
hundred Dollars ($37,500) beginning September 1, 1996. Parent will pay simple
interest on the unpaid portion of such balance at a rate equal to 4.16 %, with
accrued interest payable with each quarterly installment.
2.3 Rights of First Refusal.
(a) Definitions. The following terms shall have the following
meanings whenever used in this Section 2.3:
(i) "Bona Fide Offer" shall mean an offer, in writing, made
and signed by an offeror or offerors who is or are a person or persons or entity
or entities financially capable of carrying out the terms of such Bona Fide
Offer.
(ii) "Bona Fide Offeror" shall mean the person or persons
making the Bona Fide Offer.
(iii) "Registered Notice" shall mean notice sent by
registered or certified mail, return receipt requested, and first-class postage
prepaid or by actual delivery by messenger or overnight deliver service; and, if
such Registered Notice is sent with respect to a Bona Fide Offer (as provided
for in Section 2.3(b) hereof), such Registered Notice shall contain a true and
complete copy of the Bona Fide Offer, setting forth the number of shares of NMF
Stock to be sold by Seller, the price thereof and all of the terms and
conditions thereof, with the name(s), address(es) (both home and office) and
business(es) or other occupation(s) of the offeror or offerors. Any notice which
does not contain all such requisite information shall not be considered a
"Registered Notice" for the purposes of Section 2.3(b) hereof.
(b) Receipt of Bona Fide Offer by Seller/Right of First Refusal.
(i) In the event that Seller shall receive a Bona Fide Offer
to purchase any or all of Seller's NMF Stock, and in the further event that
Seller shall desire to accept such Bona Fide Offer, Seller shall promptly send
Registered Notice to Parent. Such Registered Notice shall offer to sell such
shares of Company Stock that are the subject of the Bona Fide Offer to Parent on
terms the same as those in such Bona Fide Offer (the "Bona Fide Offer Terms").
Parent shall accept any offer to purchase shares, if at all, by notifying
Seller, in writing, within forty (40) days, of its election to purchase such
Bona Fide Offer Shares, and including in such notice a bank or cashiers' check
for the total purchase price of the Bona Fide Offer Shares to be so purchased.
(ii) If all Bona Fide Offer Shares are not purchased by
Parent pursuant to this Section 2.3(b), Seller may sell such Bona Fide Offer
Shares to the Bona Fide Offeror, at the Bona Fide Offer Terms for a period of
time not to exceed forty (40) days from the date the Registered Notice is
received by Parent. Any sale of Bona Fide Offer Shares may not be made after
such forty (40) day period, or to a person other than the Bona Fide Offeror
without again complying with the provisions of this Section 2.3.
<PAGE>
2.4 Issuance of Equity Securities by NMF.
(a) NMF agrees that it will not issue any additional equity
securities in the future without the written consent of Seller and Parent who
will mutually determine the terms of such offer(s).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND SELLER
Each of the Companies and Seller jointly and severally represent and
warrant to Parent and Sub as follows:
3.1 Ownership of the Shares. Seller is the sole record and beneficial
owner of the Merger Company Shares and the NMF Shares, free and clear of all
Liens, and the Merger Company Shares and NMF Shares set forth opposite his name
on Exhibit 3.1 represent all of the outstanding capital stock of the Companies.
There is not outstanding any security, option, warrant, right, agreement,
understanding on commitment of any kind entitling any person to acquire any of
the Company Shares, NMF Shares or any capital stock of any of the Companies.
3.2 Authority; Consents; No Conflicts.
(a) Seller has the full legal right, power and authority to enter
into and to perform this Agreement and all other agreements, certificates and
documents executed or delivered, or to be executed or delivered, by Seller in
connection with this Agreement (collectively, with this Agreement, "Seller's
Documents"). The Seller's Documents have been duly authorized, executed and
delivered by Seller, and the Seller's Documents are legal, valid and binding
obligations of Seller, enforceable in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) No consent, approval, authorization, or waiver is required
from and no declaration or filing is required to be made to any governmental
authority or any other third party, in connection with the execution, delivery
and performance of this Agreement or any of Seller's Documents by Seller, and
such execution, delivery and performance and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate any
of the provisions of any of the Companies' articles of incorporation or by-laws,
(ii) violate any provision of applicable law or regulation or of any writ,
judgment, order, award, injunction or decree applicable to Seller or any
Company, (iii) violate, conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, instrument or writing of any nature to which Seller or any Company is
a party or by which he or any of them is bound or to which any of his or the
Companies' respective assets is subject, or (iv) result in the creation of any
Lien on any of any Company's assets or properties.
<PAGE>
(c) Each Company has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each
Company and the consummation by each Company of the transactions contemplated on
its part hereby have been duly authorized by each respective Company's board of
directors and stockholders, and no other corporate proceedings on the part of
any Company are necessary to authorize this Agreement or for such Company to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each Company and constitutes a valid and
binding agreement of such Company enforceable against each such Company in
accordance with its terms.
3.3 Organization, Good Standing and Authority of the Companies. Each
Company is a corporation duly organized, validly existing and in good standing
under the laws of Florida and has the full power and authority to own, lease and
operate its properties as it now does and to carry on its business as it is
presently being conducted. Each Company is duly qualified and in good standing
as a foreign corporation in all jurisdictions in which the property owned or
leased by it or the nature of the activities conducted by it requires
qualification. The copies of each Company's articles of incorporation and
by-laws that have been delivered to Parent are complete and correct as of the
date of this Agreement. Each Company's minute books that have been exhibited to
the Parent are complete and accurately reflect all action taken by the board of
directors and stockholders of such Company.
3.4 Capitalization.
(a) As of the date of this Agreement, MCA's authorized
capitalization consists of 7,500 shares of common stock, par value $1.00 per
share, of which 100 shares are issued and outstanding. All of the outstanding
shares of common stock were duly authorized for issuance, were validly issued,
and are fully paid and nonassessable and, except for the MCA capital stock
constituting the Merger Company Shares, there are no outstanding shares of
capital stock or other security of MCA.
(b) As of the date of this Agreement, CCI's authorized
capitalization consists of 7,500 shares of common stock, par value $1.00 per
share, of which 100 shares are issued and outstanding. All of the outstanding
shares of common stock were duly authorized for issuance, were validly issued,
and are fully paid and nonassessable and, except for the CCI capital stock
constituting the Merger Company Shares, there are no outstanding shares of
capital stock or other security of CCI.
<PAGE>
(c) As of the date of this Agreement, WRC's authorized
capitalization consists of 500 shares of common stock, par value $1.00 per
share, of which 50 shares are issued and outstanding. All of the outstanding
shares of common stock were duly authorized for issuance, were validly issued,
and are fully paid and nonassessable and, except for the WRC capital stock
constituting the Merger Company Shares, there are no outstanding shares of
capital stock or other security of WRC.
(d) As of the date of this Agreement, NMF's authorized
capitalization consists of 500 shares of common stock, par value $1.00 per
share, of which 100 shares are issued and outstanding. All of the outstanding
shares of common stock were duly authorized for issuance, were validly issued,
and are fully paid and nonassessable and, except for the NMF capital stock
constituting NMF Shares and the 100 Shares of NMF Stock held by Seller, there
are no outstanding shares of capital stock or other security of NMF.
(e) There are no agreements, commitments or restrictions relating
to ownership or voting of any shares of stock or other securities of any
Company, other than the shareholder's agreements entered into by Seller and each
Company (collectively, the "Shareholders Agreement") which are listed on Exhibit
3.4.
(f) No Company has any subsidiaries nor any equity interest in
any corporation, partnership, joint venture or other entity. Each Company has
conducted its business only through such Company.
3.5 Financial Statements. Exhibit 3.5 contains (i) the unaudited
cash-basis statements of assets, liabilities and equity of each Company as of
December 31, 1995, 1994 and 1993, together with the related statements of
receipts and disbursements for the years then ended; and (ii) an unaudited
cash-basis statement of assets, liabilities and equity of each Company as of
April 30, 1996, together with the related statements of receipts and
disbursements for the four months then ended (the "Unaudited Cash Basis
Statements").
3.6 Absence of Undisclosed Liabilities. No Company has any liability
or obligation of any kind, whether accrued, absolute, contingent or otherwise,
other than (i) liabilities and obligations under leases, commitments and other
agreements entered into in the ordinary course of business, (ii) liabilities and
obligations to trade creditors incurred in the ordinary course of business since
April 30, 1996, none of which is unusual in nature or amount and all of which in
the aggregate are not material, and (iii) other liabilities and obligations that
are not material in amount or are set forth in Exhibits to this Agreement. All
of each Company's indebtedness to Seller and any affiliate of Seller has been
discharged in full as set forth in Exhibit 3.26 to this Agreement without any
adverse tax consequence to said Company.
3.7 Absence of Certain Changes. Since December 31, 1995, each Company
has operated its business in the ordinary course and consistent with past
practice and there has been no material adverse change in the business,
properties, assets, liabilities, commitments, earnings, financial condition or
prospects of any Company.
<PAGE>
3.8 Real and Personal Property; Absence of Encumbrances.
To the best of their knowledge and belief:
(a) Each Company has good and marketable title to or, in the case
of leases and licenses, valid and subsisting leasehold interests or licenses in,
all of its properties and assets of whatever kind (whether real or personal,
tangible or intangible), including, without limitation, all properties and
assets that are shown on the Unaudited Cash Basis Statements and to properties
and assets that are shown on any Exhibit to this Agreement, in each case free
and clear of any and all Liens, except as may be set forth in Exhibits 3.8(b)
and 3.8(c) and except for liens for current taxes and assessments not yet due
and payable. The assets owned by each Company, together with those leased from
unrelated third parties on an arm's-length basis, constitute all of the assets,
tangible and intangible, used in or needed to conduct each Company's business in
the manner in which it is presently conducted.
(b) Exhibit 3.8(b) lists all the equipment, machinery, computers,
furniture, leasehold improvements, vehicles and other personal property
(collectively, "Personal Property") owned or leased by each Company and all
interests therein. All Personal Property owned or leased by each Company is in
good operating condition and in good condition of maintenance and repair,
ordinary wear and tear excepted.
(c) Exhibit 3.8(c) lists all the real property (including
buildings and structures) owned or leased by each Company and all interests
therein. All such real property, buildings and structures, and the equipment
therein, and the operations and maintenance thereof, comply with any applicable
agreements and restrictive covenants and conform to all applicable legal require
ments including those relating to the environment, health and safety, land use
and zoning. All such real property, buildings and structures are in good
operating condition and repair, ordinary wear and tear excepted.
3.9 Intellectual Property.
(a) Exhibit 3.9 sets forth a list and brief description of all
patents, trademarks, service marks, trade names and copyrights (collectively,
"Intellectual Property") that are presently being used or have since July 1,
1985 been used, in each Company's business, all applications for registration
and registrations for Intellectual Property, and all licenses, contracts, rights
and arrangements with respect to Intellectual Property. Except as set forth in
Exhibit 3.9, no rights or licenses have been granted with respect to any
Intellectual Property and all filings and other action necessary to perfect the
full legal right of each Company in the United States and foreign countries to
Intellectual Property have been effected.
<PAGE>
(b) Except as set forth in Exhibit 3.9, each Company owns or
possesses the right to use all patented and unpatented inventions, trademarks,
service marks, trade names, copyrights, trade secrets, computer lists, computer
programs and software and other proprietary processes and information of any
kind used in or necessary for the conduct of the Company's business as now
conducted, without any conflict with or infringement of the rights of others.
Except as set forth in Exhibit 3.9, no Company has received notice of any
claimed conflict with respect to any of the foregoing.
(c) Seller has no knowledge of any default or alleged default or
state of facts which with notice or lapse of time or both would constitute a
default on the part of any party in the performance under any licenses,
contracts, agreements or arrangements referred to in Exhibit 3.9.
3.10 Litigation. Except as set forth on Exhibit 3.10, (a) there is no
action, claim, litigation, proceeding, arbitration or governmental investigation
pending or, to the best of the knowledge of Seller, threatened against,
involving or affecting any Company or Seller (with respect to the Company) or
any of their respective properties or assets or any of the Companies' respective
officers, directors or employees, and (b) there are no outstanding orders,
writs, injunctions or decrees of any court, governmental agency or arbitration
tribunal against, involving or affecting Seller, any Company, or Seller's or any
Company's properties or assets.
3.11 List of Agreements, etc. Exhibit 3.11 lists as of the date hereof
(a) all of the respective Companies' and Seller's (with respect to any Company)
material contracts or agreements to which Seller or any Company is a party; (b)
all notes and agreements relating to any indebtedness of the Company or Seller
(with respect to any Company), any guaranties by the Company or Seller (with
respect to any Company) of the indebtedness of other persons of the Company or
Seller (with respect to any Company); (c) all leases or other rental agreements
under which any Company or Seller (with respect to any Company) is either lessor
or lessee; (d) all of the Companies' respective employment and consulting
agreements and all agreements that provide for severance or similar benefits;
(e) all agreements between any Company and Seller or any of Seller's affiliates;
and (f) all other agreements, commitments and understandings (written or oral)
that require payment by or to the Company of more than $5,000 or cannot be
terminated by the Company on less than 30 days' notice without liability. True
and complete copies of all of the leases, commitments and other agreements
referred to on Exhibit 3.11 have been delivered to the Parent.
<PAGE>
3.12 Status of Agreements. Each of the agreements, commitments and
leases referred to in section 3.11 (the "Contracts") is presently in full force
and effect in accordance with its terms and none of the Companies are in default
and, to the best of the knowledge of the Seller, no other party is in default
under any of the provisions of any of those Contracts and no condition exists
that, with notice or lapse of time or both, would constitute a default by any
Company or, to the best of the knowledge of the Seller, any other party to any
of the Contracts. No party to any of the Contracts has made, asserted or has any
defense, set-off or counterclaim under any of the Contracts or has exercised any
option granted to it to cancel or terminate any Contract, to shorten the term of
any Contract or to renew or extend the term of any Contract, and none of the
Companies has received any notice to that effect. None of the Companies is
engaged in any material dispute with any of its suppliers, patients or customers
and, to the best knowledge of the Seller, the transactions contemplated by this
Agreement will not have a material adverse effect on any Company's relationship
with any of its suppliers, patients or customers. Except as set forth on Exhibit
3.11, all of the Contracts have been entered into on an arm's-length basis, and
no Company's purchase commitments is in excess of the normal requirements of its
business or at an excessive price. The Seller and each Company are in compliance
with all terms and provisions of all contracts material to the operation of the
Companies' respective businesses or by which any Company is bound or affected;
and all such contracts are legally valid and binding in accordance with their
terms and in full force and effect except as may be limited by bankruptcy,
moratorium, reorganization, insolvency and other similar laws of general
application relating to or affecting the rights of creditors, and by general
principles of equity. Except as set forth on Exhibit 3.11, all of the Contracts
involving the Merger Companies have been assigned to Sub as of the Closing, and
any consents or authorizations necessary in connection therewith have been so
obtained.
3.13 Cash on Hand. As of the Closing, the Merger Companies have cash
and cash equivalents (not including accounts receivable) in an aggregate amount
that is not less than the aggregate accounts payable of the Merger Companies as
of the Closing.
3.14 Accounts Receivable. Exhibit 3.14 is an aged list of each
Company's accounts receivable as at June 6, 1996. Each Company's accounts
receivable arose in the ordinary course of business for goods or services
delivered or rendered, and to the best of their knowledge and belief constitute
only valid, undisputed claims, not subject to counterclaims or set-offs.
3.15 Environmental Matters.
(a) For the purpose of this agreement, the following terms shall
have the respective meanings set forth below:
(i) "Environment" means any surface or subsurface physical
medium or natural resource, including indoor areas, air, land, soil, surface
waters, ground waters, stream and river sediments, and biota.
(ii) "Environmental Laws" means any federal, state, local or
common law, rule, regulation, ordinance, code, order or judgment (including the
common law and any judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury to, or the
pollution or protection of human health and safety or the Environment.
<PAGE>
(iii) "Environmental Liabilities" means any claims,
judgments, damages (including punitive damages), losses, penalties, fines,
liabilities, encumbrances, liens, violations, costs and expenses (including
attorneys and consultants fees) of investigation, remediation or defense of any
matter relating to human health, safety or the Environment of whatever kind or
nature by any party, entity or authority, (A) which are incurred as a result of
(x) the existence of Hazardous Substances in, on, under, at or emanating from
any real property presently or formerly owned or operated by the Company or (y)
the offsite transportation, treatment, storage or disposal of Hazardous
Substances generated by the Company or (z) the violation of any Environmental
Laws or (B) which arise under the Environmental Laws.
(iv) "Hazardous Substances" means petroleum, petroleum
products, petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, and any materials or substances regulated
or defined as or included in the definition of "hazardous substances,"
"hazardous materials," "hazardous constituents," "toxic substances,"
"pollutants," "contaminants" or any similar denomination intended to classify
substances by reason of toxicity, carcinogenicity, ignitability, corrosivity or
reactivity under any Environmental Law.
(v) All references in this section to the Company shall
include all predecessors thereto and any person or entity the liabilities of
which, pursuant to the Environmental Laws, contractually, by common law or by
operation of law, the Company may have succeeded to.
(b) To the best of knowledge and belief, all of the current and
past operations of the Company at or from any real property presently or
formerly owned, used, leased, occupied or operated by the Company (the "Real
Property") comply and have complied with all applicable Environmental Laws.
Neither the Company nor Seller, nor, to the knowledge of the Company or Seller,
any other person or entity, has engaged in, authorized, allowed or suffered any
operations or activities upon any of the Real Property for the purpose of or in
any way involving the handling, manufacture, treatment, processing, storage,
use, generation, release, discharge, emission, dumping or disposal of any
Hazardous Substances at, on or under the Real Property, except in compliance
with all applicable Environmental Laws.
