MEDICAL DIRECTOR AGREEMENT
--------------------------
THIS MEDICAL DIRECTOR AGREEMENT ("Agreement") made as of July 21, 2000
Between South Georgia Nephrology, P.C., a Georgia professional corporation with
offices in Valdosta Georgia, hereinafter referred to as the "P.C."
And DCA of South Georgia, LLC
A limited liability company with offices at
c/o Dialysis Corporation of America
27 Miller Street
Lemoyne, PA 17043
hereinafter referred to as the "Company."
The P.C. and the Company may hereafter be referred to individually as a "Party"
and collectively as the "Parties."
WITNESSETH:
WHEREAS, the Company intends to develop, own and operate a renal dialysis
facility to be located within the vicinity of Valdosta, State of Georgia, with
such specific location as the Parties may select ("Facility");
WHEREAS, the P.C. is a limited liability company owned by Andrew Queler, M.D.
WHEREAS, the P.C. retains duly licensed physician(s) under the laws of the
State of Georgia, specializing in the treatment of kidney disease and
experienced in the medical administration of a renal dialysis facility;
WHEREAS, the Company through the operation of the Facility seeks to operate a
free standing dialysis center to provide all levels of outpatient dialysis
care, including but not limited to chronic maintenance dialysis, home treatment
through hemodialysis or peritoneal dialysis, either continuous and insulatory
peritoneal dialysis or continuous cycling peritoneal dialysis, chronic
dialysis, and inpatient dialysis services and related services to hospitals,
nursing homes, healthcare facilities, and similar institutions, as well as
ancillary services to End Stage Renal Disease ("ESRD") patients ("Dialysis
Treatments"); to provide to persons having ESRD and other forms of renal
failure the care they need; to encourage proper distribution and effective
utilization of ESRD treatment while maintaining or improving the quality of
care; and to promote the efficient delivery of ESRD care;
WHEREAS, the Company desires to contract with the P.C. to provide certain
services as defined herein and the P.C. desires to render such services to
the Company; and
WHEREAS, the Parties desire to enter into this Agreement in order to provide
a full statement of their respective responsibilities as they exist in
connection with the provision of services during the term of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and promises contained
in and intending to be legally bound by this Agreement the Parties agree as
follows:
<PAGE>
1. CONTRACT FOR SERVICES
---------------------
The Company hereby contracts with the P.C. to assist in the Facility's
Dialysis Treatments and provide services at the Facility as required by 42
CFR 405.2100 et seq., or any successor regulations, including those services
as provided in Section 3 of this Agreement. P.C. represents, warrants and
agrees that there will be available to the Facility during its operations, the
services of a qualified, licensed Medical Director as per Section 2. P.C.,
subject to the terms of this Agreement and, in particular, Section 8 hereof,
shall be responsible for planning, organizing, conducting and directing the
professional ESRD services at the Facility. All services to be provided by
the P.C. in this Agreement are hereinafter sometimes collectively referred to
as "Services." The P.C. hereby agrees to provide such Services under and
subject to the terms and conditions as provided in this Agreement.
2. MEDICAL STAFF AND COVERAGE
--------------------------
2.1 Physicians. The Services of the P.C. shall be coordinated by Dr.
----------
Andrew Queler, who is hereby appointed by the Company to serve as the Medical
Director of the Facility throughout the term of this Agreement, unless the
P.C. shall designate some other qualified physician to assume the duties of
Medical Director. Any candidate recommended or designated by the P.C. to
serve as Medical Director will be subject to the approval of Company which
approval will not be unreasonably withheld. The Medical Director may
hereinafter also be referred to as the "Physician."
2.2 Coverage. The P.C. or the Medical Director need not devote full-time
--------
to the Dialysis Treatments or the provision of Services but shall devote
sufficient time as necessary to fulfill its and his or her responsibilities
as required in this Agreement. The P.C. shall provide for Physician coverage
for all hours of Facility's operation and 24 hour emergency on-call coverage.
The Company acknowledges that P.C. and Medical Director are engaged in the
practice of medicine in the Valdosta, Georgia areas. Services deemed non-
competitive include and are limited to treatment of patients other than for
Dialysis Treatments and other than acute dialysis treatments which the Facility
may perform.
2.3 Medical Director.
----------------
2.3.1 License and Certification. Each Medical Director (i) repre-
-------------------------
sents to and shall be licensed to practice medicine and to dispense narcotics
and other pharmaceuticals in accordance with the laws of the State of Georgia;
(ii) represents to and shall be Board certified in internal medicine or in
nephrology; (iii) represents to and shall have at least 12 months of experience
or training in the care of patients at ESRD facilities; and (iv) represents
that he or she is not subject to any pending or threatened litigation or
professional discipline relating to his or her medical practice or licensure
for the prescribing and/or dispensing of narcotics and pharmaceuticals, for the
last five years has not been subject to any such litigation or professional
discipline except as disclosed in Exhibit 2.3.1, nor has any knowledge of facts
-------------
or circumstances
<PAGE> 2
that could give use to any such litigation or professional discipline other
than as disclosed in Exhibit 2.3.1.
