Exhibit 10.68
 
 
Management Agreement

Between

IntegraMed America, Inc.

And

UNC Fertility LLC

This Management Agreement (“Agreement”) is dated as of  February 1,  2012
(“Effective Date”) by and between IntegraMed America, Inc. a Delaware
corporation, with its principal place of business at Two Manhattanville Road,
Purchase, New York 10577 (“Management Company”) and UNC Fertility LLC (“LLC”), a
North Carolina not-for-profit limited liability company, within the University
of North Carolina Health Care System (the “System”) , 101 Manning Drive, Chapel
Hill, North Carolina, 27514, as the sole member. IntegraMed and LLC are
individually referred to herein as a “Party” and jointly, as “Parties.”

Recitals:

LLC specializes in gynecological services, treatment of human infertility
encompassing the provision of in vitro fertilization and other assisted
reproductive services (“Infertility Services”).  LLC provides Infertility
Services through Marc Fritz, M.D. and Jennifer Mersereau, M.D., physicians
employed by the Department of Obstetrics and Gynecology in the University of
North Carolina at Chapel Hill’s School of Medicine (“UNC”).  Drs. Fritz and
Mersereau are jointly referred to as “Physicians.”  LLC also contemplates
providing Infertility Services through other physicians employed by UNC.

IntegraMed is in the business of making available to medical providers such as
LLC certain assets (principally, facilities and equipment) and support services,
primarily consisting of (i) financial management; (ii) administrative systems;
(iii) clinical and laboratory organization and function; (iv) marketing and (v)
operations management.

LLC believes the Business Services, as hereinafter defined, will benefit its
medical practice and desires IntegraMed’s assistance with various aspects of
LLC’s medical practice through the utilization of the Business Services as more
particularly set forth herein. LLC acknowledges and agrees that the Business
Services being made available to LLC require LLC’s cooperation and
collaboration, and that IntegraMed, in making the Business Services available,
makes no warranty or representation that the Business Services will achieve
LLC’s desired goals and objectives except as expressly provided in this
Agreement.

In addition, LLC desires access to capital for funding its growth and
development, and IntegraMed desires to provide such capital or access to capital
as provided herein.

 
 

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NOW THEREFORE, in consideration of the above recitals which the Parties
incorporate into this Agreement, the mutual covenants and agreements herein
contained and other good and valuable consideration, the Parties agree as
follows:

Article   1

Definitions

1.1           Definitions.  For the purposes of this Agreement, the following
definitions shall apply:

1.1.1           “Adjustments” shall mean adjustments for refunds, discounts,
contractual adjustments, professional courtesies, and other activities that do
not generate a collectible fee as reasonably determined by IntegraMed and
LLC.  Adjustments shall not include Bad Debt.

1.1.2           “Management Company Assets” shall mean those fixed assets owned
by Management Company and utilized exclusively in connection with the operation
of LLC’s medical practice, excluding leasehold improvements. “LLC Assets” shall
mean those fixed assets owned by LLC and utilized exclusively in connection with
the operation of LLC’s medical practice.  LLC Assets shall include, without
limitation, such fixed assets as may be listed on Exhibit C to LLC’s Operating
Agreement, as that document may be amended from time to time.

1.1.3           “Bad Debt” shall mean all or a portion of an account, loan or
note receivable considered to be uncollectible in accordance with Generally
Accepted Accounting Principles (“GAAP”).

 
1.1.4
“Base Service Fee” shall mean, for any calendar month during the Term of this
Agreement, a fee payable by LLC to IntegraMed for the Business Services.

1.1.5                      “Business Services” shall mean certain personnel,
Management Company Assets, management expertise and support services provided by
Management Company, including, without limitation, the following services: (i)
financial management; (ii) administrative systems, including maintenance of
medical records through an electronic medical record system; (iii) clinical and
laboratory organization and function; (iv) marketing and (v) operations
management, all as more fully set forth in Article 4.

1.1.6           “Closing Date” shall mean, for the purposes of Sections 9.1, 9.2
and 9.3, ninety (90) days following termination of this Agreement.

1.1.7           “Cost of Services” shall have the meaning set forth in Article
2.

 
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1.1.8           “Facilities” shall mean the medical offices and clinical spaces
of LLC, including any satellite locations, related businesses and all medical
group business operations of LLC, which are utilized by LLC in its medical
practice.

1.1.9           “Fiscal Year” shall mean the 12-month period beginning July 1
and ending June 30 of each year.

1.1.10                      “Infertility Services” shall mean reproductive
endocrinology services, gynecological services, treatment of human infertility
encompassing the provision of in vitro fertilization and other assisted
reproductive services provided by LLC or any Physician Employee, Other
Professional Employee, or Technical Employee.

1.1.11                      “Management Company Overhead” shall mean all costs
and expenses of Management Company that are not directly and primarily
attributable to providing the Business Services, including, without limitation,
salaries, bonuses, payroll taxes and benefits for Management Company corporate
office employees, rent and expenses related to the operation of the Management
Company corporate office, travel and entertainment expenses for corporate
employees.

1.1.12                      “Other Professional Employee” shall mean a
non-physician individual who is an employee of Management Company and provides
services, including nurses, nurse anesthetists, physician assistants, nurse
practitioners, embryologists, psychologists, and other such professional
employees who may or may not generate professional charges, but shall not
include Technical Employees.

1.1.13                      “Performance Incentive” shall mean, for any calendar
month during the Term of this Agreement, a fee payable by LLC to IntegraMed if
LLC achieves pre-determined financial results for that month.

1.1.14                      “Physician-Employee” shall mean a physician who is
supplied to LLC by UNC or is under contract with UNC or LLC, including
physicians employed by affiliates of LLC or entities with whom LLC has
contracted, to provide Infertility Services to LLC’s patients and is duly
licensed as a physician in the state of North Carolina.

1.1.15                      “Physician and Other Professional Revenues” shall
mean, with respect to any period of time during the Initial Term or a Renewal
Term, all fees received and actually recorded during such period of time of the
Initial Term or a Renewal Term (net of Adjustments) by or on behalf of LLC as a
result of professional medical and laboratory services furnished to patients by
Physicians, Physician-Employees and Other Professional

 
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Employees while providing services to patients of the LLC, whether rendered in
an inpatient or outpatient setting.  Physician and Other Professional Revenues
shall not include (i) board attendance fees and other compensation in connection
with board memberships; and (ii) other services where Physician does not provide
professional medical services such as testimony and consultation for
litigation-related proceedings, lectures, passive investments, fundraising, or
writing (“Permitted Services”); the compensation from Permitted Services may be
retained by a Physician or Physician-Employee without limit.  Physician and
Other Professional Revenues are sometimes referred to herein as “Revenues.”
Additionally, it is understood and agreed that “Physician and Other Professional
Revenues” shall not include compensation or professional fees for teaching,
research, or patient care activities at a medical school, teaching hospital or
college (but shall include compensation provided to LLC pursuant to an agreement
for research or patient care activities at the Facilities or directly related to
LLC patients), or compensation from inventions, patents, and other intellectual
property developed by any Physician or Other Professional Employee developed
without the use or involvement of the Business Services.

1.1.16                      “Pre-distribution Earnings” (“PDE”) shall mean, with
respect to any period of time during the Initial Term or a Renewal Term: (i)
Physician and Other Professional Revenues for such period of time during the
Initial Term or a Renewal Term, less (ii) Cost of Services and the Base Service
Fee for such period of time during the Initial Term or a Renewal Term.

1.1.17                      “Receivables” shall mean and include all rights to
payment for services rendered or goods sold by the LLC, including, without
limitation, accounts receivables, contract rights, chattel paper, documents,
instruments and other evidence of patient indebtedness to LLC, policies and
certificates of insurance relating to any of the foregoing, and all rights to
payment, reimbursement or settlement or insurance or other medical benefit
payments assigned to LLC by patients or pursuant to any Preferred Provider, HMO,
capitated payment agreements or other agreements between LLC and a payer,
recorded each month (net of Adjustments).

1.1.18                      “Security Incident” shall mean the attempted or
successful unauthorized access, use, disclosure, modification, or destruction of
LLC information or interference with system operations in an LLC information
system, and includes a breach as that term is defined in 74 Fed. Reg. 42767-68
(Aug. 24, 2009), to be codified at 45 C.F.R. § 164.402.

1.1.19                      “Technical Employees” shall mean laboratory
personnel, ultrasonographers, phlebotomists and technicians who provide services
to LLC.

 
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Article   2
Cost of Services

2.1           “Cost of Services” shall mean, with respect to any period of time
during the Initial Term or a Renewal Term, all ordinary and necessary expenses
of LLC and all direct ordinary and necessary operating expenses, without
mark-up, of Management Company, exclusive of Management Company Overhead,
incurred during such period of time only to acquire products and/or services
that are specific to LLC or customized for LLC or that are directly related to
LLC’s use of services that Management Company makes available to its
infertility  practices to which it provides Business Services, including,
without limitation but without duplication, the following costs and expenses
that are paid to third parties, whether incurred by Management Company or LLC:

2.1.1           Salaries and fringe benefits of all Management Company employees
employed at LLC Facilities and devoted to providing services exclusively to the
LLC, 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           Marketing expenses incurred by or on behalf of LLC, such as
costs of printing marketing materials, media placements, and consumer seminars;

2.1.3           If applicable, any sales and use taxes, or any city, state or
local taxes assessed against LLC related to the operation of LLC’s medical
practice or its tangible personal property;

2.1.4           Lease payments, depreciation expense (determined in accordance
with GAAP), taxes and interest directly relating to the Facilities and
equipment, and other expenses of the Facilities described in Section 3.2 below;

2.1.5           Legal fees paid by Management Company upon request by LLC to
outside counsel in connection with matters specific only to the operation of LLC
such as regulatory and other issues specific to jurisdictions in which LLC
operates; provided, however, legal fees incurred by the Parties relative to the
execution or performance of this Agreement or as a result of a dispute between
the Parties under this Agreement shall be borne by each Party and shall not be
considered a Cost of Services; and provided, further any cost related to
disputes between or among only Physicians shall not be considered Cost of
Services and are outside the scope of this Agreement.