(c) To the best of knowledge and belief, the Real Property does
not contain any Hazardous Substances in, on, over, under or at it in
concentrations which would presently violate Environmental Laws or impose
liability or obligations on the present or former owner or operator of the Real
Property under the Environmental Laws for any investigation, corrective action,
remediation or monitoring of Hazardous Substances in, on, over, under or at the
Real Property. None of the Real Property is listed or proposed for listing on
the National Priorities List pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq.,
or any similar inventory of sites requiring investigation or remediation
maintained by any state. Neither the Company nor Seller has received any notice,
whether oral or written, from any governmental entity or third party of any
actual or threatened Environmental Liabilities with respect to any of the Real
Property, the Company's assets, or the conduct of the Company's business.
<PAGE>
(d) To the best of knowledge and belief, there are no underground
storage tanks, asbestos or asbestos containing materials, polychlorinated
biphenyls, urea formaldehyde, or other Hazardous Substances (other than small
quantities of Hazardous Substances stored and maintained in accordance with all
applicable Environmental Laws for use in the ordinary course of the business of
the Company) in, on, over, under or at any presently owned or operated Real
Property.
(e) To the best of knowledge and belief, there are no conditions
existing at any Real Property that require, or which with the giving of notice
or the passage of time or both may require remedial or corrective action,
removal or closure pursuant to the Environmental Laws.
(f) Seller or the Company has provided to Parent all
environmental reports, assessments, audits, studies, investigations, data and
other written environmental information in its custody, possession or control
concerning the Real Property or any Environmental Liabilities, whether actual or
threatened.
3.16 Permits and Licenses; Compliance with Law.
(a) Seller and each Company holds all the governmental licenses,
permits and authorizations (collectively, "Permits") listed under his or its
name in Exhibit 3.16 which Permits, except as set forth in that Exhibit, are
valid and unimpaired, will be unaffected by the transactions contemplated by
this agreement and constitute all of the licenses, permits and authorizations
required for the ownership or occupancy of said Company's properties and assets
and the operation of its business, and for Seller's practice of medicine in the
State of Florida and participation in the Medicare and Medicaid programs.
(b) Seller and each Company is in compliance in all respects with
the terms and conditions of such Permits and with all requirements, standards
and procedures of the federal, state and local governmental or regulatory bodies
which issued said Permits.
(c) Other than shipping dry ice without utilizing trained
personnel to do so, to the best of knowledge and belief, Seller (with respect to
the Companies) and each of the Companies is and has been in compliance with all
federal, state and local laws, regulations, ordinances, codes, orders,
requirements, standards and procedures and other requirements of all courts and
other governmental or regulatory authorities having jurisdiction over the Seller
(with respect to the Companies) and each of the Companies and the Companies'
respective assets, properties and operations, including, without limitation, all
such laws, regulations, orders and requirements relating to consumer or patient
protection, equal opportunity, health, reimbursement, protection of the
environment and occupational safety. Neither Seller (with respect to the
Companies) nor any Company has received any notice of any violation of or
default relating to any such law, regulation, order or other legal requirement.
<PAGE>
(d) Seller and the Companies have received no notice of any
violation of applicable law, order, regulation or requirement related to Seller
or any Company and Seller is not aware of any condition or state of facts that
could result in any such notice.
3.17 Employees.
(a) Exhibit 3.17 lists the names, office locations, duties, date
of hire, compensation and years of credited service for severance, vacation and
pension plan purposes of all full- and part-time employees of each Company as of
the date hereof. No employee has been granted any wage or salary increase or
bonus or any fringe benefits, except as stated in Exhibit 3.17. No employee is
owed any wages, benefits or other compensation for past services, other then
wages, benefits and compensation accrued in the ordinary course of business
during the current pay period and accrued vacation. Each Company has complied
with applicable wage and hour, equal employment, safety and other legal
requirements relating to its employees and is not engaged in any unfair labor
practice. Exhibit 3.17 also lists all current consultants of any Company and
discloses their respective duties, date of engagement and compensation.
(b) Except as set forth on Exhibit 3.18, no employee or former
employee of any Company is entitled to any severance payment or similar payment,
either by law or by agreement, upon the termination of his or her employment. No
key employee of any Company has indicated that he or she is considering
terminating his or her employment.
(c) No employee of any Company is represented by a union or other
collective bargaining agent, and there are no collective bargaining or other
labor agreements with respect to any of any Company's employees. Seller knows of
no efforts within the last three years to attempt to organize any Company's
employees, and no strike or labor dispute involving any Company has occurred
during the last three years or, to the best knowledge of Seller, is threat ened.
3.18 Employee Benefit Plans.
(a) No Company has an "employee benefit plans," within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and all regulations, rulings, and interpretations promulgated
thereunder ("ERISA").
3.19 Insurance. Each Company maintains and has maintained since its
inception adequate insurance in such amounts and against such risks and losses
as are customary for other entities of similar size engaged in Seller's and the
Companies' respective businesses. Exhibit 3.19 lists all the insurance policies
maintained by each Company, indicating the type of coverage, name of insured,
the insurer, the premium, the expiration date of each policy and the amount of
coverage. All such policies (a) are with insurance companies reasonably believed
by the Seller to be financially sound and reputable and are in full force and
effect; (b) are sufficient for compliance with all requirements of law and of
all applicable agreements; and (c) are valid, outstanding and enforceable
policies. Complete and correct copies of such policies have been fur nished to
the Parent.
<PAGE>
3.20 Banks; Power of Attorney. Exhibit 3.20 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which any Company maintains safe deposit boxes or
accounts of any nature and the names of all persons authorized to draw thereon,
make withdrawals therefrom or have access thereto. No person or entity holds any
general or special power of attorney from any Company.
3.21 Books and Records. The books and records of each Company are
complete and correct in all material respects and have been maintained in
accordance with good business practices. The minute books of each Company, as
previously made available to Parent, contain complete and accurate records of
all meetings and accurately reflect all other corporate action of the
stockholders and board of directors of said Company.
3.22 Restrictions. No Company is party to any non-competition or
similar agreement which in any way restricts the operation of said Company's
business.
3.23 Transactions with Affiliates. Except as set forth in Exhibit 3.23
hereto and except for ordinary dealings with its employees, since April 30,
1996, no Company has had any direct or indirect dealings with Seller or with any
other key employee of said Company or with any of their affiliates, associates
or relatives (each, an "Affiliate"). Except as set forth in Exhibit 3.23 and
except for employment arrangements with its employees, no Company has any
obligation to or claim against any Affiliate, and no such person or entity has
any obligation to or claim against any Company. Exhibit 3.23 reasonably
describes the nature and extent of any products, services or benefits provided
to any Company by any Affiliate without a corresponding charge equal to the fair
market value of such products, services or benefits. No Affiliate has any direct
or indirect interest of any kind in any business or entity which is competitive
with any Company.
3.24 Taxes. Seller and each Company has filed with appropriate
federal, state and local authorities (or has obtained appropriate extensions of
the time to file) all tax returns required by law, regulation or otherwise to be
filed by him or it for all taxable periods ending on or prior to the date hereof
for which tax returns have become due. Seller and each Company has paid or made
adequate provisions for the payment of all taxes, penalties and interest which
have or may become due for or during all taxable periods of Seller and each
Company ending on or prior to the date hereof, including, without limitation,
any such taxes, penalties and interest relating to the final tax returns due
with respect to the Merger Companies in connection with their merger with and
into Sub. Seller has furnished to the Parent correct and complete copies of all
notices and correspondence sent or received since January 1, 1996 by Seller
(with respect to any Company) or any Company to or from any federal, state or
local tax authorities. However, no action of the Parent in regard to the merger
shall result in a section 338 election or deemed election.
<PAGE>
3.25 Third-Party, Research Sponsor and Patient Billings.
(a) To the best of knowledge and belief, all claims, reports,
filings and billings by Seller and each Company to patients, research sponsors
and third-party payors are true and correct in all respects and are in
compliance in all respects with all applicable laws and regulations governing
such claims, reporting, filings and billing and the policies of such research
sponsors and third-party payors.
(b) To the best of knowledge and belief, Seller, each Company and
each Company's officers, directors, employees and agents, have not, directly or
indirectly (i) offered, paid, solicited or received any remuneration in
violation of the Medicare or Medicaid "fraud and abuse" or "anti-referral" laws,
including but not limited to 42 U.S.C. ss.ss. 1320a-7b(b) or 1395nn, each as
amended from time to time, the regulations promulgated thereunder and similar
provisions of state law and regulation, (ii) offered or paid any amount to, or
made any financial arrangement with, any of Seller's or any Company's past,
present or potential customers, patients or referral services in order to obtain
business or influence or induce referrals from such customers, other than
standard pricing or discount arrangements consistent with proper business
practices and applicable law; (iii) given, or agreed to give, nor is Seller
aware that there has been given, or that there is an agreement to make any gift
or gratuitous payment of any kind, nature or description (whether in money,
property or services) to any past, present or potential customer, patient,
referral source, supplier, source of financing, landlord, tenant, licensee or
anyone else at any time of the year; (iv) made, or agreed to make, nor is Seller
aware that there is any agreement to make any political contribution or any
contributions, payment or gifts of their respective funds or property to or for
the private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift relates to the
business of Seller and is illegal under the laws of the United States, any state
thereof or any other jurisdiction (foreign or domestic); or (v) made, or has
agreed to make, nor is Seller aware that there have been, or that there is any
agreement to make, any payments to any person with the intention or
understanding that any part of such payment was to be used directly or
indirectly for the benefit of any past, present or potential customer, patient,
referral source, employee, supplier or landlord of Seller or any Company, or for
any purpose other than that reflected in the documents supporting the payments.
3.26 Disclosure. No representation, warranty or other statement made
by Seller in this agreement or in any other of Seller's Documents contains an
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. Seller is not
aware of any matter that could reasonably be expected to have a materi ally
adverse effect on any Company's business or prospects that has not been
disclosed in writing to the Parent. There is no fact which Seller has not
disclosed to Parent which adversely affects, or insofar as Seller can foresee,
will adversely affect the ability of Seller to perform its obligations under
this Agreement or any other agreement entered into in connection with this
transaction. All documents, Exhibits, Schedules and other materials delivered or
made available, by or on behalf of Seller to Parent in connection with this
Agreement and the transactions contemplated hereby, are true and complete.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent, for the purpose of inducing Seller to enter into and consummate
this Agreement, hereby represents and warrants to Seller that:
4.1 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the law of Delaware.
4.2 Authority; Consents; and No Conflicts.
(a) Parent has the full legal right, power and authority to enter
into and perform this Agreement and all other agreements, certificates and
documents executed or delivered, or to be executed and delivered, by Parent in
connection with this Agreement (collectively, with this Agreement, the "Parent's
Documents"). The execution, delivery and performance by Parent of the Parent's
Documents have been duly authorized by all necessary corporate action of Parent
and the Parent's Documents are (or when executed and delivered will be) valid
and binding obligations of Parent enforceable against Parent in accordance with
its terms, except as may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) No consent, approval or authorization of, or declaration or
filing with, any court or governmental authority or any other person or entity
is required on the part of Parent in connection with the execution, delivery and
performance of the Parent's Documents. The execution, delivery and performance
by Parent of the Parent's Documents will not (i) conflict with the certificate
of incorporation or by-laws of Parent; or (ii) constitute a violation by the
Parent of any law, regulation, order, writ, judgment, injunction or decree
applicable to it.
4.3 Liquidation of Merger Companies. Parent represents that it has no
plan or intention to liquidate to liquidate Sub, cause Sub to transfer
substantially all of its assets to another corporation or entity controlled or
affiliated with Parent or to merge Sub with and into another corporation or
entity controlled or affiliated with Parent.
4.4 Financial Position Attached hereto as Exhibit 4.3 are copies of
Parent's Form 10-K and Form 10-Q for the year ended December 31, 1995 and the
quarter ended March 31, 1996, respectively. Said documents are true and complete
in all material respects.
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, the obtaining of all necessary
waivers, consents and approvals and the effecting of all necessary registrations
and filings.
5.2 Physician Employment Agreement. At the Closing, Seller and Sub
shall enter into an employment agreement pursuant to which Sub shall employ
Seller to provide certain clinical and other services (the "Physician Employment
Agreement").
5.3 Employment Agreement. At the Closing, Seller and Sub shall enter
into an Employment Agreement pursuant to which Seller shall provide certain
services to Parent.
5.4 Piggyback Registration Rights.
(a) Inclusion in other Registrations. If at any time within two
years after the date of this Agreement, Parent shall determine to file a
registration statement under the Securities Act of 1933 (the "Act") on Form S-l
or its equivalent covering an offering of Parent's common stock by Parent (other
than an exchange offer by Parent to stockholders of another corporation or an
offer to Parent's employees) or by any of its stockholders, Parent shall so
notify Seller at least 30 days prior to the filing. Upon written request made by
Seller within 15 days after the notice is given, Parent shall include in the
registration statement such number of the shares of Parent's common stock
acquired by Seller pursuant to this Agreement as Seller shall designate in its
re quest, except that Parent shall not be obligated to include any of Seller's
shares in the registration statement if:
(i) in the case of a proposed registration statement
covering shares to be offered by Parent, any proposed underwriter of the shares
covered by the registration statement advises Seller that it reasonably believes
that inclusion of Seller's shares would interfere with the offering of the other
shares being registered;
(ii) Seller shall have failed to agree in writing within 10
days after Parent's request to do so, either: (A) not to sell any of his shares
for such a period of time as Parent 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 state ment as the underwriter may specify) pursuant to a firm (as
distinguished from a best efforts) underwriting through an underwriter
designated by Parent;
<PAGE>
(iii) Parent withdraws the registration statement with
respect to all the shares for which registration was contemplated before the
registration statement becomes effective; or
(iv) Seller shall have failed to furnish to Parent such
information and other material as Parent or its counsel may have reasonably
requested with respect to the public offering of their shares or shall have
failed to take any other action or execute any documents which Parent or its
counsel reasonably considers necessary or desirable in connection with the
registration statement.
(b) Expenses. Parent shall pay all costs and expenses incurred in
connection with the preparation and filing of any registration statement and, to
the extent any of Seller's shares are included in that registration statement,
Seller shall pay the fees and expenses of brokers or underwriters relating to
the sale of Seller's shares, the fees and expenses of their counsel, stock
transfer taxes imposed on Seller's sales, the registration or filing fees
attributable to Seller's shares, the incremental cost of printing the
registration statements and prospectuses requested by Seller and blue-sky fees
and expenses in any jurisdiction in which the shares would not have to be
qualified but for the sale by Seller. Notwithstanding the foregoing, if any
registration statement filed by Parent above covers only shares held by Parent
stockholders, Seller shall pay his proportionate share of all of the costs and
expenses incurred by Parent in connection with the preparation and filing of
that registration statement (in the proportion that the number of his shares
included in the registration statement bears to the total number of shares
covered by the registration statement).
(c) Additional provisions. The following additional provisions
shall be applicable to this section:
(i) Seller's plan of distribution shall not require Parent
to file any post-effective amendment to the registration statement to update the
financial statements that are included in the registration statement and shall
not require Parent to keep the registration statement current for more than 120
days after Seller is permitted to sell his shares under the plan. Parent may
re-register any shares which shall not have been sold within that 120-day
period, and Seller shall cooperate in effecting any such re-registration.
(ii) Parent shall not be required to include Seller's shares
in more than two registration statements.
(iii) Parent shall indemnify Seller and any underwriter of
their shares and hold them harmless against any loss, liability, damage or
expense (including reasonable attorneys' fees) arising out of any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated in any registration
statement or prospectus relating to the distribution of Seller's shares, except
to the extent the loss, liability, damage or expense arises out of a statement
or omission that was based upon information fur nished in writing to Parent by
Seller for use in the registration statement or prospectus. Seller shall
indemnify Parent and hold it harmless against any loss, liability, damage or
expense (including reasonable attorneys' fees) arising out of any untrue
statement or alleged untrue statement of material fact or alleged omission to
state a material fact required to be stated in any registration statement or
prospectus relating to the distribution of Seller's shares to the extent the
loss, liability, damage or expense arises out of a statement or omission that
was based upon information furnished in writing to Parent by Seller for use in
the registration statement or pro spectus. Promptly after receipt by an
indemnified party of notice of the commencement of any action, he or it shall
notify the indemnifying party. Failure to give such a notice shall not affect
any liability the indemnifying party may have to the indemnified party otherwise
than under this paragraph. The indemnifying party may participate in the action
or may assume the defense of the action, with counsel reasonably satisfactory to
the indemnified party. After giving notice of such an assumption of the defense,
the indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
other than reasonable costs of investigation.
<PAGE>
(iv) Seller's rights under this section shall inure to the
benefit of his heirs, legatees, or personal representatives, but not to any
other transferee or successor. The provisions of this section shall be binding
upon Seller's heirs, legatees and personal representatives.
5.5 Voting of Parent Stock. Seller shall, at the Closing, deliver to
Parent a proxy (the "Proxy") granting to Gerardo Canet, President of Parent, an
irrevocable proxy to vote all shares of Parent Stock at any and all meetings of
the stockholders of Parent, at any and all adjournments thereof, and in any
action by such stockholders without a meeting. The Proxy shall expire on the
earlier of the second anniversary of the Closing Date or upon termination of
Seller's employment under the Physician's Employment Agreement or the Employment
Agreement and, during its two year term, shall afford to Parent the right to
substitute another officer of Parent in place of Mr. Canet. The parties shall
cause an appropriate legend to be affixed to the Parent Stock held by Seller to
reflect such restriction on voting.