-------------
2.3.2 Medical Staff Appointment. Each Medical Director shall
-------------------------
apply for, be awarded and maintain appointment in good standing on the medical
staff of the Facility in accordance with Facility's policies as well as
applicable Facility and medical staff bylaws, rules and regulations.
2.3.3 Program Eligibility. Each Medical Director shall be and
-------------------
remain eligible to participate in the Medicare program and the state medical
assistance program.
2.3.4 Agreement to be Bound. The P.C. and the Medical Director
---------------------
represent and warrant that they shall use their best efforts and skills in
fulfilling their responsibilities and duties as provided in this Agreement.
The P.C. shall not utilize any Physician to provide Services under this
Agreement unless such Physician has been appointed Medical Director as provided
in Section 2.1, and has executed a document, legally obligating such Physician
individually to abide by the terms and conditions of this Agreement in form as
provided in Exhibit 2.3.4 or as otherwise reasonably requested by Company.
-------------
2.3.5 No Conflict. The P.C. and each Medical Director represent and
-----------
warrant that it, he and/or she has no affiliation, contract, agreement or other
arrangement with any other person or entity that would prohibit the P.C. or
Physician from performing under this Agreement or otherwise conflict with the
terms and provisions of this Agreement. The P.C. and each Medical Director
hereby indemnify and hold the Company, the Facility and their respective
shareholders, officers, directors, successors and assigns (collectively
"Representatives") harmless from any and all claims, suits, obligations
restrictions, liabilities and other causes of action (collectively "Claims")
which may arise from a breach of this representation as set forth in this
Section 2.3.5, which indemnification includes but is not limited to any and
all costs and fees incurred by the Company, Facility and/or Representatives
in defending any such Claims as indemnified herein, including reasonably
counsel fees.
3. SERVICES
--------
The Services of the P.C. and Medical Director shall include:
3.1 Being in charge of and responsible for all medical aspects of the
Facility's operation to provide high quality medical treatment, providing the
proper coordination and functioning of all medical services, and being
responsible for adequate supervision of dialysis treatments in accordance with
federal regulation and/or any and all other applicable state and/or local
regulations now in existence or hereafter passed applicable to the operation of
the Facility;
3.2 Consulting with and advising the executive management of the Facility
on matters including, but not limited to, the hiring and firing of medical,
para-medical and technical personnel employed by the Facility and the type of
equipment and supplies to be used in the Facility for patient care;
3.3 Assuring adequate monitoring of the patient and the dialysis process
(minimum in-center rounds once per week), including for self-dialysis patients,
assuring periodic assessment of patient performance of dialysis tasks;
<PAGE> 3
3.4 Assuring the development and availability of a patient care policy
and procedures manual and its implementation; at a minimum, the manual shall
describe the types of dialysis used in the Facility and the procedures
followed in performance of such dialysis; hepatitis prevention and procedures
for handling an individual with hepatitis; and a disaster preparedness plan
(e.g., patient emergency, fire, flood);
3.5 Assuring that patient teaching materials are available for the use
of all trainees during training and at times other than during the dialysis
procedure when self-dialysis training or home dialysis training is offered;
3.6 Supervising in the development and implementation of a system of
patient care evaluation (quality assurance) including peer review and audit;
3.7 Aiding in the recruitment of qualified doctors and nurses to be
associated with and/or employed by and as required by the executive management
of the Facility;
3.8 Clinical oversight of the nursing, technical and medical staff;
3.9 Establishing and supervising a training program in dialysis
techniques for medical, nursing and technical employees of the Facility;
3.10 Serving as the chairman of the Medical Review Board of the Facility;
3.11 Consulting with other medical and governmental agencies and
facilities needed to further the interests, operating and progress of the
Facility;
3.12 Supervising the maintenance of all appropriate medical records
relating to medical services rendered at the Facility;
3.13 Developing and supervising a preventative maintenance training
program for staff personnel pertaining to the maintenance of all equipment;
3.14 Using its, his and her best efforts to be available and present at
the Facility during times of inspection by regulatory agencies;
3.15 Acting as spokesperson and coordinator for the Facility during any
Certificate of Need process in connection with the establishment and approval
processes for the Facility and any future expansion thereof and assisting the
Facility in obtaining all necessary approvals and consents for additional
dialysis stations;
3.16 Establishing review and monitoring of water quality for dialysis;
3.17 Instituting and supervising a dialyzer re-use program in compliance
with recognized medical standards;
3.18 Evaluating laboratory procedures and services;
3.19 Establishing, maintaining and monitoring infection control policies;
3.20 Assuring and warranting that the Medical Director, any Assistant
Medical Director(s) and Physician(s) have the proper credentials and maintain
the necessary licenses
<PAGE> 4
and/or approvals to participate in all federal, state and local kidney disease
programs governing the operation and/or reimbursement for the Facility in
which the Facility participates.