2.1.6           Health benefits provided to Physicians and Physician-Employees
that are paid for solely by the LLC, including health and life insurance and
long-term disability;

2.1.7           All insurance necessary to operate LLC, including fire, theft,
general liability and, if applicable,  professional liability and malpractice
insurance for Physicians and Physician-Employees of LLC, and Other Professional
and Technical Employees, that is provided by Management Company;

 
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2.1.8           Professional licensure fees and board certification fees of
Physician- Employees, and Other Professional Employees and Technical Employees
rendering Infertility Services on behalf of LLC, to the extent such fees are
paid for by Management Company;

2.1.9                      Membership dues in professional associations and
continuing professional education for Physicians and Physician-Employees and
Other Professional Employees, to the extent such costs are paid for by
Management Company;

2.1.10                      If applicable, the Risk Management Program described
in Section 4.8 herein;

2.1.11                      Costs incurred by LLC or Management Company for
filing fictitious name permits pursuant to this Agreement;

2.1.12                      Cost of medical and administrative supplies and all
direct general and administrative expenses necessary to operate the LLC,
including but not limited to travel and entertainment expenses, dues and
subscriptions, and other business related expenses, such as cellular telephone,
directly related to LLC; and

2.1.13                      Such other costs and expenses incurred by Management
Company that are directly related to LLC’s operations which are included in the
annual operation budget referred to in Section 5.2.1 or otherwise approved by
LLC in writing.

2.1.14                      Costs incurred by Management Company with respect to
specific requests for services from LLC that are outside those provided for in
this Agreement.  For such requested services, Management Company and LLC will
mutually determine in writing how such specific requests will be carried out, as
well as how charges and costs, including, but not limited to travel, will be
applied.

2.1.15                      LLC’s Bad Debt.

2.1.16                      Costs incurred by Management Company with respect to
Business Services related to a specific activity requested by LLC in writing
that are in excess of those Business Services typically provided to other
medical providers for the same activity, including, but not limited to
additional travel and staffing.

 
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2.1.17                      Such costs charged by third-party vendors that are
directly allocable to the LLC.  For example, and not by way of limitation, costs
to migrate LLC data over to Management Company systems, install and maintain
telecommunication lines linking LLC to the Management Company data center;
annual per person license fees, software license maintenance fees and hardware
maintenance fees  related to MISYS Optimum and software license and maintenance
fees associated with all other software applications utilized by LLC, including
but not limited to ARTworks®, HRIS/ON-core, Sales Force, MAS500, Citrix,
HelpSTAR, Secure ID/RSA token and spam reduction services provided by Management
Company; and, if applicable, insurance premiums for professional liability and
other insurance coverages.

2.1.18                                Such additional training that LLC may
request from Management Company beyond basic training for such applications as
ARTworks® or in connection with basic Marketing and Sales training.

2.2           Notwithstanding anything to the contrary contained herein, Cost of
Services shall not include costs of the following:

2.2.1           Any federal or state income taxes of LLC or Management Company
other than as provided above;

2.2.2           The Base Service Fee;

2.2.3           Any amount paid to or on behalf of any Physician or
Physician-Employee including salary, payroll taxes, draw or pension
contributions;

2.2.4           Management Company’s cash outlay to acquire capital assets for
which depreciation expense is to be charged as a Cost of Services under Section
2.1.4.

2.2.5           Management Company Overhead.

 
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Article   3

Engagement; Relationship of Parties

3.1           Engagement.  LLC hereby engages Management Company to perform the
functions described herein and to provide the Business Services in connection
with the management of the Facilities, all in accordance with this
Agreement.  During the Term, LLC will not utilize any Business Services other
than those provided by Management Company or an affiliate of LLC, and will not
participate in any product or service offerings that are competitive to any
product or service offering by Management Company.  Management Company hereby
accepts such engagement under the terms and conditions set forth in this
Agreement, and agrees to devote its best efforts to such engagement for the
benefit of and to further the interests of LLC, and to work collaboratively with
LLC and as otherwise may be reasonably requested by LLC from time to
time.  Management Company agrees further to provide all Business Services in
such a fashion as to meet or exceed the prevailing professional standard for
such services in the areas and localities where LLC provides Infertility
Services.

3.2           Relationship of the Parties.  The Parties are separate entities
operating independently.  The Parties hereby agree that this Agreement forms a
contractual relationship between them.  Nothing in this Agreement shall
constitute or be construed to be or to create a partnership, joint venture,
employment or employer-employee relationship between Management Company and LLC
or any of their respective employees, servants or agents.  Management Company
shall not have or exercise any control or direction over the professional
judgment or methods by which Physician-Employees provide professional medical
services at the Facilities and nothing contained in this Agreement is intended
to interfere with the professional relationship between such physicians and
their patients.

Article   4

Duties and Responsibilities of Management Company

4.1           Business Services and Administration.

4.1.1           Management Company agrees to provide the Business Services
required or otherwise requested by the LLC to provide Infertility Services
within the North Carolina counties of Orange, Chatham, Durham, Person, Caswell,
Wake, Alamance, Johnston, Harnett, Granville, and Lee (the “Territory”), and LLC
agrees to limit its use of the Business Services to the Territory, without prior
written consent from Management Company.  Management Company agrees further that
it will not provide the Business Services to any provider of Infertility
Services within the Territory other than LLC; provided, however, that nothing in
this Section 4.1.1 shall limit Management Company’s ability to offer
IntegraMed’s Attain® IVF Programs within the Territory, subject to

 
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Section 6.9.  For efficiency and economies of scale, Management Company may
provide certain of the Business Services through “shared services” provided
through Management Company’s Shared Services Program in which event, the cost of
which shall be allocated to LLC on a pro-rata basis to the extent permitted by
Section 2.1.  Under the shared services program, practices within the Management
Company network share certain costs, such as billing and collections, rather
than having separate billing and collections persons situated at the practice
location. None of the Business Services made available to LLC includes any
physician medical functions.

4.1.2           Management Company will, on behalf of LLC and as directed by
LLC, bill patients timely and collect professional fees timely for Infertility
Services rendered by LLC at the Facilities, outside the Facilities for LLC’s
hospitalized patients, and for all other Infertility Services rendered by any
Physician-Employee or Other Professional Employees to LLC’s patients.  LLC
hereby appoints and engages Management Company for the term hereof to be its
true and lawful attorney-in-fact, for the following purposes:  (i) bill patients
and third party payors in LLC’s name and on its behalf, or in a Physician’s name
if appropriate; (ii) collect Receivables resulting from such billings in LLC’s
name and on its behalf (recognizing that successfully collecting Receivables may
be dependent on LLC’s participation and cooperation, LLC will reasonably
cooperate with respect to Management Company’s collection efforts, and policies
and procedures established by the Practice Management Board governing the
collection of Receivables); (iii) receive payments from patients, insurance
companies, prepayments from health care plans, and all other third-party payers;
(iv) take possession of and endorse in the name of LLC (and/or in the name of
any Physician Employee or Other Professional Employee rendering Infertility
Services to patients of LLC) any notes, checks, money orders, and other
instruments received in payment of Infertility Services performed or to be
performed and Receivables; and (v) at LLC’s request, initiate the institution of
legal proceedings in the name of LLC, with LLC’s cooperation, to collect any
accounts and monies owed to LLC, to enforce the rights of LLC as creditor under
any contract or in connection with the rendering of any service by LLC, and to
contest adjustments and denials by governmental agencies (or its fiscal
intermediaries) as third-party payers.

4.1.3           Management Company will provide the administrative services
function of supervising and maintaining (on behalf of LLC) all files and records
relating to the operations of  the Facilities, including but not limited to
accounting and billing records, including for billing purposes, patient medical
records, and collection records.  Patient medical records shall at all times be
and remain the property of LLC and shall be located at the Facilities and be
readily accessible for patient care.  Management Company's management of all
files and records shall comply with all applicable state and federal laws and
regulations regarding confidentiality of patient records and health information,

 
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including, without limitation, the North Carolina Identity Theft Protection Act
(the “ITPA”), the Health Insurance Portability and Accountability Act of 1996,
as amended (“HIPAA”), the Standards for Privacy of Individually Identifiable
Health Information (the “Privacy Rule”), the Security Standards for the
Protection of Electronic Protected Health Information (“Security Rule”) and the
Health Information Technology for Economic and Clinical Health Act and its
implementing regulations (“HITECH”).  The medical records of each patient shall
be expressly deemed confidential and shall not be made available to any third
party except in compliance with all applicable laws, rules and
regulations.  Management Company shall have access to such records in order to
provide the Business Services hereunder and may use and disclose such records
only to the extent permitted by HIPAA and other applicable state and federal
laws and regulations.  The obligation to maintain the confidentiality of such
records shall survive termination of this Agreement.  LLC shall have
unrestricted access to all of its records at all times.

4.1.4           Management Company will provide 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 LLC’s medical practice at the Facilities.

4.1.5           Management Company will design and implement appropriate
marketing programs for LLC.  As LLC’s participation is essential in developing
such marketing program, LLC will designate one or more Physicians to (i) work
with Management Company in designing and implementing marketing plans, (ii)
participate in marketing strategy sessions, and (iii) identify business
development and managed care opportunities.

4.1.6           Management Company, upon request of LLC, will assist LLC in
recruiting additional physicians, including Management Company providing such
administrative functions as advertising for and identifying potential
candidates, checking credentials, and arranging interviews; provided, however,
LLC shall interview and make the ultimate decision as to the suitability of any
physician to become associated with LLC.

4.1.7           Management Company will, upon request of LLC, assist LLC and/or
UNC in negotiating any managed care contracts to which LLC desires to become a
party. Management Company will provide administrative assistance to LLC in
fulfilling its obligations under any such contract.

4.1.8           Management Company will, upon request of LLC, assist LLC in
arranging for legal and accounting services as may otherwise be reasonably
required in the ordinary course of LLC’s operation.

 
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4.2           Facilities.  Initially, LLC shall conduct its operations out of
facilities maintained by the UNC Health Care System (the “System”). Subsequent
to the execution of this Agreement, UNC and LLC will determine the nature and
extent of the facilities reasonably needed for LLC’s medical practice and
Management Company will assist LLC in connection with the identification,
design, and equipping of such facilities, including providing administrative
support, effort and resources in locating the facilities.  Subject to input from
the Management Company as requested by LLC, LLC shall assume responsibility for
the cost and oversight of the build-out for the Facilities.  Management Company,
in consultation with the Practice Management Board, shall assume responsibility
for equipping the Facilities, including all necessary furniture, equipment and
furnishings, and the replacement thereof from time to time, as
needed.  Additionally, Management Company shall acquire all additional
equipment, furnishings and fixtures as may be approved from time to time by the
Practice Management Board..  Management Company shall arrange, in consultation
with LLC, for all repairs, maintenance and improvements thereto, utility
(telephone, electric, gas, water) services, customary janitorial services,
refuse disposal and all other services reasonably necessary in conducting LLC’s
medical practice at the Facilities.  Management Company will arrange for the
cleaning of the Facilities, and timely maintenance and cleanliness of the
equipment, furniture and furnishings located therein.  Management Company will
advise, counsel and collaborate with LLC regarding the condition, use and needs
for the Facilities, the improvements thereto, equipment and services.