5.6 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement (including the Exhibits hereto) and the transactions contemplated
hereby (and thereby) shall be paid by the party incurring such expenses.
5.7 Public Announcements. Parent shall have control of the content and
timing of any press release or other content and timing of any press release or
other public disclosure of information ("Public Announcement") concerning the
Merger or the other transactions contemplated hereby. The Companies agree that
neither will make any Public Announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of Parent, which
consent shall not be unreasonably withheld or delayed.
<PAGE>
5.08 Commitment to Fund NMF. Parent agrees that, as part of its
commitment to the development of NMF, it will provide funding to NMF on an
as-needed basis during the four (4) year period commencing on the Closing Date,
in amounts not to exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate. Parent's undertaking to provide such funding shall, in each case, be
based on NMF's demonstrated need for such additional capital, as reasonably
determined from time to time by NMF's board of directors based on NMF's
operating budget approved by NMF's board of directors. Parent shall not receive
any additional shares of NMF's stock in consideration any funding provided in
connection with the commitment under this Section 5.10.
5.09 Option to Acquire NMF Stock.
(a) In the event that Parent shall receive a Bona Fide Offer to
purchase any or all of Parent's NMF Stock, and in the further event that Parent
shall desire to accept such Bona Fide Offer, Parent shall promptly send
Registered Notice to Seller. Such Registered Notice shall offer to sell such
shares of Company Stock that are the subject of the Bona Fide Offer to Seller on
terms the same as those in such Bona Fide Offer (the "Bona Fide Offer Terms").
Seller shall accept any offer to purchase shares, if at all, by notifying
Parent, in writing, of his election to purchase such Bona Fide Offer Shares, and
including in such notice a bank or cashiers' check for the total purchase price
of the Bona Fide Offer Shares to be so purchased.
(b) If all Bona Fide Offer Shares are not purchased by Parent
pursuant to this Section 5.10(b), Parent may sell such Bona Fide Offer Shares to
the Bona Fide Offeror, at the Bona Fide Offer Terms for a period of time not to
exceed forty (40) days from the date the Registered Notice is received by
Seller. Any sale of Bona Fide Offer Shares may not be made after such forty (40)
day period, or to a person other than the Bona Fide Offeror without again
complying with the provisions of Section 5.10(b).
(c) Parent and Seller agree to develop a Stockholder Agreement
with respect to their respective rights and responsibilities relative to NMF
within 30 days of the Closing. Such Stockholder Agreement shall provide,
together with other things which may be mutually agreeable, that either Seller
or Parent may at any time notify the other party of its desire to sever their
relationship as shareholders of NMF. Such nofifications shall contain the price
per share of NMF at which the notifying party is willing to sell its shares of
NMF to the notified party or to purchase the shares of NMF held by the notified
party. Upon receipt of such notice the notified party must elect to either sell
its shares of NMF to the notifying party or to purchase the shares of NMF held
by the notifying party, in either case at the price set forth in the notifying
party's severance notice. The time within which to respond to a severance notice
and the time to close the transaction shall be as reasonably agreed to by the
parties and set forth in the Stockholder Agreement.
5.10 Liquidation of Merger Companies. Parent covenants and agrees that
for a period of two (2) years following the Effective Time, Parent will not
liquidate Sub, cause Sub to transfer substantially all of its assets to another
corporation or entity controlled or affiliated with Parent or merge Sub with and
into another corporation or entity controlled or affiliated with Parent.
<PAGE>
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.
(a) Seller shall indemnify, defend and hold harmless Parent, Sub
and any of their respective directors, officers and employees and successors and
assigns, promptly upon demand at any time and from time to time against any and
all losses, liabilities, claims, actions, damages or expenses, including without
limitation reasonable attorneys' fees and disbursements, whether involving a
third party or between the parties to this agreement, Parent or Sub may suffer,
sustain or become subject to arising out of or in connection with (i) any
misrepresentation or breach of any warranty made by Seller or any of the
Companies in any of Seller's Documents; (ii) any breach or nonfulfillment of any
covenant or agreement made by Seller or any of the Companies in any of Seller's
Documents; (iii) any tax, penalty or interest which have or may become due for
any tax period of Seller or any Company, including, without limitation, any such
tax liability of the Merger Companies arising from or in connection with the
Merger and final tax returns due with respect to each Merger Company; and (iv)
billing of a third party payor or payment received from a third party payor in
violation of applicable federal or state law.
(b) Seller shall indemnify, defend and hold harmless Parent, Sub
and any of their respective directors, officers and employees and successors and
assigns, promptly upon demand at any time and from time to time, against any and
all damages, claims, losses, liabilities and expenses, including without
limitation, reasonable legal, accounting, consulting, engineering and other
expenses, which may arise out of (i) any action, suit, claim or proceeding
seeking money damages, injunctive relief, remedial action, or any other remedy
by reason of (A) violation of or noncompliance with the Environmental Laws or
any permit, license, approval, authorization or registration issued under the
Environmental Laws, or (B) the disposal, discharge or release of solid wastes or
Hazardous Substances whether in compliance with Environmental Laws or not, or
(C) the ownership, operation or use of any landfill, waste water treatment
facility, air pollution control equipment, storage lagoon, impoundment, or other
waste management or pollution control facility or equipment whether in
compliance with the Environmental Laws or not, or (D) exposure to any Hazardous
Substances, noises, odors or vibrations or (ii) compliance with Environmental
Laws, all to the extent they arise from the present or former ownership, use,
lease, occupancy or operation of any Real Property.
(c) Parent shall indemnify, defend and hold harmless Seller,
promptly upon demand at any time and from time to time, against any and all
losses, liabilities, claims, actions, damages or expenses, including without
limitation reasonable attorneys' fees and disbursements, whether involving a
third party or between the parties to this agreement, Seller may suffer, sustain
or become subject to arising out of or in connection with (a) any
misrepresentation or breach of any warranty made by the Parent in any of the
Parent's Documents; and (b) any breach or nonfulfillment of any covenant or
agreement made by the Parent in any of the Parent's Documents.
<PAGE>
6.2 Defense. An indemnified party shall promptly give written notice
to the indemnifying party after the indemnified party has knowledge that any
legal proceeding has been instituted or any claim has been asserted in respect
of which indemnification may be sought under the provisions of section 6.1. If
the indemnifying party, within ten (10) days after the indemnified party has
given such notice (or within such shorter period of time as an answer or other
responsive motion may be required), shall have acknowledged in writing his or
its obligation to indemnify and shall have furnished to the indemnified party a
bond, letter of credit, escrow or similar arrangement in an amount equal to the
total amount demanded in such claim or proceeding, then the indemnifying party
shall have the right to control the defense of such claim or proceeding, and the
indemnified party shall not settle or compromise such claim or proceeding
without the written consent of the indemnifying party, which consent shall not
unreasonably be withheld or delayed. The indemnified party may in any event
participate in any such defense with his or its own counsel and at his or its
own expense.
6.3 Survival. All representations, warranties, indemnities, covenants
and agreements made by Seller and Parent, respectively, in Seller's Documents or
the Parent's Documents, as the case may be, and in any instrument or certificate
delivered pursuant to, or provided for in said Documents shall survive the
consummation of the transactions contemplated by this Agreement. Each party to
this Agreement shall be deemed to have relied upon each and every representation
and warranty of the other party, regardless of any investigation or examination
made at any time by or for the party relying on such representation and
warranty.
ARTICLE VII
CERTAIN DELIVERIES AT CLOSING
7.1 Parent's Deliveries and Conditions to Seller's Obligations.
Parent is delivering the following items to Seller herewith in the form
satisfactory to Seller:
(a) A certified copy of the resolutions of the respective boards
of directors of Parent and Sub authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(b) The opinion of Claude E. White, Esq. legal counsel to the
Parent, dated the Closing Date, in the form annexed hereto as Exhibit 7.1(b).
(c) Four Hundred Thousand Dollars ($400,000).
<PAGE>
(d) The Physician Employment Agreement, duly executed by the Sub.
(e) The Employment Agreement, duly executed by Parent (the
"Employment Agreement").
(f) A certificate for the Parent Stock, in the name of Morris
Notelovitz.
(g) Copies of all consents, approvals or waivers from regulatory
authorities and third parties necessary for the execution, delivery and
performance of the Parent's Documents and the transactions contemplated thereby.
(h) Promissory Note in the amount of $600,000.
7.2 Seller's Deliveries.
Seller is delivering to Parent the following herewith in form
reasonably satisfactory to Parent:
(a) A certified copy of the articles of incorporation of, and a
good standing certificate for, each Company, dated not earlier than ten (10)
days prior to the Closing Date, from the Secretary of State of Florida.
(b) The opinion of Richard M. Knellinger, P.A., legal counsel to
Seller, dated the Closing Date, in the form annexed hereto as Exhibit 7.2(b).
(c) A certified copy of the resolutions adopted by the Companies'
respective boards of directors and shareholders authorizing and approving the
transactions contemplated by this Agreement.
(d) Certificates representing the Merger Company Shares and the
NMF Shares, without legends, duly endorsed in blank or accompanied by duly
executed stock powers, together with any required stock transfer tax stamps
affixed and canceled and all taxes on such transfer, if any, paid in full, all
at the expense of Seller. Such Shares shall be delivered to the Parent free and
clear of all Liens.
(e) The Physician Employment Agreement, duly executed by Seller.
(f) The Employment Agreement, duly executed by Seller.
(g) The Proxy, duly executed by Seller.
<PAGE>
(h) Copies of all consents, approvals or waivers from regulatory
authorities and third parties necessary for the execution, delivery and
performance of Seller's Documents and the transactions contemplated thereby, all
without cost or other adverse consequences to the Company.
ARTICLE VIII
RESTRICTIVE COVENANTS
8.1 (a) For four (4) years after the Closing Date, Seller shall not:
(i) directly or indirectly engage or be interested (whether
as owner, partner, lender, consultant, employee, agent or otherwise) in any
business, activity or enterprise which competes with any aspect of the business
being conducted by any of the Companies, Parent or Sub, or their successor(s);
(ii) directly or indirectly employ or otherwise engage, or
offer to employ or otherwise engage, any person who is then (or was at any time
within two (2) years prior to the time of such employment, engagement or offer
thereof) an employee, representative or agent of any Company, Parent or Sub, or
their successor(s); or
(iii) solicit any business from any person or entity that
has been a patient or customer of any of the Companies, Parent or Sub, or their
successor(s) or directly or indirectly induce or influence any customer,
patient, supplier or other person that has a business relationship with any of
the Companies, Parent of Sub, or their successor(s) to discontinue or reduce the
extent of such relationship.
(b) In addition, Seller shall never use or divulge any trade
secrets, patient, customer or supplier lists, pricing information, marketing
arrangements or strategies, business plans, internal performance statistics,
training manuals or other information concerning any of the Companies, Parent or
Sub or any of its affiliates that is competitively sensitive or confidential.
8.2 Seller acknowledges and agrees that the covenants contained in
this Article VIII are fair, reasonable and necessary in order to protect the
Parent's expenditure for the Company Shares and therefore it is the desire and
intent of the parties that the provisions of this Article shall be enforced to
the fullest extent permissible under the laws and public policy applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Article shall be adjudicated to be invalid or unenforceable,
such deletion shall apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is made. In addition,
should any court determine that the provisions of this Article VIII shall be
unenforceable with respect to scope, duration or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
to those contained in this Article VIII, or other provisions so as to provide to
the Parent, to the fullest extent permitted by applicable law, the benefits
intended by this Article VIII.
<PAGE>
8.3 Because the breach or attempted or threatened breach of this
restrictive covenant will result in immediate and irreparable injury to Parent
for which the Parent will not have an adequate remedy at law, Parent shall be
entitled, in addition to all other available remedies, to a decree of specific
performance of this covenant and to a temporary and permanent injunction
enjoining such breach, without posting bond or furnishing similar security. The
provisions of this Article VIII are in addition to and independent of any
agreements or covenants contained in any employment, consulting or other
agreement between Parent, Sub any of the Companies or their successor(s) and
Seller.
8.4 Nothing in Section 8.1 shall prevent Seller from engaging solely
in the practice of Medical Services as defined in the Physician Employment
Agreement after one (1) year following termination of Seller's employment
pursuant to the Employment Agreement or the Physician's Employment Agreement,
whichever first occurs.
ARTICLE IX
MISCELLANEOUS
9.1 Brokers. Seller represents and warrants to Parent that neither
Seller has dealt with or retained any broker or finder or agreed to pay any
commission or fee to any broker or finder for or on account of this Agreement or
the transactions contemplated hereby. Parent represents and warrants to Seller
that it has not dealt with or retained any broker or finder for or on account of
this Agreement or the transactions contemplated hereby. Each party agrees to
indemnify the other against any loss, cost or expense, including attorneys'
fees, as a result of any claim for a fee or commission asserted by any broker or
finder with respect to this Agreement or the consummation thereof whose claim
arises through dealings with such broker or finder by the indemnifying party.
9.2 Further Assurances. If at any time after the Closing Date any
further assignment, transfers or assurances in law are reasonably necessary or
desirable to carry out the provisions of this Agreement, the parties to this
Agreement shall without further consideration execute and deliver any and all
assignments, transfers, and assurances in law, and do all things, reasonably
necessary or proper to such end and otherwise to carry out the provisions,
intent and transactions contemplated by this Agreement.
9.3 Notice. Any notice or other communication required, by, or which
may be given pursuant to this Agreement shall be in writing and either
personally delivered or mailed, certified or registered mail, postage prepaid,
return receipt requested, or overnight courier, prepaid, and shall be deemed
given when received. Any such notice or communication shall be sent to the
address set forth below:
<PAGE>
If to Parent or Sub, at:
IVF America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Dwight Ryan, Vice President
With a copy to:
IVF America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Claude White, General Counsel
And if to Seller, at:
Morris Notelovitz, M.D.
2801 N.W. 58th Blvd.
Gainesville, FL 32605
With a copy to:
Richard M. Knellinger, P.A.
Barnett Bank Building
Suite 305
2815 NW 13th Street
Gainesville, FL 32609-2829
Attn: Richard M. Knellinger
Any party may change the persons and addressees to which
notices or other communications are to be sent to it by giving written notice of
any such change to the other party hereto.
9.4 Headings. The headings contained in this Agreement are inserted
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
9.5 Exhibits and Schedules. All Exhibits and Schedules referred to in
this Agreement are deemed annexed hereto and made a part of this Agreement.
9.6 Entire Agreement. This Agreement, together with the Exhibits and
Schedules and the other written agreements specifically identified elsewhere in
the Agreement constitutes the entire agreement between the parties to it and
supersedes all prior agreements and understandings with respect to the subject
matter of this Agreement; may not be amended, modified or discharged, nor may
any of its terms be waived, except by an instrument in writing, signed by the
party or parties to be charged; and shall bind and inure to the benefit of the
parties and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns. Nothing expressed or
mentioned in this Agreement is intended, or will be construed, to give any
person, firm corporation or other entity, other than the parties to this
Agreement and their respective successors and assigns, any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any of its
provisions.
<PAGE>
9.7 Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party, except that Parent may
assign this Agreement and its rights hereunder or delegate its objections
hereunder to any direct or indirect wholly-owned subsidiary of Parent.
9.8 Waivers. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver of any nature, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, covenant, representation or warranty of this
Agreement.
9.9 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
9.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, irrespective of the
principal place of business of the parties hereto.
9.11 Expenses. Each party shall bear its own expenses in connection
with this Agreement and all obligations to be performed by it hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first above written.
IVF AMERICA, INC. MIDLIFE CENTERS OF AMERICA, INC.
By: /s/ Dwight P. Ryan By: /s/Morris Notelovitz
------------------ ---------------------
Name: Dwight P. Ryan Name: Morris Notelovitz, MD
Title: Vice President Title: President
INMD ACQUISITION CORP. CLIMACTERIC CLINIC, INC.
By: /s/Dwight P. Ryan By: /s/Morris Notelovitz
----------------- ---------------------
Name: Dwight P. Ryan Name: Morris Notelovitz, MD
Title: Vice President Title: President
<PAGE>
SELLER: WOMEN'S RESEARCH CENTERS, INC.,
AMERICA
/s/Morris Notelovitz By: /s/Morris Notelovitz
- -------------------- --------------------
MORRIS NOTELOVITZ, M.D. Name: Morris Notelovitz, MD
Title: President
NATIONAL MENOPAUSE FOUNDATION, INC.
By: /s/Morris Notelovitz
---------------------
Name: Morris Notelovitz, MD
Title: President
EMPLOYMENT AGREEMENT
AGREEMENT made this 7th day of June, 1996 between Morris Notelovitz, M.D.,
Ph.D., residing at 2801 N.W. 58th Blvd., Gainesville, Florida 32605
("Physician") and IVF America, Inc. doing business as IntegraMed America
("INMD"), having its principal place of business at One Manhattanville Road,
Purchase, New York 10577.
R E C I T A L S:
INMD, through its Menopause Division (the "Division") is in the business of
owning certain assets and providing management and administrative services to
medical practices specializing in the provision of medical services, including
treatment of pre- and post-menopausal women ("Medical Services).
Physician is duly licensed to practice medicine in the State of Florida and
specializes in the provision of Medical Services.
Physician is simultaneously herewith entering into an Agreement and Plan of
Merger with INMD, INMD Acquisition Corp. and other parties specified therein
("Merger Agreement").
Physician is simultaneously herewith entering into an agreement with INMD
Acquisition Corp. to provide Medical Services ("Physician Employment
Agreement").
In order to further facilitate the provision of management services by INMD
and expansion of its business, INMD desires to employ Physician as Vice
President for Medical Affairs and Medical Director of the Division and Physician
desires to accept such employment, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration set forth herein, the parties agree as follows:
1. ENGAGEMENT. INMD hereby employs Physician and Physician hereby
accepts employment to serve as Vice President for Medical Affairs and Medical
Director of the Division under the terms and conditions contained herein and as
the parties may agree from time to time.