4. COMPENSATION
------------
4.1 Amount of Compensation. For the P.C.'s services as provided in this
----------------------
Agreement, which are and include the services of the Medical Director, the
Company will pay the P.C. and the P.C. accepts as full and sufficient
compensation the amounts set forth in Exhibit 4.1 ("Compensation"), incor-
-----------
porated herein by reference.
4.2 Payment. The Company shall pay Compensation under this Agreement to
-------
P.C. on the last day of each month in each Agreement Year (incremental periods
of 12 months starting from the Commencement Date), allowing for ten business
days check processing time, an amount equal to one twelfth (1/12th) of the
Compensation required to be paid to P.C. pursuant to this Article 4 in such
Agreement Year, by check drawn to the order of P.C. and mailed to the address
specified for P.C. set forth on Exhibit 12.8 attached hereto, or such other
------------
address as designated in writing.
4.3 Additional Compensation. In addition, for the P.C.'s services as
-----------------------
provided in this Agreement, which are and include the services of the Medical
Director, the Company will provide Andrew Queler M.D. with the option to
purchase up to a minimum of 10% ownership in all future dialysis facilities
that the Company may start in the Georgia Counties of Lowndes, Brooks, Berrien,
and Clinch, with the exception of one, at Companys discretion. This option will
be valid for as long as Dr. Queler remains an owner of P.C.
4.4 Physician's Fees. It is agreed and understood that P.C., the Medical
Director and all other Physicians involved in patient care at the Facility
shall do their own billing of fees for Physician's services to the appropriate
party, which services and fees shall not be billed to or be the responsibility
of the Company or the Facility.
4.4 Economical Services. The P.C. and Medical Director represent and
warrant that the Services shall be performed in an economical and professional
manner, and that each of them shall use their best efforts to maintain the
costs of Dialysis Treatments at reasonable and efficient levels subject to the
exercise of good medical judgment. This representation and warranty is a
material inducement to the Company in entering into this Agreement.
5. INSURANCE
---------
5.1 Required Coverage. The P.C. shall maintain for itself and shall
-----------------
require any Physician who provides Services pursuant to this Agreement to
maintain basic limits professional malpractice liability insurance during the
term of this Agreement and thereafter covering all Services provided pursuant
to this Agreement in amounts not less than $1,000,000 per occurrence and
$3,000,000 per annual aggregate. The P.C.'s and Medical Director's obligations
under this Section 5.1 shall survive for three (3) years following termination
of this Agreement. Upon failure of P.C. or any Physician to obtain such
professional malpractice liability insurance, in addition to being a breach of
the Agreement, the Company shall have the option, not the obligation, to obtain
the same for the P.C. and any such Physician(s), to pay the premiums and charge
the same together with any administrative and service fees and charges to the
P.C. and/or Physician and P.C. and/or Physician shall immediately pay such sum
to the Company.
<PAGE> 5
5.2 Certificate of Insurance. The P.C. and/or Physician shall provide
------------------------
to the Company prior to commencing or continuing Services hereunder certifi-
cates of insurance evidencing the professional malpractice liability insurance
coverage required in Section 5.1 as well as a certificate of insurance
evidencing the P.C.'s workmen's compensation coverage and to notify the Company
immediately of any modifications or cancellation or termination of such
insurance coverage.
5.3 Company Insurance. The Company shall provide and maintain liability
-----------------
insurance for itself and its employees who perform services at or in connection
with the Facility.
5.4 Indemnification. Each Party (including any Physician providing
---------------
Services) shall hold harmless and indemnify the other and their Representa-
tives, and any person or entity that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, it, including their officers, directors and shareholders, hereinafter
"Affiliates," from and against any and all Claims, expenses and attorney's
fees resulting from or attributable to any and all acts and omissions of such
Indemnifying Party.
6. RULES AND REGULATIONS
---------------------
6.1 Laws, Rules and Regulations. The P.C. and each Physician shall at
---------------------------
all times render Services in compliance with all applicable federal, state and
local laws, rules and regulations and in compliance in all material respects
with the Facility's bylaws, rules and regulations.
6.2 Requirements and Standards. The P.C. and all Physicians shall
--------------------------
maintain such standards and meet such requirements as will, at all times,
continue certification of the Facility as an ESRD dialysis facility under the
federal Medicare program and continuance of any license or operating certifi-
cate of the Facility.