4.3           Executive Director and Other Personnel.

4.3.1                      Executive
Director.                                                                Management
Company will employ an Executive Director, subject to continuing approval by the
LLC, to manage and administer all of the day-to-day business functions of the
Facilities in accordance with a job description prepared by Management Company
and approved by the LLC.  The Executive Director’s compensation and benefits
shall be approved by the LLC.  LLC agrees not to offer any compensation or
benefits to the Executive Director other than those approved by the Practice
Management Board.  In the event that there are material concerns relating to the
Executive Director’s performance of his or her duties pursuant to this
Agreement, Management Company will work cooperatively with the LLC to take all
such actions as may be necessary to address such concerns, up to and including
removal of the Executive Director from his or her position upon reasonable
request by LLC and, in such event, all costs and expenses associated with such
termination shall be a Cost of Services.

 
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4.3.2           Personnel.                                Management Company
will provide, as requested by LLC, support and administrative personnel,
marketing, clerical, secretarial, bookkeeping and collection personnel, and such
other personnel reasonably necessary for the efficient operation of LLC at the
Facilities.  Such personnel will be under the direction and supervision of
Management Company and the Executive Director.  The compensation of such
personnel shall be approved by LLC and LLC may request that any of such
personnel be terminated in its reasonable discretion. In such event, all costs
and expenses associated with such termination shall be a Cost of Services. Other
Professional Employees and Technical Employees shall be Management Company’s
employees; provided, however, that the LLC shall be responsible for any and all
liability arising from the negligence or malpractice of such personnel to the
extent set forth in Section 6.6.1.

4.4           Financial Planning and Goals.  Management Company, in
collaboration with the Practice Management Board, will prepare, for the approval
or disapproval of LLC, an annual capital and operating budget (the “Budget”)
reflecting the anticipated Revenues and Cost of Services, sources and uses of
capital for growth of LLC’s practice and for the provision of Infertility
Services at the Facilities.  The Practice Management Board will present the
Budget to LLC for its approval or disapproval at least thirty (30) days prior to
the commencement of the Fiscal Year.  LLC may approve or disapprove the Budget
for a Fiscal Year. The LLC’s notice of disapproval shall provide sufficient
detail to permit the Practice Management Board to submit a revised proposed
Budget. Upon approval by LLC, the Budget for any Fiscal Year shall serve as a
guide for the operation of the LLC and the making of expenditures during the
applicable Fiscal Year. If the LLC does not approve the Budget for any Fiscal
Year during the term of this Agreement, the Budget for the preceding Fiscal Year
will serve as the Budget until such time as a new Budget is approved.

4.4.1                      In connection with the development of the Budget,
Management Company shall develop and recommend annual performance objectives for
the LLC’s medical practice.  Within thirty (30) days after the conclusion of
each Fiscal Year, Management Company and LLC shall evaluate the performance of
Management Company and LLC’s medical practice with respect to the objectives for
such Fiscal Year.

4.5           Financial Statements.   Management Company will deliver to LLC
monthly financial statements (“Financial Statements”), prepared in accordance
with GAAP, within thirty (30) days after the end of each calendar month.  Such
Financial Statements will comprise, on a monthly and year-to-date basis, a clear
and detailed statement of LLC’s Revenues and Cost of Services and PDE, as well
as a clear and detailed statement of the costs and expenses incurred by
Management Company in providing the Business Services and are allocated to LLC.

 
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4.6           Tax Planning and Tax Returns.  Management Company will not be
responsible for any tax planning or tax return preparation for LLC, but will
provide support documentation in connection with the same.  Such support
documentation will not be destroyed without LLC’s consent.

4.7           Inventory and Supplies.  For the account of LLC, Management
Company shall order and purchase inventory and supplies, and such other
materials which are requested by LLC to enable LLC to deliver Infertility
Services in a cost-effective quality manner.

4.8           Risk
Management.                                                      Management
Company shall assist LLC in meeting the standards of the System’s existing Risk
Management Program.

4.9           Personnel Policies and
Procedures.                                                                                                           Management
Company shall develop, in cooperation with LLC, personnel policies, procedures
and guidelines, governing office behavior, protocol and procedures which will
aid in compliance with applicable laws and guidelines related to employment and
human resources management.

4.10           Licenses and
Permits.                                                                Upon
request by LLC, Management Company will coordinate and assist LLC in its
application for and efforts to obtain and maintain all federal, state and local
licenses, certifications and regulatory permits required for or in connection
with the operations of LLC and equipment located at the Facilities, other than
those relating to the practice of medicine or the administration of drugs by
Physicians and Physician-Employees.

4.11           Subcontracted Business Services.  Subject to prior approval of
LLC, which approval shall not be unreasonably withheld, Management Company is
expressly authorized to subcontract with other persons or entities for any of
the services that Management Company is required to perform pursuant to this
Agreement.  Provided, however, that Management Company shall disclose any term
of this Agreement to any subcontractor or potential subcontractor of Management
Company who does or will perform services to LLC to the extent the subcontractor
or potential subcontractor will perform significant or continuing functions for
LLC which are specific obligations of Management Company hereunder and shall
incorporate such terms into such subcontract, including but not limited to the
restrictive provisions of Section 3.1.1 hereof.  No such subcontract will limit
the overall responsibility of Management Company for compliance with the terms
and provisions of this Agreement unless LLC specifically agrees in
writing.  Nothing in this Section 3.11 shall apply to contracts entered into by
Management Company that relate to services not required to be performed directly
by Management Company such as payroll services.

 
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4.12           Access to Protected Health
Information.                                                                                                                     In
connection with the Business Services provided by Management Company pursuant to
this Agreement, Management Company and its employees, representatives and agents
will supervise and maintain LLC’s patient records, protected health information
(“PHI”) (as that term is defined in HIPAA), and personal information (“PI”) (as
that term is defined in the ITPA).   Management Company agrees to protect the
confidentiality of such records, PHI and PI as required by all applicable state
and federal laws and regulations, including, without limitation, the ITPA,
HIPAA, the Privacy Rule, the Security Rule, and HITECH.  In connection with such
PHI, Management Company contemporaneous with entering into this Agreement will
enter into a Business Associate Agreement with LLC, substantially in the form of
Exhibit 4.12, in accordance with the regulations promulgated under HIPAA.

4.12.1                      Management Company shall promptly notify LLC of any
Security Incident or any use or disclosure of PHI or PI which is not in
compliance with the terms of this Agreement. Management Company shall provide
such notice no later than ten (10) days after the date on which Management
Company becomes aware of such non-compliance or Security Incident or, through
the exercise of reasonable diligence, should have become aware of such
non-compliance or Security Incident.

4.12.2                      Management Company’s notification provided to LLC
shall include, to the extent possible: (i) the identity of each individual whose
PHI or PI has been, or is reasonably believed by Management Company to have
been, accessed, acquired, used, or disclosed; (ii) a thorough description of the
non-compliance or Security Incident; (iii) a description of the types of
information that were involved in the non-compliance or Security Incident; (iv)
any steps individuals should take to protect themselves from potential harm
resulting from the non-compliance or Security Incident; (v) a brief description
of Management Company’s efforts to investigate the non-compliance or Security
Incident, to mitigate harm to individuals, and to protect against any further
non-compliance; and (vi) contact procedures for individuals to ask questions or
learn additional information, which shall include a toll-free telephone number,
an e-mail address, Web site, or postal address.

4.12.3                      Management Company agrees to mitigate , to the
extent practicable, any harmful effect to LLC resulting from a Security Incident
or from a use or disclosure of PHI or PI which is not in compliance with the
terms of this Agreement.  Management Company agrees further to provide complete
cooperation to LLC should LLC elect to review or investigate such noncompliance
or Security Incident.  Management Company shall indemnify and hold harmless LLC
for any injury or damages arising from any non-compliance or Security Incident
attributable to Management Company’s negligence or failure to execute the terms
of this Agreement.

 
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Article   5

Management Company Representations, Warranties and Covenants

5.1           Duly Authorized.  Management Company represents and warrants that
this Agreement has been duly authorized, executed and delivered by Management
Company and is binding upon it, and enforceable against it in accordance with
its terms.

5.2           Duly Organized.  Management Company represents and warrants that
Management Company is duly organized under the laws of the State of Delaware and
is authorized and qualified in the State of North Carolina to do all things
required of it under this Agreement.

5.3           Capacity to Contract.  Management Company represents and warrants
that Management Company has the capacity and authority to fulfill the
obligations required of it hereunder and nothing prohibits or restricts the
right or ability of Management Company to carry out the terms hereof.

5.4           Violations of Law.  Management Company agrees that it will comply
with all applicable laws, rules and regulations related to the Business
Services.  Management Company represents and warrants that neither Management
Company nor any agreement, document or instrument executed or to be executed in
connection with this Agreement, or anything provided in or contemplated by this
Agreement, does or will violate any applicable law, rule or regulation or
breach, invalidate, cancel, make inoperative or interfere with, or result in
acceleration of maturity of, any contract or agreement to which Management
Company is bound which would affect LLC’s rights hereunder.

5.5           Insurance.  Management Company covenants that, throughout the term
of this Agreement, Management Company shall maintain and keep in full force and
effect general liability insurance in a minimum policy face amount of One
Million Dollars ($1,000,000) per occurrence/Three Million Dollars ($3,000,000)
in the aggregate.  Management Company shall provide LLC with a certificate of
insurance evidencing such coverage upon execution of this Agreement, and then on
an annual basis.

5.6           Non-Exclusion.  Management Company represents and warrants to LLC
that neither it nor any of its shareholders, members, officers, directors,
managers, or other employees is or has been excluded from participation in any
federal health care program, as defined under 42 U.S.C. Section 1320a-7b(f), for
the provision of items or services for which payment may be made under such
federal health care programs, or has arranged or contracted (by employment or
otherwise) with any employee, contractor or agent that it knows or should know
is excluded from participation in any federal health care program to provide
items or services hereunder.

 
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ARTICLE 5A

LLC  Representations, Warranties and Covenants

5A.1           Duly Authorized.  LLC represents and warrants that this Agreement
has been duly authorized, executed and delivered by LLC and is binding upon it,
and enforceable against it in accordance with its terms.

5A.2           Duly Organized.  LLC represents and warrants that LLC is duly
organized under the laws of the State of  North Carolina and is authorized and
qualified in the State of North Carolina to do all things required of it under
this Agreement. LLC agrees that during the  Term, it will remain organized as an
LLC and UNC agrees not to dissolve or terminate LLC’s existence without
Management Company’s prior written consent.

5A.3           Capacity to Contract.  LLC represents and warrants that LLC  has
the capacity and authority to fulfill the obligations required of it hereunder
and nothing prohibits or restricts the right or ability of LLC to carry out the
terms hereof.

5A.4           Violations of Law.  LLC agrees that it will comply with all
applicable laws, rules and regulations related to the Business Services.  LLC
represents and warrants that it is not aware of any agreement, document or
instrument executed or to be executed in connection with this Agreement, or
anything provided in or contemplated by this Agreement, that does or will
violate any applicable law, rule or regulation or breach, invalidate, cancel,
make inoperative or interfere with, or result in acceleration of maturity of,
any contract or agreement to which LLC is bound which would affect Management
Company’s rights hereunder.