2. DUTIES.
(a) As Vice President for Medical Affairs and Medical Director of
the Division, Physician shall focus his efforts on the development of
INMD-affiliated medical offices specializing in the provision of Medical
Services, which offices will include research capability ("New Sites").
Physician shall also oversee all patient care activities in connection with the
Division as required to ensure the proper provision of services to patients.
Physician agrees to devote his best efforts and ability and sufficient
professional time (which the parties anticipate shall require two (2) days per
week) to his services as Vice President for Medical Affairs and Medical Director
under the terms and conditions contained herein and as the parties may agree
from time to time. In connection therewith, Physician's duties shall include but
not be limited to the following:
<PAGE>
(i) Assisting with the identification of potential markets
and development of specific projects approved by INMD for New Sites;
(ii) Assisting with the preparation of appropriate
comprehensive business plans (which shall require the approval of INMD) for the
establishment of New Sites;
(iii) Assisting with the recruitment of qualified
professional and non-professional personnel and selection of equipment in
connection with New Sites and existing INMD-affiliated facilities providing
Medical Services;
(iv) Supervision of all aspects of the establishment and
commencement of operation of New Sites, subject to INMD's ultimate authority;
(v) General oversight of clinical and technical aspects of
INMD- affiliated facilities in connection with the Division, including but not
limited to review and evaluation of clinical data on a periodic basis and as
circumstances otherwise require in order to maintain a high quality of clinical
and research activities; and
(vi) Assisting with the development and implementation of
educational outreach programs designed to facilitate the development of
relationships with physicians in the obstetrics/gynecology community and other
specialties and the dissemination of information pertaining to the availability
of Medical Services and other services offered in connection with the Division.
Physician shall have access to and the assistance of INMD's corporate and
regional staffs in accomplishing the foregoing pursuant to this section 2(a).
(b) Except as permitted by the Physician Employment Agreement,
Physician shall not, during the term of this Agreement, otherwise engage in the
practice of medicine or other business activities outside of INMD without the
express written consent of INMD.
(c) INMD will cause Physician to be elected to INMD's Board of
Directors, subject to re-election by INMD's shareholders at the next annual
meeting of INMD and removal in accordance with the provisions of INMD's By-Laws;
provided that if Physician's employment hereunder shall terminate, Physician
shall be deemed to have automatically and immediately resigned from the Board of
Directors effective with such termination. Physician shall serve on the Board of
Directors without compensation (including fees and stock options) of any kind.
<PAGE>
(d) INMD shall cause Physician to be appointed President and
Chief Executive Officer of National Menopause Foundation, Inc. ("NMF"). As such,
Physician shall have general management responsibility for day-to-day operations
of NMF.
(e) As Vice President for Medical Affairs and Medical Director of
the Division, Physician will report to INMD's President and Chief Executive
Officer ("President"). In serving as President and Chief Executive Officer of
NMF, Physician shall report to INMD's President.
(f) The parties agree that Physician's time commitments hereunder
and pursuant to the Physician Employment Agreement may be reallocated from time
to time upon mutual agreement of the parties consistent with the needs of INMD,
NMF and [INMD Acquisition Corp.].
3. COMPENSATION AND BENEFITS.
(a) As compensation for Physician's services rendered hereunder,
Physician shall:
(i) Receive a base salary of Seventy-Five Thousand Dollars
($75,000) per annum, pro rated for any part of a year this Agreement is in
effect, payable in installments in accordance with INMD's regular payroll
practices; and
(ii) Be paid a bonus of up to One Hundred Thousand Dollars
($100,000) per annum, payable at a rate of Seventy-Five Thousand Dollars
($75,000) upon commencement of full operations of the first new site managed by
INMD and providing climacteric medicine services ("Site") and Twenty-Five
Thousand Dollars ($25,000) upon commencement of full operations of the second
Site each year; provided that Physician shall receive, as an advance against the
$100,000 bonus, payments in installments in accordance with INMD's regular
payroll practices, and pro rated for any part of a year this Agreement is in
effect.
(b) Physician shall be eligible to participate in INMD's medical,
dental, life and long-term disability insurance and other benefit programs from
time to time in effect for INMD's senior executives, including any 40l(k) or
other retirement plans, participation in any such plans to be in accordance with
their respective terms and conditions.
(c) Physician shall be entitled to take up to an aggregate of
four weeks of vacation each calendar year (including vacation time under the
Physician Employment Agreement) as business conditions permit, provided that
unused vacation may not accumulate from year to year, and any vacation time not
used by the end of any year shall not require any additional payment to
Physician.
(d) INMD will reimburse Physician for all reasonable and
documented business expenses incurred by Physician on behalf of INMD during the
term of employment hereunder consistent with INMD's expense reporting policy (as
the same may be modified from time to time).
<PAGE>
(e) Physician shall receive within 30 days of this Agreement, an
option to acquire 40,000 shares of INMD stock in accordance with INMD's standard
option program for employees.
4. COMPLIANCE WITH INMD POLICIES. Physician agrees at all times to
comply with the policies, directives, bylaws, rules and regulations of INMD and
the directives of INMD's President and Board of Directors (and, with respect to
NMF, its Board of Directors).
5. TERM. The term of Physician's employment shall commence on the date
hereof and shall terminate four (4) years thereafter unless sooner terminated
pursuant to the provisions of section 6. Provided INMD has not exercised its
right hereunder to terminate this Agreement, this Agreement may be extended upon
the mutual written consent of INMD and Physician on the same terms and
conditions as herein specified, for an additional three (3) year period.
6. TERMINATION.
(a) Physician's employment hereunder may be terminated at any
time by INMD for "cause" (as such term is hereinafter defined) or, upon not less
than thirty (30) days' prior written notice, without "cause". For purposes
hereof, any termination of Physician's employment pursuant to the provisions of
section 6(f) below shall additionally be considered termination of Physician's
employment by INMD without "cause". In the event Physician's employment is
terminated, this Agreement shall terminate as of the employment termination
date.
(b) In the event Physician's employment is terminated by INMD
without "cause":
(i) Physician will be paid the following severance in
monthly installments (in arrears) beginning the first full month following the
cessation of Physician's employment with INMD:
(A) if termination occurs prior to Physician's
completion of six (6) months of continuous employment with INMD, the amount of
severance shall be equal to (x) the balance of the base salary plus advance
bonus installments Physician would have received hereunder had Physician's
employment continued for such six month period, plus (y) an additional 12
months' base salary plus bonus; or
(B) if termination occurs on or after Physician's
completion of six full months of continuous employment with INMD, the amount of
severance shall be equal to 12 months' base salary plus bonus; and
(ii) Physician will be entitled to receive any accrued but
unpaid salary earned by Physician hereunder through the date of such
termination.
<PAGE>
(c) No severance shall be paid or payable to Physician in the
event Physician's employment is: (i) terminated for "cause", (ii) if Physician
voluntarily resigns from employment with INMD, or (iii) if Physician's
employment under the Physician Employment Agreement terminates pursuant to
sections 10(a)(iii) or is terminated by Physician pursuant to 10(a)(vi) thereof,
in which event this Agreement shall terminate immediately upon the date fixed
for the cessation of Physician's employment or upon Physician's resignation,
respectively; provided, however, that INMD shall nonetheless be obligated to pay
Physician any accrued but unpaid salary earned by Physician hereunder through
the date of such termination.
(d) For purposes of this Agreement, termination for "cause" shall
mean termination due to any one or more of the following:
(i) if Physician is indicted for a felony or any court or
governmental authority determines that Physician has committed any act involving
fraud, dishonesty, breach of trust or moral turpitude;
(ii) if Physician engages in gross negligence or willful
misconduct, or engages in other conduct of such a material nature (in the good
faith opinion of the President or Board of Directors of INMD) as to render
Physician's presence as Vice President for Medical Affairs and Medical Director
detrimental to INMD or its reputation;
(iii) if Physician commits a material breach of or a default
under any of the terms or conditions of this Agreement and Physician fails to
cure such breach or default within ten (10) days after written notice thereof
from INMD; or
(iv) termination of the Physician Employment Agreement for
any reason (other than termination by [INMD Acquisition Corp.] pursuant to
section 10(a)(vi) thereof).
(e) Physician's employment hereunder shall additionally terminate
immediately upon Physician's death or "permanent disability" (as such term is
hereinafter defined). In either such event, this Agreement shall terminate
immediately upon the cessation of Physician's employment; provided, however,
Physician (or Physician's legal representative, as the case may be) will be
entitled to receive any accrued but unpaid salary earned by Physician hereunder
through the date of such termination, plus severance in monthly installments (in
arrears), beginning the first full month following the date of such termination,
in an aggregate amount equal to the positive difference, if any, between (x) the
base salary plus advance bonus installments Physician would have received
hereunder for the six months immediately following such termination date had
Physician's employment continued for such six month period, and (y) the total
monies paid or payable to Physician with respect to such six month period under
the long-term disability insurance policy or policies maintained by INMD for
Physician's benefit, if any. For purposes of this Agreement, the term "permanent
disability" shall have the meaning set forth in the long-term disability
insurance policy or policies then maintained by INMD for the benefit of its
employees, or if no such policy shall then be in effect, or if more than one
such policy shall then be in effect in which the term "permanent disability"
shall be assigned different definitions, then the term "permanent disability"
shall be defined for purposes hereof to mean any physical or mental disability
or incapacity which renders Physician incapable of fully performing the services
required in accordance with Physician's obligations hereunder for a period of
120 consecutive days or for shorter periods aggregating 120 days during any
twelve-month period.
<PAGE>
(f) Supplementing the provisions of this section 6, in the event
Physician's employment hereunder is terminated by Physician due to any one or
more of the following events, such termination of employment shall be deemed
termination of Physician's employment by INMD without "cause" within the meaning
of this section 6:
(i) a material breach of or default under this Agreement by
INMD which is not cured by INMD within thirty (30) days after its receipt of
written notice thereof from Physician; or
(ii) a material reduction in Physician's duties or a
material interference with the exercise of Physician's authority by INMD's Board
of Directors (not arising from any physical or mental disability Physician may
sustain) which would be inconsistent with Physician's position as Vice President
for Medical Affairs and Medical Director of the Division and the same shall not
have been alleviated by INMD's Board of Directors within fifteen (15) days after
its receipt of prior written notice thereof from Physician; provided, however,
that a termination by Physician of employment pursuant to this section 6(f)
shall not be deemed for purposes hereof to constitute a termination of
Physician's employment by INMD without "cause", if, at the time of such
termination by Physician, INMD shall be entitled to terminate this Agreement by
reason of Physician's "permanent disability" (subject to the passage of any
remaining time necessary to render any disability Physician may sustain a
"permanent disability" under section 6(e) above), or for "cause" (subject to any
applicable cure period) and INMD shall have sent, or shall send, Physician
within ten (10) days of INMD's receipt of Physician's notice or termination, a
notice of termination by INMD specifying the "cause" or notice by INMD of such
pending Permanent Disability.
(g) Notwithstanding anything in sections 6(b) or 6(e) above to
the contrary:
(i) Physician shall not have any obligation to INMD to
mitigate any termination of employment under such subsections hereunder whereby
Physician would be required by INMD promptly to seek, procure or commence
substitute employment; and
(ii) in the event Physician does seek, procure or commence
such substitute employment, none of the income derived or to be derived by
Physician therefrom shall be set off by INMD against the balance of any
severance payments, if any, owing to Physician by INMD under this Agreement.
(h) Upon termination of this Agreement, as hereinabove provided,
neither party shall have any further obligation hereunder except for: (i)
obligations accruing prior to the date of termination; and (ii) obligations,
promises or covenants which are expressly made to extend beyond the term or
termination of this Agreement. Notwithstanding anything herein to the contrary,
the provisions of sections 7 and 8 hereof shall expressly survive the
termination of this Agreement.
<PAGE>
(i) Upon termination of this Agreement without "cause," the
Proxy (as such term is defined in the Merger Agreement) shall be of no further
force and effect.
7. RESTRICTIVE COVENANTS.
(a) For one (1) year after the termination of this Agreement,
Physician shall not:
(i) directly or indirectly engage or be interested (whether
as owner, partner, lender, consultant, employee, agent or otherwise) in any
business, activity or enterprise which competes with any aspect of the business
being conducted by INMD, its affiliates or successor(s);
(ii) directly or indirectly employ or otherwise engage, or
offer to employ or otherwise engage, any person who is then (or was at any time
within two (2) years prior to the time of such employment, engagement or offer
thereof) an employee, representative or agent of INMD, its affiliates or
successor(s); or
(iii) solicit any business from any person or entity that
has been a patient or customer of INMD, its affiliates or successor(s) or
directly or indirectly induce or influence any customer, patient, supplier or
other person that has a business relationship with INMD, its affiliates or
successor(s) to discontinue or reduce the extent of such relationship.
(b) In addition, Physician shall never use or divulge any trade
secrets, patient, customer or supplier lists, pricing information, marketing
arrangements or strategies, business plans, internal performance statistics,
training manuals or other information concerning INMD, its affiliates or
successor(s) that is competitively sensitive or confidential.
(c) Physician acknowledges and agrees that the covenants
contained in this Section 7 are fair, reasonable and necessary in order to
protect INMD's goodwill and business interests and therefore it is the desire
and intent of the parties that the provisions of this Section 7 shall be
enforced to the fullest extent permissible under the laws and public policy
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of this Section shall be adjudicated to be invalid or
unenforceable, such deletion shall apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made. In addition, should any court determine that the provisions of this
Section 7 shall be unenforceable with respect to scope, duration or geographic
area, such court shall be empowered to substitute, to the extent enforceable,
provisions similar to those contained in this Section 7, or other provisions so
as to provide to INMD, to the fullest extent permitted by applicable law, the
benefits intended by this Section 7.
<PAGE>
(d) Because the breach or attempted or threatened breach of this
restrictive covenant will result in immediate and irreparable injury to INMD for
which INMD will not have an adequate remedy at law, INMD shall be entitled, in
addition to all other available remedies, to a decree of specific performance of
this covenant and to a temporary and permanent injunction enjoining such breach,
without posting bond or furnishing similar security. The provisions of this
Section 7 are in addition to and independent of any agreements or covenants
contained in any employment, consulting or other agreement between INMD, its
affiliates or successor(s) and Physician.
(e) Nothwithstanding anything herein to the contrary, this
Section 7 shall terminate and be of no further effect after four (4) years
following the date of this Agreement.
8. PUBLICATIONS. Physician agrees that any and all abstracts,
articles, reviews, or other publications that Physician proposes to submit for
publication within the scientific or medical community, or otherwise, which
publication is the result of direct or indirect support from INMD, in the form
of, including, but not limited to, materials, patients, personnel, data or INMD
resources, Physician will submit to INMD's Vice President, Science and
Technology and its [Vice President, Medical Affairs], not less than 30 days
prior to the proposed submission date, a copy of the proposed article or
publication, for INMD's proprietary review. Physician further agrees that the
appropriate statement, "Support provided by IntegraMed America, Inc." or
"Supported in part by IntegraMed America, Inc." will be set forth as a
disclosure with respect to the publication.
9. NOTICES. All notices, requests, demands, and other communications
provided for in this Agreement or required among the parties in connection with
the Agreement shall be in writing and shall be deemed to have been given at the
time when personally delivered, mailed at any United States Post Office via
registered or certified mail, prepaid, return receipt requested, or sent by
overnight delivery service against receipt, addressed to the party at the
address set forth below or such other address as said party may designate by
notice:
If to Physician:
Morris Notelovitz, M.D., Ph.D.
2801 N.W. 58th Blvd.
Gainesville, Florida 32605
With a copy to:
Richard M. Knellinger, P.A.
Barnett Bank Building
Suite 305
2815 Northwest 13th Street
Gainesville, FL 32609-2889
<PAGE>
If to INMD, at:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Gerardo Canet, President
With a copy to:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Claude White, General Counsel
10. INSURANCE. Physician agrees that INMD may, in its discretion,
apply for and take out in its name and at its own expense, and solely for its
benefit, key man life insurance on Physician in any amount deemed or advisable
by INMD to protect its interests, and Physician agrees that he shall have no
right, title or interest therein and further agrees to submit to any medical or
other examination and to execute and deliver any application or other
instruments in writing reasonably necessary to effectuate such insurance.
11. PHYSICIAN'S REPRESENTATIONS. Physician represents and warrants that
he is not under any obligation, restriction or limitation, contractual or
otherwise, to any other individual or entity which would prohibit or impede him
from performing his duties and responsibilities hereunder and that Physician is
free to enter into and perform the terms and provisions of this Agreement, such
representations and warranty to survive the execution, delivery and termination
hereof.
12. AMENDMENT. No modification, amendment, or addition to this
Agreement, nor waiver of any of its provisions, shall be valid or enforceable
unless in writing and signed by all parties.
13. ASSIGNMENT. No assignment or delegation of this Agreement or the
rights and obligations hereunder shall be valid without the specific written
consent of both parties.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties and supersedes any prior oral or written understanding
between the parties with respect to the subject matter hereof.
15. APPLICABLE LAW. This Agreement shall be governed by the laws of
the State of Florida without regard to conflicts of law.
16. SEVERABILITY. Each provision in this Agreement is intended to be
severable, and may be modified by any court of competent jurisdiction to the
extent necessary to make such provision valid and enforceable. If any term or
provision hereof shall be determined by a court of competent jurisdiction to be
illegal or invalid for any reason whatsoever in whole or in part, such provision
or portion thereof shall be reduced as provided in Section 15 or be severed from
this Agreement and shall not affect the validity of the remainder of this
Agreement.