7. RESTRICTIVE COVENANT
--------------------
7.1 General and Definitions
-----------------------
7.1.1 Purpose. The Parties acknowledge that the Dialysis Treatments
-------
and Services are of a special and unique character and that the P.C. and each
Physician has and will receive substantial economic benefit and valuable
business information as a result of association with the Company and the
Facility; that the Company will incur expense in the development and promotion
of the Facility; and that if the P.C. or a Physician is permitted to engage in
Restricted Activity during the Restricted Period (as hereinafter defined) the
Company will suffer substantial economic injury.
7.1.2 Restricted Activity. As used in this Agreement "Restricted
-------------------
Activity" shall mean participation or involvement, direct or indirect, either
as principal, agent, proprietor, shareholder, P.C., creditor, subcontractor,
administrator, physician, medical director, officer,
<PAGE> 6
employee, consultant or otherwise, in any entity, trade or business (other than
for the Company) providing Dialysis Treatments and/or Services within the
"Restricted Area" as defined in Section 7.1.4; and "Restricted Activity" also
includes the restriction and prohibition of advising, assisting, consulting
with, leasing or selling real property to, provide financing for or aid in the
establishment or operation of any competing business or Restricted Activity in
the Restricted Area during the Restricted Period; provided however such
Restricted Activity shall not include: (i) a Physician's direct patient care
services to ESRD, other dialysis patients or any other patients as otherwise
provided for in Section 2.2 of this Agreement; (ii) the ownership of less than
five percent (5%) of the issued and outstanding stock of a public company; or
(iii) those activities listed on Exhibit 7.1.2.
-----
7.1.3 Services. The terms "Dialysis Treatments" and "Services"
--------
shall be as defined in this Agreement and inclusive of those acute and chronic
dialysis patients requiring hospitalization and other patients of an insti-
tution or hospital who may require dialysis treatment if the Facility or the
Company has an affiliation agreement to provide such inpatient dialysis
services with such local institution or hospital, including but not limited to
staff assisted hemodialysis, continuous ambulatory peritoneal dialysis and home
training staff assisted dialysis treatments, exclusive of those facilities
listed on Exhibit 7.1.3.
-------------
7.1.4 Restricted Area. As used in this Agreement, "Restricted Area"
---------------
shall mean any location within the Georgia Counties of Brooks, Lowndes, Cook,
Berrien, and Clinch.
7.1.5 Restricted Period. As used in this Agreement "Restricted
-----------------
Period" shall mean the Term of this Agreement and two(2) years thereafter,
provided however, in the event of any violation of this Article 7 the
Restricted Period shall be extended by a period of time equal to that period
beginning when the violation commenced and ending when the violation
terminated; provided further that if this Agreement is terminated pursuant
to Section 11.3 and the cause was not due to the P.C. or Medical Director,
then the Restrictive Period shall mean the Term of this Agreement and nothing
more.
7.2 Competition. During the Restricted Period the P.C. and/or any
-----------
Physician shall not engage in any Restricted Activity.
7.3 Employees and Contractors. During the Restricted Period, P.C. or
-------------------------
any Physician shall not induce, solicit or attempt to influence, any employee,
contractor, reimbursement sources, providers, suppliers, insurors and other
third-party payors of the Company or the Facility to terminate a relationship
with the Company or the Facility or to enter into any employment or other
business relationship or affiliation or Restricted Activity with any other
person, firm, or corporation, including the P.C. or any Physician.
7.4 Scope of Covenants. It is expressly understood and agreed that the
------------------
scope of the various covenants in this Article 7 are reasonable both in time
and area and are fair and necessary to protect the legitimate interests of
Company and the Facility against the material adverse effects which would
result from the violation of any of these covenants.
7.5 Divisibility of Covenants. The covenants of this Article 7 shall be
-------------------------
regarded as divisible and shall be given the greatest operative effect
possible. If any part of them is declared invalid or unenforceable in any
respect, the validity and enforceability of the remainder shall not be
affected. If the Restricted Activity, Restricted Area and/or Restricted
Period, as provided herein, should be adjudged unreasonable in any judicial
proceeding, then the Restricted Activity,
<PAGE> 7
Restricted Area and/or Restricted Period shall be reduced as is deemed
necessary to allow this Article 7 to be enforced.
7.6 Remedies. It is understood that in the event of any violation of the
--------
covenants of this Article 7, the Company and/or the Facility shall suffer
irreparable injury not compensable by monetary damages and the Company, the
Facility and their Affiliates shall be entitled to seek preliminary and
permanent injunctive relief from any court of competent jurisdiction in
addition to any other remedies available under this Agreement or at law or
in equity. The Company, the Facility and/or the Affiliates shall be entitled
to reasonable attorney's fees and other costs it or they may incur in connec-
tion with protecting their rights in the event of a breach as contemplated and
provided herein.