5A.5           Insurance.  LLC covenants that, throughout the term of this
Agreement, LLC shall maintain and keep in full force and effect general
liability insurance in a minimum policy face amount of  Three Million Dollars
($3,000,000) per occurrence/Ten Million Dollars ($10,000,000) in the aggregate
and shall cause Management Company to be made an additional named insured under
such coverage..  LLC shall provide Management Company with a certificate of
insurance evidencing such coverage  within 30 days after execution of this
Agreement, and then on an annual basis hereafter.

5A.6           Non-Exclusion.  LLC represents and warrants to Management Company
that neither it nor any of its shareholders, members, officers, directors,
managers, or other employees is or has been excluded from participation in any
federal health care program, as defined under 42 U.S.C. Section 1320a-7b(f), for
the provision of items or services for which payment may be made under such
federal health care programs, or has arranged or contracted (by employment or
otherwise) with any employee, contractor or agent that it knows or should know
is excluded from participation in any federal health care program to provide
items or services hereunder.

 
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Article   6

Duties and Responsibilities of LLC

6.1           Timely
Performance.                                                                LLC,
in engaging Management Company to provide the Business Services described in
this Agreement, acknowledges that LLC’s timely performance of its duties and
responsibilities as delineated in this Article 6 are material to this Agreement
and to Management Company’s interest.

6.2           Professional
Services.                                                                LLC
shall use its best reasonable efforts to cause its Physicians and
Physician-Employees to provide Infertility Services to LLC’s patients in
compliance at all times with ethical standards, laws and regulations applying to
the practice of medicine in the applicable jurisdiction in which such Physician
or Physician-Employee provides Infertility Services on behalf of LLC.  LLC shall
ensure that each Physician, Physician-Employee, any Other Professional Employee
employed by LLC, and any other professional provider associated with LLC is duly
licensed and competent to provide the Infertility Services being rendered within
the scope of such provider's practice.  In the event Management Company, in good
faith, has a question or concern about a physician’s capacity or capability of
providing Infertility Services, Management Company shall provide LLC with
written notification of such question or concern and shall request that such
physician cease providing Infertility Services. In event such notice is provided
by Management Company to LLC, LLC shall  within 10 days after receipt of such
notification, cause the System to take prompt action in accordance with its
bylaws (available at
http://www.unchealthcare,org/site/healthcareprofessionals/medbylaws) governing
physician conduct and performance to address concerns regarding a physician’s
capacity or capability of providing Infertility Service,

6.2.1           In addition, LLC shall require each Physician and
Physician-Employee to maintain a DEA number and appropriate medical staff
privileges as determined by LLC during the term of this Agreement. In the event
that any investigations, disciplinary actions or medical malpractice actions are
initiated against any Physician, Physician-Employee or other professional
provider, LLC shall promptly inform the Executive Director and provide a general
statement regarding the underlying facts and circumstances of such action, and
the proposed course of action to resolve the matter. Periodic updates, but not
less than monthly, shall be provided to Management Company.

6.3           Medical
Practice.                                                      LLC shall use and
occupy the Facilities exclusively for the purpose of providing Gynecology,
Infertility Services, and related services and activities and shall use its best
reasonable efforts to 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

 
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shall be conducted solely by Physicians employed by LLC or UNC and
Physician-Employees employed by or serving as independent contractors to LLC,
and Other Professional Employees employed by LLC.  No physician or medical
practitioner other than a physician or practitioner who is affiliated with LLC,
UNC, or the System and credentialed by the Office of Medical Staff Services at
UNC Hospitals shall be permitted to use or occupy the Facilities without the
prior written consent of Management Company, except in the case of a medical
emergency, in which event, notification shall be provided to Management Company
as soon after such use or occupancy as possible.

6.4           Employment of Physician and Other Professional Employees.  If the
average time until the third (3d) next available appointment for a new patient
exceeds twenty one (21) days for three (3) consecutive months, then LLC shall
promptly use its best reasonable efforts to begin recruiting a Physician who, in
LLC’s judgment, possesses the credentials and expertise necessary to enable such
Physician to become affiliated with LLC for the purpose of providing Infertility
Services. LLC agrees, in good faith use its best reasonable efforts , to recruit
such new physician within six (6) months after the determination of need.  A
condition to employment by the LLC shall be that each Physician-Employee enter
into an employment or service agreement with LLC, UNC or their respective
professional association which is a partner of LLC (“Physician Employment
Agreement”); provided, however, LLC agrees that each Physician Employment
Agreement executed after the Effective Date of this Agreement shall agree to
non-competition and non-solicitation provisions reasonably acceptable to
Management Company.  Upon LLC’s request, Management Company shall consult with
and advise LLC respecting the hiring, compensation, supervision, evaluation and
termination of Physician-Employees.  Within thirty (30) days after the Effective
Date of this Agreement, LLC and the System will enter into a staffing agreement
in the form attached hereto as Exhibit 6.4 pursuant to which the System will
provide Physicians, Other Professional and Technical personnel to LLC during the
term of this Agreement.

6.5           Continuing Medical Education  Physician-Employees shall comply
with the System’s policies regarding continuing medical education.

6.6           Professional Insurance.  LLC shall provide, upon Management
Company’s request, assurances acceptable to Management Company that the
Physician-Employees and Other Professional Employees and Technical Employees
provided to LLC by UNC have active professional liability coverage at all times
during the Term, in limits of either (1) not less than $1,000,000.00 per
occurrence, $3,000,000.00 in the aggregate or (2) such higher limits that may
be  required by North Carolina law.  Upon request, LLC shall provide a
Certificate of Insurance to Management Company evidencing such coverage within
thirty (30) days of the request.

 
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6.6.1           Throughout the term of this Agreement, LLC shall maintain and
keep in full force and effect professional liability insurance for Other
Professional Employees and Technical Employees who are employed by Management
Company and provide clinical and laboratory services to LLC in a minimum policy
amount of $3 million per occurrence/$10 million in the aggregate.  LLC shall
cause Management Company to be added to such professional liability insurance
policy as an additional named insured.

6.6.2           To the extent permitted by law, LLC agrees to indemnify and hold
harmless Management Company from losses, damages, liabilities or expenses
arising directly out of or in direct connection with negligence or malpractice
by Other Professional Employees and Technical Employees providing medical,
clinical and laboratory services to LLC during the Term of this Agreement;
provided, however, that such indemnification shall not apply to losses, damages,
liabilities or expenses for which payment is made under the professional
liability insurance coverage required by Section 6.6.1.

6.7           Licensing.  With the support and assistance of Management Company,
LLC shall obtain and maintain necessary licenses, including CLIA, and operate
its clinical laboratory and tissue bank services in accordance with all
applicable laws and regulations.  LLC agrees that the Medical Director or Tissue
Bank Director, if applicable, shall be Physician-Employees or Other Professional
Employees, if applicable, of LLC who meet the qualifications required by
applicable State law or regulation, and that should there be a vacancy in any
such position, LLC will cause another Physician-Employee or Other Professional
Employee, if applicable, to fill such vacancy in accordance with applicable
State law.

6.8           Direction of
Practice                                                                LLC, as
a continuing condition of Management Company's obligations under this Agreement,
shall at all time during the Term be and remain legally organized and operated
to provide Infertility Services in a manner consistent with state and federal
laws.  LLC, through its physicians, is expected to provide leadership in its
market area and reasonably cooperate with Management Company in Management
Company’s efforts to make the Business Services available to LLC.  In
furtherance of which:

6.8.1           LLC shall operate and maintain at the Facilities a full-time
practice of medicine specializing in the provision of Infertility Services and
shall  make arrangements for not less than two (2) full-time equivalent (FTE)
Physician-Employees to provide Infertility Services on behalf of LLC.  LLC and
its Physician-Employees shall provide patient care and clinical backup as
required for the proper provision of Infertility Services to patients of LLC at
LLC’s Facilities.  LLC shall require that its full-time Physician-Employees
devote sufficient professional time, effort and ability to LLC’s practice,
including the provision of Infertility Services and the development of such
practice.

 
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6.8.2           Each Physician-Employee shall hold and maintain a valid and
unrestricted license to practice medicine in North Carolina, and all full-time
Physician-Employees shall be board eligible in the practice of gynecology, with
training in the subspecialty of infertility and assisted reproductive
medicine.  UNC shall be responsible for paying the compensation and benefits, as
applicable, for all Physician-Employees, and for withholding, as required by
law, any sums for income tax, unemployment insurance, social security, or any
other withholding required by applicable law.

6.9           Care of Biological Materials.  LLC acknowledges that it bears all
medical obligations to patients treated at the Facilities and covenants that it
is responsible for all tissue, specimens, embryos or biological material
(“Biological Materials”) kept at the Facilities on behalf of the patients (or
former patients) of LLC.  In the event of a termination or dissolution of LLC,
or the termination of this Agreement for any reason, LLC and the Physicians will
have the obligation to account to patients and to arrange for the storage or
disposal of such Biological Materials in accordance with patient consent and the
ethical guidelines of the American Society of Reproductive Medicine (“Relocation
Program”).  Management Company, in such event, will, at the request of LLC,
assist in the administrative details of such a Relocation Program for so long as
LLC shall request and an appropriate fee shall be paid during that time.  These
obligations shall survive the termination of this Agreement.

6.10           Practice Development, Collection Efforts and Network
Involvement.  LLC agrees to participate in Management Company’s network
activities and programs, including, but not limited to, the Council of
Physicians and Scientists and offering IntegraMed’s Attain® IVF Programs to LLC
patients, and participating in other product and service offering IntegraMed has
in effect from time to time. LLC shall be entitled to offer the Attain IVF
Programs or any successor program on an exclusive basis in the Territory, as
defined in this Agreement, to its patients so long as eighty percent (80%) of
LLC “private pay” patients apply for the Attain IVF Programs during each twelve
(12) month period of the Term beginning with the Effective Date.

LLC agrees that during the term of this Agreement, LLC covenants for itself and
will use reasonable efforts to cause its Physician-Employees to:

6.10.1                      Execute such documents and take such steps
reasonably necessary to assist billing and collecting for patient services
rendered by LLC and its Physician-Employees;

6.10.2                      Promote LLC’s medical practice and participate in
marketing efforts developed by Management Company as provided for in Section
3.1.5.

6.10.3                      Reasonably cooperate with respect to Management
Company’s collection efforts, and policies and procedures governing the
collection of Receivables; and

 
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6.10.4                      Comply with all applicable laws and regulations,
federal, state and local.