<PAGE>
17. WAIVER; CONSENT. No consent or waiver, express or implied, by
either party hereto, or of any breach or default by the other party in the
performance by the other of its obligations hereunder, shall be valid unless in
writing, and no such consent or waiver shall be deemed or construed to be a
consent or waiver to or of any other breach or default on the performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure to act of
the other party or to declare the other party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The granting of any consent or approval in any other instance
by or on behalf of Physician and/or INMD shall not be construed to waive or
limit the need for such consent in any other or subsequent instance.
18. FURTHER ACTION. Each party hereto agrees that it will execute and
deliver such further instruments and will take such further action as may be
necessary to discharge, perform or carry out any of its respective obligations
and agreements hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first above written.
IVF AMERICA, INC.
By: /s/Dwight P. Ryan
------------------------------
Dwight P. Ryan, Vice President
Employee:
/s/Morris Notelovitz
-----------------------------
Morris Notelovitz, M.D.
PHYSICIAN EMPLOYMENT AGREEMENT
AGREEMENT made this 7th day of June, 1996 between Morris Notelovitz, M.D.,
Ph.D., residing at 2801 N.W. 58th Blvd., Gainesville, Florida 32605
("Physician") and INMD Acquisition Corp. ("IAC"), a Florida corporation and
wholly owned subsidiary of IVF America, Inc. ("INMD"), having its principal
place of business at Office Park West, 222 S.W. 36th Terrace, Gainesville,
Florida 32607.
R E C I T A L S:
IAC specializes in the provision of gynecological services, climacteric
medicine services, clinical research, and related services, including treatment
of pre- and post-menopausal women ("Medical Services").
Physician is duly licensed to practice medicine in the State of Florida and
specializes in the provision of Medical Services.
Physician is simultaneously herewith entering into an Agreement and Plan of
Merger with INMD, IAC and other parties specified therein ("Merger Agreement").
Physician is also simultaneously herewith entering into an agreement with
INMD to serve as Vice President, Medical Affairs and Medical Director of the
Menopause Division of INMD ("Employment Agreement").
In order to further facilitate the provision of Medical Services, IAC
desires to employ Physician and Physician desires to accept such employment, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration set forth herein, the parties agree as follows:
1. ENGAGEMENT. IAC hereby employs Physician and Physician hereby
accepts employment to provide Medical Services under the terms and conditions
contained herein and as the parties may agree from time to time.
2. DUTIES.
(a) Physician shall provide patient care and clinical backup as
required to ensure the proper provision of services to patients of IAC at IAC's
office at the address set forth in Schedule A and/or such other location(s) as
shall be mutually agreed to by IAC and Physician (the "Offices"). Physician
agrees to devote substantially all of his professional time, effort and ability
(except such time, effort and ability devoted to his duties pursuant to the
Employment Agreement and lecturing and writing in the area of climacteric
medicine) to the provision of Medical Services under the terms and conditions
contained herein and as the parties may agree from time to time. In connection
therewith, Physician's duties shall include but not be limited to the following:
<PAGE>
(i) Provision of patient counseling and medical
examinations;
(ii) Reviewing and evaluating clinical data on a routine
basis and making specific recommendations for improving treatment outcomes;
(iii) Maintenance of a thorough understanding of and
proficiency in the application of the most current medical knowledge and
technologies (including both surgical and non-surgical techniques) relevant to
Medical Services; and
(iv) Development and implementation of educational outreach
programs designed to facilitate the development of relationships with physicians
in the obstetrics/gynecology community and other medical specialties and the
dissemination of information pertaining to the availability of Medical Services.
(b) Except as permitted by Section 3(b) hereof, Physician shall
not, during the term of this Agreement, otherwise engage in the practice of
medicine outside of IAC without the express written consent of IAC and INMD.
(c) Physician acknowledges and agrees that Physician is
responsible for all clinical care or other professional services delivered by
him or pursuant to his instructions.
3. COMPENSATION.
(a) In consideration of the Medical Services to be provided by
Physician hereunder, Physician shall be compensated as provided on Schedule B
attached hereto and made a part hereof.
(b) All remuneration received by Physician in payment for any
outside professional medical activities (other than his compensation pursuant to
the Medical Director Agreement) and speaking engagements, but excluding income
derived from Physician's service on boards of directors, testimony for
litigation-related proceedings, passive investments, fund raising or book
royalties, shall be accounted to and be the sole property of IAC. Physician's
engagement in outside professional medical activities shall require the prior
express written consent of IAC and INMD, which shall not be unreasonably
withheld, and shall not interfere in any way with the fulfillment of Physician's
duties hereunder or diminish the quality of the Medical Services rendered.
<PAGE>
4. BILLING. All fees for Medical Services rendered by Physician on
behalf of IAC hereunder shall be billed and collected by IAC or its designee. In
consideration of the payment to Physician of the compensation described herein,
all receivables and collections attributable to Medical Services provided by
Physician to IAC patients are and shall become the property of IAC, and
Physician agrees immediately to turn over to IAC any such payments received by
Physician during the term hereof. Physician hereby authorizes IAC or its
designee to bill for Medical Services provided hereunder and agrees to execute
any and all assignments or other documents that may be necessary or appropriate
to permit IAC or its designee to carry out all billing and collection functions.
Physician agrees that Physician shall not otherwise submit bills for, seek
remuneration for or collect fees for Medical Services provided hereunder.
Physician shall look solely to IAC for compensation for his professional medical
services provided hereunder.
5. MEDICAL STAFF PRIVILEGES. Physician hereby acknowledges that in
order to provide Medical Services to IAC as herein required, Physician must at
all times during the term of this Agreement be a member in good standing of at
least one JCAHO-accredited hospital in the geographic area of each of the
Offices (the "Hospital(s)").
6. PROFESSIONAL LIABILITY INSURANCE. Physician shall qualify for
professional liability insurance coverage throughout the term of this Agreement
in amounts of not less than $1.0 million per occurrence, $3.0 million in the
aggregate. IAC shall obtain and maintain on behalf of Physician professional
liability insurance in amounts of not less than One Million Dollars
($1,000,000.00) per occurrence, Three Million Dollars ($3,000,000.00) in the
aggregate.
7. COMPLIANCE WITH IAC POLICIES. Physician agrees at all times to
comply with all reasonable policies, directives, bylaws, rules and regulations
of IAC. Physician acknowledges that IAC shall have final authority over: (a) the
acceptance or refusal to treat any patient; and (b) the amount of the fee to be
charged for all Medical Services rendered by Physician to patients of IAC, so
long as such fees are lawful and reasonable. Notwithstanding the foregoing,
Physician may refuse to treat any patient whom he reasonably believes should not
be treated based upon reasonable legal or medical concerns.
8. MEDICAL RECORDS. All medical records of patients to whom Physician
provides Medical Services or other medical services on behalf of IAC during the
term hereof shall be the property of IAC. A copy of the medical records of such
patients will be made available to Physician upon request consistent with
patient confidentiality laws.
9. TERM. The term of this Agreement shall begin on the date hereof and
shall terminate four (4) years thereafter unless sooner terminated pursuant to
the provisions of Section 10. Provided IAC has not exercised its right hereunder
to terminate this Agreement, this Agreement may be extended upon the mutual
written consent of IAC and Physician on the same terms and conditions as herein
specified, for an additional three (3) year period.
<PAGE>
10. TERMINATION.
(a) This Agreement shall terminate upon the occurrence of any of
the following:
(i) Termination of the Medical Director Agreement for any
reason if such agreement terminates without a successor agreement, or upon the
termination of any successor agreement thereto which terminates without a
successor agreement;
(ii) Conviction of Physician of a felony or suspension,
revocation or non-renewal of Physician's license to practice medicine; or
limitation of Physician's license to practice medicine in any manner that
materially affects his ability to provide Medical Services hereunder;
(iii) Upon the mutual agreement of the parties at any time;
(iv) Upon the loss by Physician of Hospital medical staff
privileges as described in Section 5;
(v) By either party upon a material breach by the other
party; provided that the non-breaching party first gives the breaching party
written notice of the breach, and the breaching party fails to cure the breach
within thirty (30) days after such notice;
(vi) By either party without cause upon giving the other not
less than six (6) months' prior written notice; or
(vii) Upon death or disability of Physician.
(b) Upon termination of this Agreement, as hereinabove provided,
neither party shall have any further obligation hereunder except for: (i)
obligations accruing prior to the date of termination; and (ii) obligations,
promises or covenants which are expressly made to extend beyond the term or
termination of this Agreement.
11. REPRESENTATIONS AND COVENANTS.
Physician makes the following representations and covenants, the
continuing validity and performance of which throughout the term of this
Agreement shall be a material term of this Agreement:
<PAGE>
(a) Physician is licensed to practice medicine in the State of
Florida without limitation and is board certified in obstetrics and gynecology,
and shall take all actions necessary to retain such credentials;
(b) Physician is authorized by the U.S. Drug Enforcement Agency
to prescribe all pharmaceuticals required in connection with the provision of
Medical Services; in addition, Physician maintains any and all authorizations
from the State of Florida and other governmental agencies that are required in
connection with the prescribing of pharmaceuticals or Physician's provision of
Medical Services;
(c) There are no professional disciplinary proceedings or
malpractice actions threatened or pending against Physician;
(d) Physician has notified and will promptly notify IAC of all
malpractice actions and professional disciplinary proceedings brought or
threatened to be brought against him and the progress and disposition of any
such action or proceeding; and
(e) Physician shall at all times conduct himself in compliance
with all applicable policies and procedures of IAC as reasonably communicated to
him, as well as all applicable federal, state, and local laws, rules and
regulations and ethical principles of the practice of medicine.
12. RESTRICTIVE COVENANTS.
(a) For one (1) year after the termination of this Agreement,
Physician shall not:
(i) directly or indirectly engage or be interested (whether
as owner, partner, lender, consultant, employee, agent or otherwise) in any
business, activity or enterprise which competes with any aspect of the business
being conducted by IAC, INMD, their affiliates or successor(s);
(ii) directly or indirectly employ or otherwise engage, or
offer to employ or otherwise engage, any person who is then (or was at any time
within two (2) years prior to the time of such employment, engagement or offer
thereof) an employee, representative or agent of IAC, INMD, their affiliates or
successor(s); or
(iii) solicit any business from any person or entity that
has been a patient or customer of IAC, INMD, their affiliates or successor(s) or
directly or indirectly induce or influence any customer, patient, supplier or
other person that has a business relationship with IAC, INMD, their affiliates
or successor(s) to discontinue or reduce the extent of such relationship.
<PAGE>
(b) In addition, Physician shall never use or divulge any trade
secrets, patient, customer or supplier lists, pricing information, marketing
arrangements or strategies, business plans, internal performance statistics,
training manuals or other information concerning IAC, INMD, their affiliates or
successor(s) that is competitively sensitive or confidential.
(c) Physician acknowledges and agrees that the covenants
contained in this Section 12 are fair, reasonable and necessary in order to
protect IAC's and INMD's goodwill and business interests and therefore it is the
desire and intent of the parties that the provisions of this Section 12 shall be
enforced to the fullest extent permissible under the laws and public policy
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of this Section shall be adjudicated to be invalid or
unenforceable, such deletion shall apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made. In addition, should any court determine that the provisions of this
Section 12 shall be unenforceable with respect to scope, duration or geographic
area, such court shall be empowered to substitute, to the extent enforceable,
provisions similar to those contained in this Section 12, or other provisions so
as to provide to IAC and INMD, to the fullest extent permitted by applicable
law, the benefits intended by this Section 12.
(d) Because the breach or attempted or threatened breach of this
restrictive covenant will result in immediate and irreparable injury to IAC and
INMD for which IAC and INMD will not have an adequate remedy at law, IAC and
INMD shall be entitled, in addition to all other available remedies, to a decree
of specific performance of this covenant and to a temporary and permanent
injunction enjoining such breach, without posting bond or furnishing similar
security. The provisions of this Section 12 are in addition to and independent
of any agreements or covenants contained in any employment, consulting or other
agreement between IAC, INMD, their affiliates or successor(s) and Physician.
(e) Notwithstanding anything herein to the contrary, this Section
12 shall terminate and be of no further force and effect after four (4) years
from the date of this Agreement.
13. PUBLICATIONS. Physician agrees that any and all abstracts,
articles, reviews, or other publications that Physician proposes to submit for
publication within the scientific or medical community, or otherwise, which
publication is the result of direct or indirect support from INMD, in the form
of, including, but not limited to, materials, patients, personnel, data or
Office or IAC resources, Physician will submit to INMD's Vice President, Science
and Technology and its [Vice President, Medical Affairs], not less than 30 days
prior to the proposed submission date, a copy of the proposed article or
publication, for INMD's proprietary review. Physician further agrees that the
appropriate statement, "Support provided by IntegraMed America, Inc." or
"Supported in part by IntegraMed America, Inc." will be set forth as a
disclosure with respect to the publication.
<PAGE>
14. NOTICES. All notices, requests, demands, and other communications
provided for in this Agreement or required among the parties in connection with
the Agreement shall be in writing and shall be deemed to have been given at the
time when personally delivered, mailed at any United States Post Office via
registered or certified mail, prepaid, return receipt requested, or sent by
overnight delivery service against receipt, addressed to the party at the
address set forth below or such other address as said party may designate by
notice:
If to Physician:
Morris Notelovitz, M.D., Ph.D.
2801 N.W. 58th Blvd.
Gainesville, Florida 32605
With a copy to:
Richard M. Knellinger, P.A.
Barnett Bank Building
Suite 305
2815 Northwest 13th Street
Gainesville, FL 32609-2889
If to IAC, at:
INMD Acquisition Corp.
Office Park West
222 S.W. 36th Terrace
Gainesville, Florida 32607
Attention: Executive Director
With a copy to:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Stephen Comess, Vice President
15. AMENDMENT. No modification, amendment, or addition to this
Agreement, nor waiver of any of its provisions, shall be valid or enforceable
unless in writing and signed by all parties.
16. ASSIGNMENT. No assignment or delegation of this Agreement or the
rights and obligations hereunder shall be valid without the specific written
consent of both parties.
<PAGE>
17. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties and supersedes any prior oral or written understanding
between the parties with respect to the subject matter hereof.
18. APPLICABLE LAW. This Agreement shall be governed by the laws of
the State of Florida without regard to conflicts of law.
19. SEVERABILITY. Each provision in this Agreement is intended to be
severable, and may be modified by any court of competent jurisdiction to the
extent necessary to make such provision valid and enforceable. If any term or
provision hereof shall be determined by a court of competent jurisdiction to be
illegal or invalid for any reason whatsoever in whole or in part, such provision
or portion thereof shall be reduced as provided in Section 15 or be severed from
this Agreement and shall not affect the validity of the remainder of this
Agreement.
20. WAIVER; CONSENT. No consent or waiver, express or implied, by
either party hereto, or of any breach or default by the other party in the
performance by the other of its obligations hereunder, shall be valid unless in
writing, and no such consent or waiver shall be deemed or construed to be a
consent or waiver to or of any other breach or default on the performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure to act of
the other party or to declare the other party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The granting of any consent or approval in any other instance
by or on behalf of Physician and/or IAC shall not be construed to waive or limit
the need for such consent in any other or subsequent instance.
21. FURTHER ACTION. Each party hereto agrees that it will execute and
deliver such further instruments and will take such further action as may be
necessary to discharge, perform or carry out any of its respective obligations
and agreements hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first above written.
INMD ACQUISITION CORP. Physician:
By: /s/Dwight P. Ryan /s/Morris Notelovitz
------------------------------ -----------------------------
Dwight P. Ryan, Vice President Morris Notelovitz, M.D., Ph.D.
<PAGE>
SCHEDULE A
OFFICE LOCATION(S)
222 S.W. 36th Terrace
Gainesville, Florida 32607
<PAGE>
SCHEDULE B
COMPENSATION
Physician's compensation shall be a function of Predistribution Earnings
("PDE") of IAC. 75% of IAC's PDE shall be distributed annually to Physician and
any other physician (the "Physician Group") employed by IAC; however, IAC shall
make monthly estimated payments to the Physician Group with quarterly
adjustments for actual PDE. Physician shall receive a draw towards PDE, payable
twice a month. For the initial period which Physician is the sole physician
employee, his draw shall be based on an annual draw of $150,000.
PDE of IAC shall mean Physician and Other Professional Revenues, net of
adjustments for uncollectible accounts, refunds, discounts, contractual
allowances, professional courtesies and other activities that do not generate a
collectible fee as reasonably determined by IAC ("Net Revenues"), less all costs
and expenses related to the operation of IAC and a monthly management fee paid
to INMD equal to 6% of Net Revenues.
MANAGEMENT AGREEMENT
Between
IVF AMERICA, INC.
And
W. F. HOWARD, M.D., P.A.
THIS MANAGEMENT AGREEMENT, dated May 15, 1996, by and between IVF America,
Inc., a Delaware corporation, doing business as IntegraMed America, with its
principal place of business at One Manhattanville Road, Purchase, New York 10577
("INMD") and W.F. Howard, M.D., P.A. with its principal place of business at
4325 North Josey Lane, Suite 308, Carrollton, Texas 75010, a Texas professional
association ("P.A.").
Recitals
P.A. specializes in the provision of gynecological services, including the
treatment of human infertility encompassing the provision of in vitro
fertilization and other assisted reproductive services ("Infertility Services").
All the issued and outstanding shares of capital stock of P.A. are owned by W.
F. Howard, M.D. ("Dr. Howard").
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.
P.A. desires to obtain the services of INMD in performing such management
and administrative functions to permit P.A. to devote its efforts on a
concentrated and continuous basis to the rendering of Infertility Services to
its patients .
In addition, P.A. 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 , P.A. 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.