7.7 Bankruptcy. The covenants and restrictions contained in this Section
----------
7 shall not be applicable upon a final declaration of bankruptcy of the Company
or the abandonment of the Facility by the Company which means the intentional
giving up of the Facility by the Company and not the termination of operations
or this Agreement as otherwise provided herein.
7.8 Independent Covenant. The restrictive covenants, particularly the
--------------------
covenant not to compete on the part of the P.C. and Physicians, shall be
construed as an agreement independent of any other provision of this Agreement,
and the existence of any claims or cause of action of the P.C. or Physician
against the Company or the Facility, whether based upon this Agreement or
otherwise, shall not constitute a defense to or a repeal or cancellation of the
enforcement by the Company, the Facility or the Affiliates of this covenant not
to compete.
8. CONFIDENTIALITY
---------------
8.1 Confidential Information. In the operation and development of
------------------------
existing renal dialysis facilities and implementing Dialysis Treatments and
Services by the Company and its parent, Dialysis Corporation of America ("DCA")
and the planning and development of the Company's and DCA's proposed
businesses, the Company and DCA generate information and data which is and will
be proprietary and confidential ("Confidential Information"), the disclosure of
which would be extremely detrimental to the business of the Company and DCA and
of great assistance to its competitors. The Confidential Information includes,
but is not limited to:
(a) Development. Data, plans and projections regarding the
-----------
location, development and expansion of existing and proposed facilities;
(b) Marketing. Market surveys, studies and analyses;
---------
(c) Services. Information concerning the identities, locations and
--------
qualifications of professionals and other persons presently, or prospectively
to be, retained or employed by the Company or DCA;
(d) Suppliers, etc. Information concerning the identities,
--------------
locations, prices, costs and other terms of dealings with referral and
reimbursement sources, suppliers, providers and supplier and provider
organizations and entities; administrative and accounting procedures and
policies and information about contractual and other arrangements and
affiliations with any of the foregoing;
<PAGE> 8
(e) Regulatory Matters. Information concerning legislative,
------------------
administrative, regulatory and zoning requirements, bodies and officials;
(f) Records. Medical, patient and personnel records;
-------
(g) Data. Statistical, financial, cost and accounting data;
----
(h) Patients. Existing and prospective patient lists, names and
--------
addresses; and
(i) Manuals. Administrative, accounting, operations and procedures
-------
manuals.
8.2 Non-Disclosure. The P.C. and Medical Director understand and agree
--------------
that due to the highly competitive nature of the healthcare industry and the
business of the Facility, the Company and DCA, disclosure of any of the
Confidential Information would be extremely damaging to any and all of them.
The P.C. and Medical Director agree that its, he and/or she will not use or
divulge such Confidential Information without the prior written consent of the
Company. The restrictions set forth in this Article 8 shall not apply to any
part of the Confidential Information which (i) is or becomes generally
available to the public or publicly known other than as a result of disclosure
by the P.C. or Medical Director; (ii) becomes available to the P.C. or Medical
Director on a nonconfidential basis from a source which is not itself breaching
any non-disclosure or similar restrictive covenant; (iii) is disclosed pursuant
to the requirement of a governmental agency or court of competent jurisdiction
or as otherwise required under applicable law; or (iv) was known or available
to the P.C. or Medical Director prior to the date of this Agreement without any
obligation of confidentiality; provided as to this subparagraph (iv) such can
be proved through written evidence.
8.3 Remedies. It is understood that any violation or breach of the
--------
covenants and provisions of this Article 8 could cause the Company, the
Facility and/or DCA irreparable injury not compensable by monetary damages, and
the Company, the Facility and/or DCA and their Affiliates are entitled to such
injunctive relief and any and all other remedies as provided in Section 7.6 of
this Agreement.
9. TERM
----
9.1 Term. The term of this Agreement shall commence on the Commencement
----
Date as provided in Section 9.2 and continue thereafter (unless sooner
terminated as provided for in this Agreement) for an initial term of ten (10)
years from such date ("Term").
9.2 Commencement Date. The Term of this Agreement shall commence
-----------------
("Commencement Date") on the effective date of certification of the Facility
as a Medicare-certified end-stage renal disease facility ("Certification").
If the Certification does not occur on or before 18 months following the date
of this Agreement, then this Agreement shall be void and of no force and
effect and neither party shall have any right or obligation hereunder.