6.11           No Grant of License; Independent Contractors. LLC may not use
Management Company service names, acquired or developed trade names, trademarks,
or related logos of Management Company (the “Management Company Trade Names") in
conjunction with the provision of Infertility Services.  LLC will use its own
legal entity name, and will not use the Management Company Trade Names as any
part of that name.  LLC will not allow its clinic or its Infertility Services to
become substantially associated with the Management Company Trade
Names.  IntegraMed is an independent contractor, and neither party may hold
themselves out as agents, employees, partners, or representatives of one
another.  Neither party may bind the other to any contract.

6.12           Internet
Marketing.                                                                Pursuant
to Section 3.1.5, Management Company agrees to provide marketing services,
including designing marketing plans for implementation by LLC for practice
development. In performing such marketing, Management Company may maintain the
Web site www.integramed.com or successor site, and will engage in other
marketing efforts designed to benefit LLC and other independent clinics for
which Management Company performs services.  Management Company will link to LLC
on that site, and will list LLC in its other marketing efforts and materials, as
appropriate.  LLC will also link to the Management Company website and LLC may
also, in its discretion, state expressly that it has retained Management Company
as a manager, but this is not permission to make a trademark use of the
Management Company Trade Names, nor may LLC use any Management Company Trade
Name to identify its own Infertility Services or its clinics.  For example, LLC
may, but is not required to, add to its Web site a link to the Management
Company Web site, together with the phrase “an independent member of the
IntegraMed Network” or “an independent IntegraMed affiliate”.  One of these two
phrases must also be used by LLC in connection with any marketing materials or
other communications that mention that Management Company is providing the
Business Services to LLC.
Article   7

Joint Duties and Responsibilities

7.1           Formation and Operation Of Practice Management Board.  Management
Company and LLC will establish a practice management board (“Practice Management
Board”), which will be responsible to assist LLC in developing management and
administrative policies for the overall operation of LLC; provided, however,
that LLC shall retain final authority for approving policies and procedures
governing medical and clinical aspects of LLC’s operations.

 
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The Practice Management Board will consist of designated representatives from
Management Company as determined by Management Company, designated
representatives of LLC as determined by LLC, the Executive Director and the
Medical Director.  It is the intent and objective of Management Company and LLC
that they use all reasonable efforts to agree on the overall provision of the
Business Services to LLC and that, if they disagree, they will work
cooperatively to resolve any such disagreement as outlined in this Agreement.

7.1.1           Meetings of the Practice Management Board.   The
Practice  Management Board shall meet at least three (3) times per calendar
year, and may hold additional meetings as determined by the Parties, at such
time and place as the Parties may mutually agree for management review and to
make decisions related to the LLC.  All representatives on the Practice
Management Board may participate in a meeting by means of a conference telephone
or similar communication device that allows all persons participating in the
meeting to simultaneously hear each other during the meeting, and such
participation shall be the equivalent of being present in person at the
meeting.  Notice of the time, date and place of a regular meeting shall be given
in writing or by electronic means not less than ten (10) days before the date of
the meeting, to each Party’s representatives on the Practice Management
Board.  Such notice requirement shall be deemed waived for a given meeting of
the Practice Management Board if a Party’s representative on the Practice
Management Board (i) is present at such meeting either in person or by means of
a conference telephone or other communication device or (ii) provides a waiver
in writing (including by electronic means) of such notice in advance of such
meeting.  The Practice Management Board will maintain minutes of all meetings,
which minutes shall, among other things, reflect all decisions of the Practice
Management Board.

7.1.2           Actions by the Practice Management Board.  As part of its
responsibilities delineated in Section 7.1, the Practice Management Board shall
have authority to take the following actions:

§  
Approval of budget for recommendation to LLC;

§  
Approval of renovation and expansion plans;

§  
Approval of capital expenditures involving IntegraMed capital;

§  
Approval of annual marketing budget;

§  
Approval of long-term strategic plans; and

§  
Approval of recommendations regarding physician hiring.

All authority granted to the Practice Management Board under this Section 7.1.2
shall be exercised with the affirmative consent of each Party’s representatives
to the Practice Management Board who are entitled to vote.  In the case of
matters in this Section 7.1.2 requiring a formal vote, LLC shall have one (1)
vote and Management Company shall have one (1) vote; provided, however, the
determination with respect to hiring or firing of Physician-Employees shall be
determined solely by LLC.  At least one (1) representative from each Party who
is entitled to vote must be present, either in person or by means of a
conference telephone as noted above, to constitute a quorum at any meeting of
the Practice Management Board.

 
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7.1.3           Actions by the Practice Management Board without a Meeting.  Any
action required or permitted to be taken at a meeting of the Practice Management
Board may be taken without a meeting if one (1) or more proposed written or
electronic consents, setting forth the action so taken or to be taken: (i) is
sent to the representative of each Party who is entitled to vote; (ii) is signed
or approved by the number of representatives required by Section 7.1.2; and
(iii) such signed or approved written or electronic consent is included in the
LLC’s permanent records.  The written or electronic consent (which may be signed
or approved in one or more counterparts) on any matter shall have the same force
and effect as if such matter was voted upon at a duly called meeting of the
Practice Management Board and may be described as such in any document or
instrument.

7.2           Duties and Responsibilities of The Practice Management
Board.  With the assistance of Management Company, the Practice Management Board
shall have, among others, the following duties and responsibilities:

7.2.1           Annual Budgets and
profitability.                                                                                                           Review
and recommend to LLC annual capital and operation budgets prepared by Management
Company; provided, however, all capital expenses involving Management Company
capital must be approved by the Practice Management Board in accordance with
Section 7.2.2.  The Parties covenant and agree to use their respective best
efforts to assist the Practice Management Board in achieving the projected
budgets. LLC and Management Company agree that, recognizing changes in
circumstances, annual budgets and forecast are subject to revisions.
Accordingly, the Practice Management Board may, from time to time, propose to
modify the annual budgets, as needed, including without limitation, staff
reductions, so that LLC operates in a profitable mode which means that PDE is
positive on a monthly basis.  LLC’s approval of such modifications shall not be
unreasonably withheld and shall become part of the Budget.  Further, LLC agrees
that in the event LLC incurs operational losses at any point during the term of
this Agreement, nothing herein shall obligate Management Company to incur losses
under this Agreement in order to sustain LLC’s operations.

7.2.2           Capital Improvements and
Expansion.                                                                                                           Except
as otherwise provided herein, any renovation and expansion plans, and capital
expenditures with respect to LLC involving Management Company capital shall be
reviewed and approved by the  Practice Management Board and shall be based upon
the best interests of LLC, and shall take into account capital priorities,
economic feasibility, physician support, productivity and then current market
and regulatory conditions.

7.2.3           Marketing
Budget.                                                      LLC shall assist in
the development of an annual marketing budget and plan prepared by Management
Company for approval by the Practice Management Board.  All annual advertising
and other marketing budgets prepared by Management Company shall be subject to
the review, amendment, approval and disapproval of the Practice Management
Board.

 
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7.2.4           Strategic
Planning.                                                                The
Practice Management Board shall develop long-term strategic plans.

7.2.5           Physician
Hiring.                                                      The Practice
Management Board shall make recommendations regarding the number and type of
physicians required for the efficient operation of LLC; provided, the final
determination on physician hiring shall be made by LLC.

7.2.6           Executive
Director.                                                                The
Practice Management Board will direct the day-to-day functions of the Executive
Director in managing LLC’s operations. The Executive Director shall meet with
the Medical Director on a regular basis as reasonably requested by either Party
to discuss issues pertaining to LLC.  Salary and fringe benefits paid to the
Executive Director shall be approved by the Practice Management
Board.  Management Company and the Practice Management Board will conduct an
annual evaluation of such individual’s performance.

7.3           Research. The Parties recognize that the Physicians are employees
of UNC, an institution committed to education, research, and patient care.  The
Parties acknowledge and agree that they will take all reasonable actions as may
be necessary to permit the Physicians or Physician-Employees to conduct research
of general applicability at the Facilities, or produce research presentations,
articles, or other publications of general public interest, in any case, derived
from or based on research protocols conducted at the Facilities.  The Parties
agree that, subject to compliance with all applicable laws (including without
limitation, the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”), Pub. L. No. 104-191 (1996), and the regulations promulgated
thereunder by the U.S. Department of Health and Human Services (“HHS”),
including, but not limited to Title 45 Parts 160, 162 and 164 of the Code of
Federal Regulations (“C.F.R.”), as the same may be amended from time to time
(the “HIPAA Regulations”), as well as the data privacy and security provisions
contained in the Health Information Technology for Economic and Clinical Health
(“HITECH”) Act, Title XIII of Division A of the American Recovery and
Reinvestment Act of 2009 (“ARRA”), Pub. L. No. 111-5 (2009), and other
applicable data privacy and security protection laws), and subject to compliance
with all applicable UNC policies governing human subjects research, nothing in
this Agreement shall limit the ability of the Physicians or Physician-Employees
to conduct research of general applicability or produce or publish such research
presentations, articles, or other publications of general public interest.  The
Parties agree further to work collaboratively with the Practice Management Board
to develop policies and procedures for conducting research in the Facilities.

7.4           No Grant of
License.                                                                Neither
Party may use the service names, acquired or developed trade names, trademarks,
or related logos of the other Party without such Party’s prior written consent.

 
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Article   8

Financial Arrangements

8.1           Compensation.                                           The
compensation set forth in this Article 8 is being paid to Management Company in
consideration of the substantial commitment made, capital provided and services
to be rendered by Management Company hereunder.  Management Company shall be
paid the following amounts (collectively “Compensation”) beginning as of the
Effective Date:

8.1.1                      an amount reflecting all Cost of Services paid by
Management Company pursuant to the terms of this Agreement.

8.1.2           a Base Service Fee, paid monthly but reconciled to annual
Revenues, in an amount equal to $11,183.00 a month.  The Base Service Fee shall
increase or decrease each year on the anniversary of the Effective Date by a
percentage that is equal to the percentage by which the LLC’s Revenues increased
or decreased over the prior twelve (12) month period.

8.1.3           a Performance Incentive paid monthly out of PDE but reconciled
to Fiscal Year operating results of LLC, equal to $6,033.00 a month. It is
understood and agreed that the Performance Incentive is paid to Management
Company only in the event LLC achieves positive PDE over the course of a Fiscal
Year. In the event that LLC does not achieve positive PDE over the course of a
Fiscal Year, Management Company shall retain all Performance Incentive paid to
Management Company during such Fiscal Year, but shall not be paid a Performance
Incentive for the succeeding year. For the year thereafter, the monthly
Performance Incentive shall be equal to the monthly Performance Incentive prior
to the year in which LLC did not achieve positive PDE. Nothing herein shall be
interpreted to mean that if PDE is negative, Management Company makes a
contribution to LLC to cover any such operating losses.  The Performance
Incentive shall increase or decrease each year on the anniversary of the
Effective Date by a percentage that is equal to the percentage by which the
LLC’s PDE increased or decreased over the prior twelve (12) month period.