<PAGE>
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 P.A.'s medical practice.
1.1.2 "Adjustments" shall mean adjustments for uncollectible accounts
(those accounts determined by P.A. and INMD as being uncollectible in the
ordinary course of P.A.'s business), refunds, discounts, contractual
adjustments, professional courtesies and other activities that do not
generate a collectible fee as reasonably determined by INMD and P.A.
1.1.3 "Base Management Fee" shall mean an annual fee paid by P.A. to
INMD in an amount equal to a percentage of P.A.'s annual Physician and
Other Professional Revenues. The Base Management Fee shall cover the cost
of management services provided by INMD corporate staff to P.A., as more
specifically described in Section 2.3.
1.1.4 "Cost of Services" shall mean all ordinary and necessary
expenses of P.A. and all direct ordinary and necessary operating expenses
of INMD, without mark-up, incurred in connection with the management of
P.A.'s medical practice , as more specifically described in Section 2.1.
1.1.5 "Facilities" shall mean the medical office and clinical space of
P.A., including any satellite locations, related businesses and all medical
group business operations of P.A., which are utilized by P.A. 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, including the treatment of human infertility encompassing the
provision of in vitro fertilization and other assisted reproductive
services provided by P.A. 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.
1.1.9 "Physician Employees" shall mean those individuals who are
employees or shareholders of P.A. or are otherwise under contract with P.A.
to provide professional services to P.A. patients and are duly licensed as
physicians in the State of Texas.
<PAGE>
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 P.A. 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.
1.1.11 "Physician Stockholders" shall mean Physician and/or physicians
who are stockholders of P.A.
1.1.12 "Predistribution Earnings" ("PDE") shall mean (i) Physician and
Other Professional Revenues, less (ii) Cost of Services and Base Management
Fee. PDE shall belong to P.A. except for the additional Service Fee
provided for in Section 6.1.4
1.1.13 "Revenues" shall mean the sum of all Physician and Other
Professional Revenues.
1.1.14 "Technical Employees" shall mean technicians such as
embryologists and other laboratory personnel, ultrasonographers and
phlebotomist who provide services to the P. A. 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 1.4) includes without
limitation, the following costs and expenses, whether incurred by INMD or P.A.:
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 P.A., 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 P.A., 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 P.A., such as direct costs of
printing marketing materials prepared by INMD;
<PAGE>
2.1.4 Any sales and use taxes assessed against P.A. related to the
operation of P.A.'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 P.A. to outside counsel in connection
with matters specific to the operation of P.A. 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 P.A. including fire, theft,
general liability and malpractice insurance for Physician Employees of the
P.A.;
2.1.9 Professional licensure fees and board certification fees of
Physician Employees and Other Professional Employees rendering Infertility
Services on behalf of P.A.;
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 3.7 herein;
2.1.12 Cost of filing fictitious name permits pursuant to this
Agreement; and
2.1.13 Such other costs and expenses directly incurred by INMD or P.A.
necessary for the management or operation of P.A.
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 P.A. paid to Physician Stockholders;
<PAGE>
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;
2.2.3 The Base Management Fee;
2.2.4 Any INMD overhead charges; and
2.2.5 Any federal or state income taxes of INMD other than as provided
above.
2.3 The "Base Management Fee" shall cover and include all indirect costs of
INMD including all legal, accounting, financial, marketing, management and
administrative assistance provided by INMD corporate and regional staff which
aren't provided for in Section 2.1.
ARTICLE 3
DUTIES AND RESPONSIBILITIES OF INMD
3.1 MANAGEMENT SERVICES AND ADMINISTRATION.
3.1.1 P.A. hereby appoints INMD as P.A.'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. P.A. and only
P.A. 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 P.A. 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
P.A. in performing medical functions, all Technical Employees provided by
INMD shall be subject to the professional supervision of P.A.
3.1.2 INMD shall, on behalf of P.A., bill patients and collect
professional fees for Infertility Services rendered by P.A. at the
Facilities, outside the Facilities for P.A.'s hospitalized patients, and
for all other Infertility Services rendered by any Physician Employee or
Other Professional Employee. P.A. hereby appoints INMD for the term hereof
to be its true and lawful attorney-in-fact, for the following purposes: (i)
to bill patients in P.A.'s name and on its behalf; (ii) to collect accounts
receivable resulting from such billing in P.A.'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 P.A. (and/or in the name of any
Physician Employee or Other Professional Employee rendering Infertility
Services to patients of P.A.) 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 P.A. to collect any
accounts and monies owed to P.A., to enforce the rights of P.A. 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.
<PAGE>
3.1.3 INMD shall supervise and maintain (on behalf of P.A.) 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 P.A. 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. P.A. shall have unrestricted access to all
of its records at all times.
3.1.4 INMD shall supply to P.A. 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 P.A.'s medical practice at the Facilities.
3.1.5 Subject to P.A.'s prior approval, INMD shall design and
implement an appropriate marketing and public relations program on behalf
of P.A., with appropriate emphasis on public awareness of the availability
of Infertility Services from P.A. The public relations program shall be
conducted in compliance with applicable laws and regulations governing
advertising by the medical profession. P.A. shall approve all advertising
and marketing materials prior to use.
3.1.6 INMD shall assist P.A. in recruiting additional physicians,
including such administrative functions as advertising for and identifying
potential candidates, checking credentials, and arranging interviews;
provided, however, P.A. shall interview and make the ultimate decision as
to the suitability of any physician to become associated with P.A. All
physicians recruited by INMD and accepted by P.A. shall be employees of or
independent contractors to P.A.
3.1.7 INMD shall negotiate, but shall not enter into, and shall
administer all managed care contracts on behalf of P.A. and shall consult
with P.A. on all administrative matters relating thereto.
<PAGE>
3.1.8 INMD shall arrange for legal and accounting services as may be
reasonably required in the ordinary course of the P.A.'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 P.A.
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 P.A.'s medical practice
at the Facilities.
3.2 FACILITIES. INMD shall provide the office space and facilities
necessary for the operation of P.A.'s medical practice, 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. 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 P.A. regarding the condition, use and needs for
the Facilities, equipment, services and improvements thereto. Exhibit 3.2 also
contains a representative list of equipment and furnishings to be provided by
INMD. P.A. shall have the right to review all proposed leases for office space
and INMD shall consult with P.A. with respect to the terms of such leases and
use its best efforts to ensure that the leases provide for reason assignment.
Additionally, INMD shall use its best efforts to ensure that equipment leases
provide for reasonable assignment.
3.3 EXECUTIVE DIRECTOR AND OTHER PERSONNEL.
3.3.1 EXECUTIVE DIRECTOR. Subject to the approval of P.A., INMD shall
hire and appoint an Executive Director to manage and administer all of 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 the P.A. and shall generally perform the administrative duties assigned
to the Executive Director by INMD.
3.3.2 PERSONNEL. INMD shall provide non-professional support personnel
and administrative personnel, clerical, secretarial, bookkeeping and
collection personnel reasonably necessary for the efficient operation of
P.A. 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 P.A. If
P.A. is dissatisfied with the services of any person delivering
non-professional services, P.A. 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 the P.A.'s
provision of high quality medical care and laboratory services. INMD shall
make every effort to honor the specific requests of P.A. with regard to the
assignment of INMD's employees, including the Executive Director.
<PAGE>
3.4 FINANCIAL PLANNING AND GOALS. INMD shall prepare, for the approval of
P.A., annual capital and operating budgets reflecting the anticipated revenues
and expenses, sources and uses of capital for growth of P.A.'s practice and for
the provision of Infertility Services at the Facilities. INMD shall present the
budgets to P.A. for its approval at least thirty (30) days prior to the
commencement of the Fiscal Year. INMD shall specify the targeted profit margin
for P.A.'s practice at the Facilities which shall be reflected in the overall
budget. If the parties can 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 dispute can be resolved.
3.5 AUDITS AND STATEMENTS. INMD shall prepare annual financial statements
for operations of P.A. at the Facilities within ninety (90) 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 P.A.
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 P.A., but will provide support
documentation in connection with the same. Such support documentation shall not
be destroyed without P.A.'s consent.
3.7 INVENTORY AND SUPPLIES. INMD shall order and purchase inventory and
supplies, and such other materials which are requested by P.A. to enable P.A. to
deliver Infertility Services in a cost-effective manner.
3.8 QUALITY IMPROVEMENT. INMD shall assist P.A. 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 P.A.
4.1 PROFESSIONAL SERVICES. P.A. 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 Texas. P.A. shall ensure
that each Physician Employee, Other Professional Employee and any other
professional provider associated with P.A. is duly licensed to provide the
services being rendered within the scope of such provider's practice. In
addition, P.A. shall require each Physician Employee to maintain a DEA number
and appropriate medical staff privileges as determined by P.A. during the term
of this Agreement and to obtain board certification in Reproductive
Endocrinology within five (5) years of a Physician Employee's completion of an
accredited training program. In the event that any disciplinary actions or
medical malpractice actions are initiated against any such physician or other
professional provider, P.A. shall immediately inform the Executive Director and
the underlying facts and circumstances of such action.
<PAGE>
4.2 MEDICAL PRACTICE. P.A. 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. The medical practice conducted at the Facilities shall be
conducted solely by physicians employed by or serving as independent contractors
to P.A., and other Professional Employees as defined herein. 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
P.A. shall determine that additional physicians are necessary, P.A. shall
undertake and use its best efforts to locate physicians who, in P.A.'s judgment,
possess the credentials and expertise necessary to enable such physician
candidates to become affiliated with P.A. for the purpose of providing
Infertility Services. P.A. shall cause each Physician Employee to enter into an
employment agreement with P.A. in the form attached hereto as Exhibit 4.3 or
such other form as is mutually acceptable to P.A. and INMD. P.A. covenants that
it will not employ any physician unless the physician shall sign such employment
agreement before employment. P.A. 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 P.A., INMD shall consult with P.A. respecting such
matters.
4.4 CONTINUING MEDICAL EDUCATION . P.A. shall require its Physician
Employees and Other Professional Employees to participate in such continuing
medical education as P.A. deems to be reasonably necessary for such physicians
or Other Professional Employees to remain current in the provision of
Infertility Services.
4.5 PROFESSIONAL INSURANCE ELIGIBILITY. P.A. 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.
ARTICLE 5
LICENSE OF INMD NAME
5.1 GRANT OF LICENSE. INMD hereby grants to P.A. 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 P.A. at the Facilities. Notwithstanding the License
granted to P.A. hereunder, INMD retains the absolute right to use and license
the Trade Names to others, except in the Counties of Collin, Dallas, Denton,
Ellis, Johnson, Rockwall and Tarrant, Texas (the "Exclusive Territory"). Should
INMD grant a license to any other physician or entity within the Exclusive
Territory, INMD must obtain the consent of P.A.
<PAGE>
5.2 FICTITIOUS NAME PERMIT. If necessary, P.A. 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 P.A. 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 P.A. in obtaining any such original, amended or
renewal fictitious name permit.
5.3 RIGHTS OF INMD. P.A. 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, P.A. shall not in any manner represent that it has any
ownership interest in the Trade Names, and P.A.'s use shall not create in P.A.'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 P.A. shall inure to the
benefit of INMD. P.A. 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. P.A. 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 P.A. or join P.A. as a party thereto. P.A. 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, P.A.
shall: (i) within 30 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 P.A.'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 P.A. and shall not be a Cost of Services.
<PAGE>
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 the
following amounts (collectively "Service Fees"):
6.1.1 an amount reflecting all Cost of Services (whether incurred by
INMD or P.A.) paid or recorded by INMD pursuant to the terms of this
Agreement;
6.1.2. any amounts advanced by INMD to P.A. to fund obligations of
P.A. or pursuant to Section 6.3, below;
6.1.3. during each year of this Agreement, a Base Management Fee of an
amount equal to six percent (6%) of the Revenues;
6.1.4 an additional Service Fee equal to 25% of PDE.
6.2 ACCOUNTS RECEIVABLE. On or before the 15th business day of each month,
INMD shall reconcile the accounts receivable of P.A. arising during the previous
calendar month. Accounts receivable shall be defined as all receivables recorded
each month (net of Adjustments) on the books of the P.A. INMD shall transfer or
pay such amount of funds to P.A. equal to the accounts 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 P.A., as described in Section 2.1 above. P.A. shall cooperate with
INMD and execute all necessary documents in connection with the assignment of
such accounts receivable to INMD or at INMD's option, to its lenders. All
collections in respect of such accounts receivable shall be deposited in a bank
account at a bank designated by INMD. To the extent P.A. comes into possession
of any payments in respect of such accounts receivable, P.A. shall direct such
payments to INMD for deposit in bank accounts designated by INMD.
6.3 ADVANCES. In addition to the purchase of the Accounts Receivable set
forth in 6.2 above, INMD agrees to advance funds to P.A., to provide new
services, utilize new technologies, fund projects such as new and replacement
equipment, meet Cost of Services, provide working capital or fund mergers with
other physicians or physician groups into P.A. ("Advance"). Such Advances shall
be made only with the consent of P.A.
<PAGE>
6.3.1 Any amounts advanced hereunder shall be considered Service Fees
as provided for in Section 6.1 and shall be repaid monthly, except amounts
advanced for new and replacement equipment which are depreciated in
accordance with GAAP and therefore included in Cost of Services, in such
amounts as agreed to between INMD and P.A.
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.
ARTICLE 7
EXCLUSIVE MANAGEMENT RIGHT AND TERM
7.1 INMD Agrees to pay P.A. the sum of $557,500.00 for the exclusive right
to manage P.A. during the term of this Agreement (the "Exclusive Management
Right"), $100,000.00 of which shall be paid upon the signing of this Agreement
and the balance as follows: (i) $100,000.00 on the last business day of May 1997
and May 1998, (ii) $36,785.71 on the last business day of May 1999, 2000, 2001,
2002, 2003, 2004 and 2005, and (iii) payments provided for hereunder shall be
paid notwithstanding the termination provisions of Article 8 of the Management
Agreement.
7.2 The term of this Agreement shall begin May 15, 1996 and shall expire
ten (10) years after such date unless earlier terminated pursuant to Article 8,
below.
ARTICLE 8
TERMINATION OF THE AGREEMENT
8.1 TERMINATION FOR CAUSE .
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.
<PAGE>
8.1.3 ILLEGALITY. 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 P.A. 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.
8.1.4 ECONOMIC INFEASIBILITY. Any party may terminate this Agreement
upon 90 days prior written notice to the other parties in the event that
the provision of Infertility Services as contemplated by this Agreement is
no longer feasible for any reason beyond the control of a party hereto,
including, without limitation, due to technological obsolescence of the
Infertility Services, adverse modification of the reimbursement system
materially affecting payment for such services, or adverse change in the
applicable laws or regulations materially affecting the delivery of
Infertility Services.
8.2 TERMINATION BY INMD FOR PROFESSIONAL DISCIPLINARY ACTIONS. INMD may
terminate this Agreement upon 10 days prior written notice to P.A. if
Physician's authorization to practice medicine is suspended, revoked or not
renewed, or if any other formal disciplinary action is taken against Physician
which could reasonably lead to a suspension, revocation or non-renewal of
Physician's license.
8.3 SUBSTANTIAL CHANGE IN INMD OWNERSHIP. P.A. may terminate this Agreement
if INMD ceases to be listed on a major stock exchange due to INMD's financial
position failing to meet requirements for listing on the particular exchange on
which the stock is traded; provided, however, INMD shall have the right to give
assurances of its ability to perform hereunder without material variation in
performance to the date of changed circumstances.
8.4 DEATH OR DISABILITY OF DR. HOWARD. INMD may terminate this Agreement
upon the death or disability of Dr. Howard. Upon the death or disability of Dr.
Howard, INMD shall have the right of first refusal to identify and recommend a
physician to acquire Dr. Howard's ownership interest in P.A., to the extent
permitted by law.
<PAGE>
ARTICLE 9
PURCHASE OF ASSETS - OBLIGATIONS AND OPTIONS
9.1 TERMINATION BY INMD. If INMD terminates this Agreement due to the
insolvency of P.A. (Section 8.1.1) for reasons other than circumstances directly
attributable to INMD, for a material breach by P.A. (Section 8.1.2), for
disciplinary action against a Physician Employee (Section 8.2), or the death or
disability of Dr. Howard (Section.8.4.), P.A. agrees, within 90 days of the date
of termination, at INMD's option, to purchase from INMD the P.A. Assets as set
forth in Sections 9.1.1 to 9.1.3 below, together with leasehold improvements.
9.1.1 The purchase price of the P.A. Assets will be the net book value
determined in accordance with GAAP, consistently applied, as at the date of
the termination.
9.1.2 In addition to purchasing the P.A. Assets and leasehold
improvements pursuant to this section 9.1, P.A. shall pay INMD 75% of the
preceding 12 months revenues over $1,200,000.00.
9.1.3 In addition, P.A. shall repay INMD such portion of the payment
received by P.A. from INMD under the terms of the Asset Purchase Agreement
for the Exclusive Management Right in excess of an amount determined by
multiplying the number of years the Management Agreement has been in effect
rounded off to the nearest quarter of the year by $55,750.00 ("Earned
Amount"). The amount due is then deducted from the amount P.A. actually
received from INMD for the Exclusive Management Right under the payment
terms of the Asset Purchase Agreement. P.A. will pay the difference, if
any, to INMD.
9.1.4 If a purchase is completed under this Section 9.1, P.A. shall
use its best efforts to assume all leases for offices and equipment used
directly for the management and operation of P.A.'s business and may hire
such employees as it determines are necessary to operate the medical
practice and business.