9.3 Renewal. Provided the P.C. and the Medical Director have fulfilled
-------
their obligations and responsibilities under this Agreement and have not
defaulted or breached under the terms and conditions of the Agreement, then
this Agreement is automatically renewed for five additional five year renewals
provided P.C. or Company does not give the other party less than
<PAGE> 9
one (1) year written notification prior to the end of the Term or any
particular renewal period, of its intent to terminate at the expiration of
the Term or such renewal period.
10. CONTRACTUAL RELATIONSHIP
------------------------
10.1 Independent Contractor. The P.C. and any Medical Director shall,
----------------------
at all times, be independent contractors and not employees of the Company or
the Facility, and the P.C. and any Medical Director shall not hold itself or
the Physicians out as employees of the Company or the Facility. In furtherance
thereof, the Company and Facility and P.C. covenant and agree that one is
neither the employee, employer, principal or agent of the other, except that
each of the P.C. and Medical Director is an independent contractor to the
Company and the Facility. However, it is understood that nothing in this
section or elsewhere in this Agreement shall be deemed not to subject the P.C.
and Medical Director to the supervision of the executive management or the
board of directors of the Company and the administrator of the Facility and to
their directions and control, except such Physicians shall have independent
control over the medical practice, and further that Medical Director and other
physicians shall not be subject to company's supervision or control. Medical
Director and other physicians shall not be questioned with respect to their
medical diagnoses and recommended treatments, and they shall have unfettered
discretion to treat patients within each physician's unlimited license to
practice medicine.
P.C. and all other Physicians understand and agree that personnel employed
at the Facility are employees of the Company and are not to be considered or
viewed as employees or servants of P.C. No demands or requests will be made or
placed upon such employees for secretarial duties, patient scheduling, etc.,
other than for Dialysis Treatment as to be provided by the Facility.
10.2 Obligations. The P.C. and each Physician shall be liable for the
-----------
payment or provision for payment of all their required withholding, social
security and other taxes or benefits. It is further understood and agreed that
there is no obligation on behalf of the Company or the Facility to provide to
any Physician benefits such as but not limited to group health insurance,
dental benefits, life insurance, etc.
10.3 Withholding. Neither the Company nor the Facility shall withhold,
-----------
on behalf of the P.C. or any Physician, any sums for income tax, unemployment
insurance, social security or any other withholding or benefit, all of which
shall be the respective obligations of the P.C. or any Physician.
10.4 Control. Nothing in the Agreement is intended, and shall not be
-------
construed, to create an employer/employee relationship, a partnership or a
joint venture relationship. The interest of the Parties is to ensure that the
Dialysis Treatments of and the Services to be performed for the Facility by the
P.C. and the Physicians are rendered and performed in a competent, efficient
and satisfactory manner and in accordance with this Agreement and all rules and
regulations of the Facility.
10.5 Governmental Review. In the event the Internal Revenue Service or
-------------------
any other governmental agency shall, at any time, question or challenge the
independent contractor relationship between the Company and the P.C. or the
Physicians, the Company, the P.C. and the Physician, upon receipt by either of
them of notice from the Internal Revenue Service or any other governmental
agency, shall promptly notify the other Parties and afford the other Parties
the opportunity to participate in any discussion or negotiation with the
Internal Revenue Service or
<PAGE> 10
other governmental agency, irrespective of whom or by whom such discussions or
negotiations are initiated. The other Parties shall participate in any such
discussions or negotiations to the extent permitted by the Internal Revenue
Service or other governmental agency. The provisions of this Section 10.5
shall apply only to issues arising from the independent contractor relationship
described herein and not to any other tax matter involving the Parties.
11. TERMINATION
-----------
11.1 Termination Without Fault
-------------------------
11.1.1 Without cause. Company may terminate this agreement at any
-------------
time, without cause, upon fifteen (15) days written notice to the P.C., during
the first twelve months from the commencement, or until any outstanding loans
to the P.C. are paid in full, whichever is longer.
11.1.2 Death. This Agreement shall terminate upon the death of the
-----
Medical Director unless within thirty (30) days of the death of Medical
Director, P.C. has appointed a substitute Medical Director, which is the
obligation of P.C., approved by the Company, and such substitute Medical
Director agrees to be bound by this Agreement and executes Exhibit 2.3.4.