8.1.4           In the event that either Section 8.1.2 or 8.1.3 of this
Agreement is found to be illegal, unenforceable, against public policy, or
forbidden by law, by any local, state or federal agency or department, or any
court of competent jurisdiction or notice is given to a Party hereto by the
North Carolina Medical Board of its negative determination regarding either
Section 8.1.2 or 8.1.3 (“Findings”), then Section 8.1.2 and/or 8.1.3 and/or the
Base Service Fee and Performance Incentives shall be replaced, effective
immediately and retroactive to the date of this Agreement, by a fixed annual
Service  Fee, payable in equal monthly installments (“Alternate Service Fee”) on
or before the 15th business day of each month. Said Alternate Service Fee shall
be in an amount mutually agreed upon, within thirty (30) days’ time from the
Findings, between Management Company and LLC.

 
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8.2           Accounts Receivable.

8.2.1           On or before the 20th business day of each month, commencing
with the first month following the Effective Date, Management Company shall
reconcile the Receivables of LLC arising during the previous calendar
month.  Subject to the terms and conditions of this Agreement, LLC hereby sells
and assigns to Management Company as absolute owner, and Management Company
hereby purchases from LLC all Receivables hereafter owned by or arising in favor
of LLC on or before the 20th business day of each month. Management Company
shall transfer or pay such amount of funds to LLC equal to the Receivables less
Compensation due Management Company pursuant to Section 8.1.  LLC shall
cooperate with Management Company and execute all necessary documents in
connection with the purchase and assignment of such Receivables to Management
Company.  All collections in respect of such Receivables shall be deposited in a
bank account at a bank designated by Management Company.  To the extent LLC
comes into possession of any payments in respect of such Receivables, LLC shall
direct such payments to Management Company for deposit in bank accounts
designated by Management Company.

8.2.2           Any Medicare or Medicaid Receivables due to LLC shall be
excluded from the operation of Section 6.2.1 hereof. Any such Receivables shall
be subject to agreement of LLC and Management Company with respect to the
collection thereof.

8.2.3           LLC will be charged monthly interest at an annualized rate equal
to the Prime Rate published in the Wall Street Journal on Receivables with
average days sales outstanding (“DSO”) greater than 60 days for a trailing
three-month period.  For example, if prime is 6% and LLC’s Revenues are
$1,385,000 for a three-month period, the average Revenues per day (assuming 90
days in such three-month period) equals $15,389. If on the last day of  that
same three-month  period LLC’s Receivables are $1.5 million, then LLC’s  DSO
equal 97 days ($1.5 million divided by $15,389), resulting in interest being
charged for the month on $569,393.00 of LLC’s Receivables  ($15,389 times 37
days) at a rate of 0.5% ( 6% prime rate divided by 12), or a $2,846.97 interest
charge. Any application of this Section 8.2.3 shall exclude Bad Debt from the
determination of Receivables subject to an interest payment.

8.2.4           On or before the 20th business day of each month, commencing
with the month following the Effective Date, Management Company shall remit to
LLC the PDE generated for the previous calendar month.

 
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8.3           Advances.                                Management Company may
advance necessary funds upon request for LLC to meet Cost of Services; provided,
however, nothing herein shall obligate Management Company to incur Cost of
Services and Physician salary Advances in excess of Revenues under this
Agreement in order to sustain LLC’s operations. As security for such Advances,
LLC shall deliver to Management Company with the execution of this Agreement a
Security Agreement in the form of Exhibit 8.3 hereto giving Management Company a
security interest in the Collateral, as that term is defined in the Security
Agreement between the Parties. Management Company shall, in its sole discretion,
be entitled to take any and all necessary action to prevent financial losses, in
the form of Cost of Services on behalf of LLC, to Management Company in the
event LLC’s Cost of Services exceed LLC’s Revenues at any point during the Term
of this Agreement.  Notwithstanding anything herein to the contrary, no Advances
will be made by Management Company to satisfy Physician-Employee draws, salaries
or pension contributions, unless requested by LLC.

8.3.1           Any Advance hereunder shall be a debt owed to Management Company
by LLC and shall be repaid in twelve equal installments plus accrued interest on
the first day of each month following any Advance. To the extent PDE is
available for distribution to UNC for a particular month; Management Company is
authorized to deduct any outstanding Advance from the PDE prior to distribution
to UNC to pay any installment then due.

8.3.2           Interest expense will be charged on an Advance and will be
computed at the Prime Rate published in the Wall Street Journal on the date that
such Advance is made to the LLC.

8.4           Capital
Commitment                                                                During
the Term, Management Company agrees to make available up to
$500,000.00,  interest-free, for capital purchases on behalf of LLC in order for
LLC to conduct its business (the “Capital Commitment”).  Any amount invested by
Management Company in the Facilities at LLC’s written request that is in excess
of the Capital Commitment will be charged to LLC as a capital cost, depreciated
in accordance with GAAP, at an interest rate equal to the Prime Rate published
in the Wall Street journal on the date that such amount is made available to LLC
plus two (2%) percent.

8.5           Right to Audit.  Subject to the confidentiality provisions in
Section 12.13, LLC  shall have the right during the Term of this Agreement to
perform audits that may be considered necessary by LLC to determine the accuracy
and correctness of Management Company’s accounting and internal controls,
including Management Company’s calculation of the Cost of Services, Base Service
Fee, Performance Incentive, or other payments described in this Section 8.  LLC
may conduct such audits upon ten (10) days’ prior written notice to Management
Company.  Any such audit may be conducted, in the LLC’s sole discretion, by a
person employed or engaged by LLC or its affiliates or an independent,
third-party auditor selected by LLC.  The expenses associated with an audit
shall be paid by LLC.

 
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8.5.1           Management Company will cooperate by furnishing LLC with any and
all information as is reasonably necessary to perform and complete the audit
procedures noted above.  LLC agrees that any such audit will be conducted at
such times and in such a manner so as to avoid undue disruption of Management
Company’s operations.  In the event that LLC determines that Management Company
has made an error in calculating the payments due from LLC pursuant to this
Section 8 that results in LLC being charged more for the Business Services than
LLC is obligated to pay under this Agreement, Management Company shall promptly
refund the excess charges for the Business Services to LLC.

Article   9

Term, Service Rights, Payments, And Other Commitments

9.1           Term.  This Agreement shall begin on the Effective Date and shall
continue for twenty (20) years (the “Initial Term”), with automatic successive
twenty (20) year terms (each, a “Renewal Term”), unless sooner terminated as
herein provided. In the event either Party elects not to renew this Agreement at
the expiration of the Term or a Renewal Term, said Party shall give the other
not less than one (1) year’s prior written notice of its intention not to renew
at the expiration of the Term or a Renewal Term.

9.2           Payment Commitment.  In consideration of the payment by Management
Company to UNC of Six Hundred Sixty-Three Thousand ($663,000.00) Dollars
(hereinafter referred to as the “Right to Manage Fee”) and the considerable
investment of time and resources in LLC expected by Management Company, LLC
grants to Management Company the exclusive right to provide the Business
Services to LLC; provided, however, that nothing in this Agreement shall
prohibit the System or any of its affiliates from providing services to LLC,
upon approval by Management Company, such approval not to be unreasonably
withheld.

9.3           Within thirty (30) days of the Effective Date, LLC shall cause 50%
of the Right to Manage Fee to be put in a bank account managed by Management
Company for purposes of LLC operating losses or working capital requirements for
up to 24 months from the Effective Date.

Article   10

Termination of the Agreement

10.1           Termination

 
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10.1.1                      Termination without Cause. Notwithstanding any
language in this Agreement to the contrary, LLC may terminate this Agreement
without cause during the Initial Term on the tenth (10th) anniversary of the
Effective Date.  LLC may also terminate this Agreement without cause during each
successive Renewal Term on the tenth (10th) anniversary of the first (1st) day
of any such Renewal Term.  LLC shall provide Management Company with not less
than one (1) year’s prior written notice of its intent to terminate this
Agreement pursuant to this Section 10.1.1.

10.1.2                      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 ninety (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
ten (10) days prior written notice to the other Parties.

10.1.3                      Material
Breach.                                                      Either Party may
terminate this Agreement immediately if it believes that the other Party has
materially breached its obligations hereunder, and such breach has not been
corrected within thirty (30) days (“Cure Period”) of the non-breaching Party
(“Accuser”) giving written notice (“Breach Notice”) to the breaching Party
(“Accused”), setting forth in detail the basis for the belief (“Accusation”). If
the Accused agrees with the Breach Notice and cures the material breach within
the Cure Period, no further action will be required by either Party.  If the
Accused agrees with the Breach Notice, but the breach is not curable within the
Cure Period and the Accused is making diligent efforts to cure the breach during
the Cure Period (“Good Faith Cure Efforts”), the Parties may continue to operate
under the terms and conditions of this Agreement.  If after the exercise of such
Good Faith Cure Efforts, the Accused shall be unable to cure the breach within
sixty (60) days from the Breach Notice, the Accuser may extend the time in which
to cure the breach, upon request of the Accused.

10.2           Termination By Management Company for Professional Disciplinary
Actions.    Management Company may terminate this Agreement upon ten (10) days
prior written notice to LLC if a Physician-Employee’s authorization to practice
medicine is suspended, revoked or not renewed due to concerns with patient
safety or the Physician-Employee’s fitness to practice medicine and LLC has
failed to suspend such physician’s authorization to treat LLC’s patients;
provided, however, such action may not be taken until LLC has been given thirty
(30) days to resolve such physician’s authorization to practice medicine. LLC
shall notify Management Company within five (5) days of a notice that a
physician’s authorization to practice medicine is suspended, revoked or not
renewed or that formal disciplinary action has been taken against a physician
which could reasonably lead to a suspension, revocation or non-renewal of a
physician’s license due to concerns with patient safety or the physician’s
fitness to practice medicine.

 
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10.3           Non-Renewal at the expiration of a Term or Renewal Term. In the
event either Party gives not less than one (1) year’s prior written notice of
its intent not to renew at the expiration of the Term or a Renewal Term, this
Agreement shall automatically expire at the end of the Term or Renewal Term.

10.4           Failure to Obtain a Certificate of Need.  LLC may terminate this
Agreement upon ten (10) days prior written notice to Management Company in the
event that the Certificate of Need (“CON”) Section of the North Carolina
Division of Health Services Regulation determines that a CON is required to
begin construction or development of the Facility and subsequently fails to
issue a CON for the Facility despite the Parties’ best reasonable efforts to
obtain such CON. If not already being sought prior to the execution of this
Agreement, LLC shall, within 10 days of the execution of this Agreement, begin
using its best reasonable efforts to obtain a notice of no review from the North
Carolina CON Section.