9.2 TERMINATION BY P.A. In the event this Agreement is terminated by P.A.
as a result of the insolvency of INMD (8.1.1), material breach by INMD (8.1.2),
or substantial change in ownership of INMD (Section 8.3), P.A. shall have the
option, exercisable in writing within 90 days of the date of termination, to
declare the Note in default at the net book value determined under Section
9.1.1, together with leasehold improvements. Upon such event, P.A. shall be
entitled to the P.A. assets as collateral for the Note. If there is a
deficiency, INMD shall continue to pay the Right to Manage Fee on the last
business day of May until the Note is paid in full. If the net book value of the
P.A. assets exceed the balance due for the Right to Manage Fee, P.A. shall,
within 30 days of such determination, remit the difference to INMD.
<PAGE>
9.2.1 If a termination occurs under this Section 9.2, P.A. shall use
its best efforts to assume all leases for offices and equipment used
directly for the management and operation of P.A.'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 P.A. exercise 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 P.A. does not exercise the option within 90 days of
termination, P.A. shall have relinquished its right and interest to the
P.A. Assets and INMD shall be free to use or dispose of the P.A. 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 P.A.
Assets, and assign all right, title and interest in and to and obligations under
the Lease(s) to P.A. and return to P.A. all security deposits. P.A. 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
P.A. Assets free and clear of all liens, encumbrances or security interests
thereon.
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 the insurance
coverage, P.A. 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) P.A. utilizing patient
informed consent forms supplied by INMD and (ii) P.A. complying with
requirements of INMD's insurance company. A certificate of insurance evidencing
such policies shall be presented to P.A. 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.
<PAGE>
10.2 INMD shall use its best efforts to cause P.A. to be made an additional
insured under INMD's professional liability coverage. If P.A. isn't made an
insured, P.A. shall carry professional liability insurance covering P.A. and
P.A.'s employees in the amount of $1 million per incident, $3 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 P.A. 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
MISCELLANEOUS
11.1 INDEPENDENT CONTRACTOR. INMD and P.A. are independent contracting
parties. In this regard, the parties agree that:
11.1.1 The relationship between INMD and P.A. 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 P.A.;
11.1.2 Neither P.A. nor INMD (on behalf of P.A.) shall seek or accept
payment from Medicare or Medicaid for services provided by P.A.
11.1.3 Notwithstanding the authority granted to INMD herein, INMD and
P.A. agree that P.A. shall retain the full authority to direct all of the
medical, professional, and ethical aspects of its medical practices;
11.1.4 Any powers of P.A. not specifically vested in INMD by the terms
of this Agreement shall remain with P.A.;
11.1.5 P.A. shall, at all times, be the sole employer of the Physician
Employees, the Other Professional Employees required by law to be employees
of P.A. and all other professional personnel engaged by P.A. 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 P.A.;
<PAGE>
11.1.6 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;
11.1.7 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
11.1.8 Matters involving the internal agreements and finances of P.A.,
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 P.A., and other employees of
P.A., disposition of P.A. 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 P.A. and licensing, shall remain the sole responsibility of P.A.
and the individual Physician Stockholder(s).
11.2 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 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.
11.3 USE OF NAME OF P.A. The name or any statement that may implicitly
refer directly or indirectly to P.A. or impute any affiliation directly or
indirectly between INMD and P.A. shall not be used in any manner or on behalf of
INMD in any advertising or promotional materials or otherwise without P.A.'s
prior written consent. However, INMD may use P.A's name or address in
advertising to the public solely for the purpose of providing directions to the
office of P.A.
11.4 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.
11.5 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.
<PAGE>
11.6 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.
11.7 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.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas to the fullest extent permitted
by law, without regard to the application of conflict of law rules.
11.9 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.
11.10 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.
11.11 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:
11.11.1 If for INMD at:
IVF America, Inc.
One Manhattanville Road
Purchase, NY 10577-2100
Attention: Peter Callan, Vice President
<PAGE>
With a copy to:
IVF America, Inc.
One Manhattanville Road
Purchase, NY 105277-2100
Attention: Claude White, General Counsel
11.11.2 If for P.A. at:
W. F. Howard, M.D., P.A.
4325 North Josey Lane, Suite 308
Carrollton, Texas 75010
Attention: W.F. Howard, M.D.
With a copy to:
Gary W. Blanscet, Esq.
14001 Dallas Parkway
Suite 1200
Dallas, Texas 75240
Any party hereto, by like notice to the other parties, may designate such other
address or addresses to which notice must be sent.
11.12 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.
11.13 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.
11.14 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.
<PAGE>
(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 P.A. will designate at each
others request the specific information which INMD or P.A. considers to be
Confidential Information.
11.15 INDEMNIFICATION.
11.15.1 INMD agrees to indemnify and hold harmless P.A., 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 11.15.1 shall
survive termination of this Agreement.
11.15.2 P.A. 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 P.A. related to the performance of its duties and responsibilities
under this Agreement. The obligations contained in this Section 11.15.2
shall survive termination of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
IVF AMERICA, INC. W.F. HOWARD, M.D., P.A.
By:/s/ Peter Callan By: /s/ W.F. Howard
---------------------------- ---------------------------------
PETER CALLAN, VICE PRESIDENT W.F. HOWARD, M.D.
PRESIDENT
<PAGE>
EXHIBIT 3.2
DESCRIPTION OF OFFICE AND FACILITIES
TO BE PROVIDED BY INMD TO P.A.
------------------------------
The office location will be determined by INMD and P.A.
<PAGE>
EXHIBIT 4.3
PHYSICIAN EMPLOYMENT AGREEMENT
ASSET PURCHASE AGREEMENT
AGREEMENT made this 15th day of May, 1996, by and between IVF America,
Inc., a Delaware corporation, doing business as IntegraMed America, having its
principal place of business at One Manhattanville Road, Purchase, New York 10577
("Buyer") and W.F. Howard, M.D., P.A., with its principal place of business at
4325 North Josey Lane, Suite 308, Carrollton, Texas 75010 ( "P.A" or "Seller").
W.F. Howard, M.D., is the sole shareholder of P.A. ("Physician").
RECITALS
Buyer is engaged in the business of owning certain assets and providing
management and administrative services to medical practices specializing in the
provision of gynecological services, including treatment of human infertility,
encompassing the provision of in vitro fertilization and other assisted
reproductive services ("Infertility Services"); and
Physician is licensed to practice medicine in Texas and is engaged in the
practice of providing Infertility Services through P.A. (the "Practice");
Seller wishes to sell and Buyer wishes to purchase certain assets utilized
in connection with the Practice, and Buyer desires to acquire the exclusive
right to provide management and related administrative services to Seller in
connection with the continued operation of the Practice.
Seller is willing to grant exclusive management rights to Buyer for
management and related administrative services for the P.A., and Buyer wishes to
provide such services.
In consideration of the mutual promises and covenants herein contained, the
parties hereto agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND EXCLUSIVE MANAGEMENT RIGHTS
1.01 Assets of P.A.
Subject to the terms and conditions set forth in this
Agreement and based upon the representations, warranties and covenants made
herein, at the Closing (as herein defined), Seller shall sell, assign, convey
and transfer to Buyer and Buyer shall acquire from Seller the assets and
property of the P.A., together with all liens and encumbrances, as set forth in
Exhibit 1.01 (a) ("P.A. Assets").
<PAGE>
1.02 Exclusive Management Right
P.A. grants to Buyer the exclusive right to manage P.A.'s
business ("Exclusive Management Right") as more particularly set forth in the
Management Agreement between Buyer and P.A. to be effective as of the Closing
Date (the "Management Agreement"), the form of which agreement is attached
hereto as Exhibit 1.02 and made a part hereof.
1.03 Excluded Assets
The terms P.A. Assets does not include, and Seller reserves and
does not sell or transfer to Buyer any right, title or interest in, the assets
listed in Exhibit 1.03 ( collectively, "Excluded Assets").
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price.
Upon and subject to the terms and conditions set forth herein
and in consideration for the grant of the Exclusive Management Right , the sale
of the P. C. Assets, and Seller entering into the Management Agreement, Buyer
shall pay Seller the sum of $701,472.80 ("Purchase Price"):
2.02 Manner of Payment
(a) On the Closing Date, Buyer shall pay the Seller an initial
payment of $100,000.00 for the Exclusive Management Right and $143,972.80 for
the purchase of the P.A. Assets.
(b) The balance of $457,500.00 for the Exclusive Management Right
shall be paid as follows: (i) $100,000.00 on the last business day of May 1997
and May 1998, (ii) $36,785.71 on the last business day of May 1999, 2000, 2001,
2002, 2003, 2004 and 2005, and (iii) payments provided for hereunder shall be
paid notwithstanding the termination provisions of Article 8 of the Management
Agreement.
2.03 Allocation of Purchase Price
The purchase price shall be allocated among the assets of the
P.A. and the Exclusive Management Right as set forth in Exhibit 2.03 hereto, and
the parties agree to respect such allocation for tax purposes and to cause all
tax returns, including IRS Form 8594, to be filed consistent therewith.
<PAGE>
2.04 Closing Statement.
Seller shall deliver to Buyer unaudited statements dated not more
than three (3) days prior to Closing Date ( the "Closing Statement"), which
shall set forth the dollar value as of the date of the Closing Statement of (a)
the P.A. Assets provided for in paragraph _ of Exhibits 1.01 (a) and (b) the
dollar amount of open accounts payable for the purpose of paragraph 2.05.
2.05 Assumption of Liabilities
Subject to the conditions herein set forth, from and after the
Closing Date, Buyer shall assume and shall pay, perform and discharge (the
following being collectively referred to as "Assumed Liabilities") only those
liabilities set forth in Exhibit 2.05. Buyer shall not assume, acquire or
otherwise become responsible or liable for any liabilities other than those
specifically set forth herein and enumerated in Exhibit 2.05. Buyer agrees to
advance funds to the Seller in an amount not to exceed $20,000.00 to be used by
Seller for making payments on accounts payable arising prior to and existing as
of the Closing Date. Buyer agrees to assist Seller in the management of the
payables. Any such advances will be treated in accordance with Section 6.3 of
the Management Agreement.
ARTICLE III
CLOSING
The closing ( the "Closing") of the transactions contemplated by this
Agreement shall be held at 5:00 p.m. on May 15, 1996 (the "Closing Date") at the
offices of Seller, 4325 North Josey Lane, Suite 308, Carrollton, Texas 75010 or
such other date or at such other time or location as to which Seller and Buyer
may agree to in writing. The effective time of the Closing shall be 12:00
midnight on the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF Seller
Seller represent and warrant to Buyer, for the purpose of inducing Buyer to
enter into and consummate this Agreement, that:
4.01 Organization and Power
(a) P.A. is a duly formed and existing professional association
organized under the laws of Texas, whose sole shareholder is Physician.
Physician is duly licensed to practice medicine in the State of Texas.
<PAGE>
(b) Seller has full right, power and authority to enter into this
Agreement and to consummate the transactions herein contemplated and Seller has
received the consent of the Physician, as sole shareholder and sole director,
authorizing and approving this Agreement and the transactions contemplated
hereby.
(c) This Agreement constitutes the valid and binding obligation
of Seller fully enforceable against Seller in accordance with its terms.
4.02 Authority; No Conflicting Instruments
(a) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated will not, and with notice
or the lapse of time or both would not, except for contracts, liens or
encumbrances disclosed in Exhibits 1.01 (a) and 2.05 (i) result in the breach of
any of the terms or conditions of, or constitute any default under, the Articles
of Incorporation or By-Laws of Seller or under any mortgage, bond, indenture,
agreement, lease or other instrument or obligation to which Seller is a party or
by which it or any of its properties or assets may be bound, except for any such
breach which does not materially adversely affect Seller or its business; (ii)
violate any law or regulation relating to Seller; and (iii) violate any
judgment, award, order, writ, injunction or decree relating to Seller.
(b) No consent, approval or authorization of, or declaration or
filing with any federal, state, local or foreign governmental or regulatory
authority, or any other third party, is required in connection with the
execution and delivery of this Agreement by Seller or the performance by Seller
of the transactions contemplated by this Agreement, except for (i) consents of
lessors under Seller's lease(s), real property or equipment; and (ii) any state
licensing board approvals relating to Seller's business and (iii) any consents
of third parties to contracts that are not material to Seller's business.
4.03 P.A. Assets
Seller has good and marketable title to the P.A. Assets ,
respectively and said P.A. Assets owned exclusively by Seller, free and clear of
all liens, mortgages and encumbrances of any kind or nature, except as set forth
on Exhibit 1.01(a).
4.04 Financial Statements Attached hereto as Exhibit 4.04 are the
unaudited financial statements of Seller consisting of balance sheets, and
profit and loss statements for the years ended December 31, 1993, 1994 and 1995
and notes thereto, together with a balance sheet and a profit and loss statement
for the Three-month period ended March 31, 1996 ( collectively, the "Financial
Statements"). The Financial Statements are compiled on an income tax basis.
<PAGE>
(a) Seller does not have any liabilities, debts or obligations,
whether accrued, absolute or contingent, and whether due or to become due, which
are not reflected or reserved against in the Financial Statements in accordance
with generally accepted accounting principles applied on a consistent basis. As
of the date hereof, Seller has no unfunded liability under any Employee Benefit
Plan ( as hereinafter defined) and there are no circumstances, conditions events
or arrangements which may hereafter give rise to any such liabilities or
obligations which may be asserted against Buyer under any such plan.
(b) Seller has filed with appropriate federal, state and local
authorities (or has obtained appropriate extensions of the time to file) all tax
returns required by law, regulation or otherwise to be filed by Seller for all
taxable periods ending on or prior to the date hereof for which tax returns have
become due. Seller has paid or made adequate provisions for the payment of all
taxes, penalties and interest which have or may become due for or during all
taxable periods of Seller ending on or prior to the date hereof.
4.05 Financial Position
Since March 31, 1996:
(a) There has not been (i) any change in the financial condition,
assets, properties, liabilities, business or results of operations of Seller
other than changes in the ordinary and usual course of business, none of which,
individually or in the aggregate, has been adverse to the business or operations
of Seller; (ii) any strike, labor trouble, employee dispute, property dispute,
lease or contract dispute, loss or destruction or property, actual or
threatened, claim or other event, adversely affecting, or which would adversely
affect, the financial position or business of Seller.
(b) Seller has not granted any wage or salary increase or bonus
or any fringe benefits, or created or amended any Employee Benefit Plan or other
fringe benefit plan (as hereinafter defined) or entered into any employment or
labor contract with any director, officer, employee or group of employees,
except for normal increases in a manner consistent with Seller's policies and
practices.
4.06 Licenses
(a) Seller holds all such licenses, orders, approvals and permits
("Licenses") of every kind or nature which are material to the operation of
Seller's business and operations and such Licenses are in full force and effect
and no action., proceeding or, investigation has been instituted or threatened
with reference to or affecting the existence of said Licenses. A list of all
Licenses is set forth on Exhibit 4.06. Seller is in compliance in all respects
with the terms and conditions of such Licenses and with all requirements,
standards and procedures of the federal, state and local governmental or
regulatory bodies which issued said Licenses.
<PAGE>
(b) Seller is in compliance in all material respects with all
federal, state and local laws, ordinances, codes, regulations, orders,
requirements, standards and procedures which are applicable to the Practice.
4.07 Litigation
(a) There are no actions, suits, claims or legal, administrative
or arbitration proceedings or investigations pending or, threatened against,
involving or affecting Seller or Seller's properties or assets, except as set
forth on Exhibit 4.07(a). Seller has no notice or knowledge of any outstanding
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against, involving or affecting Seller or Seller's
properties or assets except as set forth on Exhibit 4.07(a). Buyer shall have no
liability or obligation with respect to any matter which arose out of Seller's
operations prior to the Closing Date whether set forth on Exhibit 4.07(a).
(b) Seller has received no notice of any violation of applicable
law, order, regulation or requirement related to either Seller, the Practice, or
P.A. Assets, and is not aware of any condition or state of facts that could
result in any such notice.
4.08 Third-Party Billings
(a) All billings by Seller to third-party payors are true and
correct in all respects and are in compliance in all respects with all
applicable laws and regulations and the policies of such third-party payors.
(b) Neither Seller nor any of it's officers, directors, employees
or agents, on behalf of or for the benefit of Seller, directly or indirectly,
has (i) offered or paid any amount to, or made any financial arrangement with,
any of Seller's past or present customers or potential customers in order to
obtain business from such customers, other than standard pricing or discount
arrangements consistent with proper business practices (ii) given, or agreed to
give, or is aware that there has been given, or that there is an agreement to
make any gift or gratuitous payment of any kind, nature or description (whether
in money, property or services) to any past or present customer, supplier,
source of financing, landlord, subtenant, licensee or anyone else at any time of
the year (iii) made, or has agreed to make, or is aware that there is any
agreement to make any political contribution or any contributions, payment or
gifts of their respective funds or property to or for the private use of any
governmental official, employee or agent where either the payment or the purpose
of such contribution, payment or gift relates to the business of Seller and is
illegal under the laws of the United States, any state thereof or any other
jurisdiction (foreign or domestic), or (iv) made, or has agreed to make, or is
aware that there have been, or that there is any agreement to make, any payments
to any person with the intention or understanding that any part of such payment
was to be used directly or indirectly for the benefit of any past or present
customer, employee, supplier or landlord of Seller, or for any purpose other
than that reflected in the documents supporting the payments.
<PAGE>
4.09 Contracts and Agreements
(a) Exhibit 4.09(a) is a list as of the date hereof of all the
material contracts or agreements related to the business of Seller to which
Seller is a party, all of which are valid and existing, in full force and
effect, and binding upon the parties thereto in accordance with their terms.
Seller has paid in full or accrued all amounts due thereunder which are
currently due and as separately identified on Exhibit 4.09(a). Except as
otherwise disclosed, no approval or consent of any person or entity is needed in
order that the contracts and other agreements as listed continue in full force
and effect with respect to Buyer from and after the Closing Date.