11.1.3 Disability. If the Medical Director becomes mentally or
----------
physically unable to perform the Services required under this Agreement for a
continuous period of thirty (30) days, or if the P.C. or Medical Director is
professionally disqualified so that it, he or she cannot adequately perform
its, his or her duties and responsibilities as Medical Director, or is absent
other than for a short illness or vacation or similar reason, and the P.C.
fails to promptly appoint a substitute Medical Director, but no later than
thirty (30) days from such occurrence, which is the obligation of P.C.,
approved by the Company, which substitute Medical Director agrees to be bound
by this Agreement, such shall be deemed a breach of this Agreement, other than
due to failure to perform based on mental or physical disability due to natural
causes, which will not be deemed a breach but rather a basis for termination,
and the Company may terminate this Agreement on thirty (30) days written
notice. Any professional disqualification of the P.C. or the Medical Director
or non-short term absence of the Medical Director hereby leaving the Facility
without a qualified Medical Director acceptable to the Company, except due to
disability or incompetence due to natural causes as opposed to conditions
caused by the Medical Director, such as but not limited to drug abuse or
alcoholism, and any conduct or omission to act by the P.C. or the Medical
Director, that may be deemed unethical or subject the P.C. or the Medical
Director to discipline or to professional disqualification by standards
published from time to time by the Judicial Council of the American Medical
Association, whether or not disciplinary action is taken, is a basis for the
Company in its sole discretion to terminate the Agreement and shall be deemed a
breach of this Agreement.
11.2 Right to Terminate Upon Default. Except as otherwise provided in
-------------------------------
Section 11.1, a Party shall have the right as provided in this Section 11.2, to
terminate this Agreement at any time upon the occurrence of any of the
following events:
11.2.1 In the event the P.C. or any of its appointed Physicians
violates Sections 2.3.1, 2.3.3, 2.3.5, 7.2 or Article 8, the Company may
terminate this Agreement immediately; and
11.2.2In the event a Party materially violates any other term or
condition of this Agreement which violation is not cured within thirty (30)
days after written notice to the
<PAGE> 11
breaching Party of such violation or if the violation cannot reasonable be
cured within such thirty (30) days, the breaching party has not commenced
within such thirty (30) days and thereafter diligently pursued action
reasonably necessary to cure such violation, the other Party may terminate
this Agreement.
11.3 Loss of License; Force Majeure. Either Party may terminate this
------------------------------
Agreement if:
11.3.1 The license for the Facility or its certification to
participate in the ESRD program is lost or suspended for ninety (90) days or
longer not due to nor the fault of that Party seeking to terminate, after
exhaustion of all hearings and appeal rights; or
11.3.2 The Facility is not usable or reasonably relocatable within
one hundred twenty (120) days due to fire, natural disaster, change of laws or
Force Majeure or other cause beyond the Parties' control, and not due to nor
the fault of that Party seeking to terminate.
11.4 Cumulative Remedies. The specific remedies provided in this
-------------------
Agreement shall be in addition to and not in substitution for the rights and
remedies which would otherwise be vested in the Parties under the Agreement,
at law or in equity, all of which rights and remedies are specifically
reserved by the Parties. Failure of a Party to exercise any remedy shall not
constitute a waiver of the Party's rights for that default nor of any further
or future default.
12. GENERAL PROVISIONS
------------------
12.1 Assignment. The P.C. shall not assign, sell or transfer this
----------
Agreement, its obligations hereunder or any interest herein. This Agreement may
be assigned in whole or in part by the Company.
12.2 Governing Law. This Agreement shall be deemed to have been made
-------------
and shall be construed and interpreted in accordance with the laws of the State
of Georgia, conflicts of law provisions notwithstanding.
12.3 Severability. If any term or provision of this Agreement or in the
------------
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Agreement on the application
of such term or provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby, and
each term and provision of the Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12.4 Integrated Agreement. This Agreement constitutes the entire
--------------------
understanding and agreement between the Parties concerning the subject matter
hereof. This Agreement supersedes all prior written or oral agreements or
understanding existing between the Parties concerning the subject matter
hereof.
12.5 Captions. Captions contained in this Agreement are inserted only as
--------
a matter of convenience and in no way define, limit, or extend the scope or
intent of this Agreement or any provision hereof.
12.6 Gender. Any noun or pronoun used in this Agreement shall be
------
construed in masculine, feminine or neuter as its sense and use may require.
<PAGE> 12
12.7 Waivers and Amendments. No waiver of any term, provision, or
----------------------
condition of this Agreement, whether by conduct or otherwise in any one or
more instances, shall be deemed to be or construed as a further and continuing
waiver of any such term, provision or condition of this Agreement. No amend-
ment to any provision of this Agreement shall be effective unless in writing
and signed by each Party.
12.8 Notices. All notices pursuant to this Agreement shall be in writing
-------
and shall be given by hand delivery or by depositing said notices in the United
States registered or certified mails, return receipt requested, addressed to a
party at the addresses as provided in attached Exhibit 12.8, or to such other
address as may hereafter be specified in writing by one Party notifying all
other Parties in the manner set forth herein. All notices given in the manner
prescribed in this Section shall be deemed properly served upon receipt.
12.9 Access to Books and Records. This Section is included herein
---------------------------
because of the possible application of Section 1861 (v) (1) (I) of the Social
Security Act to this Agreement; if that section should not be found applicable
to this Agreement under the terms of such section then this Section shall be
deemed not to be a part of this Agreement and shall be null and void.