10.5           Termination Fee.  LLC may terminate this Agreement at any time by
providing written notice of its intent to purchase Management Company’s
exclusive right to provide the Business Services.  LLC’s written notice
(“Termination Notice”) shall include the date on which this Agreement will
terminate (“Termination Date”) and the fee for which LLC will purchase
Management Company’s right to provide the Business Services (the “Termination
Fee”).  Unless the Parties agree otherwise in writing, the Termination Fee shall
be an amount equal to the budgeted Base Service Fee and Performance Incentive
for the then current Fiscal Year multiplied by the number of years remaining in
the Initial Term or then current Renewal Term.  LLC’s payment of the Termination
Fee may be paid either as (i) as a lump sum within 30 days of the Termination
Date or (ii) a monthly payment on the first business day of the month over the
remainder of the Initial or then current Renewal Term commencing with the month
following the Termination Date.  Notwithstanding any language in this Agreement
to the contrary, LLC shall not be obligated to pay the Termination Fee in the
event that LLC terminates this Agreement as permitted in Sections 10.1, 10.3, or
10.4.

10.6           After Termination.  Upon termination of this Agreement for any
reason or expiration of the Term, no Party shall have any further obligations
hereunder except for: obligations set forth in Article 11 of this Agreement;
obligations accruing prior to the date of termination or expiration;
obligations, promises, or covenants contained herein which are expressly made to
extend beyond the Term of this Agreement; and such remedies as may be available
to a Party on account of an uncured breach by the other Party.

Article   11

Obligations and Options Upon Termination

11.1           Termination by  Management Company.  If Management Company
terminates this Agreement during the Initial Term pursuant to Article 10, due to
the insolvency of LLC (Section 10.1.2), or for a Finding of material breach by
LLC (Section 10.1.3), or LLC fails to suspend a physician whose license is
suspended, revoked or not renewed (Section 10.2), the following shall apply:

 
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11.1.1
In addition to any other remedies available to Management Company at law or in
equity, on or before the Closing Date, LLC shall:

(a)
Pay to Management Company in immediately available funds, an amount equal to the
net book value (in accordance with GAAP) of all Management Company Assets at all
Facilities made available to LLC by Management Company, in the event LLC opts to
acquire the Management Company Assets.

(b)
In exchange for Management Company reassigning to LLC its interests in the
Receivables acquired under Section 8.2, pay to Management Company in immediately
available funds, an amount equal to the uncollected accounts receivable
purchased from LLC which have not been charged to LLC as a Bad Debt under Cost
of Services;

(c)
Pay to Management Company, in immediately available funds, an amount equal to
$663,000.00.

(d)
Provide to Management Company a Consent to Assignment from each landlord of real
estate leased by Management Company for the benefit of LLC to the extent each
landlord is willing to provide such consent. The parties shall endeavor to
obtain a consent that includes a release of Management Company from any further
obligations or liability under the leases as of the Closing Date, except for
liabilities accruing prior to the Closing Date, and shall satisfy any
requirements provided for in the assignment provisions of the applicable leases;

(e)
Hire all Management Company employees working at the Facilities or make
provision for their termination after the Closing Date;

(f)           Pay to Management Company in immediately available funds any
outstanding liabilities under this Agreement, including any and all loans or
Advances; and

(g)           Execute such documents and perform such acts as may be reasonably
necessary to accomplish the transactions required to effect the termination.

11.2           Termination By LLC. In the event this Agreement is terminated by
LLC as a result of the insolvency of Management Company (10.1.2) or a Finding of
a material breach by Management Company (10.1.3), the following shall apply:

 
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11.2.1
On or before the Closing Date, LLC shall:

(a)
Pay to Management Company in immediately available funds, an amount equal to the
net book value (in accordance with GAAP) of any Management Company Assets at all
Facilities made available to LLC by Management Company, in the event LLC opts to
acquire the Management Company Assets;

(b)
In exchange for Management Company reassigning to LLC its interests in the
Receivables acquired under Section 8.2, pay to Management Company in immediately
available funds, an amount equal to the uncollected accounts receivable
purchased from LLC which have not been charged to LLC as a Bad Debt under Cost
of Services;

(c)
Have the option of assuming leases for office and equipment used directly for
the operation of LLC’s business. In such event, a Consent to Assignment from
each landlord of real estate leased by Management Company for the benefit of LLC
to the extent each landlord is willing to provide such consent shall be
obtained.;

(d)
Hire all Management Company employees working at the Facilities or make
provision for their termination;

(e)
Pay to Management Company in immediately available funds any outstanding
liabilities under this Agreement, including any and all loans or Advances; and

(f)
Return to Management Company all materials specifically designated as
proprietary, including, but not limited to, consents, policy and procedure
manuals, Risk Management and Clinical Standards Review Manuals (“Proprietary
Materials”).  LLC’s failure (except as otherwise provided herein) to cease using
the Proprietary Materials at the termination or expiration of this Agreement may
result in immediate and irreparable damage to Management Company and to the
rights of any licensee of Management Company for which there may be no adequate
remedy at law.  In the event of such failure, Management Company shall be
entitled to seek 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, Management Company shall be entitled to seek a temporary restraining
order, without prejudice to any other remedy available to Management Company.

(g)
Execute such documents and perform such acts as may be reasonably necessary to
accomplish the transactions required to effect the termination.

 
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11.3           Expiration of the Term or a Renewal Term. In the event this
Agreement expires at the end of the Term or a Renewal Term, the following shall
apply:

11.3.1                      On the last day of the Term, LLC shall:

(a)
Pay to Management Company in immediately available funds, an amount equal to the
net book value (in accordance with GAAP) of any Management Company Assets at all
Facilities made available to LLC by Management Company, in the event LLC opts to
acquire the Management Company Assets;

(b)
In exchange for Management Company reassigning to LLC its interests in the
Receivables acquired under Section 8.2, pay to Management Company in immediately
available funds, an amount equal to the uncollected accounts receivable
purchased from LLC which have not been charged to LLC as a Bad Debt under Cost
of Services;

(c)
Pay to Management Company, in immediately available funds, an amount equal to
$663,000.00.

(c)
Assume all leases for office space and equipment used directly for the operation
of LLC’s business.  In such event, a Consent to Assignment from each landlord of
real estate leased by Management Company for the benefit of LLC shall be
obtained, to the extent each landlord is willing to provide such consent.;

(d)
Hire all Management Company employees working at the Facilities or make
provision for their termination.

(e)           Pay to Management Company in immediately available funds any
outstanding liabilities under this Agreement, including any and all loans or
Advances; and

(f)           Execute such documents and perform such acts as may be reasonably
necessary toaccomplish the transactions required to effect the termination.

11.4           Transfer of Ownership.  Upon receipt of payments due under  this
Article 11 and other payments due, Management Company shall transfer ownership
and possession of the Receivables and all Management Company Assets, and assign
all right, title and interest in and to and obligations under the Lease(s) to
LLC and return to LLC all security deposits.  LLC shall have the option of
receiving full credit on the payments due under this Article 11 for all liens,
encumbrances or security interest, or of having Management Company transfer
ownership of the Management Company Assets free and clear of all liens,
encumbrances or security interests thereon.

 
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Article   12

Miscellaneous

12.1           Independent Contractor.   As set forth in Section 3.2, Management
Company and LLC are independent contracting parties.  In this regard, the
Parties agree that:

12.1.1   The relationship between Management Company and LLC is that of an
independent supplier of non-medical services and a medical practice,
respectively, and, unless otherwise provided herein, nothing in this Agreement
shall be construed to create a principal-agent, employer-employee, or
master-servant relationship between Management Company and LLC;

12.1.2   Notwithstanding the authority granted to Management Company herein,
Management Company and LLC agree that LLC shall retain the full authority to
direct all of the medical, professional, and ethical aspects of its medical
practices;

12.1.3   Any powers of LLC not specifically vested in Management Company by the
terms of this Agreement shall remain with LLC;

12.1.4 No Party shall have the right to participate in any benefits, employment
programs or plans sponsored by the other Party on behalf of the other Party’s
employees, including, but not limited to, workers’ compensation, unemployment
insurance, tax withholding, health insurance, life insurance, pension plans or
any profit sharing arrangement;

12.1.5   In no event shall any Party be liable for the debts or obligations of
any other Party except as otherwise specifically provided in this Agreement; and

12.1.6   Matters involving the internal agreements and finances of LLC,
including but not limited to the disposition of LLC property and stock,
accounting, tax preparation, tax planning, and pension and investment planning,
hiring and firing of physicians, decisions and contents of reports to regulatory
authorities governing LLC and licensing, shall remain the sole responsibility of
LLC.

12.2           Force Majeure.  No Party shall be liable to the other Party for
failure to perform any of the services required under this Agreement in the
event of a strike, lockout, calamity, act of God, unavailability of supplies, or
other event over which such Party has no control, for so long as such event
continues and for a reasonable period of time thereafter, and in no event shall
such Party be liable for consequential, indirect, incidental or like damages
caused thereby.

12.3           Equitable
Relief.                                                      Without limiting
other possible remedies available to a non-breaching Party for the breach of the
covenants contained herein the Parties may seek injunctive or other equitable
relief to enforce those covenants.

 
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12.4           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.

12.5           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 which consent shall not be
unreasonably withheld, and any attempted assignment without such consent shall
be void and of no force and effect, The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the Parties’ respective heirs,
legal representatives, successors and permitted assigns.

12.6           Waiver of Breach.  The failure to insist upon strict compliance
with any of the terms, covenants or conditions herein shall not be deemed a
waiver of such terms, covenants or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.

12.7           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina irrespective of the
principal place of business of the Parties hereto.

12.8           Dispute Resolution.  Any and all claims, disputes, or
controversies arising under, out of, or in connection with this Agreement or any
breach thereof (each a “Controversy” and collectively “Controversies”), except
for equitable relief sought pursuant to Section 12.3 hereof, may be resolved
pursuant to the following resolution process:

12.8.1                      First, the Parties shall, in good faith, attempt to
resolve any Controversy as follows: (i) the Party seeking to resolve the
Controversy shall prepare a written position statement and deliver a copy
thereof to the other Party; and (ii) no later than ten (10) days after delivery
of such position statement, appropriate representatives of each Party shall meet
and seek, in good faith, to resolve the Controversy.

12.8.2                      Second, if the Controversy cannot be resolved within
thirty (30) days after the initiation of good faith negotiations, then such
Controversy may be determined by binding arbitration in the State of North
Carolina, City of Chapel Hill (hereinafter “Arbitration”).  The Party seeking
determination may subject any such Controversy to Arbitration, and the rules of
commercial arbitration thereof shall govern.  If both Parties

 
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agree to participate, the Arbitration shall be conducted and decided by a single
arbitrator, unless the Parties mutually agree, in writing at the time of the
Arbitration, to three arbitrators.  In reaching a decision, the arbitrator(s)
shall have no authority to change or modify any provision of this Agreement,
including any liquidated damages provision.  Each Party shall bear its own
expenses and one-half the expenses and costs of the arbitrator(s).  Any
application to compel Arbitration, confirm or vacate an arbitral award or
otherwise enforce this Section 10.7 shall be brought in the Courts of the State
of North Carolina or the United States District Court  for the District of North
Carolina.

12.8           Separability.                                           If any
portion of the provisions hereof shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application of such
portion or provisions in circumstances other than those in which it is held
invalid or unenforceable, shall not be affected thereby, and each portion or
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law, but only to the extent the same continues to reflect fairly
the intent and understanding of the Parties expressed by this Agreement taken as
a whole.

12.9           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.

12.10                      Notices.                                Any notice or
other communication required by or which may be given pursuant to this Agreement
shall be in writing and mailed, certified or registered mail, postage prepaid,
return receipt requested, or overnight delivery service, such as FedEx or DHL
Express, prepaid, and shall be deemed given when received. Any such notice or
communication shall be sent to the address set forth below:

If for Management Company:

Jay Higham, President & CEO
IntegraMed America, Inc.
Two Manhattanville Road
Purchase, New York 10577

With a copy to:

Claude E. White, General Counsel
IntegraMed America, Inc.
Two Manhattanville Road
Purchase, New York 10577

 
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If for LLC:

The University of North Carolina at Chapel Hill
School of Medicine
Department of Obstetrics and Gynecology
Attention: Kim Schneider
3009 Old Clinic Building, CB 7570
Chapel Hill, NC 27599-7570

With a copy to:

The University of North Carolina at Chapel Hill
Office of University Counsel
110 Bynum Hall
Campus Box 9105
222 East Cameron Avenue
Chapel Hill, NC 27599-9105
Attention: General Counsel

Any Party hereto, by like notice to the other Parties, may designate such other
address or addresses to which notice must be sent.

12.11                      Entire Agreement.   This Agreement and all
attachments hereto represent the entire understanding of the Parties hereto with
respect to the subject matter hereof and thereof, and cancel and supersede all
prior agreements and understandings among the Parties hereto, whether oral or
written, with respect to such subject matter.

12.12                      No Medical Practice by Management
Company.  Management Company will not engage in any activity that constitutes
the practice of medicine, and nothing contained in this Agreement is intended to
authorize Management Company to engage in the practice of medicine or any other
licensed profession.

12.13                      Confidential Information.

12.13.1                      During the initial term and any renewal term(s) of
this Agreement, the Parties may have access to or become acquainted with each
other’s 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, to the extent not otherwise required by applicable law, no Party
shall directly or indirectly, communicate, disclose, divulge, publish or
otherwise express to any individual or governmental or non-governmental entity
or

 
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authority (individually and collectively referred to as “Person”) or use for its
own benefit, except in connection with the performance or enforcement of  this
Agreement, or the benefit of any Person any Confidential Information, no matter
how or when acquired, of another Party.  Each Party shall cause each of its
employees to be advised of the confidential nature of such Confidential
Information and to agree to abide by the confidentiality terms of this
Agreement.  No Party shall photocopy or otherwise duplicate any Confidential
Information of another Party without the prior express written consent of the
such other Party except as is required to perform services under this
Agreement.  All such Confidential Information shall remain the exclusive
property of the proprietor and shall be returned to the proprietor immediately
upon any termination of this Agreement.

12.13.2                      Confidential Information shall not include
information which  (i) is or becomes publicly known through no fault of a Party
hereto; (ii) is learned by a Party from a third-party legally entitled to
disclose such information; (iii) was already known to a Party at the time of
disclosure by the disclosing Party; (iv) was received from an unrelated third
party; provided such information was not obtained, to the recipient’s knowledge,
by said third party, directly or indirectly, on a confidential basis or in
violation of any confidentiality agreement; (v) that is independently developed
by the recipient’s employees or agents who are not privy to the Confidential
Information; or (vi) information that the recipient is required by applicable
law to disclose; provided that if a Party is requested or required (by
deposition, interrogatory, request for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process), the
Party will give the other Party prompt written notice of such request or
requirement so that such Party may seek an appropriate protective order or other
remedy.

12.13.3                      In order to minimize any misunderstanding regarding
what information is considered to be Confidential Information, Management
Company or LLC will designate at each other’s request the specific information
which Management Company or LLC considers to be Confidential Information.

12.13.4                      The terms of this Section 12.13 shall expressly
survive the expiration or termination of this Agreement for whatever reason.

12.14                      Indemnification.

12.14.1                      Management Company agrees to indemnify and hold
harmless LLC, its directors, officers, employees  and servants from any suits,
claims, actions, losses, damages, liabilities or expenses arising out of or in
connection with any, negligence by Management Company related to the performance
of its duties and responsibilities under this Agreement or any breach of any
representation or warranty.

 
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The obligations contained in this Section 12.14.1 shall survive termination of
this Agreement. This indemnification provision shall apply to both third-party
claims and second-party claims, including, but not limited to, claims, actions,
damages, losses, expenses, or costs (including, but not limited to, reasonable
attorneys' fees and court costs) incurred by one Party to this Agreement as a
result of an act, or omission to act, on the part of the other Party, its
agents, or employees pursuant to this Agreement

12.14.2                      To the extent permitted by law, LLC agrees to
indemnify and hold harmless Management Company, its shareholders, directors,
officers, employees and servants from any suits, claims, actions, losses,
damages, liabilities or expenses arising directly out of or in direct connection
with any negligence by LLC related to the performance of its duties and
responsibilities under this Agreement or any breach of any representation or
warranty.  The obligations contained in this Section 12.14.2 shall survive
termination of this Agreement. This indemnification provision shall apply to
both third-party claims and second-party claims, including, but not limited to,
claims, actions, damages, losses, expenses, or costs (including, but not limited
to, reasonable attorneys' fees and court costs) incurred by one Party to this
Agreement as a result of an act, or omission to act, on the part of the other
Party, its agents, or employees pursuant to this Agreement.

12.14.3                      In the event of any claims or suits directly
relating to the Facilities in which Management Company and/or LLC and/or their
directors, officers, employees and servants are named, each of Management
Company and LLC for their respective directors, officers, employees agree to
cooperate in the defense of such suit or claim at the sole expense of the Party
named in such claim or suit; such cooperation shall include, by way of example
but not limitation, meeting with defense counsel (to be selected by the
respective Party hereto), the production of any documents in his/her possession
for review, response to subpoenas and the coordination of any individual defense
with counsel for the respective Parties hereto.  The respective Party shall, as
soon as practicable, deliver to the other Party copies of any summonses,
complaints, suit letters, subpoenas or legal papers of any kind, served upon
such Party, for which such Party seeks indemnification hereunder.  This
obligation to cooperate in the defense of any such claims or suits shall survive
the termination, for whatever reason, of this Agreement.

12.14.4                      Indemnification Procedures.  The indemnification
obligations and liabilities of the Parties under this Agreement shall be subject
to the following terms and conditions:
 
12.14.4.1                      The party seeking indemnification (the
“Indemnified Party”) must give the other party (the “Indemnifying Party”)
written notice of any claim promptly after the Indemnified Party receives notice
of such claim; provided, however, that a failure by the Indemnified Party to
notify the Indemnifying Party promptly shall not relieve the Indemnifying Party
from liability for indemnification, except to the extent that such failure to
notify the Indemnifying Party materially prejudices the Indemnifying Party;
 

 
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12.14.4.2                      The Indemnifying Party shall have the right to
undertake, by counsel of its own choosing, the defense of such claim; provided
that the Indemnifying Party shall have acknowledged in writing its obligation to
indemnify and hold the Indemnified Party harmless from any liabilities with
respect to such claim;
 
12.14.4.3                      In the event the Indemnifying Party does not
elect to undertake such defense, or within ten (10) business days after notice
of such claim from the Indemnified Party, the Indemnifying Party shall fail to
defend, the Indemnified Party (upon five (5) days written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such claim, by counsel of its own choosing, on behalf of and for
the account and at the risk of the Indemnifying Party, subject to the right of
the Indemnifying Party thereafter, upon (i) acknowledging in writing its
obligation to indemnify and hold the Indemnified Party harmless from any
liabilities with respect to such claim, and (ii) reimbursing the Indemnified
Party for attorneys’ fees and defense costs incurred, to assume defense of such
claim at any time prior to settlement, compromise or final determination
thereof; and
 
12.14.4.4                      Notwithstanding anything in this Section 12.14 to
the contrary, the Indemnified Party shall have the right, at its own cost and
expense, to participate in the defense and, to the extent such participation
affects the Indemnified Party, the compromise or settlement of the claim.  The
Indemnifying Party shall not settle or compromise any claim or consent to entry
of any judgment without the Indemnified Party’s prior written consent, which
consent shall not be unreasonably withheld with respect to monetary matters and
matters that are not likely to adversely affect the business operations or
reputation of the Indemnified Party.  In the event the Indemnifying Party
undertakes defense of any claim, the Indemnified Party, at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel concerning such claim and the Indemnifying Party and the Indemnified
Party and their respective counsel shall cooperate with respect to the defense
of such claim.
 
12.15                      Compliance with Laws.  This Agreement and the
transactions contemplated by this Agreement are intended to comply with all
applicable federal and North Carolina laws and regulations.  In the event either
Party determines in good faith that this Agreement or any of the transactions
contemplated hereby are not in compliance with such laws and regulations, then
the Parties shall negotiate in good faith to modify the terms and provisions of
this Agreement to remedy any prior noncompliance, but if compliance cannot be
achieved reasonably within thirty (30) days, then notwithstanding any other
provision set forth in this Agreement, this Agreement shall terminate unless
either Party reasonably requests an extension of time in which to bring this
Agreement into compliance with any applicable law or regulation; notwithstanding
anything herein to the contrary, in lieu of termination of this Agreement,
either party may seek a judicial or administrative determination with respect to
any issues regarding compliance with applicable federal or North Carolina laws
and regulations.

12.16                      Variations of Pronouns.  All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or persons or entity
may require.

 
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12.17                      Counterparts.  This Agreement may be executed by the
Parties in any number of separate counterparts, and all such counterparts so
executed constitute one agreement binding on all the Parties notwithstanding
that all the Parties are not signatories to the same counterpart.

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IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of
the day and year first above written.

UNC FERTILITY LLC

By:         /s/:Allen Daugird                                       
     Allen Daugird, M.D. M.B.A.

IntegraMed America, Inc.

By:         /s/:Jay Higham                                                
     Jay Higham, Chairman, President & CEO

 
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Exhibit 3.12

Business Associate Agreement

 
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Exhibit 6.4

Staffing Agreement

 
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Exhibit 8.3

Security Agreement

 
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