(b) Seller and Physician are in compliance with all terms and
provisions of all contracts material to the operation of the Practice and the
P.A. or by which the Practice or any of the P.A. or the Exclusive Management
Right is bound or affected; and all such contracts are legally valid and binding
in accordance with their terms and in full force and effect except as may be
limited by bankruptcy, moratorium, reorganization, insolvency and other similar
laws of general application relating to or affecting the rights of creditors,
and by general principles of equity.
(c) All documents, Exhibits and other materials delivered or made
available, by or on behalf of Seller to Buyer in connection with this Agreement
and the transactions contemplated hereby, are true and complete. The information
furnished by or on behalf of Seller to Buyer in connection with this Agreement
and the transactions contemplated hereby does not, in light of the circumstances
under which the statements contained in the information so furnished are made,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained therein not false or misleading.
There is no fact which Seller has not disclosed to Buyer which adversely
affects, or insofar as Seller can foresee, will adversely affect the P.A. Assets
or the ability of Seller to perform its obligations under this Agreement or any
other agreement entered into in connection with this transaction.
4.10 Insurance Seller has maintained at all times since January 1,
1985, with responsible and financially solvent insurance companies, adequate
insurance covering risks of such types and in such amounts as are customary for
other professional corporations of similar size engaged in Seller's business.
Exhibit 4.10 contains a true and complete list of all policies of insurance
relating to comprehensive liability coverage, the amount of coverage, the period
of coverage, the type of coverage and all pending claims under such policies.
4.11 Personnel
(a) Exhibit 4.11(a) lists each current employee, both full-time
and part- time, of Seller and all current consultants of Seller and discloses
their duties, the date of hire or contract, the annual compensation, bonuses and
incentive arrangements with each.
<PAGE>
(b) Exhibit 4.11(b) describes all of Seller's fringe benefit
plans generally available to Seller's employees ("Employee Benefit Plans").
Seller has complied with the terms and conditions of such Employee Benefit
Plans. Seller has no obligations to establish or create any employee pension
benefit plan or defined benefit plan for the benefit of any of its employees to
become effective after the date hereof. Buyer shall have no obligations relating
to the Employee Benefit Plans or the employees covered thereunder and Buyer
shall have no obligations for employees of Seller arising out of federal or
state law or case decisions as to employment matters arising prior to Closing
Date except in each case for those obligations Buyer assumes hereunder relating
to accrued salaries and wages ( including accrued vacation and sick leave) or
permanent and temporary employees, any accrued bonuses of managerial employees
and any accrued bonus hours of temporary employees of Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, for the purpose of inducing Seller to enter into and consummate this
Agreement, hereby represents and warrants to Seller that:
5.01 Organization, Power and Authority
(a) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full power and
authority, corporate and otherwise, to carry on its business as now conducted
and to own or lease and to operate its properties and assets now owned or leased
and operated by it, to conduct the business of Seller and to consummate the
transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement by
Buyer has been duly authorized by all requisite corporate action, and no further
action or approval is required in order to constitute this Agreement as a valid,
binding and enforceable obligation of Buyer, and this Agreement constitutes the
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
(c) The execution and delivery of this Agreement and the
consummation of the transactions as herein contemplated will not violate any
provisions of any applicable law or of the Certificate of Incorporation or
By-Laws of Buyer, or any order, judgment or decree of any court or other agency
of government binding on Buyer, or conflict with, result in a breach of or
constitute ( with due notice or lapse of time or both) a default under any
contractual obligation of Buyer, result in or require the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of Buyer's
properties or assets , require any approval of or any consent of any person
under any contractual obligation of Buyer or conflict with or result in any
breach or default under any of the terms, conditions or provisions of any
indenture, mortgage, deed of trust or other instrument to which Buyer is a party
or by which it or its properties may be bound or affected.
<PAGE>
ARTICLE VI
INDEMNIFICATION
6.01 Survival of Representations and Warranties
The representations and warranties contained in this Agreement
and in any instrument or certificate delivered pursuant to, or provided for in
this Agreement ("Representations and Warranties"), shall survive the
consummation of the transactions contemplated by this Agreement for a period of
two (2) years after the Closing Date ( three years with respect to those in
sections 4.01 and 4.02) provided, however, that the expiration of the applicable
period would not preclude either party from indemnification by the other
relating to any third-party Claim ( as defined herein). Each party to this
Agreement shall be deemed to have relied upon each and every representation and
warranty of the other party, regardless of any investigation made at any time by
the party relying on such representation and warranty.
6.02 Indemnification
(a) After the Closing Date, Seller shall indemnify Buyer against,
and defend and hold Buyer harmless from, all demands, claims, actions or causes
of action, assessments, losses, damages, deficiencies, liabilities, costs and
expenses ( including interest, penalties and reasonable attorneys' fees and
disbursements) (excluding indirect, punitive and consequential damages)
(hereinafter collectively called "Claim") arising out of or in connection with
(i) any breach of the Representations and Warranties, covenants or agreements of
Seller contained in this Agreement or any agreement or instrument delivered by
Seller pursuant to this Agreement; and (ii) the operations of Seller (including,
but not limited to provision of services, actions of officers and directors, use
of trademarks, service marks, logos or other proprietary symbols) on or prior to
the Closing Date except as expressly assumed by Buyer pursuant hereto. Upon the
assertion of any Claim against Buyer that may give rise to a liability of a
Seller hereunder, Buyer shall notify said Seller of the existence of such Claim
(which notice shall include a description thereof) and Buyer shall give said
Seller reasonable opportunity to defend and/or settle such Claim at said
Seller's own expense and with counsel of its own selection, which counsel shall
be reasonably satisfactory to Buyer; provided, however, that in the case of any
Claim, Buyer shall have the right to participate in any administrative or
judicial proceedings with respect to such Claim, at its expense and with counsel
of its choice. If a Seller shall, after ten (10)- days notice thereof by Buyer,
fail, in Buyer's judgment to take adequate action to defend any Claim, Buyer
shall have the right to undertake the defense, compromise or settlement of such
Claim on behalf of, for the account of, and at the risk of a Seller. If the
Claim is one that cannot by its nature be solely defended by a Seller, then
Buyer shall, at its expense, make available all information and assistance as
may reasonably be requested by a Seller.
<PAGE>
(b) Buyer hereby agrees to indemnify Seller against, and to
defend and hold Seller harmless from Claims arising out of in connection with
(i) any breach of any representation, warranty, covenant or agreement of Buyer
contained in this Agreement or any agreement or instrument delivered by Buyer
pursuant to this Agreement; and (ii) the management by Buyer of the P. A. after
the Closing Date. Upon the assertion of any Claim that may give rise to a
liability of Buyer hereunder, Seller shall notify Buyer of the existence of such
claim (which notice shall include a description thereof). Seller shall give
Buyer reasonable opportunity to defend and/or settle such Claim at its own
expense and with counsel of its own selection, which counsel shall be
satisfactory to Seller; provided, however, that in the case of any Claim, a
Seller shall have the right to participate in any administrative or judicial
proceedings with respect to such Claim, at its expense and with counsel of its
choice. If Buyer shall, after ten (10) days- notice thereof by a Seller, fail to
defend any Claim, said Seller shall have the right to undertake the defense,
compromise or settlement of such Claim on behalf of, for the account of, and at
the risk of Buyer. If the Claim is one that can not by its nature be solely
defended by Buyer, then said Seller shall, at its sole expense, make available
all information and assistance as may be requested by Buyer.
(c) The respective rights of the parties to be indemnified by the
other shall not in any way be limited by the existence or non-existence of
insurance coverage.
(d) This indemnification provision shall survive the Closing and
shall be effective during the term of the Management Agreement and any extension
thereof and for one year following the termination of the Management Agreement.
ARTICLE VII
CERTAIN COVENANTS
7.01 Conduct Prior to Closing Date
During the period from the date of this Agreement through the
Closing Date, Seller agrees to conduct its business in the ordinary and normal
course of business. In connection therewith:
(a) P.A. shall use its best efforts to (i) maintain all patient
lists, records, billing and collection data, goodwill associated with the
Practice, and all material files and records and intangible assets related to
the continued operation of the Practice, (ii) preserve, protect and maintain the
P.A. Assets (iii) use its efforts to preserve the good standing of the P.A. and
to keep available the services of present employees and agents and to preserve
the goodwill of suppliers, patients and others having business relationships
with the P.A.; (iv) not sell, lease, or otherwise dispose of any of the P.A.
Assets, or other properties, rights or claims, except in the ordinary course of
business, without Buyer's written consent.
<PAGE>
(c) Seller shall not , without Buyer's prior written consent, do
any of the following: waive or commit to waive any right of substantial value;
sell, transfer, dispose of or encumber or commit to sell, transfer, dispose of
or encumber the P.A. Assets; incur any indebtedness for borrowed money; make
capital expenditures in excess of $5,000 in the aggregate; terminate any key
employee or take any action that impairs the existing relationships between
Seller and its employees and other persons and entities having business
relations with Seller; or take any action in the conduct of its business which
would be contrary to, or in breach of, any term or Representation or Warranty
contained in this Agreement.
7.02 Conduct After Closing Date
Seller assumes any and all liabilities for taxes and deficiencies
with respect to the operation of the Practice prior to the Closing Date.
ARTICLE VIII
CONDITION TO OBLIGATIONS
8.01 Conditions to Seller's Obligations The obligations of Seller
under this Agreement are subject to the satisfaction on or before the Closing
Date of the following conditions, any of which may be waived by Seller by
proceeding with the Closing:
(a) The representations and warranties of Buyer set forth in this
Agreement shall be true on and as of the Closing Date with the same effect as
though made on such date. Buyer shall have performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by Buyer prior to or on the Closing Date and Buyer shall have
delivered to Seller a certificate, dated as of the Closing Date, to all such
effects;
(b) No suit, action or other proceeding shall be pending before
any court or other government agency in which it is sought to restrain or
prohibit performance of this Agreement or the consummation of the transactions
contemplated herein or in connection herewith to subject Seller to liability on
the ground that it has breached any law or duty or otherwise acted improperly,
nor shall any such suit, action, or proceeding be threatened;
(c) Buyer shall have delivered in form satisfactory to Seller and
which is consistent with this Agreement the documents identified below:
1. A certified copy of a resolution of the Board of
Directors of Buyer authorizing the execution and delivery of this Agreement,
consummation of the transactions contemplated hereby and payment to Seller of
the Purchase Price as herein defined.
<PAGE>
2. The opinion of Claude E. White, Esq. legal counsel to
Buyer, dated the Closing Date, in the form annexed hereto as Exhibit 8.01(c) 2.
3. An agreement of Buyer assuming the liabilities, including
without limitation office and equipment leases, of Seller set forth on Exhibit
2.01 and taking assets subject to liens and encumbrances set forth on Exhibit
1.01(a).
4. Promissory Note in the amount of $457,500.00.
8.02 Conditions to Buyer's Obligation The obligations of Buyer under
this Agreement are subject to the satisfaction on or before the Closing Date of
the following conditions, any of which may be waived by Buyer by proceeding with
the Closing:
(a) The representations and warranties of Seller set forth in
this Agreement shall be true on and as of the Closing Date with the same effect
as though made on such date. Seller shall have performed all obligations and
complied with by Seller prior to or on the Closing Date and Seller shall have
delivered to Buyer, a certificate, dated as the Closing Date, to all such
effects.
(b) No suit, action or other proceeding shall be pending before
any court or other government agency in which it is sought to restrain or
prohibit performance of this Agreement or the consummation of the transactions
contemplated herein or in connection herewith to subject Buyer to liability on
the ground that it has breached any law or duty or otherwise acted improperly,
nor shall any such suit, action or proceeding be threatened except as disclosed
on Exhibit 4.07(a);
(c) Seller shall have delivered in form reasonably satisfactory
to Buyer and consistent with this Agreement the documents identified below:
1. A Certificate of Existence of Seller, dated not earlier
than thirty (30) days prior to the Closing Date, from the Secretary of State of
Seller's incorporation.
2. An assignment to Buyer transferring to Buyer all of the
right, title and interest of Seller in and to all telephone numbers utilized by
Seller in the operation of its business.
3. An assignment of all office and equipment leases listed
on Exhibits 4.09 (a), including security deposits.
4. Such bills of sale and instruments of title as requested
by Buyer as shall convey to Buyer all of the P.A. Assets , free and clear of all
liens.
5. An assignment to Buyer of all executory agreements of
Seller set forth on or referred to in Exhibit 4.09(a) including separate
assignments of each agreement listed in Paragraph _ of Exhibits 1.01(a).
6. The opinion of Gary W. Blanscet, Esq., legal counsel to
Seller and Physician, dated the Closing Date, in the form annexed hereto as
Exhibit 8.01(c) 6.
<PAGE>
7. Certified copies of resolutions adopted by Seller's Board
of Directors and Physician authorizing and approving the transaction
contemplated by this Agreement.
ARTICLE IX
RESTRICTIVE COVENANTS
9.01 Seller and Physician acknowledge and recognize the highly
competitive nature of Seller's business and agree that they will not, for a
period of one (1) year from and after the termination of the Management
Agreement, pursuant to Article 9 thereof, enter into an agreement with any other
person or entity specializing in managing labs or medical practices similar to
P.A.'s practice business or which is in competition with Buyer to provide
management and administrative services to the P. A.
9.02 Seller and Physician acknowledge and agree that the covenants
contained in this Article IX are fair, reasonable and necessary in order to
protect Buyer's expenditure for the P.A. Assets and therefore it is the desire
and intent of the parties that the provisions of this Article shall be enforced
to the fullest extent permissible under the laws and public policy applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Article shall be adjudicated to be invalid or unenforceable,
such deletion shall apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is made. In addition,
should any court determine that the provisions of this Article IX shall be
unenforceable with respect to scope, duration or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
to those contained in this Article IX, or other provisions so as to provide to
Buyer, to the fullest extent permitted by applicable law, the benefits intended
by this Article IX.
9.03 In the event of a breach or threatened breach by Seller of the
provisions of this Article IX, Buyer shall be entitled to an injunction
restraining Seller from such breach. Nothing contained in this Article IX shall
be construed as prohibiting Buyer from pursing any other remedies available for
such breach or threatened breach.
9.04 The provisions of this Article IX are in addition to (and not in
Lieu of) any agreement or covenant contained in any employment or other
agreement between Seller and any employee as a result of this Agreement.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.01 Seller represents and warrants to Buyer that Seller has not
dealt with or retained any broker or finder or agreed to pay any commission or
fee to any broker or finder for or on account of this Agreement or the
transactions contemplated hereby. Buyer represents and warrants to Seller that
it has not dealt with or retained any broker or finder for or on account of this
Agreement or the transactions contemplated hereby. Each party agrees to
indemnify the other against any loss, cost or expense, including attorneys'
fees, as a result of any claim for a fee or commission asserted by any broker or
finder with respect to this Agreement or the consummation thereof whose claim
arises through dealings with such broker or finder by the indemnifying party.
10.02 If at any time after the Closing Date any further assignment,
transfers or assurances in law are reasonably necessary or desirable to carry
out the provisions of this Agreement, the parties to this Agreement shall
execute and deliver any and all assignments, transfers, and assurances in law,
and do all things, reasonably necessary or proper to such end and otherwise to
carry out the provisions and intent of this Agreement.
10.03 Any notice or other communication required, by, or which may be
given pursuant to this Agreement shall be in writing and either personally
delivered or mailed, certified or registered mail, postage prepaid, return
receipt requested, or overnight courier, prepaid, and shall be deemed given when
received. Any such notice or communication shall be sent to the address set
forth below:
If to Buyer, at:
IVF America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Dwight Ryan, Vice President
With a copy to:
IVF America, Inc.
One Manhattanville Road
Purchase, New York 10577-2100
Attention: Claude White, General Counsel
<PAGE>
And if to P.A., at:
W. F. Howard, M.D., P.A.
4325 North Josey Lane, Suite 308
Carrollton, Texas 75010
Attention: W.F. Howard, M.D.
With a copy to:
Gary W. Blanscet, Esq.
14001 Dallas Parkway, Suite 1200
Dallas, Texas 75240
Any party may change the persons and addressees to which notices or other
communications are to be sent to it by giving written notice of any such change
to the other party hereto.
10.04 The headings contained in this Agreement are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
10.05 All Exhibits referred to in this Agreement are deemed annexed
hereto and made a part of this Agreement.
10.06 This Agreement, together with the Exhibits:
(a) Constitutes the entire agreement among the parties to it with
respect to the purchase and sale of the P.A. Assets and supersedes all prior
agreements and understandings;
(b) may not be modified or discharged, nor may any of its terms
be waived, except by an instrument in writing, signed by the party or parties to
be charged; and
(c) shall bind and inure to the benefit of the parties and their
respective successors and permitted assigns. Nothing expressed or mentioned in
this Agreement is intended, or will be construed, to give any person, firm
corporation or other entity, other than the parties to this Agreement and their
respective successors and assigns, any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any of its provisions.
10.07 This Agreement may not be assigned by any party hereto without
the prior written consent of the other party. No assignment or delegation of any
rights or obligations hereunder shall release the assignor from any of its
liabilities hereunder.
<PAGE>
10.08 The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver of any nature, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, covenant, representation or warranty of this
Agreement.
10.09 This Agreement may be executed in any number of separate
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.10 This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, irrespective of the principal place of
business of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement the date first
above written by their respective duly authorized officers.
W. F. Howard, M.D., P.A.
By: /s/W. F. Howard
-----------------------
. W. F. Howard, M.D.
President
IVF America, Inc.
By: /s/Peter Callan
----------------------------
Peter Callan, Vice President