12.9.1 P.C. Until the expiration of four (4) years after the
---
furnishing of Services pursuant to this Agreement, the P.C. shall make
available upon written request of the Secretary of Health and Human Services
or the United States Controller General or any of their duly authorized
representatives, this Agreement, and any books, documents and records of the
P.C. that are necessary to certify the nature and extent of costs incurred by
the Company under this Agreement.
12.9.2 Subcontractors. If the P.C. carries out any of the duties
--------------
of this Agreement with a value of Ten Thousand Dollars ($10,000) or more over
a twelve (12) month period through a subcontract with a related organization
or person, such subcontract must be approved by the Company and must contain a
clause similar to that set forth in Section 12.9.1 above.
12.10 No Discrimination. Each Party agrees that, in the performance of
-----------------
this Agreement, services will be provided without discrimination toward any
patients, employees, or other persons regardless of their race, creed, color
or ethnic background. Both the Company and P.C. are equal opportunity
employers. All Parties shall comply with all requirements and provisions of
the Civil Rights Act of 1964, 42 U.S.C.A. Section 2000 et seq. and other
applicable federal and state law.
12.11 Recovery of Litigation Costs. Subject to Articles 7 and 8 of this
----------------------------
Agreement, if any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
12.12 Confidentiality. This Agreement and its terms and provisions shall
---------------
be kept confidential and shall not be disclosed to any other party, nor shall
this Agreement or any part thereof be reproduced or summarized, except to the
extent as required by law.
12.13 Binding Agreement. All of the terms and provisions of this
-----------------
Agreement shall be binding upon, inure to the benefit of and be enforceable by
each of the Parties hereto, their respective legal representatives and their
permitted successors and assigns.
<PAGE> 13
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of
the day and year first above written.
SOUTH GEORGIA NEPHROLOGY, P.C.
/s/ Andrew Queler
By:---------------------------------------
Name: Andrew Queler, M.D
Title: President
DCA OF SOUTH GEORGIA, LLC
/s/ Stephen W. Everett
By:---------------------------------------
Member: Dialysis Corporation Of America
Name: Stephen Everett
Title: President
It is understood that if Andrew Queler opts out of his contract with SG
Nephrology within the first year that his medical directorship obligations will
be similarly limited to 6 months notice.
A.Q.
<PAGE> 14
EXHIBIT 2.3.1
LITIGATION AND PROFESSIONAL DISCIPLINE
<PAGE> 15
EXHIBIT 2.3.4
MEDICAL DIRECTOR
I, Andrew Queler, M.D., Medical Director of DCA of South Georgia, LLC
In order to induce the Company to execute this Agreement, to appoint the
undersigned as Medical Director and to permit the undersigned to assist in
providing Dialysis Treatments and Services; in consideration of the amounts to
be paid as provided in this Agreement to P.C.; and intending to be legally
bound hereby, the undersigned agrees to be bound personally by the Agreement,
including the restrictions set forth in Article 7 of this Agreement.
/s/ Andrew Queler
Date: 8/2, 2000 ------------------------------------
Andrew Queler, M.D.
ACKNOWLEDGED and AGREED
this 21st day of July, 2000
DCA of South Georgia, LLC
/s/ Stephen W. Everett
By:------------------------------
<PAGE> 16
EXHIBIT 4.1
COMPENSATION
For P.C.'s services under this Medical Director Agreement, the Company
will pay the P.C. Fifty Thousand ($50,000.00) Dollars per Agreement Year; or
Four Thousand One Hundred Sixty Seven ($4,167.00) Dollars per month.
The P.C.'s Compensation shall be renegotiated in good faith on or about
the end of each Agreement Year and shall be competitive with the national
standard in the industry and shall consider workload at the Facility. Failure
to reach an acceptable renegotiated Compensation shall not be deemed a breach
of nor a basis for termination of this Medical Director Agreement.
<PAGE> 17
EXHIBIT 7.1.2
EXCLUSIONS FROM RESTRICTED ACTIVITY
None
<PAGE> 18
EXHIBIT 7.1.3
Facilities Excluded From Restricted Area:
See Exhibit 7.1.2
<PAGE> 19
EXHIBIT 12.8
NOTICES
To Company: DCA of South Georgia, LLC
c/o Dialysis Corporation of America - Member
27 Miller Avenue, Suites 2 & 3
Lemoyne, PA 17043
Attn: Stephen W. Everett, President
With a copy to: Lawrence E. Jaffe, Esq.
777 Terrace Avenue
Hasbrouck Heights, NJ 07604
To P.C.: South Georgia Nephrology, P.C.
Attn: Dr. Andrew Queler
With a copy to:
